<PAGE> 1
Filed with the SEC on October 17, 1996 Registration No. 333-
----------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
--------------------
DEPOSIT GUARANTY CORP.
(Exact name of registrant as specified in its charter)
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MISSISSIPPI 6711 64-072169
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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. Anthony J. Correro, III
Watkins Ludlam & Stennis, P.A. Correro Fishman Haygood Phelps
633 North State Street Weiss Walmsley & Casteix, L.L.P.
Post Office Box 427 201 St. Charles Avenue, 47th Floor
Jackson, Mississippi 39205-0427 New Orleans, LA 70170-4700
Telephone Number: (601) 949-4701 Telephone Number: (504) 586-5253
Approximate date of commencement of proposed sale of securities to the public:
At the Effective Date of the merger of Jefferson Guaranty Bancorp, Inc. into
Deposit Guaranty Louisiana Corp. 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. /__/
CALCULATION OF REGISTRATION FEE
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================================================================================================================================
Proposed Maximum
Title of Each Class of Amount to be Offering Price Proposed Maximum Aggregate Amount of
Securities to be Registered Registered(1) Per Unit Offering Price(2) Registration Fee
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Common Stock, no par value 890,009 NA $21,199,000 $7,310
================================================================================================================================
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(1) Plus such additional shares as may be issued as a result of the adjustment
provisions contained in the Agreement and Plan of Merger. Based upon the
anticipated maximum number of shares to be issued in connection with the
transaction described herein.
(2) Estimated in accordance with Rule 457(f)(2) solely for the purpose of
calculating the registration fee on the basis of the book value of the
outstanding shares of Jefferson Guaranty Bancorp, Inc. common and preferred
stock as of June 30, 1996.
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
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<CAPTION>
Caption or Location
in Proxy
Items in Form S-4 Statement/Prospectus
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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 Mergers; Comparative
Rights of Shareholders
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
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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-2 or
S-3 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-2 or
S-3 Companies.................... Information Concerning Jefferson
Guaranty Bancorp; Market Prices of and
Dividends on Jefferson Guaranty
Bancorp's Preferred and Common Stock;
Jefferson Guaranty Bancorp Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Index to Jefferson Guaranty Bancorp
Financial Statements
</TABLE>
<PAGE> 4
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18. Information if Proxies, Consents
or Authorizations Are to be
Solicited........................ Incorporation of
Certain Documents by
Reference; Summary;
Introduction; The Mergers--Interests
of Certain Persons in
the Mergers; Stock
Ownership of Certain Beneficial Owners
and Management of Jefferson Guaranty
Bancorp; Experts
19. Information if Proxies, Consents
or Authorizations Are Not to be
Solicited or in an Exchange
Offer............................ Not Applicable
</TABLE>
<PAGE> 5
JEFFERSON GUARANTY BANCORP, INC.
3525 NORTH CAUSEWAY BOULEVARD
METAIRIE, LOUISIANA 70002
October __, 1996
To Our Shareholders:
You are cordially invited to attend a Special Meeting (the "Meeting")
of Shareholders of Jefferson Guaranty Bancorp, Inc. ("Jefferson Guaranty
Bancorp") to be held at 8:00 a.m., local time, on December 3, 1996 in the
Board Room on the 4th floor of Jefferson Guaranty Bank, 3525 N. Causeway
Boulevard, Metairie, Louisiana.
At the Meeting holders of common stock will be asked to consider and
vote upon the proposal to approve an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of August 22, 1996, pursuant to which Jefferson Guaranty
Bancorp will merge into a subsidiary of Deposit Guaranty Corp. ("Deposit
Guaranty"), and Jefferson Guaranty Bank will merge into a banking subsidiary of
Deposit Guaranty. Pursuant to the Merger Agreement, (i) each outstanding share
of Jefferson Guaranty Bancorp common stock will be converted into either
.637363 shares of Deposit Guaranty common stock or the right to receive $29.00
in cash, and (ii) each share of Jefferson Guaranty Bancorp Preferred Stock will
be converted into either 63.7363 shares of Deposit Guaranty common stock or the
right to receive $2,900.00 in cash, in each case at the election of the holder
of the Jefferson Guaranty Bancorp shares as more fully described in the
accompanying Proxy Statement/Prospectus. Under a formula set forth in the
Merger Agreement, no more than eighty percent (80%) and no less than fifty-five
percent (55%) of the Jefferson Guaranty Bancorp shares (treating, for this
purpose, the shares of Preferred Stock as equivalent to 100 shares of Common
Stock) may be exchanged for Deposit Guaranty common stock. Likewise, no more
than forty-five percent (45%) and no less than twenty percent (20%) of the
Jefferson Guaranty Bancorp shares may be exchanged for cash. Because the Merger
Agreement places limits on the total amount of Deposit Guaranty common stock
which may be issued and the total amount of cash which may be paid, any
election is subject to adjustment and no guarantee can be given that an
election will be fully honored.
The Board of Directors of Jefferson Guaranty Bancorp believes the
mergers are in the best interests of Jefferson Guaranty Bancorp 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.
At the meeting, common and preferred shareholders will also be asked
to approve the purchase of certain warrants held by me and to pay a bonus to me
on completion of the proposed mergers.
We urge you to read the enclosed materials carefully so that you can
evaluate the proposals 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,
A. Peyton Bush, III
President
<PAGE> 6
JEFFERSON GUARANTY BANCORP, INC.
3525 NORTH CAUSEWAY BOULEVARD
METAIRIE, LOUISIANA 70002
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Jefferson Guaranty Bancorp, Inc.:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Jefferson Guaranty Bancorp, Inc. ("Jefferson Guaranty Bancorp")
will be held in the Board Room on the 4th floor of Jefferson Guaranty Bank,
3525 N. Causeway Boulevard, Metairie, Louisiana on December 3, 1996 at 8:00
a.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
August 22, 1996, by and among Deposit Guaranty Corp., a
Mississippi corporation ("Deposit Guaranty"), Deposit Guaranty
Louisiana Corp. ("Deposit Guaranty Louisiana"), a Louisiana
corporation and a wholly-owned subsidiary of Deposit Guaranty,
and Deposit Guaranty National Bank of Louisiana ("DGNB
Louisiana"), a national bank and a wholly-owned subsidiary of
Deposit Guaranty Louisiana, on the one hand, and Jefferson
Guaranty Bancorp, a Delaware corporation, and its wholly-
owned subsidiary, Jefferson Guaranty Bank, a Louisiana state
bank, on the other hand, pursuant to which (a) Jefferson
Guaranty Bancorp will merge into Deposit Guaranty Louisiana
(the "Holding Company Merger") and Jefferson Guaranty Bank
will merge into DGNB Louisiana (the "Bank Merger"), and (b)(i)
each outstanding share of Jefferson Guaranty Bancorp Common
Stock will be converted into either .637363 shares of Deposit
Guaranty common stock or the right to receive $29.00 in cash,
and (ii) each outstanding share of Jefferson Guaranty Bancorp
Preferred Stock will be converted into either 63.7363 shares
of Deposit Guaranty common stock or the right to receive
$2,900.00 in cash, in each case at the election of the holder
of the Jefferson Guaranty Bancorp shares and subject to
possible adjustment in accordance with the terms of the Merger
Agreement;
2. To consider and vote upon approval of the purchase by
Jefferson Guaranty Bancorp of warrants to purchase 56,284
shares of Jefferson Guaranty Bancorp Common Stock held by A.
Peyton Bush for the consideration described in the
accompanying Proxy Statement/Prospectus and to pay a $210,000
bonus to A. Peyton Bush immediately prior to consummation of
the Holding Company Merger and the Bank Merger; and
3. To transact such other business as may lawfully come before
the meeting or any adjournment or postponement thereof.
IF THE HOLDING COMPANY MERGER IS CONSUMMATED, ANY HOLDER OF COMMON
STOCK OR PREFERRED STOCK WHO PERFECTS HIS STATUTORY APPRAISAL RIGHTS UNDER
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW (THE "DGCL") WILL HAVE THE
RIGHT TO SEEK APPRAISAL OF HIS OR HER SHARES. SEE "APPRAISAL RIGHTS" IN THE
ACCOMPANYING PROXY STATEMENT/PROSPECTUS FOR A STATEMENT OF THE RIGHTS OF SUCH
SHAREHOLDERS AND A DESCRIPTION OF THE PROCEDURES REQUIRED TO BE FOLLOWED BY
SHAREHOLDERS TO OBTAIN APPRAISAL OF THEIR SHARES. A COPY OF THE PROVISIONS OF
THE DGCL REGARDING SUCH RIGHTS OF DISSENT AND APPRAISAL IS ATTACHED TO THE
PROXY STATEMENT/PROSPECTUS AS EXHIBIT B.
Only shareholders of record as of the close of business on October 18,
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 Jefferson Guaranty Bancorp 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
Harold N. Garic, Secretary
October __, 1996
Metairie, Louisiana
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PROSPECTUS PROXY STATEMENT
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DEPOSIT GUARANTY CORP. JEFFERSON GUARANTY BANCORP, INC.
- ------------------- --------------------
890,009 SHARES OF SPECIAL MEETING OF
COMMON STOCK, NO PAR VALUE SHAREHOLDERS TO BE HELD
DECEMBER 3, 1996
This Proxy Statement/Prospectus is being furnished to the shareholders
of Jefferson Guaranty Bancorp, Inc. ("Jefferson Guaranty Bancorp") in
connection with the solicitation of proxies by the Board of Directors of
Jefferson Guaranty Bancorp for use at its Special Meeting (the "Meeting") of
Shareholders to be held on December 3, 1996. This Proxy Statement/Prospectus
was first mailed to shareholders of Jefferson Guaranty Bancorp on or about
October __, 1996.
At the Meeting, among other things, the holders of Jefferson Guaranty
Bancorp common stock ("Jefferson Guaranty Bancorp Common Stock"), will be asked
to approve the Agreement and Plan of Merger (the "Merger Agreement"), dated as
of August 22, 1996, by and among Deposit Guaranty Corp. ("Deposit Guaranty"), a
Mississippi corporation, Deposit Guaranty Louisiana Corp. ("Deposit Guaranty
Louisiana"), a Louisiana corporation and a wholly-owned subsidiary of Deposit
Guaranty and Deposit Guaranty National Bank of Louisiana ("DGNB Louisiana"), a
national bank and a wholly-owned subsidiary of Deposit Guaranty Louisiana, on
the one hand, and Jefferson Guaranty Bancorp, a Delaware corporation, and its
wholly-owned subsidiary, Jefferson Guaranty Bank ("Jefferson Guaranty Bank"), a
Louisiana state bank, on the other hand, pursuant to which Jefferson Guaranty
Bancorp will merge into Deposit Guaranty Louisiana (the "Holding Company
Merger") and Jefferson Guaranty Bank will merge into DGNB Louisiana (the "Bank
Merger," and together with the Holding Company Merger, the "Mergers"). 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
statutory appraisal rights see "Appraisal 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
890,009 shares of Deposit Guaranty Common Stock, no par value (the "Deposit
Guaranty Common Stock") which may be issued in connection with the Mergers.
This document constitutes a Proxy Statement of Jefferson Guaranty Bancorp in
connection with the Meeting and a Prospectus of Deposit Guaranty with respect
to the shares of Deposit Guaranty Common Stock which may be issued to holders
of Jefferson Guaranty Bancorp common and preferred stock upon consummation of
the Mergers. Each of Deposit Guaranty and Jefferson Guaranty Bancorp 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 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 Jefferson Guaranty Bancorp's
shareholders upon consummation of the Holding Company 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 October ___, 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. Electronic filings made through the Electronic
Data Gathering, Analysis, and Retrieval System are publicly available through
the Commission's Web site (http://www.sec.gov).
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. The Registration Statement and any
amendments thereto, including exhibits filed as a part thereof, are available
for inspection and copying as set forth above.
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 NOVEMBER 13, 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.
<PAGE> 9
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 Reports on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 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 Jefferson Guaranty Bancorp 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
Purposes of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of the Meeting; Record Date . . . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Recommendations of the Boards of Directors . . . . . . . . . . . . . . . 3
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other Conditions to Consummation of the Mergers . . . . . . . . . . . . . 3
Election Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange of Jefferson Guaranty Bancorp Certificates;
No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . 4
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . 4
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Recent Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . 5
Jefferson Guaranty Bancorp and Subsidiary - 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Structure and Terms of the Mergers . . . . . . . . . . . . . . . . . . 11
Background of Mergers . . . . . . . . . . . . . . . . . . . . . . . . . 12
Reasons for the Mergers . . . . . . . . . . . . . . . . . . . . . . . . 13
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 14
Other Conditions to the Mergers . . . . . . . . . . . . . . . . . . . . 15
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . 15
Election to Receive Deposit Guaranty Common Stock, Cash, or
a Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exchange of Jefferson Guaranty Bancorp Certificates . . . . . . . . . . 17
Amendment; Waiver; Termination . . . . . . . . . . . . . . . . . . . . 18
Conduct of Business Pending the Mergers . . . . . . . . . . . . . . . . 18
Preferred Stock Dividends . . . . . . . . . . . . . . . . . . . . . . . 19
Resales of Deposit Guaranty Common Stock . . . . . . . . . . . . . . . 19
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 20
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . 20
PROPOSAL TO APPROVE CERTAIN PAYMENTS . . . . . . . . . . . . . . . . . . . 22
Purchase of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Certain Internal Revenue Code Provisions . . . . . . . . . . . . . . . 23
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Consequences of Failure to Approve . . . . . . . . . . . . . . . . . . 24
APPRAISAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 26
Cumulative Voting Rights . . . . . . . . . . . . . . . . . . . . . . . 27
Limitations on Directors' and Officers' Liability . . . . . . . . . . . 27
Supermajority Voting Requirements; Business Combinations . . . . . . . 27
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 28
Vacancies in the Board of Directors . . . . . . . . . . . . . . . . . . 28
Amendment of the Articles of Incorporation or Bylaws . . . . . . . . . 28
Shareholder Proposals and Nominations . . . . . . . . . . . . . . . . . 29
Redemption and Retirement . . . . . . . . . . . . . . . . . . . . . . . 29
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Shareholders' Inspection Rights . . . . . . . . . . . . . . . . . . . . 30
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
MARKET PRICES OF AND DIVIDENDS ON JEFFERSON GUARANTY BANCORP'S PREFERRED
AND COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF JEFFERSON
GUARANTY BANCORP . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Certain Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 33
INFORMATION CONCERNING JEFFERSON GUARANTY BANCORP . . . . . . . . . . . . 34
The Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
The Greater New Orleans Area . . . . . . . . . . . . . . . . . . . . . 34
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . 35
JEFFERSON GUARANTY BANCORP MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . 37
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
INDEX TO JEFFERSON GUARANTY BANCORP FINANCIAL STATEMENTS . . . . . . . . . F-1
</TABLE>
Exhibit A - Agreement and Plan of Merger
Exhibit B - Section 262 of the Delaware General Corporation Law
<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.
PURPOSES OF THE MEETING
MERGER AGREEMENT. At the Meeting holders of Jefferson Guaranty Bancorp
Common Stock will be asked to consider and vote upon a proposal to approve an
Agreement and Plan of Merger, dated August 22, 1996 (the "Merger Agreement"),
by and among Deposit Guaranty Corp., a Mississippi corporation ("Deposit
Guaranty"), its wholly-owned subsidiary, Deposit Guaranty Louisiana Corp., a
Louisiana corporation ("Deposit Guaranty Louisiana"), and Deposit Guaranty
Louisiana's wholly-owned subsidiary, Deposit Guaranty National Bank of
Louisiana, a national banking association ("DGNB Louisiana"), on the one hand,
and Jefferson Guaranty Bancorp, Inc., a Delaware corporation ("Jefferson
Guaranty Bancorp") and its wholly-owned subsidiary, Jefferson Guaranty Bank, a
Louisiana state bank ("Jefferson Guaranty Bank"), on the other hand, pursuant
to which, among other things, (a) Jefferson Guaranty Bancorp will be merged
into Deposit Guaranty Louisiana (the "Holding Company Merger"), and (b)
Jefferson Guaranty Bank will be merged into DGNB Louisiana (the "Bank Merger"
and together with the Holding Company Merger, the "Mergers"). On the effective
date of the Mergers (the "Effective Date") (i) each outstanding share of
Jefferson Guaranty Bancorp Common Stock (except shares as to which statutory
appraisal rights are exercised) will be converted into either .637363 shares of
Deposit Guaranty Common Stock or the right to receive $29.00 in cash, and (ii)
each share of Jefferson Guaranty Bancorp Preferred Stock (except shares as to
which statutory appraisal rights are exercised) will be converted into either
63.7363 shares of Deposit Guaranty Common Stock or the right to receive
$2,900.00 in cash (the "Exchange Ratio"), in each case at the election of the
holder of the Jefferson Guaranty Bancorp shares. Under a formula set forth in
the Merger Agreement, no more than eighty percent (80%) and no less than
fifty-five percent (55%) of the Jefferson Guaranty Bancorp shares may be
exchanged for Deposit Guaranty Common Stock. Likewise, no more than forty-five
percent (45%) and no less than twenty percent (20%) of the Jefferson Guaranty
Bancorp shares may be exchanged for cash. These percentages will be computed on
the Effective Date based on the sum of the number of outstanding shares of
Jefferson Guaranty Bancorp Common Stock and 100 times the number of outstanding
shares of Jefferson Guaranty Bancorp Preferred Stock. Because the Merger
Agreement places limits on the total amount of Deposit Guaranty Common Stock
which may be issued and the total amount of cash which may be paid, any
election is subject to adjustment, and no guarantee can be given that an
election will be fully honored. As a result of the Mergers, the business and
properties of Jefferson Guaranty Bancorp will become the business and
properties of Deposit Guaranty Louisiana, the business and properties of
Jefferson Guaranty Bank will become the business and properties of DGNB
Louisiana, and shareholders of Jefferson Guaranty Bancorp who receive stock
will become shareholders of Deposit Guaranty.
CERTAIN PAYMENTS. Holders of Common Stock and Preferred Stock will be
asked to consider and vote upon approval of the purchase from A. Peyton Bush,
President and Chief Executive Officer and a director of Jefferson Guaranty
Bancorp and Jefferson Guaranty Bank, of warrants held by him to purchase 56,284
common shares of Jefferson Guaranty Bancorp, for a total purchase price to Mr.
Bush of $1,283,275, and the payment to Mr. Bush immediately prior to the
consummation of the Mergers of a bonus of $210,000. In addition to the purchase
of the warrants sought to be approved, Jefferson Guaranty Bancorp will also
purchase from Mr. Bush warrants to acquire 42,750 shares of Jefferson Guaranty
Bancorp Common Stock for a total purchase price of $1,308,151.
DATE, TIME AND PLACE OF THE MEETING; RECORD DATE
A Special Meeting (the "Meeting") of the Shareholders of Jefferson
Guaranty Bancorp will be held on November 20, 1996, at 8:00 a.m., in the Board
Room on the 4th floor of Jefferson Guaranty Bank, 3525 N. Causeway Boulevard,
Metairie, Louisiana. The Board of Directors of Jefferson Guaranty Bancorp has
fixed the close of business on October 18, 1996, as the record date (the "Record
Date") for determining holders of outstanding shares of Jefferson Guaranty
Bancorp Stock entitled to notice of and to vote at the Meeting. Only holders of
Jefferson Guaranty Bancorp Common Stock of record on the books of Jefferson
Guaranty Bancorp at the close of business on the Record Date are entitled to
vote at the Meeting or at any adjournment or postponement thereof on the
Mergers, and only holders of Jefferson Guaranty Bancorp Common Stock and
Preferred Stock of record on the books of Jefferson Guaranty Bancorp at the
close of business on the
1
<PAGE> 13
Record Date are entitled to vote at the Meeting or at any adjournment or
postponement thereof on the approval of the matters described above under
"Certain Payments" ("Certain Payments Proposal"). As of the Record Date, there
were 1,244,375 shares of Jefferson Guaranty Bancorp Common Stock issued and
outstanding, each of which is entitled to one vote on both the Mergers and the
Certain Payments Proposal. Also as of the Record Date, there were 3,484 shares
of Jefferson Guaranty Bancorp Preferred Stock issued and outstanding, each of
which is entitled to 100 votes on the Certain Payments Proposal. 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
Jefferson Guaranty Bancorp Common Stock. As of the Record Date, the executive
officers and directors of Jefferson Guaranty Bancorp as a group had the power
to vote approximately 510,652 shares of Jefferson Guaranty Bancorp Common
Stock, representing approximately forty-one percent (41%) of the outstanding
shares, all of which are expected to be voted in favor of the Merger Agreement.
Approval of the Certain Payments Proposal requires the affirmative
vote at the Meeting of the holders of not less than seventy-five percent (75%)
of the sum of (i) the outstanding shares of Jefferson Guaranty Bancorp Common
Stock, and (ii) 100 times the outstanding shares of Jefferson Guaranty Bancorp
Preferred Stock, excluding in each case shares held by certain disqualified
persons under provisions of the Internal Revenue Code. As of the Record Date,
and excluding shares held by disqualified persons, the total number of votes
entitled to be cast on the Certain Payments Proposal was 1,511,324. As of
the Record Date, the executive officers and directors of Jefferson Guaranty
Bancorp who are not disqualified persons were entitled to cast 594,401 votes,
representing approximately 39.3% of the total number of votes entitled to be
cast on the Certain Payments Proposal, all of which are expected to be voted in
favor of the Certain Payments Proposal.
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 national banking association with its principal office in Jackson,
Mississippi; Commercial National Bank, a national banking association with its
principal office in Shreveport, Louisiana; Deposit Guaranty National Bank of
Louisiana, 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 three (3) full-service mortgage
banking firms, Deposit Guaranty Mortgage Company, headquartered in Jackson,
Mississippi, McAfee Mortgage Company, headquartered in Lubbock, Texas 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 June 30, 1996, Deposit Guaranty had total assets of $6.1
billion, total deposits of $4.8 billion, total loans of $3.8 billion and
shareholders' equity of $556.4 million. Based on total assets at June 30, 1996,
Deposit Guaranty ranked first among Mississippi-based bank holding companies.
DEPOSIT GUARANTY LOUISIANA CORP. Deposit Guaranty Louisiana is a
Louisiana corporation which owns one hundred percent (100%) of Commercial
National Bank and DGNB Louisiana. Deposit Guaranty acquired one hundred percent
(100%) of the stock of Deposit Guaranty Louisiana in February, 1990. Other than
its ownership of Commercial National Bank and DGNB of Louisiana, Deposit
Guaranty Louisiana does not engage in substantial business activities.
DEPOSIT GUARANTY NATIONAL BANK OF LOUISIANA. DGNB Louisiana is a
national bank headquartered at 201 NW Railroad Ave., Hammond, Louisiana. DGNB
Louisiana provides a full complement of consumer and commercial banking
services in Tangipahoa and Ascension Parishes, Louisiana.
JEFFERSON GUARANTY BANCORP, INC. Jefferson Guaranty Bancorp is a bank
holding company headquartered at 3525 North Causeway Boulevard, Metairie,
Louisiana 70002, telephone number (504) 838-4558. Its only subsidiary is
Jefferson Guaranty Bank. As of June 30, 1996, Jefferson Guaranty Bancorp had
total assets of $298.7 million, total deposits of $273.9 million, loans of
$158.2 million and shareholders' equity of $21.2 million.
2
<PAGE> 14
JEFFERSON GUARANTY BANK. Jefferson Guaranty Bank, a Louisiana state
banking association, is a full-service commercial bank offering a comprehensive
range of banking and trust services primarily in the Greater New Orleans Area.
It conducts its business through its main office at 3525 North Causeway
Boulevard, Metairie, Louisiana and at ten (10) branch offices, eight (8) in
Jefferson Parish, Louisiana, one (1) in St. Tammany Parish, Louisiana and one
(1) in the central business district of Orleans Parish, Louisiana.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The Board of Directors of Deposit Guaranty has approved the Merger
Agreement because it believes that the Mergers 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 Jefferson Guaranty Bancorp can take advantage of increased overall
efficiencies and economies of scale. The Board of Directors of Jefferson
Guaranty Bancorp has approved the Merger Agreement and recommends its approval
by shareholders because it believes shareholders will receive greater value
from the Mergers than if Jefferson Guaranty Bancorp remained independent. See
"The Mergers -- Reasons for the Mergers."
The Board of Directors of Jefferson Guaranty Bancorp has approved the
Certain Payments Proposal and recommends shareholder approval because it
believes they provide appropriate compensation to Mr. Bush and at the same time
do not reduce the consideration in the Mergers that would otherwise be received
by shareholders. In addition, approval of the Certain Payments Proposal by the
shareholders will allow them to be fully deducted for federal income tax
purposes and will avoid the federal excise tax to which Mr. Bush would be
subject if the payments were not submitted to and approved by the shareholders.
See "Proposal to Approve Certain Payments".
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 is anticipated in November,
1996, although there can be no assurance that such approval will be forthcoming
or as to the conditions to or timing of such approval. See "The Mergers --
Regulatory Approvals."
OTHER CONDITIONS TO CONSUMMATION OF THE MERGERS
In addition to regulatory approvals and the approval by the holders of
Jefferson Guaranty Bancorp Common Stock, 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 reorganization under Section 368
of the Code, the absence of a material adverse change in the financial
condition, results of operations or business of the other party, and DGNB
Louisiana entering into an employment agreement with A. Peyton Bush, III on
terms satisfactory to the parties on or before the Effective Date. See "The
Mergers -- Other Conditions to the Mergers" for a fuller discussion of the
conditions to consummation.
ELECTION PROCEDURES
Enclosed with this Proxy Statement/Prospectus is an election form to
be used by Jefferson Guaranty Bancorp shareholders to elect to receive either
cash or Deposit Guaranty Common Stock, or a combination thereof, in exchange
for Jefferson Guaranty Bancorp Common Stock or Preferred Stock. THE ELECTION
DEADLINE IS IMMEDIATELY PRIOR TO THE TIME OF THE MEETING. ELECTIONS MAY NOT BE
CHANGED AFTER THE ELECTION DEADLINE. ANY SHAREHOLDER WHO FAILS TO MAKE AN
ELECTION BY THE ELECTION DEADLINE WILL BE DEEMED TO HAVE ELECTED TO RECEIVE
CASH FOR ALL OF HIS SHARES. Because the Merger Agreement places limits on the
total amount of Deposit Guaranty Common Stock which may be issued and the total
amount of cash which may be paid, any election is subject to adjustment, and no
guarantee can be given that an election will be fully honored. See "The Mergers
- -- Election Procedures."
EXCHANGE OF JEFFERSON GUARANTY BANCORP CERTIFICATES; NO FRACTIONAL SHARES
Enclosed with this Proxy Statement/Prospectus are a letter of
transmittal and instructions for use in effecting the surrender of the
certificates of Jefferson Guaranty Bancorp Stock in exchange for
certificates representing Deposit
3
<PAGE> 15
Guaranty Common Stock and/or cash. See "The Mergers -- Exchange of Jefferson
Guaranty Bancorp 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."
