<PAGE> 1
Filed with the SEC on May 23, 1996 Registration No. 333-03051
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
------------------
DEPOSIT GUARANTY CORP.
(Exact name of registrant as specified in its charter)
MISSISSIPPI 6711 64-072169
(State or other jurisdiction (Primary Standard Industrial (IRS Employer Identi-
of incorporation or Classification Code Number) fication Number)
organization)
ARLEN L. MCDONALD
210 EAST CAPITOL STREET 210 EAST CAPITOL STREET
POST OFFICE BOX 730 POST OFFICE BOX 730
JACKSON, MISSISSIPPI 39205 JACKSON, MISSISSIPPI 39205
TELEPHONE NUMBER: (601)354-8497 TELEPHONE NUMBER: (601)354-8497
(Address, including zip code, (Name, address, including zip
and telephone number, including code, and telephone number,
area code of registrant's including area code, of agent
principal executive offices) for service)
Copies to:
L. Keith Parsons, Esq. Lisa M. Buchanan, Esq.
Watkins Ludlam & Stennis. P.A. Jones, Walker, Waechter, Poitevent,
633 North State Street Carrere & Denegre, L.L.P.
Post Office Box 427 201 St. Charles Avenue, Suite 5100
Jackson, Mississippi 39205-0427 New Orleans, Louisiana 70170
Telephone Number: (601)949-4701 Telephone Number: (504) 582-8310
Approximate date of commencement of proposed sale of securities to the public:
At the Effective Date of the merger of Bank of Gonzales Holding Company, Inc.
into Commercial National Corporation as described in the attached Proxy
Statement/Prospectus.
If the securities being registered on this form are being offered in
conjunction with the formation of a holding company and there is compliance
with General Instruction G, check the following box. /__/
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE> 2
DEPOSIT GUARANTY CORP.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
Caption or Location
in Proxy
Items in Form S-4 Statement/Prospectus
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<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus....................... Cover Page of
Registration Statement;
Cross Reference Sheet;
Cover Page of the Proxy
Statement/Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus........ Available Information;
Incorporation of
Certain Documents by
Reference
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information...................... Summary
4. Terms of the Transaction......... Summary; The Merger; Comparison of the Rights of
Holders of Gonzales Holding Common Stock and
Deposit Guaranty Common Stock
5. Pro Forma Financial Information.. Not Applicable
6. Material Contracts with the
Company Being Acquired........... Not Applicable
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Under-
writers.......................... Not Applicable
8. Interest of Named Experts and
Counsel.......................... Legal Opinion; Experts
9. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities... Not Applicable
</TABLE>
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<TABLE>
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10. Information with Respect to
S-3 Registrants.................. Available Information;
Incorporation of
Certain Documents by
Reference
11. Incorporation of Certain Infor-
mation by Reference.............. Available Information;
Incorporation of
Certain Documents by
Reference
12. Information with Respect to S-2
or S-3 Registrants............... Not Applicable
13. Incorporation of Certain Infor-
mation by Reference.............. Not Applicable
14. Information with Respect to
Registrants Other Than S-3 or
S-2 Registrants.................. Not Applicable
15. Information with Respect to S-3
Companies........................ Not Applicable
16. Information with Respect to S-2
or S-3 Companies................. Not Applicable
17. Information with Respect to
Companies Other Than S-3 or
S-2 Companies.................... Information Concerning
Gonzales Holding ; Market Prices of and
Dividends on Gonzales Holding Common
Stock; Management's Discussion
and Analysis of Financial Condition
and Results of Operations for the
Years Ended December 31, 1995 and
1994; Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the Quarters
Ended March 31, 1996 and 1995; Index
to Financial Statements
</TABLE>
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<TABLE>
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18. Information if Proxies, Consents
or Authorizations Are to be
Solicited........................ Incorporation of
Certain Documents by
Reference; Summary;
Introduction; The Merger--Interests
of Certain Persons in
the Merger; Stock
Ownership of Management of
Gonzales Holding; Principal Shareholders of
Gonzales Holding ; Experts
19. Information if Proxies, Consents
or Authorizations Are Not to be
Solicited or in an Exchange
Offer............................ Not Applicable
</TABLE>
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BANK OF GONZALES HOLDING COMPANY, INC.
916 SOUTH BURNSIDE AVENUE AT WORTHEY ROAD
POST OFFICE BOX 1089
GONZALES, LOUISIANA 70707-1089
May 23, 1996
To Our Shareholders:
You are cordially invited to attend a Special Meeting (the "Meeting") of
Shareholders of Bank of Gonzales Holding Company, Inc. ("Gonzales Holding") to
be held at 2:00 p.m., local time, on June 27, 1996 at the Holiday Inn -
Gonzales at 1500 West Highway 30, Gonzales, Louisiana.
At the Meeting you will be asked to consider and vote upon the proposal to
approve an Agreement and Plan of Merger (the "Merger Agreement"), dated as of
February 5, 1996, by and among Deposit Guaranty Corp., a Mississippi
corporation ("Deposit Guaranty"), Commercial National Corporation ("CNC"), a
Louisiana corporation and a wholly-owned subsidiary of Deposit Guaranty, and
Citizens National Bank ("Citizens Bank"), a national bank and a wholly-owned
subsidiary of CNC, on the one hand, and Gonzales Holding and its wholly-owned
subsidiary, Bank of Gonzales ("Gonzales Bank"), on the other hand, pursuant to
which (a) Gonzales Holding will merge into CNC (the "Holding Company Merger")
and Gonzales Bank will merge into Citizens Bank (the "Bank Merger" and together
with the Holding Company Merger, the "Mergers"), and (b) each outstanding share
of Gonzales Holding common stock will be converted into shares of Deposit
Guaranty common stock as more fully described in the accompanying Proxy
Statement/Prospectus.
The affirmative vote of the holders of at least a majority of the
outstanding shares of common stock of Gonzales Holding must approve the Merger
Agreement. Consummation of the Mergers also requires certain regulatory
approvals.
The Board of Directors of Gonzales Holding believes the Mergers are in the
best interests of Gonzales Holding and its shareholders and unanimously
recommends that you vote for approval of the Merger Agreement. The reasons for
such recommendation are set forth in the accompanying Proxy
Statement/Prospectus. Furthermore, Gonzales Holding's financial advisor, Alex
Sheshunoff & Co. Investment Banking, has issued its opinion to the effect that,
as of the date of such opinion and based upon the considerations described
therein, the terms of the Mergers are fair, from a financial point of view, to
the shareholders of Gonzales Holding.
We believe that the Mergers represent an exceptional opportunity for
Gonzales Holding shareholders to join on favorable terms in a combined
enterprise with greater financial resources and a more geographically
diversified business. As a result of the proposed Mergers, you, as a
shareholder of Deposit Guaranty, will own common stock in a bank holding
company whose shares are actively traded. Combining Gonzales Holding with
Deposit Guaranty through the Mergers should thus provide Gonzales Holding
shareholders with a continued equity interest in a larger, more diversified
banking company.
We urge you to read the enclosed materials carefully so that you can
evaluate the Mergers for yourself.
All shareholders are invited to attend the Meeting in person. However, in
order to ensure that your shares will be represented at the Meeting, please
date, sign and promptly return the enclosed proxy card in the enclosed
postage-paid envelope whether or not you plan to attend the Meeting. If you
attend the Meeting in person, you may, if you wish, vote personally on all
matters brought before the Meeting.
Very truly yours,
D. Dale Gaudet
President and Chief Executive Officer
<PAGE> 6
BANK OF GONZALES HOLDING COMPANY, INC.
916 SOUTH BURNSIDE AVENUE AT WORTHEY
POST OFFICE BOX 1089
GONZALES, LOUISIANA 70707-1089
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Bank of Gonzales Holding Company, Inc.:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Bank of Gonzales Holding Company, Inc. ("Gonzales Holding ")
will be held at the Holiday Inn - Gonzales at 1500 West Highway 30, Gonzales,
Louisiana on June 27, 1996 at 2:00 p.m., local time, for the purpose of
considering and voting upon the following matters:
1. To consider and vote upon the proposal to approve an Agreement and
Plan of Merger (the "Merger Agreement"), dated as of February 5,
1996, by and among Deposit Guaranty Corp., a Mississippi corporation
("Deposit Guaranty"), Commercial National Corporation ("CNC"), a
Louisiana corporation and a wholly-owned subsidiary of Deposit
Guaranty, and Citizens National Bank ("Citizens Bank"), a national
bank and a wholly-owned subsidiary of CNC, on the one hand, and
Gonzales Holding, and its wholly-owned subsidiary, Bank of Gonzales
("Gonzales Bank"), a Louisiana state bank, on the other hand,
pursuant to which (a) Gonzales Holding will merge into CNC (the
"Holding Company Merger") and Gonzales Bank will merge into Citizens
Bank (the "Bank Merger"), and (b) each outstanding share of Gonzales
Holding common stock will be converted into shares of Deposit
Guaranty common stock in accordance with the terms of the Merger
Agreement; and
2. To transact such other business as may lawfully come before the
meeting or any adjournment or postponement thereof.
DISSENTING SHAREHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF THE
BUSINESS CORPORATION LAW OF LOUISIANA WILL BE ENTITLED TO RECEIVE PAYMENT OF
THE FAIR CASH VALUE OF THEIR SHARES IF THE HOLDING COMPANY MERGER IS EFFECTED
UPON APPROVAL BY LESS THAN EIGHTY PERCENT (80%) OF THE TOTAL VOTING POWER OF
GONZALES HOLDING.
The affirmative vote of the holders of a majority of the outstanding
shares of Gonzales Holding Common Stock is required for approval of the Merger
Agreement. Only shareholders of record as of the close of business on May 15,
1996, are entitled to vote at the Meeting. All shareholders are invited to
attend the Meeting in person. However, in order to ensure that your shares will
be represented at the Meeting, please date, sign and promptly return the
enclosed proxy card in the enclosed postage-paid envelope, whether or not you
plan to attend the Meeting. Your proxy may be revoked by appropriate notice to
the Secretary of Gonzales Holding at any time prior to the voting thereof. If
you attend the Meeting in person, you may, if you wish, vote personally on all
matters brought before the Meeting.
By Order of the Board of Directors
Ida N. Reine
Secretary
May 23, 1996
Gonzales, Louisiana
<PAGE> 7
PROSPECTUS PROXY STATEMENT
- ---------- ---------------
DEPOSIT GUARANTY CORP. BANK OF GONZALES HOLDING COMPANY, INC.
___________________ ______________
634,000 SHARES OF SPECIAL MEETING OF
COMMON STOCK, NO PAR VALUE SHAREHOLDERS TO BE HELD
JUNE 27, 1996
This Proxy Statement/Prospectus is being furnished to the shareholders of
Bank of Gonzales Holding Company, Inc. ("Gonzales Holding") in connection with
the solicitation of proxies by the Board of Directors of Gonzales Holding for
use at its Special Meeting (the "Meeting") of Shareholders to be held on June
27, 1996. This Proxy Statement/Prospectus was first mailed to shareholders of
Gonzales Holding on or about May 24, 1996.
At the Meeting, the holders of Gonzales Holding common stock, no par
value, ("Gonzales Holding Common Stock"), will be asked to approve the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of February 5,
1996, by and among Deposit Guaranty Corp. ("Deposit Guaranty"), a Mississippi
corporation, Commercial National Corporation ("CNC"), a Louisiana corporation
and a wholly-owned subsidiary of Deposit Guaranty and Citizens National Bank
("Citizens Bank") a wholly-owned subsidiary of CNC, on the one hand, and
Gonzales Holding and its wholly-owned subsidiary, Bank of Gonzales ("Gonzales
Bank"), a Louisiana state bank, on the other hand, pursuant to which Gonzales
Holding will merge into CNC (the "Holding Company Merger") and Gonzales Bank
will merge into Citizens Bank (the "Bank Merger", and together with the Holding
Company Merger, the "Mergers"). Upon consummation of the Mergers, each
outstanding share of Gonzales Holding common stock ("Gonzales Holding Common
Stock"), other than shares held by Gonzales Holding shareholders who perfect
dissenters' rights, will be converted into shares of Deposit Guaranty common
stock, no par value per share ("Deposit Guaranty Common Stock"), and cash in
lieu of any fractional shares, all in accordance with the terms of the Merger
Agreement. For a more complete description of the Merger Agreement and the
terms of the Mergers, see "The Mergers." A conformed copy of the Merger
Agreement is attached to this Proxy Statement/Prospectus as Exhibit A. For a
more complete description of dissenters' rights see "Dissenters' Rights".
Deposit Guaranty has filed a Registration Statement on Form S-4 with the
Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
634,000 shares of Deposit Guaranty Common Stock to be issued in connection with
the Mergers. This document constitutes a Proxy Statement of Gonzales Holding in
connection with the Meeting and a Prospectus of Deposit Guaranty with respect
to the shares of Deposit Guaranty Common Stock to be issued upon consummation
of the Mergers. Each of Deposit Guaranty and Gonzales Holding has furnished all
information included herein with respect to it and its consolidated
subsidiaries.
No person is authorized to give any information or to make any
representation concerning the Mergers not contained in this Proxy
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this Proxy
Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction, to
or from any person to whom it is unlawful to make such offer or solicitation of
an offer or proxy solicitation in such jurisdiction. Neither the delivery of
this Proxy Statement/Prospectus nor any distribution of the securities made
under this Proxy Statement/Prospectus shall, under any circumstances, create
any implication that there has been no change in the information set forth
herein since the date of this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus does not cover any resales of Deposit
Guaranty Common Stock to be received by Gonzales Holding shareholders upon
consummation of the Merger, and no person is authorized to make use of this
Proxy Statement/Prospectus in connection with any such resale.
_________________________
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR
HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________________
The date of this Proxy Statement/Prospectus is May 23, 1996.
<PAGE> 8
AVAILABLE INFORMATION
Deposit Guaranty is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by Deposit Guaranty can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549 and at its Regional
Offices located in the Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained from the Commission's
Public Reference Section, Judiciary Plaza, 450 Fifth Street N.W., Washington,
D.C. 20549, at prescribed rates.
Deposit Guaranty has filed with the Commission a Registration Statement on
Form S-4 (the "Registration Statement") under the Securities Act with respect
to the common stock offered by this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted pursuant to
the Rules and Regulations of the Commission, and to which portions reference is
hereby made for further information with respect to Deposit Guaranty and the
securities offered hereby.
AS INDICATED BELOW, THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY
REFERENCE CERTAIN INFORMATION WITH RESPECT TO DEPOSIT GUARANTY, WHICH IS NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH INFORMATION OR
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE WITHOUT CHARGE, UPON THE
WRITTEN OR ORAL REQUEST OF ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED. IN ORDER TO ENSURE TIMELY
DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JUNE 20, 1996, AND
SUCH REQUESTS SHOULD BE DIRECTED TO DEPOSIT GUARANTY'S PRINCIPAL EXECUTIVE
OFFICES AT 210 EAST CAPITOL STREET, JACKSON, MISSISSIPPI 39201, ATTENTION:
ARLEN L. MCDONALD, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
TELEPHONE NUMBER (601) 354-8497.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Deposit Guaranty with the Commission are
hereby incorporated by reference:
(1) Deposit Guaranty's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
(2) Deposit Guaranty's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996;
(3) The description of capital stock contained in Item 14 of Deposit
Guaranty's Registration Statement on Form 10 filed April 21, 1970,
Item 4 of Deposit Guaranty's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1982, Item 4 of Deposit Guaranty's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1986, Item 4 of
Deposit Guaranty's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1987, relating to the description of Deposit
Guaranty's Common Stock.
All documents filed by Deposit Guaranty pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date of the Meeting of shareholders of Gonzales Holding are hereby incorporated
by reference into this Proxy Statement/Prospectus and shall be deemed a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
<PAGE> 10
TABLE OF CONTENTS
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Page
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SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of the Meeting; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reasons for the Merger; Recommendation of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 2
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other Conditions to Consummation of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange of Gonzales Holding Certificates; No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . 3
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Deposit Guaranty - Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bank of Gonzales Holding Company, Inc. and Subsidiaries - Selected Financial Data . . . . . . . . . . . . . . 6
Deposit Guaranty Corp. and Subsidiaries - Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 7
Comparative Per Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Record Date; Voting Rights; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Structure and Terms of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Background of Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reasons for the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Conditions to the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exchange of Gonzales Holding Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Amendment; Waiver; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Conduct of Business Pending the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Resales of Deposit Guaranty Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Filing Written Objection and Vote Against the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Notice of the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Written Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Payment and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 11
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COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Cumulative Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Limitations on Directors' and Officers' Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Supermajority Voting Requirements; Business Combinations; Control Shares . . . . . . . . . . . . . . . . . . 24
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Vacancies in the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Amendment of the Articles of Incorporation or Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Shareholder Proposals and Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
MARKET PRICES OF AND DIVIDENDS ON GONZALES HOLDING COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF GONZALES HOLDING . . . . . . . . . . . . . . . . . . 27
INFORMATION CONCERNING GONZALES HOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Supplemental Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31,
1995 AND 1994GONZALES HOLDING AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31,
1996 AND 1995GONZALES HOLDING AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
INDEX TO GONZALES HOLDING FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit A - Agreement and Plan of Merger
Exhibit B - Fairness Opinion of Sheshunoff
Exhibit C - Section 131 of the Louisiana Business Corporation Law
</TABLE>
<PAGE> 12
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement/ Prospectus and the documents incorporated
herein by reference. This summary is necessarily incomplete and is subject to
and qualified in its entirety by reference to the more detailed information and
financial statements contained elsewhere in this Proxy Statement/Prospectus,
including the Exhibits and the documents incorporated in this Proxy
Statement/Prospectus by reference. Certain capitalized terms used in this
summary are defined elsewhere in this Proxy Statement/Prospectus.
PURPOSE OF THE MEETING
The purpose of the Meeting is to consider and vote upon a proposal to
approve an Agreement and Plan of Merger, dated February 5, 1996 (the "Merger
Agreement"), by and among Deposit Guaranty Corp., a Mississippi corporation
("Deposit Guaranty"), its wholly-owned subsidiary, Commercial National
Corporation, a Louisiana corporation ("CNC"), and CNC's wholly-owned
subsidiary, Citizens National Bank, a national banking association ("Citizens
Bank"), on the one hand, and Bank of Gonzales Holding Company, Inc., a
Louisiana corporation ("Gonzales Holding") and its wholly-owned subsidiary,
Bank of Gonzales, a Louisiana state bank ("Gonzales Bank"), on the other hand,
pursuant to which, among other things, (a) Gonzales Holding will be merged into
CNC (the "Holding Company Merger"), (b) Gonzales Bank will be merged into
Citizens Bank (the "Bank Merger" and together with the Holding Company Merger,
the "Mergers"), and (c) on the effective date of the Mergers (the "Effective
Date"), each outstanding share of Gonzales Holding common stock, no par value
per share ("Gonzales Holding Common Stock"), will be converted into a number of
shares of common stock, no par value per share, of Deposit Guaranty ("Deposit
Guaranty Common Stock") determined by dividing 634,000 by the number of shares
of Gonzales Holding Common Stock outstanding on the date immediately preceding
the Effective Date. Based on the number of shares of Gonzales Holding Common
Stock outstanding on March 31, 1996, Gonzales Holding shareholders will receive
1.1706 shares of Deposit Guaranty Common Stock for each share of Gonzales
Holding Common Stock. As a result of the Mergers, the business and properties
of Gonzales Holding will become the business and properties of CNC, the
business and properties of Gonzales Bank will become the business and
properties of Citizens Bank, and shareholders of Gonzales Holding will become
shareholders of Deposit Guaranty.
DATE, TIME AND PLACE OF THE MEETING; RECORD DATE
A Special Meeting (the "Meeting") of the Shareholders of Gonzales Holding
will be held on June 27, 1996, at 2:00p.m., at the Holiday Inn - Gonzales at
1500 West Highway 30, Gonzales, Louisiana. The Board of Directors of Gonzales
Holding has fixed the close of business on May 15, 1996, as the record date
(the "Record Date") for determining holders of outstanding shares of Gonzales
Holding Common Stock entitled to notice of and to vote at the Meeting. Only
holders of Gonzales Holding Common Stock of record on the books of Gonzales
Holding at the close of business on the Record Date are entitled to vote at the
Meeting or at any adjournment or postponement thereof. As of the Record Date,
there were 541,611 shares of Gonzales Holding Common Stock issued and
outstanding, each of which is entitled to one vote. See "Introduction --
General" and "Introduction -- Record Date; Voting Rights; Proxies."
VOTE REQUIRED
Approval of the Merger Agreement requires the affirmative vote at the
Meeting of the holders of not less than a majority of the outstanding shares of
Gonzales Holding Common Stock. As of the Record Date, the executive officers
and directors of Gonzales Holding as a group had the power to vote
approximately 165,115 shares of Gonzales Holding Common Stock, representing
approximately 30% of the outstanding shares, all of which are expected to be
voted in favor of the Merger Agreement.
THE PARTIES
Deposit Guaranty Corp. Deposit Guaranty is a bank holding company
headquartered at 210 East Capitol Street, Jackson, Mississippi 39201, telephone
(601) 354-8497. Its principal subsidiaries are Deposit Guaranty National Bank,
a
1
<PAGE> 13
national banking association with its principal office in Jackson, Mississippi;
Commercial National Bank, a national banking association with its principal
office in Shreveport, Louisiana; Citizens National Bank, a national banking
association with its principal office in Hammond, Louisiana; Merchants National
Bank, a national banking association with its principal office in Fort Smith,
Arkansas; and two full-service mortgage banking firms, Deposit Guaranty
Mortgage Company, headquartered in Jackson, Mississippi and First Mortgage
Corp., headquartered in Omaha, Nebraska. Deposit Guaranty, through its
subsidiaries, provides comprehensive corporate, commercial, correspondent and
individual banking services, mortgage loan servicing, and personal and
corporate trust services.
As of December 31, 1995, Deposit Guaranty had total assets of $6 billion,
total deposits of $4.8 billion, total loans of $3.6 billion and shareholders'
equity of $539.1 million. Based on total assets at December 31, 1995, Deposit
Guaranty ranked first among Mississippi-based bank holding companies.
Commercial National Corporation. Commercial National Corporation is a
Louisiana corporation, which owns 100% of Commercial National Bank and Citizens
Bank. Deposit Guaranty acquired 100% of the stock of Commercial National
Corporation in February, 1990. Other than its ownership of Commercial National
Bank and Citizens National Bank, Commercial National Corporation does not
engage in substantial business activities.
Citizens National Bank. Citizens Bank is a national bank headquartered at
201 NW Railroad Ave., Hammond, Louisiana. Citizens Bank provides a full
complement of consumer and commercial banking services in Tangipahoa Parish,
Louisiana.
Bank of Gonzales Holding Company, Inc. Gonzales Holding is a bank holding
company headquartered at 916 South Burnside Avenue at Worthey Road, Gonzales,
Louisiana 70707-1089, telephone number (504) 621-7200. Its only subsidiary is
Gonzales Bank. Gonzales Holding, through its subsidiary, provides a full
complement of consumer and commercial banking services in Ascension Parish,
Louisiana. As of December 31, 1995, Gonzales Holding had total assets of $124.4
million, total deposits of $108.2 million, loans of $59.6 million and
shareholders' equity of $12.4 million.
Bank of Gonzales. Gonzales Bank, a Louisiana state banking association, is
a full service commercial bank offering consumer and commercial banking
services primarily in Ascension Parish, Louisiana. It conducts its business
through its main office at South Burnside Avenue at Worthey, Gonzales,
Louisiana and at two branch offices in eastern Ascension Parish, Louisiana. The
Bank offers a full range of traditional commercial banking services, including
demand, savings and time deposits, consumer, commercial and real estate loans,
safe-deposit boxes and access to two retail credit plans -- "VISA" and
"Mastercard".
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
The Gonzales Holding Board has unanimously approved the Mergers and the
Merger Agreement and has determined that the Mergers are in the best interests
of Gonzales Holding and its shareholders. In approving the Mergers, Gonzales
Holding's directors considered among other factors the financial terms of the
transaction; the liquidity afforded to shareholders of Gonzales Holding through
ownership of a publicly traded stock; a review of the business and prospects of
Gonzales Holding and Deposit Guaranty; the federal income tax consequences of
the Mergers; the likelihood of the Mergers being approved by regulatory
authorities without undue conditions or delays; and an opinion from Alex
Sheshunoff & Co. Investment Banking ("Sheshunoff") regarding the fairness of
the terms of the Mergers, from a financial point of view, to Gonzales Holding
's shareholders. THE GONZALES HOLDING BOARD OF DIRECTORS BELIEVES THE MERGERS
ARE IN THE BEST INTEREST OF GONZALES HOLDING 'S SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT GONZALES HOLDING 'S SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
MERGER AGREEMENT.
The Board of Directors of Deposit Guaranty has approved the Merger
Agreement because it believes that the Merger will enhance Deposit Guaranty's
earnings capacity by enabling it to deliver products and provide services to a
larger geographic customer base and that the combination of Deposit Guaranty
and Gonzales Holding can take advantage of
2
<PAGE> 14
increased overall efficiencies and economies of scale. See "The Mergers --
Reasons for the Mergers; Recommendation of the Gonzales Bank Board of
Directors.
FAIRNESS OPINION
The Board of Directors of Gonzales Holding has received the written
opinion of Sheshunoff, Gonzales Holding's financial advisor, that the terms of
the Mergers are fair, from a financial point of view, to Gonzales Holding and
Gonzales Holding shareholders. The opinion of Sheshunoff is attached hereto as
Exhibit B and should be read in its entirety. See "The Merger -- Opinion of
Financial Advisor."
REGULATORY APPROVALS
It is a condition to the consummation of the Mergers that all required
regulatory approvals, including the approval of the Office of the Comptroller
of the Currency (OCC) , be obtained. OCC approval was obtained on April 24 ,
1996. See "The Mergers -- Regulatory Approvals."
OTHER CONDITIONS TO CONSUMMATION OF THE MERGERS
In addition to regulatory approvals and the approval by the shareholders
of Gonzales Holding, the respective obligations of each party under the Merger
Agreement are subject, among other conditions, to receipt of an opinion of
Watkins Ludlam & Stennis, P.A. substantially to the effect that the
transactions contemplated by the Merger Agreement will be treated for federal
income tax purposes as a tax-free reorganization under Section 368 of the Code,
and the absence of a material adverse change in the financial condition,
results of operations or business of the other party's consolidated group. See
"The Merger -- Other Conditions to the Mergers" for a fuller discussion of the
conditions to consummation.
EXCHANGE OF GONZALES HOLDING CERTIFICATES; NO FRACTIONAL SHARES
As soon as practicable after the Effective Date, The Bank of New York (the
"Exchange Agent") will mail to each holder of record of Gonzales Holding Common
Stock, a letter of transmittal and instructions for use in effecting the
surrender of the certificates which, immediately prior to the Effective Date,
represented outstanding shares of Gonzales Holding Common Stock in exchange for
certificates representing Deposit Guaranty Common Stock. See "The Merger --
Exchange of Gonzales Holding Certificates." Cash will be paid in lieu of any
fractional share interests in Deposit Guaranty Common Stock. See "The Mergers
- -- Structure and Terms of the Mergers." Certificates representing Gonzales
Holding Common Stock should not be surrendered until the transmittal form is
received.
EFFECTIVE DATE
If the Merger Agreement is approved by the requisite vote of the
shareholders of Gonzales Holding and the Mergers are approved by all required
regulatory agencies and the other conditions to the Mergers are satisfied or
waived (where permissible), the Merger will become effective at the date (the
"Effective Date") a certificate of merger (the "Certificate of Merger") is
filed with the Secretary of State of Louisiana, or as of such later date in
time to which Deposit Guaranty and Gonzales Holding agree, which may be
specified in the Certificate of Merger to be filed with the Louisiana Secretary
of State pursuant to the Business Corporation Law of the State of Louisiana
(the "Louisiana BCL"). It is expected that the Effective Date will occur in
mid-1996; however, there can be no assurance that the conditions to the Merger
will be satisfied or waived so that the Merger can be consummated. See "The
Merger -- Effective Date" and "The Mergers -- Other Conditions to the Mergers."
3
<PAGE> 15
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Gonzales Holding's management and Board of Directors
have interests in the Mergers in addition to their interests as shareholders of
Gonzales Holding generally. Those interests relate to, among other things,
provisions in the Merger Agreement regarding indemnification and eligibility to
participate in certain Deposit Guaranty employee benefit plans. Executive
officers of Gonzales Holding also have an interest in the Mergers as a result
of change in control severance arrangements in their existing employment
agreements. See "The Mergers - Interests of Certain Persons in the Mergers."
TERMINATION
Among other reasons, the Merger Agreement may be terminated at any time
prior to the Effective Date (i) in the event the Merger Agreement is not
approved by the shareholders of Gonzales Holding at the Meeting, (ii) if the
number of shares of Gonzales Holding Common Stock, the holders of which perfect
dissenters' rights, exceeds 10% of the outstanding shares of Gonzales Holding
Common Stock, or (iii) if the Closing has not occurred by December 31, 1996.
The Merger Agreement may also be terminated by mutual consent, or by Gonzales
Holding's Board of Directors if necessary to fulfill its fiduciary duties based
on advice of counsel upon payment of certain expenses. See "The Mergers --
Amendment; Waiver; Termination."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Mergers is conditioned upon receipt of an opinion of
counsel substantially to the effect that the Mergers will be treated, for
federal income tax purposes, as a tax-free reorganization, with the result
that, no gain or loss will be recognized by Gonzales Holding or by holders of
Gonzales Holding Common Stock who exchange all of their Gonzales Holding Common
Stock solely for Deposit Guaranty Common Stock pursuant to the Mergers (except
with respect to cash, if any, received in lieu of fractional shares). Gonzales
Holding shareholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the Mergers. See "The Mergers -- Certain
Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The purchase method of accounting will be used to reflect the Mergers upon
consummation. "The Mergers -- Accounting Treatment."
DISSENTERS' RIGHTS
Under certain conditions and by complying with the specific procedures
required by Louisiana law and described herein, Gonzales Holding 's
shareholders will have the right to dissent from the Holding Company Merger, in
which event, if the Holding Company Merger is consummated, such shareholders
may be entitled to receive in cash the fair value of their shares of Gonzales
Holding Common Stock. See "Dissenters Rights" and Exhibit C hereto.
DEPOSIT GUARANTY - RECENT DEVELOPMENTS
On April 16, 1996, Deposit Guaranty reported that consolidated net income
for the three months ended March 31, 1996, was $21.5 million, or $1.11 per
share, compared to $18.0 million, or $.93 per share, for the same period in
1995. This increase in earnings was primarily due to an increase in net
interest income resulting largely from a 19% increase in loan volume. The first
quarter of 1996 also included a gain of $1.7 million, after income taxes,
resulting from the disposition of assets related to lease financing
transactions as well as approximately $750 thousand resulting from adoption of
a new accounting pronouncement relating to mortgage service rights.
4
<PAGE> 16
Deposit Guaranty's return on average assets for the first quarter of 1996
was 1.44% compared to 1.39% for the same period in 1995. Return on average
equity for the first quarter of 1996 was 15.97% compared to 15.10% for the
first quarter of 1995.
Deposit Guaranty's total assets were $6.0 billion at March 31, 1996, up
from $5.4 billion at March 31, 1995. Stockholder's equity was $520 million at
March 31, 1996, compared to $483 million at March 31, 1995.
On April 26, 1996, Deposit Guaranty issued unsecured 7 1/4% Senior Notes
Due May 1, 2006 in the aggregate principal amount of $100 million. The proceeds
of the offering will be used for general corporate purposes, including
investments in, and advances to, Deposit Guaranty's banking and nonbanking
subsidiaries, reduction of short-term borrowings, investments, and financing
possible future acquisitions, including, without limitation, the acquisition of
banking and nonbanking companies and financial assets and liabilities.
SELECTED FINANCIAL DATA
The following selected financial data for Deposit Guaranty and Gonzales
Holding has been derived from the consolidated financial statements of Deposit
Guaranty and Gonzales Holding. The information set forth below should be read
in conjunction with the consolidated financial statements of Deposit Guaranty
and Gonzales Holding incorporated by reference or included elsewhere herein.
5
<PAGE> 17
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARIES - SELECTED FINANCIAL
DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited)
March 31, Year Ended December 31,
--------------------- -----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $ 2,490 $ 2,421 $ 9,981 $ 8,940 $ 8,800 $ 8,512 $ 8,888
Interest expense 834 760 3,258 2,488 2,432 3,100 4,587
--------- --------- --------- --------- --------- --------- ---------
Net interest income 1,656 1,661 6,723 6,452 6,368 5,412 4,301
Provision for possible loan losses 12 10 60 (250) (398) 385 1,195
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for
possible loan losses 1,644 1,651 6,663 6,702 6,766 5,027 3,106
Other operating income 335 334 1,419 1,477 1,324 1,198 1,145
Other operating expense 1,314 1,077 4,241 4,302 4,673 4,058 3,497
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes,
extraordinary item, and cumulative
effect of accounting change 665 908 3,841 3,877 3,417 2,167 754
Income tax expense 221 306 1,230 1,251 620 737 --
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item and
cumulative effect of accounting change 444 602 2,611 2,626 2,797 1,430 754
Extraordinary item -- -- -- -- -- 686 --
Cumulative effect of accounting change -- -- -- -- 4,282 -- --
--------- --------- --------- --------- --------- --------- ---------
Net income $ 444 $ 602 $ 2,611 $ 2,626 $ 7,079 $ 2,116 $ 754
========= ========= ========= ========= ========= ========= =========
NET INCOME PER SHARE
Income before extraordinary item and
cumulative effect of accounting change $ .82 $ 1.11 $ 4.82 $ 4.86 $ 4.99 $ 2.80 $ 1.73
========= ========= ========= ========= ========= ========= =========
Extraordinary item -- -- -- -- -- 1.35 --
Cumulative effect of accounting change -- -- -- -- 7.63 -- --
Net income per share $ .82 $ 1.11 $ 4.82 $ 4.86 $ 12.62 $ 4.15 $ 1.73
--------- --------- --------- --------- --------- --------- ---------
Weighted average shares outstanding 541,611 541,611 541,611 540,587 560,907 510,013 435,072
Cash dividends per share $ 2.35 $ .35 $ 5.40 $ 5.40 $ .50 $ -- $ --
STATEMENTS OF CONDITION - AVERAGES
Total assets $ 124,575 $ 118,745 $ 121,664 $ 117,916 $ 113,450 $ 104,342 $ 97,814
Earning assets 117,382 109,639 112,853 107,983 102,746 95,719 87,224
Investment Securities 53,981 48,190 50,712 47,806 44,485 34,371 22,301
Loans, net of unearned income 59,360 60,276 60,049 59,352 57,522 56,487 58,988
Total deposits 107,754 103,252 105,523 101,687 100,673 98,745 93,158
Total stockholders' equity 11,852 11,409 11,771 12,009 11,927 4,871 3,122
SELECTED RATIOS
Return on average assets 1.43% 2.06% 2.15% 2.23% 6.24% 2.03% .77%
Return on average equity 15.07 21.40 22.18 21.87 59.35 43.44 24.15
Net interest margin - tax equivalent 5.68 6.14 5.96 5.98 5.60 5.39 4.93
Allowance for possible loan losses to
loans, net of unearned income 2.30 2.48 2.44 2.62 3.11 4.04 3.49
Net charge-offs to average loans, net
of unearned income .10 .04 .28 .10 .05 .18 2.70
Dividend payout 286.86 31.56 112.03 111.21 3.93 -- --
Average equity to average assets 9.51 9.61 9.68 10.18 10.51 4.67 3.19
Leverage ratio 8.88 10.38 9.60 9.84 9.20 5.97 5.62
Tier I risk-based capital 18.02 20.05 19.30 19.33 18.24 11.58 --
Total risk-based capital 19.28 21.77 20.56 21.08 19.91 13.29 --
</TABLE>
6
<PAGE> 18
DEPOSIT GUARANTY CORP. AND SUBSIDIARIES -
SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited)
March 31, Year Ended December 31,
------------------------- ---------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $ 105,000 $ 92,387 $ 402,704 $ 307,272 $ 299,327 $ 322,114 $ 382,432
Interest expense 45,708 38,500 173,432 125,881 124,687 155,459 231,473
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income 59,292 53,887 229,272 181,391 174,640 166,655 150,959
Provision for possible loan 1,335 -- 2,160 (4,750) (16,000) 10,378 17,260
losses ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income after
provision for possible loan
losses 57,957 53,887 227,112 186,141 190,640 156,277 133,699
Other operating income 29,537 21,023 91,989 93,499 74,781 67,977 61,439
Other operating expense 56,404 48,539 211,452 180,047 171,567 164,470 152,828
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income taxes 31,090 26,371 107,649 99,593 93,854 59,784 42,310
Income tax expense 9,601 8,399 35,029 32,463 27,302 14,270 10,090
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 21,489 $ 17,972 $ 72,620 $ 67,130 $ 66,552 $ 45,514 $ 32,220
=========== =========== =========== =========== =========== =========== ===========
NET INCOME PER SHARE
Primary $ 1.11 $ .93 $ 3.7 $ 3.8 $ 3.77 $ 2.67$2.04
Fully diluted 1.11 .93 3.7 3.8 3.77 2.6 1.93
WEIGHTED AVERAGE SHARES
OUTSTANDING
Primary 19,326,213 19,313,252 19,215,581 17,668,062 17,649,852 17,033,664 15,799,996
Fully diluted 19,326,213 19,313,252 19,215,581 17,668,062 17,649,852 17,465,282 17,442,388
CASH DIVIDENDS PER SHARE $ .33 $ .28 $ 1.2 $ 1.0 $ .93 $ .80 $ .78
STATEMENTS OF CONDITION -
AVERAGES
Total assets $ 5,996,474 $ 5,250,661 $ 5,571,697 $ 4,940,977 $ 4,826,726 $4,777,596 $4,814,533
Earning assets 5,316,217 4,682,847 4,961,261 4,413,938 4,333,740 4,275,345 4,329,336
Securities available for sale 1,417,961 38,677 186,194 712,184 1,308,634 -- --
Investment securities 131,554 1,437,058 1,365,070 718,891 396,011 1,616,658 1,417,299
Loans, net of unearned income 3,607,822 3,010,717 3,273,408 2,581,724 2,293,416 2,261,034 2,411,731
Deposits 4,694,213 4,247,080 4,438,797 3,997,038 3,867,669 3,876,927 3,990,963
Long-term debt -- -- -- -- -- 6,320 24,020
Total stockholders' equity 541,298 482,668 498,023 429,967 367,592 315,833 275,345
SELECTED RATIOS
Return on average assets 1.44% 1.39% 1.30% 1.36% 1.3% .9 .67%
Return on average equity 15.97 15.10 14.5 15.6 18.10 14.4 11.70
Net interest margin - tax 4.62 4.78 4.7 4.2 4.18 4.1 3.77
equivalent
Allowance for possible loan
losses to loans, net of
unearned income 1.61 1.89 1.6 1.9 2.56 3.3 3.74
Net charge-offs (recoveries) to
average loans, net of
unearned income .13 (.01) .1 .1 (.14 1.0 .77
Dividend payout 29.73 30.11 32.0 27.8 24.67 29.9 38.24
Average equity to average 9.03 9.19 8.9 8.7 7.62 6.6 5.72
assets
Leverage ratio 7.76 8.42 7.8 8.4 8.13 6.8 5.42
Tier I risk-based capital 11.12 11.92 11.0 12.4 13.28 12.0 9.95
Total risk-based capital 12.38 13.18 12.3 13.7 14.54 13.2 12.11
</TABLE>
7
<PAGE> 19
<TABLE>
<CAPTION>
COMPARATIVE PER SHARE INFORMATION
Deposit
Guaranty and Gonzales
Historical Gonzales Holding
------------------------------- Holding Pro Pro Forma
Deposit Gonzales Forma Equivalent
Per Common Share Guaranty Holding Combined(a) (b)
- --------------------------- -------- -------- --------------- -----------
<S> <C> <C> <C> <C>
NET INCOME (C)
For the three months ended
March 31, 1996 $1.11 $.82 $1.11 $1.30
For the year ended
December 31,
1995 3.78 4.82 3.82 4.47
1994 3.80 4.86 3.85 4.50
1993 3.77 12.62 4.07 4.76
CASH DIVIDENDS (D)
For the three months ended
March 31, 1996 $.33 $2.35 $.33 $.39
For the year ended
December 31,
1995 1.21 5.40 1.21 1.42
1994 1.06 5.40 1.06 1.24
1993 .93 .50 .93 1.09
BOOK VALUE (E)
As of March 31, 1996 $27.25 $20.94 $27.25 $31.88
As of December 31, 1995 27.82 22.96 27.82 32.54
As of December 31, 1994 25.23 20.39 25.23 29.52
</TABLE>
(a) In accordance with generally accepted accounting principles, Deposit
Guaranty will account for the Merger using the purchase accounting method.
Deposit Guaranty has been authorized to purchase in the open market up to
100% of the Deposit Guaranty Common Stock to be issued in the Holding
Company Merger. The pro forma calculations assume a 100% repurchase.
(b) Gonzales Holding pro forma equivalent amounts are computed by multiplying
the pro forma combined amounts by the conversion number of 1.17.
(c) Net income per common share is based on weighted average common shares
outstanding.
(d) Pro forma cash dividends represent historical cash dividends of Deposit
Guaranty.
(e) Book value per common share is based on total period-end shareholders'
equity.
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<PAGE> 20
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to shareholders of
Gonzales Holding in connection with the solicitation by the Board of Directors
of Gonzales Holding of proxies for use at a Special Meeting of Shareholders
(the "Meeting") to be held at 2:00 p.m., local time, on June 27, 1996 at the
Holiday Inn - Gonzales at 1500 West Highway 30, Gonzales, Louisiana, and at any
adjournment or postponement thereof.
At the Meeting, shareholders will consider and vote upon a proposal to
approve the Merger Agreement, by and among Deposit Guaranty, CNC, Citizens
Bank, Gonzales Holding, and Gonzales Bank pursuant to which Gonzales Holding
will merge into CNC, Gonzales Bank will merge into Citizens Bank and each share
of Gonzales Holding Common Stock issued and outstanding immediately prior to
the Effective Date of the Merger (except Dissenting Shares, as hereinafter
defined) will be converted into and exchangeable for a number of shares of
Deposit Guaranty Common Stock, determined by dividing 634,000 by the number of
shares of Gonzales Holding Common Stock outstanding on the date immediately
preceding the Effective Date. Based on the number of shares of Gonzales Holding
Common Stock outstanding on March 31, 1996, Gonzales Holding shareholders will
receive 1.1706 shares of Deposit Guaranty Common Stock for each share of
Gonzales Holding Common Stock. As a result of the Merger, the shareholders of
Gonzales Holding will become shareholders of Deposit Guaranty.
This Proxy Statement/Prospectus constitutes a proxy statement of Gonzales
Holding with respect to the Meeting and a prospectus of Deposit Guaranty with
respect to the shares of Deposit Guaranty Common Stock to be issued in
connection with the Mergers. The information in this Proxy Statement/Prospectus
concerning Deposit Guaranty and its subsidiaries and Gonzales Holding and its
subsidiary has been furnished by each of such entities, respectively.
The principal executive office of Deposit Guaranty is located at 210 East
Capitol Street, Jackson, Mississippi 39201, and its telephone number is (601)
354-8497. The principal executive office of Gonzales Holding is located at 916
South Burnside Avenue at Worthey Road, Gonzales, Louisiana 70707-1089, and its
telephone number is (504) 621-7200.
This Proxy Statement/Prospectus is first being mailed to shareholders of
Gonzales Holding on or about May 24, 1996.
RECORD DATE; VOTING RIGHTS; PROXIES
The Board of Directors of Gonzales Holding has fixed the close of business
on May 15, 1996 as the Record Date for determining holders of outstanding
shares of Gonzales Holding Common Stock entitled to notice of and to vote at
the Meeting. Only holders of Gonzales Holding Common Stock of record on the
books of Gonzales Holding at the close of business on the Record Date are
entitled to vote at the Meeting or at any adjournment or postponement thereof.
As of the Record Date, there were 541,611 shares of Gonzales Holding Common
Stock issued and outstanding, each of which is entitled to one vote. The
presence, in person or by proxy, of a majority of the total voting power of
Gonzales Holding Common Stock is necessary to constitute a quorum of the
stockholders to take action at the Meeting. Shares of Gonzales Holding Common
Stock represented by properly executed proxies will be voted in accordance with
the instructions indicated on the proxies or, if no instructions are indicated,
will be voted FOR the proposal to approve the Merger Agreement and, in the
discretion of the proxy holders, as to any other matter which may properly come
before the Meeting or any adjournment or postponement thereof. A shareholder
who has given a proxy may revoke it at any time before it is voted by (a)
filing with the Secretary of Gonzales Holding (i) a notice in writing revoking
it, or (ii) a duly executed proxy bearing a later date or (b) voting in person
at the Meeting.
Approval of the Merger Agreement requires the affirmative vote at the
Meeting of the holders of a majority of the outstanding shares of the Gonzales
Holding Common Stock. Therefore, an abstention or failure to return a properly
9
<PAGE> 21
executed proxy will have the same effect as a vote against the Merger
Agreement, as will a broker's submitting a proxy without exercising
discretionary authority with respect to approval of the Merger Agreement. As of
the Record Date, the executive officers and directors of Gonzales Holding as a
group had the power to vote approximately 165,115 shares of Gonzales Holding
Common Stock, representing approximately 30% of the outstanding shares, all of
which are expected to be voted in favor of the Merger Agreement.
Deposit Guaranty's shareholders are not required to approve the Merger
Agreement or the issuance of shares of Deposit Guaranty Common Stock.
Gonzales Holding will bear the costs of soliciting proxies from its
shareholders. In addition to the use of the mail, proxies may be solicited by
the directors, officers and employees of Gonzales Holding in person, or by
telephone or telegram. Such directors, officers and employees will not be
additionally compensated for such solicitation but may be reimbursed for
out-of-pocket expenses incurred in connection therewith. Arrangements will also
be made with custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of Gonzales Holding Common Stock
held of record by such persons, and Gonzales Holding may reimburse such
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred in connection therewith.
THE MERGERS
GENERAL
The Merger Agreement provides that, subject to the satisfaction or waiver
(where permissible) of certain conditions, including, among other things, the
receipt of all necessary regulatory approvals, the expiration of all related
waiting periods and the approval by the shareholders of Gonzales Holding,
Gonzales Holding will be merged with and into CNC, and the Gonzales Bank will
be merged with and into Citizens Bank. As a result of the Mergers, the separate
corporate existence of Gonzales Holding and Gonzales Bank will cease and the
shareholders of Gonzales Holding will become shareholders of Deposit Guaranty.
The date on which the Mergers will be consummated is herein referred to as the
"Effective Date." See "The Merger -- Effective Date."
The description of the Merger Agreement included in this Proxy
Statement/Prospectus is qualified in its entirety by reference to the Merger
Agreement, which is incorporated herein by reference and a copy of which is
attached hereto as Exhibit A.
STRUCTURE AND TERMS OF THE MERGERS
Upon consummation of the Merger, Gonzales Holding will be merged with and
into CNC and each share of Gonzales Holding Common Stock issued and outstanding
at the Effective Date (other than shares owned by shareholders who, pursuant to
the Louisiana BCL, perfect any right to receive the fair value of such shares
("Dissenting Shares")) will be converted into and exchangeable for a number of
shares of Deposit Guaranty Common Stock determined by dividing 634,000 by the
number of shares of Gonzales Holding Common Stock outstanding on the date
immediately preceding the Effective Date (the "Exchange Ratio"). Based on the
number of shares of Gonzales Holding Common Stock outstanding on March 31,
1996, Gonzales Holding shareholders will receive 1.1706 shares of Deposit
Guaranty Common Stock for each share of Gonzales Holding Common Stock. If prior
to the Effective Date Deposit Guaranty should split or combine Deposit Guaranty
Common Stock, or pay a dividend or other distribution in Deposit Guaranty
Common Stock, then the exchange ratio shall be appropriately adjusted to
reflect such split, combination, dividend or distribution.
The Exchange Ratio was determined by a process of arm's length
negotiations involving the managements of Gonzales Holding and Deposit Guaranty
and their respective financial advisors. The 634,000 shares of Deposit Guaranty
Common Stock to be issued upon consummation of the Mergers will constitute
approximately 3.3% of the shares of Deposit Guaranty Common Stock outstanding
immediately after the Effective Date. This calculation does not make any
10
<PAGE> 22
adjustment for fractional shares or Dissenting Shares and is based upon the
number of shares of Gonzales Holding Common Stock and Deposit Guaranty Common
Stock outstanding on the Record Date.
No fractional shares of Deposit Guaranty Common Stock will be issued in
the Mergers. Any shareholder otherwise entitled to receive a fractional share
of Deposit Guaranty Common Stock will be paid a cash amount in lieu of any such
fractional share determined by multiplying (i) the closing sale price of a
share of Deposit Guaranty Common Stock on the date immediately proceeding the
Effective Date as quoted on the National Association of 2Securities Dealers
Automated Quotation System, by (ii) the fraction of a share of Deposit Guaranty
Common Stock to which such holder would otherwise be entitled.
BACKGROUND OF MERGERS
In early 1994 after receiving expressions of interest from several
regional banks to acquire Gonzales Holding, the Gonzales Holding Board engaged
Alex Sheshunoff & Co. Investment Banking ("Sheshunoff") to value Gonzales
Holding and invite acquisition offers. Of the four preliminary offers received,
in the judgment of the Board, only one represented the appropriate value of
Gonzales Holding and, after a due diligence examination of Gonzales Holding by
the high bidder, that offer was reduced substantially. The Board concluded that
the offering price was inadequate and the offer was rejected.
Acquisition offers are often based in part on a multiple of the target's
book value and the adequacy of such offers is often evaluated by this multiple
of book value. However, if a banking company is excessively capitalized, as was
the case with Gonzales Holding in early 1994, the excess capitalization is
customarily acquired on a dollar for dollar basis rather than as a multiple of
book value.
In 1994, the Board adopted a dividend policy designed to distribute the
excess capitalization to shareholders through a series of special dividends.
After the payment of these dividends, which reduced the capital of Gonzales
Holding to normal levels, in late 1995 the Board again engaged Sheshunoff to
value Gonzales Holding and seek acquisition offers. In late 1995, offering
packages were sent to nine large banks resulting in the receipt of nine
non-binding offers.
During December 1995, the four largest bidders were permitted to perform
due diligence examinations of Gonzales Holding, after which one offer was
withdrawn, one offer was reduced and one offer was increased. Negotiations were
conducted with the two highest bidders over a period of three weeks, resulting
in the enhancement of both offers. After considerable examination and analysis,
the Board determined that the offer submitted by Deposit Guaranty was the
highest and best offer and on February 5, 1996 executed the Merger Agreement
with Deposit Guaranty.
The decision of the Board to enter into the Merger Agreement with Deposit
Guaranty was based on a careful analysis of various factors and after
consulting with the Board's financial, legal and other advisors and Gonzales
Holding management. Although the two highest offers received were very similar
in terms of exchange ratios, the Board selected Deposit Guaranty because of its
historic and expected stock performance.
REASONS FOR THE MERGERS
In reaching its decision that the Merger Agreement is in the best
interests of Gonzales Holding and its shareholders, the Board considered a
number of factors in addition to the financial terms, including, but not
limited to the following:
(a) the financial condition and results of operations of, and prospects
for, each of Gonzales Holding and Deposit Guaranty;
11
<PAGE> 23
(b) the likelihood that Gonzales Bank would experience significant
increased competitive pressures in its market area from larger
banking and other financial institutions capable of offering a
broader array of technologically advanced financial services and
products;
(c) the lack of marketability of Gonzales Holding Common Stock and the
liquidity that would be offered to Gonzales Holding's shareholders
through the ownership of securities of a publicly traded company such
as Deposit Guaranty;
(d) The financial terms of the Mergers, including the relationship of the
value of the Deposit Guaranty Common Stock issuable in the Mergers to
the market value, book value, and earnings per share of Gonzales
Holding Common Stock;
(e) The nonfinancial terms of the Mergers, including the treatment of the
Mergers as a tax-free exchange of Gonzales Holding Common Stock for
Deposit Guaranty Common Stock for federal and state income tax
purposes;
(f) The likelihood of the Mergers being approved by applicable regulatory
authorities without undue conditions or delay; and
(g) The opinion rendered by Sheshunoff, Gonzales Holding's financial
advisor, to the effect that the terms of the Mergers, as provided in
the Merger Agreement, are fair from a financial point of view, to the
holders of Gonzales Holding Common Stock.
Gonzales Holding's Board did not assign any specific or relative weight to
the foregoing factors in its considerations. Gonzales Holding's Board believes
that the Merger Agreement will provide significant value to all Gonzales
Holding shareholders and will enable them to participate in opportunities for
growth that Gonzales Holding's Board believes the Mergers make possible.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS OF GONZALES HOLDING HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, BELIEVES THAT THE MERGER AGREEMENT
IS IN THE BEST INTERESTS OF GONZALES HOLDING'S SHAREHOLDERS AND RECOMMENDS THAT
ALL SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
DEPOSIT GUARANTY. The Deposit Guaranty Board of Directors believes that by
expanding Deposit Guaranty's customer base into the southern portion of
Louisiana, the Mergers should enhance Deposit Guaranty's earnings capacity by
enabling it to deliver products and provide services to that enlarged customer
base, and by permitting cost savings through consolidation of operations. In
addition, the Deposit Guaranty Board of Directors believes that the combination
of Deposit Guaranty and Gonzales Holding will allow Deposit Guaranty and
Gonzales Holding to increase overall efficiency and take advantage of economies
of scale in several areas. In evaluating the Mergers, the Deposit Guaranty
Board of Directors considered a variety of factors, including the respective
results of operations, financial condition and prospects of Deposit Guaranty
and Gonzales Holding; the compatibility and complimentary nature of the
respective businesses and managerial philosophies of Deposit Guaranty and
Gonzales Holding; and the relative prices paid in recent acquisitions of
financial institutions.
OPINION OF FINANCIAL ADVISOR
In October 1995, Gonzales Holding, retained Sheshunoff, an investment
banking firm based in Austin, Texas, on the basis of its experience, to prepare
an information package and contact potential purchasers identified by
Sheshunoff for the purpose of effecting a sale, merger, exchange or other
similar transaction with respect to the shares of Gonzales Holding.
Additionally, Gonzales Holding retained Sheshunoff to render a written fairness
opinion (the "Opinion") to the Board of Directors of Gonzales Holding.
Sheshunoff has been in the business of consulting for the banking industry for
over twenty years, including the appraisal and valuation of banking
institutions and their securities
12
<PAGE> 24
in connection with mergers and acquisitions and equity offerings. Sheshunoff
has a long history of familiarity and involvement with the banking industry
nationwide, as well as familiarity with the Louisiana market and recent
transactions in this market. Sheshunoff reviewed the negotiated terms of the
Merger Agreement. Prior to being retained for this assignment, Sheshunoff has
provided professional services and products to Gonzales Holding. The revenues
derived from such services and products are insignificant when compared to
Sheshunoff's total gross revenues.
On January 18, 1996, in connection with its consideration of the Merger
Agreement, Sheshunoff issued its oral Opinion to the Board of Directors of
Gonzales Holding that, in its opinion as investment bankers, the terms of the
Mergers as provided in the Merger Agreement are fair and equitable, from a
financial perspective, to Gonzales Holding's shareholders. The oral Opinion,
which was confirmed in a written opinion dated May 20, 1996, is based upon
conditions as they existed on December 31, 1995. A copy of the Opinion is
attached as Exhibit B to this Proxy Statement/Prospectus and should be read in
its entirety by Gonzales Holding shareholders. Sheshunoff's written opinion
does not constitute an endorsement of the Mergers or a recommendation to any
shareholder as to how such shareholder should vote.
In rendering its Opinion, Sheshunoff reviewed certain publicly available
information concerning Gonzales Holding and Deposit Guaranty. Sheshunoff
considered many factors in making its evaluation. In arriving at its Opinion
regarding the fairness of the transaction, Sheshunoff reviewed: (i) the Merger
Agreement; (ii) the external auditor's reports to the Board of Directors of
Gonzales Holding and the internal audit function of Deposit Guaranty; (iii) the
audited balance sheet and income statement for each of the past three years for
each organization; (iv) each organization's rate sensitivity analysis reports;
(v) each organization's listing of marketable securities showing rate, maturity
and market value as compared to book value; (vi) each organization's internal
loan classification list; (vii) a listing of other real estate owned for each
organization; (viii) the budget and long range operating plan of each
organization; (ix) a listing of unfunded letters of credit and any other
off-balance sheet risks for each organization; (x) the minutes of the Board of
Directors meetings of Gonzales Holding; (xi) the Board report for each
organization; (xii) the listing and description of significant real properties
for each organization; and (xiii) market conditions and current trading levels
of outstanding equity securities of both organizations. Sheshunoff conducted an
on-site review of Gonzales Holding and Deposit Guaranty.
In reaching its Opinion, Sheshunoff analyzed the total purchase price
basis using standard evaluation techniques (as discussed below) including
comparable sales multiples (market value), net present value, cash flow
analysis, return on investment and the price as a percentage of total assets
based on certain assumptions of projected growth, earnings and dividends and a
range of discount rates from 12% to 15%. Sheshunoff also considered as one of
the methods of determining the fairness of the transaction, the projected pro
forma impact on Gonzales Holding shareholders' equivalent earnings per share
and equity per share (appreciation/dilution analysis), which was based upon
stand-alone financial projections for both Gonzales Holding and Deposit
Guaranty compared with pro forma financial projections.
In performing its analysis, Sheshunoff relied upon financial projections
for Gonzales Holding which were prepared and furnished by the management of
Gonzales Holding. Deposit Guaranty's projections were prepared by Sheshunoff
based on its review of publicly available information, discussions with the
management of Deposit Guaranty and an on-site due diligence review of Deposit
Guaranty. Gonzales Holding and Deposit Guaranty do not publicly disclose
internal management projections of the type provided to Sheshunoff in
connection with its review of the Mergers and such projections were not
prepared with a view towards public disclosure. The projections were based on
numerous variables and assumptions which are inherently uncertain, including
without limitation, factors related to general economic and competitive
conditions. Accordingly, actual results could vary significantly from those set
forth in such projections.
In addition, Sheshunoff discussed with the management of Gonzales Holding
and Deposit Guaranty the relative operating performance and future prospects of
each organization, primarily with respect to the current level of their
earnings and future expected operating results, giving weight to Sheshunoff's
assessment of the future of the banking industry and each organization's
performance within the industry. Sheshunoff compared the results of operation
of
13
<PAGE> 25
Gonzales Holding with the results of operation of a peer group comprised of all
Louisiana banks with total assets of $100 to $499 million (50 banks).
Sheshunoff compared the results of operation of Deposit Guaranty with the
results of operation of a national peer group comprised of all bank holding
companies with total assets between $5 billion and $10 billion (31 holding
companies).
Many variables affect the value of banks, not the least of which is the
uncertainty of future events, so that the relative importance of the valuation
variables differs in different situations. The primary financial variables to
be considered are earnings, equity, dividends or dividend-paying capacity,
asset quality and cash flow. In addition, in most instances, if not all, value
is further tempered by non-financial factors such as marketability, voting
rights or block size, history of past sales of the bank's stock, nature and
relationship of the other shareholders in the bank, and special ownership or
management considerations.
"Market value" is generally defined as the price, established on an
"arms-length" basis, at which knowledgeable, unrelated buyers and sellers would
agree. The market value in connection with the evaluation of control of a bank
is determined by the previous sales of banks in the state or region.
Sheshunoff has access to a substantial database detailing the prices paid
for banking institutions nationwide. The database includes transactions
involving banking organizations in Louisiana and the surrounding states with
total assets of less than $250 million which sold for 100% stock from March 22,
1995 through March 22, 1996 (the "Market Comparables") and over the past five
years. The database provides comparable pricing and financial performance data
for banking organizations sold or acquired. Organized by different peer groups,
the data presents averages of financial performance and purchase price levels,
thereby facilitating a valid comparative purchase price analysis. In analyzing
the transaction value of Gonzales Holding, Sheshunoff has considered the market
approach and has evaluated price to equity and price to earnings multiples of
the Market Comparables. The following table provides the 13 banking
organizations included in the Market Comparables relative to the ratios of the
transaction as of the date of the fairness opinion:
<TABLE>
<CAPTION>
PURCHASE PRICE PURCHASE PRICE PURCHASE PRICE TO
SELLER CITY STATE TO EQUITY (X) TO EARNINGS (X) TOTAL ASSETS (%)
<S> <C> <C> <C> <C> <C>
American Bancshares Houma LA 2.13 17.64 20.28
Cedar Creek Bncshes Seven Points TX 2.70 14.00 21.26
Canadian Bancshares Canadian TX 1.59 11.24 19.19
New Iberia Bancorp New Iberia LA 2.40 23.28 21.85
Delta B&TC Belle Chasse LA 2.16 17.76 17.10
Equitable BankShares Dallas TX 2.87 21.67 17.85
First Citizens BncSt Morgan City LA 2.52 18.03 27.28
Weatherford Nat Bksh Weatherford TX 2.18 12.15 18.73
Bunkie Bancshares Bunkie LA 2.27 15.84 18.59
Tom Green Nat'l Bank San Angelo TX 1.98 18.66 13.00
FNB Bancshares, Inc. Lake Providence LA 1.93 12.91 13.52
Peoples Bancshares Chalmette LA 2.01 21.09 17.36
Valley-Hi Inv. Co. San Antonio TX 1.24 6.87 8.79
AVERAGES 2.15X 16.24X 18.06%
Gonzales Holding Gonzales LA 2.38 13.22 23.82
</TABLE>
COMPARABLE SALES MULTIPLES. Sheshunoff calculated a "Purchase price based
on book value" of $49.36 per share based on Gonzales Holding's December 31,
1995 equity and the average price to equity multiple of 2.15x for the Market
Comparables. Sheshunoff calculated a "Purchase price based on earnings" of
$67.23 per share based on Gonzales Holding's estimated 1996 earnings and the
average price to earnings multiple of 16.24x for the Market Comparables. The
financial performance characteristics of the banking organizations in the
Market Comparables vary,
14
<PAGE> 26
sometimes substantially, from those of Gonzales Holding. When the variance is
significant for relevant performance factors, adjustments to the price
multiples are appropriate when comparing them to the transaction value.
NET PRESENT VALUE ANALYSIS. The investment or earnings value of any
banking organization's stock is an estimate of the present value of the future
benefits, usually cash flows with an estimated residual value based on a range
of multiples of earnings or book value at some point in the future.
Sheshunoff's cash flow computations are based on Gonzales Holding's dividend
paying capacity available to common shareholders while maintaining a 6.00% tier
1 leverage ratio and using a net present value discount rate range of 12.00% to
15.00%. Assuming a residual value based on book value in the year 2005 and a
price to book range of 1.30x to 1.80x resulted in a present value range from
$31.95 per share to $44.83 per share. Assuming a residual value based on a
price to earnings range of 10x to 15x resulted in a present value range from
$29.12 per share to $41.26 per share.
PROJECTED IMPACT ON GONZALES HOLDING SHAREHOLDERS. Consideration was given
to the levels of book value and earnings per share appreciation or dilution
percentages between the merger partners over the next five years after
consummation. To justify the fairness of the transaction for Gonzales Holding
shareholders, it is important to project, based upon realistic projections of
future performance, a positive impact for Gonzales Holding shareholders. It is
important to note that the appreciation/dilution analysis is one of the methods
utilized by Sheshunoff. The projected appreciation/dilution analysis supports
Sheshunoff's Opinion as to the fairness of the transaction to Gonzales
Holding's shareholders from a financial point of view. This analysis does not
address future shareholder transactions involving Deposit Guaranty stock after
consummation of the transaction.
MARKETING EFFORTS. In rendering its opinion Sheshunoff considered the
marketing efforts Gonzales Holding undertook prior to signing the Merger
Agreement with Deposit Guaranty. In connection with the sale, the management of
Gonzales Holding believed the value of Gonzales Holding would be maximized by
soliciting offers from prospective buyers. A marketing effort was undertaken by
Sheshunoff, which produced indications of interest from nine regional holding
companies. The highest four bidders where invited to perform due diligence at
Gonzales Holding. After a final round of offers were analyzed, Gonzales Holding
entered into discussions with Deposit Guaranty which led to the Merger
Agreement.
There are many other factors to consider, when valuing a going concern,
which do not directly impact the earnings stream and the net present value but
which do exert a degree of influence over the fair market value of a going
concern. These factors include, but are not limited to, the general condition
of the industry, the economic and competitive situations in the market area and
the expertise of the management of the organization being valued.
Neither Gonzales Holding nor Deposit Guaranty imposed any limitations upon
the scope of the investigation to be performed by Sheshunoff in formulating
such Opinion. In rendering its Opinion, Sheshunoff did not independently verify
the asset quality and financial condition of Gonzales Holding or Deposit
Guaranty, but instead relied upon the data provided by or on behalf of Gonzales
Holding and Deposit Guaranty to be true and accurate in all material respects.
For its services as independent financial analyst for the transaction,
including the rendering of its Opinion referred to above, Gonzales Holding has
agreed to pay Sheshunoff aggregate fees of 0.75% of the total consideration
paid, which includes the professional fee for the Opinion.
EFFECTIVE DATE
The Mergers will be consummated and become effective at the time a
certificate of merger (the "Certificate of Merger") is filed with the Secretary
of State of Louisiana, or as of such later date or time to which Deposit
Guaranty and Gonzales Holding agree, which may be specified in the Certificate
of Merger. Unless Deposit Guaranty and Gonzales Holding otherwise agree, the
Mergers will be consummated as soon as practicable following receipt of
Gonzales Holding shareholder and necessary regulatory approvals and
satisfaction or waiver of the other conditions to the Mergers. It is expected
that the Effective Date will occur in mid-1996; however, there can be no
assurance that the conditions to the Merger will be satisfied or waived so that
the Merger can be consummated. See "The Merger -- Regulatory Approvals" and --
"Other Conditions to the Mergers."
15
<PAGE> 27
REGULATORY APPROVALS
Consummation of the Mergers is conditioned on approval by all required
regulatory authorities, including approval by the OCC. OCC approval was
obtained on April 24, 1996. The Board of Governors of the Federal Reserve
System, the Louisiana Office of Financial Institutions and the Federal Deposit
Insurance Corporation must also review the Bank Merger and comment on the
competitive factors involved. The Bank Merger may not be consummated until the
expiration of fifteen (15) days after approval by the OCC has been obtained.
During this 15-day period, the United States Department of Justice, if it
objects to the proposed Bank Merger for antitrust reasons, may file suit to
enjoin the Bank Merger.
OTHER CONDITIONS TO THE MERGERS
In addition to Gonzales Holding shareholder and regulatory approval, the
respective obligations of each party under the Merger Agreement are subject,
among other conditions, to (i) the absence of any order, decree or injunction
of a court or agency of competent jurisdiction enjoining or prohibiting
consummation of the Mergers, (ii) receipt of an opinion of Watkins Ludlam &
Stennis, P.A. substantially to the effect that the transactions contemplated by
the Merger Agreement will be treated for federal income tax purposes as a
tax-free reorganization under Section 368 of the Code, (iii) that on the date
of closing the representations and warranties made in the Merger Agreement by
each party are true and correct in all material respects, (iv) that prior to
the Effective Date there not have been a material adverse change in the
financial condition, results of operations or business of the other party's
consolidated group and (v) the receipt of customary legal opinions.
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
INDEMNIFICATION. The Merger Agreement provides that CNC shall indemnify
the former directors, officers, employees and agents of Gonzales Holding
against all claims to which they become subject arising out of actions or
omissions occurring at or prior to the Effective Date of the Mergers, including
the transactions contemplated by the Merger Agreement, to the full extent
permitted by Louisiana law or by Gonzales Holding 's Articles of Incorporation
and Bylaws. The Merger Agreement also provides that Citizens Bank shall
indemnify the former directors, officers, employees and agents of Gonzales Bank
against all claims to which they become subject arising out of actions or
omissions occurring at or prior to the Effective Date of the Mergers, including
the transactions contemplated by the Merger Agreement, to the full extent
permitted by Louisiana law or by Gonzales Bank 's Articles of Incorporation and
Bylaws. CNC and Citizens Bank have agreed to use their best efforts to maintain
Gonzales Holding 's and Gonzales Bank's existing directors' and officers'
liability insurance policies (or a policy providing at least comparable
coverage) for a period of five (5) years after the Effective Date of the
Mergers. The Merger Agreement also provides for indemnification by Deposit
Guaranty of Gonzales Holding and its officers, directors and control persons
from and against liability arising under the Securities Act or otherwise if
such liability arises out of or is based on an untrue statement or omission of
a material fact required to be stated in the Registration Statement, of which
this Proxy Statement/Prospectus forms a part, or in any amendment or supplement
thereto, or necessary to make the statements made not misleading. This
indemnification does not apply to statements made in reliance on information
furnished to Deposit Guaranty by or on behalf of Gonzales Holding or Gonzales
Bank for use in the Registration Statement.
EMPLOYEE BENEFITS. The Merger Agreement provides that, after the Effective
Date of the Mergers, Deposit Guaranty will, subject to compliance with
applicable legal and regulatory requirements, provide coverage for all
employees of Gonzales Holding and Bank of Gonzales under Deposit Guaranty's
benefit plans for which they are eligible, as soon as practicable after the
Effective Date. All prior years of service of Gonzales Bank employees will be
counted for vesting and eligibility purposes under all applicable Deposit
Guaranty employee benefit plans to the extent permitted by applicable law. Any
Gonzales Bank employee who, immediately prior to the Effective Date, is covered
by or is a participant in a Gonzales Bank employee benefit plan, shall, on the
Effective Date, be covered by or participate in the comparable Deposit Guaranty
employee benefit plan if a comparable plan otherwise is maintained by Deposit
Guaranty and if the eligibility requirements of the Deposit Guaranty plan are
met.
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EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Gonzales Holding is a party to an
Amended and Restated Employment Agreement (the "Employment Agreement") with its
Chief Executive Officer, Mr. Dale Gaudet, which terminates on December 31,
1998. In accordance with this agreement, if the Gonzales Bank terminates the
Mr. Gaudet's employment without cause, then Gonzales Holding shall pay him his
full salary through the date of termination, and in lieu of any further salary
payments to him for periods subsequent to the date of termination, shall pay as
severance an amount equal to the present value (using a discount rate of 5%) of
the remaining salary due to him under the agreement.
Gonzales Holding is also a party to Amended and Restated Contingency
Severance Agreements ("Severance Agreements") with each of three (3) senior
vice-presidents, namely Rachel P. Cherco, James H. May, Jr. and Ida N. Reine,
the latest of which terminates on December 31, 1998. Under the Severance
Agreements, if the executive officer's employment with Gonzales Holding or
Gonzales Bank of Gonzales is terminated without "Cause" (as defined in the
Employment Agreement) within two years after a "Change in Control," then the
executive officer will be entitled to receive certain severance payments and
benefits. For purposes of the agreements, "Cause" generally will exist only if
the executive officer dies or is disabled for a continuous period of 180 days,
if he or she commits or is charged with a felony or any crime involving moral
turpitude, the willful and continuing failure by the executive officer to
promptly and efficiently discharge and perform those duties assigned to the
executive him or her in a manner in which such duties were performed prior to
the "Change in Control," or certain other criminal or unethical activities.
The Mergers will constitute a "Change in Control" for purposes of the
Severance Agreements. If an executive officer who is a party to a Severance
Agreement is discharged within two years after the Mergers without "Cause," he
or she will be entitled to receive, in addition and without prejudice to any
other rights he or she may have, including the right to bring a claim for
damages, an amount equal to the excess, if any, of (i) two times his or her
salary over (ii) the amount of compensation paid to the executive officer after
the Change in Control.