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 and the Secretary of State of Delaware, or as of such
later date or time to which Deposit Guaranty and Jefferson Guaranty Bancorp
agree, which may be specified in the Certificate of Merger. Subject to all
conditions being met or waived, and unless Deposit Guaranty and Jefferson
Guaranty Bancorp otherwise agree, the Mergers will be consummated the later of
January 3, 1997 or a date selected by Deposit Guaranty within five days after
the expiration of all legally required waiting periods and receipt of
regulatory approvals. See "The Mergers -- Effective Date" and "The Mergers --
Other Conditions to the Mergers."
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
Certain members of Jefferson Guaranty Bancorp's management and Board
of Directors have interests in the Mergers in addition to their interests as
shareholders of Jefferson Guaranty Bancorp generally. These interests relate
to, among other things, provisions in the Merger Agreement regarding
indemnification and eligibility to participate in Deposit Guaranty employee
benefit plans, proposed employment and consulting relationships with DGNB
Louisiana, the renegotiation of a lease of a branch office site by DGNB
Louisiana, the purchase of outstanding warrants and a bonus payment. 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) if the Merger Agreement is not approved by
the holders of Jefferson Guaranty Bancorp Common Stock at the Meeting, (ii) if
the number of shares of Jefferson Guaranty Bancorp Common Stock, the holders of
which perfect statutory appraisal rights, exceeds ten percent (10%) of the
outstanding shares of Jefferson Guaranty Bancorp Common Stock, or (iii) if the
Mergers have not occurred by June 30, 1997. The Merger Agreement may also be
terminated by mutual consent. 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 reorganization, with the result that, no gain
or loss will be recognized by Jefferson Guaranty Bancorp or by holders of
Jefferson Guaranty Bancorp Common Stock or Preferred Stock who exchange all of
their Jefferson Guaranty Bancorp Stock solely for Deposit Guaranty Common Stock
pursuant to the Mergers (except with respect to cash, if any, received in lieu
of fractional shares) and that those shareholders of Jefferson Guaranty Bancorp
who receive cash and Deposit Guaranty Common Stock could recognize gain and
that those shareholders who receive solely cash could recognize gain, but in
any event such gain would not exceed the amount of cash received. WHILE IT IS
EXPECTED THAT ANY GAIN WILL BE SUBJECT TO CAPITAL GAINS TREATMENT, UNDER
CERTAIN LIMITED CIRCUMSTANCES DESCRIBED HEREIN, THE GAIN COULD BE TREATED AS A
DIVIDEND AND TAXED AT ORDINARY INCOME TAX RATES. Jefferson Guaranty Bancorp's
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. See "The Mergers -- Accounting Treatment."
APPRAISAL RIGHTS
Under Delaware law, any Jefferson Guaranty Bancorp shareholder who
does not vote in favor of, or abstains from voting on, the Merger Agreement and
files a demand for appraisal prior to the Meeting has the right to obtain cash
payment for the "fair value" of his shares. In order to exercise such rights,
a shareholder must comply with all procedural
4
<PAGE> 16
requirements of Section 262 of the DGCL, a description of which is provided
below under "Appraisal Rights." The "fair value" would be determined in
judicial proceedings, the result of which cannot be predicted. Failure to take
any steps required under Section 262 of the DGCL will result in the loss of
such statutory appraisal rights. See "Appraisal Rights" and Exhibit B hereto.
RECENT MARKET PRICES
On August 22,1996 the day before the public announcement that the
parties had entered into the Merger Agreement, the closing sales price for a
share of Deposit Guaranty Common Stock, as quoted on the NASDAQ National
Market, was $46.25. On October __, 1996, the closing sales price for a share of
Deposit Guaranty Common Stock was $___. No assurance can be given as to the
sales price of a share of Deposit Guaranty Common Stock on the Effective Date.
No established public trading market for Jefferson Guaranty Bancorp's Preferred
or Common Stock exists.
SELECTED FINANCIAL DATA
The following selected financial data for Deposit Guaranty and
Jefferson Guaranty Bancorp has been derived from the consolidated financial
statements of Deposit Guaranty and Jefferson Guaranty Bancorp. The data should
be read in conjunction with historical financial statements, related notes, and
other financial information concerning Jefferson Guaranty Bancorp and Deposit
Guaranty incorporated by reference or included herein.
5
<PAGE> 17
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY - SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------------------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $10,145 $9,617 $19,943 $16,912 $16,564 $17,680 $20,031
Interest expense 3,526 2,734 6,071 4,277 4,520 6,663 10,765
-------------------------------------------------------------------------------
Net interest income 6,619 6,883 13,872 12,635 12,044 11,017 9,266
Provision for possible loan losses -- -- -- -- 800 1,300 1,615
-------------------------------------------------------------------------------
Net interest income after provision 6,619 6,883 13,872 12,635 11,244 9,717 7,651
for possible loan losses
Other operating income 2,269 1,973 4,117 3,872 4,598 3,711 4,429
Other operating expense 7,524 7,553 15,067 14,467 14,225 12,730 11,757
-------------------------------------------------------------------------------
Income before income taxes, 1,364 1,303 2,922 2,040 1,617 698 323
extraordinary gain, and
cumulative effect of acctg change
Income tax expense (benefit) (120) -- -- -- 450 41 --
-------------------------------------------------------------------------------
Income before extraordinary gain and 1,484 1,303 2,922 2,040 1,167 657 323
cumulative effect of acctg change
Extraordinary gain, net of tax -- -- -- -- 514 -- --
Cumulative effect of acctg change -- -- -- -- 1,083 -- --
-------------------------------------------------------------------------------
Net income $1,484 $1,303 $2,922 $2,040 $2,764 $657 $323
===============================================================================
PRIMARY EARNINGS (LOSS) PER SHARE
Income before extraordinary gain and
cumulative effect of acctg change $1.00 $.88 $2.00 $1.36 $.74 $.43 $(.07)
Extraordinary gain, net of tax -- -- -- -- .41 -- --
Cumulative effect of acctg change -- -- -- -- .86 -- --
-------------------------------------------------------------------------------
Primary earnings (loss) per share $1.00 $.88 $2.00 $1.36 $2.01 $.43 $(.07)
===============================================================================
Primary weighted avg shares o/s 1,348,320 1,321,371 1,326,896 1,293,020 1,252,442 942,475 942,475
FULLY DILUTED EARNINGS PER SHARE
Income before extraordinary gain and
cumulative effect of acctg change $.88 $.78 $1.74 $1.24 $.73 -- --
Extraordinary gain, net of tax -- -- -- -- .32 -- --
Cumulative effect of acctg change -- -- -- -- .68 -- --
-------------------------------------------------------------------------------
Fully diluted earnings per share $.88 $.78 $1.74 $1.24 $1.73 (A) (A)
Fully diluted weighted avg shares o/s 1,696,720 1,669,771 1,675,296 1,641,420 1,593,691 (A) (A)
===============================================================================
PREFERRED DIVIDENDS $139 $139 $279 $279 $251 $253 $388
-------------------------------------------------------------------------------
(A) Fully diluted earnings per share computations are not presented in 1992 and 1991 as the convertible preferred stock
and stock warrants had an antidilutive effect on the computations.
STATEMENTS OF CONDITION - AVERAGES
Total assets $298,500 $268,837 $279,309 $266,820 $265,182 $264,902 $254,880
Earning assets 268,670 242,401 252,138 241,042 238,202 236,847 231,513
Investment securities 93,464 70,727 74,379 82,854 81,333 76,167 57,022
Loans, net of unearned income 154,922 162,533 159,081 150,178 145,327 143,694 135,313
Total deposits 274,404 246,446 256,405 245,737 244,686 244,471 229,109
Total stockholders' equity 20,482 17,899 18,495 16,489 14,205 11,939 11,328
SELECTED RATIOS
Return on average assets 1.00% .98% 1.05% .76% 1.04% .25% .13%
Return on average equity 14.57 14.68 15.80 12.37 19.46 5.50 2.85
Net interest margin 4.95 5.73 5.50 5.24 5.06 4.65 4.00
Reserve for possible loan losses to 2.82 3.11 3.22 2.92 3.10 2.47 2.44
loans, net of unearned income, end of
period
Net charge-offs (recoveries) to
average loans, net of unearned
income .70 (.32) (.13) (.19) (.03) .76 1.48
Average equity to average assets 6.86 6.66 6.62 6.18 5.36 4.51 4.44
Leverage ratio 6.94 6.49 6.61 6.14 5.44 2.54 2.22
Tier 1 risk-based capital 11.92 10.46 11.28 9.74 9.66 4.45 4.58
Total risk-based capital 13.35 11.92 12.74 11.17 11.10 8.77 9.17
</TABLE>
6
<PAGE> 18
DEPOSIT GUARANTY CORP. AND SUBSIDIARIES - SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
June 30, Year Ended December 31,
------------------------ ------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income 209,594 191,042 $ 402,704 $ 307,272 $ 299,327 $ 322,114 $ 382,432
Interest expense 90,442 81,574 173,432 125,881 124,687 155,459 231,473
------------------------ ------------------------------------------------------------------
Net interest income 119,152 109,468 229,272 181,391 174,640 166,655 150,959
Provision for possible loan
losses 2,670 1,000 2,160 (4,750) (16,000) 10,378 17,260
------------------------ ------------------------------------------------------------------
Net interest income after
provision for possible loan
losses 116,482 108,468 227,112 186,141 190,640 156,277 133,699
Other operating income 57,583 42,215 91,989 93,499 74,781 67,977 61,439
Other operating expense 112,460 98,915 211,452 180,047 171,567 164,470 152,828
------------------------ ------------------------------------------------------------------
Income before income taxes 61,605 51,768 107,649 99,593 93,854 59,784 42,310
Income tax expense 19,680 16,423 35,029 32,463 27,302 14,270 10,090
------------------------ ------------------------------------------------------------------
Net income $41,925 $35,345 $ 72,620 $ 67,130 $ 66,552 $ 45,514 $ 32,220
======================== ==================================================================
NET INCOME PER SHARE
Primary $2.18 $1.84 $3.78 $3.80 $3.77 $2.67 $2.04
Fully diluted 2.18 1.84 3.78 3.80 3.77 2.63 1.93
WEIGHTED AVERAGE SHARES
OUTSTANDING
Primary 19,193,877 19,187,536 19,215,581 17,668,062 17,649,852 17,033,664 15,799,996
Fully diluted 19,193,877 19,187,536 19,215,581 17,668,062 17,649,852 17,465,282 17,442,388
CASH DIVIDENDS PER SHARE $.68 $.58 $1.21 $1.06 $.93 $.80 $.78
STATEMENTS OF CONDITION - AVERAGES
Total assets $5,948,987 $5,355,417 $5,571,697 $4,940,977 $4,826,726 $4,777,596 $4,814,533
Earning assets 5,318,556 4,782,541 4,961,261 4,413,938 4,333,740 4,275,345 4,329,336
Securities available for sale 1,294,080 33,589 186,194 712,184 1,308,634 --- ---
Investment securities 127,790 1,524,301 1,365,070 718,891 396,011 1,616,658 1,417,299
Loans, net of unearned
income 3,655,285 3,085,791 3,273,408 2,581,724 2,293,416 2,261,034 2,411,731
Deposits 4,677,628 4,296,162 4,438,797 3,997,038 3,867,669 3,876,927 3,990,963
Long-term debt 36,039 --- --- --- --- 6,320 24,020
Total stockholders' equity 531,615 485,025 498,023 429,967 367,592 315,833 275,345
SELECTED RATIOS
Return on average assets 1.42% 1.33% 1.30% 1.36% 1.38% .95% .67%
Return on average equity 15.86 14.70 14.58 15.61 18.10 14.41 11.70
Net interest margin - tax
equivalent 4.64 4.73 4.75 4.24 4.18 4.12 3.77
Allowance for possible loan
losses to loans, net of
unearned income 1.56 1.81 1.64 1.95 2.56 3.30 3.74
Net charge-offs (recoveries) to
average loans, net of
unearned income .15 .05 .12 .10 (.14) 1.02 .77
Dividend payout 31.19 31.52 32.01 27.89 24.67 29.96 38.24
Average equity to average
assets 8.94 9.06 8.94 8.70 7.62 6.61 5.72
Leverage ratio 8.27 8.26 7.87 8.43 8.13 6.80 5.42
Tier I risk-based capital 11.01 11.71 11.05 12.49 13.28 12.00 9.95
Total risk-based capital 12.26 12.97 12.30 13.75 14.54 13.27 12.11
</TABLE>
7
<PAGE> 19
COMPARATIVE PER SHARE INFORMATION
<TABLE>
<CAPTION>
Historical Deposit Guaranty
---------------------------------- and Jefferson Jefferson
Jefferson Guaranty Bancorp Guaranty Bancorp
Deposit Guaranty Pro Forma Pro Forma
Per Common Share Guaranty Bancorp Combined(a) Equivalent (b)
- ---------------------------------- ---------- ----------- ----------------- ----------------
<S> <C> <C> <C> <C>
NET INCOME (c)
For the six months ended
June 30, 1996
Primary $2.18 $1.00 $2.15 $1.37
Fully Diluted 2.18 .88 2.15 1.37
For the year ended December 31, 1995
Primary 3.78 2.00 3.73 2.38
Fully Diluted 3.78 1.74 3.73 2.38
COMMON STOCK DIVIDENDS (d)
For the six months ended
June 30, 1996 .68 - .68 .43
For the year ended
December 31,
1995 1.21 - 1.21 .77
PREFERRED STOCK DIVIDENDS (e)
For the six months ended
June 30, 1996 - 40.00 - 43.34
For the year ended
December 31, 1995 - 80.00 - 77.12
BOOK VALUE PER COMMON SHARE (f)
As of June 30, 1996 28.31 12.63 28.31 18.04
As of December 31, 1995 27.82 11.90 27.82 17.73
</TABLE>
(a) In calculating the pro forma combined earnings per share amounts
reflected above, it was assumed that the maximum number (890,009) of
shares of Deposit Guaranty Common Stock along with $10.1 million in
cash are exchanged in the transaction. The calculation also assumes
that an equivalent amount of Deposit Guaranty shares issued to
Jefferson Guaranty Bancorp shareholders in the business combination are
concurrently reacquired in separate stock purchases of shares on the
open market, thereby resulting in no additional Deposit Guaranty
shares of common stock outstanding for purposes of computing pro forma
combined earnings per share.
(b) Jefferson Guaranty Bancorp pro forma equivalent amounts are computed
by multiplying the pro forma combined amounts by the exchange ratio
of .637363.
(c) Net income per common share is based on weighted average common shares
outstanding.
(d) Pro forma common stock dividends represent historical cash dividends of
Deposit Guaranty.
(e) Pro forma preferred dividends represent the exchange of one share of
Jefferson Guaranty Bancorp Preferred Stock for Deposit Guaranty Common
Stock using the exchange rate of 63.7363 and the applicable Deposit
Guaranty dividend rate.
(f) Book value per common share is based on total period-end shareholders'
equity and in the case of Jefferson Guaranty Bancorp assumes all of
its Preferred Stock had been converted into common shares and all of
the management warrants had been exercised.
8
<PAGE> 20
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to shareholders of
Jefferson Guaranty Bancorp in connection with the solicitation by the Board of
Directors of Jefferson Guaranty Bancorp of proxies for use at a Special Meeting
of Shareholders (the "Meeting") to be held at 8:00 a.m., local time, on
December 3, 1996 in the Board Room on the 4th floor of Jefferson Guaranty Bank,
3525 N. Causeway Boulevard, Metairie, Louisiana, and at any adjournment or
postponement thereof.
At the Meeting, shareholders of Jefferson Guaranty Bancorp Common
Stock will consider and vote upon a proposal to approve the Merger Agreement,
by and among Deposit Guaranty, Deposit Guaranty Louisiana, DGNB Louisiana,
Jefferson Guaranty Bancorp, and Jefferson Guaranty Bank pursuant to which
Jefferson Guaranty Bancorp will merge into Deposit Guaranty Louisiana, and
Jefferson Guaranty Bank will merge into DGNB Louisiana. On the Effective Date
(i) each outstanding share of Jefferson Guaranty Bancorp Common Stock (except
shares as to which statutory appraisal rights are exercised) will be converted
into either .637363 shares of Deposit Guaranty Common Stock or the right to
receive $29.00 in cash, and (ii) each share of Jefferson Guaranty Bancorp
Preferred Stock (except shares as to which statutory appraisal rights are
exercised) will be converted into either 63.7363 shares of Deposit Guaranty
Common Stock or the right to receive $2,900.00 in cash (the "Exchange Ratio"),
in each case at the election of the holder of the Jefferson Guaranty Bancorp
shares. Under a formula set forth in the Merger Agreement, no more than eighty
percent (80%) and no less than fifty-five percent (55%) of the Jefferson
Guaranty Bancorp shares may be exchanged for Deposit Guaranty Common Stock.
Likewise, no more than forty-five percent (45%) and no less than twenty percent
(20%) of the Jefferson Guaranty Bancorp shares may be exchanged for cash. These
percentages will be computed based on the sum of the number of outstanding
shares on the Effective Date of Jefferson Guaranty Bancorp Common Stock and 100
times the number of outstanding shares on the Effective Date of Jefferson
Guaranty Bancorp Preferred Stock. Because the Merger Agreement places limits on
the total amount of Deposit Guaranty Common Stock which may be issued and the
total amount of cash which may be paid, any election is subject to adjustment,
and no guarantee can be given that an election will be fully honored.
At the Meeting, holders of Common Stock and Preferred Stock will be
asked to consider and vote upon approval of the purchase from A. Peyton Bush,
President and Chief Executive Officer and a director of Jefferson Guaranty
Bancorp and Jefferson Guaranty Bank, of warrants held by him to purchase 56,284
common shares of Jefferson Guaranty Bancorp, for a total purchase price to Mr.
Bush of $1,283,275, and the payment to Mr. Bush immediately prior to the
consummation of the Mergers of a bonus of $210,000. In addition to the purchase
of the warrants sought to be approved, Jefferson Guaranty Bancorp will also
purchase from Mr. Bush warrants to acquire 42,750 shares of Jefferson Guaranty
Bancorp for a total purchase price of $1,308,151.
This Proxy Statement/Prospectus constitutes a proxy statement of
Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bancorp is
located at 3525 North Causeway Boulevard, Metairie, Louisiana 70002, and its
telephone number is (504) 838-4558.
This Proxy Statement/Prospectus is first being mailed to shareholders
of Jefferson Guaranty Bancorp on or about October __, 1996.
RECORD DATE; VOTING RIGHTS; PROXIES
The Board of Directors of Jefferson Guaranty Bancorp has fixed the
close of business on October 18, 1996 as the Record Date for determining holders
of outstanding shares of Jefferson Guaranty Bancorp entitled to notice of and
to vote at the Meeting. Only holders of Jefferson Guaranty Bancorp Common Stock
of record on the books of Jefferson Guaranty Bancorp at the close of business
on the Record Date are entitled to vote at the Meeting or at any adjournment or
postponement thereof on the Mergers, and
9
<PAGE> 21
only holders of Jefferson Guaranty Bancorp Common Stock and Preferred Stock of
record on the books of Jefferson Guaranty Bancorp at the close of business on
the Record Date are entitled to vote at the Meeting or at any adjournment or
postponement thereof on the approval of the matters described under "Proposal
to Approve Certain Payments." As of the Record Date, there were 1,244,375
shares of Jefferson Guaranty Bancorp Common Stock issued and outstanding, each
of which is entitled to one vote on both the Mergers and the Certain Payments
Proposal, except for certain shares held by "disqualified persons" as defined
under the provisions of the Internal Revenue Code. Also as of the Record Date,
there were 3,484 shares of Jefferson Guaranty Bancorp Preferred Stock issued
and outstanding, each of which is entitled to 100 votes on the Certain Payments
Proposal, except for certain shares held by "disqualified persons." The
presence, in person or by proxy, of a majority of the total voting power of
Jefferson Guaranty Bancorp Common Stock is necessary to constitute a quorum of
the shareholders to take action at the Meeting on the Mergers. The presence, in
person or by proxy, of a majority of the total voting power of Jefferson
Guaranty Bancorp Common Stock and Preferred Stock is necessary to constitute a
quorum of the shareholders to take action at the Meeting on the Certain
Payments Proposal. Shares of Jefferson Guaranty Bancorp 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 the Certain Payments
Proposal, 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 Jefferson Guaranty Bancorp (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 Jefferson
Guaranty Bancorp Common Stock. Therefore, an abstention or failure to return a
properly 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 Jefferson Guaranty
Bancorp as a group had the power to vote approximately 510,652 shares of
Jefferson Guaranty Bancorp Common Stock representing approximately forty-one
percent (41%) 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.
Approval of the Certain Payments Proposal requires the affirmative
vote at the Meeting of the holders of not less than seventy-five percent (75%)
of the sum of (i) the outstanding shares of Jefferson Guaranty Bancorp Common
Stock, and (ii) 100 times the outstanding shares of Jefferson Guaranty Bancorp
Preferred Stock, excluding in each case shares held by certain disqualified
persons under provisions of the Internal Revenue Code. As of the Record Date,
and excluding shares held by disqualified persons, the total number of votes
entitled to be cast on the Certain Payments Proposal was 1,511,324. As of the
Record Date, the executive officers and directors of Jefferson Guaranty Bancorp
who are not disqualified persons were entitled to cast 594,401 votes,
representing approximately 39.3% of the total number of votes entitled to be
cast on the Certain Payments Proposal, all of which are expected to be voted in
favor of the Certain Payments Proposal.
Jefferson Guaranty Bancorp 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 Jefferson Guaranty
Bancorp 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 Jefferson
Guaranty Bancorp Stock held of record by such persons, and Jefferson Guaranty
Bancorp may reimburse such custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred in connection therewith.
10
<PAGE> 22
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 Jefferson
Guaranty Bancorp, Jefferson Guaranty Bancorp will be merged with and into
Deposit Guaranty Louisiana, and Jefferson Guaranty Bank will be merged with and
into DGNB Louisiana. As a result of the Mergers, the separate corporate
existence of Jefferson Guaranty Bancorp and Jefferson Guaranty Bank will cease
and shareholders of Jefferson Guaranty Bancorp, except for those who receive
only cash for their Jefferson Guaranty Bancorp shares, 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 Mergers -- 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 Holding Company Merger, Jefferson Guaranty
Bancorp will be merged with and into Deposit Guaranty Louisiana and (i) each
outstanding share of Jefferson Guaranty Bancorp Common Stock (except shares as
to which statutory appraisal rights are exercised) will be converted into
either .637363 shares of Deposit Guaranty Common Stock or the right to receive
$29.00 in cash, and (ii) each share of Jefferson Guaranty Bancorp Preferred
Stock (except shares as to which statutory appraisal rights are exercised) will
be converted into either 63.7363 shares of Deposit Guaranty Common Stock or the
right to receive $2,900.00 in cash, in each case at the election of the holder
of the Jefferson Guaranty Bancorp shares. Under a formula set forth in the
Merger Agreement, no more than eighty percent (80%) and no less than fifty-five
percent (55%) of the Jefferson Guaranty Bancorp shares may be exchanged for
Deposit Guaranty Common Stock. Likewise, no more than forty-five percent (45%)
and no less than twenty percent (20%) of the Jefferson Guaranty Bancorp shares
may be exchanged for cash. These percentages will be computed based on the sum
of the number of outstanding shares on the Effective Date of Jefferson Guaranty
Bancorp Common Stock and 100 times the number of outstanding shares on the
Effective Date of Jefferson Guaranty Bancorp Preferred Stock. To the extent the
sum of all cash elections exceeds the total cash elections permitted under the
Merger Agreement, Deposit Guaranty Common Stock will be allocated pro rata to
the electing shareholders instead of cash to the extent of the
oversubscription. To the extent all Deposit Guaranty Common Stock elections
exceed the total Deposit Guaranty Common Stock permitted under the Merger
Agreement, cash will be allocated pro rata to the electing shareholders instead
of Deposit Guaranty Common Stock to the extent of the oversubscription. 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 Jefferson Guaranty Bancorp and
Deposit Guaranty. If the maximum number of shares of Deposit Guaranty Common
Stock which may be issued upon consummation of the Mergers (890,009) are
issued, such shares will constitute approximately 4.6% of the shares of Deposit
Guaranty Common Stock outstanding immediately after the Effective Date. This
calculation is based upon the number of shares of 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 preceding
the Effective Date as quoted on the National Association of Securities Dealers
Automated Quotation System, by (ii) the fraction of a share of Deposit Guaranty
Common Stock to which such holder would otherwise be entitled.
11
<PAGE> 23
BACKGROUND OF MERGERS
As part of its strategic planning, Jefferson Guaranty Bancorp's Board of
Directors considered various options from time to time, including the
possibility of merging with another financial institution. Periodically,
Jefferson Guaranty Bancorp had received informal inquiries as to its interest
in being acquired. Jefferson Guaranty Bancorp did not respond to these
inquiries because, at the time, the Board of Directors deemed it in the best
interest of Jefferson Guaranty Bancorp's shareholders to remain an independent
company. During 1996, Peyton Bush, President and Chief Executive Officer of
Jefferson Guaranty Bancorp, had discussions with individual Board members, as
well as large non-director shareholders, concerning the strategic alternatives
available to Jefferson Guaranty Bancorp. In April 1996, Jefferson Guaranty
Bancorp's management discussed with the Executive Committee of the Board and
the Board the possibility that under certain circumstances merging with a
larger high-quality financial institution may be more beneficial to the
shareholders than remaining independent. It was noted that over the past two
years there had been an increase in acquisitions of Louisiana banks at
substantial prices. It was also expected that Jefferson Guaranty Bancorp would
face increasing competition from larger institutions and that the relaxation of
interstate branching laws could intensify that competition. In discussions with
the Board, it was agreed that Mr. Bush would make discreet inquiries to three
financial institutions headquartered outside of Louisiana which had been
identified as having an interest in Jefferson Guaranty Bancorp and in the
Greater New Orleans market. These institutions were chosen because it was
thought that they would be willing to pay higher prices than others for the
market penetration that acquiring Jefferson Guaranty Bancorp would provide.
Since Jefferson Guaranty Bancorp was not committed to a sale, the Board wanted
to limit the number of contacts so as to reduce the possibility of rumors or
publicity and be in a position to terminate the merger discussions without
damage to Jefferson Guaranty Bancorp's market position.