Deposit Guaranty has agreed in the Merger Agreement to assume Gonzales
Holding 's obligations under these Employment and Severance Agreements.
ELECTION TO CITIZENS BANK BOARD. The Merger Agreement provides that for a
period of not less than three years after the Mergers are consummated, at least
two former directors of Gonzales Bank will be elected to serve as directors of
Citizens Bank.
EXCHANGE OF GONZALES HOLDING CERTIFICATES
At the Effective Date, each Gonzales Holding shareholder will cease to
have any rights as a shareholder of Gonzales Holding and his or her sole rights
will pertain to the shares of Deposit Guaranty Common Stock to which such
holder's shares of Gonzales Holding Common Stock shall have been converted
pursuant to the Mergers, except for the right to receive cash for any
fractional shares.
As soon as practicable following the Effective Date, the Exchange Agent
for the Deposit Guaranty Common Stock will mail to each holder of record of
Gonzales Holding Common Stock a letter of transmittal and instructions for
effecting the surrender of the stock certificates which, immediately prior to
the Effective Date, represented outstanding shares of Gonzales Holding Common
Stock in exchange for certificates representing shares of Deposit Guaranty
Common Stock. SHAREHOLDERS OF GONZALES HOLDING ARE REQUESTED NOT TO SURRENDER
THEIR GONZALES HOLDING CERTIFICATES FOR EXCHANGE UNTIL SUCH LETTER OF
TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. Upon surrender of a certificate
representing Gonzales Holding Common Stock for exchange and cancellation to the
Exchange Agent, together with a duly executed letter of transmittal, the holder
of such Gonzales Holding Common Stock shall be entitled to receive in exchange
therefor a Deposit Guaranty certificate representing the number of whole shares
of Deposit Guaranty Common Stock to which such holder of Gonzales Holding
Common Stock shall have become entitled pursuant to the Merger Agreement, and a
check in payment for any fractional share of Deposit Guaranty Common Stock to
which such holder may be entitled.
After the Effective Date and until surrendered, certificates representing
Gonzales Holding Common Stock will be deemed for all purposes, other than the
payment of dividends or other distributions, if any, in respect of Deposit
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Guaranty Common Stock, to represent the number of whole shares of Deposit
Guaranty Common Stock into which such shares of Gonzales Holding Common Stock
have been converted. Deposit Guaranty will not pay former shareholders of
Gonzales Holding who become holders of Deposit Guaranty Common Stock pursuant
to the Mergers any dividends or other distributions that may have become
payable to holders of record of Deposit Guaranty Common Stock following the
Effective Date until they have surrendered their certificates evidencing
ownership of shares of Gonzales Holding Common Stock along with a properly
completed letter of transmittal.
Gonzales Holding shareholders who cannot locate their certificates are
urged to contact promptly the Secretary of Gonzales Holding at South Burnside
Avenue at Worthey Road, Post Office Box 1089, Gonzales, Louisiana 70707,
telephone number (504) 621-7200. A new certificate will be issued to replace
the lost certificate(s) only upon execution by the shareholder of an affidavit
certifying that his or her certificate(s) cannot be located and an agreement to
indemnify Gonzales Holding and Deposit Guaranty and their transfer agents and
registrars against any claim that may be made against Gonzales Holding or
Deposit Guaranty by the owner of the certificate(s) alleged to have been lost
or destroyed. Gonzales Holding or Deposit Guaranty may also require the
shareholder to post a bond in such sum as is sufficient to support the
shareholders' agreement to indemnify Gonzales Holding and Deposit Guaranty.
AMENDMENT; WAIVER; TERMINATION
The Merger Agreement may be amended at any time before or after its
approval by the shareholders of Gonzales Holding by written agreement of
Gonzales Holding and Deposit Guaranty, except that no amendment may be made
after Gonzales Holding shareholder approval that by law would require further
shareholder approval unless such further shareholder approval is obtained.
The Merger Agreement provides that either party may (i) extend the time
for performance of any of the obligations or other acts of the other parties,
(ii) waive any inaccuracies in the representations and warranties contained in
the Merger Agreement or in any document delivered pursuant to the Merger
Agreement or (iii) waive compliance with any of the agreements or conditions
contained in the Merger Agreement other than the satisfaction of all
requirements prescribed by law for consummation of the Mergers.
The Merger Agreement may be terminated at any time prior to the Effective
Date (a) by mutual written consent of the parties, properly authorized by their
respective Boards of Directors; (b) by Deposit Guaranty, CNC, and Citizens
Bank, (i) if at the time of such termination there shall be a material adverse
change in the consolidated financial condition of Gonzales Bank or Gonzales
Holding from that set forth in Gonzales Bank's or Gonzales Holding's financial
statements for the period ended December 31, 1995; (ii) in the event there are
dissenting shareholders who hold more than ten percent (10%) of the shares of
Gonzales Holding Common Stock, or (iii) if the transaction is not consummated
by December 31, 1996; (c) by any party, if (i) a United States District Court
shall rule upon application of the Department of Justice after a full trial on
the merits or a decision on the merits based on a stipulation of facts that the
transactions contemplated by this Agreement violate the antitrust laws of the
United States; or (ii) the Merger Agreement shall not have been approved by the
affirmative vote of the holders of at least a majority of the outstanding
shares of Gonzales Holding Common Stock; or (d) by Gonzales Holding's Board of
Directors if necessary to fulfill its fiduciary duties based on advice of
counsel upon payment of certain expenses.
CONDUCT OF BUSINESS PENDING THE MERGERS
The Merger Agreement provides that Gonzales Bank and Gonzales Holding will
conduct their businesses and engage in transactions only in the ordinary course
and consistent with prudent banking practice. Without the prior consent of
Deposit Guaranty, neither Gonzales Bank nor Gonzales Holding shall (i) increase
by more than ten percent (10%) the compensation payable by Gonzales Bank or
Gonzales Holding to any of its directors, officers, agents, consultants, or any
of its employees whose total compensation after such increase would be in
excess of $25,000 per annum, grant or pay any extraordinary bonus, percentage
compensation, service award or other like benefit to any such director,
officer, agent, consultant or employee, or make or agree to any extraordinary
welfare, pension, retirement or similar payment or arrangement for the benefit
of any such director, officer, agent, consultant or employee, (ii) sell or
dispose of material assets except in the ordinary course of business, (iii)
enter into any new capital commitments or make
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any capital expenditures, except commitments or expenditures within existing
operating and capital budgets or otherwise in the ordinary course of business,
or (iv) authorize or issue any additional shares of any class of its capital
stock or any securities exchangeable for or convertible into any such shares or
any options or rights to acquire any such shares, or otherwise authorize or
affect any change in its capitalization. In addition, no dividends shall be
paid by Gonzales Holding, except for (i) a special dividend by Gonzales Holding
in February, 1996 of $2.00 per share, and (ii) regular quarterly dividends in
1996 of $.35 per share for each complete calendar quarters that elapses prior
to the Effective Date, and no dividends shall be paid by Gonzales Bank except
dividends by Gonzales Bank to Gonzales Holding to the extent necessary to fund
authorized dividends of Gonzales Holding and to pay necessary and routine
expenses of Gonzales Holding.
In addition, Gonzales Holding has agreed that, without the prior approval
of Deposit Guaranty, it will not solicit or encourage inquiries or proposals
with respect to, or, except to the extent required in the opinion of its
counsel to discharge properly its fiduciary duties to Gonzales Holding's
consolidated group and its shareholders, furnish any information relating to or
participate in any negotiations or discussion concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or a substantial
equity interest in, or any business combination with, Gonzales Holding or
Gonzales Bank, other than as contemplated by the Merger Agreement. Gonzales
Holding has also agreed to instruct its officers, directors, agents and
affiliates to refrain from doing any of the above and to notify Deposit
Guaranty immediately if any such inquiries or proposals are received by, any
such information is requested from, or any negotiations or discussions are
sought to be initiated with it or any of its officers, directors, agents and
affiliates.
RESALES OF DEPOSIT GUARANTY COMMON STOCK
The shares of Deposit Guaranty Common Stock to be issued to the holders of
Gonzales Holding Common Stock pursuant to the Merger Agreement are being
registered under the Securities Act pursuant to a Registration Statement on
Form S-4, of which this Proxy Statement/Prospectus is a part, thereby allowing
such shares to be freely transferred without restriction by persons who will
not be "affiliates" of Deposit Guaranty or who were not "affiliates" of
Gonzales Holding within the meaning of Rule 145 under the Securities Act. In
general, affiliates of Gonzales Holding include its executive officers and
directors and any person who controls, is controlled by or is under common
control with Gonzales Holding. Holders of Gonzales Holding Common Stock who are
affiliates of Gonzales Holding will not be able to resell the Deposit Guaranty
Common Stock received by them in the Mergers unless the Deposit Guaranty Common
Stock is registered for resale under the Securities Act, is sold in compliance
with Rule 145 under the Securities Act or is sold in compliance with another
exemption from the registration requirements of the Securities Act.
Pursuant to Rule 145 under the Securities Act, the sale of Deposit
Guaranty Common Stock held by former affiliates of Gonzales Holding will be
subject to certain restrictions. Such persons may sell Deposit Guaranty Common
Stock under Rule 145 only if (i) Deposit Guaranty has filed all reports
required to be filed by it under Section 13 or 15(d) of the Exchange Act during
the preceding twelve months, (ii) such Deposit Guaranty Common Stock is sold in
a "broker's transaction," which is defined in Rule 144 under the Securities Act
as a sale in which (a) the seller does not solicit or arrange for orders to buy
the securities, (b) the seller does not make any payment other than to the
broker, (c) the broker does no more than execute the order and receive a normal
commission and (d) the broker does not solicit customer orders to buy the
securities, and (iii) such sale and all other sales made by such person within
the preceding three months do not exceed the greater of (x) one percent of the
outstanding shares of Deposit Guaranty Common Stock or (y) the average weekly
trading volume of Deposit Guaranty Common Stock on the Nasdaq National Market
during the four-week period preceding the sale. Any affiliate of Gonzales
Holding who is not an affiliate of Deposit Guaranty after the Mergers may sell
Deposit Guaranty Common Stock without restriction following the second
anniversary of the Effective Date.
Gonzales Holding has agreed to use its best efforts to cause each of its
directors and executive officers and each person who is a beneficial owner of
5% or more of the outstanding Gonzales Holding Common Stock (each of whom may
be deemed to be an affiliate under the Securities Act) to enter into an
agreement not to sell shares of Deposit Guaranty Common Stock received by him
or her in violation of the Securities Act or the rules and regulations of the
Commission thereunder.
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EXPENSES AND FEES
All legal and other costs and expenses incurred in connection with the
Mergers and the transactions contemplated thereby will be paid by the party
incurring such costs and expenses, except that if the Merger Agreement is
terminated by Gonzales Holding's Board of Directors to fulfill its fiduciary
duties based on advice of counsel, Gonzales Holding will be required to
indemnify Deposit Guaranty for all expenses incurred by it in connection with
the Mergers.
ACCOUNTING TREATMENT
The Mergers, if consummated as proposed, will be treated as a purchase for
accounting and financial reporting purposes. The purchase method accounts for a
business combination as the acquisition of one enterprise by another, the value
of the company's shares issued in the transaction is included in stockholders'
equity and any of such amount in excess of net fair values of tangible and
identifiable intangible assets of the acquired company is treated as an
intangible asset on the acquiring company's financial statements.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal federal income tax consequences
of the Mergers is based on provisions of the Internal Revenue Code of 1986 (the
"Code"), the regulations thereunder, judicial authority, and administrative
rulings and practice as of the date hereof or before the Effective Date.
Consummation of the Mergers is conditioned on the receipt by Deposit Guaranty
and Gonzales Holding of an opinion of counsel to Deposit Guaranty to the effect
that the Merger will be treated, for federal income tax purposes, as a tax-free
reorganization under Section 368(a) of the Code.
Any Gonzales Holding shareholder who, pursuant to the Mergers, exchanges
all of the Gonzales Holding Common Stock that such holder owns solely for
Deposit Guaranty Common Stock will not recognize any gain or loss upon such
exchange. The aggregate tax basis of Deposit Guaranty Common Stock received by
such a holder in exchange for Gonzales Holding Common Stock will equal such
holder's tax basis in the Gonzales Holding Common Stock surrendered. If such
shares of Gonzales Holding Common Stock are held as capital assets at the
Effective Date, the holding period of the Deposit Guaranty Common Stock
received will include the holding period of the Gonzales Holding Common Stock
surrendered therefor. Gonzales Holding shareholders should consult their tax
advisors as to the determination of their tax basis and holding period in any
one share of Deposit Guaranty Common Stock, as several methods of determination
may be available.
To avoid the expense and inconvenience to Deposit Guaranty of issuing
fractional shares, no fractional shares of Deposit Guaranty Common Stock will
be issued pursuant to the Mergers. Any Gonzales Holding shareholder who
receives cash pursuant to the Mergers in lieu of a fractional share interest
will be treated as having received such fractional share pursuant to the
Mergers, and then as having exchanged such fractional share for cash in a
redemption by Deposit Guaranty subject to Section 302(a) of the Code, provided
that such deemed redemption is not "substantially disproportionate" with
respect to such Gonzales Holding shareholder or is "not essentially equivalent
to a dividend." If the Deposit Guaranty Common Stock represents a capital asset
in the hands of the shareholder, then the shareholder will generally recognize
capital gain or loss on such a deemed redemption of the fractional share in an
amount determined by the difference between the amount of cash received for
such fractional share and the shareholder's tax basis in the fractional share.
Gonzales Holding shareholders who perfect dissenters' rights will be
treated as having received the fair value of the Gonzales Holding Common Stock,
as determined in the dissenters' rights proceeding, in redemption of the
Gonzales Holding Common Stock subject to the proceeding. Such deemed redemption
will be subject to Section 302(a) of the Code, if such deemed redemption is
"substantially disproportionate" with respect to the Gonzales Holding
shareholder who exercises dissenters' rights or is "not essentially equivalent
to a dividend," with the result that a holder who exercises dissenters' rights
will recognize gain or loss equal to the difference between the amount realized
and such holder's tax basis in the Gonzales Holding Common Stock subject to the
proceeding. Any such gain or loss recognized
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on such redemption will be treated as capital gain or loss if the Gonzales
Holding Common Stock with respect to which dissenters' rights were exercised
were held as capital assets. Each Gonzales Holding shareholder who contemplates
exercising dissenters' rights should consult a tax advisor as to the
possibility that all or a portion of the payment received pursuant to the
dissenters' proceeding will be treated as dividend income.
Unless an exemption applies under the applicable law and regulations, the
Exchange Agent will be required to withhold thirty-one percent (31%) of any
cash payments to which a shareholder or other payee is entitled pursuant to the
Mergers unless the shareholder or other payee provides its taxpayer
identification number (social security number or employer identification
number) and certifies that such number is correct. Each shareholder and, if
applicable, each other payee should complete and sign the substitute Form W-9
included as part of the transmittal letter so as to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is established in a manner satisfactory to Deposit
Guaranty and the Exchange Agent.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGERS WITHOUT REGARD TO THE PARTICULAR FACTS
AND CIRCUMSTANCES OF EACH GONZALES HOLDING SHAREHOLDER. GONZALES HOLDING
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGERS, INCLUDING THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
DISSENTERS' RIGHTS
Under Section 131 of the Louisiana BCL (a copy of which is attached hereto
as Exhibit C), any holder of record of shares of Gonzales Holding Common Stock,
who files a written objection to the Mergers prior to or at the Meeting at
which the vote on the Mergers is taken, and who votes against the Mergers, may
demand in writing that such shareholder be paid in cash the fair cash value of
such shares ("Dissenters' Rights"). HOWEVER, INTERESTED PARTIES SHOULD NOTE
THAT, IF THE MERGER AGREEMENT IS APPROVED BY EIGHTY PERCENT (80%) OR MORE OF
THE OUTSTANDING SHARES OF GONZALES HOLDING COMMON STOCK, SECTION 131 OF THE
LOUISIANA BCL PROVIDES THAT NO GONZALES HOLDING SHAREHOLDER WILL HAVE
DISSENTERS' RIGHTS. A person who is a beneficial owner, but not a registered
owner, of shares of Gonzales Holding Common Stock who wishes to exercise the
rights of a dissenting shareholder under the Louisiana BCL cannot do so in his
own name but should have the record ownership of the shares transferred to his
or her name or instruct the record owner thereof to take all required action to
comply on his behalf with the procedures under Section 131 of the Louisiana
BCL.
Any shareholder of record contemplating exercising Dissenters' Rights is
urged to review carefully the provisions of Section 131 of the Louisiana BCL,
particularly the procedural steps required to perfect Dissenters' Rights
thereunder. DISSENTERS' RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF
SECTION 131 ARE NOT FULLY SATISFIED.
Set forth below is a summary of the procedures relating to the exercise of
Dissenters' Rights. The following summary does not purport to be a complete
statement of the provisions of Section 131 of the Louisiana BCL and is
qualified in its entirety by reference to Exhibit C hereto and to any
amendments to such sections as may be adopted after the date of this Proxy
Statement/Prospectus.
FILING WRITTEN OBJECTION AND VOTE AGAINST THE MERGERS
To exercise the right of dissent, a shareholder (each a "Dissenter") must
(i) deliver to Gonzales Holding a written objection to the Merger Agreement
prior to or at the Meeting AND ALSO (ii) vote the shares of Gonzales Holding
Common Stock held by him (in person or by proxy) against the Merger Agreement
at the Meeting. Neither a vote against the Merger Agreement nor a specification
in a proxy to vote against the Merger Agreement will in and of itself
constitute the necessary written objection to the Merger Agreement. Moreover,
by voting in favor of, or abstaining from voting on, the Merger Agreement, or
by returning the enclosed proxy without instructing the proxy holders to vote
against the Merger Agreement, a shareholder waives his or her rights under
Section 131.
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NOTICE OF THE EFFECTIVE DATE
If the Merger Agreement is approved by less than eighty percent (80%) of
the outstanding shares of Gonzales Holding Common Stock, then, promptly after
the Effective Date, notice will be given to each Dissenter that the Mergers
have become effective. The notice shall be sent by registered mail, addressed
to the Dissenter at such Dissenter's last address on Gonzales Holding's records
immediately prior to the Effective Date.
WRITTEN DEMAND
Within twenty (20) days after the mailing of such notice a Dissenter must
file with CNC a demand in writing (the "Demand") for payment of the fair cash
value of such Dissenter's shares as of the day prior to the Meeting, stating
the amount demanded and a post office address to which CNC may reply.
Simultaneously with the filing of the Demand, the Dissenter shall also deposit
the certificate(s) representing his shares of Gonzales Holding Common Stock
(duly endorsed and transferred to CNC upon the sole condition that the
certificate(s) will be delivered to CNC upon payment of the value of the shares
in accordance with Section 131 of the Louisiana BCL) in escrow with a chartered
bank or trust company located in Ascension Parish, Louisiana (the "Escrow
Bank"). Along with the Demand, the Dissenter shall deliver to CNC a written
acknowledgment of the Escrow Bank that it holds such certificate(s), endorsed
as specified above.
A Dissenter who fails to satisfy any of the foregoing conditions within
the proper time periods will conclusively be presumed to have acquiesced to the
Mergers and will forfeit any right to seek payment pursuant to Section 131.
Such written demand may be sent to CNC.
APPRAISAL
If CNC does not agree to the amount demanded by the Dissenter, or does not
agree that any payment is due, it will, within twenty (20) days after receipt
of such Demand and acknowledgment, notify such Dissenter in writing of either
(i) the value it will agree to pay, or (ii) its belief that no payment is due.
If the Dissenter does not agree to accept the offered amount, or disagrees with
CNC's assertion that no payment is due, he must within sixty (60) days after
the receipt of such notice file suit against CNC in Ascension Parish, Louisiana
for a judicial determination of the fair cash value of his shares. Any
Dissenter who is also entitled to file such suit may, within such 60-day period
but not thereafter, intervene as a plaintiff in any suit filed against CNC by
another former shareholder of Gonzales Holding for a judicial determination of
the fair cash value of such other shareholder's shares. If a Dissenter fails to
bring or to intervene in such a suit within the applicable sixty-day period,
the Dissenter will be deemed to have consented to accept either CNC's statement
that no payment is due or, if CNC does not contend that no payment is due, to
accept the value of his shares specified by CNC in its notice of disagreement.
Dissenters considering exercising Dissenters' Rights should bear in mind
that the fair cash value of their shares determined under Section 131 of the
Louisiana BCL could be more than, the same as or less than the consideration
they would otherwise receive pursuant to the Merger Agreement if they do not
seek such rights, and that opinions of financial advisors as to fairness are
not opinions as to fair cash value under Section 131 of the Louisiana BCL.
Any Dissenter who has duly filed a Demand in compliance with Section 131
of the Louisiana BCL will, after filing the Demand, cease to have any of the
rights of a shareholder, except those rights generally provided to Dissenters
under Section 131 of the Louisiana BCL.
A Dissenter has the right to voluntarily withdraw his or her Demand and to
accept the terms offered in the Merger Agreement at any time before CNC gives
its notice of disagreement, but thereafter the Dissenter may withdraw his or
her Demand only with the consent of CNC. If a Demand is properly withdrawn, or
the Dissenter otherwise loses his Dissenters' Rights, a Dissenter shall only be
entitled to receive the consideration offered pursuant to the Merger Agreement.
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When the fair cash value of the Dissenter's Shares is agreed upon between
the Dissenter and CNC, or CNC has become liable for the value demanded by the
Dissenter because of its failure to give Notice of Disagreement, or the
Dissenter has become bound to accept the value which CNC agrees is due because
of his failure to bring suit within sixty (60) days after receipt of the Notice
of Disagreement, CNC may, at its option, pay to the Escrow Bank the amount
which the Dissenter is entitled to receive for his shares, and CNC shall be
entitled to receive such shares from the Escrow Bank. Any action by the
Dissenter to recover such value must be brought within five (5) years from the
date the value was agreed upon, or the liability of CNC became fixed.
PAYMENT AND COSTS
If upon the filing of any such suit or intervention CNC deposits with the
court the amount, if any, which it specified in its Notice of Disagreement, and
if in that notice CNC offered to pay such amount to the Dissenter on demand,
then the costs (not including legal fees) of the suit or intervention will be
taxed against the Dissenter if the amount finally awarded to the Dissenter,
exclusive of interest and costs, is equal to or less than the amount so
deposited; otherwise, the costs (not including legal fees) will be assessed
against CNC.
NOTICES
Prior to the Effective Date, dissenting shareholders of Gonzales Holding
should send any communications regarding their rights to Ida N. Reine,
Secretary, Bank of Gonzales Holding Company, Inc., South Burnside Avenue at
Worthey Road, Post Office Box 1089, Gonzales, Louisiana 70707. On or after the
Effective Date, dissenting shareholders should send any communications
regarding their rights to J. Clifford Harrison, Secretary, Commercial National
Corporation, Post Office Box 1200, Jackson, Mississippi 39215-1200. All such
communications should be signed by or on behalf of the dissenting shareholder
in the form in which his shares are registered on the books of Gonzales
Holding. Deposit Guaranty, CNC and Citizens Bank have the right to terminate
the Merger Agreement if the number of shares of Gonzales Holding Common Stock
as to which holders thereof are legally entitled to assert dissenters' rights
exceeds 10% of the outstanding shares of Gonzales Holding Common Stock. See
"The Mergers - Amendment; Waiver; Termination."
ANY GONZALES HOLDING SHAREHOLDER WHO DESIRES TO EXERCISE DISSENTERS'
RIGHTS SHOULD CAREFULLY REVIEW THE LOUISIANA BCL AND IS URGED TO CONSULT SUCH
SHAREHOLDER'S LEGAL ADVISOR BEFORE EXERCISING OR ATTEMPTING TO EXERCISE SUCH
RIGHTS.
COMPARATIVE RIGHTS OF SHAREHOLDERS
Gonzales Holding is incorporated in the State of Louisiana and Deposit
Guaranty is incorporated in the State of Mississippi. If the Mergers are
consummated, shareholders of Gonzales Holding, whose rights as shareholders are
currently governed by Louisiana law and by Gonzales Holding's Amended and
Restated Articles of Incorporation (the "Gonzales Holding Articles") and
Bylaws, will, upon consummation of the Mergers, become shareholders of Deposit
Guaranty and their rights as such will be governed by Mississippi law and by
Deposit Guaranty's Articles of Incorporation (the "Deposit Guaranty Articles")
and Bylaws.
Certain significant differences between the rights of shareholders of
Gonzales Holding and shareholders of Deposit Guaranty are set forth below. This
summary is not intended to be relied upon as an exhaustive list or a detailed
description of the provisions discussed and is qualified in its entirety by the
Louisiana BCL and the Mississippi Business Corporation Act (the "Mississippi
BCA") and by the Articles of Incorporation and Bylaws of each of Gonzales
Holding and Deposit Guaranty, respectively, to which Gonzales Holding
shareholders are referred.
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CUMULATIVE VOTING RIGHTS
GONZALES. Each outstanding share of Gonzales Holding stock is entitled to
one (1) vote on each matter submitted to a vote. The Gonzales Holding Articles
do not provide for cumulative voting in the election of directors.
DEPOSIT GUARANTY. Pursuant to the Mississippi BCA and Deposit Guaranty's
Bylaws, each outstanding share of Deposit Guaranty stock is entitled to one (1)
vote on each matter submitted to a vote. However, in connection with the
election of directors, holders of Deposit Guaranty Common Stock have cumulative
voting rights. Pursuant to the Deposit Guaranty Bylaws, every shareholder
entitled to vote in the election of directors shall have the right to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are directors to be elected, or to cumulate his votes by giving one (1)
candidate the number of votes equal to the number of directors to be elected
multiplied by the number of his shares, or by distributing such votes on the
same principle among any number of candidates.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
GONZALES HOLDING. Gonzales Holding's Articles provide that no director or
officer of Gonzales Holding shall be liable to Gonzales Holding or its
shareholders for monetary damages for breach of fiduciary duty as a director or
officer, provided that the foregoing provision shall not eliminate or limit the
liability of a director or officer for (a) any breach of his duty of loyalty to
the Corporation or its shareholders; (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (c)
unlawful payment of dividends, distribution of assets, or purchase or
redemption of Gonzales Holding shares, or (d) any transaction from which he
derived an improper personal benefit.
DEPOSIT GUARANTY. Deposit Guaranty's Articles and Bylaws do not contain
any provision limiting the personal liability of Deposit Guaranty's directors
and officers for monetary damages resulting from breach of fiduciary duty.
SUPERMAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS; CONTROL SHARES
GONZALES HOLDING. The Gonzales Holding Articles provide that, except as is
otherwise made mandatory by law, an agreement of merger or consolidation of
Gonzales Holding, the sale of all or substantially all of the assets of
Gonzales Holding, or the dissolution of Gonzales Holding may be authorized by
the affirmative vote of two-thirds of the total voting power of Gonzales
Holding, unless the transaction is approved by two-thirds of the Board of
Directors in which case, only a majority of the total voting power is required
to approve the transaction.
Gonzales Holding is subject to Louisiana's Fair Price Protection Statute
(Sections 132-134 of the Louisiana BCL), which requires that, in addition to
any vote otherwise required by law or a corporation's articles of
incorporation, any "business combination" (as defined in the statute) between a
corporation and the holder of 10% or more of its total voting power be
recommended by the corporation' s board of directors and approved by (i) at
least 80% of the total voting power of the corporation and (ii) at least
two-thirds of the votes entitled to be cast by shareholders other than the 10%
shareholder, unless certain minimum price, form of consideration and procedural
requirements are satisfied by the 10% shareholder, or if the board approves the
business combination before the 10% shareholder becomes a 10% shareholder. The
Fair Price Protection Statute does not apply to the Mergers.
DEPOSIT GUARANTY. Deposit Guaranty's Articles require that any Business
Combination (as defined below) involving Deposit Guaranty or a subsidiary of
Deposit Guaranty and an Interested Shareholder (as defined below) or any
affiliate or associate of an Interested Shareholder or any person that
following such transaction would be an affiliate or associate of an Interested
Shareholder be approved by the affirmative vote of at least eighty percent
(80%) of the votes entitled to be cast by the holders of all the then
outstanding shares of voting stock of Deposit Guaranty, excluding shares held
by the Interested Shareholder, unless the transaction is approved by a majority
of the Continuing Directors (as defined below) or unless certain fair price and
procedural requirements are satisfied.
24
<PAGE> 36
REMOVAL OF DIRECTORS
GONZALES HOLDING. Gonzales Holding's Articles provide that Gonzales
Holding shareholders may remove a director upon the affirmative vote of
shareholders holding 75% of the total voting power at any special meeting
called for that purpose, even though the director's term has not expired.
DEPOSIT GUARANTY. Deposit Guaranty's Articles provide that Deposit
Guaranty shareholders may remove a director with or without cause, but only at
a meeting expressly called for that purpose and upon the affirmative vote of
the holders of at least eighty percent (80%) of the voting power of all shares
of stock entitled to vote generally in the election of directors, and in the
event that less than the entire Board is to be removed, not one of the
directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the class
of directors of which he is a part.
VACANCIES IN THE BOARD OF DIRECTORS
GONZALES HOLDING. Under Gonzales Holding's Bylaws, any vacancy occurring
in the Gonzales Holding Board of Directors (including any vacancy resulting
from an increase in the authorized number of directors, or from failure of the
shareholders to elect the full number of authorized directors), may be filled
by a majority vote of the remaining directors even though such remaining
directors constitute less than a quorum, provided that the shareholders shall
have the right at a special meeting called for that purpose prior to such
action by the Board, to fill the vacancy.
DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, any vacancy, including
one occurring as a result of an increase in the number of directors, may be
filled only by the shareholders.
AMENDMENT OF THE ARTICLES OF INCORPORATION OR BYLAWS
GONZALES HOLDING. The Gonzales Holding Articles provide that the
amendment, repeal or adoption of any provision inconsistent with certain
provisions of its Articles and Bylaws generally containing supermajority voting
provisions requires a vote of 75% of the total voting power of Gonzales
Holding. Otherwise, any amendment to the Articles requires only the affirmative
vote of two-thirds of the voting power present. The Gonzales Holding Bylaws
provide that the Gonzales Holding Board may amend or repeal the Gonzales
Holding Bylaws, and the affirmative vote of 75% of the total voting power of
Gonzales Holding may amend or repeal any Bylaws at any annual or special
meeting, provided that notice of the proposed amendment or repeal was contained
in the notice of such meeting.
DEPOSIT GUARANTY. Under the Mississippi BCA, the board of directors has
the power to amend or repeal the bylaws of a Mississippi corporation such as
Deposit Guaranty, unless such power is expressly reserved for the shareholders.
Deposit Guaranty's Articles provide that an amendment to the Bylaws relating to
composition of the Board of Directors and removal of directors must be approved
by the affirmative vote of at least eighty percent (80%) of the shareholders
(the same proportion required in order to effect the removal of a director),
excluding (except for purposes of determining whether a quorum is present)
those shares beneficially owned by any Interested Shareholder. The affirmative
vote of at least eighty percent (80%) of the shareholders is also required to
amend the provisions of the Articles of Incorporation requiring a supermajority
approval of Business Combinations. Amendments to the Articles of Incorporation
that result in Dissenters' rights require the affirmative vote of a majority of
the outstanding shares entitled to vote on the amendment. Otherwise, the
Articles of Incorporation may be amended by a majority vote of the shares
present at a meeting where a quorum is present.
SPECIAL MEETINGS OF SHAREHOLDERS
GONZALES HOLDING. Under Gonzales Holding 's Bylaws, special meetings of
the shareholders, for any purpose or purposes, may be called by the President
or the Board of Directors, or, upon the written request of any two directors or
of any shareholder or shareholders holding in the aggregate not less than
one-fifth of the total voting power of Gonzales Holding 's voting stock.
DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, special meetings of the
shareholders, for any purpose or purposes, may be called by the Chairman of the
Board, the President or the Board of Directors, or upon the written
25
<PAGE> 37
request of shareholders holding in the aggregate not less than ten percent
(10%) of the total voting power entitled to vote on an issue.
SHAREHOLDER PROPOSALS AND NOMINATIONS
GONZALES HOLDING. Neither Gonzales Holding 's Articles nor Bylaws set
forth any procedures with respect to submission by a shareholder of a proposal
for consideration at a shareholders' meeting. The Gonzales Holding Bylaws
provide that any shareholder entitled to vote in the election of directors may
nominate any person for election as a director, provided the nomination is made
to the Secretary of the Corporation and received not less than thirty (60) days
or more than sixty (90) days prior to the meeting; provided, however, that if
less than 60 days notice of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received no
later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed.
DEPOSIT GUARANTY. Deposit Guaranty's Bylaws provide procedures that must
be followed to properly bring a proposal before a shareholders meeting or to
nominate candidates for election as directors. At least sixty (60) days prior
notice to the Secretary of Deposit Guaranty is required if a shareholder
intends to nominate an individual for election to the Board of Directors or
propose any shareholder action. These Bylaw provisions also require information
to be supplied about both the shareholder making such nomination or proposal
and the person nominated.
MARKET PRICES OF AND DIVIDENDS ON GONZALES HOLDING COMMON STOCK
No established public trading market for Gonzales Holding's common stock
exists. The primary market area for Gonzales Holding's common stock is
Ascension Parish. No sales of Gonzales Holding's common stock came to the
attention of management of Gonzales Holding in 1995 or 1994. As of December 31,
1995, there were 756 holders of record of Gonzales Holding Common Stock.
In 1995 and 1994, Gonzales Holding paid eight quarterly dividends of $0.35
per share, plus four extraordinary dividends totaling $8.00 per share, for
total dividends of $5,849,000. In the first quarter of 1996 Gonzales Holding
paid a dividend of $2.35 per share. The holders of Gonzales Holding Common
Stock are entitled to receive dividends when and if declared by the Gonzales
Holding Board out of funds that are legally available therefor. If the Mergers
are not consummated, it is the intention of the Gonzales Holding Board to
continue declaring quarterly cash dividends. However, there can be no assurance
that Gonzales Holding 's dividend policy would remain unchanged.
26
<PAGE> 38
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF GONZALES HOLDING
The following table indicates the beneficial ownership as of May 15, 1996
of Gonzales Holding 's Common Stock by (i) each person known to the Company to
be the beneficial owner of more than 5% of the outstanding Gonzales Holding
Common Stock, (ii) each director of Gonzales Holding, (iii) the CEO (who is
also a director), and (iv) all directors and executive officers of Gonzales
Holding as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership Class
---- -------------------- -------
<S> <C> <C>
John P. Casey, Jr 13,772(1) 2.54
Earl D. Dixon 5,720(2) 1.06
John F. Fraiche, M.D 225 *
D. Dale Gaudet 26,507(3) 4.89
Rosa B. Jackson 225 *
Phillip A. Lewis, Jr., Ph.D 6,600(4) 1.22
Roy L. Marchand, Jr 12,275(5) 2.27
Matthew G. McKay
18332 N. Mission Hills
Baton Rouge, LA 70810 35,544 6.56
Elanie S. Neese
2239 South Evergreen Avenue
Gonzales, LA 70737 68,820 12.71
John B. Noland
Suite 2424
One American Place
Baton Rouge, LA 70825 37,702 6.96
Gayle P. Robert 2,938(6) *
Randal J. Robert 367(7) *
Eric W. St. Amant 17,040(8) 3.15
Penrose C. St. Amant
P. O. Box 128
Gonzales, LA 70707-0128 48,878(9) 9.02
Cynthia S. Stafford 5,044 *
All Directors and Executive
Officers as a group (15 persons) 165,115 30.49
</TABLE>
* Less than 1%.
(1) Includes 13,222 shares as to which Mr. Casey shares voting and
investment power.
(2) Includes 400 shares as to which Mr. Dixon shares voting and
investment power.
(3) Includes 25,911 shares as to which Mr. Gaudet shares voting and
investment power.
(4) Includes 6,050 shares as to which Mr. Lewis shares voting and
investment power.
(5) Includes 2,511 shares as to which Mr. Marchand shares voting and
investment power.
(6) Includes 754 shares as to which Mr. G. Robert shares voting and
investment power.
(7) Includes 142 shares as to which Mr. R. Robert shares voting and
investment power.
(8) Includes 440 shares as to which Mr. E. St. Amant shares voting and
investment power.
(9) Includes 3,922 shares as to which Mr. P. St. Amant shares voting and
investment power.
27
<PAGE> 39
INFORMATION CONCERNING GONZALES HOLDING
GENERAL
Gonzales Holding is a Louisiana business corporation and a one-bank
holding company registered under the federal Bank Holding Company Act of 1956.
It was formed in 1983 primarily for the purpose of holding all of the
outstanding stock of the Gonzales Bank, which is Gonzales Holding's sole
subsidiary. Gonzales Bank was formed in 1920 under the banking laws of the
State of Louisiana. Gonzales Bank conducts a general commercial banking
business through its main office at South Burnside Avenue and Worthey Road,
Gonzales, Louisiana and at two branch offices in eastern Ascension Parish,
Louisiana. Gonzales Bank offers a full range of traditional commercial banking
services, including demand, savings and time deposits, consumer, commercial and
real estate loans, safe-deposit boxes and access to two retail credit plans --
"VISA" and "MasterCard". Gonzales Bank does not offer trust services. Drive-in
banking facilities and automated teller machines ("ATMs") are located at all
three banking locations. Gonzales Bank also maintains three stand-alone ATMs
within Ascension Parish.
COMPETITION
Gonzales Bank competes actively with national and state banks and savings
and loan institutions in Louisiana for all types of loans and deposits.
Gonzales Bank also competes for loans with other financial institutions, such
as insurance companies, real estate investment trusts, savings and loans, small
loan companies, credit unions and certain government agencies. As of December
31, 1995, Gonzales Bank was the largest financial institution headquartered in
Ascension Parish as measured by total deposits and total assets. Five other
financial institutions have a total of eleven banking offices located in
Ascension Parish.
EMPLOYEES
As of December 31, 1995, Gonzales Holding and Gonzales Bank had
approximately 63 full time equivalent employees. Gonzales Holding has no
salaried employees, although certain executive officers hold parallel positions
with Gonzales Bank. No employees are represented by unions or other bargaining
units, and management considers its relations with employees to be
satisfactory.
SUPERVISION AND REGULATION
Gonzales Holding and Gonzales Bank are extensively regulated under both
federal and state laws. To the extent that the following information describes
particular statutory provisions, it is qualified in its entirety by reference
to the particular statutory and regulatory provisions. Any change in applicable
law or regulation may have a material effect on the business and prospects of
Gonzales Holding.
Gonzales Holding is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and, as such, is subject
to the provisions of the BHCA and to regulation and supervision by the Board of
Governors of the Federal Reserve System (the "Reserve Board"). Gonzales Holding
is required to file with the Reserve Board annual reports containing such
information as the Reserve Board may require pursuant to the BHCA and also is
subject to periodic examination by the Reserve Board. The BHCA limits, with
certain exceptions, the business in which a bank holding company may engage,
directly or through subsidiaries, to banking, managing or controlling banks,
and furnishing or performing activities so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is a proper incident to banking or
managing or controlling banks, the Reserve Board must consider whether its
performance by an affiliate of a bank holding company can reasonably be
expected to produce benefits to the public, such as greater convenience,
increased competition or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or other unsound banking practices. The
Reserve Board has adopted regulations implementing the provisions of the BHCA
with respect to the activities of bank holding
28
<PAGE> 40
companies. Whether or not a particular non-banking activity is permitted under
the BHCA, the Reserve Board is authorized to require a bank holding company to
terminate any activity or to divest itself of any non-banking subsidiary if its
actions represent unsafe or unsound practices or violations of law.
Under the BHCA, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with the extension
of credit, the lease or sale of property or provision of any services. In
addition, the BHCA prohibits a bank holding company from borrowing from its
bank subsidiaries unless such loans are secured by specified amounts and types
of collateral. Such secured loans are also subject to certain limitations based
upon the subsidiary bank's capital and surplus.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDIC Act") subjected bank holding companies as well as banks to significantly
increased regulation and supervision. Among other things, the FDIC Act provides
that undercapitalized institutions, as defined by regulatory authorities, must
submit recapitalization plans, and a parent company of such an institution must
either (i) guarantee the institution's compliance with the capital plan, up to
an amount equal to the lesser of five percent of the institution's assets at
the time it becomes undercapitalized or the amount of the capital deficiency
when the institution fails to comply with the plan, or (ii) suffer certain
adverse consequences such as a prohibition of dividends by the parent company
to its shareholders.
Gonzales Holding is also subject to the Louisiana Bank Holding Company
Act, as amended (the "Louisiana Act") which, among other things, provides that
a bank holding company and its subsidiaries may not engage in any insurance
activity in which a bank may not engage. The Louisiana Commissioner of
Financial Institutions is authorized to administer the Louisiana Act and to
issue orders and regulations thereunder.
Federal and Louisiana laws provide for the enforcement of any pro rata
assessment of shareholders of a bank to cover impairment of capital stock by
sale, to the extent necessary, of the stock of any assessed shareholder failing
to pay the assessment. Gonzales Holding, as shareholder of Gonzales Bank, is
subject to these provisions.
Both federal and state laws extensively regulate various aspects of
Gonzales Bank's business, including requirements regarding the maintenance of
reserves against deposits, limitations on the rates that can be charged on
loans or paid on deposits, branching and restrictions on the nature and amounts
of loans and investments that can be made. As a state bank, Gonzales Bank is
subject to the supervisory authority of the Louisiana Commissioner of Financial
Institutions, whose office conducts periodic examinations of Gonzales Bank. As
a federally insured bank, Gonzales Bank is also subject to supervision and
regulation by the Federal Deposit Insurance Corporation (the "FDIC"). Under
certain circumstances, regulatory authorities may prohibit the payment of
dividends by a bank or its parent holding company. The FDIC Act and regulations
promulgated thereunder classify banks into five categories generally relating
to their regulatory capital ratios and institute a system of supervisory
actions indexed to a bank's particular classification. Generally, banks that
are classified as "well capitalized," or "adequately capitalized" are not
subject to the supervisory actions specified in the FDIC Act for prompt
corrective action, but may be restricted from taking certain actions that will
lower their classification. Banks classified as "undercapitalized,"
significantly undercapitalized," or "critically undercapitalized" are subject
to restrictions in supervisory actions of increasing stringency based on the
level of classification. Under present regulation, Gonzales Bank is "well
capitalized." While such a classification would exclude Gonzales Bank from the
restrictions and actions envisioned by the prompt corrective action provisions
of the FDIC Act, the regulatory agencies have broad powers under other
provisions of federal law that would permit them to place restrictions on
Gonzales Bank or to take other supervisory action regardless of such
classification.
SUPPLEMENTAL FINANCIAL INFORMATION
Supplemental financial information for Gonzales Holding and Gonzales Bank
is set forth below.
29
<PAGE> 41
DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY; INTEREST RATES
AND INTEREST DIFFERENTIAL
Average balance sheets, interest income and expenses, and average yields on
interest-bearing assets and effective rates paid on interest-bearing
liabilities for 1995 and 1994 were (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------
AVERAGE YIELD/
BALANCE INTEREST RATE
--------- --------- -----
<S> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (1) $ 60,049 $ 6,437 10.72%
Taxable investment securities 50,013 3,384 6.77
Tax-exempt investment securities 699 31 4.43
Interest-bearing deposits with
other banks 409 28 6.85
Federal funds sold 1,763 101 5.73
--------- --------- -----
Total interest-earning assets $ 112,933 $ 9,981 8.84%
Noninterest-earning assets:
Cash and due
from banks 4,161
Premises and equipment, net 2,318
Other real estate owned 431
Deferred tax asset 1,476
Other assets 1,833
Less allowance for loan losses (1,488)
---------
Total Assets $ 121,664
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 19,132 $ 407 2.13%
Savings deposits 20,510 499 2.43
Time deposits of $100,000 or more 6,554 337 5.14
Time deposits of less than $100,000 38,057 1,793 4.71
Federal funds purchased 148 9 6.08
Other borrowed funds 3,330 213 6.40
--------- --------- -----
Total interest-bearing liabilities $ 87,731 $ 3,258 3.71%
Noninterest-bearing liabilities:
Demand deposits 21,270
Other 892
----------
Total liabilities 109,893
----------
Shareholders' equity 11,771
----------
Total Liabilities and Shareholders' Equity $ 121,664
=========
Net interest income $ 6,723
=========
Net interest margin 5.96%
=====
</TABLE>
30
<PAGE> 42
<TABLE>
<CAPTION>
DECEMBER 31, 1994
----------------------------------
AVERAGE YIELD/
BALANCE INTEREST RATE
--------- --------- ----
<S> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans(1) $ 59,352 $ 6,114 10.30%
Taxable investment securities 47,317 2,772 5.86
Tax-exempt investment securities 489 20 4.09
Interest-bearing deposits with
other banks 77 3 3.90
Federal funds sold 748 31 4.14
--------- --------- ----
Total interest-earning assets $ 107,983 $ 8,940 8.28%
Noninterest-earning assets:
Cash and due
from banks 4,124
Premises and equipment, net 2,420
Other real estate owned 658
Deferred tax asset 2,924
Other assets 1,539
Less allowance for loan losses (1,732)
---------
Total Assets $ 117,916
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 18,452 $ 342 1.85%
Savings deposits 20,541 473 2.30
Time deposits of $100,000 or more 5,968 210 3.52
Time deposits of less than $100,000 36,627 1,264 3.45
Federal funds purchased 569 23 4.04
Other borrowed funds 2,711 176 6.49
--------- --------- ----
Total interest-bearing liabilities $ 84,868 $ 2,488 2.93%
Noninterest-bearing liabilities:
Demand deposits 20,099
Other 940
---------
Total liabilities 105,907
Shareholders' equity 12,009
---------
Total Liabilities and Shareholders' Equity $ 117,916
=========
Net interest income $ 6,452
=========
Net interest margin 5.98%
=====
</TABLE>
- ---------
(1) For the purpose of these computations, nonaccruing loans are included in
the average balance. Also, installment loans are stated net of unearned
income.
31
<PAGE> 43
The following table sets forth for the periods indicated a summary of the
changes in interest earned and interest paid resulting from changes in volume
and changes in rates (In thousand of dollars):
<TABLE>
<CAPTION>
1995 COMPARED TO 1994 1994 COMPARED TO 1993
INCREASE (DECREASE) DUE TO (1) INCREASE (DECREASE) DUE TO (1)
----------------------------------------- -----------------------------------------
VOL. RATE NET VOL. RATE NET
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans(2) $ 74 $ 249 $ 323 $ 192 $ 316 $ 508
Taxable investment
securities 181 431 612 197 40 237
Tax-exempt invest-
ment securities 9 2 11 9 (9) --
Interest-bearing
deposits with
other banks 21 4 25 1 (1) --
Federal funds sold 58 12 70 3 8 11
------- ------- ------- ------- ------- -------
Total interest-earn-
ing assets 343 698 1,041 402 354 756
Interest-bearing
liabilities:
Interest-bearing
demand deposits 13 52 65 39 (52) (13)
Savings deposits (1) 27 26 25 (35) (10)
Time deposits of
$100,000 or more 30 97 127 (23) -- (23)
Time deposits of
less than $100,000 67 462 529 (74) (12) (86)
Federal funds
purchased (26) 12 (14) 11 3 14
Other borrowed
funds 39 (2) 37 174 -- 174
------- ------- ------- ------- ------- -------
Total interest-bearing
liabilities 122 648 770 152 (96) 56
------- ------- ------- ------- ------- -------
$ 221 $ 50 $ 271 $ 250 $ 450 $ 700
======= ======= ======= ======= ======= =======
</TABLE>
___________________________
(1) The change in interest due to both rate and volume has been allocated
entirely to volume.
(2) Balances of nonaccrual loans have been included for computational
purposes.
32
<PAGE> 44
The following table shows the interest rate sensitivity gaps for different time
periods and the cumulative interest rate sensitivity gaps for the same periods
as of December 31, 1995 (In thousands of dollars).
<TABLE>
<CAPTION>
3 MONTHS 3 TO 6 6 TO 12
OR LESS MONTHS MONTHS
--------- --------- ---------
<S> <C> <C> <C>
Interest-earning assets:
Loans(1) $ 21,424 $ 2,015 $ 2,946
Taxable investment securities 501 -- 2,334
Tax-exempt investment securities -- 572 --
Interest-bearing deposits
with other banks 300 -- 1,000
Federal funds sold 2,634 -- --
--------- --------- ---------
Total interest-earning assets 24,859 2,587 6,280
Interest-bearing liabilities:
Interest-bearing demand deposits 20,039 -- --
Savings deposits 20,711 -- --
Time deposits of $100,000 or more 900 2,409 2,765
Time deposits of less than $100,000 9,614 7,821 11,099
Other borrowed funds -- -- --
--------- --------- ---------
Total interest-bearing liabilities $ 51,264 $ 10,230 $ 13,864
========= ========= =========
Gap $ (26,405) $ (7,643) $ (7,584)
Cumulative gap $ (26,405) $ (34,048) $ (41,632)
<CAPTION>
1 TO 5 OVER 5
YEARS YEARS TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Interest-earning assets:
Loans(1) $ 28,074 $ 4,815 $ 59,274
Taxable investment securities 16,334 32,023 51,192
Tax-exempt investment securi-
ties -- 995 1,567
Interest-bearing deposits
with other banks -- -- 1,300
Federal funds sold -- -- 2,634
--------- --------- ---------
Total interest-earning assets 44,408 37,833 115,967
Interest-bearing liabilities:
Interest-bearing demand deposits $ -- $ -- $ 20,039
Savings deposits -- -- 20,711
Time deposits of $100,000 or more 1,011 -- 7,085
Time deposits of less than $100,000 10,160 -- 38,694
Other borrowed funds -- 3,260 3,260
--------- --------- ---------
Total interest-bearing liabilities 11,171 3,260 89,789
Gap $ 33,237 $ 34,573 $ 26,178
Cumulative gap $ (8,395) $ 26,178 --
</TABLE>
- ---------
(1) Loans above exclude nonaccrual loans of $299,000.
33
<PAGE> 45
INVESTMENT PORTFOLIO
The following table sets forth the maturities of investment securities at
December 31, 1995 and the weighted average yields of such securities
(calculated on the basis of the cost and effective yields weighted for the
scheduled maturity of each security). As discussed in the notes to the
consolidated financial statements, Gonzales Holding has an unused net operating
loss carry forward at December 31, 1995. Accordingly, tax-equivalent
adjustments have not been made in calculating yields on obligations of states
and political subdivisions. In addition, for purposes of this table, Federal
Home Loan Bank stock with a book value of $572,000 has been excluded.
<TABLE>
<CAPTION>
AFTER ONE
WITHIN BUT WITHIN
ONE YEAR FIVE YEARS
------------------ ------------------------
SECURITIES AVAILABLE-FOR-SALE: AMOUNT YIELD AMOUNT YIELD
--------- ----- --------- -----
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of other
U.S. Government agencies and corporations $ 2,523 6.97% $ 10,725 6.45%
Obligations of states and political subdivisions -- -- -- --
--------- ---------
$ 2,523 $ 10,725
===============================
Mortgage-backed bonds and collateralized mortgage
obligations $ 313 7.16% $ 4,650 5.98%
========= =========
SECURITIES HELD-TO-MATURITY:
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations $ -- -- $ 959 7.58%
Obligations of states and political subdivisions -- -- -- --
--------- ---------
$ -- $ 959
===============================
Mortgage-backed bonds and collateralized
mortgage obligations $ - $ -
===============================
</TABLE>
34
<PAGE> 46
<TABLE>
<CAPTION>
AFTER FIVE
BUT WITHIN
TEN YEARS AFTER TEN YEARS
------------------ ----------------------
SECURITIES AVAILABLE-FOR-SALE: AMOUNT YIELD AMOUNT YIELD
--------- ----- --------- -----
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations $ 1,721 6.58% $ -- --
Obligations of states and political subdivisions -- -- -- --
--------- ---------
$ 1,721 $ --
===============================
Mortgage-backed bonds and collateralized
mortgage obligations $ -- -- $ 19,912 6.74%
========= =========
SECURITIES HELD-TO-MATURITY:
U.S. Treasury securities and obligations of other
U.S. Government agencies and corporations $ 2,504 6.86% $ -- --
Obligations of states and political subdivisions 519 3.55% 476 5.60%
--------- ---------
$ 3,023 $ 476
===============================
Mortgage-backed bonds and collateralized
mortgage obligations $ 4,742 5.63% $ 3,144 6.65%
========= =========
</TABLE>
Gonzales Bank's mortgage-backed bonds and collateralized mortgage obligations
stated maturity dates are as scheduled above, however principal and interest
payments are received monthly causing a portion of the outstanding balance to
paydown throughout the term.
Gonzales Holding does not own securities representing 10% or more of its
shareholders' equity with any one issuer.
The following table sets forth the carrying amounts of investment securities at
the dates indicated (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
------- -------
<S> <C> <C>
U.S. Treasury securities and obligations of other U.S. Government
agencies and corporations $18,432 $15,158
Obligations of state and political subdivisions 995 499
Mortgage-backed bonds and collateralized
mortgage obligations 32,760 30,809
Federal Home Loan Bank stock 572 537
------- -------
Total $52,759 $47,003
======= =======
</TABLE>
35
<PAGE> 47
LOAN PORTFOLIO
The table below sets forth Gonzales Bank's loan distribution at the end of each
of the last two years (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
------- -------
<S> <C> <C>
Commercial, financial and agricultural $27,327 $27,772
Real estate - mortgage 20,210 20,586
Real estate - construction 1,894 1,618
Installment 10,142 9,694
------- -------
Total $59,573 $59,670
======= =======
</TABLE>
The following table shows the maturity of loans (excluding real estate-mortgage
and installment loans) outstanding as of December 31, 1995 (In thousands of
dollars). Also provided are the amounts due after one year, classified
according to sensitivity to changes in interest rates.
<TABLE>
<CAPTION>
MATURING
------------------------------------------
WITHIN AFTER ONE BUT AFTER
ONE YEAR WITHIN FIVE YEARS FIVE YEARS TOTAL
-------- ----------------- ---------- -------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $ 6,018 $13,394 $ 7,915 $27,327
Real estate - construction 1,894 -- -- 1,894
------- ------- ------- -------
$ 7,912 $13,394 $ 7,915 $29,221
======= ======= ======= =======
Loans maturing after one year with:
Fixed interest rates $13,816
Variable interest rates 7,492
-------
$21,308
=======
</TABLE>
36
<PAGE> 48
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes Gonzales Bank's loan loss experience for each of
the two years ended (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
------- -------
<S> <C> <C>
Balance at beginning of period $ 1,525 $ 1,835
Charge-offs:
Commercial, financial and agricultural 25 32
Real estate (construction and mortgage) 10 9
Installment 184 133
------- -------
Total Charge-offs 219 174
Recoveries:
Commercial, financial and agricultural 8 67
Real estate (construction and mortgage) 15 11
Installment 28 36
------- -------
Total Recoveries 51 114
Net charge-offs 168 60
Provision charged (credited) to operations 60 (250)
------- -------
Balance at end of period $ 1,417 $ 1,525
======= =======
Ratio of net charge-offs to average loans
outstanding .28% .10%
</TABLE>
The provision for loan losses, which is charged to income from operations, is
based upon the changes in the loan portfolio, the amount of net loan losses
incurred, and management's estimation of potential future losses based on
several factors including, but not limited to, current economic conditions,
loan portfolio composition, nonaccrual loans, problem loans and prior loan loss
experience.
As a result of an improving economy and loan portfolio during 1994, management
determined that the allowance for possible loan losses exceeded the required
amount by $250,000 and credited the provision for possible loan losses for this
amount.
The following table shows an allocation of the allowance for possible loan
losses for each of the two years indicated (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------- ----------------------------
PERCENTAGE OF LOANS PERCENTAGE OF LOANS
IN EACH CATEGORY IN EACH CATEGORY
AMOUNT TO TOTAL LOANS AMOUNT TO TOTAL LOANS
------ -------------- ------ --------------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $1,059 45.87% $ 919 46.54%
Real estate - mortgage 332 33.92% 408 34.50%
Real estate - construction -- 3.18% 27 2.71%
Installment 20 17.03% 160 16.25%
Unallocated 6 -% 11 -%
------ ------ ------ ------
Total $1,417 100.00% $1,525 100.00%
====== ====== ====== ======
</TABLE>
37
<PAGE> 49
RISK ELEMENTS
The following table summarizes nonperforming loans at December 31, 1995 and
1994 (In thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Nonaccrual loans $ 299 $ 123
Accruing loans past due 90 days or more 26 23
Restructured loans not included above 833 1,076
</TABLE>
If nonaccrual loans had performed in accordance with their original terms,
interest income would have increased by approximately $17,000 in 1995 and
$11,000 in 1994. Interest collected and recognized as interest income on these
loans was $9,000 in 1995 and $126,000 in 1994.
DEPOSITS
The average deposits and rates paid on such deposits are summarized for the
period indicated in the following tables (In thousands of dollars):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994
------------------- -------------------
AMOUNT RATE AMOUNT RATE
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits $ 21,270 $ 20,099
Interest-bearing demand deposits 19,132 2.13% 18,452 1.85%
Savings deposits 20,510 2.43% 20,541 2.30%
Time deposits 44,611 4.77% 42,595 3.46%
-------- --------
Total $105,523 $101,687
===============================
</TABLE>
Maturities of time deposits of $100,000 or more outstanding as of December 31,
1995 are summarized as follows (In thousands of dollars):
<TABLE>
<CAPTION>
TIME CERTIFICATES OF DEPOSIT
----------------------------
<S> <C>
3 months or less $ 900
Over 3 through 6 months 2,409
Over 6 through 12 months 2,765
Over 12 months 1,011
------
Total $7,085
======
</TABLE>
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994
------- -------
<S> <C> <C>
Return on average assets 2.15% 2.23%
Return on average equity 22.18% 21.87%
Dividend payout ratio 112.03% 111.21%
Average equity to average assets 9.68% 10.18%
</TABLE>
38
<PAGE> 50
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
GONZALES HOLDING AND SUBSIDIARY
The purpose of this discussion is to focus on information about the
financial condition and results of operations of Gonzales Holding and Gonzales
Bank that is not otherwise apparent from the consolidated financial statements
and financial data presented elsewhere herein.
FINANCIAL CONDITION
OVERVIEW. Total assets of Gonzales Holding at December 31, 1995 and 1994
were $124,435,000 and $117,569,000, respectively, a $6,866,000 or 5.8%
increase. Average assets for 1995 and 1994 were $121,664,000 and $117,916,000,
a 3.2% increase. In order to better understand the reasons for the overall
increase in total assets, and likewise, in liabilities and shareholders'
equity, this discussion will focus on changes in the significant components of
Gonzales Holding's balance sheet.
Cash and due from banks represent coin and currency on hand at Gonzales
Bank and amounts on deposit with correspondent banks, and are the primary
source for the daily withdrawal needs of depositors and credit needs of loan
customers. At December 31, 1995 and 1994, cash and due from banks were
$5,068,000 and $4,957,000, an increase of $111,000. Average cash and due from
banks were $4,161,000 in 1995 and $4,124,000 in 1994, which represents a
$37,000 or 0.9% increase. As the largest nonearning asset on the balance sheet,
management closely monitors the level of cash on hand and in correspondent
banks as part of the overall asset/liability strategy, in order to maintain a
balance between the needs of customers and management's obligation to endeavor
to enhance shareholders' profits by assuring that the level of all nonearning
assets is minimized.
Earning assets include federal funds sold, investment securities, and
loans and are Gonzales Holding's principal source of income. Earning assets
averaged $113,403,000 in 1995 and $108,502,000 in 1994, a $4,901,000 or 4.5%
increase. Total interest earned on these assets in 1995 and 1994 were
$9,981,000 and $8,940,000, respectively, which represents average yields of
8.80% and 8.24%.
Banks must meet legal reserve requirements on a daily basis by maintaining
a specified level of currency and coin on hand plus funds on deposit at Federal
Reserve Banks. Banks with excess reserves on a particular day may sell the
excess to other banks needing funds to meet their reserve requirements on that
day. These federal funds sold represent unsecured loans to other banks, usually
on a daily basis, and are made at an agreed rate of interest (the federal funds
rate). At December 31, 1995 and 1994, federal funds sold were $2,634,000 and
$627,000, respectively. Average federal funds sold were $1,763,000 in 1995 and
$748,000 in 1994 and yielded 5.73% and 4.14%, respectively.
INVESTMENT SECURITIES. Investment securities, in addition to providing a
source of income, are used to manage interest rate and liquidity risk as part
of Gonzales Bank's overall asset/liability strategy. On January 1, 1994,
Gonzales Bank adopted the Financial Accounting Standards Board's Statement of
Financial Accounting Standards number 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." Under SFAS 115, investment
securities of Gonzales Bank are classified as either "held-to-maturity" or
"available-for-sale." Investments held-to-maturity are bonds and notes for
which Gonzales Bank has the positive intent and ability to hold until their
maturity, and are carried at cost, adjusted for amortization of premiums and
accretion of discounts. Investments available-for-sale consist of bonds and
notes not classified as held-to-maturity and are carried at their fair value.
The carrying amounts of all investment securities at December 31, 1995 and
1994 were $52,759,000 and $47,003,000. At December 31, 1995 and 1994, the
amortized costs of all investment securities (available-for-sale and
held-to-maturity) were $52,304,000 and $49,138,000, respectively, and the fair
values were $52,682,000 and $46,083,000. Average carrying amounts of
investments were $51,262,000 in 1995 and $48,325,000 in 1994, which include
average unrealized losses on securities available-for-sale of $709,000 and
$901,000, respectively. The decrease in interest rates in 1995 caused an
increase in the fair values of the securities. At the end of 1994, the fair
value of all securities was $3,054,000 less than the amortized cost. At the end
of 1995, the fair value was $378,000 more than the amortized cost. Of this
$378,000 net unrealized gain at December 31, 1995, unrealized gains of $455,000
have
39
<PAGE> 51
increased the carrying amount of securities available-for-sale, while
unrealized losses of $77,000 have not affected the carrying amount of the
securities held-to-maturity, which are carried at amortized cost. The average
amortized cost of the investment securities increased by $2,745,000, from
$49,226,000 in 1994 to $51,971,000 in 1995.
LOANS. Gonzales Holding's primary use of funds is for loan demand. Loans
outstanding at the end of 1995 and 1994 were $59,573,000 and $59,670,000, a
decrease of only $97,000 or 0.2%. Average loans outstanding for 1995 and 1994
were $60,049,000 and $59,352,000, a $697,000 or 1.2% increase. Interest income
generated from loans was $6,437,000 for 1995 and $6,114,000 for 1994, for
average yields of 10.72% and 10.30%, respectively. The increase in average
yield on loans does not reflect the general decrease in interest rates which
occurred during the latter part of 1995. Management expects average loans to
continue to increase due to the continued strong economic environment,
aggressive marketing strategies, and the decline in rates.
DEPOSITS. Deposits are Gonzales Holding's primary source of funds. Total
deposits at December 31, 1995 and 1994 were $108,180,000 and $102,527,000,
respectively. Deposits averaged $105,523,000 in 1995 and $101,687,000 in 1994,
a $3,836,000 or 3.8% increase. Interest-bearing deposits in 1995 and 1994
averaged $84,253,000 and $81,588,000. Interest expense for these deposits was
$3,036,000 in 1995 and $2,289,000 in 1994, for average rates paid of 3.60% and
2.81%. Although rates began falling during the latter part of 1995, the average
rates paid in 1995 remained higher than the 1994 average.
EQUITY. Stockholders' equity increased from $11,042,000 at December 31,
1994 to $12,435,000 at December 31, 1995 due to net income in 1995 of
$2,611,000, dividends declared of $2,925,000, and an increase during 1995 in
the fair values of investment securities available-for-sale, net of deferred
income taxes, of $1,707,000. During 1995 and 1994, Gonzales Holding paid
regular dividends of $0.35 per share per quarter, plus $4.00 per share per year
in extraordinary dividends.
RESULTS OF OPERATIONS
Net income for 1995 and 1994 was $2,611,000 and $2,626,000, respectively,
a $15,000 or 0.6% decrease.
NET INTEREST INCOME. Net interest income is the difference between
interest income from loans, investments, and other interest-earning assets and
interest expense on deposits and other interest-bearing liabilities. Net
interest income for 1995 and 1994 was $6,723,000 and $6,452,000, a $271,000 or
4.2% increase. The various components of net interest income as they relate to
the particular interest-earning assets and interest-bearing liabilities have
been discussed in the previous section titled "Financial Condition." The net
interest margin (that is, net interest income divided by average
interest-earning assets) was 5.93% in 1995 and 5.95% in 1994. With close
monitoring of the rates, along with proper asset/liability management, the net
interest margin will be managed to maximize profits under both falling and
rising interest rate environments.
PROVISION FOR LOAN LOSSES. The provision for possible loan losses is based
on changes in the loan portfolio, the amount of net loan losses incurred, and
management's estimates of potential future losses based on several factors
including, but not limited to, current economic conditions, loan portfolio
composition, prior loan loss experience, and the level of impaired and other
problem loans. The continued improvement of the economy and reduction of
nonperforming and other problem loans contributed to management's decision to
reduce the allowance for possible loan losses by $250,000 in 1994 through a
credit to operations. In 1995, the allowance decreased by $108,000 due to net
charge-offs of $168,000 offset by a charge to operations for the provision for
loan losses of $60,000. Gonzales Holding adopted Statement of Financial
Accounting Standard number 114, "Accounting by Creditors for Impairment of a
Loan," in 1995, which did not have a material effect on financial condition or
the results of operations. Loans which have been identified by management as
impaired generally include nonaccrual loans, loans past due ninety days or more
and still accruing, loans which have previously had some portion classified as
either loss or doubtful, and other loans which for specific reasons have been
identified as impaired. At December 31, 1995, loans totaling $1,746,000 were
specifically classified as impaired. Nonperforming loans at December 31, 1994
include nonaccrual loans, loans which are past due ninety days or more as to
principal or interest payments and still accruing, and loans for which the
terms have been restructured due to the financial troubles of borrowers. Total
nonperforming loans at December 31, 1994 were $1,222,000. In addition,
management has identified other loans which are contractually current and not
classified as either impaired or nonperforming, but the borrowers are
experiencing financial difficulties. These other loans totaled $2,282,000 at
the end of 1995 and $1,895,000 at the end of 1994.
40
<PAGE> 52
NON-INTEREST INCOME. Noninterest income was $1,419,000 for 1995 and
$1,477,000 for 1994. Noninterest income consists primarily of service charges
on deposit accounts and fees for other financial services, which were
$1,164,000 in 1995 and $1,126,000 in 1994, a $38,000 or 3.3% increase. This
increase is directly attributable to the 3.6% increase in demand, NOW, money
market, and savings accounts during 1995. The net income from operation of
foreclosed real estate was $60,000 in 1995 and $142,000 in 1994. The major
portion of these amounts were from credits to the provision for loss on
foreclosed real estate of $40,000 in 1995 and $100,000 in 1994.
NON-INTEREST EXPENSE. Noninterest expense was $4,241,000 for 1995 and
$4,302,000 for 1994, a $61,000 or 1.4% decrease. This decrease is attributable
principally to two components of noninterest expense: (1) net occupancy
expense, which was $307,000 in 1995 and $346,000 in 1994, a $39,000 decrease,
and (2) equipment expense, which was $347,000 in 1995 and $373,000 in 1994, a
$26,000 decrease. The decrease in net occupancy expense was primarily due to a
$28,000 reduction in building repairs and maintenance. The decrease in
equipment expense was primarily due to a $36,000 decrease in depreciation
expense on furniture, equipment and automobiles.
INCOME TAX EXPENSE. Income tax expense was $1,230,000 and $1,251,000 for
1995 and 1994. These provisions for taxes include current expenses of $93,000
in 1995 and $66,000 in 1994, which represent alternative minimum tax that
Gonzales Holding has paid. These taxes are expected to be recovered in future
years as credit carryovers when Gonzales Holding again begins incurring taxes
under the regular income tax system.
LIQUIDITY AND CAPITAL RESOURCES
The primary functions of asset/liability management are to assure adequate
liquidity and to maintain an appropriate balance between interest-earning
assets and interest-bearing liabilities. Liquidity management involves the
ability to meet the cash flow requirements of customers who may be either
depositors wanting to withdraw funds or borrowers needing assurance that
sufficient funds will be available to meet their credit needs. The principal
sources of liquidity for Gonzales Holding are cash and due from bank accounts,
investment securities which are available-for- sale, federal funds sold,
maturing loans, short-term borrowings through federal funds lines of credit,
and advances from the Federal Home Loan Bank.
Gonzales Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly discretionary,
actions by regulators that, if undertaken, could have a direct material effect
on Gonzales Bank's financial statements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, Gonzales Bank must meet
specific capital guidelines that involve quantitative measures of Gonzales
Bank's assets, liabilities, and certain off- balance sheet items as calculated
under regulatory accounting practices. Gonzales Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require Gonzales Bank to maintain minimum amounts and ratios of total and Tier
1 capital, as defined in the regulations, to risk-weighted assets, as defined,
and of Tier 1 capital to average assets, as defined. Management believes, as of
December 31, 1995, that Gonzales Bank meets all capital adequacy requirements
to which it is subject.
As of December 31, 1995, the most recent notification from the Federal
Deposit Insurance Corporation categorized Gonzales Bank as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized, Gonzales Bank must maintain a total risk-based capital
ratio of 10% or higher, Tier 1 risk-based capital ratio of 6% or higher, and
Tier 1 leverage capital ratio of 5% or higher. No conditions or events have
occurred since that notification that management believes have changed Gonzales
Bank's category.
41
<PAGE> 53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 1996 AND 1995
GONZALES HOLDING AND SUBSIDIARY
FINANCIAL CONDITION
Gonzales Holding's total assets increased during the first three months of
1996 from $124,435,000 to $125,849,000, a $1,414,000 or 1.1% increase. In order
to better understand the reasons for the overall increase in total assets, and
likewise, in liabilities and shareholders' equity, this discussion will focus
on changes in the significant components of the Company's statement of
financial condition.
Cash and due from banks at March 31, 1996 and December 31, 1995 were
$4,611,000 and $5,068,000, respectively, a decrease of $457,000 or 9.0%. As the
largest nonearning asset, management of Gonzales Holding closely monitors the
level of cash on hand and in correspondent banks as part of the overall
asset/liability strategy. In connection with its asset/liability management,
Gonzales Bank sells excess funds to other banks in the form of federal funds
transactions. Federal funds sold at March 31, 1996 and December 31, 1995 were
$1,239,000 and $2,634,000, respectively, a $1,395,000 or 53.0% decrease.
Investment securities were $56,373,000 at March 31, 1996 and included
$40,027,000 which were available-for-sale and $16,346,000 which were
held-to-maturity. At December 31, 1995, securities available-for-sale and
held-to-maturity totaled $40,416,000 and $12,343,000, respectively. Under FASB
115, available-for-sale securities are required to be adjusted and carried at
their fair values, with a corresponding increase or decrease recorded as an
unrealized gain or loss in shareholders' equity, net of any income tax effects.
At December 31, 1995, the total unrealized gain on available-for-sale
securities was $453,000 before any income tax effects. After netting deferred
income taxes of $154,000 against this unrealized gain, a $299,000 net
unrealized gain was recorded in shareholders' equity. During the first quarter
of 1996, as interest rates increased slightly, the unrealized gain was reduced
and totaled $56,000 at March 31,1996. After netting a deferred income tax of
$19,000 against this figure, a $37,000 net unrealized gain was recorded in
shareholders' equity.