Between April and June, 1996, Jefferson Guaranty Bancorp provided certain
financial information to the three contacted institutions, which were advised
that Jefferson Guaranty Bancorp had not made a decision to sell but was
interested in determining their level of interest in acquiring Jefferson
Guaranty Bancorp. Mr. Bush kept the Executive Committee of the Board informed
of these events and updated the full Board at its May 1996 meeting. In mid-June
1996, Jefferson Guaranty Bancorp received from the three institutions written
preliminary expressions of interest containing financial terms, all of which
were subject to change based on their "due diligence" reviews of Jefferson
Guaranty Bancorp.
On June 24, 1996, management presented these expressions of interest to
the Executive Committee of the Board, which reached no conclusion as to the
acceptability of any of the proposals. The Committee authorized Mr. Bush to
contact Deposit Guaranty, which had submitted the highest proposal, and to
invite it to perform a "due diligence" review and submit a firm proposal. After
completing its review, Deposit Guaranty submitted a proposal valued at $28.05
per Jefferson Guaranty Bancorp Common share. The Board at its special meeting
on July 24, 1996 evaluated this proposal as well as the other two institutions'
expressions of interest. The Board authorized Mr. Bush to inform Deposit
Guaranty that it desired a higher price and would be inviting one of the other
institutions to perform a "due diligence" review. Deposit Guaranty responded
by increasing its proposal to the current merger consideration with the
understanding that Jefferson Guaranty Bancorp would not solicit other bids or
allow any other institution to perform a "due diligence" review. After
consultation with the Executive Committee and other Board members, management
concluded that Deposit Guaranty's offer was substantially above the other
proposals received, was comparable to the prices paid recently for other banks
in Louisiana, and was very favorable to Jefferson Guaranty Bancorp's
shareholders. Jefferson Guaranty Bancorp engaged special merger counsel who,
along with management and Jefferson Guaranty Bancorp's primary corporate legal
counsel, worked to reach an agreement with Deposit Guaranty to be submitted to
the Board. These negotiations were substantially concluded by August 19, 1996.
On August 16, 1996 a bank holding company which was not one of the three
institutions previously contacted submitted an unsolicited expression of
interest to acquire Jefferson Guaranty Bancorp. The proposal contained a range
of values to be given for Jefferson Guaranty Bancorp's stock. After
consultation with Executive Committee members, management requested
clarification of the expression of interest.
On August 20, 1996, a draft of a proposed definitive merger agreement
with Deposit Guaranty was circulated to Jefferson Guaranty Bancorp's Board. On
the morning of August 22, 1996 the Executive Committee of the Board met to
review the terms of the proposed definitive agreement and the presentation to
be made that afternoon to the full Board. Mr. Bush presented a comparison of
the Deposit Guaranty terms and the preliminary expression of interest from the
other institution.
12
<PAGE> 24
He stated that he expected to receive a revised proposal from the other
institution prior to the Board meeting and speculated that the revised letter
would propose a price at or near the upper end of the range contained in the
other institution's preliminary proposal. Based on that assumption, after a
discussion of management's comparative analysis, the Executive Committee
concluded that it would be in the shareholders' best interest to sign the
agreement with Deposit Guaranty. The Committee approved management's analysis
for presentation to the Board. Later on August 22, 1996 but prior to the Board
meeting, a revised expression of interest was received from the other
institution proposing a price approximately 4% higher in face transaction value
than Deposit Guaranty's offer, subject to a "due diligence" review. The
revised proposal was consistent with the assumptions used by the Executive
Committee in its earlier discussions.
On the afternoon of August 22, 1996, a special Board meeting was held to
review the terms of the proposed merger agreement along with the expression of
interest received from the other institution. After carefully considering the
other institution's proposal and consulting with the Board's advisors and
Jefferson Guaranty Bancorp management, the Board voted unanimously to enter
into the Merger Agreement with Deposit Guaranty.
REASONS FOR THE MERGERS
In reaching its decision the Board considered a number of factors
including, but not limited to, the following:
(a) an evaluation of the financial condition and results of
operations of, and prospects for, Jefferson Guaranty Bancorp and
Deposit Guaranty, and of the possibility of long-term
appreciation in the value of Deposit Guaranty Common Stock.
(b) the financial terms of the Mergers, including the relationship
of the value of the Deposit Guaranty Common Stock or cash
issuable in the Mergers to the market value, book value, and
earnings per share of Jefferson Guaranty Bancorp Common Stock,
and other information such as premiums paid in other recent
Louisiana merger transactions.
(c) a comparison of the Deposit Guaranty proposed merger
consideration and the other institution's proposal in terms of
the claim on earnings and book value, as well as the market
value, to be exchanged for each Jefferson Guaranty Bancorp
share.
(d) the risk of Deposit Guaranty's withdrawing its offer if
Jefferson Guaranty Bancorp decided to negotiate with the other
institution.
(e) the possibility that Jefferson Guaranty Bancorp may not be able
to negotiate a more favorable definitive agreement with the
other institution after its due diligence review.
(f) the delay and uncertainty associated with another due diligence
review and the drafting and negotiation of another complex
definitive agreement.
(g) the likelihood that Jefferson Guaranty Bancorp 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.
(h) the lack of marketability of Jefferson Guaranty Bancorp
Preferred and Common Stock and the liquidity that would be
offered to Jefferson Guaranty Bancorp's shareholders who receive
Deposit Guaranty Common Stock through the ownership of
securities of a publicly traded company such as Deposit
Guaranty.
(i) the fact that Deposit Guaranty currently pays dividends on its
Common Stock and Jefferson Guaranty Bancorp does not.
13
<PAGE> 25
(j) the nonfinancial terms of the Mergers, including the flexible
structure of the transaction offering Jefferson Guaranty
Bancorp's shareholders the ability to elect to receive either
cash or Deposit Guaranty stock in exchange for their Jefferson
Guaranty Bancorp Common and Preferred stock and the treatment of
the Mergers as a tax-free exchange for those shareholders who
receive all stock.
(k) the likelihood of the Mergers being approved by applicable
regulatory authorities without undue conditions or delay.
(l) the effect of the Mergers on customers and employees of Jefferson
Guaranty Bank.
Jefferson Guaranty Bancorp's Board did not assign any specific or
relative weight to the foregoing or other factors in its considerations.
Jefferson Guaranty Bancorp's Board believes that the Merger Agreement will
provide significant value to all Jefferson Guaranty Bancorp shareholders and
will enable them to participate in opportunities for growth that Jefferson
Guaranty Bancorp's Board believes the Mergers make possible.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS OF JEFFERSON GUARANTY
BANCORP HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, BELIEVES THAT THE MERGER
AGREEMENT IS IN THE BEST INTERESTS OF JEFFERSON GUARANTY BANCORP'S SHAREHOLDERS
AND RECOMMENDS THAT ALL SHAREHOLDERS OF COMMON STOCK VOTE "FOR" APPROVAL OF THE
MERGER AGREEMENT.
DEPOSIT GUARANTY. The Deposit Guaranty Board of Directors believes that
by expanding Deposit Guaranty's customer base in the southeastern 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 Jefferson Guaranty Bancorp will allow Deposit Guaranty
and Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bancorp; the compatibility
and complimentary nature of the respective businesses and managerial
philosophies of Deposit Guaranty and Jefferson Guaranty Bancorp; and the
relative prices paid in recent acquisitions of financial institutions.
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 and of Delaware, or as of such later date or time to
which Deposit Guaranty and Jefferson Guaranty Bancorp agree, which may be
specified in the Certificate of Merger. Subject to all conditions being met or
waived, and unless Deposit Guaranty and Jefferson Guaranty Bancorp otherwise
agree, the Mergers will be consummated the later of January 3, 1997 or a date
selected by Deposit Guaranty, within five days after the expiration of all
legally required waiting periods and receipt of all regulatory approvals. See
"The Mergers -- Regulatory Approvals" and -- "Other Conditions to the Mergers."
REGULATORY APPROVALS
Consummation of the Mergers is conditioned on approval by all required
regulatory authorities, including approval by the OCC. OCC approval is
anticipated in November, 1996, although there can be no assurance that such
approval will be forthcoming or as to the conditions to or timing of such
approval. 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
14
<PAGE> 26
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 Jefferson Guaranty Bancorp's 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 reorganization under Section 368 of the Code, (iii) the accuracy
on the date of closing of the representations and warranties made in the Merger
Agreement by each party in all material respects except for inaccuracies in
such representations and warranties that are not material individually or in
the aggregate to the financial condition, results of operations, business or
prospects of the party, (iv) the absence prior to the Effective Date of a
material adverse change in the financial condition, results of operations or
business of the other party and (v) the receipt of customary legal opinions.
Consummation of the Mergers is also conditioned upon DGNB Louisiana entering
into an employment agreement with A. Peyton Bush on terms satisfactory to the
parties on or before the Effective Date, the acquisition by Jefferson Guaranty
Bancorp of certain outstanding warrants held by A. Peyton Bush and Harold N.
Garic, and the acquisition or exercise of all other outstanding warrants.
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
INDEMNIFICATION. The Merger Agreement provides that Deposit Guaranty
Louisiana shall indemnify the former directors, officers, employees and agents
of Jefferson Guaranty Bancorp 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 Jefferson
Guaranty Bancorp's Articles of Incorporation and Bylaws. The Merger Agreement
also provides that DGNB Louisiana shall indemnify the former directors,
officers, employees and agents of Jefferson Guaranty 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 Jefferson Guaranty Bank's Articles of Incorporation and Bylaws.
Deposit Guaranty Louisiana and DGNB Louisiana have agreed to use their best
efforts to maintain Jefferson Guaranty Bancorp's and Jefferson Guaranty 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 Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bancorp or Jefferson Guaranty 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 Jefferson Guaranty Bancorp and Jefferson Guaranty Bank 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 Jefferson
Guaranty 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 Jefferson Guaranty Bank employee who,
immediately prior to the Effective Date, is covered by or is a participant in a
Jefferson Guaranty 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.
LEASE OF BRANCH SITE. In 1993, Jefferson Guaranty Bank leased a branch
site in the Central Business District of New Orleans from a corporation which
is owned directly or indirectly by Thomas B. Coleman and Thomas K. Winingder,
each of whom is a director of Jefferson Guaranty Bancorp, pursuant to which it
made rental payments of $80,000 and $60,000 for years 1995 and 1994. Rental
payments of approximately $80,000 will be made in 1996. No rental payments were
due for 1993.
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<PAGE> 27
The lease agreement, which expires in April 1999, contains a provision which
allows either Jefferson Guaranty Bank or the lessor to cancel the lease should
Jefferson Guaranty Bank be acquired by another institution. Deposit Guaranty
has expressed its desire to retain this branch site but to date no agreement
has been reached on the renewal of the lease.
EMPLOYMENT AND CONSULTING AGREEMENTS. DGNB Louisiana required as a
condition to the consummation of the Mergers that it shall have entered into an
employment agreement with A. Peyton Bush, Chief Executive Officer and a
director of Jefferson Guaranty Bancorp. The agreement will commence on the date
that the Mergers become effective and will be for two years during which time
he would be employed by DGNB Louisiana and could not accept employment by
another financial institution. Mr. Bush will receive an annual salary
substantially less than his current salary and will receive benefits similar to
the benefits he is currently receiving. In accordance with this agreement, if
DGNB Louisiana terminates Mr. Bush's employment without cause, DGNB Louisiana
must pay him his full salary called for in the agreement through the expiration
date of the agreement.
DGNB Louisiana will also execute pursuant to the Merger Agreement a
consulting agreement with Harold N. Garic which provides for a severance
payment equal to three months of salary at his current level and continuation
of his salary for an additional nine months. Under this agreement, Mr. Garic is
not prohibited from obtaining other employment.
PURCHASE OF WARRANTS AND BONUS. Jefferson Guaranty Bancorp will purchase
warrants to acquire its common stock held by certain of its officers, including
A. Peyton Bush and Harold N. Garic, as more fully described under "Proposal to
Approve Certain Payments" elsewhere herein. In addition, Mr. Bush will be paid
a bonus of $210,000 immediately prior to the consummation of the Mergers.
ELECTION TO RECEIVE DEPOSIT GUARANTY COMMON STOCK, CASH, OR A COMBINATION
Enclosed with this Proxy Statement/Prospectus is an election form to be
used by Jefferson Guaranty Bancorp's shareholders to elect to receive either
cash or Deposit Guaranty Common Stock, or a combination thereof, in exchange
for Jefferson Guaranty Bancorp Common Stock and Jefferson Guaranty Bancorp
Preferred Stock. THE ELECTION DEADLINE IS IMMEDIATELY PRIOR TO THE MEETING. ANY
SHAREHOLDER WHO FAILS TO MAKE AN ELECTION BY THE ELECTION DEADLINE WILL BE
DEEMED TO HAVE ELECTED TO RECEIVE CASH FOR ALL OF HIS SHARES. ELECTIONS MAY NOT
BE CHANGED AFTER THE ELECTION DEADLINE. Because the Merger Agreement places
limits on the total amount of Deposit Guaranty Common Stock which may be issued
and the total amount of cash which may be paid, any election is subject to
adjustment and no guarantee can be given that an election will be fully
honored. To the extent the sum of all cash elections exceeds the total cash
elections permitted under the Merger Agreement, Deposit Guaranty Common Stock
will be allocated pro rata to the electing shareholders instead of cash to the
extent of the oversubscription. To the extent all Deposit Guaranty Common Stock
elections exceed the total Deposit Guaranty Common Stock permitted under the
Merger Agreement, cash will be allocated pro rata to the electing shareholders
instead of Deposit Guaranty Common Stock to the extent of the oversubscription.
The exchange consideration of .637363 shares of Deposit Guaranty Common
Stock for each share of Jefferson Guaranty Bancorp Common Stock or one
hundredth of a share of Jefferson Guaranty Bancorp Preferred Stock was
determined based on a per share market price of Deposit Guaranty Common Stock
of $45.50, or $29.00 in value per share of Jefferson Guaranty Bancorp Common
Stock or one hundredth of a share of Jefferson Guaranty Bancorp Preferred
Stock, respectively, the same amount as the cash consideration that would be
paid by Deposit Guaranty. Shareholders who receive Deposit Guaranty
Common Stock for all or a portion of their shares may receive more or less than
$29.00 per share of Jefferson Guaranty Bancorp Common Stock or one hundredth of
a share of Jefferson Guaranty Bancorp Preferred Stock in actual market value of
Deposit Guaranty Common Stock on the Effective Date, depending on the price of
Deposit Guaranty Common Stock on the Effective Date of the Holding Company
Merger. Any election to receive stock will be determined and be final as of the
date of the Meeting and may not be changed thereafter, even though the
Effective Date may occur a considerable time after the Meeting, and the market
price of Deposit Guaranty Common Stock may increase or decrease after the
election deadline.
The table below shows for various market values of Deposit Guaranty
Common Stock what the value would be per "Equivalent JGB Share" (equal to one
share of Jefferson Guaranty Bancorp Common Stock or one hundredth of a share of
Jefferson Guaranty Bancorp Preferred Stock), using the stock exchange ratio of
.637363. In addition, by way of illustration the table shows the average value
per "Equivalent JGB Share" assuming various percentages of stock and cash are
received:
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<TABLE>
<CAPTION>
Market Price Value of Deposit Guaranty
Per Deposit Guaranty Common Stock Per Average Value Received Per Equivalent JGB Share
Share Equivalent JGB Share Assuming Various Percentages of Stock and Cash Received
--------------------- ------------------------- -------------------------------------------------------------------
80% Stock 50% Stock 20% Stock
100% Stock 20% Cash 50% Cash 80% Cash 100% Cash
---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
$42.00 $26.77 $26.77 $27.22 $27.89 $28.55 $29.00
43.00 27.41 27.41 27.73 28.21 28.68 29.00
44.00 28.04 28.04 28.23 28.52 28.81 29.00
45.00 28.68 28.68 28.74 28.84 28.94 29.00
45.50 29.00 29.00 29.00 29.00 29.00 29.00
46.00 29.32 29.32 29.26 29.16 29.06 29.00
47.00 29.96 29.96 29.77 29.48 29.19 29.00
48.00 30.59 30.59 30.27 29.80 29.32 29.00
49.00 31.23 31.23 30.78 30.12 29.45 29.00
</TABLE>
As of the close of business on October __, 1996 the closing sales price
of Deposit Guaranty Common Stock as quoted on the NASDAQ National Market was
$________. There can be no assurance as to the market price of Deposit Guaranty
Common Stock on the Effective Date. The Merger Agreement does not permit
Jefferson Guaranty Bancorp to terminate the Mergers if the market price of
Deposit Guaranty Common Stock declines unless such decline is the result of a
material adverse change in the financial condition, results of operations,
business or prospects of Deposit Guaranty, nor does it permit Deposit Guaranty
to terminate the Mergers if the market price of Deposit Guaranty Common Stock
rises.
EXCHANGE OF JEFFERSON GUARANTY BANCORP CERTIFICATES
Enclosed with this Proxy Statement/Prospectus is a letter of transmittal
and instructions for effecting the surrender of the stock certificates for
Jefferson Guaranty Bancorp Common Stock or Jefferson Guaranty Bancorp Preferred
Stock in exchange for certificates representing shares of Deposit Guaranty
Common Stock and/or cash. Upon consummation of the Mergers and surrender of a
certificate representing Jefferson Guaranty Bancorp Common Stock or Jefferson
Guaranty Bancorp Preferred Stock for exchange and cancellation to the Exchange
Agent, together with a duly executed letter of transmittal, the holder of such
Jefferson Guaranty Bancorp Common Stock or Jefferson Guaranty Bancorp Preferred
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 Jefferson Guaranty Bancorp Common Stock or
Jefferson Guaranty Bancorp Preferred 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 and/or a
check for the amount of cash to which such holder may be entitled.
After the Effective Date and until surrendered, certificates representing
Jefferson Guaranty Bancorp Common Stock and Jefferson Guaranty Bancorp
Preferred Stock will be deemed for all purposes, other than the payment of
dividends or other distributions, if any, in respect of Deposit Guaranty Common
Stock, to represent the number of whole shares of Deposit Guaranty Common Stock
or the right to receive cash into which such shares of Jefferson Guaranty
Bancorp Common Stock have been converted. Deposit Guaranty will not pay former
shareholders of Jefferson Guaranty Bancorp 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
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<PAGE> 29
ownership of shares of Jefferson Guaranty Bancorp Common Stock or Jefferson
Guaranty Bancorp Preferred Stock along with a properly completed letter of
transmittal.
Jefferson Guaranty Bancorp shareholders who cannot locate their
certificates are urged to promptly contact Harold N. Garic, Secretary of
Jefferson Guaranty Bancorp at 3525 North Causeway Boulevard, Metairie,
Louisiana 70002, telephone number (504) 838-4558. 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 Jefferson Guaranty Bancorp and Deposit
Guaranty and their transfer agents and registrars against any claim that may be
made against Jefferson Guaranty Bancorp or Deposit Guaranty by the owner of the
certificate(s) alleged to have been lost or destroyed. Jefferson Guaranty
Bancorp 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
Jefferson Guaranty Bancorp and Deposit Guaranty.
AMENDMENT; WAIVER; TERMINATION
The Merger Agreement may be amended at any time before or after its
approval by the shareholders of Jefferson Guaranty Bancorp by written agreement
of Jefferson Guaranty Bancorp and Deposit Guaranty, except that no amendment
may be made after Jefferson Guaranty Bancorp shareholder approval that changes
the amount or form of consideration to be received by Jefferson Guaranty
Bancorp's shareholders, or changes any terms or conditions of the Merger
Agreement if such change would adversely affect the holders of Jefferson
Guaranty Bancorp Stock, unless further shareholder approval is obtained.
The Merger Agreement provides that the parties by action taken by their
respective Boards 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 and certain other requirements that are conditions
to the obligations of each party.
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, Deposit Guaranty
Louisiana, and DGNB Louisiana, (i) if at the time of such termination there
shall be a material adverse change in the consolidated financial condition of
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp from that set forth in
Jefferson Guaranty Bank's or Jefferson Guaranty Bancorp's financial statements
for the period ended June 30, 1996; or (ii) if there are dissenting
shareholders who hold more than ten percent (10%) of the shares of Jefferson
Guaranty Bancorp Common Stock; (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 the Merger Agreement violate the
antitrust laws of the United States, (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 Jefferson Guaranty Bancorp Common Stock, or (iii) the
transaction is not consummated by June 30, 1997; or (d) by Jefferson Guaranty
Bancorp and Jefferson Guaranty Bank, if at the time of such termination there
shall have been a material adverse change in the financial conditions, results
of operations, business or prospects of Deposit Guaranty, Deposit Guaranty
Louisiana or DGNB Louisiana.
CONDUCT OF BUSINESS PENDING THE MERGERS
The Merger Agreement provides that Jefferson Guaranty Bank and Jefferson
Guaranty Bancorp 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 Jefferson Guaranty Bank nor
Jefferson Guaranty Bancorp shall (i) increase by more than ten percent (10%)
the compensation payable by Jefferson Guaranty Bank or Jefferson Guaranty
Bancorp to any of its directors, officers, agents, consultants, or any of its
employees whose total compensation after such increase would be in excess of
$50,000 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 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
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<PAGE> 30
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 effect any change in its
capitalization, except with respect to the issuance of shares of Jefferson
Guaranty Bancorp Common Stock upon exercise of warrants or conversion of
Jefferson Guaranty Bancorp Preferred Stock outstanding on the date of the
Merger Agreement. In addition, no dividends shall be paid by Jefferson
Guaranty Bancorp, except for dividends to holders of Jefferson Guaranty Bancorp
Preferred Stock in the amount of $20.00 per share per quarter for any complete
calendar quarter ending on or before the Effective Date and, with respect to a
calendar quarter not completed on the Effective Date, if the Effective Date is
after the record date for the payment of dividends on Deposit Guaranty Common
Stock for such quarter, an additional amount determined by multiplying $20.00
by a fraction, the numerator of which is the number of days in such quarter
prior to the Effective Date and the denominator of which is ninety (90).
In addition, Jefferson Guaranty Bancorp 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 or its Board's fiduciary duties to
Jefferson Guaranty Bancorp and its shareholders, furnish any information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, or any business combination with, Jefferson
Guaranty Bancorp or Jefferson Guaranty Bank, other than as contemplated by the
Merger Agreement. Jefferson Guaranty Bancorp 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.
PREFERRED STOCK DIVIDENDS
The Merger Agreement provides that dividends may be paid by Jefferson
Guaranty Bancorp to holders of Jefferson Guaranty Bancorp Preferred Stock in
the amount of $20.00 per share per quarter for any complete calendar quarter
ending on or before the Effective Date and, with respect to a calendar quarter
not completed on the Effective Date, if the Effective Date is after the record
date for the payment of dividends on Deposit Guaranty Common Stock for such
quarter, an additional amount determined by multiplying $20.00 by a fraction,
the numerator of which is the number of days in such quarter prior to the
Effective Date and the denominator of which is ninety (90).
RESALES OF DEPOSIT GUARANTY COMMON STOCK
The shares of Deposit Guaranty Common Stock to be issued to the holders
of Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bancorp within the meaning of Rule 145 under the Securities
Act. In general, affiliates of Jefferson Guaranty Bancorp include its executive
officers and directors and any person who controls, is controlled by or is
under common control with Jefferson Guaranty Bancorp. Holders of Jefferson
Guaranty Bancorp Stock who are affiliates of Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bancorp
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 (12) 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 (3) months do not exceed the greater of
(x) one percent (1%) 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 Jefferson Guaranty Bancorp who is not an affiliate of Deposit
Guaranty after the Mergers may sell Deposit Guaranty Common Stock subject only
to
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<PAGE> 31
the requirements of clause (i) above, following the second anniversary of the
Effective Date and may sell without restriction following the third anniversary
of the Effective Date.
Jefferson Guaranty Bancorp 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 five percent (5%) or more of the outstanding Jefferson
Guaranty Bancorp 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.
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 Jefferson Guaranty Bancorp's Board of Directors to fulfill its
fiduciary duties based on advice of counsel, Jefferson Guaranty Bancorp will be
required to indemnify Deposit Guaranty for all expenses reasonably 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 Jefferson Guaranty Bancorp of an opinion of counsel to Deposit Guaranty to
the effect that the Mergers will be treated, for federal income tax purposes,
as a reorganization under Section 368(a) of the Code.
ALL STOCK RECEIVED. Any Jefferson Guaranty Bancorp shareholder who,
pursuant to the Mergers, exchanges all of the Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bancorp Stock will equal such holder's tax basis in the
Jefferson Guaranty Bancorp Stock surrendered. If such shares of Jefferson
Guaranty Bancorp 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 Jefferson Guaranty Bancorp Stock surrendered therefor.
Jefferson Guaranty Bancorp's 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.
PART STOCK AND PART CASH RECEIVED. If the consideration received by a
Jefferson Guaranty Bancorp shareholder consists of part cash and part Deposit
Guaranty Common Stock, a shareholder whose adjusted basis in the shares of
Jefferson Guaranty Bancorp Stock surrendered in the transaction is less than
the value, as of the Effective Date, of the Deposit Guaranty Common Stock plus
the amount of cash received will realize a gain on the transaction. Such
shareholders will recognize gain equal to the lesser of (i) the excess, if any,
of the value, as of the Effective Date, of the Deposit Guaranty Common Stock
plus the amount of cash received, over the adjusted basis of the shares of
Jefferson Guaranty Bancorp Common Stock surrendered in the transaction or (ii)
the amount of cash received. The character of such recognized gain (i.e., as a
dividend or capital gain) will depend upon whether, on a
shareholder-by-shareholder basis, the exchange of Jefferson Guaranty Bancorp
Common Stock for Deposit Guaranty Common Stock and cash has the effect of the
distribution of a dividend. In this case, there are two applicable tests for
this determination: (i) a test to see if the hypothetical redemption of Deposit
Guaranty Common Stock (discussed below) is "substantially disproportionate"
with respect to the shareholder, and (ii) a test to determine whether the
hypothetical redemption of Deposit Guaranty Common Stock is "not essentially
equivalent to a dividend," with both tests taking into account the
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<PAGE> 32
constructive stock ownership rules of Section 318(a) of the Code. If either one
of these tests is met, the Jefferson Guaranty shareholder will be entitled to
capital gain treatment.
Under the above two tests, each Jefferson Guaranty Bancorp shareholder
is treated first as hypothetically receiving 100 percent Deposit Guaranty
Common Stock, in the Holding Company Merger, followed immediately by a
hypothetical redemption for cash of a portion of those shares assumed received.
This hypothetical cash redemption is deemed to reduce the shareholder's
ownership interest in Deposit Guaranty to the number of Deposit Guaranty shares
which are actually received in the Holding Company Merger by a Jefferson
Guaranty Bancorp shareholder. The "substantially disproportionate" test is met
if the number of shares of Deposit Guaranty Common Stock actually received by a
Jefferson Guaranty Bancorp Shareholder in the Holding Company Merger is less
than 80 percent of the number of shares which would have been received had
solely stock been issued to him, thus entitling the shareholder to receive
capital gain treatment with respect to cash received by him, determined in the
manner discussed above.