Investment securities which are considered as held-to-maturity are carried
at their amortized costs and were $16,346,000 and $12,343,000 at March 31, 1996
and December 31, 1995, respectively. The fair values of held-to-maturity
securities were $16,140,000 at March 31, 1996, a $206,000 unrealized loss, and
$12,266,000 at December 31, 1995, a $77,000 unrealized loss. The values of
these securities also decreased as a result of the slight rise in interest
rates.
Gonzales Holding's primary use of funds is for loan demand. Loans
outstanding at March 31, 1996 and December 31, 1995, net of unearned income,
were $59,624,000 and $59,573,000, respectively, an increase of $51,000 or 0.1%.
Management of Gonzales Holding expects loans to continue to increase due to the
continued strong economic environment and Gonzales Bank's aggressive marketing
strategies. Nonaccrual loans, which are loans on which interest recognition has
been suspended until received because of doubts as to the borrowers' ability to
repay principal or interest, were $215,000 at March 31, 1996 and $299,000 at
December 31, 1995. Problem loans are loans for which payments are presently
current, but the borrowers are experiencing financial difficulties. Loans
classified as problem loans totaled $2.3 million at March 31, 1996 and December
31, 1995. No related parties had any nonaccrual, past due, or problem loans at
March 31, 1996 and December 31, 1995.
The allowance for possible loan losses was $1,371,000 at March 31, 1996
and $1,417,000 at December 31, 1995. This $46,000 decrease is the result of a
$12,000 addition to the allowance for the first three months of 1996 and net
loan charge-offs of $58,000. Management of Gonzales Holding believes that the
allowance for possible loan losses as of March 31, 1996 is adequate.
The net deferred tax asset was $794,000 at December 31, 1995 and $863,000
at March 31, 1996. This increase of $69,000 consisted of a $66,000 deferred
income tax expense for the three months ended March 31, 1996, and a decrease in
the deferred tax liability applicable to the aforementioned unrealized gain on
available-for-sale securities, which was $154,000 at year-end 1995 and $19,000
at March 31, 1996, a $135,000 decrease.
42
<PAGE> 54
The increase in deposits of $1,317,000 consisted of an increase in time
deposits of $1,397,000, a 3.1% increase, and a decrease in demand, savings,
NOW's and MMDA's of $80,000, or 0.1%.
Additional advances from the Federal Home Loan Bank to fund long-term
residential mortgages were received in the first quarter of 1996. The total
advances payable to the Federal Home Loan Bank were $4,218,000 and $3,260,000
at March 31, 1996 and December 31, 1995, a net increase of $958,000.
Shareholders' equity decreased by $1,091,000 during the first quarter of
1996 from $12,435,000 at year-end 1995 to $11,344,000 at March 31, 1996. This
decrease was the result of a decrease in the net unrealized gain on investment
securities available-for-sale, as discussed above, of $262,000, and an increase
of $829,000 in the retained earnings deficit. The retained earnings deficit at
year-end 1995 of $606,000 increased to $1,435,000 at March 31, 1996 through net
income of $444,000 and dividends declared of $1,273,000.
RESULTS OF OPERATIONS
Net income for the first quarter of 1996 was $444,000 or $0.82 per average
share outstanding. Net income for the first quarter of 1995 was $602,000 or
$1.11 per average share outstanding. This $158,000 decrease in 1996 as compared
to 1995 is due to changes in several areas as follows:
Net interest income is Gonzales Holding's principal source of revenue and
is measured by the difference between interest income earned on loans and
investments and interest expense incurred on deposits and other borrowings.
Gonzales Holding's net interest income for the first three months of 1996
decreased by only $5,000 as compared to the same period in 1995. With careful
monitoring of interest-earning assets and interest-bearing liabilities through
its asset/liability management program, management is able to adjust for any
changes in interest rates in order to maximize profits during periods of
favorable (i.e. anticipated) movements in rates, and minimize adverse effects
during periods of unfavorable (i.e. unanticipated) movements in rates.
The provision for possible loan losses replenishes the allowance for
possible loan losses to a level that is considered adequate by management to
absorb potential losses. The adequacy of the allowance is determined through an
evaluation of the loan portfolio, loan loss experience, and economic
conditions. The provision for the three months ended March 31, 1996 and 1995
was $12,000 and $10,000.
Total other income was $335,000 and $334,000 for the three months ended
March 31, 1996 and 1995, respectively. Total other expense was $1,314,000 and
$1,077,000 for the quarters ended March 31, 1996 and 1995, respectively, a
$237,000 increase. Salaries and employee benefits, a component of total other
expense, increased by $168,000 due primarily to the severance of a senior
officer of Gonzales Bank. The officer's contingent severance agreement required
Gonzales Bank to pay him twice his annual salary upon his release following a
change in control. The change in control came about when Gonzales Holding's
Board of Directors voted to merge with Deposit Guaranty Corporation of
Mississippi. The merger is subject to shareholder and regulatory approval which
is expected by June, 1996. Another component of total other expense is the loss
on impaired assets. As a result of adopting FASB Statement 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of", Gonzales Holding recognized a loss of $179,000 related to certain premises
held and used by Gonzales Bank.
Income tax expense for the quarters ended March 31, 1996 and 1995 was
$221,000 and $306,000, respectively, a decrease of $85,000. The deferred
expense portion of income tax expense was $66,000 in 1996 and $293,000 in 1995.
The current expense portion of $155,000 in 1996 and $13,000 in 1995 represents
an estimate of the alternative minimum tax to be paid with the filing of the
Federal income tax returns.
LEGAL OPINION
Watkins Ludlam & Stennis, P.A., of Jackson, Mississippi has rendered its
opinion that the shares of Deposit Guaranty Common Stock to be issued in
connection with the Mergers have been duly authorized and if and when issued
pursuant to the terms of the Merger Agreement, will be validly issued, fully
paid and non-assessable.
43
<PAGE> 55
EXPERTS
The consolidated financial statements of Deposit Guaranty as of December
31, 1995 and 1994, and for each of the years in the three-year period ended
December 31, 1995, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, also incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1994,
consolidated financial statements refers to a change in the method of
accounting for debt securities.
The consolidated financial statements of Gonzales Holding as of December
31, 1995 and 1994, and for each of the years in the two-year period ended
December 31, 1995, have been audited by Basil M. Lee and Company, C.P.A., as
indicated in their reports with respect thereto and have been included herein
and in the registration statement in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Board of Directors
of Gonzales Holding knows of no matters which will be presented for
consideration at the Meeting other than as set forth in the Notice of such
meeting attached to this Proxy Statement/Prospectus. However, if any other
matters shall come before the Meeting or any adjournment or postponement
thereof and be voted upon the enclosed proxy shall be deemed to confer
discretionary authority to the individuals named as proxies therein to vote the
shares represented by such proxy as to any such matters.
44
<PAGE> 56
INDEX TO FINANCIAL STATEMENTS
BANK OF GONZALES HOLDING COMPANY, INC.
AND SUBSIDIARY
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F-2
Consolidated Statements of Financial Condition at December 31, 1995 and 1994 and March 31, 1996 F-3
(Unaudited)
Consolidated Statements of Income for each of the Years in the Two Year F-4
Period Ended December 31, 1995 and for the Three (3) Months Ended
March 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Cash Flows for each of the Years in the F-5
Two Year Period Ended December 31, 1995 and for the Three (3) Months Ended
March 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Shareholders' Equity for each of the F-6
Years in the Two Year Period Ended December 31, 1995 and for the Three (3) Months Ended
March 31, 1996 and 1995 (Unaudited)
Notes to Consolidated Financial Statements for each of the Years in the F-7
Two Year Period Ended December 31, 1995
</TABLE>
F-1
<PAGE> 57
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Bank of Gonzales Holding Company, Inc.
We have audited the accompanying consolidated statements of financial condition
of Bank of Gonzales Holding Company, Inc. and its subsidiary as of December 31,
1995 and 1994, and the related consolidated statements of income, shareholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bank of Gonzales
Holding Company, Inc. and its subsidiary as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.
/s/ Basil M. Lee and Company
BASIL M. LEE AND COMPANY
Certified Public Accountants
Baton Rouge, Louisiana
January 31, 1996
F-2
<PAGE> 58
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
(Unaudited) December 31,
March 31, ---------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 4,611 $ 5,068 $ 4,957
Federal funds sold 1,239 2,634 627
--------- --------- ---------
Cash and cash equivalents 5,850 7,702 5,584
Interest-bearing deposits in banks 1,000 1,300 --
Securities available-for-sale, at fair value 40,027 40,416 33,275
Securities held-to-maturity, fair values of $16,140 (unaudited) at
March 31, 1996, $12,266 in 1995 and $12,808 in 1994 16,346 12,343 13,728
Loans receivable, net of allowance for loan losses of $1,371
(unaudited) at March 31, 1996, $1,417 in 1995 and $1,525 in 1994 58,253 58,156 58,145
Premises and equipment 2,068 2,289 2,360
Foreclosed real estate 310 290 572
Accrued interest receivable 746 788 759
Deferred tax asset 863 794 2,811
Other assets 386 357 335
--------- --------- ---------
Total assets $ 125,849 $ 124,435 $ 117,569
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing demand deposits $ 21,650 $ 21,651 $ 20,438
Interest-bearing demand, NOW's and MMDA's 19,318 20,039 19,186
Savings 21,353 20,711 20,589
Time deposits $100,000 and more 7,595 7,085 5,716
Other time deposits 39,581 38,694 36,598
--------- --------- ---------
Total deposits 109,497 108,180 102,527
Advance from Federal Home Loan Bank 4,218 3,260 3,410
Accrued interest payable 251 201 162
Other liabilities 539 359 428
--------- --------- ---------
Total liabilities 114,505 112,000 106,527
--------- --------- ---------
SHAREHOLDERS' EQUITY
Common stock, no par value - 10,000,000 shares authorized, 561,801 13,227 13,227 13,227
shares issued and outstanding at March 31, 1996 and in 1995 and 1994
Retained earnings (deficit) (1,435) (606) (292)
Treasury stock, at cost, 20,190 shares at March 31, 1996 and in 1995
and 1994 (485) (485) (485)
Net unrealized appreciation (depreciation) on available-
for-sale securities, net of tax expense (benefit) of $19 (unaudited)
at March 31, 1996, $154 in 1995 and $(726) in 1994 37 299 (1,408)
--------- --------- ---------
Total shareholders' equity 11,344 12,435 11,042
--------- --------- ---------
Total liabilities and shareholders' equity $ 125,849 $ 124,435 $ 117,569
========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE> 59
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended March 31, Year Ended December 31,
--------------------------- --------------------------
1996 1995 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans receivable $ 1,578 $ 1,594 $ 6,437 $ 6,114
Taxable investment securities 841 804 3,384 2,772
Tax-exempt investment securities 14 5 31 20
Federal funds sold 40 13 101 31
Interest-bearing deposits in other banks 17 4 28 3
Other -- 1 -- --
--------- --------- --------- ---------
TOTAL INTEREST INCOME 2,490 2,421 9,981 8,940
--------- --------- --------- ---------
INTEREST EXPENSE
Deposits 771 703 3,036 2,289
Federal Home Loan Bank Advance 63 54 213 176
Other -- 3 9 23
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE 834 760 3,258 2,488
--------- --------- --------- ---------
NET INTEREST INCOME 1,656 1,661 6,723 6,452
Provision for loan losses 12 10 60 (250)
--------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,644 1,651 6,663 6,702
--------- --------- --------- ---------
NONINTEREST INCOME
Service charges on deposit accounts 290 290 1,164 1,126
Other service charges and fees 11 12 47 71
Net income (cost) from operation of foreclosed
real estate (3) (3) 60 142
Other 34 32 148 138
--------- --------- --------- ---------
TOTAL NONINTEREST INCOME 332 331 1,419 1,477
--------- --------- --------- ---------
NONINTEREST EXPENSE
Salaries and employee benefits 652 484 2,028 2,010
Net occupancy expense 83 77 307 346
Equipment expense 77 80 347 373
Loss on impaired assets 179 -- -- --
Investment securities (gains) losses (29) 68 50 43
Other 349 365 1,509 1,530
--------- --------- --------- ---------
TOTAL NONINTEREST EXPENSE 1,311 1,074 4,241 4,302
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 665 908 3,841 3,877
Income tax expense 221 306 1,230 1,251
--------- --------- --------- ---------
NET INCOME $ 444 $ 602 $ 2,611 $ 2,626
========= ========= ========= =========
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .82 $ 1.11 $ 4.82 $ 4.86
========= ========= ========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING 541,611 541,611 541,611 540,587
========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE> 60
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
March 31, Year Ended December 31,
------------------------- -------------------------
1996 1995 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income $ 444 $ 602 $ 2,611 $ 2,626
Adjustments to reconcile net income to net cash provided by
operating activities
Deferred tax expense 66 293 1,137 1,186
Depreciation and amortization 47 58 241 296
Provision for loan losses 12 10 60 (250)
Net realized losses (gains) on available-for-sale securities (29) 68 50 44
Loss on impaired assets 179 -- -- --
Provision for losses on foreclosed real estate -- -- (40) (100)
Net (accretion) amortization of securities (8) 3 (70) 190
(Gain) on sales of foreclosed real estate -- -- (18) (40)
Loss on sales of premises and equipment -- -- -- 11
(Increase) decrease in accrued interest receivable 42 1 (29) (150)
Increase in other assets (29) (35) (43) (52)
Increase in accrued interest payable 50 37 39 19
Increase (decrease) in accrued expenses and other liabilities 180 (52) (69) 131
-------- -------- -------- --------
Net cash provided by operating activities 954 985 3,869 3,911
-------- -------- -------- --------
Cash flows from investing activities
Net (increase) decrease in interest-bearing deposits with banks 300 (300) (1,300) --
Purchases of available-for-sale securities (4,831) (5,342) (21,704) (17,066)
Proceeds from sales of available-for-sale securities 2,678 3,011 12,790 19,976
Proceeds from maturities of available-for-sale securities 1,675 306 2,644 4,134
Purchases of held-to-maturity securities (4,179) -- (4,698) (11,388)
Proceeds from maturities of held-to-maturity securities 683 309 7,819 766
Net (increase) in loans (129) (1,135) (122) (458)
Proceeds from sales of foreclosed real estate -- 84 391 165
Net purchases of premises and equipment (5) (37) (149) (116)
-------- -------- -------- --------
Net cash used by investing activities (3,808) (3,104) (4,329) (3,987)
-------- -------- -------- --------
Cash flows from financing activities
Net increase in deposits 1,317 1,282 5,653 3,332
Net decrease in federal funds purchased -- -- -- (1,050)
Net increase (decrease) in F.H.L.B. advances 958 (36) (150) 3,410
Dividends paid (1,273) (190) (2,925) (2,874)
Purchases of treasury stock -- -- -- (19)
Sales of treasury stock -- -- -- 27
-------- -------- -------- --------
Net cash provided by financing activities 1,002 1,056 2,578 2,826
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents (1,852) (1,063) 2,118 2,750
Cash and cash equivalents, beginning of period 7,702 5,584 5,584 2,834
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 5,850 $ 4,521 $ 7,702 $ 5,584
======== ======== ======== ========
Interest paid $ 784 $ 723 $ 3,219 $ 2,469
======== ======== ======== ========
Income taxes paid $ 8 $ 16 $ 102 $ 40
======== ======== ======== ========
Foreclosed real estate acquired in satisfaction of loans $ 20 $ 13 $ 51 $ 88
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE> 61
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Retained Cost of Common (Depreciation) on Total
Earnings Stock in Available-for-Sale Shareholders'
Common Stock (Deficit) Treasury Securities Equity
------------ --------- -------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 $ 13,203 $ 75 $ (561) $ -- $ 12,717
Net unrealized appreciation at January
1, 1994, due to adoption of SFAS
115, net of taxes of $151 -- -- -- 294 294
Net income, 1994 -- 2,626 -- -- 2,626
Sale of 3,950 shares of treasury stock 1 (69) 95 -- 27
Purchase of 783 shares of treasury stock -- -- (19) -- (19)
Dividends declared -- (2,924) -- -- (2,924)
Deferred tax benefit from exercise
of stock options 23 -- -- -- 23
Net changes in unrealized
appreciation (depreciation) on
available-for-sale securities, net of
taxes of $877 -- -- -- (1,702) (1,702)
-------- -------- -------- -------- --------
Balance at December 31, 1994 13,227 (292) (485) (1,408) 11,042
Net income, 1995 -- 2,611 -- -- 2,611
Dividends declared -- (2,925) -- -- (2,925)
Net changes in unrealized
appreciation (depreciation) on
available-for-sale securities, net of
taxes of $880 -- -- -- 1,707 1,707
-------- -------- -------- -------- --------
Balance at December 31, 1995 13,227 (606) (485) 299 12,435
Net income (unaudited) 444 -- -- 444
Dividends declared (unaudited) -- (1,273) -- -- (1,273)
Net changes in unrealized
appreciation (depreciation) on
available-for-sale securities, net of
taxes of $135 (unaudited) -- -- -- (262) (262)
-------- -------- -------- -------- --------
Balance at March 31, 1996 (unaudited) $ 13,227 $ (1,435) $ (485) $ 37 $ 11,344
======== ======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE> 62
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by Bank of Gonzales Holding Company, Inc.
(the Company) and its wholly-owned subsidiary, Bank of Gonzales (the Bank), and
the methods of applying those principles conform with generally accepted
accounting principles consistently applied and generally practiced within the
banking industry. The principles which significantly affect the determination
of financial condition and net income are summarized below:
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and the Bank. All significant intercompany balances and
transactions have been eliminated. Investment in the Bank is carried at the
Company's equity in the underlying net assets.
Nature of operations: The Bank provides a variety of financial services to
individual and business customers through its three offices in Ascension
Parish, Louisiana, which is primarily an industrial area. The Bank's primary
deposit products are checking and savings accounts and certificates of deposit.
Its primary lending products are commercial, real estate and consumer loans.
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 allowances
for losses on loans and foreclosed real estate, management obtains independent
appraisals for significant properties.
While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions, which depends heavily on the
petrochemical industry. In addition, regulatory agencies, as an integral part
of their examination process, periodically review the Bank's allowances for
losses on loans and foreclosed real estate. Such agencies may require the Bank
to recognize additions to the allowances based on their judgments about
information available to them at the time of their examination. Because of
these factors, it is reasonably possible that the allowances for losses on
loans and foreclosed real estate may change materially in the near term.
Investment Securities: Investment securities are classified in two categories
and accounted for as follows:
Securities Held-to-Maturity. Bonds and notes for which the Bank has the
positive intent and ability to hold to maturity are reported at cost,
adjusted for amortization of premiums and accretion of discounts which are
recognized in interest income using the interest method over the period to
maturity.
Securities Available-for-Sale. Securities available-for-sale consist of
bonds and notes not classified as securities held-to-maturity.
Declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than temporary
result in write-downs of the individual securities to their fair value. The
related write-downs are included in earnings as realized losses. Unrealized
holding gains and losses, net of tax, on securities available- for-sale are
reported as a net amount in a separate component of shareholders' equity until
realized. Gains and losses on the sale of securities available-for-sale are
determined using the specific-identification method.
F-7
<PAGE> 63
Loans Receivable and Allowance for Loan Losses: Loans are stated at the amount
of unpaid principal reduced by unearned income and the allowance for loan
losses. Unearned income on discounted loans is recognized as income over the
term of the loans using a method that approximates the interest method.
Interest on other loans is calculated by using the simple interest method on
daily balances of the principal amount outstanding. Loans are generally placed
on nonaccrual when principal or interest is delinquent for ninety days or more.
Interest income generally is not recognized on nonaccrual loans unless the
likelihood of further loss is remote. Interest payments received on such loans
are applied as a reduction of the loan principal balance. Impaired loans
generally include nonaccrual loans, loans past due ninety days or more and
still accruing, and restructured loans. Loans reviewed for impairment include
all loans (except consumer installment loans, which are generally smaller
balance, homogeneous loans) which management has identified as warranting
special attention, such as past due loans, large loans, and loans for which
management is aware of a borrower's financial difficulties.
The allowance for loan losses represents an amount which, in management's
judgment, will be adequate to absorb possible losses on existing loans that may
become uncollectible. The amount of the allowance is based on management's
evaluation of the collectibility of the loan portfolio, including the nature of
the portfolio, credit concentrations, trends in historical loss experience,
specific impaired loans, and economic conditions. Allowances for impaired loans
are generally determined based on collateral values. Ultimate losses may vary
from current estimates. A loan is charged off when it is determined to be
uncollectible. The allowance is increased by a provision for loan losses, which
is charged to expense, and reduced by charge-offs, net of recoveries.
Premises and Equipment: Premises and equipment are stated at cost less
accumulated depreciation. Repairs and maintenance expenditures which extend the
useful life of an asset are capitalized, and routine maintenance and repair
expenditures are expensed as incurred. Depreciation expense is computed using
the straight-line method over the estimated useful lives of the respective
assets.
Foreclosed Real Estate: Foreclosed real estate is comprised of properties
acquired through foreclosure proceedings or acceptance of deed in lieu of
foreclosure. These properties are carried at the lower of cost or estimated
fair market value. Losses arising at the time of acquisition of such property
are charged against the allowance for loan losses. Subsequent losses are
included in net income from operation of foreclosed real estate.
Federal Income Taxes: Provision for deferred income taxes is made as a result
of temporary differences between the financial and taxable bases of assets and
liabilities. These differences relate principally to the provision for possible
loan losses, foreclosed real estate expense, accretion of discounts on
investment securities, and the tax net operating loss carryforward.
Statement of Cash Flows: For purposes of the statement of cash flows, the
Company considers due from bank accounts and federal funds sold to be cash
equivalents.
Treasury Stock: Treasury stock is accounted for by the cost method on an
average cost basis.
Fair Values of Financial Instruments: Statement of Financial Accounting
Standards number 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about financial instruments,
whether or not recognized in the statement of financial condition. In cases
where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and, in
many cases, could not be realized in immediate settlement of the instruments.
Statement 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company.
Reclassifications: Certain items included in the financial statements for 1994
have been reclassified to conform with the 1995 presentation and have no effect
on net income previously reported.
F-8
<PAGE> 64
NOTE B--RESTRICTIONS ON SHAREHOLDERS' EQUITY
Under applicable law, the Bank cannot, without the prior approval of regulatory
authorities, pay dividends during any year which exceed the combined net income
of that year and the immediately preceding year. Additionally, under applicable
law, the Bank cannot make loans, extensions of credit, repurchase agreements,
investments, or advances, which will exceed 10% of its capital stock and
surplus, to an affiliate. At December 31, 1995, the Bank had no such loans or
advances to its affiliate.
NOTE C--RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances with the Federal
Reserve Bank. The average amount of these reserve balances for the years ended
December 31, 1995 and 1994 was approximately $811,000 and $787,000,
respectively.
NOTE D--INVESTMENT SECURITIES
The amortized cost and estimated fair value of investments in debt securities
are as follows (In thousands of dollars):
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Fair
Securities available-for-sale: Gains Losses Value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 3,973 $ 64 $ -- $ 4,037
U.S. Government agencies and corporations 10,781 199 48 10,932
Mortgage-backed securities and collateralized
mortgage obligations 24,635 357 117 24,875
------- ------- ------- -------
$39,389 $ 620 $ 165 $39,844
======= ======= ======= =======
</TABLE>
F-9
<PAGE> 65
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Fair
Securities held-to-maturity: Gains Losses Value
--------- ---------- ---------- ----------
(In thousands of dollars)
<S> <C> <C> <C> <C>
U.S. Government agencies and corporations $ 3,463 $ 46 $ -- $ 3,509
Obligations of states and political subdivisions 995 17 46 966
Mortgage-backed securities and collateralized
mortgage obligations 7,885 22 116 7,791
------- ------- ------- -------
$12,343 $ 85 $ 162 $12,266
======= ======= ======= =======
Debt securities pledged to secure public funds and
for other purposes $ 4,116 $ 4,058
======= =======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Fair
Securities available-for-sale: Gains Losses Value
--------- ---------- ---------- ----------
(In thousands of dollars)
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 6,455 $ -- $ 185 $ 6,270
U.S. Government agencies and corporations 2,199 -- 292 1,907
Mortgage-backed securities and collateralized
mortgage obligations 26,218 -- 1,657 24,561
------- ------- ------- -------
$34,872 $ -- $ 2,134 $32,738
======= ======= ======= =======
Securities held-to-maturity:
U.S. Government agencies and corporations $ 6,981 $ 14 $ 201 $ 6,794
Obligations of states and political subdivisions 499 -- 87 412
Mortgage-backed securities and collateralized
mortgage obligations 6,248 -- 646 5,602
------- ------- ------- -------
$13,728 $ 14 $ 934 $12,808
======= ======= ======= =======
Debt securities pledged to secure public funds and
for other purposes $ 3,214 $ 3,149
======= =======
</TABLE>
F-10
<PAGE> 66
The following is a summary of maturities of securities available-for-sale and
held-to-maturity as of December 31, 1995 (in thousands of dollars):
<TABLE>
<CAPTION>
Securities available-for-sale Securities held-to-maturity
----------------------------- ---------------------------
Amortized Estimated Amortized Estimated
Contractual maturities: Cost Fair Value Cost Fair Value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 2,807 $ 2,836 $ -- $ --
Due after one year through five years 15,249 15,375 959 976
Due after five years through ten years 1,704 1,721 7,764 7,632
Due after ten years 19,629 19,912 3,620 3,658
------- ------- ------- -------
$39,389 $39,844 $12,343 $12,266
======= ======= ======= =======
</TABLE>
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. Proceeds from sales of investments in debt securities
during 1995 and 1994 were $12,790,000 and $19,976,000, respectively. Gross
gains of $74,000 in 1995 and $111,000 in 1994, and gross losses of $124,000 in
1995 and $155,000 in 1994, were realized on those sales.
The Bank owns stock in the Federal Home Loan Bank of approximately $572,000
which was pledged to partially secure a line of credit totaling $6,204,000.
Quarterly stock dividends are paid and the Federal Home Loan Bank will
repurchase the stock at par if no advances are outstanding.
NOTE E--LOANS RECEIVABLE
Most of the Bank's loan customers are in Ascension Parish, Louisiana and its
adjacent parishes. Loans, net of unearned discount, consisted of the following
major categories at December 31 (In thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Commercial, financial and agricultural $ 27,327 $ 27,772
Real estate-mortgage 20,210 20,586
Real estate-construction 1,894 1,618
Installment 10,973 10,449
-------- --------
60,404 60,425
Unearned income (831) (755)
-------- --------
$ 59,573 $ 59,670
======== ========
</TABLE>
F-11
<PAGE> 67
Changes in the allowance for loan losses for the years ended December 31, 1995
and 1994 were as follows (In thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Balance at beginning of year $ 1,525 $ 1,835
Provision charged (credited) to operations 60 (250)
Loans charged-off (219) (174)
Recoveries 51 114
------- -------
Balance at end of year $ 1,417 $ 1,525
======= =======
</TABLE>
The Bank adopted Statement of Financial Accounting Standards number 114,
"Accounting by Creditors for Impairment of a Loan," in 1995, which did not have
a material effect on financial condition or the results of operations. At
December 31, 1995, loans totaling $1,746,000 were specifically classified as
impaired. Of the total impaired loans at December 31, 1995, $416,000 had a
related allowance for loan losses of $104,000. The average balance of these
loans in 1995 was approximately $2,178,000. In 1995, interest income
recognized on these loans was approximately $175,000. No commitments to loan
additional funds to borrowers of impaired loans were outstanding at December
31, 1955.
Nonperforming loans at December 31, 1994, prior to the adoption of Statement
114, consist of nonaccrual loans, past due loans and restructured loans.
Nonaccrual loans are loans on which interest recognition has been suspended
until realized because of doubts as to the borrower's ability to repay
principal or interest. Past due loans are accruing loans that are
contractually past due 90 days or more as to principal or interest.
Restructured loans are loans whose terms have been modified, because of a
deterioration in financial condition of the borrower, to provide for a
reduction of either interest or principal payments. The following table
summarizes the Company's nonperforming and restructured loans at December 31,
1994, in thousands of dollars:
<TABLE>
<S> <C>
Nonaccrual loans $ 123
Accruing loans past due 90 days or more $ 23
Restructured loans $1,076
</TABLE>
In 1994, if nonaccrual loans had performed in accordance with their original
terms, interest income would have increased by approximately $11,000. Interest
collected and recognized as interest income on these loans in 1994 was
$126,000.
In addition, at December 31, 1995 and 1994, the Bank had approximately
$2,282,000 and $1,895,000, respectively, of loans which were contractually
current and not considered impaired or nonperforming, but the borrowers were
experiencing financial difficulties.
NOTE F--TRANSACTIONS WITH RELATED PARTIES
Loans have been made to directors, principal shareholders and executive
officers and their associates. The balance of such loans at December 31, 1995
and 1994 was $5,091,000 and $5,542,000, respectively. During 1995, new loans of
$755,000 were made and repayments of $1,206,000 were received. There were no
nonaccrual, past due and other loans to related parties who are currently
experiencing financial difficulties at December 31, 1995 and 1994.
At December 31, 1995 and 1994 related parties had deposit balances totaling
approximately $4,016,000 and $3,587,000, respectively.
Consulting and other service fees amounting to approximately $9,000 in 1995 and
$9,000 in 1994 have been paid to business affiliates of certain directors.
F-12
<PAGE> 68
NOTE G--FORECLOSED REAL ESTATE
Changes in the allowance for losses on foreclosed real estate for the years
ended December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
----- -----
(In thousands of dollars)
<S> <C> <C>
Balance at beginning of year $ 50 $ 150
Provision (credited) to operations (40) (100)
Foreclosed real estate charged-down (10) --
----- -----
Balance at end of year $-- $ 50
===== =====
</TABLE>
NOTE H--PREMISES AND EQUIPMENT
Premises and equipment at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In thousands of dollars)
<S> <C> <C>
Land $ 334 $ 334
Buildings and improvements 4,072 4,022
Furniture and equipment 1,240 1,155
------ ------
Total 5,646 5,511
Less accumulated depreciation and amortization 3,357 3,151
------ ------
Net $2,289 $2,360
====== ======
</TABLE>
NOTE I--PENSION PLAN
In 1989, the Bank established a 401(k) profit sharing plan and trust ("cash or
deferred arrangement"). Under the plan, all employees who were employed at
January 1, 1989, the effective date, are eligible to participate. Other
employees become eligible on the first January 1 or July 1 following their
attaining age 21 and completing 3 months of service. Participants may elect to
defer from 1% up to 15% of their compensation as elective contributions. The
Bank is not required to match employee contributions, but is permitted to make
a discretionary contribution that would be allocated to all participants based
on compensation. The Bank contributed $30,000 to the plan in 1995. No
contributions were made by the Bank in 1994.
F-13
<PAGE> 69
NOTE J--INCOME TAXES
The components of income tax expense for each of the two years ended December
31 were:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In thousands of dollars)
<S> <C> <C>
Current $ 93 $ 66
Deferred 1,137 1,185
------ ------
$1,230 $1,251
====== ======
</TABLE>
The applicable federal income tax expense for financial reporting purposes
differed from the amount computed by applying the federal statutory income tax
rate of 34% to income before income taxes for the following principal reasons:
<TABLE>
<CAPTION>
1995 1994
Amount Rate Amount Rate
------- ------- ------- -------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Taxes at statutory rates $ 1,306 34.0 % $ 1,318 34.0 %
Tax-exempt income (23) (0.6)% (15) (0.4)%
Nondeductible expenses 7 0.2 % 5 0.1 %
Alternative minimum tax 93 2.4 % 66 1.7 %
(Increase) decrease in tax credits carryforward (153) (4.0)% (123) (3.1)%
------- ------- ------- -------
$ 1,230 32.0 % $ 1,251 32.3 %
======= ======= ======= =======
</TABLE>
At December 31, 1995 and 1994, a net deferred tax asset of $794,000 and
$2,811,000 was recorded which consisted of:
<TABLE>
<CAPTION>
1995 1994
------- -------
(In thousands of dollars)
<S> <C> <C>
Net unrealized (appreciation) depreciation on available-for-sale securities $ (154) $ 726
Tax net operating loss carryforward 853 2,032
Provision for real estate losses 73 160
Provision for loan losses (161) (181)
Depreciation expense (118) (107)
Credits carryforward 329 182
Other (28) (1)
------- -------
$ 794 $ 2,811
======= =======
</TABLE>
A valuation allowance of $14,000 and $167,000 at December 31,1995 and 1994 was
recorded to reduce the deferred tax asset related to the carryforward of tax
credits due to expire in future years.
F-14
<PAGE> 70
At December 31, 1995, the Company had available net operating loss
carryforwards of approximately $2,509,000 which, if not used, will expire as
follows: 2005 - $1,071,000 and 2006 - $1,438,000.
NOTE K--CREDIT ARRANGEMENTS
Pursuant to unsecured line of credit agreements for short-term borrowings with
certain banks, the Company may borrow up to $5,400,000 on such terms as the
Company and the banks mutually agree. At December 31, 1995, $5,400,000 remained
available to the Company.
Pursuant to collateral agreements with the Federal Home Loan Bank ("FHLB"), the
Company may borrow up to $6,204,000, which represents 65% of the Bank's first
mortgage loans, in advances secured by FHLB stock, cash and interest-bearing
deposits in FHLB and qualifying first mortgage collateral. FHLB advances may be
short-term or long-term, and they may have either fixed or floating interest
rates. The Company had $3,260,000 in outstanding advances from the FHLB at
December 31, 1995 and $3,410,000 at December 31, 1994. Principal and interest
is due monthly at an average weighted interest rate of 6.38%. Annual principal
repayment requirements are (in thousands of dollars):
<TABLE>
<S> <C>
1996 $ 160
1997 170
1998 181
1999 193
2000 206
Thereafter 2,350
------
$3,260
======
</TABLE>
F-15
<PAGE> 71
NOTE L--BANK OF GONZALES HOLDING COMPANY, INC. (PARENT COMPANY ONLY) FINANCIAL
INFORMATION
Statements of Financial Condition
<TABLE>
<CAPTION>
December 31,
1995 1994
-------- --------
(In thousands of dollars)
<S> <C> <C>
ASSETS
Cash $ 5 $ 5
Investment in Bank of Gonzales, at equity 12,191 10,797
Deferred tax asset 240 240
Dividends receivable 190 190
-------- --------
Total assets $ 12,626 $ 11,232
======== ========
LIABILITIES
Dividends payable $ 190 $ 190
Other liabilities 1 --
-------- --------
Total liabilities 191 190
-------- --------
SHAREHOLDERS' EQUITY
Common Stock 13,227 13,227
Retained earnings (deficit) (606) (292)
Less treasury stock, at cost (485) (485)
Net unrealized appreciation (depreciation) on available-for-sale securities
of subsidiary, net of taxes 299 (1,408)
-------- --------
Total shareholders' equity 12,435 11,042
-------- --------
Total liabilities and shareholders' equity $ 12,626 $ 11,232
======== ========
</TABLE>
Statements of Income
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
------- -------
(In thousands of dollars)
<S> <C> <C>
Income
Dividends from bank subsidiary $ 2,925 $ 2,924
Expenses 1 --
------- -------
Income before equity in undistributed income of subsidiary 2,924 2,924
Equity in undistributed income of Bank of Gonzales (313) (298)
------- -------
Net income $ 2,611 $ 2,626
======= =======
</TABLE>
F-16
<PAGE> 72
Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31,
1995 1994
------- -------
(In thousands of dollars)
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,611 $ 2,626
Adjustments to reconcile net income to net cash provided by operating
activities
Equity in undistributed net income of bank 313 298
Deferred tax benefit -- (5)
Increase in dividends receivable -- (50)
Increase in other liabilities 1 --
------- -------
Net cash provided by operating activities 2,925 2,869
------- -------
Cash flows from investing activities -- --
------- -------
Cash flows from financing activities
Proceeds from sales of treasury stock -- 27
Purchases of treasury stock -- (19)
Dividends paid (2,925) (2,874)
------- -------
Net cash (used) by financing activities (2,925) (2,866)
------- -------
Net increase in cash and cash equivalents -- 3
Cash and cash equivalents, beginning of year 5 2
------- -------
Cash and cash equivalents, end of year $ 5 $ 5
======= =======
</TABLE>
NOTE M--STOCK OPTION AGREEMENT
In 1991 and 1992 the Company granted to all senior vice presidents (4 persons)
an option to purchase up to 2,500 shares of common stock each of Bank of
Gonzales Holding Company, Inc. at an exercise price equal to the book value of
such shares on December 31, 1988. These options are not transferable and became
exercisable in 1992 upon attainment of an $8.00 per share book value of stock
and the termination of the Cease and Desist Order by FDIC. During 1994, 3,500
shares were exercised at $4.32 per share. The following is a summary of
transactions for the year ended December 31, 1994:
<TABLE>
<CAPTION>
Shares Under Option 1994
------------------- -----
<S> <C>
Outstanding, beginning of year 3,500
Granted during the year -
Exercised during the year 3,500
Canceled during the year -
Outstanding, end of year -
Exercisable, end of year -
</TABLE>
F-17
<PAGE> 73
NOTE N--FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit, which involve credit risk in excess of the amounts recognized in the
balance sheets. The Bank's exposure to credit loss in the event of
nonperformance by the other party to these financial instruments is represented
by the contractual amounts of the instruments. The Bank uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance sheets instruments, including collateral or other security to
support the financial instruments.
At December 31, 1995 and 1994, commitments to extend credit totaled $5,873,000
and $5,485,000, respectively. These commitments are agreements to lend to a
customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments may expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements.
At December 31, 1995 and 1994, commitments under standby letters of credit
totaled $210,000 and $98,000, respectively. Standby letters of credit are
conditional commitments issued by the Bank to guarantee the performance of a
customer to a third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loans to
customers.
The estimated fair values of the Company's financial instruments at December
31, 1995 are as follows:
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
-------- --------
(In thousands of dollars)
<S> <C> <C>
Financial assets:
Cash and due from banks $ 5,068 $ 5,068
Federal funds sold 2,634 2,634
Interest-bearing deposits in banks 1,300 1,300
Securities 52,759 52,682
Loans receivable 58,156 59,315
Financial liabilities:
Deposits 108,180 108,026
Federal Home Loan Bank advance 3,260 3,304
Unrecognized financial instruments:
Commitments to extend credit -- 19
Standby letters of credit -- 1
</TABLE>
The following methods and assumptions were used by the Company in estimating
fair values of financial instruments:
Cash, due from banks, federal funds sold, and interest-bearing deposits in
banks. The carrying amount is a reasonable estimate of fair value.
Securities. Fair value is based on quoted market price, if available. If a
quoted market price is not available, fair value is estimated using quoted
market prices for similar securities.
Loans receivable. The fair value is estimated by discounting the estimated
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings and for the same remaining maturities.
F-18
<PAGE> 74
Deposits. The fair value of demand, savings, NOW and money market accounts is
the amount payable on demand at the reporting date. The fair value of
fixed-maturity time deposits is estimated using the rates currently offered for
deposits of similar remaining maturities.
Federal Home Loan Bank advance. Rates currently available to the Bank for debt
with similar terms and remaining maturities are used to estimate fair value of
existing debt.
Commitments to extend credit and standby letters of credit. The fair value is
estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties.
NOTE O--OTHER EXPENSES
Other expenses for the years ended December 31 were:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In thousands of dollars)
<S> <C> <C>
Advertising $ 148 $ 73
Director fees 116 110
Postage, freight, express 116 102
Office supplies 115 102
FDIC and State assessments 140 247
Bank shares tax 109 184
Other 765 712
------ ------
$1,509 $1,530
====== ======
</TABLE>
NOTE P--CONTINGENCIES
The Bank has entered into agreements with its senior officers (total of four
persons) that, should the Bank terminate their employment for any reason, other
than for cause, death or permanent disability, within two years after a change
in control, each would be entitled to a lump sum payment of twice their annual
compensation reduced by amounts paid by the Bank after a change in control. In
addition, should the president of the Bank be terminated, other than for cause,
death, or permanent disability, prior to December 31, 1998, the Bank would be
obligated to pay as severance pay the present value of the remaining salary due
him through December 31, 1998 in the form of a lump sum.
NOTE Q--DEPOSITS
At December 31, 1995, the scheduled maturities of time deposits, in thousands
of dollars, are as follows:
<TABLE>
<S> <C>
1996 $34,872
1997 10,163
1998 634
1999 110
-------
$45,779
=======
</TABLE>
F-19
<PAGE> 75
NOTE R--REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly discretionary, actions by regulators
that, if undertaken, could have a direct material effect on the Bank's
financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and Tier 1
capital, as defined in the regulations, to risk-weighted assets, as defined,
and of Tier 1 capital to average assets, as defined. Management believes, as of
December 31, 1995, that the Bank meets all capital adequacy requirements to
which it is subject.
As of December 31, 1995, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain a total risk-based capital ratio of 10% or
higher, Tier 1 risk-based capital ratio of 6% or higher, and Tier 1 leverage
capital ratio of 5% or higher. No conditions or events have occurred since that
notification that management believes have changed the Bank's category.
NOTE S--SUBSEQUENT EVENTS
On January 18, 1996, the Company's Board of Directors voted to merge the
Company with Deposit Guaranty Corporation (the "Acquiror") of Mississippi. The
Bank will become a branch of a subsidiary owned by the Acquiror, and
shareholders of the Company will receive approximately 1.17 shares of the
Acquiror's common stock in exchange for each share of their Company common
stock. The merger is subject to the approval of the Company's shareholders and
appropriate regulatory authorities. Such approval is expected by June, 1996.
NOTE T--IMPAIRMENT OF LONG-LIVED ASSETS
The Company will adopt Statement of Financial Accounting Standards No. 121
(FASB 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," in 1996. FASB 121 requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable, and that an impairment loss be recognized if the sum of future
cash flows from the use of the asset is less than the carrying amount.
Management expects that the adoption of FASB 121 in 1996 will result in a
charge to operations of approximately $190,000 related to the carrying amount
of certain Bank premises.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim financial statements are prepared pursuant to the requirements for
reporting on Form 10-QSB. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring nature necessary for a
fair statement of the results for interim periods. The adoption of FASB 121 on
January 1, 1996, resulted in a charge to operations for the quarter ended March
31, 1996 of $179,000 related to certain premises held and used by the Bank
subsidiary. The current period results of operations are not necessarily
indicative of results that may be expected for the full year ended December 31,
1996.
F-20
<PAGE> 76
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
DEPOSIT GUARANTY CORP.,
COMMERCIAL NATIONAL CORPORATION
BANK OF GONZALES HOLDING COMPANY, INC.
AND
BANK OF GONZALES
<PAGE> 77
AGREEMENT AND PLAN OF MERGER
By and Among
DEPOSIT GUARANTY CORP.,
COMMERCIAL NATIONAL CORPORATION,
CITIZENS NATIONAL BANK,
BANK OF GONZALES HOLDING COMPANY, INC.
And
BANK OF GONZALES
<PAGE> 78
Table of Contents
<TABLE>
<S> <C> <C>
Article I. THE HOLDING COMPANY MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Holding Company Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Effective Date of the Holding Company Merger. . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Effect of the Holding Company Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 Additional Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.05 Conversion of Gonzales Holding Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.06 Exchange of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 DGC to Make Shares Available. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08 Shares of CNC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.09 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Article II. THE BANK MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.01 The Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.02 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.03 Cancellation of Capital Stock of Gonzales Bank . . . . . . . . . . . . . . . . . . . . . . . 3
2.04 Capital Structure of the Receiving Association . . . . . . . . . . . . . . . . . . . . . . . 3
2.05 Effects of the Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.06 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Article III. REPRESENTATIONS AND WARRANTIES OF GONZALES BANK AND GONZALES HOLDING . . . . . . . . . . . . . . . . 4
3.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.02 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.03 Investments; No Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.04 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.05 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.06 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.07 SEC Documents; Financial Statements; Other Reports; Liabilities. . . . . . . . . . . . . . . 5
3.08 No Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.09 Title to Properties; Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.10 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Trademarks; Trade Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Absence of Questionable Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.17 Powers of Attorney; Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.18 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.19 Benefit and Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.20 Contracts and Commitments; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.22 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.23 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.24 Contract Termination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Article IV. REPRESENTATIONS AND WARRANTIES OF DGC, CNC AND CNB . . . . . . . . . . . . . . . . . . . . . . . . 13
4.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 79
<TABLE>
<S> <C> <C>
4.02 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.03 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.04 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.05 SEC Documents; Financial Statements; Liabilities. . . . . . . . . . . . . . . . . . . . 14
4.06 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.07 Legality of DGC Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.08 Statements are True and Correct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.09 No Shareholder Vote. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Broker's and Finder's Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Article V. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.01 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.02 Limitation on Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.03 Current Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.04 Access to Properties and Records; Confidentiality. . . . . . . . . . . . . . . . . . . . 16
5.05 Interim Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.06 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.07 Approval of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.08 Compliance with SEC Rules 144 and 145. . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.09 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Indemnification and Liability Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 18
Article VI. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.01 Conditions to Each Party's Obligations under this Agreement. . . . . . . . . . . . . . . 19
6.02 Conditions to the Obligations of DGC, CNC, and CNB under this Agreement. . . . . . . . 19
6.03 Conditions to the Obligations of Bank of Gonzales and Bank of Gonzales Holding
Company, Inc. under this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Article VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.01 Time and Place. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.02 Deliveries at the Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Article VIII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Article IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.01 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.03 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.04 Amendment, Extension and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.05 Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.06 Non-Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 25
9.07 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.09 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February 5, 1996, by and
among Bank of Gonzales Holding Company, Inc. ("Gonzales Holding"), a
corporation organized under the laws of the State of Louisiana, and its
wholly-owned subsidiary Bank of Gonzales ("Gonzales Bank"), a state banking
association organized under the laws of Louisiana, and Deposit Guaranty Corp.
("DGC"), a corporation organized under the laws of the State of Mississippi,
its wholly-owned subsidiary Commercial National Corporation ("CNC"), a
corporation organized under the laws of Louisiana, and CNC's wholly-owned
subsidiary Citizens National Bank ("CNB"), a banking association organized
under the laws of the United States, each acting pursuant to a resolution of
its Board of Directors.
In consideration of the mutual covenants, representations, warranties and
agreements herein contained, the parties agree that Gonzales Holding shall be
merged into CNC (the "Holding Company Merger") on the terms and subject to the
conditions set forth in this Agreement and simultaneously therewith or
immediately following the Holding Company Merger, Gonzales Bank shall be merged
into CNB (the "Bank Merger" and together with the Holding Company Merger, the
"Mergers"), on the terms and subject to the conditions set forth in this
Agreement.
Article I.
THE HOLDING COMPANY MERGER
1.01 Holding Company Merger. In accordance with the applicable provisions
of the Louisiana Business Corporation Law ("LBCL"), Gonzales Holding shall be
merged with and into CNC pursuant to a certificate of merger substantially in
the form attached as Exhibit A and executed and acknowledged in the manner
required by law; the separate existence of Gonzales Holding shall cease; and
CNC shall be the corporation surviving the Holding Company Merger.
1.02 Effective Date of the Holding Company Merger. The Holding Company
Merger shall become effective on the date (the "Effective Date") set forth in
the certificate of merger filed in the office of the Secretary of State of
Louisiana.
1.03 Effect of the Holding Company Merger. On the Effective Date, (i) the
separate existence of Gonzales Holding shall cease and Gonzales Holding shall
be merged with and into CNC, (ii) CNC shall continue to possess all of the
rights, privileges and franchises possessed by it and shall, on the Effective
Date, become vested with and possess all rights, privileges and franchises
possessed by Gonzales Holding, (iii) CNC shall be responsible for all of the
liabilities and obligations of Gonzales Holding in the same manner as if CNC
had itself incurred such liabilities or obligations, and the Holding Company
Merger shall not affect or impair the rights of the creditors or of any persons
dealing with Gonzales Holding, (iv) the Holding Company Merger will not of
itself cause a change, alteration or amendment to the Articles of Incorporation
or the Bylaws of CNC, (v) the Holding Company Merger will not of itself affect
the tenure in office of any officer or director of CNC and no such person will
succeed to such positions solely by virtue of the Holding Company Merger, and
(vi) the Holding Company Merger shall, from and after the Effective Date, have
all the effects provided by applicable Louisiana law.
1.04 Additional Actions. If, at any time after the Effective Date, CNC
shall consider or be advised that any further assignments or assurances in law
or any other acts are necessary or desirable (i) to vest, perfect or confirm,
of record or otherwise, in CNC, title to or the possession of any property or
right of Gonzales Holding acquired or to be acquired by reason of, or as a
result of, the Holding Company Merger, or (ii) otherwise to carry out the
purposes of this Agreement, Gonzales Holding and its proper officers and
directors shall be deemed to have granted to CNC an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in CNC and otherwise
to carry out the purposes of this Agreement; and the proper officers and
directors of CNC are fully authorized in the name of Gonzales Holding to take
any and all such action.
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1.05 Conversion of Gonzales Holding Shares. Each share of common stock, no
par value, of Gonzales Holding (the "Gonzales Holding Common Stock") issued and
outstanding immediately prior to the Effective Date other than shares of
Gonzales Holding Common Stock owned by stockholders who, pursuant to the LBCL,
perfect dissenters' rights ("Dissenting Shares"), shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be
converted into and exchangeable for the number of shares of common stock, no
par value, of DGC (the "DGC Common Stock") equal to the Exchange Ratio, as
defined below, subject to adjustment as provided herein and, in respect of
fractional shares, subject to Section 1.06 hereof. The Exchange Ratio shall
equal 634,000 divided by the number of shares of Gonzales Holding Common Stock
outstanding on the date immediately preceding the Effective Date. If prior to
the Effective Date DGC should split or combine DGC Common Stock, or pay a
dividend or other distribution in DGC Common Stock, then the exchange ratio
shall be appropriately adjusted to reflect such split, combination, dividend or
distribution.
1.06 Exchange of Shares. (a) As soon as practicable after the Effective
Date, Deposit Guaranty National Bank, acting as exchange agent (the "Exchange
Agent"), shall mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Date represented issued and
outstanding shares of Gonzales Holding Common Stock (the "Certificates"), a
form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing DGC Common Stock. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of shares of DGC
Common Stock to which such holder of Gonzales Holding Common Stock shall have
become entitled pursuant to the provisions hereof, and the Certificate so
surrendered shall forthwith be cancelled. Lost Certificates shall be treated in
accordance with the existing procedures of Gonzales Holding.
(b) No dividends or other distributions declared after the Effective Date
with respect to DGC Common Stock and payable to the holders of record thereof
after the Effective Date shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate. Subject
to the effect, if any, of applicable law, after the subsequent surrender and
exchange of a Certificate, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to the shares of DGC
Common Stock into which the shares represented by such certificate have been
converted.
(c) If any certificate representing shares of DGC Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by reason of
the issuance of a certificate representing shares of DGC Common Stock in any
name other than that of the registered holder of the Certificate surrendered,
or required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Date there shall be no transfers on the stock
transfer books of Gonzales Holding of the shares of Gonzales Holding Common
Stock which are outstanding immediately prior to the Effective Date. If, after
the Effective Date, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of DGC Common Stock as provided herein.
(e) No certificates or scrip representing fractional shares of DGC Common
Stock shall be issued upon the surrender for exchange of such Certificates, no
dividend or distribution with respect to DGC Common Stock shall be payable on
or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
shareholder of DGC. In lieu of any such fractional share, DGC shall pay to each
former stockholder of Gonzales Holding who otherwise would be entitled to
receive a fractional share of DGC Common Stock an amount in cash determined by
multiplying (i) the closing sale price of a share of DGC Common Stock on the
date immediately proceeding the Effective Date as quoted on the National
Association of Securities Dealers Automated Quotation System, by (ii) the
fraction of a share of DGC Common Stock to which such holder would otherwise be
entitled.
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1.07 DGC to Make Shares Available. DGC shall make available a sufficient
number of shares for conversion and exchange in accordance with Section 1.05,
by transferring such shares to the Exchange Agent for the benefit of the
stockholders of Gonzales Holding.
1.08 Shares of CNC. The shares of capital stock of CNC outstanding
immediately prior to the Effective Date shall not be changed or converted by
virtue of the Holding Company Merger.
1.09 Tax Consequences. It is intended that the Holding Company Merger
shall constitute a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a "plan of reorganization" within the meaning of
Section 368 of the Code.
Article II.
THE BANK MERGER
2.01 The Bank Merger. On the Effective Date (as defined in Section 2.02
hereof), Gonzales Bank shall be merged with and into CNB under the Articles of
Association of CNB, as amended, existing under Charter No. 13648, pursuant to
the provisions of, and with the effect provided in, 12 U.S.C. Section 215a and
La. R.S. 6:351 et seq. On the Effective Date, CNB, the Receiving Association,
shall continue to be a national banking association, and its business shall
continue to be conducted at its main office in Hammond, Louisiana, and at its
legally established branches (including, without limitation, the legally
established offices from which Gonzales Bank conducted business immediately
prior to the Effective Date). The Articles of Association of CNB shall not be
altered or amended by virtue of the Bank Merger, and the incumbency of the
directors and officers of CNB shall not be affected by the Bank Merger nor
shall any person succeed to such positions by virtue of the Bank Merger. CNB
shall file this Agreement with the Louisiana Commissioner of Financial
Institutions (the "Commissioner") pursuant to La. R.S. 6:352 and make
appropriate filings with the Office of the Comptroller of the Currency (the
"OCC"). Gonzales Bank and CNB are sometimes referred to together as the
"Merging Associations."
2.02 Effective Date. The Bank Merger shall become effective on the
Effective Date.
2.03 Cancellation of Capital Stock of Gonzales Bank. On the Effective
Date, by virtue of the Bank Merger, all shares of the capital stock of Gonzales
Bank shall be cancelled and no cash, securities or other property shall be
issued in the Bank Merger in respect thereof.
2.04 Capital Structure of the Receiving Association. As of December 31,
1995, CNB had capital of $2,341,210 divided into 234,121 shares of common stock
authorized, each of $10 par value ("CNB Common Stock"), surplus of $3,603,351
and undivided profits, including capital reserves, of $12,480,851. As of
December 31, 1995, Gonzales Bank had capital of $4,400,000 divided into 440,000
shares of common stock authorized, each of $10 par value, surplus of $8,506,000
and an accumulated deficit, including capital reserves, of $775,000.
On the Effective Date, the amount of capital of the Receiving Association
shall be $2,341,210 divided into 234,121 shares of common stock, each of the
par value of $10, and on the Effective Date, the Receiving Association shall
have a surplus of $3,603,351, plus the value of the consideration to be paid by
DGC in the Holding Company Merger, and undivided profits, including capital
reserves, which when combined with capital and surplus will be equal to the
capital structure of CNB, as set forth above, adjusted, however, for the
results of operations of CNB between December 31, 1995 and the Effective Date.
2.05 Effects of the Bank Merger. On the Effective Date, the corporate
existence of each of the Merging Associations shall be merged into and
continued in CNB, the Receiving Association, and such Receiving Association
shall be deemed to be the same corporation as each bank or banking association
participating in the Bank Merger. All rights,
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franchises and interests of the individual Merging Associations in and to every
type of property (real, personal and mixed) and choses in action shall be
transferred to and vested in the Receiving Association by virtue of the Bank
Merger without any deed or other transfer. The Receiving Association, upon the
Bank Merger and without any order or other action on the part of any court or
otherwise, shall hold and enjoy all rights of property, franchises and
interests, including appointments, designations and nominations, and all other
rights and interests as trustee, executor, administrator, registrar of stocks
and bonds, guardian of estates, and in every other fiduciary capacity, in the
same manner and to the same extent as such rights, franchises and interests
were held or enjoyed by any one of the Merging Associations at the time of the
Bank Merger, subject to the conditions specified in 12 U.S.C. Section 215a(f).
The Receiving Association shall, from and after the Effective Date, be liable
for all liabilities of the Merging Associations.
2.06 Tax Consequences. It is intended that the Bank Merger shall
constitute a tax-free reorganization pursuant to Section 368(a)(1)(A) of the
Code, and that the transactions made the subject matter of the plan shall
constitute a "plan of reorganization" for purposes of the rules and regulations
governing Code Section 368.
Article III.
REPRESENTATIONS AND WARRANTIES OF
GONZALES BANK AND GONZALES HOLDING
Gonzales Bank and Gonzales Holding hereby make the following
representations and warranties to DGC, CNB, and CNC:
3.01 Corporate Organization. (a) Gonzales Bank is a banking association
duly organized, validly existing and in good standing under the laws of the
State of Louisiana. Gonzales Bank has the power and authority to own or lease
all of its properties and assets and to carry on its business as it is now
being conducted.
(b) Gonzales Holding is a corporation duly organized, validly existing and
in good standing under the laws of the State of Louisiana. Gonzales Holding has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary.
3.02 Capitalization. (a) The authorized capital stock of Gonzales Bank
consists of 600,000 shares of common stock, $10.00 par value (the "Gonzales
Bank Common Stock"). At the close of business on December 31, 1995, there were
440,000 shares of Gonzales Bank Common Stock issued and outstanding and no
shares held in Gonzales Bank's treasury. Except as set forth on Schedule 3.02
hereto, all issued and outstanding shares of Gonzales Bank Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights with no personal liability attaching to the ownership
thereof. Except as set forth on Schedule 3.02 hereof, Gonzales Bank has not
issued any additional shares of Gonzales Bank Common Stock since December 31,
1995, and does not have and is not bound by any outstanding subscription,
options, warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of Gonzales Bank Common Stock or any
security representing the right to purchase or otherwise receive any Gonzales
Bank Common Stock. Gonzales Holding has good, valid and marketable title to,
the Gonzales Bank Common Stock, and on the Effective Date the same will be free
and clear of all liens, encumbrances, pledges, claims, options, charges and
assessments of any nature whatsoever.
(b) The authorized capital stock of Gonzales Holding consists of
10,000,000 shares of Gonzales Holding Common Stock. At the close of business on
December 31, 1995, there were 561,801 shares of Gonzales Holding Common Stock
issued and outstanding and 20,190 shares held in Gonzales Holding's treasury.
Except as set forth on Schedule 3.02 hereto, all issued and outstanding shares
of Gonzales Holding Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights with no
personal liability attaching to the ownership thereof.
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Except as set forth on Schedule 3.02 hereof, Gonzales Holding has not issued
any additional shares of Gonzales Holding Common Stock since December 31, 1995,
and does not have and is not bound by any outstanding subscription, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Gonzales Holding Common Stock or any
security representing the right to purchase or otherwise receive any Gonzales
Holding Common Stock.
3.03 Investments; No Subsidiaries. The "Gonzales Consolidated Group," as
such term is used in this Agreement, consists of Gonzales Holding and Gonzales
Bank. Except as set forth on Schedule 3.03 hereof, neither Gonzales Bank nor
Gonzales Holding has any subsidiaries or equity interest or other investment,
direct or indirect, in any corporation, partnership, joint venture or other
entity except for such equity interest or other investment which Gonzales Bank
may have acquired as a result of foreclosure and is as of the date hereof
holding subject to sale.
3.04 Loan Portfolio. All loans, discounts and financing leases (in which
any member of the Gonzales Consolidated Group is lessor) reflected on the
Gonzales Latest Balance Sheet (as defined in Section 3.07) (a) were, at the
time and under the circumstances in which made, made for good, valuable and
adequate consideration in the ordinary course of business of the Gonzales
Consolidated Group, (b) are evidenced by genuine notes, agreements or other
evidences of indebtedness and (c) to the extent secured, have been secured by
valid liens and security interests which have been perfected. Set forth in
Schedule 3.04 hereto is a true and complete list of all real property in which
Gonzales Bank has an interest as creditor or mortgagee in an amount greater
than $50,000. Except as set forth in Schedule 3.04 hereto, there are no
outstanding loans held by Gonzales Bank with an unpaid balance of $25,000 or
more in which a material default has occurred. A material default for purposes
of this Section 3.04 includes, without limitation, the failure to pay
indebtedness or an installment thereof more than sixty (60) days after it is
due and payable.
3.05 Authority; No Violation. Each of Gonzales Bank and Gonzales Holding
has full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by Gonzales Bank have been duly and validly approved by the
Board of Directors of Gonzales Bank, and, except for approval by Gonzales
Holding as the sole shareholder of Gonzales Bank, no other corporate
proceedings on the part of Gonzales Bank are necessary to consummate the
transactions so contemplated. The Board of Directors of Gonzales Holding has
duly and validly approved this Agreement and the transactions contemplated
hereby and has authorized the execution and delivery of this Agreement by
Gonzales Holding, and, except for the approval of this Agreement by its
shareholders, no other corporate proceedings on the part of Gonzales Holding
are necessary to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by Gonzales Bank and Gonzales
Holding and constitutes a valid and binding obligation of Gonzales Bank and of
Gonzales Holding enforceable against each in accordance with its terms, except
that enforcement may be limited by bankruptcy, reorganization, insolvency and
other similar laws and court decisions relating to or affecting the enforcement
of creditors' rights generally and by general equitable principles.
3.06 Consents and Approvals. Except as set forth in Schedule 3.06 hereto,
no permit, consent, approval or authorization of, or declaration, filing or
registration with, any public body or authority or to the knowledge of Gonzales
Bank and Gonzales Holding any third party is necessary in connection with (i)
the execution and delivery by Gonzales Bank or Gonzales Holding of this
Agreement, or (ii) the consummation by Gonzales Holding or Gonzales Bank of the
Mergers and the other transactions contemplated hereby.
3.07 SEC Documents; Financial Statements; Other Reports; Liabilities. (a)
Gonzales Holding has filed all required reports, schedules, forms, statements
and other documents with the SEC since January 1, 1992 (the "Gonzales Holding
SEC Documents"), complete copies of which have been provided to DGC, CNC, and
CNB. As of their respective dates, the Gonzales Holding SEC Documents, and any
such reports, forms and documents filed by Gonzales Holdings with the SEC after
the date hereof, complied, or will comply, as to form in all material respects
with the requirements of the Securities Act of 1933 (the "Securities Act") or
the Securities Exchange Act of 1934 (the "Exchange Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Gonzales Holding SEC Documents, and none of the Gonzales Holding SEC
Documents contained, or will contain, any untrue statement of a material fact
or
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<PAGE> 85
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information contained
in any Gonzales Holding SEC Document has been revised or superseded by a later
filed Gonzales Holding SEC Document, none of the Gonzales Holding SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements of Gonzales Holding and its
consolidated subsidiaries (collectively, the "Gonzales Financial Statements")
included in the Gonzales Holding SEC Documents have been audited by Basil M.
Lee and Company, certified public accountants (in the case of the audited
Gonzales Financial Statements) in accordance with generally accepted auditing
standards, have been prepared in accordance with generally accepted accounting
principles and, except as disclosed therein, applied on a basis consistent with
prior periods, and present fairly the financial position of Gonzales Holding
and its consolidated subsidiaries at such dates and the results of operations
and cash flows for the periods then ended, except, in the case of the interim
financial statements (collectively, the Gonzales Interim Financial
Statements"), as permitted by Rule 10-01 of Regulation S-X of the SEC. The
Gonzales Interim Financial Statements reflect all adjustments (consisting only
of normal recurring adjustments) that are necessary for a fair statement of the
results for the interim periods presented therein. Neither Gonzales Holding nor
any of its consolidated subsidiaries has, nor are any of their respective
assets subject to, any liability, commitment, debt or obligation (of any kind
whatsoever whether absolute or contingent, accrued, fixed, known, unknown,
matured or unmatured) that is material individually or in the aggregate, except
as and to the extent reflected on the latest balance sheet included as part of
the Gonzales Interim Financial Statements (the "Gonzales Latest Balance
Sheet"), or as may have been incurred or may have arisen since the date of the
Gonzales Latest Balance Sheet in the ordinary course of business.
(c) Since the date of the Gonzales Latest Balance Sheet, there has been no
change that has had or is likely to have a material adverse effect on any
member of the Gonzales Consolidated Group.
(d) Gonzales Holding has delivered to DGC, CNC and CNB true and complete
copies of the annual report to the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") for the year ended December 31, 1994 of
each member of the Gonzales Consolidated Group required to file such reports
and all call reports made to the Federal Deposit Insurance Corporation ("FDIC")
or the Federal Reserve Board, as the case may be, since December 31, 1992, of
each member of the Gonzales Consolidated Group required to file such reports.
All call reports referred to above have been filed on the appropriate form and
prepared in all material respects in accordance with such form's instructions
and the applicable rules and regulations of the regulating federal agency.
3.08 No Broker's Fees. Except as fully described and set forth in Schedule
3.08 hereto, neither Gonzales Bank, Gonzales Holding nor any of their officers
or directors has employed any broker or finder or incurred any liability for
any broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, except for fees payable in
connection with the financial services rendered by Alex Sheshunoff & Co.
3.09 Title to Properties; Encumbrances. Except as set forth in Schedule
3.09 hereto, Gonzales Bank and Gonzales Holding have good, valid and marketable
title to, or a valid leasehold interest in, (a) all their real properties and
(b) all other properties and assets reflected in the Gonzales Latest Balance
Sheet, other than any of such properties or assets which have been sold or
otherwise disposed of since the date of the Gonzales Latest Balance Sheet in
the ordinary course of business and consistent with past practice. Except as
set forth in Schedule 3.09 hereto, all of such properties and assets are free
and clear of all title defects, mortgages, pledges, liens, claims, charges,
security interests or other encumbrances of any nature whatsoever, including,
without limitation, leases, options to purchase, conditional sales contracts,
collateral security arrangements and other title or interest retention
arrangements, and are not, in the case of real property, subject to any
easements, building use restrictions, exceptions, reservations or limitations
of any nature whatsoever, except, with respect to all such properties and
assets (i) liens for current taxes and assessments not in default, (ii) minor
imperfections of title, and encumbrances, if any, which have arisen in the
ordinary course of business, which are not substantial in character, amount or
extent and which do not detract from the value of or interfere with the present
or contemplated use of any of the properties
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subject thereto or affected thereby or otherwise impair the business operations
conducted or contemplated by Gonzales Bank or Gonzales Holding, (iii) mortgages
and encumbrances which secure indebtedness, which is properly reflected in the
Gonzales Latest Balance Sheet, and (iv) liens arising as a matter of law in the
ordinary course of business with respect to obligation incurred after the date
of the Gonzales Latest Balance Sheet provided that such obligations are not
delinquent or are being contested in good faith. All personal property material
to the business, operations or financial condition of Gonzales Bank or Gonzales
Holding, and all buildings, structures and fixtures used by Gonzales Bank or
Gonzales Holding in the conduct of their businesses, are in good operating
condition and repair, ordinary wear and tear excepted. Except as set forth in
Schedule 3.09 hereto, neither Gonzales Bank nor Gonzales Holding has received
any notification of any violation (which has not been cured) of any building,
zoning or other similar law, ordinance or regulation in respect of such
property or structures or its use thereof.
3.10 No Undisclosed Liabilities. Except as set forth in Schedule 3.10
hereto, as of the date hereof neither Gonzales Bank nor Gonzales Holding has
any liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except liabilities
and obligations (i) fully reflected or reserved against in the Gonzales Latest
Balance Sheet or disclosed in the notes thereto or (ii) incurred since the date
of the Gonzales Latest Balance Sheet in the ordinary course of business and
consistent with past practice.
3.11 Absence of Certain Changes or Events. (a) Except as set forth in
Schedule 3.11 hereto, since the date of the Gonzales Latest Balance Sheet,
there has not been:
i) any material adverse change in the business, operations,
properties, assets or financial condition of Gonzales Bank or Gonzales
Holding, or any event which has had or will have a material adverse effect
on any of the foregoing;
ii) any loss, damage, destruction or other casualty materially and
adversely affecting any of the properties, assets or business of Gonzales
Bank or Gonzales Holding or any of their subsidiaries (whether or not
covered by insurance);
iii) any increase of more than ten percent (10%) in the compensation
payable by Gonzales Bank or Gonzales Holding to any of their directors,
officers, agents, consultants, or any of their employees whose total
compensation after such increase was in excess of $25,000 per annum, or
any extraordinary bonus, percentage compensation, service award or other
like benefit granted, made or accrued to the credit of any such director,
officer, agent, consultant or employee, or any extraordinary welfare,
pension, retirement or similar payment or arrangement made or agreed to by
Gonzales Bank or Gonzales Holding for the benefit of any such director,
officer, agent, consultant or employee;
iv) any change in any method of accounting or accounting practice of
Gonzales Bank or Gonzales Holding;
v) any loan in excess of $25,000 or portion thereof rescheduled as
to payments thereon, subject to a moratorium on payment thereof or written
off by Gonzales Bank or Gonzales Holding as uncollectible; or
vi) any agreement or understanding, whether in writing or otherwise,
of Gonzales Bank or Gonzales Holding to do any of the foregoing.
(b) Except as set forth in Schedule 3.11 hereto, since the date of the
Gonzales Latest Balance Sheet, neither Gonzales Bank nor Gonzales Holding has:
i) issued or sold any promissory note, stock, bond or other
corporate security of which it is the issuer in an amount greater than
$25,000;
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ii) discharged or satisfied any lien or encumbrance or paid or
satisfied any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) in an amount
greater than $50,000 as to each such lien, encumbrance, obligation or
liability other than current liabilities shown on the Gonzales Latest
Balance Sheet and current liabilities incurred since the date of the
Gonzales Latest Balance Sheet in the ordinary course of business and
consistent with past practice and other than any such lien, encumbrance,
obligation or liability of the nature (regardless of amount) required to
be disclosed pursuant to Section 3.11(a)(iii) hereto;
iii) declared, paid or set aside for payment any dividend or other
distribution (whether in cash, stock or property) in respect of its
capital stock, except for (i) a Special Dividend by Gonzales Holding in
February 1996 of $2.00 per share, (ii) regular quarterly dividends in 1996
of $.35 per share for each complete calendar quarters elapsed prior to the
Effective Date, and (iii) dividends by Gonzales Bank to Gonzales Holding
to the extent necessary to fund authorized dividends of Gonzales Holding
and to pay necessary and routine expenses of Gonzales Holding;
iv) split, combined or reclassified any shares of its capital stock,
or redeemed, purchased or otherwise acquired any shares of its capital
stock or other securities;
v) sold, assigned or transferred any of its assets (real, personal
or mixed, tangible or intangible) canceled any debts or claims or waived
any rights of substantial value, except, in each case, in the ordinary
course of business and consistent with past practice;
vi) paid any amounts or incurred any liability to or in respect of,
or sold any properties or assets (real, personal or mixed, tangible or
intangible) to, or engaged in any transaction (other than any transaction
of the nature (regardless of amount) required to be disclosed pursuant to
Section 3.11(a)(iii) hereof) or entered into any agreement or arrangement
with, any corporation or business in which Gonzales Bank, Gonzales Holding
or any of their officers or directors, or any "affiliate" or "associate"
(as such terms are defined in the rules and regulations promulgated under
the Securities Act of any such person, has any direct or indirect
interest;
vii) entered into any collective bargaining agreements; or
viii) entered into any other transaction other than in the ordinary
course of business and consistent with past practice or in connection with
the transactions contemplated by this Agreement.
3.12 Leases. Set forth in Schedule 3.12 hereto is an accurate and complete
list of all leases calling for annual rent payments in excess of $10,000
pursuant to which Gonzales Bank or Gonzales Holding, as lessee, leases real or
personal property, including, without limitation, all leases of computer or
computer services and all arrangements for time-sharing or other data
processing services, describing for each lease Gonzales Bank's or Gonzales
Holding's financial obligations under such lease its rental payments,
expiration date and renewal terms. Except as set forth in Schedule 3.12 hereto:
(a) all such leases are in full force and effect in accordance with their terms
and (b) there exists no event of default or event, occurrence, condition or act
which with the giving of notice, the lapse of time or the happening of any
further event or condition would become a default under any such lease.