If the "substantially disproportionate" test is not met, the gain will
nevertheless qualify for capital gain treatment if the "not essentially
equivalent to a dividend" test is met. Under analogous Internal Revenue Service
rulings and case law, this test will be met with respect to any shareholder (i)
who is a minority shareholder whose relative stock ownership in Deposit
Guaranty after the Mergers is minimal and who exercises no control over the
affairs of Deposit Guaranty, and (ii) whose ownership interest in Deposit
Guaranty is substantially less (after consideration of pre-existing ownership
of Deposit Guaranty Common Stock either directly or through attribution than
what would have resulted in an exchange solely for stock (such as a shareholder
receiving for example, 15% cash and 85% Deposit Guaranty Common Stock in the
transaction). Based on the criteria in these Internal Revenue rulings and case
law, Jefferson Guaranty Bancorp shareholders not meeting the "substantially
disproportionate" test are expected to meet the "not essentially equivalent to
a dividend" test. However, the application of these rules pertaining to capital
gains treatment is dependent upon each Jefferson Guaranty Bancorp shareholder's
particular facts and circumstances and is affected by the above-mentioned
attribution rules. Each Jefferson Guaranty Bancorp shareholder should consult
his tax advisor as to the tax effects of the Mergers, including the receipt of
cash.
In the event a shareholder realizes a loss, under current tax laws, such
loss would not be currently allowed and would not be recognized for federal
income tax purposes. Such disallowed loss would be reflected in the adjusted
tax basis of the shares of Deposit Guaranty Common Stock received in the
Holding Company Merger.
ALL CASH RECEIVED. If the consideration received by a Jefferson Guaranty
Bancorp shareholder consists entirely of cash, gain or loss will be recognized
by the shareholder to the extent of the difference between the amount of cash
received and the adjusted tax basis of the shares of Jefferson Guaranty Bancorp
Common Stock surrendered in the transaction. Any such gain or loss recognized
will be treated as capital gain or loss if the Jefferson Guaranty Bancorp
Common Stock surrendered in the transaction were held as capital assets and if
after the exchange such shareholder is not treated as constructively owning any
Deposit Guaranty Common Stock. In determining constructive ownership, stock
owned by a shareholder's spouse, children, grandchildren and parent generally
must be attributed to that shareholder. Stock owned by partnerships, estates,
trusts and certain corporations is attributed to the partners, beneficiaries
and shareholders in applying these rules. If a shareholder's interest after
application of these attribution rules has not been completely terminated in
the transaction that shareholder may nevertheless receive capital gain
treatment under the "substantially disproportionate" or "not essentially
equivalent to a dividend" tests discussed above.
FRACTIONAL SHARES. 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 Jefferson Guaranty
Bancorp 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 the provisions
and limitations of Section 302(a) of the Code. 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.
DISSENTERS. Jefferson Guaranty Bancorp's shareholders who perfect
statutory appraisal rights will be treated as having received the fair value of
the Jefferson Guaranty Bancorp Stock, as determined in the appraisal rights
proceeding, in redemption of the Jefferson Guaranty Bancorp Stock subject to
the proceeding. Such deemed redemption will be subject to the provisions and
limitations of Section 302(a) of the Code, with the result that a holder who
exercises statutory appraisal rights will recognize gain or loss equal to the
difference between the amount realized and such holder's tax basis in the
Jefferson Guaranty Bancorp Stock subject to the proceeding. Any such gain or
loss recognized on such redemption will be treated as capital gain or loss if
the Jefferson Guaranty Bancorp Stock with respect to which statutory appraisal
rights were exercised were held as capital assets and if after the deemed
redemption, such shareholder does not constructively own any Deposit Guaranty
Common Stock. Each Jefferson Guaranty Bancorp shareholder who contemplates
exercising statutory appraisal rights should consult his tax advisor as to the
possibility that all or a portion of the payment received pursuant to the
appraisal proceeding will be treated as dividend income.
BACKUP WITHHOLDING. Unless an exemption applies under the applicable law
and regulations, Deposit Guaranty National Bank as 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 his 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
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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 JEFFERSON GUARANTY BANCORP SHAREHOLDER. JEFFERSON
GUARANTY BANCORP 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.
PROPOSAL TO APPROVE CERTAIN PAYMENTS
PURCHASE OF WARRANTS
There are outstanding warrants to purchase 266,000 shares of Jefferson
Guaranty Bancorp Common Stock, consisting of warrants granted to A. Peyton
Bush, Chief Executive Officer and a director of Jefferson Guaranty Bancorp, to
purchase 156,750 shares, warrants to Harold N. Garic, Chief Financial Officer
of Jefferson Guaranty Bancorp, to purchase 34,250 shares, and warrants to other
employees to purchase 75,000 shares.
The terms of the grant of each of the warrants provided that warrants not
yet exercisable would nevertheless become immediately exercisable during a
period immediately prior to any merger of Jefferson Guaranty Bancorp and,
accordingly, all of the warrant holders will be entitled to exercise their
warrants during a yet to be determined period prior to the Effective Date.
However, a warrant holder who exercises his warrant is required to pay the
exercise price in cash and, in addition, will be subject in certain cases to
taxation at ordinary income rates on the difference between the exercise price
and the fair market value of the shares of Jefferson Guaranty Bancorp Common
Stock received.
In lieu of exercise of the warrants, which would allow the warrant holder
to become a common stockholder and elect to receive cash and/or Deposit
Guaranty Common Stock in the Merger, Jefferson Guaranty Bancorp has offered to
each warrant holder to purchase each of his warrants for cash equal to the
difference between $29.00 and the exercise price (the "Exercise Difference"),
plus an amount equal to seven percent (7%) of such difference (the "Premium").
In addition, and in lieu of the foregoing offer, Jefferson Guaranty Bancorp has
offered to purchase warrants held by Mr. Bush for 42,750 shares and warrants
held by Mr. Garic for 14,250 shares, which were granted in 1987 and are not
part of the Company's Employees' Incentive Stock Plan, and to also purchase
from Mr. Bush warrants held by him for 56,284 shares which were granted under
the Employees' Incentive Stock Plan and the exercisability of which will be
accelerated because of the Merger. The Merger Agreement requires that the above
mentioned warrants held by Messrs. Bush and Garic be purchased prior to the
consummation of the Mergers and that all other warrants be purchased or
exercised prior to the Mergers. The offered price for each of the above
mentioned warrants held by Messrs. Bush and Garic is the Exercise Difference,
plus an amount (the "Gross Up") intended to provide the same after-tax proceeds
to Messrs. Bush and Garic that would have been the case if the gain on the sale
of the warrants were taxed at capital gains rates rather than ordinary income
rates. The following table shows the amount of warrants held, the Exercise
Difference, the combined Premium or Gross Up and the total amount payable for
warrants held if all offers were accepted:
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<TABLE>
<CAPTION>
Shares Premium
Underlying Exercise or
Name Warrants Difference Gross Up Total
- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C>
A. Peyton Bush
- 1987 Warrants 42,750 $1,090,125 $218,026
- Accelerated
warrants 56,284 1,069,396 213,879
- Other Warrants 57,716 1,118,054 78,264
------- ---------- --------
156,750 $3,277,575 $510,169 $3,787,744
------- ---------- --------
Harold N. Garic
- 1987 Warrants 14,250 $ 363,375 $ 72,672
- Other Warrants 20,000 380,000 26,600
------- ---------- --------
34,250 $ 743,375 $ 99,272 842,647
------- ---------- --------
17 Other Officers 75,000 $1,425,000 $ 99,750 1,524,750
------- ---------- -------- ----------
All Officers 266,000 $5,445,950 $709,191 $6,155,141
======= ========== ======== ==========
</TABLE>
As of the date of this Proxy Statement/Prospectus, Jefferson Guaranty
Bancorp had been advised that Messrs. Bush and Garic intend to sell only those
warrants to Jefferson Guaranty Bancorp that are required to be purchased to
meet the condition of the Merger Agreement and to exercise all other warrants
(57,716 shares in the case of Mr. Bush and 20,000 shares in the case of Mr.
Garic) and elect to receive Deposit Guaranty's Common Stock in the Merger with
respect to the shares received upon exercise.
The proposal to purchase the warrants and to make the Premium and the
Gross Up payments did not reduce the Merger consideration available to other
shareholders. It should be noted, however, that unlike other shareholders
electing cash, warrant holders who sell their warrants to Jefferson Guaranty
Bancorp will be assured of receiving cash for all of their shares and may thus
be in a better position than other cash electing shareholders.
BONUS
The Board of Directors has authorized the payment to A. Peyton Bush of
a cash bonus of $210,000, payable immediately prior to the consummation of the
Mergers. The bonus is equal to the difference between Mr. Bush's current salary
and the salary for two years which he would receive under the two year proposed
employment contract. For information regarding the proposed employment contract
between Mr. Bush and DGNB Louisiana and a proposed consulting agreement between
Harold N. Garic and DGNB Louisiana, see "The Mergers -- Interest of Certain
Persons in the Mergers."
CERTAIN INTERNAL REVENUE CODE PROVISIONS
Under Section 280G and Section 4999 of the Internal Revenue Code (the
"Code"), "excess parachute payments" are not deductible by the corporation that
pays them, and the recipients of such payments are subject to a twenty percent
(20%) excise tax on all such payments. A "parachute payment" is a payment made
to a "disqualified individual" which is contingent on the change in control of
a corporation, and such a payment is an "excess parachute payment" to the
extent that it exceeds three (3) times such individual's "base amount."
A "disqualified individual" is an employee, independent contractor or
other person who performs services for the corporation and is also an officer,
shareholder or among the highest paid one percent (1%) of the corporation's
employees.
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The "base amount" of a disqualified individual is equal to his average annual
compensation paid by the corporation over the most recent five (5) years
preceding the change in control.
Jefferson Guaranty Bancorp has been informed by its tax advisors that
the amounts of Exercise Difference, Premium or Gross Up with respect to all
outstanding warrants the exercisability of which will be accelerated by virtue
of the Mergers, whether or not purchased by Jefferson Guaranty Bancorp, and the
Gross Up on the 1987 Warrants, as well as the amount of the bonus that is
scheduled to be paid to Mr. Bush, may be deemed to be parachute payments.
Assuming that such amounts constitute parachute payments, Jefferson Guaranty
Bancorp, in consultation with its tax advisors, has calculated each recipient's
base amount and determined that there would be no excess parachute payments
except with respect to Mr. Bush. In his case, Jefferson Guaranty Bancorp's
calculations indicate that, if no exception were available under the Code,
approximately $1.2 million would not be deductible by Jefferson Guaranty
Bancorp (or Deposit Guaranty Louisiana as its successor corporation) and Mr.
Bush would be subject to an excise tax of approximately $240,000.
However, in the case of a corporation such as Jefferson Guaranty
Bancorp, the stock of which is not readily tradable on an established
securities market, if the stockholders of the corporation approve the making of
the parachute payments to Mr. Bush after receiving adequate disclosure of all
the material facts surrounding the making of the parachute payments, no portion
of such payments will be deemed to be "excess parachute payments." Accordingly,
at the Meeting the shareholders will be asked to approve all payments to Mr.
Bush to purchase his warrants, and the payment of a bonus to him immediately
prior to the consummation of the Mergers. One of the purposes of the proposal
is to provide shareholders with all of the material facts surrounding the
parachute payments to Mr. Bush so that if an adequate number of the
stockholders approve the payments, such approval may be sufficient to avoid any
"excess parachute payment" issues which may arise, even if any such payments
are ultimately characterized as parachute payments.
VOTE REQUIRED
In order for the payments to receive the benefit of the Code exception
they must be approved by the vote of persons who owned more than 75% of the
voting power of all outstanding stock of the corporation making the payments.
For the purposes of this requirement, (i) each share of Preferred Stock of
Jefferson Guaranty Bancorp is entitled to vote and is treated as if it were 100
shares of Jefferson Guaranty Bancorp Common Stock, the number of shares into
which it is convertible, (ii) Common and Preferred Stock will vote together as
a single class and (iii) the Proposal must be approved by a vote of at least
75% of the combined number of shares of common stock outstanding and 100 times
the number of shares of Preferred Stock outstanding, less shares held by
disqualified persons. An abstention or failure to vote on the proposal, will
have the same effect as a vote against the proposal.
CONSEQUENCES OF FAILURE TO APPROVE
If the Proposal is not approved, the purchase of Mr. Bush's warrants
and the payment of the bonus will nevertheless be made. Such action will not
affect the Merger or decrease the consideration to be received by shareholders.
However, Mr. Bush will be subject to the above mentioned excise tax and
Jefferson Guaranty Bancorp (and its successor, Deposit Guaranty Louisiana) will
not be able to deduct the excess parachute payments for income tax purposes.
APPRAISAL RIGHTS
Any holder of Jefferson Guaranty Bancorp Stock is entitled to
appraisal rights under Section 262 of the Delaware General Corporation Law
("DGCL") ("Section 262") (a copy of which is attached hereto as Exhibit B) as a
result of the Holding Company Merger. All references in Section 262 and in this
summary to a "stockholder" are to the record holder of Common Stock or
Preferred Stock as to which appraisal rights are being asserted. A person
having a beneficial interest in shares of Stock that are held of record in the
name of another person, such as a broker or nominee, must act promptly to cause
the record holder to follow the steps summarized below properly and in a timely
manner to perfect whatever appraisal rights the beneficial owner may have.
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<PAGE> 36
Under the DGCL, any holder of Stock who follows the procedures set
forth in Section 262 will be entitled to have his shares appraised by the
Delaware Court of Chancery and to receive payment of the "fair value" of such
shares, exclusive of any element of value arising from the accomplishment or
expectation of the Holding Company Merger, as determined by such court. In
order for a stockholder to perfect his appraisal rights, his shares must not be
voted in favor of adopting the Holding Company Merger. Because a proxy which
does not contain voting instructions will, unless revoked, be voted for
approval of the Merger Agreement, a stockholder who votes by proxy and who
wishes to exercise his appraisal rights must (i) vote against approval of the
Merger Agreement, or (ii) abstain from voting on approval of the Merger
Agreement.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, the corporation, not less than twenty (20) days prior
to the meeting, must notify each of its stockholders entitled to appraisal
rights that such appraisal rights are available and include in such notice a
copy of Section 262. This Proxy Statement/Prospectus shall constitute such
notice to the stockholders of Jefferson Guaranty Bancorp. The following
discussion is not a complete statement of the law pertaining to appraisal
rights under the DGCL. Any stockholder who wishes to exercise such appraisal
rights or who wishes to preserve his right to do so, should review Section 262
and the following discussion carefully because failure to timely and properly
comply with the procedures specified will result in the complete loss of
appraisal rights under the DGCL.
Each stockholder electing to demand the appraisal of his shares of
Stock must deliver to Jefferson Guaranty Bancorp, before the taking of the vote
on the Merger Agreement, a written demand for appraisal of such shares. Such
written demand (i) should be sent to Jefferson Guaranty Bancorp, 3525 North
Causeway Boulevard, Metairie, Louisiana 70002, Attention: Harold N. Garic,
Secretary; (ii) must be received by Jefferson Guaranty Bancorp prior to the
vote being taken on the Merger Agreement at the Meeting; and (iii) will be
sufficient if it reasonably informs Jefferson Guaranty Bancorp of the identity
of the stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. Appraisal rights may be exercised only by a
stockholder who holds his shares on the date of making the demand for appraisal
and who continuously holds such shares through the Effective Date. A vote
against adoption of the Merger Agreement, in person or by proxy, will not in
and of itself constitute a demand for appraisal satisfying the requirements of
Section 262.
Only a holder of record of Common Stock or Preferred Stock is entitled
to assert appraisal rights for the shares registered in that holder's name. A
demand for appraisal should be exercised by or on behalf of the holder of
record, fully and correctly, as his name appears on his Stock certificates. If
such holder's shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the shares are owned of record by more than one person, as in
a joint tenancy or a tenancy in common, the demand should be executed by or on
behalf of all joint owners. An authorized agent, including one or more joint
owners, may execute a demand for appraisal on behalf of a holder of record;
however, the agent must identify the record owner or owners and expressly
disclose the fact that, in executing the demand, the agent is acting as agent
for such owner or owners. A record holder, such as a broker, who holds shares
of Stock as nominee for several beneficial owners may exercise appraisal rights
with respect to the shares held for one or more beneficial owners while not
exercising such rights with respect to the shares held for other beneficial
owners. In such case, the written demand should set forth the number of shares
as to which appraisal is sought. Where no number of shares is expressly
mentioned, the demand will be presumed to cover all shares held in the name of
the record owner. Stockholders who hold their shares of stock in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights are
urged to consult with their brokers to determine the appropriate procedures for
the making of a demand for appraisal by such a nominee.
Within ten (10) days after the Effective Date, Deposit Guaranty must
send a notice as to the effectiveness of the Holding Company Merger to each
person who has made demand for appraisal and otherwise satisfied the foregoing
provisions of Section 262. Within 120 days after the Effective Date, but not
thereafter, Deposit Guaranty or any stockholder entitled to appraisal rights
under Section 262 may file a petition in the Delaware Court of Chancery
demanding a determination of the "fair value" of the shares. Notwithstanding
the foregoing, at any time within sixty (60) days after the Effective Date any
stockholder has the right to withdraw his previously made demand for appraisal
and accept the Holding Company Merger consideration. After such 60-day period,
a stockholder may only withdraw his demand for appraisal of the Jefferson
Guaranty Bancorp Stock with the consent of Deposit Guaranty. Deposit Guaranty
will not file a petition with respect to the appraisal of the "fair value" of
the shares. Accordingly, it is the obligation of stockholders to initiate all
necessary action to perfect their appraisal rights within the time periods
prescribed in Section 262.
Within 120 days after the Effective Date, any stockholder who has
complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from Deposit Guaranty, as the
surviving corporation of the Holding Company Merger, a statement setting forth
the aggregate number of shares not voted in favor of adoption of the Holding
Company
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<PAGE> 37
Merger and with respect to which demands for appraisal have been received and
the aggregate number of holders of such shares. Such statement must be mailed
within ten (10) days after a written request therefor has been received by
Deposit Guaranty or within ten (10) days after expiration of the period for
delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed, after a hearing on
such petition, the Delaware Court of Chancery will determine whether the
stockholder is entitled to appraisal rights and will determine the "fair value"
of their shares, exclusive of any element of value arising from the
accomplishment or expectation of the Holding Company Merger, together with a
fair note of interest, if any, to be paid upon the amount determined to be the
fair value. Stockholders considering seeking appraisal should be aware that
the fair value of their shares as determined under Section 262 could be more
than, the same as, or less than the consideration they would receive pursuant
to the Merger Agreement if they did not seek appraisal of their shares, and
that investment banking opinions as to fairness are not necessarily opinions as
to "fair value" under Section 262. The Delaware Supreme Court has stated that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceeding. The Court will also determine the
amount of interest, if any, to be paid upon the amounts to be received by
persons whose shares have been appraised. The costs of the action may be
determined by the Court and borne by the parties as the Court deems equitable.
Upon application of a stockholder, the Court may also order that all or a
portion of the expenses incurred by any stockholder in connection with an
appraisal, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts utilized in the appraisal proceeding be charged
pro rata against the value of all the shares entitled to appraisal.
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Date, be entitled to vote the shares
of stock subject to such demand for any purpose or be entitled to the payment
of dividends or other distributions on such shares (except dividends or other
distributions payable to stockholders of record as of a date prior to the
Effective Date).
If any stockholder who demands appraisal of his shares under Section
262 fails to perfect, or effectively withdraws or loses, his right to
appraisal, the shares of such holder will be converted into the right to
receive Deposit Guaranty Common Stock and/or cash in accordance with the Merger
Agreement. A stockholder will fail to perfect, and therefore lose, his right to
appraisal if no petition for appraisal is filed within 120 days after the
Effective Date, or if the stockholder delivers to Deposit Guaranty a written
withdrawal of his demand for appraisal and his acceptance of the Merger, except
that any such attempt to withdraw made more than sixty (60) days after the
Effective Date will require the written approval of Deposit Guaranty.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights will result in loss of such rights.
COMPARATIVE RIGHTS OF SHAREHOLDERS
Jefferson Guaranty Bancorp is incorporated in the State of Delaware
and Deposit Guaranty is incorporated in the State of Mississippi. If the
Mergers are consummated, shareholders of Jefferson Guaranty Bancorp who receive
Deposit Guaranty Common Stock, and whose rights as shareholders are currently
governed by Delaware law and Jefferson Guaranty Bancorp's Certificate of
Incorporation (the "Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bancorp 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 DGCL and the Mississippi Business Corporation Act (the
"Mississippi BCA") and by the Articles of Incorporation and Bylaws of each of
Jefferson Guaranty Bancorp and Deposit Guaranty, respectively, to which
Jefferson Guaranty Bancorp's shareholders are referred.
CUMULATIVE VOTING RIGHTS
JEFFERSON GUARANTY BANCORP. Each outstanding share of Jefferson
Guaranty Bancorp Common Stock is entitled to one (1) vote on each matter
submitted to a vote. In regard to the election of directors, neither the
Jefferson Guaranty Bancorp Articles
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nor Bylaws provide for cumulative voting, but the Bylaws state that the members
of the board of directors shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present or by proxy,
entitled to vote in the election.
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
JEFFERSON GUARANTY BANCORP. The Jefferson Guaranty Bancorp Articles
and Bylaws provide that no director of Jefferson Guaranty Bancorp shall be
liable to Jefferson Guaranty Bancorp or its shareholders for monetary damages
for breach of fiduciary duty as a director, provided that the foregoing
provision shall not eliminate or limit the liability of a director 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 Jefferson Guaranty Bancorp shares, or (d)
any transaction from which he derived an improper personal benefit. Neither the
Jefferson Guaranty Bancorp Articles nor Bylaws provide for the limitation of
liability of its officers for monetary damages for breach of fiduciary duty.
DEPOSIT GUARANTY. The Deposit Guaranty 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
JEFFERSON GUARANTY BANCORP. DGCL provides that a majority of all votes
entitled to be cast is required for a merger, consolidation or sale of
substantially all of the assets of the corporation. The Jefferson Guaranty
Bancorp Articles contain no additional voting requirements.
DEPOSIT GUARANTY. The Mississippi BCA states that in the absence of a
greater requirement in the articles of incorporation, a sale, lease, exchange,
or other disposition of all, or substantially all, a corporation's property
requires approval by a majority of the shares entitled to vote on the
transaction. The Deposit Guaranty Articles do not provide for a greater than
majority vote on such a transaction.
The Deposit Guaranty 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.
An "Interested Shareholder" is defined to include any person (other
than Deposit Guaranty, certain Deposit Guaranty subsidiaries, employee benefit
plans of Deposit Guaranty and the trustees of such plans) who (a) is or has
announced a plan to become the beneficial owner of ten percent (10%) or more of
the voting stock of Deposit Guaranty, or (b) is an affiliate or associate of
Deposit Guaranty who has, within the past two (2) years, been the beneficial
owner of ten percent (10%) or more of Deposit Guaranty's voting stock. A person
is the "beneficial owner" of voting stock which such person, directly or
indirectly, owns or has the right to acquire or vote.
A "Business Combination" includes the following: (a) a merger or
consolidation of Deposit Guaranty or any subsidiary with an Interested
Shareholder; (b) any sale, disposition or other arrangement (including
investments, loans, advances, guarantees, extensions of credit, creation of
security interests and joint ventures) with or for the benefit of an Interested
Shareholder involving assets or securities having a fair market value (or
involving aggregate commitments) of $10,000,000 or more or constituting more
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<PAGE> 39
than five percent (5%) of the book value of the total assets (in the case of
transactions involving assets or commitments other than capital stock) or five
percent (5%) of the shareholders' equity (in the case of transactions in
capital stock) of the entity in question, as reflected in the most recent
fiscal year-end consolidated balance sheet of such entity existing at the time
the shareholders of Deposit Guaranty would be required to approve or authorize
such transaction; (c) the adoption of any plan or proposal for the liquidation
or dissolution of Deposit Guaranty for any amendment to Deposit Guaranty's
Bylaws; or (d) any reclassification of securities, recapitalization, merger
with a subsidiary or other transaction which has the effect, directly or
indirectly, or increasing an Interested Shareholder's proportionate share of
the outstanding capital stock of Deposit Guaranty or a subsidiary.
A "Continuing Director" means: (a) any member of the Deposit Guaranty
Board of Directors who is not affiliated with an Interested Shareholder and who
either (i) was a Deposit Guaranty director prior to the time the Interested
Shareholder became an Interested Shareholder, or (ii) was a Deposit Guaranty
director on April 30, 1986 and has been a Deposit Guaranty director
continuously since; and (b) any successor of a Continuing Director who is not
affiliated with an Interested Shareholder and who was recommended or elected to
succeed the Continuing Director by a majority of the Continuing Directors.
REMOVAL OF DIRECTORS
JEFFERSON GUARANTY BANCORP. Jefferson Guaranty Bancorp's Bylaws
provide that Jefferson Guaranty Bancorp shareholders may remove a director with
or without cause at any time by the affirmative vote of shareholders holding of
record in the aggregate at least a majority of the outstanding shares of the
corporation at a special meeting of the shareholders called for that purpose. A
director may also be removed for cause by action of the Board.
DEPOSIT GUARANTY. The Deposit Guaranty 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
JEFFERSON GUARANTY BANCORP. Under Jefferson Guaranty Bancorp's Bylaws,
the remaining directors may fill any vacancy in the Jefferson Guaranty Bancorp
Board occurring by reason of an increase in the number of directors, or by
reason of the death, resignation, disqualification, removal (unless a vacancy
created by the removal of a director by the shareholders shall be filled by the
shareholders at the meeting at which the removal was effected), or inability to
act of any director, or otherwise, shall be filled for the unexpired portion of
the term by a majority vote of the remaining directors, though less than a
quorum, at any regular meeting or special meeting of the board of directors
called for that purpose.
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
JEFFERSON GUARANTY BANCORP. Pursuant to DGCL, the Jefferson Guaranty
Bancorp Articles may be amended by at least a majority of the outstanding
shares entitled to vote thereon. The Jefferson Guaranty Bancorp Bylaws provide
that the Jefferson Guaranty Bancorp Board of Directors may make, alter, amend,
and repeal the Bylaws. However, the Board may not change the Bylaws with regard
to the quorum for shareholders' or directors' meetings, removal of directors,
or filling of vacancies of directors resulting from the removal by the
shareholders. Any changes made in the Bylaws by the Board regulating an
impending election of directors must be set forth in a notice to the
shareholders at the next meeting of shareholders for the election of directors.
The Jefferson Guaranty Bancorp Bylaws also provide that shareholders may also
alter, repeal, or create Bylaws by a majority vote of shareholders entitled to
vote at an election of directors at any annual or special 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. The Deposit Guaranty 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)
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<PAGE> 40
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.
SHAREHOLDER PROPOSALS AND NOMINATIONS
JEFFERSON GUARANTY BANCORP. Neither the Jefferson Guaranty Bancorp
Articles nor Bylaws set forth any procedures with respect to submission by a
shareholder of a proposal or nomination for consideration at a shareholders'
meeting.
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.
REDEMPTION AND RETIREMENT
JEFFERSON GUARANTY BANCORP. Delaware law prohibits the purchase or
redemption of a corporation's stock when the capital of a corporation is, or
would become, impaired; but shares entitled to a preference of dividends or in
liquidation may be purchased or redeemed out of capital if the shares are to be
retired upon the purchase or redemption and the capital of the corporation is
reduced in accordance with legal requirements. Delaware law allows a
corporation, in determining the amount of surplus, to value its assets at fair
market value rather than at historical book value.
DEPOSIT GUARANTY. Under Mississippi law, a corporation is permitted to
purchase or redeem shares of its own stock except where upon doing so, the
corporation would not be able to pay its debts as they become due in the usual
course of business. This prohibition also applies to where the corporation's
total assets would be less than the sum of the corporation's total liabilities,
plus, unless the articles of incorporation permit otherwise, the amount that
would be needed to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those whose shares are
purchased or redeemed, if the corporation were to be dissolved at the time of
such purchase or redemption. Mississippi law permits a Board of Directors to
base its determination as to whether such purchase or redemption is prohibited
either on financial statements prepared on the basis of accounting practices
and principles that are reasonable in the circumstances or on a fair valuation
or other method that is reasonable under the circumstances.
DIVIDENDS
JEFFERSON GUARANTY BANCORP. Under Delaware law, a corporation can pay
dividends out of surplus or, if there is no surplus, out of net profits for the
current year and/or the immediately preceding fiscal year (provided that the
amount of capital of the corporation is not less than the aggregate amount of
the capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets).
DEPOSIT GUARANTY. Mississippi law permits the payment of dividends
unless the corporation would not be able to pay its debts as they become due in
the usual course of business or the corporation's total assets would be less
than the sum of the corporation's total liabilities plus, unless the articles
of incorporation permit otherwise, the amount that would be needed, if the
corporation were to be dissolved at the time of such dividends, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the dividends.
SHAREHOLDERS' INSPECTION RIGHTS
JEFFERSON GUARANTY BANCORP. Delaware law allows any stockholder to
inspect the shareholders' list for any purpose reasonably related to such
person's interest as a stockholder. Moreover, during the ten (10) days
preceding a shareholders' meeting, a stockholder may inspect the shareholders'
list for any purpose germane to that meeting.
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<PAGE> 41
DEPOSIT GUARANTY. Under the Mississippi BCA, any shareholder may
inspect the shareholders' list if the demand is made in good faith and for a
proper purpose. Such shareholder must describe his purpose and establish that
the list is directly connected to his purpose. Moreover, the shareholders' list
must be available for inspection by any shareholder beginning two (2) days
after notice of a shareholders' meeting is given and continuing until the
meeting takes place.
BOARD OF DIRECTORS
JEFFERSON GUARANTY BANCORP. The Jefferson Guaranty Bylaws state that
the number of directors shall be not less than twelve (12) and not more than
twenty-five (25), unless otherwise determined by vote of a majority of the
directors. In no event shall the number be less than three (3), unless all of
the outstanding shares are owned (beneficially) and of record by less than
three (3) shareholders, in which event the number of directors shall not be
less than the number of shareholders permitted by DGCL.
DEPOSIT GUARANTY. The Mississippi Articles and Bylaws both provide
that the number of directors shall not be less than one (1) nor more than
fifteen (15) as shall be determined from time to time by resolution of the
Board of Directors or at the annual meeting of shareholders.
INDEMNIFICATION
JEFFERSON GUARANTY BANCORP. The Jefferson Guaranty Bancorp Articles
and Bylaws provide that officers, directors, employees, and agents of Jefferson
Guaranty Bancorp shall be indemnified and held harmless by the corporation to
the fullest extent authorized by the DGCL against all expense, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person. Moreover, the Jefferson Guaranty Bancorp Articles and
Bylaws provide a right to file suit for indemnification if such claim is not
paid by the corporation within thirty (30) days of receipt of the written claim
by the corporation. A successful claimant shall be entitled to costs for
prosecuting such a claim.
Under Delaware law, directors and officers, as well as other employees
and individuals, may be indemnified against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of a
corporation -- a "derivative action"), if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe their conduct was unlawful. A similar standard
of care is applicable in the case of derivative actions, except that
indemnification extends only to expenses (including attorneys' fees) incurred
in connection with defense or settlement of such an action.
DEPOSIT GUARANTY. The Mississippi BCA provides that a director,
officer or agent of a corporation may be indemnified for such service if he
conducted himself in good faith, and he reasonably believed in the case of
conduct in his official capacity with the corporation, that his conduct was in
the corporation's best interests; and in all other cases that his conduct was
at least not opposed to the corporation's best interests. In the case of a
criminal proceeding, a director must show that he had no reasonable cause to
believe his conduct was unlawful. Indemnification permitted under this section
in connection with a derivative action is limited to reasonable expenses
incurred in connection with the proceeding.
Under its Articles of Incorporation, Deposit Guaranty is required to
indemnify any person who was or is a party or is threatened to be made a party
to a civil, criminal, administrative or investigative action (other than an
action by or on behalf of Deposit Guaranty) because he is or was an officer,
director, employee or agent of Deposit Guaranty, or is or was at the request of
Deposit Guaranty serving as a director, officer, employee or agent of another
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred. In case of an
action by or on behalf of Deposit Guaranty, Deposit Guaranty is required to
provide indemnity for expenses (including attorneys' fees) actually and
reasonably incurred in connection with such action if such person is not
adjudged to be liable for negligence or misconduct in the performance of his
duty or if a court determines that despite the negligence or misconduct, in
view of all the circumstances, indemnity for expenses is proper.
Indemnification may be made in specific cases only if a determination
is made by either a disinterested quorum of the Board of Directors, independent
legal counsel, the shareholders of Deposit Guaranty or a court of competent
jurisdiction that the person seeking indemnification acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of Deposit Guaranty, and, with respect to criminal actions, the person had no
reasonable cause to believe his conduct was
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<PAGE> 42
unlawful. Indemnification is not extended to suits instituted by the person
seeking indemnification, unless the Board of Directors approves otherwise.
Under both the DGCL and Mississippi BCA, the corporation may pay,
prior to final disposition, the expenses (including attorney's fees) incurred
by a director or officer in defending a proceeding. Moreover, expenses incurred
by an officer or director in defending any action may be advanced prior to
final disposition upon receipt of an undertaking by the director or officer of
the corporation to repay such advances if it is ultimately determined that he
is not entitled to indemnification. Under Mississippi law, however, a
determination must be made that the facts known to those making the
determination would not preclude indemnification. Neither Delaware law nor
Mississippi law require the undertaking to be secured and the undertaking may
be accepted without reference to financial ability to make the repayment. In
both Delaware and Mississippi, however, indemnification is unavailable to a
person who has been found liable to the corporation.
MARKET PRICES OF AND DIVIDENDS ON JEFFERSON GUARANTY BANCORP'S
PREFERRED AND COMMON STOCK
No established public trading market for Jefferson Guaranty Bancorp's
Preferred or Common Stock exists. No sales of Jefferson Guaranty Bancorp's
Stock came to the attention of management of Jefferson Guaranty Bancorp during
the last year. As of June 30, 1996, there were 95 holders of record of
Jefferson Guaranty Bancorp Common Stock and 38 holders of record of Jefferson
Guaranty Bancorp Preferred Stock.
The holders of Jefferson Guaranty Bancorp Common Stock are entitled to
receive dividends when and if declared by the Jefferson Guaranty Bancorp Board
out of funds that are legally available thereof. If the Mergers are not
consummated, Jefferson Guaranty Bancorp does not expect to start paying
cash dividends on its Common Stock until late 1997 or early 1998. However,
there can be no assurance that Jefferson Guaranty Bancorp would start paying
any dividends and the amount of such future dividends would depend on Jefferson
Guaranty Bancorp's earnings at that time.
Jefferson Guaranty Bancorp's Series C Cumulative Convertible Preferred
Stock is convertible in whole or part at the holder's option into Common Stock.
Each Series C Preferred share has a stated value of $1,000 and is convertible
into 100 shares of Common Stock. Dividends on Series C are cumulative and
payable quarterly at a per annum rate of eight percent (8%) of the stated value
and there are no unpaid dividends as of June 30, 1996. Dividends at this rate
have been paid since February, 1993.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF JEFFERSON GUARANTY BANCORP
MANAGEMENT
The following table indicates the beneficial ownership as of October
18, 1996 of Jefferson Guaranty Bancorp's equity securities by (i) each Director
of Jefferson Guaranty Bancorp, (ii) the Chief Executive Officer (who is also a
Director) and the Chief Financial Officer, and (iii) all Directors and
executive officers of Jefferson Guaranty Bancorp, determined in accordance with
Rule 13d-3 of the Securities & Exchange Commission. In addition to its Common
Stock, Jefferson Guaranty Bancorp currently has outstanding 3,484 shares of
Series C Cumulative Convertible Preferred Stock, none of which are entitled to
vote on the Mergers, but which could be converted into Common Stock within
sixty (60) days.
<TABLE>
<CAPTION>
NAME OUTSTANDING PERCENTAGE (1) OTHER (2) TOTAL PERCENTAGE (3)
- ---- ----------- -------------- ---------- ----- --------------
<S> <C> <C> <C> <C> <C>
Coleman E. Adler 1,000 * - 1,000 *
Warren H. A. Backer 10,000 (4) * 5,000 15,000 1.2%
A. Peyton Bush, III 39,251 (5) 3.2% 166,750 (6) 206,001 14.6%
James J. Coleman, Sr. 144,606 11.6% 35,200 179,806 (7) 14.1%
Thomas B. Coleman 30,400 2.4% - 30,400 (8) 2.4%
</TABLE>
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<PAGE> 43
<TABLE>
<S> <C> <C> <C> <C> <C>
Harold N. Garic, II 16,000 1.3% 34,250 (9) 50,250 3.9%
Leslie R. Jacobs 500 * - 500 *
G. W. James, Jr. 5,000 * - 5,000 .4%
John E. Koerner, III 10,000 * 10,000 20,000 1.6%
Ted A. Kritikos 10,000 * 5,000 15,000 (10) 1.2%
John Ochsner, M.D. 20,000 1.6% 5,000 25,000 2.0%
James A. O'Neill 70,400 5.7% 40,400 110,800 (11) 8.6%
Gray S. Parker 93,245 7.5% 23,500 116,745 (12) 9.2%
James W. Pellerin 5,500 * 5,500 11,000 .9%
P. K. Scheerle, R.N. 1,000 * - 1,000 *
Thomas K. Winingder 53,750 4.3% 9,400 63,150 (13) 5.0%
ALL DIRECTORS AND
EXECUTIVE OFFICERS
AS A GROUP (18 PERSONS) 510,652 41.0% 885,652 53.7%
</TABLE>
- --------------
* Less than 1%.
(1) Only the shares listed under the column captioned "Outstanding" are
entitled to be voted on the Merger Agreement and the adjoining percentage
column indicates these shares' percentage of the total shares entitled to
vote on the Merger. Because of the method of calculating the shares which
are entitled to be voted on the Certain Payments Proposal, the
table does not indicate the number or percentage of votes entitled to be
cast on this proposal.
(2) Indicates the number of shares of Common Stock that could be acquired
upon conversion of Shares of Preferred Stock beneficially owned (using
the conversion rate of 100 shares of common for each share of Preferred
Stock) and upon exercise of warrants currently held by executive
officers.
(3) Under Rule 13d-3 of the Securities & Exchange Commission, shares subject
to management warrants and shares that may be acquired upon conversion of
Preferred Stock are deemed outstanding for purposes of computing the
percentage of Common Stock beneficially owned by such person individually
and by all Directors and executive officers as a group but those shares
which could be acquired by other persons are not deemed to be outstanding
for the purpose of computing an individual's ownership percentage.
(4) Includes 3,000 shares in the name of Mr. Backer's children as to which
Mr. Backer disclaims beneficial ownership.
(5) Includes 3,250 shares in the names of Mr. Bush's wife and children as to
which Mr. Bush disclaims beneficial ownership.
(6) Includes 156,750 shares that Mr. Bush has the right to acquire upon
exercise of warrants.
(7) Includes 49,000 shares in the names of Mr. Coleman's grandchildren and
children but excludes those shares included under his son, Director
Thomas B. Coleman, and his son-in-law, Director Thomas K. Winingder. In
addition, includes 129,775 shares in the name of a corporation of which
Mr. Coleman is an officer and a director and Mr. Thomas B. Coleman and
Mr. Winingder's wife are principal shareholders. Mr. Coleman disclaims
beneficial ownership of all of the above mentioned shares.
(8) Includes 29,400 shares in the name of Mr. Thomas B. Coleman's children as
to which Mr. Coleman disclaims beneficial ownership. See Note #7.
(9) Includes 34,250 shares that Mr. Garic has the right to acquire upon
exercise of warrants.
(10) Includes 14,300 shares in the names of Mr. Kritikos' children as to which
Mr. Kritikos disclaims beneficial ownership.
(11) Includes 110,400 shares registered in the name of Mr. O'Neill and his
wife.
(12) Includes 59,625 shares in the name of a charitable foundation of which
Mr. Parker is a Trustee and 56,120 shares in the name of Mr. Parker's
step-father both of which Mr. Parker disclaims beneficial ownership.
(13) Includes 46,350 shares in the names of Mr. Winingder's wife and children
as to which Mr. Winingder disclaims beneficial ownership. See Note #7.
CERTAIN STOCKHOLDERS
The following table sets forth certain information as of October 18, 1996
concerning persons, other than the persons listed in the prior table, known to
Jefferson Guaranty Bancorp to be the beneficial owner of more than five percent
(5%) of Jefferson Guaranty Bancorp's equity securities, determined in
accordance with Rule 13d-3 of the Securities & Exchange Commission.
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<PAGE> 44
<TABLE>
<CAPTION>
CONVERTED
NAME OUTSTANDING PERCENTAGE (1) PREFERRED (2) TOTAL PERCENTAGE (3)
- ---- ----------- -------------- -------------- ----- --------------
<S> <C> <C> <C> <C> <C>
Colson Investments 113,842 9.1% - 113,842 (4) 9.1%
150 Nassau Street
New York, New York 10038
Douglas W. Hawes 74,856 6.0% 2,800 77,656 6.2%
LeBoeuf, Lamb,
Green & MacRae
125 West 55th Street
New York, New York 10019
Robert C. McNair 78,600 6.3% 63,600 142,200 10.9%
President and Chief Executive
Officer
Cogen Technologies
Suite 5000
Houston, Texas 77002
Matilda Gray Stream 71,250 5.7% - 71,250 5.7%
Managing Director
J. G. Gray Estate
P. O. Box 40
Lake Charles, Louisiana 70602
The Woldenberg Foundation 50,000 4.0% 50,000 100,000 7.7%
Stephen Goldring, Trustee
c/o Whitney National Bank
Trust Department
P. O. Box 61260
New Orleans, Louisiana 70161
</TABLE>
- ------------------------------
(1) Only the shares listed under the column captioned "Outstanding" are entitled
to be voted on the Merger Agreement and the adjoining percentage column
indicates these shares' percentage of the total shares entitled to vote on
the Merger. Because of the method of calculating the shares which are
entitled to be voted on the Certain Payments Proposal, the table does not
indicate the number or percentage of votes entitled to be cast on such
Proposal.
(2) Indicates the number of shares of Common Stock that could be acquired upon
conversion of Shares of Preferred Stock beneficially owned (using the
conversion rate of 100 shares of common for each share of Preferred Stock).
(3) Under Rule 13d-3 of the Commission, shares that may be acquired upon
conversion of Preferred Stock are deemed outstanding for purposes of
computing the percentage of Common Stock owned by such person individually
but those shares which could be acquired by other persons are not deemed to
be outstanding for the purpose of computing an individual's ownership
percentage.
(4) Consists of shares owned by the partners of Colson Investments and their
affiliates as follows: Peter DelCol, 35,902 shares; Roy B. Simpson, 20,500
shares; Roy B. Simpson, Jr., 27,590 shares; Colson Services Corp., a
corporation in which Messrs. DelCol, Simpson and Simpson, Jr. are
shareholders, 14,885 shares; and Simpson Family Partners, a partnership in
which Messrs. Simpson and Simpson Jr. are general partners, 14,965 shares.
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<PAGE> 45
INFORMATION CONCERNING JEFFERSON GUARANTY BANCORP
Jefferson Guaranty Bancorp, a Delaware corporation, is a one-bank holding
company organized in 1987 for the purpose of acquiring all of the stock of a
then failing Louisiana institution, Jefferson Guaranty Bank. The acquisition
was completed in January 1988 with the intention of Jefferson Guaranty Bancorp
recapitalizing Jefferson Guaranty Bank and restoring its viability as a
long-term investment. Jefferson Guaranty Bancorp does not have any subsidiaries
other than Jefferson Guaranty Bank. Jefferson Guaranty Bancorp has no salaried
employees, although certain executive officers hold parallel positions with
Jefferson Guaranty Bank. The executive offices of Jefferson Guaranty Bancorp
are located at 3525 North Causeway Boulevard, Metairie, Louisiana 70002,
telephone (504) 838-4558.
THE BANK
Jefferson Guaranty Bank is a state-chartered institution operating eleven
(11) branches in the Greater New Orleans Area. Nine (9) of Jefferson Guaranty
Bank's branches are located in Jefferson Parish which borders the city limits
of New Orleans. The other two (2) branches are located on St. Charles Avenue in
the central business district of New Orleans and in the Northpark Business
Section of Covington in St. Tammany Parish. Jefferson Guaranty Bank's main
office is located at 3525 North Causeway Boulevard, Metairie, Louisiana. All of
Jefferson Guaranty Bank's locations are owned with the exception of its main
office and its St. Charles, Chateau and Lakeway branches, which are leased.
Jefferson Guaranty Bank is a full-service commercial bank offering a
comprehensive range of banking and trust services. Its only subsidiary is
Jefferson Guaranty Bank Community Development Corporation which is a
not-for-profit corporation with the sole purpose being community development.
Jefferson Guaranty Bank concentrates on developing relationships with
successful small- and medium-size businesses, executives, professionals, and
other financially responsible individuals. Based on assets at June 30, 1996,
Jefferson Guaranty Bank was the sixth largest bank in the New Orleans
Metropolitan Area with total assets of $298 million and 198 full-time
equivalent employees. No employees are represented by unions or other
bargaining units, and management considers its relations with employees to be
satisfactory.
THE GREATER NEW ORLEANS AREA
The Greater New Orleans Area is Louisiana's largest metropolitan area with
a population of approximately 1,318,000 and employment of 602,000. Although New
Orleans serves as the administrative center of the state's oil and gas
industry, the area is less dependent on the oil and gas industry than is
Louisiana as a whole. Over the last several years, the city has invested
heavily in tourism-related developments, such as a new Mississippi riverfront
aquarium and a multi- phase convention center. The port of New Orleans, the
nation's third-largest port in terms of total tonnage handled, makes a
substantial contribution to the local economy. The New Orleans area is also
supported by the shipbuilding, aerospace, food processing and health care
industries. It was hoped that the gaming industry would boost the local economy
through additional tourism revenue and by providing additional employment
opportunities in the local job market. To date, this has not been realized.
Jefferson Parish has a population of approximately 460,000 and total
employment of 201,000. There are 105,000 homeowners and 25,000 businesses in
the parish. Approximately one-third of the jobs in the parish are in the
service sector. A leader in the health care industry, Jefferson Parish is home
to eight (8) of the state's most prominent acute care hospitals, including East
Jefferson General Hospital and the world renowned Ochsner Foundation Hospital.
Per capita income of Jefferson Parish residents is among the highest in
Louisiana. In 1995, Jefferson Parish led all other parishes in the state in
retail sales and in the rate of economic growth. By July of 1996, unemployment
in the parish had been reduced 5.4 percent from a high of 12 percent in 1989.
This unemployment percentage compares to a state unemployment rate of 7.1
percent and a national rate of 5.6 percent as of July of 1996.
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<PAGE> 46
COMPETITION
Jefferson Guaranty Bank faces keen competition in its primary market area,
Jefferson Parish, and in St. Tammany Parish and the central business district
of New Orleans. In this area there are 17 state chartered or national banks, as
well as 12 savings and loan or homestead institutions. Several of the banks in
the Greater New Orleans Area are subsidiaries of holding companies or branches
of banks having far greater resources than Jefferson Guaranty Bancorp.
SUPERVISION AND REGULATION
Jefferson Guaranty Bancorp and Jefferson Guaranty 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 Jefferson Guaranty Bancorp.
Jefferson Guaranty Bancorp 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").
Jefferson Guaranty Bancorp 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 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 (5%) 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.
Jefferson Guaranty Bancorp 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.
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<PAGE> 47
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. Jefferson Guaranty Bancorp, as shareholder of Jefferson
Guaranty Bank, is subject to these provisions.
Both federal and state laws extensively regulate various aspects of
Jefferson Guaranty 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,
Jefferson Guaranty Bank is subject to the supervisory authority of the
Louisiana Commissioner of Financial Institutions, whose office conducts
periodic examinations of Jefferson Guaranty Bank. As a federally insured bank,
Jefferson Guaranty 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 (5) 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
and supervisory actions of increasing stringency based on the level of
classification. Under present regulation, Jefferson Guaranty Bank is "well
capitalized." While such a classification would exclude Jefferson Guaranty 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
Jefferson Guaranty Bank or to take other supervisory action regardless of such
classification.
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<PAGE> 48
JEFFERSON GUARANTY BANCORP MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements of Jefferson Guaranty Bancorp and related
Notes appearing elsewhere in the Proxy Statement/Prospectus.
REVIEW OF RESULTS OF OPERATIONS - FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
AS COMPARED TO THE SIX-MONTH PERIOD ENDED JUNE 30, 1995
EARNINGS SUMMARY. Jefferson Guaranty Bancorp reported a 13.9% increase in
net income to approximately $1,484,000 or $1.00 per share for the six months
ended June 30, 1996, compared to net income of $1,303,000 or $.88 per share for
the six months ended June 30, 1995. The most significant factors affecting net
income of the periods mentioned are highlighted below.
- A reduction in net interest income of $264,000 as a result of
reductions in net interest margins as discussed below.
- Higher trust income and ATM fees produced a 15.0% increase in other
operating income in 1996 compared to the first six months of 1995.
- The first six months of 1996 were positively impacted by a $120,000
tax benefit related to a reduction in the tax asset valuation
reserve associated with Jefferson Guaranty Bancorp's available net
operating loss carryforwards.
Net earnings for the six months ended June 30, 1996 resulted in an
annualized return on average assets of 1.00% versus 0.98% for the comparable
period in 1995. The annualized return on average stockholders' equity was
14.57% in 1996 and 14.68% in 1995.
NET INTEREST INCOME. Net interest income is the difference between
interest and fees earned on loans, securities and other interest-earning assets
(interest income) and interest paid on deposits (interest expense) and
represents the principal source of earnings for Jefferson Guaranty Bancorp. Net
interest income is affected by changes in the volume of interest-earning assets
and interest-bearing liabilities, and the rates earned or paid thereon. For the
purposes of this earnings analysis, interest-earning assets, including loans,
have been presented as averages, net of unearned income.
Interest income increased $528,000 to $10,145,000 for the six months
ended June 30, 1996 from $9,617,000 for the comparable period in 1995. This
increase was attributable primarily to the increase in average earning assets
for the period ended June 30, 1996 as compared to the period ended June 30,
1995. For the periods ended June 30, 1996 and 1995, investment securities
represented 34.8% and 29.2%, respectively, of average interest-earning assets.
For the six months ended June 30, 1996 and 1995, the annualized yield on
investment securities was 5.63% and 5.59%, respectively. The percentage of
average loans to total earning assets decreased to 57.7% in 1996 from 67.1% for
the comparable period of 1995. The annualized yield on average loans was 8.94%
for the six months ended June 30, 1996 compared to 9.04% for the six months
ended June 30, 1995. Interest-earning assets as a percentage of total average
assets was 90% in 1996 and 1995.
Interest expense increased $792,000 or 29% to $3,526,000 for the six
months ended June 30, 1996, from $2,734,000 for the comparable 1995 period. The
fluctuations in interest expense from 1995 to 1996 were attributable to the
increases in the cost of funds, changes in the mix of interest-bearing
liabilities and increases in the volume of interest-bearing liabilities. The
annualized average rate paid on interest-bearing liabilities was 3.80% and
3.30% for the six months ended June 30, 1996 and 1995, respectively. During the
six months ended June 30, 1996, the volume of interest-bearing liabilities
averaged $186,774,000, or 11.6% higher than the $167,296,000 average for the
six months ended June 30, 1995. Interest-bearing demand deposits represented
41.5% of interest-bearing liabilities during the 1996 period and 47.3% for the
comparable period in 1995. The annualized rates paid on interest-bearing demand
deposits were 2.33% and 2.23% for the six months ended June 30, 1996 and 1995,
respectively. Time deposits represented 44.6% of interest-bearing liabilities
during the 1996 period as compared to 37.6% during the period ended 1995. The
annualized rates paid on time deposits during the six months ended June 30,
1996 and 1995 were 5.55% and 4.79%, respectively.
37
<PAGE> 49
Net interest income for the six months ended June 30, 1996 decreased 3.8%
to $6,619,000 from $6,883,000 for the same period in 1995. The annualized net
interest margin between interest-earning assets and interest-bearing
liabilities decreased to 4.95% for the six months ended June 30, 1996 from
5.73% for the six months ended June 30, 1995. The annualized net yield on
interest-earning assets was 7.59% in 1996 compared to 8.00% in 1995. The
decreases in annualized net interest margins and annualized net yields on
interest-earning assets resulted from the changes in interest income and
expenses as described above, including increased deposit volumes and decreases
in average loans, both of which were used to fund purchases of investment
securities.
NONINTEREST INCOME. Jefferson Guaranty Bancorp derives a significant
portion of its noninterest income from traditional retail banking services
including various account charges and service fees and from trust fees.
Noninterest income from deposit accounts is significantly affected by
competitive pricing of these services and the volume of noninterest-bearing
accounts. Service charge income was $1,346,000 and $1,271,000 for the six
months ended June 30, 1996 and 1995, respectively. The increase was primarily a
result of an overall increase in average deposits for the six months ended June
30, 1996 as compared to the six months ended June 30, 1995. Trust fees
increased 13.5% to $463,000 for the first six months of 1996 compared to
$408,000 for the comparable period of 1995. ATM fee income increased $78,000,
or 66.7% from 1995 to the comparable period in 1996.