3.13 Trademarks; Trade Names. Set forth in Schedule 3.13 hereto is an
accurate and complete list and brief description of all trademarks (either
registered or common law), trade names and copyrights (and all applications and
licenses therefor) owned by Gonzales Bank or Gonzales Holding or in which they
have any interest. Gonzales Bank and Gonzales Holding own, or have the rights
to use, all trademarks, trade names and copyrights used in or necessary for the
ordinary conduct of their existing businesses as heretofore conducted, and the
consummation of the transactions contemplated hereby will not alter or impair
any such rights. Except as set forth in Schedule 3.13 hereto, no claims are
pending by any person for the use of any trademarks, trade names or copyrights
or challenging or questioning the validity or effectiveness of any license
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or agreement relating to the same, nor is there any valid basis for any such
claim, challenge or question, and use of such trademarks, trade names and
copyrights by Gonzales Bank or Gonzales Holding does not infringe on the rights
of any person.
3.14 Compliance with Applicable Law. Gonzales Bank and Gonzales Holding
hold all licenses, franchises, permits and governmental authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied in all material respects with and are not in
default in any respect under any, applicable statutes, laws, ordinances, rules,
regulations, and orders of all federal, state and local governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over them
or over any part of their operations (to the extent that such default could
result in a material limitation on the conduct of Gonzales Bank's or Gonzales
Holding's business, or could cause Gonzales Bank or Gonzales Holding to incur a
substantial financial penalty); and, except as set forth in Schedule 3.14
hereto, neither Gonzales Bank nor Gonzales Holding has received notice of a
violation of, and does not know of any violation of or of any valid basis for
any claim of a violation of, any of the above.
3.15 Absence of Questionable Payments. Gonzales Bank and Gonzales Holding
have not, and, to the knowledge of Gonzales Bank or Gonzales Holding, no
director, officer, agent, employee, consultant or other person acting on behalf
of, Gonzales Bank or Gonzales Holding has, (a) used any Gonzales Bank or
Gonzales Holding corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or (b)
made any direct or indirect unlawful payments to government officials from any
Gonzales Bank or Gonzales Holding corporate funds, or established or maintained
any unlawful or unrecorded accounts with funds received from Gonzales Bank or
Gonzales Holding.
3.16 Insurance. Set forth in Schedule 3.16 hereto is an accurate and
complete list of all policies of insurance, including the amounts thereof,
owned by Gonzales Bank or Gonzales Holding or in which Gonzales Bank or
Gonzales Holding is named as the insured party. All such policies are valid,
enforceable and in full force and effect, and no member of the Gonzales
Consolidated Group has received any notice of material premium increase or
cancellation with respect to any of its insurance policies now in effect. Such
insurance with respect to Gonzales Bank's and Gonzales Holding's property and
the conduct of their businesses is in such amounts and against such risks as
are usually insured against by institutions of similar size operating similar
properties and businesses in the State of Louisiana and, in the opinion of
management of Gonzales Holding or Gonzales Bank, as the case may be, are
adequate for the conduct of Gonzales Bank's and Gonzales Holding's businesses.
Except as set forth in Schedule 3.16 hereto, within the past five (5) years,
neither Gonzales Bank nor Gonzales Holding has ever been refused any insurance
nor have their coverages been limited (other than certain exclusions for
coverage of certain events or circumstances stated in such policies) by any
insurance carrier to which they have applied for insurance or with which they
have carried insurance.
3.17 Powers of Attorney; Guarantees. Except as set forth in Schedule 3.17
hereto, other than in the ordinary course of business neither Gonzales Bank nor
Gonzales Holding has given any power of attorney to any person to act on its
behalf, or has any obligation or liability, either actual, accruing or
contingent, as guarantor, surety, cosigner, endorser, co-maker or indemnitor in
respect of the obligation of any person, corporation, partnership, joint
venture, association, organization or other entity.
3.18 Tax Matters. Gonzales Bank and Gonzales Holding make the following
representations with respect to tax matters:
(a) For purposes of this Section, the following definitions shall apply:
(1) The term "Taxes" shall mean all taxes, however denominated, including
any interest, penalties or other additions to tax that may become payable in
respect thereof, imposed by any federal, state or local government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or
profits taxes (including, but not limited to, federal income taxes and state
income taxes), real property gains taxes, payroll and employee withholding
taxes, unemployment insurance taxes, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal
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property taxes, stamp taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which any member of the Gonzales Consolidated Group is
required to pay, withhold or collect.
(2) The term "Returns" shall mean all reports, estimates, declarations of
estimated tax, information statements and returns relating to, or required to
be filed in connection with, any Taxes, including information returns or
reports with respect to backup withholding and other payments to third parties.
(b) To the knowledge of the Gonzales Consolidated Group, all material
Returns required to be filed by or on behalf of members of the Gonzales
Consolidated Group have been duly filed and, to the knowledge of the Gonzales
Consolidated Group, such Returns are true, complete and correct in all material
respects. All Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis, and
no other Taxes are payable by the Gonzales Consolidated Group with respect to
items or periods covered by such Returns or with respect to any period prior to
the date of this Agreement. Each member of the Gonzales Consolidated Group has
withheld and paid over all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto,
in connection with amounts paid or owning to any employee, creditor,
independent contractor, or other third party. There are no liens on any of the
assets of any member of the Gonzales Consolidated Group with respect to Taxes,
other than liens for Taxes not yet due and payable or for Taxes that a member
of the Gonzales Consolidated Group is contesting in good faith through
appropriate proceedings and for which appropriate reserves have been
established.
(c) The Returns of the Gonzales Consolidated Group have never been audited
by a government or taxing authority, nor to the knowledge of the Gonzales
Consolidated Group, is any such audit in process, pending or threatened. To the
knowledge of the Gonzales Consolidated Group, no deficiencies exist or have
been asserted or are expected to be asserted with respect to Taxes of the
Gonzales Consolidated Group, and no member of the Gonzales Consolidated Group
has received notice or expects to receive notice that it has not filed a Return
or paid Taxes required to be filed or paid by it. No member of the Gonzales
Consolidated Group is a party to any action or proceeding for assessment or
collection of Taxes, nor to the knowledge of the Gonzales Consolidated Group,
has such event been asserted or threatened against any member of the Gonzales
Consolidated Group or any of its assets. No waiver or extension of any statute
of limitations is in effect with respect to Taxes or Returns of the Gonzales
Consolidated Group.
3.19 Benefit and Employee Matters. (a) Schedule 3.19(a) lists all pension,
retirement, stock option, stock purchase, stock ownership, savings, stock
appreciation right, profit sharing, deferred compensation, employment,
compensation arrangements, consulting, bonus, collective bargaining, group
insurance, severance and other employee benefit, incentive and welfare
policies, contracts, plans and arrangements, and all trust agreements related
thereto established or maintained by Gonzales Holding or Gonzales Bank, for the
benefit of any of the present or former directors, officers, or other employees
of Gonzales Bank and Gonzales Holding. Schedule 3.19(a) also identifies each
"employee benefit plan," as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
maintained or contributed to by any member of the Gonzales Consolidated Group.
Except as set forth in Schedule 3.19(a), all "employee benefit plans"
maintained by Gonzales Bank or Gonzales Holding (all such plans being listed in
Schedule 3.19(a) hereto) (collectively, the "Gonzales Bank Plans") are in
material compliance with the provisions of ERISA and the applicable provisions
of the Code. No member of the Gonzales Consolidated Group has ever maintained
or become obligated to contribute to any "employee benefit plan" as such term
is defined in Section 3(3) of ERISA, (i) that is subject to Title IV of ERISA
or (ii) that is a multiemployer plan under Title IV of ERISA. To the knowledge
of the Gonzales Consolidated Group, no "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975 of the Code, has occurred that could
result in liability to Gonzales Holding, Gonzales Bank or DGC, CNC or CNB. The
Bank of Gonzales Savings Plan & Trust has been determined to be "qualified"
within the meaning of Section 401(a) of the Code and neither Gonzales Bank nor
Gonzales Holding knows of any fact which would adversely affect the qualified
status of such plan. Gonzales Holding has provided to DGC copies of the most
recent determination letter issued by the Internal Revenue Service with respect
to such plan. No member of the Gonzales Consolidated Group has any current or
projected liability in respect of post-employment welfare benefits for retired,
current or former employees, except as required to avoid excise tax under
Section 4980B of the Code.
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(b) Except as set forth in Schedule 3.19(b) hereto, (i) each of Gonzales
Bank and Gonzales Holding is in material compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, occupational safety and health and neither is
engaged in any unfair labor practice, (ii) there is no unfair labor practice
complaint against Gonzales Bank or Gonzales Holding pending or threatened
before, or on appeal from, the National Labor Relations Board, (iii) there is
no labor strike, dispute, slowdown or stoppage actually pending or threatened
against or affecting Gonzales Bank or Gonzales Holding, (iv) no representation
question exists respecting the employees of Gonzales Bank or Gonzales Holding,
(v) no grievance which might have an adverse effect on Gonzales Bank or
Gonzales Holding or the conduct of their businesses nor any arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claims therefor exist, (vi) no collective bargaining agreement which is
binding on Gonzales Bank or Gonzales Holding restricts them from closing any of
their operations, and (vii) neither Gonzales Bank nor Gonzales Holding has
experienced any work stoppage or other material labor difficulty during the
last five (5) years.
3.010 Contracts and Commitments; No Default. (a) The following information
relating to Gonzales Bank and Gonzales Holding has been made available to DGC,
CNC or CNB:
i) to the extent permitted by law, any bank regulatory agency
reports relating to the examination of Gonzales Bank which have been made
available to Gonzales Bank or Gonzales Holding for the past five (5)
years;
ii) the name of each bank with which Gonzales Bank or Gonzales
Holding has an account or safekeeping or custodial arrangement or
correspondent relationship and the names of all persons who are authorized
with respect thereto;
iii) all mortgages, indentures, promissory notes, deeds of trust,
loan or credit agreements or similar instruments under which Gonzales Bank
or Gonzales Holding is indebted in an amount greater than $50,000 for
borrowed money or the price of purchased property, accompanied by
originals or certified copies thereof and all amendments or modifications
of any thereof;
iv) any loans, including any other credit arrangements by Gonzales
Bank, to any holder of ten percent (10%) or more of Gonzales Holding
Common Stock, to any of Gonzales Bank's or Gonzales Holding's directors or
executive officers, to any members of the immediate families of any of
Gonzales Bank's or Gonzales Holding's directors or executive officers or
to any corporation, firm or other organization in which any of such
directors or executive officers has a financial interest; and
v) any pending application, including any documents or materials
relating thereto, which has been filed by Gonzales Bank or Gonzales
Holding with any bank regulatory authority in order to obtain the approval
of such bank regulatory authority for the establishment of a new branch
bank or a new subsidiary bank.
(b) Except as set forth in Schedule 3.20 hereto, neither Gonzales Bank nor
Gonzales Holding is a party to or bound by, nor have any bids or proposals been
made by or to Gonzales Bank or Gonzales Holding with respect to, any written or
oral, express or implied:
i) contract relating to the matters referred to in paragraph (a)
above;
ii) contract with or arrangement for directors, officers,
employees, former employees, agents or consultants with respect to
salaries, bonuses, percentage compensation, pensions, deferred
compensation or retirement payments, or any profit-sharing, stock option,
stock purchase or other employee benefit plan or arrangement;
iii) collective bargaining or union contract or agreement;
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iv) contract, commitment or arrangement for the borrowing of money
or for a line of credit in an amount greater than $50,000;
v) contract, commitment or arrangement for the lending of money or
for the granting of a line of credit in an amount greater than $100,000;
vi) contract or agreement for the future purchase by it of any
materials, equipment, services, or supplies, which is not in the ordinary
course of business, and has a term of more than twelve (12) months
(including periods covered by any option to renew by either party);
vii) contract containing covenants purporting to limit its freedom
to compete;
viii) contract or commitment for the acquisition, construction or
refurbishment of any property, plant or equipment, other than contracts
and commitments for the acquisition, construction or refurbishment of any
property, plant or equipment not in excess of $20,000 for any one
establishment or $50,000 in the aggregate.
(c) Each of Gonzales Bank and Gonzales Holding have performed in all
material respects all the obligations required to be performed by it under any
material contract, agreement, arrangement, commitment or other instrument to
which it is a party (including, without limitation, any of those described in
paragraphs (a) and (b) of this Section 3.20), and there is not, with respect to
any such contract, agreement, commitment or other instrument, (i) any notice of
violation, or (ii) any existing default (or event which, with or without due
notice or lapse of time or both, would constitute a default) on the part of
Gonzales Bank or Gonzales Holding, which default would have a material adverse
effect on its business, operations, properties, assets or financial condition,
and neither Gonzales Bank nor Gonzales Holding has received notice of any such
default, nor has Gonzales Bank or Gonzales Holding knowledge of any facts or
circumstances which would reasonably indicate that it will be or may be in
default under, any such contract, agreement, arrangement, commitment or other
instrument subsequent to the date hereof.
3.21 Disclosure. All facts material to the business, operations,
properties, assets, liabilities (contingent or otherwise), financial condition
and prospects of Gonzales Bank and Gonzales Holding have been disclosed to DGC,
CNC, and CNB in writing in or pursuant to this Agreement. No representation or
warranty contained in this Agreement, and no statement contained in any
schedule or certificate, list or other writing furnished to DGC or CNB pursuant
to the provisions hereof, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein not misleading. No information material to this transaction which is
necessary to make the representations and warranties herein contained not
misleading has been withheld from, or has not been delivered in writing to, DGC
and CNB.
3.22 Litigation. Except (a) as disclosed in a Gonzales Holding SEC
Document, (b) that are not material individually or in the aggregate, or (c) as
listed on Schedule 3.22, there are no actions, suits, proceedings, arbitrations
or investigations pending or, to the knowledge of Gonzales Holding or Gonzales
Bank, threatened, before any court, any governmental agency or instrumentality
or any arbitration panel, against or affecting Gonzales Holding or Gonzales
Bank or any of their subsidiaries or any of the directors, officers, or
employees of the foregoing, and to the knowledge of Gonzales Holding or
Gonzales Bank no facts or circumstances exist that would be likely to result in
the filing of any such action that would have a material adverse effect on
Gonzales Holding or Gonzales Bank. Neither Gonzales Holding or Gonzales Bank
nor any of their subsidiaries is subject to any currently pending judgment,
order or decree entered in any lawsuit or proceeding.
3.23 Environmental Matters. (a) To the best knowledge of each, Gonzales
Holding and Gonzales Bank are, and have been, in compliance with all applicable
federal, state and local laws, regulations, rules and decrees pertaining to
pollution or protection of the environment ("Environmental Laws"), including
without limitation the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., the Louisiana Environmental
Quality Act, La. R.S. 30: 2001 et seq., or any similar
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federal, state or local law, except for such instances of non-compliance that
are not reasonably likely to have, individually or in the aggregate, a material
adverse effect on the financial condition, results of operations, business or
prospects of Gonzales Holding and Gonzales Bank.
(b) To the best knowledge of each, all property owned, leased, operated or
managed by Gonzales Holding or Gonzales Bank, or in which Gonzales Holding or
Gonzales Bank has any interest, including any mortgage or security interest
("Business Property"), and all businesses and operations conducted on any of
the Business Property (whether by Gonzales Holding or Gonzales Bank, a
mortgagor, or any other person), are, and have been, in compliance with all
applicable Environmental Laws, except for such instances of non-compliance that
are not reasonably likely to have, individually or in the aggregate, a material
adverse effect on the financial condition, results of operations, business or
prospects of Gonzales Holding or Gonzales Bank.
(c) To the best knowledge of each, there is no judicial, administrative,
arbitration or other similar proceeding pending or threatened before any court,
governmental agency, authority or other forum in which Gonzales Holding or
Gonzales Bank or any prior owner of any Business Property has been or, with
respect to threatened matters, is threatened to be named as a party relating to
(i) alleged noncompliance with any applicable Environmental Law or (ii) the
release or threatened release into the environment of any Hazardous Substance
(as defined below), and relating to any of the Business Property, except for
such proceedings pending or threatened that are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the financial
condition, results of operations, business or prospects of Gonzales Holding or
Gonzales Bank, and to the knowledge of each there is no reasonable basis for
any such proceeding. The term "Hazardous Substance" means any pollutant,
contaminant, or toxic or hazardous substance, chemical, or waste defined,
listed or regulated by any Environmental Law (and specifically shall include,
but not be limited to, asbestos, polychlorinated biphenyls, and petroleum and
petroleum products).
(d) To the best knowledge of each, there has been no release or threatened
release of a Hazardous Substance in, on, under, or affecting any of its
Business Property, except such release or threatened release that is not
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the financial condition, results of operations, business or prospects
of Gonzales Holding or Gonzales Bank.
3.24 Contract Termination Provisions. Except for those contracts set forth
in Schedule 3.24 hereto, all contracts between Gonzales Bank or Gonzales
Holding and any employee thereof or independent contractor thereto shall, by
the terms of such contracts or a written addendum thereto, be terminable by
DGC, CNC, or CNB following the Mergers, upon no more than thirty (30) day's
written notice to the employee or independent contractor.
Article IV.
REPRESENTATIONS AND WARRANTIES OF DGC, CNC AND CNB
DGC, CNC and CNB represent and warrant to Gonzales Bank and Gonzales
Holding as follows:
4.01 Corporate Organization. DGC and CNC are corporations duly organized,
validly existing and in good standing under the laws of the States of
Mississippi and Louisiana, respectively, and CNB is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States. DGC, CNC, and CNB, respectively, have the corporate
power and authority (and CNB has received appropriate authorizations from the
OCC to own or lease all of their properties and assets and to carry on their
businesses as they are now being conducted.
4.02 Capitalization. The authorized capital stock of DGC consists of
50,000,000 shares of DGC Common Stock, 10,000,000 shares of Class A Voting
Preferred Stock, no par value, and 10,000,000 shares of Class B Non- Voting
Preferred Stock, no par value (collectively, "the DGC Preferred Stock"). At the
close of business on December 31, 1995, there were 19,379,643 shares of DGC
Common Stock issued and outstanding and no shares of DGC Preferred Stock had
been
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issued. In addition, options to acquire 442,852 shares of DGC Common Stock were
outstanding. The authorized capital stock of CNC consists of 5,000,000 shares,
no par value. At the close of business on December 31, 1995, there were
4,200,000 shares of CNC Common Stock issued and outstanding, one hundred
percent (100%) of which shares were owned by DGC. The authorized capital stock
of CNB consists of 234,121 shares of CNB Common Stock. At the close of business
on December 31, 1995, there were 234,121 shares of CNB Common Stock issued and
outstanding, one hundred percent (100%) of which shares were owned by CNC. All
issued and outstanding shares of DGC Common Stock have been, and the shares of
DGC Common Stock to be issued pursuant to the Holding Company Merger will be,
duly authorized and validly issued, and all such shares are and will be fully
paid. Except as referred to above, DGC does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of DGC
Common Stock or DGC Preferred Stock or any security representing the right to
purchase or otherwise receive any DGC Common Stock or DGC Preferred Stock.
4.03 Authority; No Violation. (a) DGC, CNC, and CNB, respectively, have
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The respective Boards of
Directors of DGC, CNC, and CNB, or a majority thereof, and DGC as the sole
shareholder of CNC, have duly and validly approved and adopted this Agreement
and the transactions contemplated hereby, have executed or authorized the
execution of and have authorized the delivery of this Agreement, and except for
approval by CNC, as the sole shareholder of CNB, no other corporate proceedings
on the part of DGC, CNC, or CNB are necessary or desirable to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by DGC, CNC, and CNB and constitutes a valid and binding
obligation of each of DGC, CNC, and CNB, enforceable in accordance with its
terms.
(b) Neither the execution and delivery of this Agreement by DGC, CNC, or
CNB nor the consummation by DGC, CNC, or CNB of the transactions contemplated
hereby, nor compliance by DGC, CNC, or CNB with any of the provisions hereof,
will (i) violate any provision of the Certificate of Incorporation or Bylaws of
DGC, or CNC, or the Articles of Association or Bylaws of CNB, (ii) to the best
knowledge of DGC, CNC, and CNB violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to DGC, CNC,
CNB, or any of their subsidiaries or any of their respective properties or
assets, or (iii) to the best knowledge of DGC, CNC, and CNB violate, conflict
with, result in a breach of any provisions of, constitute a default (or an
event which, with or without due notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of DGC, CNC, CNB, or any of their subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which DGC, CNC,
CNB, or any of their respective subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound or affected, except
for such conflicts, breaches or defaults as are set forth in Schedule 4.03
hereto, or which either individually or in the aggregate will not have a
material adverse effect on the business, operations, properties, assets or
financial condition of DGC, CNB or any of their respective subsidiaries.
4.04 Consents and Approvals. Except for consents and approvals of, or
filings or registrations, with the SEC, OCC, the Federal Reserve Bank, the
FDIC, and the Commissioner, no consents or approvals of or filings or
registrations with any third party or any public body or authority are
necessary in connection with (i) the execution and delivery by DGC, CNC, and
CNB of this Agreement or (ii) the consummation of the Mergers and the other
transactions contemplated hereby.
4.05 SEC Documents; Financial Statements; Liabilities. (a) DGC has filed
all required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1992 (the "DGC SEC Documents"), complete copies of which
have been provided to Gonzales Holding. As of their respective dates, the DGC
SEC Documents, and any such reports, forms and documents filed by DGC with the
SEC after the date hereof, complied, or will comply, as to form in all material
respects with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such DGC SEC Documents, and none of the DGC SEC
Documents contained, or will contain, any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent that information
contained in any DGC SEC Document has been revised or
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superseded by a later filed DGC SEC Document, none of the DGC SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The DGC financial statements included in the DGC SEC Documents have
been audited by KPMG Peat Marwick LLP, certified public accountants (in the
case of the DGC audited financial statements) in accordance with generally
accepted auditing standards, have been prepared in accordance with generally
accepted accounting principles and, except as disclosed therein, applied on a
basis consistent with prior periods, and present fairly the financial position
of DGC and its consolidated subsidiaries at such dates and the results of
operations and cash flows for the periods then ended, except, in the case of
the DGC interim financial statements, as permitted by Rule 10-01 of Regulation
S-X of the SEC. The DGC interim financial statements reflect all adjustments
(consisting only of normal recurring adjustments) that are necessary for a fair
statement of the results for the interim periods presented therein. Neither DGC
nor any of its consolidated subsidiaries has, nor are any of their respective
assets subject to, any liability, commitment, debt or obligation (of any kind
whatsoever whether absolute or contingent, accrued, fixed, known, unknown,
matured or unmatured) that is material individually or in the aggregate, except
as and to the extent reflected on the latest balance sheet included in the DGC
interim financial statements (the "DGC Latest Balance Sheet"), or as may have
been incurred or may have arisen since the date of the DGC Latest Balance Sheet
in the ordinary course of business.
(c) Since the date of the DGC Latest Balance Sheet, there has been no
change that has had or is likely to have a material adverse effect on DGC or
its subsidiaries.
4.06 Litigation. Except (a) as disclosed in a DGC SEC Document, (b) that
are not material individually or in the aggregate, or (c) as listed on Schedule
4.06, there are no actions, suits, proceedings, arbitrations or investigations
pending or, to the knowledge of DGC, threatened, before any court, any
governmental agency or instrumentality or any arbitration panel, against or
affecting DGC or any of its subsidiaries or any of the directors, officers, or
employees of the foregoing, and to the knowledge of DGC no facts or
circumstances exist that would be likely to result in the filing of any such
action that would have a material adverse effect on DGC. Neither DGC nor any of
its subsidiaries is subject to any currently pending material judgment, order
or decree entered in any lawsuit or proceeding.
4.07 Legality of DGC Common Stock. The DGC Common Stock to be issued in
connection with the Holding Company Merger, when issued and delivered in
accordance with the terms hereof, will be duly authorized, validly issued,
fully paid and non-assessable, and free of pre-emptive rights.
4.08 Statements are True and Correct. None of the information included in
(a) the Registration Statement to be filed by DGC with the SEC in connection
with the DGC Common Stock to be issued in the Holding Company Merger in
accordance with Section 5.06 hereof, (b) the Proxy Statement to be mailed to
the shareholders of Gonzales Holding in connection with its shareholders
meeting, and (c) any other documents to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby
that has been or will be supplied by DGC or any of its subsidiaries, will, at
the respective times such documents are filed, and, in the case of the
Registration Statement, when it becomes effective and, with respect to the
Proxy Statement, when first mailed to the shareholders of Gonzales Holding, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading,
or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Gonzales Holding shareholders' meeting, be false or
misleading with respect to any material fact or omit to state any material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading. All documents that DGC is responsible for
filing with the SEC or any other regulatory authority in connection with the
transactions contemplated hereby, will comply in all material respects with the
provisions of applicable law.
4.09 No Shareholder Vote. No vote of any class of shareholders of DGC is
required to approve this Agreement or the transactions contemplated hereby in
order to comply with the Mississippi Business Corporation Act, DGC's Articles
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of Incorporation or Bylaws, or the rules and regulations of any exchange on
which the DGC Common Stock is listed or traded.
4.10 Broker's and Finder's Fee. No agent, broker, person or firm acting
on behalf of DGC, CNC or CNB is or will be entitled to any commission or
broker's or finder's fee from any of the parties hereto, or from any affiliate
of the parties hereto, in connection with any of the transactions contemplated
herein.
4.11 Disclosure. No representations or warranties by DGC, CNC or CNB in
this Agreement and no statement contained in the schedules or exhibits or in
any certificates to be delivered pursuant to this Agreement, contains or will
contain any untrue statement of material fact or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
Article V.
COVENANTS OF THE PARTIES
5.01 Conduct of Business. Except with the consent of the other parties
hereto, during the period from the date of this Agreement to the Effective
Date:
(a) Gonzales Bank and Gonzales Holding will conduct their businesses and
engage in transactions only in the ordinary course and consistent with prudent
banking practice.
(b) Neither Gonzales Holding nor Gonzales Bank shall (i) increase by more
than ten percent (10%) the compensation payable by Gonzales Bank or Gonzales
Holding to any of its directors, officers, agents, consultants, or any of its
employees whose total compensation after such increase would be in excess of
$25,000 per annum, (ii) grant or pay any extraordinary bonus, percentage
compensation, service award or other like benefit to any such director,
officer, agent, consultant or employee, or (iii) make or agree to any
extraordinary welfare, pension, retirement or similar payment or arrangement
for the benefit of any such director, officer, agent, consultant or employee.
(c) Neither Gonzales Holding nor Gonzales Bank shall sell or dispose of
material assets except in the ordinary course of business.
(d) Neither Gonzales Holding nor Gonzales Bank shall enter into any new
capital commitments or make any capital expenditures, except commitments or
expenditures within existing operating and capital budgets or otherwise in the
ordinary course of business.
(e) Neither Gonzales Bank nor Gonzales Holding shall authorize or issue
any additional shares of any class of its capital stock or any securities
exchangeable for or convertible into any such shares or any options or rights
to acquire any such shares, nor shall Gonzales Bank or Gonzales Holding
otherwise authorize or affect any change in its capitalization.
(f) No dividends shall be paid by Gonzales Holding, except for (i) a
special dividend by Gonzales Holding in February, 1996 of $2.00 per share, and
(ii) regular quarterly dividends in 1996 of $.35 per share for each complete
calendar quarters that elapses prior to the Effective Date. No dividends shall
be paid by Gonzales Bank except dividends by Gonzales Bank to Gonzales Holding
to the extent necessary to fund authorized dividends of Gonzales Holding and to
pay necessary and routine expenses of Gonzales Holding.
5.02 Limitation on Actions. Prior to the Effective Date or until the
termination of this Agreement, Gonzales Holding shall not, without the prior
approval of the chief executive officer of DGC,
(a) solicit or encourage inquiries or proposals with respect to; or
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(b) except as may be necessary as advised in writing by its counsel to
discharge its fiduciary duties, furnish any information relating to or
participate in any negotiations or discussions concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or of a substantial
equity interest in, Gonzales Holding or any subsidiary thereof, or any business
combination with Gonzales Holding or any subsidiary thereof, other than as
contemplated by this Agreement; and shall instruct its officers, directors,
agents and affiliates to refrain from doing any of the above; provided,
however, that nothing contained herein shall be deemed to prohibit any officer
or director of Gonzales Holding from taking any action that counsel to Gonzales
Holding has advised in writing is required to discharge his or her fiduciary
duties to Gonzales Holding and its shareholders.
Gonzales Bank and Gonzales Holding agree to notify DGC by telephone within
twenty-four hours of receipt of any inquiry with respect to a proposed merger,
consolidation, assets acquisition, tender offer or other takeover transaction
with another person or receipt of a request for information from the FDIC, OCC
or other governmental authority with respect to a proposed acquisition of
Gonzales Bank or Gonzales Holding by another party.
5.03 Current Information. During the period from the date of this
Agreement to the Effective Date, Gonzales Bank and Gonzales Holding will cause
one or more of its designated representatives to confer on a regular and
frequent basis with representatives of DGC and to report the general status of
its ongoing operations. In addition, separate reporting on matters involving
the loan portfolio will occur monthly and will include, but not be limited to,
(i) all board reports, (ii) new and renewed loans (including loan
applications), (iii) delinquency reports, (iv) loan extensions, (v) to the
extent possible, loan policy exceptions, loan documentation exceptions, and
financial statement exceptions, (vi) watch list reports, (vii) all written
communications concerning problem loan accounts greater than $50,000, (viii)
notification and written details involving new loan products and/or loan
programs, and (ix) such other information regarding specific loans, the loan
portfolio and management of the loan portfolio as may be requested. Gonzales
Bank and Gonzales Holding will promptly notify DGC of any material change in
the normal course of their business or in the operation of their properties and
of any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of litigation involving either party, and will keep DGC fully informed of such
events.
5.04 Access to Properties and Records; Confidentiality. (a) For purposes
of allowing DGC, CNC, and CNB and their counsel to prepare regulatory
submissions, and for other relevant purposes, Gonzales Bank and Gonzales
Holding shall permit DGC reasonable access to their properties during normal
business hours, and shall disclose and make available to DGC and its agents all
books, papers and records relating to their assets, stock ownership,
properties, operations, obligations and liabilities, including, but not limited
to: their books of account (including their general ledgers); tax records;
minute books of directors' and shareholders' meetings; charter documents;
bylaws; material contracts and agreements; filings with any regulatory
authority; litigation files; compensatory plans affecting its employees; and
any other materials pertaining to business activities, projects or programs in
which the other parties may have a reasonable interest in light of the proposed
Mergers. No member of the Gonzales Consolidated Group shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of any customer or other person, would
jeopardize the attorney-client privilege of the institution in possession or
control of such information, or would contravene any law, rule, regulation,
order, judgment, decree or binding agreement. The parties will make appropriate
substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) All information furnished by any member of the Gonzales Consolidated
Group pursuant hereto shall be treated as the sole property of the party
furnishing the information until consummation of the Mergers contemplated
hereby and, if such Mergers shall not occur, DGC, CNC, and CNB shall return to
Gonzales Holding all documents or other materials containing, reflecting or
referring to such information, shall use its best efforts to keep confidential
all of such information, and shall not directly or indirectly use such
information for any competitive or other commercial purpose. The obligation to
keep such information confidential shall continue for two (2) years from the
date the proposed Mergers are abandoned and shall not apply to (a) any
information which (i) DGC, CNC and CNB can establish by convincing evidence was
already in its possession prior to the disclosure thereof by Gonzales Holding
or Gonzales Bank, (ii) was then generally known to the public or set forth in
public records, (iii) became known to the public through no fault of DGC, CNC
or CNB, or (iv) was
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disclosed to the party receiving the information by a third party not bound by
an obligation of confidentiality, or (b) disclosures in accordance with an
order of a court of competent jurisdiction.
5.05 Interim Financial Statements. As soon as reasonably available, but in
no event more than fifteen (15) days after the end of each month ending after
the date of this Agreement, Gonzales Bank and Gonzales Holding will deliver to
DGC copies of their monthly financial statements.
5.06 Regulatory Matters. (a) DGC shall prepare and file a registration
statement with the SEC on Form S-4 under the Securities Act (the "Registration
Statement"), including a proxy statement (the "Proxy Statement") to be mailed
to Gonzales Holding shareholders in connection with the meeting to be called to
consider the Holding Company Merger, as soon as reasonably practicable
following the date of this Agreement. The Registration Statement shall comply
in all material respects with the Securities Act and DGC will use its best
efforts to cause the Registration Statement to be declared effective as soon as
practicable, to qualify the DGC Common Stock under the securities or blue sky
laws of such jurisdictions as may be required and to keep the Registration
Statement and such qualifications current and in effect for so long as is
necessary to consummate the transactions contemplated hereby.
(b) DGC will use its best efforts to prepare all necessary documentation,
to effect all necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement,
including those required by the OCC, the Federal Reserve Board, the FDIC and
the Commissioner.
(c) Gonzales Holding shall cooperate in preparing the Registration
Statement and the Proxy Statement. Gonzales Holding will promptly furnish all
such data and information relating to it and its subsidiaries as DGC may
reasonably request for the purpose of including such data and information in
the Registration Statement.
(d) DGC will indemnify and hold harmless Gonzales Holding, each of its
directors, each of its officers and each person, if any, who controls Gonzales
Holding within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint, several or solidary, to which they or any of
them may become subject, under the Securities Act, any state securities or blue
sky laws, or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or in any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each such person for any legal or other expenses reasonably
incurred, promptly as they are incurred, by such person in connection with
investigating or defending any such action or claim; provided, however, that
DGC shall not be liable in any case to the extent that any such loss, claim,
damage or liability (or action in respect thereof) arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or any such amendment or supplement
in reliance upon or in conformity with information furnished to DGC by or on
behalf of the Gonzales Consolidated Group for use therein.
(e) Promptly after receipt by an indemnified party under subparagraph (d)
above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against DGC under such
subparagraph, notify DGC in writing of the commencement thereof. In case any
such action shall be brought against any indemnified party and it shall notify
DGC of the commencement thereof, DGC shall be entitled to participate therein
and, to the extent that it shall wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and, after notice from DGC to
such indemnified party of its election so to assume the defense thereof, DGC
shall not be liable to such indemnified party under such subparagraph for any
legal expenses of other counsel or any other expenses subsequently incurred by
such indemnified party; provided, however, if DGC elects not to assume such
defense or counsel for the indemnified parties advises in writing that there
are material substantive issues which raise conflicts of interest between DGC
or Gonzales Holding and one or more of the indemnified parties, such
indemnified parties may retain counsel satisfactory to them, and DGC shall pay
all reasonable fees and expenses of such counsel for the indemnified parties
promptly as statements therefor are received.
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5.07 Approval of Shareholders. Gonzales Holding will (i) take all steps
necessary to call, give notice of, convene and hold a special meeting of its
shareholders as soon as practicable for the purpose of approving this Agreement
and the transactions contemplated hereby and for such other purposes as may be
necessary or desirable, (ii) subject to the provisions of Section 5.02(b)
hereof, recommend to its shareholders the approval of this Agreement and the
transactions contemplated hereby and such other matters as may be submitted to
its shareholders in connection with this Agreement, and (iii) cooperate and
consult with DGC, CNC, and CNB with respect to each of the foregoing matters.
Gonzales Holding, as the sole shareholder of Gonzales Bank, shall approve this
Agreement and the Bank Merger. CNC, as the sole shareholder of CNB, shall
approve this Agreement and the Bank Merger.
5.08 Compliance with SEC Rules 144 and 145. Gonzales Holding shall
identify in a letter to DGC, after consultation with its counsel and with DGC
and its counsel, persons who may be deemed to be affiliates of Gonzales Holding
as that term is defined in Rule 145 under the Securities Act and who will
become beneficial owners of Common Stock of DGC pursuant to the Holding Company
Merger ("Gonzales Holding Affiliates"). Gonzales Holding shall use its best
efforts to cause all Gonzales Holding Affiliates to execute and deliver to DGC
written agreements to comply with the applicable resale restrictions set forth
in Rules 144 and 145 under the Securities Act.