NONINTEREST EXPENSE. Noninterest expense was $7,524,000 and $7,553,000
for the six months ended June 30, 1996 and 1995, respectively. Personnel
expenses totaled $3,447,000 and $3,416,000 for the six months ended June 30,
1996 and 1995, respectively. Occupancy expense was $1,135,000 in 1996 and 1995.
Equipment expense increased $130,000 to $918,000 in 1996 from $788,000 in 1995
primarily due to additional depreciation expense related to purchases of new
equipment and investments in technology. Other expense decreased $190,000 or
8.6% to $2,024,000 for the six months ended June 30, 1996 from $2,214,000 for
the six months ended June 30, 1995 primarily as a result of the reduction in
FDIC insurance premiums, partially offset by increases in various other
expenses.
INCOME TAXES. An income tax benefit of $120,000 positively affected
earnings for the six months ended June 30, 1996. There was no income tax
expense or benefit recognized in the six month period ended June 30, 1995.
Jefferson Guaranty Bancorp accounts for income taxes under Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, which
requires an asset and liability approach for financial accounting and reporting
of income taxes.
REVIEW OF FINANCIAL CONDITION - FOR THE PERIOD ENDED JUNE 30, 1996 AS COMPARED
TO THE PERIOD ENDED JUNE 30, 1995
SECURITIES. Jefferson Guaranty Bank accounts for its investment
securities under Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Securities
held to maturity are those securities that management has the ability and
intent to hold to maturity, and are reported at amortized cost. All securities
are classified as held to maturity at June 30, 1996 and June 30, 1995.
Additional information on investment securities as of June 30, 1996 is
contained in Note B of the June 1996 consolidated financial statements.
LOANS. Loans, net of unearned income, decreased to $158,217,000 at June
30, 1996 from $162,635,000 for the comparable 1995 period. The reserve for loan
losses was $4,457,000 and $5,059,000 as of June 30, 1996 and 1995,
respectively. Composition of the Company's loan portfolio at June 30, 1996 and
information on the activity of the loan loss reserve for the six months ending
June 30, 1996 are contained in the Notes to the June 1996 consolidated
financial statements.
Jefferson Guaranty Bancorp seeks to maintain adequate liquidity and
minimize exposure to interest rate volatility. Contractual maturities may vary
significantly from actual maturities due to loan extensions, early pay-offs due
to refinancing or fluctuations in interest rates, and other factors.
DEPOSITS. Total deposits increased $12,626,000 or 4.8% to $273,958,000 at
June 30, 1996 from $261,332,000 for the comparable 1995 period. Time deposits
at June 30, 1996 and 1995 were $83,122,000 and $69,214,000, respectively. Time
deposits represent 30.3% and 26.5% of total deposits at June 30, 1996 and 1995,
respectively. Interest-bearing demand deposits decreased $4,837,000 or 6.1% to
$73,874,000 for the period ended June 30, 1996 from $78,711,000 for the
comparable period in 1995. Savings deposits as a percentage of total deposits
was approximately 9% in 1996 and 1995. Savings deposits totaled $25,306,000 at
June 30, 1996 and $23,707,000 at June 30, 1995. Total demand deposits were
$91,656,000 and $89,700,000 at June 30, 1996 and 1995, respectively.
38
<PAGE> 50
REVIEW OF RESULTS OF OPERATIONS - FOR THE FISCAL YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
EARNINGS SUMMARY. Jefferson Guaranty Bancorp reported net income of
$2,922,000 or $2.00 per share for the year ended December 31, 1995, compared to
net income of $2,040,000 or $1.36 per share for the year ended December 31,
1994. Net income for 1993 was $2,764,000 or $2.01 per share.
Income before taxes, extraordinary gain and cumulative effect of change
in accounting principle increased 43% in 1995 and 26% in 1994. The most
significant factors affecting net income for the periods mentioned are
highlighted below.
- An increase in 1995 of 4.6% in average interest-earning assets. This
follows an increase of 1.2% in 1994.
- Growth in average loans in 1995 of 5.9% following an increase of
3.3% in 1994.
- A decrease in average investment securities as a percentage of
average interest-earning assets from 34.4% in 1994 to 29.5% in 1995.
- Maintenance of high asset quality and reserve coverage ratios. Net
recoveries were $202,000, $281,000, and $45,000 in 1995, 1994 and
1993, respectively. In recognition of the low level of charge-offs
and improved asset quality, no loan provisions were required in 1994
or 1995; the loan provision was $800,000 in 1993.
- Trust fee income increased 16.9% and 10.9% for the years 1995 and
1994, respectively.
- Increases in other operating expenses of 4.2% and 1.7% in 1995 and
1994, respectively, resulting primarily from higher personnel and
occupancy expenses, and increased equipment expenses relating to
investments in technology, partially offset by lower litigation and
other expenses.
- Net income in 1993 was positively impacted by security gains of
$439,000, an extraordinary gain on early retirement of debt of
$514,000 and the cumulative effect of a change in accounting for
income taxes of $1,083,000, offset by income tax expense totaling
$450,000.
Net earnings in 1995 resulted in a return on average assets of 1.05%
compared to .76% and 1.04% during 1994 and 1993, respectively. The return on
average stockholders equity was 15.80% in 1995, 12.37% in 1994, and 19.46% in
1993.
NET INTEREST INCOME. Net interest income is the difference between
interest and fees earned on loans, securities and other interest-earning assets
(interest income) and interest paid on deposits (interest expense) and
represents the principal source of earnings for Jefferson Guaranty Bancorp. Net
interest income is affected by changes in volume of interest-earning assets and
interest-bearing liabilities, and the rates earned or paid thereon. For the
purposes of this earnings analysis, interest-earning assets, including loans,
have been presented as averages, net of unearned income.
Interest income increased $3,031,000 to $19,943,000 for the year ended
December 31, 1995 from $16,912,000 for the comparable period in 1994. Interest
income for 1993 was $16,564,000. These increases were attributable to increases
in average interest-earning assets for the years ended December 31, 1995 and
1994, respectively, and increases in the yield on interest-earning assets as
set forth in the Rate/Volume Analysis shown elsewhere in this Proxy
Statement/Prospectus. The percentage of average loans to total earning assets
increased to 63% for the year ended December 31, 1995 from 62% and 61% for the
years ended December 31, 1994 and 1993. The yield on average loans was 9.07%
for the year ended December 31, 1995 compared to 8.44% and 8.24% for the years
ended December 1994 and 1993, respectively. Loan growth was partially funded by
a reduction in investment securities. For the year ended December 31, 1995,
investment securities represented 29% of average interest-earning assets. For
the comparable 1994 and 1993 periods, investment securities represented 34% of
average interest-earning assets. For the years ended December 31, 1995, 1994,
and 1993, the yield on investment securities was 5.70%, 4.52%, and 5.01%,
respectively. Interest-earning assets as a percentage of total average assets
was approximately 90% for each of the three years ended December 31, 1995.
Interest expense increased $1,794,000 or 42% to $6,071,000 for the year
ended December 31, 1995, from $4,277,000 for the comparable 1994 period.
Interest expense for 1993 was $4,520,000. The fluctuations in interest expense
from 1994 to 1995 were attributable to the higher interest rate environment,
changes in the mix of interest-bearing liabilities, and increases in the
39
<PAGE> 51
volume of interest-earning liabilities as set forth in the Rate/Volume Analysis
shown elsewhere in this Proxy Statement/Prospectus. The average rate paid on
interest-bearing liabilities was 3.51%, 2.52%, and 2.53% for the years ended
December 31, 1995, 1994 and 1993, respectively. These increases in interest
expense also represent higher deposit costs as customers shifted into higher
yielding deposit products.
Net interest income increased 9.79% to $13,872,000 in 1995 from
$12,635,000 in 1994 and 4.91% in 1994 from $12,044,000 in 1993. The net
interest margin between interest-earning assets and interest-bearing
liabilities increased to 5.50% for the year ended December 31, 1995 from 5.24%
for the year ended December 31, 1994. The net interest margin in 1993 was
5.06%. The net yield on interest-earning assets was 7.91% in 1995 compared to
7.02% in 1994 and 6.95% in 1993. The increases in net interest margins and net
yields on interest-earning assets from 1993 to 1994 resulted from the changes
in interest income and expenses as described above, primarily driven by changes
in volumes of interest- earning assets and interest-bearing liabilities
including a shift in the asset mix whereby loans increased as a percentage of
total earning assets. The increases in net interest margins and net yields on
interest-earning assets from 1994 to 1995 resulted from the changes in interest
income and expenses as described above, primarily driven by increases in yields
on interest-earning assets and rates paid on interest-bearing liabilities.
NONINTEREST INCOME. Jefferson Guaranty Bancorp derives a significant
portion of its noninterest income from traditional retail banking services
including various account charges and service fees and from trust fees.
Noninterest income from deposit accounts is significantly affected by
competitive pricing of these services and the volume of noninterest-bearing
accounts. Service charge income was $2,573,000, $2,564,000 and $2,832,000 for
the years ended December 31, 1995, 1994, and 1993, respectively. The decrease
from 1993 to 1994 was primarily a result of lower NSF fee income and lower
account analysis fee income. Trust fee income increased 16.9% and 10.9% for the
years 1995 and 1994, respectively, to $925,000 in 1995 from $791,000 in 1994
and $713,000 in 1993. Noninterest income for 1993 included a $439,000 gain on
the sale of investment securities.
NONINTEREST EXPENSE. Noninterest expense was $15,067,000, $14,467,000 and
$14,225,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
Personnel expenses increased 8.2% and 6.0% in 1995 and 1994, respectively, to
$6,819,000 in 1995 from $6,301,000 in 1994 and $5,947,000 in 1993. Occupancy
expense increased to $2,259,000 in 1995 from $2,059,000 in 1994 and $1,876,000
in 1993. Equipment expense increased to $1,668,000 in 1995 from $1,476,000 in
1994 and $1,176,000 in 1993 primarily due to additional depreciation expense
and maintenance related to purchases of new equipment, new branch locations,
and investments in technology. Litigation expenses decreased from $627,000 in
1993 to $284,000 in 1994 and $125,000 in 1995 as legal issues arising from
events prior to Jefferson Guaranty Bancorp's acquisition of Jefferson Guaranty
Bank in 1988 have been substantially resolved. Other expense decreased to
$4,196,000 in 1995 from $4,347,000 and $4,599,000 in 1994 and 1993,
respectively. The reduction in other expenses in 1995 and 1994 was primarily
due to decreases in expenses relating to other real estate, partially offset by
increases in business development expenses, including advertising. The
reduction in other expenses in 1995 was also affected by the decrease in FDIC
insurance premiums.
INCOME TAXES. The Company adopted Statement of Financial Accounting
Standards No. 109 Accounting for Income Taxes, effective January 1, 1993,
recording a cumulative effect of change in accounting for income taxes of
$1,083,000. This positive impact on 1993 earnings was partially offset by
income tax expense totaling $450,000. There was no net income tax expense or
benefit recorded in 1994 or 1995.
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------
1995 1994
-------- ---------
<S> <C> <C>
Return on average assets 1.05% .76%
Return on average equity 15.80% 12.37%
Average equity to average assets 6.62% 6.18%
</TABLE>
40
<PAGE> 52
AVERAGE BALANCES AND INTEREST RATES, INTEREST YIELD/RATES. The following table
sets forth average balances of interest- earning assets and interest-bearing
liabilities, the amount of interest earned/paid thereon, and the yield/rate for
each of the three years ended December 31, 1995.
<TABLE>
<CAPTION>
(In Thousands)
1995 1994 1993
----------------------------- ---------------------------- ---------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
----------------------------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Loans, net of unearned income $159,081 $14,632 9.07% $150,178 $12,846 8.44% $145,327 $12,144 8.24%
Investment securities 74,379 4,240 5.70 82,854 3,749 4.52 81,333 4,077 5.01
Federal funds sold 18,678 1,071 5.73 8,010 317 3.97 11,542 343 2.97
-------- ------- ---- -------- ------- ---- ------- ------- ----
Total interest-earning assets 252,138 19,943 7.91% 241,042 16,912 7.02% 238,202 16,564 6.95%
Reserve for possible loan losses (5,001) (4,706) (4,142)
Other assets 32,172 30,484 31,122
-------- -------- -------
Total assets $279,309 $266,820 $265,182
======== ======== ========
Liabilities and
Stockholders' Equity:
Interest-bearing liabilities:
Savings deposits $23,685 $531 2.24% $23,041 $489 2.12% $22,564 $486 2.15%
Interest-bearing demand deposits 78,469 1,775 2.26 87,245 1,753 2.01 91,835 1,918 2.09
Time deposits 68,917 3,593 5.21 56,829 1,815 3.19 59,844 1,765 2.95
-------- ------- ---- -------- ------- ---- ------- ------- ----
Total interest-bearing deposits 171,071 5,899 3.45 167,115 4,057 2.43 174,243 4,169 2.39
Long-term debt 1,787 172 9.49 2,700 220 8.04 4,532 351 7.64
-------- ------- ---- -------- ------- ---- ------- ------- ----
Total interest-bearing
liabilities 172,858 6,071 3.51% 169,815 4,277 2.52% 178,775 4,520 2.53%
Demand deposits 85,334 78,622 70,443
Other liabilities 2,622 1,894 1,759
Stockholders' equity 18,495 16,489 14,205
-------- -------- -------
Total liabilities and $279,309 $266,820 $265,182
stockholders' equity ======== ======== ========
Net interest income and margin $ 13,872 5.50% $12,635 5.24% $12,044 5.06%
======== ======= =======
</TABLE>
41
<PAGE> 53
RATE/VOLUME ANALYSIS. The following table sets forth changes in
interest income and interest expense for each major category of
interest-earning assets and interest-bearing liabilities and the amount of the
respective changes attributable to volumes and rates for the periods indicated.
(In Thousands)
<TABLE>
<CAPTION>
1995/1994 1994/1993
---------------------------------------- -------------------------------------
Change Change
Attributable To Total Attributable To Total
------------------------ Increase ------------------------ Increase
Rate Volume (Decrease) Rate Volume (Decrease)
---- ------ ---------- ---- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Investment securities $ 974 $ (483) $ 491 $ (398) $ 69 $ (329)
Federal funds sold 142 612 754 115 (140) (25)
Loans 978 808 1,786 293 409 702
------- ------- ------- ------- ------- -------
Total interest income 2,094 937 3,031 10 338 348
INTEREST-BEARING LIABILITIES:
Savings deposits 28 14 42 (7) 10 3
Certificates of deposit 1,148 630 1,778 146 (96) 50
Other interest-bearing deposits 220 (198) 22 (72) (93) (165)
Long-term debt 39 (87) (48) 16 (147) (131)
------- ------- ------- ------- ------- -------
Total interest expense 1,435 359 1,794 83 (326) (243)
------- ------- ------- ------- ------- -------
NET INTEREST INCOME $ 659 $ 578 $ 1,237 $ (73) $ 664 $ 591
======= ======= ======= ======= ======= =======
</TABLE>
42
<PAGE> 54
INVESTMENT SECURITIES. At December 31, 1995, the investment securities
portfolio aggregated $101,484,000, an increase of $26,864,000 from year end
1994. During 1994 there was a decrease of $14,797,000 in investment securities.
The following table sets forth the composition of the investment
portfolio at the end of each period presented (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
U. S. Treasury $ 29,717 $ 30,886 $ 45,193
U S. Government agency
and corporation obligations 71,767 43,734 44,224
-------- -------- --------
Total $101,484 $ 74,620 $ 89,417
======== ======== ========
</TABLE>
Since the adoption of SFAS 115 effective January 1, 1994, all securities
have been classified as Held to Maturity, therefore, these securities are
stated at cost, adjusted for amortization of premium and accretion of discount
using a method which approximates the level-yield method.
At December 31, 1995, the Held to Maturity securities portfolio had a net
unrealized gain of $234,000 with gross gains of $370,000 and gross losses of
$136,000. There were no investment sales during 1995 or 1994. Gross gains of
$439,000 were realized on investment sales during 1993.
The following table presents selected repricing information for
investment securities at December 31, 1995 (in thousands):
<TABLE>
<CAPTION>
One Year One to After Five
or Less Five Years Years
----------- ---------- -----------
<S> <C> <C> <C>
Held to Maturity:
U. S. Treasury:
Amount $ 29,717 -- --
Yield 5.25% -- --
U. S. Government agency and
corporation obligations:
Amount 71,344 $ 423 --
Yield 5.99% 10.60% --
-------- ------- --------
Total $101,061 $ 423 --
======== ======= ========
</TABLE>
See Note C to Jefferson Guaranty Bancorp's Consolidated Financial
Statements appearing elsewhere in this Proxy Statement/Prospectus for
information concerning the amortized cost and estimated fair values of
Jefferson Guaranty Bancorp's investment securities at December 31, 1995 and
1994.
43
<PAGE> 55
LOANS. Jefferson Guaranty Bancorp engages in commercial and consumer
lending. In accordance with the lending policy established by Jefferson
Guaranty Bancorp's Board of Directors, each loan is evaluated based on cash
flow, equity invested, collateral adequacy and character of the borrower.
In addition, such other factors as market conditions for the borrower's
business or project and prevailing economic trends and conditions are
considered.
The following table sets forth the type and amount of loans outstanding as
of the date indicated (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Commercial, financial $ 47,423 $ 51,815 $ 46,068 $ 48,248 $ 53,450
and industrial
Real estate - construction 4,367 4,961 6,739 6,890 6,168
Real estate - mortgage 54,919 63,323 62,401 69,113 61,640
Industrial revenue bonds 289 437 2,651 4,060 5,557
Consumer 47,931 43,400 27,415 19,899 15,776
Other loans 773 443 845 714 105
-------- -------- -------- -------- --------
Total loans 155,702 164,379 146,119 148,924 142,696
Unearned Income (113) (123) (236) (401) (755)
-------- -------- -------- -------- --------
Total loans (net) $155,589 $164,256 $145,883 $148,523 $141,941
======== ======== ======== ======== ========
</TABLE>
Jefferson Guaranty Bancorp's lending activities are concentrated
primarily in the Greater New Orleans Area. Its customers are engaged in various
business activities and have diverse economic characteristics.
Although average loans increased during the three years ended December
31, 1995, from $145,327,000 in 1993, to $150,178,000 and $159,081,000 in 1994
and 1995, respectively, the end-of-period balance outstanding in loans as of
December 31, 1995 reflects the decline which was experienced throughout 1995.
The following table provides information concerning loan portfolio
repricing as of December 31, 1995:
(In Thousands)
<TABLE>
<CAPTION>
One Year One to After Five
or Less Five Years Years Total
---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Commercial $ 76,943 $ 23,314 $ 7,460 $ 107,717
Consumer 17,824 25,465 4,583 47,872
---------- ----------- ------------ -----------
$ 94,767 $ 48,779 $ 12,043 $ 155,589
========== =========== ============ ===========
</TABLE>
As of December 31, 1995, loans repricing after one year which have
fixed interest rates total $28,336,000 and variable interest rates total
$32,486,000.
44
<PAGE> 56
NONPERFORMING ASSETS. Management classifies loans as nonperforming
when they are either on nonaccrual, accruing but past due ninety days or more,
or a troubled debt restructuring. Loans are automatically placed on nonaccrual
when principal or interest is past due ninety days or more, unless the loan is
both well secured and in the process of being collected. Additionally, loans
are placed on nonaccrual when collection of all principal or interest is deemed
unlikely. Loans totaling $364,000 were classified as nonperforming at year-end
1995, compared to $661,000 for 1994, and $555,000 for 1993. If these loans had
performed in accordance with their original terms, interest income would have
increased by $38,000 for both 1995 and 1994, and $79,000 for 1993,
respectively. Income recognized on nonaccrual loans totaled $23,000, $133,000,
and $74,000 in 1995, 1994 and 1993, respectively. The following table
summarizes the risk element in the loan portfolio and real estate acquired
through foreclosure:
(In Thousands)
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $322 $376 $ 549 $1,177 $5,087
Accruing loans past due -- -- 6 17 4
ninety days or more
Troubled debt restructuring 42 285 -- 2,575 3,265
---- ---- ------ ------ ------
Nonperforming loans
$364 $661 $ 555 $3,769 $8,356
==== ==== ====== ====== ======
Real estate acquired through
foreclosure (net) $ 23 $178 $1,006 $5,889 $4,823
==== ==== ====== ====== ======
</TABLE>
Management is not aware of any loans classified for regulatory
purposes as loss, doubtful, substandard, or special mention and excluded from
the above table which: (1) represents or results from trends or uncertainties
that will materially impact future operating results, liquidity or capital
reserves, or (2) represents credits with material unrecognized exposure about
which management is aware of any information which causes doubts as to the
ability of such borrowers to comply with the loan repayment terms.
RESERVE FOR POSSIBLE LOAN LOSSES. The reserve for possible loan losses
is maintained to provide for possible losses in the loan portfolio. On January
1, 1995 Jefferson Guaranty Bancorp adopted SFAS No. 114, as amended by SFAS No.
118 "Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures." In accordance with SFAS No. 114, the portion of the 1995 reserve
for possible loan losses related to loans identified as impaired is based on
discounted cash flows using the loan's initial effective interest rate or the
fair value of the collateral for certain collateral dependent loans.
The determination of the balance in the reserve for possible loan
losses is based on an analysis of the loan portfolio and reflects an amount
which, in management's judgment, is adequate to provide for potential loan
losses after giving consideration to the character of the loan portfolio, loan
concentrations, current year charge-offs, historical ratios of charge-offs to
average loans, trends in portfolio volumes, delinquencies, nonaccrual loans,
current economic conditions, and such other factors that deserve current
recognition in estimating loan losses. The provision for possible loan losses
is charged to operating expenses.
45
<PAGE> 57
The following table sets forth loan loss experience and certain
information relating to the reserve for loan losses as of the dates and or the
periods indicated (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $4,801 $4,520 $3,675 $3,469 $3,852
Provision charged to expense -- -- 800 1,300 1,615
Charge-offs:
Consumer 103 112 132 188 145
Commercial and all other 279 485 716 1,951 2,629
------ ------ ------ ------ ------
Total charge-offs 382 597 848 2,139 2,774
------ ------ ------ ------ ------
Recoveries:
Consumer 82 116 105 179 147
Commercial and all other 502 762 788 866 629
------ ------ ------ ------ ------
Total recoveries 584 878 893 1,045 776
------ ------ ------ ------ ------
Net loan charge-offs (202) (281) (45) 1,094 1,998
(recoveries)
------ ------ ------ ------ ------
Balance at end of year $5,003 $4,801 $4,520 $3,675 $3,469
====== ====== ====== ====== ======
Net loan charge-offs as a %
of average loans and leases (.13)% (.19)% (.03)% .76% 1.48%
Recoveries as a % of charge- (152.88)% (147.07)% (105.31)% (48.85)% (27.97)%
offs
Reserve for possible loan 3.22% 2.92% 3.10% 2.47% 2.44%
losses as a % of year-end
loans and leases
</TABLE>
The following table sets forth the approximate dollar amount of the
reserve for loan losses allocable to the stated loan categories, and the
percent of total loans in each such category as of December 31 for each period
presented:
(Dollars In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------------- ------------------- ------------------ ---------------- ---------------
Percent Percent Percent Percent Percent
Allow. of Loans Allow. of Loans Allow. of Loans Allow. of Loans Allow. of Loans
-------- --------- -------- -------- -------- -------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial $2,040 69% $2,199 74% $1,978 81% $1,822 87% $2,146 89%
Consumer 1,147 31% 1,082 26% 817 19% 390 13% 301 11%
Unallocated 1,816 -- % 1,520 -- % 1,725 -- % 1,463 -- % 1,022 -- %
------ ------ ------ ---- ------ ---- ------ ---- ------ ----
$5,003 100% $4,801 100% $4,520 100% $3,675 100% $3,469 100%
====== ====== ====== ==== ====== ==== ====== ==== ====== ====
</TABLE>
46
<PAGE> 58
INTEREST RATE SENSITIVITY. Interest rate risk is the potential impact of
changes in interest rates on net interest income and results from disparities
in repricing opportunities of assets and liabilities over a period of time.
Management estimates the effects of changing interest rates and various balance
sheet strategies on the level of net interest income. Management may alter the
mix of floating and fixed-rate assets and liabilities or change pricing
schedules as a means of limiting interest rate risk.
Presented below is the interest rate sensitivity position at December 31,
1995. This profile is based on a point in time and does not consider subsequent
changes in interest rate levels or spreads between asset and liability
categories.
(In Thousands)
<TABLE>
<CAPTION>
0-3 4-12 1-5 After 5 Total
Months Months Years Years
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Assets:
Loans, excluding non-accruals $ 75,771 $19,466 $49,218 $ 10,812 $155,267
Investment securities 46,851 54,169 464 -- 101,484
Fed funds 8,580 -- -- -- 8,580
Int-bearing deposits in banks 46 -- -- -- 46
-------- ------- ------- -------- --------
Total interest-earning assets 131,248 73,635 49,682 10,812 265,377
Noninterest-earning assets -- -- -- 32,457 32,457
-------- ------- ------- -------- --------
Total assets $131,248 $73,635 $49,682 $ 43,269 $297,834
======== ======= ======= ======== ========
Sources of funds:
Savings deposits -- $24,053 -- -- $24,053
NOW accounts $ 26,691 -- -- -- 26,691
Money Market accounts 51,064 -- -- -- 51,064
Time deposits 25,364 37,213 $17,439 -- 80,016
Long term debt 1,250 -- -- -- 1,250
-------- ------- ------- -------- --------
Total int-bearing liabilities 104,369 61,266 17,439 -- 183,074
Noninterest-bearing deposits -- -- -- $ 92,772 92,772
Other liabilities -- -- -- 2,134 2,134
Shareholders' equity -- -- -- 19,854 19,854
-------- ------- ------- -------- --------
Total source of funds $104,369 $61,266 $17,439 $114,760 $297,834
======== ======= ======= ======== ========
Repricing gap $ 26,879 $12,369 $32,243 $(71,491)
Cumulative repricing gap 26,879 39,248 71,491 --
Cumulative repricing gap/
total assets 9.02% 13.18% 24.00%
</TABLE>
47
<PAGE> 59
DEPOSITS. The following table sets forth average deposits and rates paid on
such deposits for the periods indicated (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------
1995 1994
----------------------------- --------------------------
Amount Rate Amount Rate
---------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits $ 85,334 -- $ 78,622 --
Interest-bearing demand deposits 78,469 2.26% 87,245 2.01%
Savings deposits 23,685 2.24% 23,041 2.12%
Time deposits 68,917 5.21% 56,829 3.19%
--------- ---------
Total $ 256,405 $ 245,737
========= =========
</TABLE>
Maturities of time deposits of $100,000 or more outstanding as of December
31, 1995 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1995
-----------------
<S> <C>
3 months or less $ 3,640
Over 3 through 6 months 3,975
Over 6 through 12 months 2,696
Over 12 months 2,929
--------
Total $ 13,240
========
</TABLE>
LIQUIDITY. Liquidity for a financial institution can be expressed in terms of
maintaining sufficient funds available to meet both expected and unanticipated
obligations in a cost-effective manner. Adequate liquidity allows the Company
to meet the demands of both the borrower and the depositor on a timely basis,
as well as pursue other business opportunities as they arise. Thus, liquidity
is maintained through the Company's ability to convert assets into cash, manage
the maturities of liabilities and generate funds on a short-term basis through
the national Federal funds market.
Federal funds sold totaling $8.6 million provide the major source of
liquidity at December 31, 1995. Cash flows from repayments and maturities from
the securities and loan portfolios provide an additional source of liquidity.
Excluding prepayments from mortgage-backed securities, $65.4 million, or 65%,
of the securities portfolio and $49.9 million, or 32%, of total loans, have
contractual maturities of one year or less.
The Company relies largely on core deposits to fund loan demand and long-term
investments. Core deposits, defined as total deposits less time deposits of
$100 thousand or more, have increased, ending the year at $261.4 million which
compares to $240.7 million and $240.9 million at the end of 1994 and 1993,
respectively. Although the Company prefers to meet liquidity requirements
through internally generated funding sources and through the matching of
maturities of assets and liabilities, it also maintains funding relationships
with other financial institutions.
The parent company requires liquidity to pay preferred dividends to its
shareholders, to meet operating expenses and to service its requirements on its
long-term debt. The parent company relies on dividends from its subsidiary,
Jefferson Guaranty Bank.
48
<PAGE> 60
CAPITAL. As of December 31, 1995 and 1994, Jefferson Guaranty Bancorp and its
subsidiary, Jefferson Guaranty Bank are in compliance with applicable
regulatory capital requirements as set forth in the following table (dollars in
thousands):
<TABLE>
<CAPTION>
Jefferson Guaranty Bancorp
------------------------------------------------------
December 31,
------------------------------------------------------
1995 1994
----------- ----------
<S> <C> <C>
Capital:
Tier I $19,296 $16,444
Tier II 2,138 2,110
------- -------
Total capital $21,434 $18,554
<CAPTION>
Regulatory
1995 1994 Minimum
------------- ------------- ---------------
<S> <C> <C> <C>
Ratios:
Tier I capital to risk-weighted assets 11.28% 9.74% 4.0%
Total capital to risk-weighted assets 12.74% 11.17% 8.0%
Leverage Ratio 6.61% 6.14% 4.0%
</TABLE>
<TABLE>
<CAPTION>
Jefferson Guaranty Bank
------------------------------------------------------
December 31,
------------------------------------------------------
1995 1994
---------- -----------
<S> <C> <C>
Capital:
Tier I $20,226 $18,602
Tier II 2,138 2,110
------- -------
Total capital $22,364 $20,712
======= =======
<CAPTION>
Regulatory
1995 1994 Minimum
---------- ----------- ---------------
<S> <C> <C> <C>
Ratios:
Tier I capital to risk-weighted assets 12.05% 11.20% 4.0%
Total capital to risk-weighted assets 13.32% 12.47% 8.0%
Leverage Ratio 6.93% 6.94% 4.0%
</TABLE>
49
<PAGE> 61
FAIR VALUE OF FINANCIAL INSTRUMENTS. The fair value of certain
financial assets and liabilities as of December 31, 1995 is disclosed in Note Q
of Jefferson Guaranty Bancorp's Consolidated Financial Statements appearing
elsewhere in this Proxy Statement/Prospectus. Fair values were determined based
on market quotes, where available, or were calculated using discounted cash
flows, if no market quotes were available. The differences between fair values
and book values were primarily caused by differences between contractual and
market interest rates at year-end.
Fluctuations in fair value will occur as interest rates change. Since
the repricing of assets and liabilities are relatively matched, changes in fair
values are not expected to have a material impact on Jefferson Guaranty
Bancorp's financial condition, results of operations, liquidity or capital
resources.
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.
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.
With respect to the unaudited interim financial information for the
periods ended March 31, 1996 and 1995 and June 30, 1996 and 1995, incorporated
by reference herein, KPMG Peat Marwick LLP has reported that they applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports included in Deposit
Guaranty's quarterly reports on Form 10-Q for the quarters ended March 31, 1996
and June 30, 1996, incorporated by reference herein, states that they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of section 11 of
the Securities Act of 1933 for their reports on the unaudited interim financial
information because those reports are not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of sections 7 and 11 of the Act.
The consolidated financial statements of Jefferson Guaranty Bancorp as
of December 31, 1995, 1994 and 1993 and for the years then ended included in
this Proxy Statement/Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto and are 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. Reference is made to said report, which includes an explanatory
paragraph with respect to the changes in methods of accounting for investment
securities in 1994 and income taxes in 1993 as discussed in Note A to the
audited financial statements.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Board of
Directors of Jefferson Guaranty Bancorp 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.
50
<PAGE> 62
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Consolidated Financial Statements for the Years Ended December 31, 1995, 1994 and 1993:
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Changes in Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Consolidated Financial Statements for the Six Months Ended June 30, 1996 and 1995 (Unaudited):
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-26
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-28
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
</TABLE>
F-1
<PAGE> 63
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board
of Directors of Jefferson Guaranty Bancorp:
We have audited the accompanying consolidated balance sheets of Jefferson
Guaranty Bancorp (a Delaware corporation) and subsidiary as of December 31,
1995, 1994 and 1993 and the related consolidated statements of income, changes
in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jefferson Guaranty Bancorp and
subsidiary as of December 31, 1995, 1994 and 1993 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in Note A to the financial statements, effective January 1,
1994, the Company changed its method of accounting for investment securities,
and effective January 1, 1993, the Company changed its method of accounting for
income taxes.
New Orleans, Louisiana
January 24, 1996
F-2
<PAGE> 64
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and due from banks $ 22,128 $ 21,239 $ 17,062
Federal funds sold 8,580 2,780 11,500
Total Cash and Cash Equivalents 30,708 24,019 28,562
Investment securities - at amortized cost (fair value $101,718,
$72,194 and $89,630 as of December 31, 1995, 1994 and 1993 respectively) 101,484 74,620 89,417
Loans, net of unearned discount and fees 155,589 164,256 145,883
Reserve for possible loan losses (5,003) (4,801) (4,520)
- ------------------------------------------------------------------------------------------------------------------------------
Loans, net 150,586 159,455 141,363
Premises and equipment 11,621 10,260 7,992
Intangible asset 558 767 854
Other real estate, net 23 178 1,006
Other assets 2,854 2,162 2,283
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $297,834 $271,461 $271,477
==============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------
Deposits
Noninterest bearing $ 92,772 $ 86,130 $ 79,266
Interest bearing 181,824 164,043 171,540
- ------------------------------------------------------------------------------------------------------------------------------
Total deposits 274,596 250,173 250,806
Other liabilities 2,134 1,727 2,093
Long-term debt 1,250 2,350 3,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 277,980 254,250 255,899
Stockholders' equity
Preferred stock - authorized 16,200 shares; issued
3,484 shares Series C Cumulative Convertible 3,484 3,484 3,484
Common stock - authorized 5,000,000 shares of common
stock, $1.00 par value; issued 1,244,375 shares 1,244 1,244 1,244
Surplus 9,746 9,746 9,746
Accumulated earnings 5,380 2,737 1,104
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 19,854 17,211 15,578
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $297,834 $271,461 $271,477
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 65
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $14,632 $12,846 $12,144
Federal funds sold 1,071 317 340
U. S. Government, Federal agency and corporation obligations 4,240 3,749 4,080
- -------------------------------------------------------------------------------------------------------------------------------
Total interest income 19,943 16,912 16,564
INTEREST EXPENSE
Deposits 5,899 4,057 4,169
Long-term debt 172 220 351
- -------------------------------------------------------------------------------------------------------------------------------
Total interest expense 6,071 4,277 4,520
NET INTEREST INCOME 13,872 12,635 12,044
Provision for possible loan losses - - 800
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 13,872 12,635 11,244
OTHER OPERATING INCOME
Service charges 2,573 2,564 2,832
Security gains - - 439
Trust fees 925 791 713
Other 619 517 614
- -------------------------------------------------------------------------------------------------------------------------------
Total other operating income 4,117 3,872 4,598
OTHER OPERATING EXPENSES
Personnel 6,819 6,301 5,947
Occupancy 2,259 2,059 1,876
Equipment 1,668 1,476 1,176
Litigation 125 284 627
Other operating expenses 4,196 4,347 4,599
- -------------------------------------------------------------------------------------------------------------------------------
Total other operating expenses 15,067 14,467 14,225
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES, EXTRAORDINARY GAIN AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 2,922 2,040 1,617
Income tax expense - - 450
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY GAIN AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 2,922 2,040 1,167
Extraordinary gain on early retirement of debt, net of tax of $240 - - 514
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 2,922 2,040 1,681
Cumulative effect of change in accounting for income taxes - - 1,083
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME 2,922 2,040 2,764
Preferred dividend requirements 279 279 251
- -------------------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON SHARES $ 2,643 $ 1,761 $ 2,513
===============================================================================================================================
Earnings per share data shown on F-5.
</TABLE>
The accompanying notes are an integral part of these financial statements.
(CONTINUED)
F-4
<PAGE> 66
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary earnings per share before extraordinary gain
and cumulative effect of change in accounting principle $2.00 $1.36 $ .74
Extraordinary gain - - .41
Cumulative effect of change in accounting for income taxes - - .86
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $2.00 $1.36 $2.01
==============================================================================================================================
Fully diluted earnings per share before extraordinary gain
and cumulative effect of change in accounting principle $1.74 $1.24 $ .73
Extraordinary gain - - .32
Cumulative effect of change in accounting for income taxes - - .68
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME $1.74 $1.24 $1.73
=============================================================================================================================
</TABLE>
F-5
<PAGE> 67
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
----------------------------------------------------------------------------
ACCUMULATED TOTAL
EARNINGS TOTAL COMMON PREFERRED
COMMON STOCK SURPLUS (DEFICIT) EQUITY STOCK TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 $ 942 $6,300 $ (1,409) $ 5,833 $6,200 $12,033
Dividends on Preferred Stock - - (251) (251) - (251)
Sale of Stock Units 348 - - 348 3,484 3,832
Repurchase and retirement of
Series A and B Preferred
and Class A Common (46) 3,446 - 3,400 (6,200) (2,800)
Net Income for the Year 1993 - - 2,764 2,764 - 2,764
----------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 1,244 9,746 1,104 12,094 3,484 15,578
Dividends on Preferred Stock - - (279) (279) - (279)
Purchase JBI Stock Warrant* - - (128) (128) - (128)
Net Income for the Year 1994 - - 2,040 2,040 - 2,040
----------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 1,244 9,746 2,737 13,727 3,484 17,211
Dividends on Preferred Stock - - (279) (279) - (279)
Net Income for the Year 1995 - - 2,922 2,922 - 2,922
----------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 $1,244 $9,746 $ 5,380 $16,370 $3,484 $19,854
============================================================================
</TABLE>
* See NOTE L.
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 68
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,922 $ 2,040 $ 2,764
Adjustments to reconcile net income to net cash provided by
operations:
Depreciation and amortization 1,651 1,421 1,238
Amortization and accretion of investment securities, net (1,085) (52) (56)
Decrease in net interest receivables and payables 197 87 135
Decrease (increase) in net other receivables and payables 100 (139) 40
Litigation, legal and claim settlements, net of noncash adjustments (481) (242) 367
Net gain on sale of property and securities - (71) (443)
Extraordinary gain on early retirement of debt - - (754)
Provision for possible loan losses - - 800
Provision for possible losses on disposition of other real estate - 33 274
Cumulative effect of change in accounting principle - - (1,083)
Deferred income tax expense - - 690
Other, net 10 - -
- ------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATIONS 3,314 3,077 3,972
INVESTING ACTIVITIES
Purchases of investment securities (101,060) (39,567) (77,478)
Proceeds from maturities and payments of investment securities 75,281 54,416 61,914
Proceeds from sales of investment securities - - 7,251
Net loan fundings 8,890 (18,138) 2,780
Purchases of premises and equipment, net of sales proceeds (2,931) (3,086) (946)
Proceeds from sales of other real estate, net of capitalized costs 151 445 4,599
- ------------------------------------------------------------------------------------------------------------------------------
NET CASH UTILIZED IN INVESTING ACTIVITIES (19,669) (5,930) (1,880)
FINANCE ACTIVITIES
Net increase (decrease) in demand deposits, NOW, money market and
savings accounts 2,952 (1,798) 4,487
Net increase (decrease) in certificates of deposit 21,471 1,165 (5,355)
Proceeds from sale of common and preferred stock - - 3,832
Repurchase of stock - - (2,800)
Purchase of JBI stock warrant - (128) -
Dividends paid on preferred stock (279) (279) (251)
Proceeds from long-term debt - - 3,500
Repayment of long-term debt (1,100) (650) (5,746)
- ------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (UTILIZED IN) FINANCING ACTIVITIES 23,044 (1,690) (2,333)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,689 (4,543) (241)
Cash and cash equivalents at beginning of year 24,019 28,562 28,803
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $30,708 $24,019 $28,562
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 69
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE A - SUMMARY OF ACCOUNTING POLICIES
Jefferson Guaranty Bancorp (the "Company") through its wholly owned subsidiary,
Jefferson Guaranty Bank (the "Bank"), provides a wide range of financial
services throughout the New Orleans, Louisiana metropolitan area, including the
surrounding parishes of Jefferson and St. Tammany. These services include
commercial, retail and mortgage loans, as well as cash management and trust
services. The Bank, through an alliance with a third party brokerage firm,
also offers alternative investments, including stocks, bonds, mutual funds and
annuities.
The accounting and reporting policies the Company and the Bank conform with
generally accepted accounting principles and practices within the banking
industry. The following summarizes significant accounting policies:
Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and the Bank. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Use of Estimates
The preparation of the 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.
Investment Securities
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." SFAS No. 115 requires the classification of
securities into one of three categories: Trading, Available-for-Sale, or
Held-to-Maturity. Adoption of the new standard had no effect on the Company's
financial statements, since all investments were classified as
Held-to-Maturity.
Management determines the appropriate classification of debt securities at the
time of purchase and re-evaluates this classification periodically. Securities
are classified as Held-to-Maturity when the Company has the positive intent and
ability to hold the securities to maturity. Securities not classified as
Held-to-Maturity or Trading will be classified as Available-for-Sale.
Available-for-Sale securities will be presented at fair value, with unrealized
gains and losses, net of tax, reported as a separate component of stockholders'
equity.
As of December 31, 1995, all securities were classified in the Held-to-Maturity
category, therefore these securities are stated at cost, adjusted for
amortization of premium and accretion of discount using a method which
approximates the level-yield method. Gains and losses are recognized when
securities are sold, based on the specific identification method.
F-8
<PAGE> 70
Loans
Loans are reported at their principal amounts, net of unearned discount,
unearned fees, and the reserve for possible loan losses. Interest income is
accrued daily as earned on all loans not discounted. Income is not accrued on
loans if collection of the interest or any portion of the principal is deemed
by management to be unlikely. Income on discounted loans is recognized using
the sum-of-the-months digits method which does not produce results materially
different from the interest method.
Loan origination and commitment fees are generally amortized over the
contractual life of the related loans. Commitment fees related to standby
letters of credit are recognized over the commitment period. Due to the
immaterial effect on the Company's financial statements, certain commercial
lending costs and installment lending fees and costs were not capitalized and
amortized as an adjustment of the related loans' yield as is required by SFAS
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Leases."
Reserve for Possible Loan Losses
The reserve for possible loan losses is maintained to provide for possible
losses inherent in the loan portfolio. On January 1, 1995 the Company adopted
SFAS No. 114, as amended by SFAS No. 118 "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures." In accordance with
SFAS No. 114, the portion of the 1995 reserve for possible loan losses related
to loans identified as impaired is based on discounted cash flows using the
loan's initial effective interest rate or the fair value of the collateral for
certain collateral dependent loans.
The determination of the balance in the reserve for possible loan losses is
based on an analysis of the loan portfolio and reflects an amount which, in
management's judgement, is adequate to provide for potential loan losses after
giving consideration to the character of the loan portfolio, loan
concentrations, current year charge-offs, historical ratios of charge-offs to
average loans, trends in portfolio volumes, delinquencies, nonaccrual loans,
current economic conditions, and such other factors that deserve current
recognition in estimating loan losses. The provision for possible loan losses
is charged to operating expenses.
Other Real Estate
Other Real Estate acquired principally through foreclosure is stated, net of
reserves, at the lower of outstanding loan balance at the date of foreclosure
or fair value less selling cost. Subsequent reductions of the carrying value
are charged to operating expenses. The net carrying value of Other Real Estate
is based upon management's continuing evaluation of property market values and
the current economic environment. Gains and losses are recognized when
properties are sold. In accordance with SFAS No. 114, a loan is classified as
in-substance foreclosure when the Company takes possession of the underlying
collateral regardless of whether formal foreclosure proceedings have occurred.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided principally on the straight-line basis
over the estimated useful life of each type of asset. Leasehold improvements
are amortized over the life of the respective lease or the estimated useful
lives of the improvements, whichever is shorter.
Income Taxes
Effective January 1, 1993, the Company adopted SFAS No. 109 "Accounting for
Income Taxes." Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. To the extent that current available evidence
about the future raises doubt about
F-9
<PAGE> 71
the realization of a deferred tax asset, a valuation allowance is established.
The measurement of tax assets and liabilities is based on enacted tax laws.
Income tax expense or benefit is based on income reported for financial
accounting purposes. The change in the net deferred tax position between
periods represents the deferred tax expense or benefit recognized as a
component of income tax expense in the financial statements.
Intangible Asset
The intangible asset primarily represents the excess of the cost of the Bank
over the fair value of its net assets at January 12, 1988, the date of
acquisition by the Company, and is being amortized using the straight-line
method over a fifteen year period. Amortization expense charged to operations
during 1995, 1994 and 1993 was $87,000.
Cash Equivalents
For purposes of reporting cash flows, cash equivalents include amounts due from
banks and Federal funds sold. Generally, Federal funds are sold for periods of
less than 30 days, commonly for one-day periods.
NOTE B - CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances with the Federal
Reserve Bank based on a percentage of deposits. The average balances
maintained during 1995, 1994 and 1993 for such purpose were $2,050,000,
$2,022,000 and $1,524,000, respectively.
F-10
<PAGE> 72
NOTE C - INVESTMENT SECURITIES
The approximate book values, gross unrealized gains (losses) and fair values of
investment securities at December 31, 1995, 1994 and 1993 are shown below (in
thousands). Fair values were determined from quoted prices.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
GROSS GROSS
BOOK UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury obligations $ 29,717 $ 24 $ (17) $ 29,724
U. S. Government agency and corporation obligations:
Adjustable Rate Mortgages ("ARMs") 26,747 274 (72) 26,949
Fixed Rate Mortgages 874 40 - 914
U. S. Small Business Administration
guaranteed loans 10,670 11 (8) 10,673
Other 33,476 21 (39) 33,458
- -------------------------------------------------------------------------------------------------------------------------------
Total $101,484 $370 $(136) $101,718
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1994
GROSS GROSS
BOOK UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury obligations $30,886 $ - $ (323) $30,563
U. S. Government agency and corporation obligations:
Adjustable Rate Mortgages ("ARMs") 27,815 3 (1,810) 26,008
Fixed Rate Mortgages 1,431 32 - 1,463
Other 14,488 - (328) 14,160
- -------------------------------------------------------------------------------------------------------------------------------
Total $74,620 $35 $(2,461) $72,194
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1993
GROSS GROSS
BOOK UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury obligations $45,193 $ 4 $ (33) $45,164
U. S. Government agency and corporation obligations:
Adjustable Rate Mortgages ("ARMs") 32,178 202 (69) 32,311
Fixed Rate Mortgages 2,145 135 - 2,280
Other 9,901 2 (28) 9,875
- -------------------------------------------------------------------------------------------------------------------------------
Total $89,417 $343 $(130) $89,630
===============================================================================================================================
</TABLE>
F-11
<PAGE> 73
NOTE C - CONTINUED
The book value and estimated market value of investment securities at December
31, 1995, by contractual maturity, is as follows (in thousands):
<TABLE>
<CAPTION>
BOOK VALUE FAIR VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 63,193 $ 63,182
Due after one year through five years - -
- -------------------------------------------------------------------------------------------------------------------------------
63,193 63,182
Mortgage-backed securities 27,621 27,863
U. S. Small Business Administration Guaranteed Loans 10,670 10,673
- -------------------------------------------------------------------------------------------------------------------------------
Total $101,484 $101,718
===============================================================================================================================
</TABLE>
Contractual maturity and/or repricing information for the mortgage-backed
securities and U. S. Small Business Administration Guaranteed Loans at December
31, 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
CONTRACTUAL MATURITY OR REPRICING BOOK
VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Within one year or less $37,868
After one through five years 423
- -------------------------------------------------------------------------------------------------------------------------------
Total $38,291
================================================================================================================================
</TABLE>
At December 31, 1995, 1994 and 1993, securities with an aggregate book value of
approximately $3,230,000, $4,121,000 and $4,439,000, respectively, were
required to be pledged for public and trust deposits, and for other purposes
required or permitted by law.
NOTE D - LOANS
The composition of the Bank's loan portfolio at December 31, 1995, 1994 and
1993 was as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial and industrial $ 47,423 $ 51,815 $ 46,068
Real estate - construction 4,367 4,961 6,739
Real estate - mortgages 54,919 63,323 62,401
Industrial revenue bonds 289 437 2,651
Consumer 47,931 43,400 27,415
All other loans 773 443 845
- ------------------------------------------------------------------------------------------------------------------------------
Total loans 155,702 164,379 146,119
Unearned discount and fees (113) (123) (236)
- ------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned discount and fees $155,589 $164,256 $145,883
==============================================================================================================================
</TABLE>
F-12
<PAGE> 74
NOTE D - CONTINUED
The Bank's lending activities are concentrated primarily in the Greater New
Orleans area. Its customers are engaged in various business activities and
have diverse economic characteristics.
At December 31, 1995, 1994 and 1993, the Bank had loans outstanding to
directors and executive officers of the Company and their related business
interests aggregating approximately $4,534,000, $4,396,000, and $3,134,000,
respectively. The 1995 activity of these related party loans included $996,000
in additional loans and $858,000 in loan reductions. The 1994 activity of
these related party loans included $2,138,000 in additional loans and changes
in composition of the Board of Directors and $876,000 in loan reductions. The
1993 activity of these related party loans included $85,000 in additional loans
and $2,069,000 in loan reductions and changes in composition of the Board of
Directors.
NOTE E - NONPERFORMING ASSETS
The following is a summary of nonperforming loans and other real estate as of
December 31, 1995, 1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $322 $376 $549
Accruing loans past due ninety days or more - - 6
Restructured loans 42 285 -
- -------------------------------------------------------------------------------
Total nonperforming loans $364 $661 $555
===============================================================================
Other Real Estate $ 23 $178 $1,006
===============================================================================
</TABLE>
As discussed in Note A, the Company adopted SFAS No. 114 effective January 1,
1995. The adoption of SFAS No. 114 did not have a material impact on the
financial condition or operating results of the Company. At December 31, 1995
total loans that were considered to be impaired under SFAS No. 114 were
$364,000 for which the related reserve for possible loan losses was $133,000.
Average impaired loans during the year ended December 31, 1995 were
approximately $513,000.
If interest had been accrued throughout the year on all nonaccruing loans,
under their contractual terms, such income would have approximated $38,000 for
both 1995 and 1994 and $79,000 for 1993. Interest income on nonaccruing loans
is recorded only when received and when the collection of principal is no
longer deemed by management to be unlikely. Interest recoveries on loans
previously charged off where the principal has since been fully recovered are
recorded only when received. Such interest recoveries and interest income on
nonaccruing or charged-off loans totaled approximately $23,000, $133,000 and
$74,000 for 1995, 1994 and 1993, respectively. Of the $322,000 of nonaccruing
loans as of December 31, 1995, approximately $122,000 were current as to
payment of contractual interest.
F-13
<PAGE> 75
NOTE E - CONTINUED
A summary of changes in the reserve for possible loan losses during 1995, 1994
and 1993 is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $ 4,801 $ 4,520 $ 3,675
Provision charged to operations - - 800
Recoveries 584 878 893
Less: Charge-offs (382) (597) (848)
- --------------------------------------------------------------------------------
Balance at end of year $ 5,003 $ 4,801 $ 4,520
================================================================================
</TABLE>
NOTE F - PREMISES AND EQUIPMENT
Premises and equipment at December 31, 1995, 1994 and 1993, is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
ACCUMULATED
DEPRECATION
AND BOOK
1995 COST AMORTIZATION VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Buildings $ 5,422 $1,482 $ 3,940
Leasehold improvements 1,952 954 998
Furniture and equipment 7,900 4,481 3,419
Land 3,264 - 3,264
- --------------------------------------------------------------------------------
Total $18,538 $6,917 $11,621
================================================================================
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
DEPRECATION
AND BOOK
1994 COST AMORTIZATION VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Buildings $ 3,653 $1,246 $ 2,407
Leasehold improvements 1,941 785 1,156
Furniture and equipment 7,153 3,720 3,433
Land 3,264 - 3,264
- --------------------------------------------------------------------------------
Total $16,011 $5,751 $10,260
================================================================================
</TABLE>
F-14
<PAGE> 76
NOTE F - CONTINUED
<TABLE>
<CAPTION>
ACCUMULATED
DEPRECATION
AND BOOK
1993 COST AMORTIZATION VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Buildings $ 3,449 $1,050 $2,399
Leasehold improvements 1,487 815 672
Furniture and equipment 5,476 2,838 2,638
Land 2,283 - 2,283
- --------------------------------------------------------------------------------
Total $12,695 $4,703 $7,992
================================================================================
</TABLE>
Total depreciation and amortization for premises and equipment amounted to
$1,564,000, $1,334,000 and $1,151,000 for the years ended December 31, 1995,
1994 and 1993, respectively.
In March 1995 the Financial Accounting Standards Board ("FASB") issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," which requires impairment losses to be recorded on
long- lived assets used in operations, including related goodwill, when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
SFAS No. 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. The Company adopted SFAS No. 121 effective January
1, 1996 and the effect of adoption was not material.
NOTE G - DEPOSITS
Cash payments for interest on deposits and other borrowings for the years 1995,
1994 and 1993 amounted to $5,322,000, $4,001,000 and $4,198,000, respectively.
At December 31, 1995, 1994 and 1993, the aggregate of time certificates of
deposit in denominations of $100,000 or more, amounted to $13,240,000,
$9,496,000 and $9,863,000, respectively. The related interest expense was
$530,000, $281,000 and $287,000 for the years 1995, 1994 and 1993,
respectively.