5.09 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Effective Date any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary or
desirable action.
5.10 Public Announcements. DGC, CNC, CNB, Gonzales Bank and Gonzales
Holding will cooperate with each other in the development and distribution of
all news releases and other public information disclosures with respect to this
Agreement or any of the transactions contemplated hereby. No party to this
agreement shall make any public announcement or otherwise make any disclosure
(either public or private), other than such disclosure to employees or agents
of any such party as may be required to carry out the transactions contemplated
by this Agreement and except as may be required by law, without the express
written consent of all parties hereto. Each party hereto shall undertake such
reasonable steps as may be required to ensure that its employees and agents
comply with the provisions of this Section 5.10.
5.11 Benefits. (a) From and after the Effective Date, DGC will, subject to
compliance with applicable legal and regulatory requirements, provide coverage
for all Gonzales Bank employees under all DGC employee benefit plans for which
they are eligible, as soon as practicable after the Effective Date. All prior
years of service of Gonzales Bank employees will be counted for vesting and
eligibility purposes under all applicable DGC employee benefit plans to the
extent permitted by applicable law. Any Gonzales Bank employee who, immediately
prior to the Effective Date, is covered by or is a participant in a Gonzales
Bank employee benefit plan listed in Schedule 3.20 of this Agreement, shall, on
the Effective Date, be covered by or participate in the comparable DGC employee
benefit plan if a comparable plan otherwise is maintained by DGC and if the
eligibility requirements of the DGC plan are met.
(b) After the Effective Date, CNB will honor the employment agreements
described in Schedule 5.11 and will provide severance benefits to former
employees of Gonzales Bank that are at least equivalent to the benefits that
would have been provided under the current severance policy of Gonzales Bank, a
copy of which has been provided to CNB.
5.12 Election of Directors. For a period of not less than three (3) years
after the Effective Date, DGC and CNC shall elect at least two (2) former
members of the Board of Directors of Gonzales Bank to serve as directors of
CNB.
5.13 Indemnification and Liability Insurance. (a) From and after the
Effective Date, CNC shall indemnify, defend, and hold harmless the former
directors, officers, employees and agents of Gonzales Holding (each such
director, officer, employee or agent referred to as a "Holding Company
Indemnified Party") against all losses, claims, damages, liabilities, judgments
(and related expenses including but not limited to, attorney's fees and amounts
paid in settlement), joint,
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several or solidary, and any action or other proceeding in respect thereof, to
which the Holding Company Indemnified Parties or any of them become subject,
based upon or arising out of actions or omissions of such persons occurring at
or prior to the Effective Date (including the transactions contemplated by this
Agreement) to the full extent permitted under Louisiana Law or by Gonzales
Holding's Articles of Incorporation and Bylaws as in effect on the date hereof,
whichever is greater.
(b) From and after the Effective Date, CNB shall indemnify, defend, and
hold harmless the former directors, officers, employees and agents of Gonzales
Bank (each such director, officer, employee or agent referred to as a "Bank
Indemnified Party") against all losses, claims, damages liabilities, judgments
(and related expenses including but not limited to, attorney's fees and amounts
paid in settlement), joint, several or solidary, and any action or other
proceeding in respect thereof, to which the Bank Indemnified Parties or any of
them become subject, based upon or arising out of actions or omissions of such
persons occurring at or prior to the Effective Date (including the transactions
contemplated by this Agreement) to the full extent permitted under Louisiana
Law or by Gonzales Bank's Articles of Incorporation and Bylaws as in effect on
the date hereof, whichever is greater.
(c) CNB and CNC shall use its best efforts to maintain the existing
directors' and officers' liability insurance policy of Gonzales Bank and
Gonzales Holding, respectively, covering persons who are currently covered by
such insurance for a period of five (5) years after the Effective Date on terms
generally no less favorable than those in effect on the date of this Agreement;
provided, however, that CNB and CNC may substitute therefor policies providing
at least comparable coverage containing terms and conditions no less favorable
than those in effect on the date of this Agreement.
Article VI.
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations under this Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions,
none of which may be waived:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the affirmative vote of the holders of at least a majority of
the outstanding shares of Gonzales Holding Common Stock, voted at the special
meeting of shareholders of Gonzales Holding called pursuant to Section 5.07
hereof.
(b) None of the parties hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Mergers.
(c) DGC, CNC, CNB, Gonzales Holding and Gonzales Bank shall have received
an opinion of Messrs. Watkins Ludlam & Stennis, P.A. substantially to the
effect that the transactions contemplated by this Agreement will be treated for
federal income tax purposes as a tax-free reorganization under Section 368 of
the Code.
(d) A Registration Statement relating to the shares of DGC Common Stock to
be issued pursuant to this Agreement shall have become effective under the
Securities Act and shall not be subject to any stop order or a threatened stop
order. All necessary consents or permits from or registrations or filings with
state securities commissions shall have been obtained or made.
(e) This Agreement and the transactions contemplated hereby shall have
been approved by the OCC and all other applicable federal and state
authorities.
6.02 Conditions to the Obligations of DGC, CNC, and CNB under this
Agreement. The obligations of DGC, CNC, and CNB under this Agreement shall be
further subject to the satisfaction, at or prior to the Effective Date, of the
following conditions, any one or more of which may be waived by DGC, CNC, and
CNB:
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(a) Each of the obligations of Gonzales Bank and Gonzales Holding required
to be performed by it at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with and the
representations and warranties of Gonzales Bank and Gonzales Holding contained
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Effective Date as though made at and as of
the Effective Date (except as otherwise contemplated by this Agreement) and
DGC, CNC, and CNB shall have received a certificate to that effect signed by
the president and the chief financial officer of Gonzales Bank and Gonzales
Holding.
(b) All action required to be taken by, or on the part of, Gonzales Bank
and Gonzales Holding to authorize the execution, delivery and performance of
this Agreement by Gonzales Bank and Gonzales Holding and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
the Boards of Directors of Gonzales Bank and Gonzales Holding and DGC, CNC, and
CNB shall have received certified copies of the resolutions evidencing such
authorization.
(c) Any and all permits, consents, waivers, clearances, approvals and
authorizations (in addition to those referred to in Section 6.01 hereof) of all
third parties and governmental bodies shall have been obtained by Gonzales Bank
and Gonzales Holding, which are necessary in connection with the consummation
of the Mergers by Gonzales Holding and Gonzales Bank and the other transactions
contemplated hereby.
(d) DGC, CNC, and CNB shall have received an opinion from Jones, Walker,
Waechter, Poitevent, Carrere & Denegre L.L.P., counsel to Gonzales Bank and
Gonzales Holding, dated the date of the Closing, in form satisfactory to CNB,
DGC, and CNC to the effect that:
i) Gonzales Holding is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana and
has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Gonzales
Bank is a state banking corporation duly organized, validly existing and
in good standing under the laws of Louisiana (a) has all requisite
corporate power to own, lease and operate its properties and to carry on
its business as now being conducted, (b) is duly authorized to conduct a
general banking business under the Banking Laws of the State of Louisiana,
and (c) is an insured bank as defined in the Federal Deposit Insurance
Act;
ii) This Agreement has been duly and validly authorized, executed
and delivered by Gonzales Holding and Gonzales Bank and is valid and
enforceable against each of them, except that enforcement may be limited
by bankruptcy, reorganization, insolvency and other similar laws and court
decisions relating to or affecting the enforcement of creditors' rights
generally and by general equitable principles;
iii) The authorized capital stock of Gonzales Holding consists of
10,000,000 shares of Gonzales Holding Common Stock, of which, as of
December 31, 1995, 561,801 shares have been duly issued, are presently
outstanding and are fully paid and non-assessable;
iv) The authorized capital stock of Gonzales Bank consists of
600,000 of Gonzales Bank Common Stock of which, as of December 31, 1995,
440,000 shares are issued and outstanding; all of such outstanding shares
are validly issued, fully paid and non-assessable;
v) The execution and delivery by Gonzales Holding and Gonzales
Bank of this Agreement, consummation by Gonzales Holding and Gonzales Bank
of the transactions contemplated hereby and compliance by Gonzales Holding
and Gonzales Bank with the provisions hereof will not violate the Articles
of Incorporation of Gonzales Holding or Gonzales Bank or violate, result
in a breach of, or constitute a default under, any material lease,
mortgage, contract, agreement, instrument, judgment, order or decree to
which Gonzales Holding or Gonzales Bank is a party or to which they may be
subject;
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vi) Such counsel has participated in several conferences with
representatives of the parties of this Agreement and their respective
accountants and counsel in connection with the preparation of the
Registration Statement and the Proxy Statement to be filed in connection
with the transactions contemplated by this Agreement and have considered
the matters required to be stated therein and the statements contained
therein, and based on the foregoing (in certain circumstances relying as
to materiality on the opinions of officers and representatives of the
parties to this Agreement) nothing has come to the attention of such
counsel that would lead them to believe that such Registration Statement
or the Proxy Statement, as amended or supplemented if it has been amended
or supplemented, at the time it became effective and as amended or
supplemented, (in the case of the Registration Statement) or at the time
distributed to shareholders (in the case of the Proxy Statement),
contained any untrue statement of a material fact or omitted a material
fact required to be stated therein or necessary to make the statements
therein not misleading (except in each such case for the financial
statements and other financial and statistical data included therein, as
to which no opinion need be rendered).
As to matters of fact, counsel to Gonzales Holding and Gonzales Bank may
rely, to the extent they deem appropriate, upon certificates of officers of
Gonzales Holding and Gonzales Bank, provided, such certificates are delivered
to DGC and CNB prior to the Closing or attached to the opinion of counsel.
(e) There shall not have occurred any material adverse change in the
financial condition, results of operations, business or prospects of Gonzales
Holding or Gonzales Bank from the date of the Gonzales Latest Balance Sheet to
the Closing.
(f) Gonzales Holding shall have used it bests efforts to cause all
Affiliates to execute and deliver to DGC written agreements to comply with the
applicable resale restrictions set forth in Rule 145 under the Securities Act.
Gonzales Bank and Gonzales Holding will furnish DGC, CNC, and CNB with
such certificates of their officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Section 6.02 as DGC,
CNC, and CNB may reasonably request.
6.03 Conditions to the Obligations of Bank of Gonzales and Bank of
Gonzales Holding Company, Inc. under this Agreement. The obligations of
Gonzales Bank and Gonzales Holding under this Agreement shall be further
subject to the satisfaction, at or prior to the Effective Date, of the
following conditions, any one or more of which may be waived by Gonzales Bank
and Gonzales Holding:
(a) Each of the obligations of DGC, CNC, or CNB, respectively, required to
be performed by them at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with and the
representations and warranties of DGC, CNC, and CNB contained in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Date as though made at and as of the
Effective Date (except as otherwise contemplated by this Agreement) and
Gonzales Bank and Gonzales Holding shall have received certificates to that
effect signed by the presidents and chief financial officers of DGC, CNC, and
CNB, respectively.
(b) All action required to be taken by, or on the part of, DGC, CNC, and
CNB to authorize the execution, delivery and performance of this Agreement of
DGC, CNC, and CNB and the consummation of the transactions contemplated hereby
shall have been duly and validly taken by the Boards of Directors of DGC, CNC,
and CNB, respectively, and Gonzales Bank and Gonzales Holding shall have
received certified copies of the resolutions evidencing such authorization.
(c) Gonzales Holding shall have received a letter from Alex Sheshunoff &
Co., or another financial advisor selected by Gonzales Holding, dated within
five (5) days of the date of mailing of the Proxy Statement to its shareholders
to the effect that the terms of the Holding Company Merger are fair to its
shareholders from a financial point of view.
(d) There shall not have occurred any material adverse change in the
financial condition, results of operations, business or prospects of DGC, CNC
or CNB from the date of the DGC Latest Balance Sheet to the Closing.
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<PAGE> 102
(e) Gonzales Holding and Gonzales Bank shall have received from Messrs.
Watkins, Ludlam and Stennis, P.A., counsel for DGC, CNC and CNB (or as to
certain matters involving Louisiana law from Louisiana counsel to DGC, CNC and
CNB), an opinion, dated as of the Closing, in form and substance satisfactory
to Gonzales Holding and Gonzales Bank, to the effect that:
i) DGC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Mississippi and has all
requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. DGC is qualified to do
business as a foreign corporation in Louisiana. CNC is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Louisiana and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. CNB is a state banking corporation duly organized, validly
existing and in good standing under the laws of Louisiana (a) has all
requisite corporate power to own, lease and operate its properties and to
carry on its business as now being conducted, (b) is duly authorized to
conduct a general banking business under the Banking Laws of the State of
Louisiana, and (c) is an insured bank as defined in the Federal Deposit
Insurance Act;
ii) This Agreement has been duly and validly authorized, executed
and delivered by DGC, CNC, and CNB is valid and enforceable, except that
enforcement may be limited by bankruptcy, reorganization, insolvency and
other similar laws and court decisions relating to or affecting the
enforcement of creditors' rights generally and by general equitable
principles;
iii) The authorized capital stock of DGC consists of 50,000,000
shares of DGC Common Stock, 10,000,000 shares of Class A Voting Preferred
Stock, no par value, and 10,000,000 shares of Class B Non-Voting Preferred
Stock, no par value of which, as of December 31, 1995, 19,379,643 shares
of Common Stock have been duly issued, are presently outstanding and are
fully paid and non-assessable. All shares of DGC Common Stock to be issued
to holders of Gonzales Holding Common Stock will be, when issued as
described in this Agreement and the Registration Statement, duly
authorized and validly issued, fully paid and non-assessable, free of
liens, security interests, pledges or other encumbrances and all
preemptive or similar rights other than liens, security interests, pledges
or other encumbrances placed thereon by the holders of Gonzales Holding
Common Stock;
iv) The authorized capital stock of CNC consists of 5,000,000 shares
of CNC Common Stock, of which, as of December 31, 1995, 4,200,000 shares
have been duly issued, are presently outstanding and are fully paid and
non-assessable;
v) The authorized capital stock of CNB consists of 234,121shares of
CNB Common Stock of which, as of December 31, 1995, 234,121 shares are
issued and outstanding; all of such outstanding shares are validly issued,
fully paid and non-assessable;
vi) The execution and delivery by DGC, CNC, and CNB of this
Agreement, consummation by DGC, CNC, and CNB of the transactions
contemplated hereby and compliance by DGC, CNC, and CNB with the
provisions hereof will not violate the Articles of Incorporation or
Association of DGC, CNC, and CNB or violate, result in a breach of, or
constitute a default under, any material lease, mortgage, contract,
agreement, instrument, judgment, order or decree to which DGC, CNC, and
CNB is a party or to which they may be subject;
vii) the Registration Statement has become effective, and to such
counsel's knowledge, no stop order suspending its effectiveness has been
issued nor have any proceedings for that purpose been instituted;
viii) the Registration Statement and each amendment or supplement
thereto, as of their respective effective or issue dates, complied as to
form in all material respects with the requirements of the Securities Act
and the rules and regulations promulgated thereunder, and we do not know
of any contracts or documents required to be filed as exhibits to the
Registration Statement which are not filed as required; it being
understood that such
23
<PAGE> 103
counsel need express no opinion as to the financial statements or other
financial or statistical data contained in or omitted from the
Registration Statement or the Proxy Statement; and
ix) Such counsel has participated in several conferences with
representatives of the parties of this Agreement and their respective
accountants and counsel in connection with the preparation of the
Registration Statement and the Proxy Statement to be filed in connection
with the transactions contemplated by this Agreement and have considered
the matters required to be stated therein and the statements contained
therein, and based on the foregoing (in certain circumstances relying as
to materiality on the opinions of officers and representatives of the
parties to this Agreement) nothing has come to the attention of such
counsel that would lead them to believe that such Registration Statement
or the Proxy Statement, as amended or supplemented if it has been amended
or supplemented, at the time it became effective and as amended or
supplemented, (in the case of the Registration Statement) or at the time
distributed to shareholders (in the case of the Proxy Statement),
contained any untrue statement of a material fact or omitted a material
fact required to be stated therein or necessary to make the statements
therein not misleading (except in each such case for the financial
statements and other financial and statistical data included therein, as
to which no opinion need be rendered).
As to matters of fact, counsel to DGC, CNC and CNB may rely, to the extent
they deem appropriate, upon certificates of officers of DGC, CNC, and CNB,
provided, such certificates are delivered to Gonzales Holding and Gonzales Bank
prior to the Closing or attached to the opinion of counsel.
DGC, CNC, and CNB will furnish Gonzales Bank and Gonzales Holding with
such certificates of their officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Section 6.03 as
Gonzales Bank and Gonzales Holding may reasonably request.
Article VII.
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and VIII
hereof, the Closing of the transactions contemplated hereby shall take place at
the offices of DGC, One Deposit Guaranty Plaza, 210 East Capitol Street,
Jackson, Mississippi 39205 at 9:00 A.M., local time, on the first business day
after the date on which all of the conditions contained in Article VI, to the
extent not waived, are satisfied or at such other place, at such other time, or
on such other date as DGC, CNC, CNB, Gonzales Holding and Gonzales Bank may
mutually agree upon for the Closing to take place.
Deliveries at the Closing. Subject to the provisions of Articles VI and
VIII hereof, at the Closing there shall be delivered to DGC, CNC, CNB, Gonzales
Holding and Gonzales Bank the opinions, certificates, and other documents and
instruments required to be delivered under Article VI hereof.
Article VIII.
TERMINATION
8.01 Termination. This Agreement may be terminated at any time prior to
the Effective Date, whether before or after approval of the Holding Company
Merger by the shareholders of Gonzales Holding:
(a) by mutual written consent of the parties, properly authorized by their
respective Boards of Directors;
24
<PAGE> 104
(b) by DGC, CNC, and CNB, if at the time of such termination there shall
be a material adverse change in the consolidated financial condition of
Gonzales Bank or Gonzales Holding from that set forth in Gonzales Bank's or
Gonzales Holding's Financial Statements for the period ended December 31, 1995;
(c) by any party hereto, if a United States District Court shall rule upon
application of the Department of Justice after a full trial on the merits or a
decision on the merits based on a stipulation of facts that the transactions
contemplated by this Agreement violate the antitrust laws of the United States;
(d) by any party hereto, if at the special meeting of shareholders to be
called by Gonzales Holding pursuant to this Agreement, this Agreement shall not
have been approved by the affirmative vote of the holders of at least a
majority of the outstanding shares of Gonzales Holding Common Stock voted at
the special meeting of shareholders of Gonzales Holding called pursuant to
Section 5.07 hereof;
(e) by DGC, CNC, and CNB, in the event there are dissenting shareholders
who hold more than ten percent (10%) of the shares of Gonzales Holding Common
Stock;
(f) by any party hereto if Closing shall not have occurred by December 31,
1996; or
(g) by Gonzales Holding's Board of Directors in accordance with Section
5.02(b) hereof upon payment of the expenses referenced in Section 9.01 hereof.
Effect of Termination. In the event of termination of this Agreement by
either DGC, CNC, CNB, Gonzales Holding or Gonzales Bank as provided above, this
Agreement shall forthwith become void and except as provided in Section 5.04
and Section 9.01 hereof there shall be no further liability on the part of
Gonzales Bank, Gonzales Holding, DGC, CNC, CNB, or their respective officers or
directors.
Article IX.
MISCELLANEOUS
9.01 Expenses. Except as set forth below, all out-of-pocket costs and
expenses incurred in connection with the Mergers (including, but not limited
to, counsel fees) shall be paid by the party incurring such costs and expenses.
In recognition of the fact that DGC will bear the bulk of the expense in
preparing for regulatory approvals, in the event Gonzales Holding terminates or
seeks to terminate this Agreement without cause, or if the shareholders of
Gonzales Holding fail to approve the transaction because of action taken by an
officer or director of Gonzales Holding upon advice of counsel pursuant to
Section 5.02(b), Gonzales Holding shall indemnify DGC for all expenses
reasonably incurred by DGC in attempting to comply with the terms of the
Agreement.
9.02 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified first class mail (return receipt requested) or by
facsimile, cable, telegram or telex addressed as follows:
(a) If to DGC, CNC, or CNB, to:
Deposit Guaranty Corporation
One Deposit Guaranty Plaza
210 East Capitol Street
P.0. Box 730
Jackson, Mississippi 39205
Attention: Arlen L. McDonald
Fax Number: (601) 354-8192
25
<PAGE> 105
Copy to:
Watkins Ludlam & Stennis, P.A.
633 North State Street (39202)
Post Office Box 427
Jackson, Mississippi 39205-0427
Attention: L. Keith Parsons, Esq.
Fax Number: (601) 949-4804
(b) If to Gonzales Bank or Gonzales Holding, to:
Bank of Gonzales Holding Company, Inc.
South Burnside Avenue at Worthey Road
P.O. Box 1089
Gonzales, La. 70709-1089
Attn: D. Dale Gaudet
Fax Number: (504) 621-7239
Copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Ave., Suite 5100
New Orleans, La. 70170
Attn: W. Philip Clinton
Fax Number: (504) 582-8012
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
9.03 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and with respect to Sections 5.12
and 5.13, the additional parties referenced therein, and their respective
successors and assigns; provided, however, that neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other parties, and that
nothing in this Agreement is intended to confer, expressly or by implication,
upon any other person any rights or remedies under or by reason of this
Agreement.
9.04 Amendment, Extension and Waiver. Subject to applicable law, at any
time prior to the consummation of the Mergers, whether before or after approval
thereof by the Gonzales Holding shareholders, DGC, CNC, CNB, Gonzales Holding
and Gonzales Bank may, by action taken by their respective Boards of Directors
(i) amend this Agreement, (ii) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (iii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (iv) waive compliance with any of the
agreements or conditions contained in Articles V and VI (other than Section
6.01 hereof; provided, however, that, subject to Section 1.01 hereof, after any
approval of the Holding Company Merger by the shareholders of Gonzales Holding,
there may not be, without further approval of such shareholders, any amendment,
extension or waiver of this Agreement which changes the amount or form of
consideration to be delivered to shareholders of Gonzales Holding. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
9.05 Complete Agreement. This Agreement, including the documents and other
writings referred to herein or delivered pursuant hereto, contains the entire
agreement and understanding of the parties with respect to its subject matter.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings other than those expressly set forth herein or therein. This
Agreement supersedes all prior agreements and understandings between the
parties, both written and oral, with respect to its subject matter.
26
<PAGE> 106
9.06 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Date, or the earlier termination of this Agreement pursuant to Article VIII
hereof. Each party hereby agrees that its sole right and remedy with respect to
any breach of a representation or a warranty by the other party shall be to not
consummate the transactions described herein if such breach results in the
nonsatisfaction of a condition set forth in Section 6.02(a) or 6.03(a) hereof,
provided, however, that the foregoing shall not be deemed a waiver of any claim
for intentional misrepresentation or fraud.
9.07 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.08 Governing Law. This Agreement shall be governed by the laws of the
State of Louisiana, without giving effect to the principles of conflicts of
laws thereof.
9.09 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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<PAGE> 107
IN WITNESS WHEREOF, a majority of the members of the Boards of Directors
of CNB and Gonzales Bank, respectively, have each executed this Agreement and
directed the authorized signature and seal of each respective bank to be set
hereunto by its President and attested to by its Secretary or Cashier, and the
Boards of Directors of DGC, CNC, and Gonzales Holding have caused this
Agreement to be executed by their duly authorized officers, all as of the day
and year first above written.
Attest: DEPOSIT GUARANTY CORP.
By
- ------------------------------ -------------------------
Secretary President
Attest: COMMERCIAL NATIONAL
CORPORATION
By
- ------------------------------ -------------------------
Secretary President
Attest: BANK OF GONZALES HOLDING
COMPANY, INC.
By
- ------------------------------ -------------------------
Secretary President
[EXECUTION BELOW BY CITIZENS NATIONAL BANK AND BANK OF GONZALES]
<PAGE> 108
Attest: CITIZENS NATIONAL BANK
By
- ------------------------------ -------------------------
Secretary President
(Seal of Bank)
Attest: BANK OF GONZALES
By
- ------------------------------ -------------------------
Secretary President
(Seal of Bank)
<PAGE> 109
EXHIBIT B
FAIRNESS OPINION OF SHESHUNOFF
<PAGE> 110
EXHIBIT B
May 20, 1996
Board of Directors
Bank of Gonzales Holding Company, Inc.
P.O. Box 1089
Gonzales, Louisiana 70707
Members of the Board:
We understand that Bank of Gonzales Holding Company, Inc., Gonzales, Louisiana
("Gonzales Holding") and Deposit Guaranty Corporation, Jackson, Mississippi
("DGC") have entered into an Agreement and Plan of Merger, dated as of February
5, 1996 (the "Agreement"), which provides, among other things, for the merger
(the "Merger") of Gonzales Holding with and into DGC. Pursuant to the Merger,
each share of common stock, no par value, of Gonzales Holding (the "Gonzales
Holding Common Stock") issued and outstanding immediately prior to the
Effective Date other than shares of Gonzales Holding Company Common Stock owned
by stockholders who, pursuant to the Louisiana Business Corporation Law
("LBCL"), perfect dissenters' rights ("Dissenting Shares"), shall, by virtue of
the Agreement and without any action on the part of the holder thereof, be
converted into and exchangeable for the number of shares of common stock, no
par value, of DGC (the "DCG Common Stock") equal to the Exchange Ratio, as
defined below, subject to adjustment as provided herein and, in respect of
fractional shares, subject to Section 1.06 of the Agreement.
The Exchange Ratio shall equal 634,000 divided by the number of shares of
Gonzales Holding Common Stock outstanding on the date immediately preceding the
Effective Date. If prior to the Effective Date DGC should split or combine DGC
Common Stock, or pay a dividend or other distribution in DGC Common Stock, then
the exchange ratio shall be appropriately adjusted to reflect such split,
combination, dividend or distribution. The terms and conditions of the Merger
are more fully set forth in the Agreement. Based upon 541,611 of Gonzales
Holding Common Stock outstanding and a stock price of $46.75 per share as of
March 22, 1996 for DGC's Common Stock, DGC will issue 634,000 common shares to
Gonzales Holding shareholders for a total transaction value of $29,639,500.
You have requested our opinion, as an independent financial advisor, as to
whether the Agreement is fair from a financial point of view to holders of
Gonzales Holding Common Stock, as of the date hereof.
In connection with our opinion, we have: (i) reviewed the Agreement; (ii)
reviewed certain publicly available financial statements and other information
of Gonzales Holding and DGC; (iii) reviewed certain internal financial
statements and other financial and operating data concerning Gonzales Holding
and DGC; (iv) discussed the past and current operations and financial condition
and the prospects of Gonzales Holding and DGC with senior executives; (v)
reviewed certain historical market prices and trading volumes of DGC and
compared them to other publicly traded companies deemed relevant; (vi) compared
Gonzales Holding and DGC from a financial point of view with certain other
companies which we deemed to be relevant; (vii) reviewed the results of certain
regulatory examinations of Gonzales Holding and DGC with the senior management
of the respective companies; (viii) reviewed the financial terms, to the extent
publicly
<PAGE> 111
available, of certain comparable merger transactions; and (ix) performed such
other analyses and examinations as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. In addition, we have not made an independent evaluation of the assets
or liabilities of Gonzales Holding and DGC, nor have we been furnished with any
such appraisals. In addition, we are not an expert in the evaluation of loan
portfolios for the purposes of assessing the adequacy of the allowance for
losses with respect thereto and have assumed that such allowances for each of
the companies are in the aggregate adequate to cover such losses. Our opinion
is necessarily based on economic, market and other conditions as in effect on,
and the information made available to us as of, the date hereof. With respect
to financial forecasts, as well as projected cost savings, we have assumed that
they have been reasonably prepared and reflect the best currently available
estimates and judgments of management of Gonzales Holding and DGC, as to the
future financial performance of Gonzales Holding and DGC, respectively, and we
have assumed such forecasts and projections will be realized in the amounts and
at the times contemplated thereby.
Our opinion is limited to the fairness, from a financial point of view, to the
holders of Gonzales Holding Common Stock of the Agreement and does not address
Gonzales Holding's underlying business decision to undertake the Merger.
Moreover, this letter, and the opinion expressed herein, does not constitute a
recommendation to any stockholder as to any approval of the Merger or the
Agreement. It is understood that this letter may not be disclosed or otherwise
referred to without our prior written consent, except as may otherwise be
required by law or by a court of competent jurisdiction.
Very truly yours,
/s/ Alex Sheshunoff &
Co. Investment Banking
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
<PAGE> 112
EXHIBIT C
SECTION 131 OF THE LOUISIANA BUSINESS
CORPORATION LAW
<PAGE> 113
EXHIBIT C
La. R.S. 12:131 (1993)
Section 131. Rights of a shareholder dissenting from certain corporate actions
A. Except as provided in subsection B of this section, if a corporation
has, by vote of its shareholders, authorized a sale, lease or exchange of all
of its assets, or has, by vote of its shareholders, become a party to a merger
or consolidation, then, unless such authorization or action shall have been
given or approved by at least eighty percent of the total voting power, a
shareholder who voted against such corporate action shall have the right to
dissent. If a corporation has become a party to a merger pursuant to R.S.
12:112(H), the shareholders of any subsidiaries party to the merger shall have
the right to dissent without regard to the proportion of the voting power which
approved the merger and despite the fact that the merger was not approved by
vote of the shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist in the
case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance with
their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at the record
date fixed to determine shareholders entitled to receive notice of and to vote
at the meeting of shareholders at which a merger or consolidation was acted on,
were listed on a national securities exchange, or were designated as a national
market system security on an inter-dealer quotation system by the National
Association of Securities Dealers, unless the articles of the corporation
issuing such stock provide otherwise or the shares of such shareholders were
not converted by the merger or consolidation solely into shares of the
surviving or new corporation.
C. Except as provided in the last sentence of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than
eighty percent of the total voting power, and the merger, consolidation or
sale, lease or exchange of assets authorized thereby be effected, the
corporation shall promptly thereafter give written notice thereof, by
registered mail, to each shareholder who filed such written objection to, and
voted his shares against, such action, at such shareholder's last address on
the corporation's records. Each such shareholder may, within twenty days after
the mailing of such notice to him, but not thereafter, file with the
corporation a demand in writing for the fair cash value of his shares as of the
day before such vote was taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of the corporation may
be sent, and at the same time deposit in escrow in a chartered bank or trust
company located in the parish of the registered office of the corporation, the
certificates representing his shares, duly endorsed and transferred to the
corporation upon the sole condition that said certificates shall be delivered
to the corporation upon payment of the value of the shares determined in
accordance with the provisions of this section. With his demand the shareholder
shall deliver to the corporation, the written acknowledgment of such bank or
trust company that it so holds his certificates of stock. Unless the objection,
demand and acknowledgment aforesaid be made and delivered by the shareholder
within the period above limited, he shall conclusively be presumed to have
acquiesced in the
<PAGE> 114
corporate action proposed or taken. In the case of a merger pursuant to R.S.
12:112(H), the dissenting shareholder need not file an objection with the
corporation nor vote against the merger, but need only file with the
corporation, within twenty days after a copy of the merger certificate was
mailed to him, a demand in writing for the cash value of his shares as of the
day before the certificate was filed with the secretary of state, state in such
demand the value demanded and a post office address to which the corporation's
reply may be sent, deposit the certificates representing his shares in escrow
as hereinabove provided, and deliver to the corporation with his demand the
acknowledgment of the escrow bank or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder,
at the designated post office address, of its disagreement, and shall state in
such notice the value it will agree to pay if any payment should be held to be
due; otherwise it shall be liable for, and shall pay to the dissatisfied
shareholder, the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to whether
any payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily
whether any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit
filed by another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or decree shall be
made by the court staying the proposed corporate action, and any such corporate
action may be carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit, within sixty
days after receipt of notice of disagreement by the corporation shall
conclusively bind the shareholder (1) by the corporation's statement that no
payment is due, or (2) if the corporation does not contend that no payment is
due, to accept the value of his shares as fixed by the corporation in its
notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay to the
dissatisfied shareholder on demand an amount in cash deemed by it to be the
fair cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as
the case may be; otherwise the costs of the proceeding shall be taxed against
such shareholder.
<PAGE> 115
H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights accorded by
this section. Such a demand may be withdrawn by the shareholder at any time
before the corporation gives notice of disagreement, as provided in subsection
D of this section. After such notice of disagreement is given, withdrawal of a
notice of election shall require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed corporate action is abandoned
or rescinded, or a court shall determine that the shareholder is not entitled
to receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him (and, on his request,
new certificates shall be issued to him in exchange for the old ones endorsed
to the corporation), and he shall be reinstated to all his rights as a
shareholder as of the filing of his demand for value, including any intervening
preemptive rights, and the right to payment of any intervening dividend or
other distribution, or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by
the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in
the interim.
<PAGE> 116
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Deposit Guaranty is incorporated under the laws of Mississippi. Subarticle
E of Article 8 of the Mississippi Business Corporation Act prescribes the
conditions under which indemnification may be obtained by a present or former
director or officer of Deposit Guaranty who incurs expenses or liability as a
consequence of matters arising out of his activities as a director or officer.
Article Nine of Deposit Guaranty's Articles of Incorporation also provides
for indemnification of officers and directors under certain circumstances.
Deposit Guaranty has purchased a liability policy which, subject to any
limitations set forth in the policy, indemnifies Deposit Guaranty's directors
and officers for damages that they become legally obligated to pay as a result
of any negligent act, error or omission committed by such person in his
capacity as an officer or director.
ITEM 21. EXHIBITS
The following exhibits are furnished (or incorporated by reference) as a
part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2* Agreement and Plan of Merger dated as of February 5, 1996, as amended, included as
Exhibit A to the Proxy Statement/Prospectus contained herein.
5* Opinion of Watkins Ludlam & Stennis, P.A. regarding legality of common stock
registered hereby.
8* Opinion of Watkins Ludlam & Stennis, P.A. regarding tax matters.
23(a)* Consent of KPMG Peat Marwick LLP, independent accountants
23(b)* Consent of Basil M. Lee and Company, independent accountants
23(c)* Consent of Watkins Ludlam & Stennis, P.A. is contained in their opinion filed as
Exhibit 5 to this Registration Statement
23(d)* Consent of Alex Sheshunoff & Co.
24* Power of attorney included as part of signature page
99* Form of Proxy
</TABLE>
*Previously Filed
<PAGE> 117
ITEM 22. UNDERTAKINGS
(1) The Registrant hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by
the other Items of the applicable form.
(2) The Registrant hereby undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and issued in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act 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.
(3) The Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(4) The Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 20 above, 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 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.
<PAGE> 118
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Deposit
Guaranty has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Jackson, State of Mississippi on this the 22th day of May, 1996.
DEPOSIT GUARANTY CORP.
BY: /s/ E. B. ROBINSON
-------------------------------------
E. B. Robinson, Jr.
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ E. B. ROBINSON Chairman of the Board May 22, 1996
- ------------------------------- and Director (Principal
E. B. Robinson, Jr. Executive Officer)
* President and Director May 22, 1996
- -------------------------------
Howard L. McMillan, Jr.
/s/ ARLEN L. McDONALD Executive Vice President May 22, 1996
- ------------------------------ (Principal Financial
Arlen L. McDonald Officer)
/s/ STEPHEN E. BARKER Controller (Principal May 22, 1996
- ------------------------------ Accounting Officer)
Stephen E. Barker
* Director May 22, 1996
- -------------------------------
Richard H. Bremer
* Director May 22, 1996
- -------------------------------
Richard D. McRae, Jr.
</TABLE>
<PAGE> 119
<TABLE>
<S> <C> <C>
* Director May 22, 1996
- -------------------------------
W. R. Newman, III
* Director May 22, 1996
- -------------------------------
John N. Palmer
* Director May 22, 1996
- -------------------------------
Steven C. Walker
* Director May 22, 1996
- -------------------------------
J. Kelley Williams
*By: /s/ E. B. ROBINSON, JR.
-----------------------------------------
E. B. Robinson, Jr.
Attorney in Fact
</TABLE>