F-15
<PAGE> 77
NOTE H - FEDERAL INCOME TAXES
As discussed in Note A, the Company accounts for income taxes using the asset
and liability method of SFAS No. 109, "Accounting for Income Taxes."
The components of income tax expense for the years ended December 31, 1995,
1994 and 1993 were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current $ 25 $ - $ -
Deferred (25) - 450
- ----------------------------------------------------------------------------------------------------------------------------
Total income tax expense $ - $ - $450
============================================================================================================================
</TABLE>
Total income tax expense differed from the amount computed by applying the
statutory federal income tax rate to pretax income for the years ended December
31, 1995, 1994 and 1993 as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes at statutory federal income tax rate $ 993 $ 694 $ 806
Increase (decrease) resulting from:
Nontaxable interest income (8) (41) (90)
Intangible amortization and other nondeductible expenses 53 38 32
Income tax allocated to extraordinary gain - - (240)
Change in valuation allowance (1,289) (545) -
Other adjustments 251 (146) (58)
- ----------------------------------------------------------------------------------------------------------------------------
Total income tax expense $ - $ - $ 450
============================================================================================================================
</TABLE>
The components of the Company's deferred tax assets and liabilities as of
December 31, 1995, 1994 and 1993 were as follows (in thousands):
<TABLE>
<CAPTION>
ASSETS (LIABILITIES) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reserve for possible litigation losses $ 39 $ 196 $ 261
Reserve for possible loan losses (789) (779) (762)
Net operating loss carryforwards 3,183 3,978 3,883
Other real estate 12 32 710
Other 151 311 191
- ----------------------------------------------------------------------------------------------------------------------------
Subtotal 2,596 3,738 4,283
Valuation allowance (2,049) (3,338) (3,883)
- ----------------------------------------------------------------------------------------------------------------------------
Net deferred tax asset $ 547 $ 400 $ 400
============================================================================================================================
</TABLE>
F-16
<PAGE> 78
NOTE H - CONTINUED
As of December 31, 1995, the Bank had substantial pre-acquisition net operating
loss carryforwards (NOL's); however, under current tax laws governing the
carryover of net operating losses in acquisitions, the utilization of such loss
carryforwards are limited to approximately $45,000 per year through the year
2002, for a total future utilization of approximately $315,000. During 1995,
in accordance with the provisions of SFAS No. 109, the tax benefit of the pre-
acquisition NOL's has been recognized, reducing the intangible assets generated
in the acquisition by $107,000. As of December 31, 1995, for tax purposes, the
Company had post-acquisition NOL's of approximately $9,047,000 available to
offset future taxable income which will expire in varying amounts through the
year 2009.
The Company maintains a valuation allowance for portions of the recorded
deferred tax assets. At each reporting period, the Company applies the
evaluation criteria set forth in SFAS No. 109, as well as current banking laws
and regulations, to determine the realizability of deferred tax assets and, if
appropriate, records adjustments to the valuation allowance. The valuation
allowance was reduced by approximately $1,289,000 in 1995 and $545,000 in 1994,
which amounts are reflected as reductions of income taxes for those respective
periods in the accompanying financial statements.
NOTE I - LONG-TERM DEBT AND EXTRAORDINARY GAIN
As of January 1, 1993 the Company had a subordinated capital note in the
aggregate principal amount of $6,000,000. During 1993 the Company purchased
this capital note for $5.2 million, resulting in an extraordinary gain of
$754,000 reflected net of income tax of $240,000 in the accompanying
consolidated statement of income for the year ending December 31, 1993. The
purchase was partially funded with a $3,500,000 bank loan currently bearing
interest quarterly at the lending bank's prime rate (8.5%, 9.25% and 7.25% at
December 31, 1995, 1994 and 1993, respectively). This loan is collateralized
by all issued and outstanding shares of the Jefferson Guaranty Bank. The
Company is subject to several loan covenants which include asset quality and
equity ratios and is in compliance with all requirements as of December 31,
1995.
The Company made principal prepayments on this note totalling $1,100,000,
$650,000 and $500,000 in 1995, 1994 and 1993, respectively. The remaining
long-term debt is scheduled to mature as follows:
<TABLE>
<CAPTION>
MATURITY IN THOUSANDS
- --------------------------------------------------------------------------------
<S> <C>
June 1997 $ 575
June 1998 675
- --------------------------------------------------------------------------------
Total $1,250
================================================================================
</TABLE>
Interest expended and paid on long-term debt included in the accompanying
consolidated statements of income during 1995, 1994 and 1993 was $172,000,
$220,000 and $351,000, respectively.
F-17
<PAGE> 79
NOTE J - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Bank is obligated under noncancellable operating leases of premises with
approximate aggregate minimum rentals for the periods ending December 31 as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 IN THOUSANDS
- --------------------------------------------------------------------------------
<S> <C>
1996 $1,356
1997 1,344
1998 1,310
1999 1,288
2000 1,222
- --------------------------------------------------------------------------------
Total $6,520
================================================================================
</TABLE>
Net rentals on premises included in operating expenses for the years 1995, 1994
and 1993 were $1,270,000, $1,195,000 and $1,057,000, respectively.
Other
In the normal course of business, the Bank is party to financial instruments
which are not recorded in the financial statements. These financial
instruments include commitments to extend credit and letters of credit. Loan
commitments and lines of credit represent commitments to lend funds at specific
rates, with fixed expiration or review dates and for specific purposes. These
commitments are agreements to fund loans if the conditions in the agreements
are met. Since many commitments are never actually drawn upon, the unfunded
amounts do not necessarily represent future funding requirements. The Bank
evaluates each customer's credit worthiness on an individual basis. The amount
of collateral obtained, if any, upon extension of credit is based on the credit
worthiness of the customer.
Standby letters of credit obligate the Bank to pay third parties if customers
fail to pay or to perform under the agreements with those third parties.
Letters of credit are subject to credit reviews, collateral requirements and
debt covenants similar to those in loan agreements. The credit risk involved
in issuing letters of credit is essentially the same as that which is involved
in extending loans to customers.
There are no financial instruments which present an unusual risk to the Bank
and no material losses are anticipated as a result of these transactions.
A summary of obligations under financial instruments for the years ended
December 31, 1995, 1994 and 1993 which are not reflected in the financial
statements is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Unfunded loan commitments $37,096 $28,670 $26,979
Standby letters of credit $ 1,334 $ 1,433 $ 1,536
- --------------------------------------------------------------------------------
</TABLE>
The Company has no investments such as derivative financial instruments which
would be subject to the additional disclosure requirements of SFAS No. 119
("Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments").
F-18
<PAGE> 80
NOTE K - LEGAL PROCEEDINGS
A reserve for losses which may result from lawsuits or future claims arising
from events prior to the Company's acquisition of the Bank in January 1988 has
been established. A lawsuit which concluded in January 1994 resulted in a
judgement against the Bank. The Bank lost its appeal of this judgement in 1995
and paid from the existing reserve $593,000, including interest to the court.
The plaintiff has appealed the computation of interest on this judgement. In
addition, a significant lawsuit involving allegations concerning 1985 actions
by a former officer of the Bank was settled in 1994 for $200,000, which was
paid out of the reserve for litigation losses. During 1995, the Bank recovered
$181,000 from its former insurance carrier on this case, which was recorded as
a recovery to the reserve for litigation losses. There are other lawsuits or
claims pending all of which are minor in nature. As of December 31, 1995, 1994
and 1993, the balance in the reserve for possible litigation losses was
$115,000, $575,000 and $767,000, respectively. Management believes this
reserve is adequate.
NOTE L - STOCKHOLDERS' EQUITY
As of December 31, 1995, 1994 and 1993, the Company's capitalization included
$3,484,000 of Series C Cumulative Convertible Preferred Stock ("Series C
Preferred") with a stated value of $1,000 per share. Each share of the Series
C Preferred, which has an 8% per annum dividend rate payable quarterly, is
convertible in whole or part at the holder's option into 100 shares of Common
Stock. Series C Preferred Stock is not mandatorily convertible nor can it be
converted at the option of the Company.
As of January 1, 1993, the Company's capitalization included $6,200,000 of
Preferred Stock, divided equally into Series A Cumulative Redeemable Preferred
Stock and Series B Cumulative Convertible Preferred Stock both with a stated
value of $1,000 per share. At January 1, 1993, the amount of dividends in
arrears (which were unaccrued) on the Series A and B Cumulative Preferred Stock
was $1,468,831 ($236.91 per share). On February 5, 1993, the Company sold
3,484 units of its stock for $3,832,400. Each unit consisted of 100 shares of
Common Stock and one share of Series C Cumulative Convertible Preferred Stock
("Series C Preferred") with a stated value of $1,000 per share. The Company
used $2,800,000 of the proceeds to purchase all outstanding shares of its
Series A Cumulative Redeemable Preferred Stock, Series B Cumulative Convertible
Preferred Stock and 46,500 shares of Class A Common Stock. The repurchased
stock certificates were cancelled along with unpaid and unaccrued Preferred
dividends.
In addition, the Company had Common shares outstanding of 1,244,375 as of
December 31, 1995, 1994 and 1993. The authorized capital stock of the Company
also includes 500,000 shares of Class A Common Stock, of which none were
outstanding as of December 31, 1995, 1994 and 1993. Both classes of Common
Stock have identical rights except Class A Common Stock has no voting rights.
The Company issued a warrant for 64,125 shares of its Common Stock with an
exercise price of $10.00 per share and an expiration date of January 12, 1995
to Jefferson Bancshares, Inc. ("JBI") in conjunction with the acquisition of
the Bank by the Company in 1988. In December 1994 this warrant was purchased
for $128,250 by the Company from JBI and cancelled. Other warrants have been
issued under an employee stock warrant plan as discussed in Note O. The number
of shares of Common Stock which had been reserved for future issuance for
preferred conversions and stock warrants was 624,400 as of December 31, 1995
and 1994 and 555,025 as of December 31, 1993.
Regulations applicable to state chartered banks and their holding companies
prescribe minimum capital levels in relation to risk-weighted assets
(risk-based capital ratios) and total assets (leverage ratio). Year end ratios
(risk-based and leverage) for 1995, 1994 and 1993 exceed the standards required
for designation of an institution as "well-capitalized" by the Company's
primary regulators.
NOTE M - EARNINGS PER COMMON SHARE
Primary earnings per common share are computed by dividing net earnings, less
the annual preferred stock dividend of approximately $279,000 in both 1995 and
1994 and $251,000 in 1993 by the weighted average number of shares of common
stock and common stock equivalents outstanding during each year. The weighted
average number of shares used to calculate primary earnings per share was
1,326,896, 1,293,020 and 1,252,442 for 1995, 1994 and 1993, respectively.
F-19
<PAGE> 81
Fully diluted earnings per share are calculated by dividing net earnings by the
weighted average fully diluted common shares and common stock equivalents
outstanding. The weighted average number of shares used to calculate fully
diluted earnings per share was 1,675,296, 1,641,420 and 1,593,691 for 1995,
1994 and 1993, respectively.
For purposes of presentation in the accompanying financial statements, common
stock equivalents computed under the treasury method were value based on
management's best estimate of the approximate weighted average market value of
the Company's common stock for the respective periods. Historically, the
Company's stock has rarely traded and therefore there are no sources for quoted
market values.
NOTE N - OTHER OPERATING EXPENSES
The composition of other operating expenses in 1995, 1994 and 1993 was as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising $ 675 $ 592 $ 416
FDIC insurance and advalorem assessments 644 860 890
Postage, telephone and office supplies 990 912 871
Provision for possible losses on disposition of other real estate - - 274
Repossession and other real estate 59 91 251
Insurance 187 180 184
Professional and outside services 349 485 384
Other 1,292 1,227 1,329
- --------------------------------------------------------------------------------------------------------------
Total $4,196 $4,347 $4,599
==============================================================================================================
</TABLE>
NOTE O - EMPLOYEE BENEFITS
The Bank has a 401(k) plan which is available to substantially all employees
electing to participate. Contributions to the plan are made at the discretion
of the Board of Directors. These contributions, included in Personnel Expense
in the consolidated statements of income, were equal to 50% of qualified
employee contributions, or approximately $99,000, $89,000 and $76,000 in 1995,
1994 and 1993, respectively. The Company provides no other post-retirement or
post- employment benefits to its employees.
In addition, the Company has an employee incentive stock warrant plan. At
December 31, 1995, the Company had outstanding to key executives two warrants
to acquire 57,000 shares of Common Stock with an exercise price of $3.50 per
share expiring in September 1997, six warrants to acquire 26,500 shares of
Common Stock with an exercise price of $10.00 per share expiring in February
1997, sixteen warrants to acquire 36,500 shares of Common Stock with an
exercise price of $10.00 per share expiring in February 1998, eight warrants to
acquire 129,500 shares of Common Stock with an exercise price of $10.00 per
share expiring in July 2004 and one warrant to acquire 16,500 shares of Common
Stock with an exercise price of $8.70 per share expiring in August 2001. Under
the stock warrant plan, the Company has reserved 10,000 shares of Common Stock
for additional warrants to be issued to key management personnel. No warrants
were issued under this plan in 1995.
NOTE P - RELATED PARTY TRANSACTIONS
During 1995, 1994 and 1993, legal expenses were incurred by the Company in
connection with the workout of nonperforming loans, the sale of repossessed
assets, litigation and other routine Company activities, as discussed in Notes
E and K. The Company paid legal fees of approximately $64,000, $262,000 and
$168,000 in 1995, 1994, and 1993, respectively, for services rendered by a law
firm in which a member of the Board of Directors of the Company is a partner.
In addition, the Company paid $80,000 in 1995 and $60,000 in 1994 as rental
payments for a branch site leased from a corporation which is owned directly or
indirectly by two of the Company's directors. In December 1993, the Company
sold repossessed property for $200,000, which exceeded the net book value of
the property, to a corporation which is
F-20
<PAGE> 82
owned directly or indirectly by two of the Company's directors. In addition,
the corporation to which the property was sold owns 94,575 shares of Common
Stock and 352 shares of Preferred Stock.
See Note D for discussion of related party loan activity.
NOTE Q - FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures About Fair Values of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available,
fair values are based on estimates using present value or other calculation
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 necessarily be substantiated by
comparison to independent markets, and in many cases, could not be realized in
immediate settlement of the instrument.
SFAS No. 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented below as of December 31, 1995, 1994 and 1993 do not
necessarily represent the underlying value of the Company.
<TABLE>
<CAPTION>
DECEMBER 31, 1995 ESTIMATED
CARRYING FAIR
(IN THOUSANDS) VALUE VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 30,708 $ 30,708
Marketable securities 101,484 101,718
Loans, net 150,586 149,893
LIABILITIES:
Noninterest bearing deposits 92,772 92,772
Interest bearing deposits 181,824 182,246
Long-term debt 1,250 1,250
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1994 ESTIMATED
CARRYING FAIR
(IN THOUSANDS) VALUE VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 24,019 $ 24,019
Marketable securities 74,620 72,194
Loans, net 159,455 158,059
LIABILITIES:
Noninterest bearing deposits 86,130 86,130
Interest bearing deposits 164,043 163,814
Long-term debt 2,350 2,350
- --------------------------------------------------------------------------------
</TABLE>
F-21
<PAGE> 83
NOTE Q - CONTINUED
<TABLE>
<CAPTION>
DECEMBER 31, 1993 ESTIMATED
CARRYING FAIR
(IN THOUSANDS) VALUE VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 28,562 $ 28,562
Marketable securities 89,417 89,630
Loans, net 141,363 143,116
LIABILITIES:
Noninterest bearing deposits 79,266 79,266
Interest bearing deposits 171,540 171,647
Long-term debt 3,000 3,000
- --------------------------------------------------------------------------------
</TABLE>
The following methods and assumptions were used by the Company in estimating
the fair value of its financial instruments:
The carrying value of cash and cash equivalents is a reasonable
estimate of fair value. The fair value of marketable securities is
determined from quoted prices.
The fair value of fixed rate loans is estimated by discounting future
cash flows using current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturity. The carrying value of variable rate loans is a reasonable
estimate of fair value. The Company's recorded carrying value of
nonperforming loans approximates estimated current fair value.
Management believes that these estimates, net of loan loss reserves,
reasonably approximate fair value, given the nature of such
receivables and expectations of possible loan portfolio losses.
As permitted by the SFAS No. 107, noninterest bearing deposits are
shown at their face value. Interest bearing deposits include variable
and fixed rate instruments. The fair value of variable rate demand,
money market, savings and time deposits is the amount payable on
demand at December 31, 1995, 1994 and 1993. The fair value of fixed
rate time deposits is estimated by discounting the future cash flows,
using current rates applicable to each category of such financial
instruments.
The Company's long-term debt carries a variable interest rate which
fluctuates based on a quoted market rate index, and therefore carrying
value is considered a reasonable estimate of fair value.
F-22
<PAGE> 84
NOTE R - CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
JEFFERSON GUARANTY BANCORP
CONDENSED BALANCE SHEETS
(PARENT ONLY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest bearing deposits in banks $ 215 $ 194 $ 321
Investment in subsidiary 20,226 18,602 17,438
Intangible asset 558 767 854
Other 107 - -
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $21,106 $19,563 $18,613
===============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
Accrued expenses $ 2 $ 2 $ 35
Long-term debt 1,250 2,350 3,000
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,252 2,352 3,035
Stockholders' equity
Preferred stock - authorized 16,200 shares; issued
3,484 shares Series C Cumulative Convertible 3,484 3,484 3,484
Common stock - authorized 5,000,000 shares of common
stock, $1.00 par value; issued 1,244,375 shares 1,244 1,244 1,244
Surplus 9,746 9,746 9,746
Accumulated earnings 5,380 2,737 1,104
- -------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 19,854 17,211 15,578
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $21,106 $19,563 $18,613
===============================================================================================================================
</TABLE>
F-23
<PAGE> 85
NOTE R - CONTINUED
JEFFERSON GUARANTY BANCORP
CONDENSED STATEMENTS OF INCOME
(PARENT ONLY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income
Dividends from banking subsidiary $1,600 $1,200 $1,875
Equity in undistributed earnings of subsidiary 1,624 1,164 633
Interest 5 7 17
- -------------------------------------------------------------------------------------------------------------------------------
Total income 3,229 2,371 2,525
Expenses
Interest on long-term debt 172 220 351
Other expenses 120 111 157
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 292 331 508
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 2,937 2,040 2,017
Income taxes 15 - 7
- -------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary gain 2,922 2,040 2,010
Extraordinary gain on early retirement of debt, pre-tax - - 754
- -------------------------------------------------------------------------------------------------------------------------------
Net Income $2,922 $2,040 $2,764
===============================================================================================================================
</TABLE>
F-24
<PAGE> 86
NOTE R - CONTINUED
JEFFERSON GUARANTY BANCORP
CONDENSED STATEMENTS OF CASH FLOWS
(PARENT ONLY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 2,922 $ 2,040 $ 2,764
Extraordinary gain on early retirement of debt - - (754)
Equity in undistributed earnings of subsidiary (1,624) (1,164) (633)
Increase (decrease) in interest and other payables - (33) 33
Amortization/adjustment of intangible asset 87 87 102
Deferred income tax expense 15 - -
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operations 1,400 930 1,512
- ------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from sale of common and preferred stock - - 3,832
Repurchase of stock - - (2,800)
Purchase of JBI stock warrant - (128) -
Dividends paid on preferred stock (279) (279) (251)
Proceeds from long-term debt - - 3,500
Repayment of long-term debt (1,100) (650) (5,746)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash utilized in financing activities (1,379) (1,057) (1,465)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 21 (127) 47
Cash and cash equivalents at beginning of year 194 321 274
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 215 $194 $ 321
==============================================================================================================================
</TABLE>
The Company relies on the operational success of the Bank, its primary asset,
to meet its cash flow needs. The primary source of funds for the Company to
service the interest on its long-term debt and pay preferred dividends is
dividends from the Bank. For 1996, the Company's cash requirements will
include approximately $100,000 for debt service, and approximately $279,000 for
preferred dividends. The Company believes that the 1996 earnings of the Bank
will be sufficient to allow dividends to be paid to the Company to meet it's
cash flow needs.
F-25
<PAGE> 87
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
ASSETS 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Cash and due from banks $ 21,905
Federal funds sold 23,300
Investment securities - at amortized cost 84,877
Loans, net of unearned discount and fees 158,217
Reserve for possible loan losses (4,457)
- -------------------------------------------------------------------------------------------------------------
Loans, net 153,760
Premises and equipment 11,400
Intangible asset 515
Other real estate, net -
Other assets 2,968
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $298,725
=============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing $ 91,656
Interest bearing 182,302
- -------------------------------------------------------------------------------------------------------------
Total deposits 273,958
Other liabilities 2,318
Long-term debt 1,250
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 277,526
Stockholders' equity
Preferred stock - authorized 16,200 shares; issued
3,484 shares Series C Cumulative Convertible 3,484
Common stock - authorized 5,000,000 shares of common
stock, $1.00 par value; issued 1,244,375 shares 1,244
Surplus 9,746
Accumulated earnings 6,725
- -------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 21,199
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $298,725
=============================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE> 88
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
- -------------------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $3,478 $3,736 $7,003 $7,391
Federal funds sold 273 160 525 266
U. S. Government, Federal agency and corporation obligations 1,279 1,052 2,617 1,960
- -------------------------------------------------------------------------------------------------------------------------------
Total interest income 5,030 4,948 10,145 9,617
INTEREST EXPENSE
Deposits 1,727 1,420 3,473 2,628
Long-term debt 27 50 53 106
- -------------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,754 1,470 3,526 2,734
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 3,276 3,478 6,619 6,883
Provision for possible loan losses - - - -
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 3,276 3,478 6,619 6,883
OTHER OPERATING INCOME
Service charges 683 624 1,346 1,271
Trust fees 247 215 463 408
Other 248 131 460 294
- -------------------------------------------------------------------------------------------------------------------------------
Total other operating income 1,178 970 2,269 1,973
OTHER OPERATING EXPENSES
Personnel 1,704 1,747 3,447 3,416
Occupancy 560 585 1,135 1,135
Equipment 469 375 918 788
Other operating expenses 1,036 1,120 2,024 2,214
- -------------------------------------------------------------------------------------------------------------------------------
Total other operating expenses 3,769 3,827 7,524 7,553
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES 685 621 1,364 1,303
Income tax benefit (60) - (120) -
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME 745 621 1,484 1,303
Preferred dividend requirements 69 69 139 139
- -------------------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON SHARES $ 676 $ 552 $1,345 $1,164
===============================================================================================================================
EARNINGS PER SHARE
- -------------------------------------------------------------------------------------------------------------------------------
Primary $.50 $.42 $ 1.00 $ .88
Fully Diluted $.44 $.37 $ .88 $ .78
===============================================================================================================================
WEIGHTED AVERAGE SHARES (000'S)
- -------------------------------------------------------------------------------------------------------------------------------
Primary 1,351 1,321 1,348 1,321
Fully Diluted 1,700 1,670 1,697 1,670
===============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE> 89
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,484 $ 1,303
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 913 815
Amortization and accretion of investment securities, net (467) (507)
Decrease in net interest receivables and payables 247 239
Decrease (increase) in net other receivables and payables 46 40
Other (225) 111
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATIONS 1,998 2,001
INVESTING ACTIVITIES
Purchases of investment securities (40,800) (42,207)
Proceeds from maturities and payments of investment securities 57,874 33,709
Net loan fundings (3,305) 1,875
Purchases of premises and equipment, net of sales proceeds (656) (1,357)
Proceeds from sales of other real estate, net of capitalized costs 163 151
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (UTILIZED IN) INVESTING
ACTIVITIES 13,276 (7,829)
FINANCE ACTIVITIES
Net increase (decrease) in demand deposits, NOW, money market
and savings accounts (3,744) 490
Net increase (decrease) in certificates of deposit 3,106 10,669
Dividends paid on preferred stock (139) (139)
Repayment of long-term debt - (850)
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (UTILIZED IN) FINANCING ACTIVITIES (777) 10,170
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 14,497 4,342
Cash and cash equivalents at beginning of year 30,708 24,019
- ---------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 45,205 $ 28,361
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE> 90
JEFFERSON GUARANTY BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Jefferson Guaranty Bancorp (the "Company") through its wholly owned subsidiary,
Jefferson Guaranty Bank (the "Bank"), provides a wide range of financial
services throughout the New Orleans, Louisiana metropolitan area, including the
surrounding parishes of Jefferson and St. Tammany. The Bank, through an
alliance with a third party brokerage firm, also offers alternative
investments, including stocks, bonds, mutual funds and annuities.
The accounting and reporting policies the Company and the Bank conform with
generally accepted accounting principles and practices within the banking
industry.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the interim periods are
not necessarily indicative of the results that may be expected for the entire
year. For further information, refer to the audited consolidated financial
statements and footnotes thereto included elsewhere in the Proxy Statement.
Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and the Bank. All significant intercompany accounts and transactions
have been eliminated in consolidation.
NOTE B - INVESTMENT SECURITIES
As of June 30, 1996 all securities were classified in the Held-to-Maturity
category. The approximate book values, gross unrealized gains (losses) and
fair values of investment securities at June 30, 1996 are shown below (in
thousands). Fair values were determined from quoted prices.
<TABLE>
<CAPTION>
GROSS GROSS
BOOK UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury obligations $29,971 $ 3 $ (24) $29,950
U. S. Government agency and corporation obligations:
Adjustable Rate Mortgages ("ARMs") 24,471 190 (259) 24,402
Fixed Rate Mortgages 709 27 - 736
U. S. Small Business Administration
guaranteed loans 9,466 80 (27) 9,519
Other 20,260 - (32) 20,228
- ------------------------------------------------------------------------------------------------------------------------------
Total $84,877 $300 $(342) $84,835
==============================================================================================================================
</TABLE>
F-29
<PAGE> 91
NOTE B - CONTINUED
At June 30, 1996 securities with an aggregate book value of approximately
$3,296,000, were required to be pledged for public and trust deposits, and for
other purposes required or permitted by law.
NOTE C - LOANS
The composition of the Company's loan portfolio at June 30, 1996 was as follows
(in thousands):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Commercial, financial and industrial $ 50,044
Real estate - construction 4,851
Real estate - mortgages 51,255
Industrial revenue bonds 216
Consumer 51,513
All other loans 426
- --------------------------------------------------------------------------------
Total loans 158,305
Unearned discount and fees (88)
- --------------------------------------------------------------------------------
Loans, net of unearned discount and fees $158,217
================================================================================
</TABLE>
NOTE D - PREMISES AND EQUIPMENT
In March 1995 the Financial Accounting Standards Board ("FASB") issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," which requires impairment losses to be recorded on
long- lived assets used in operations, including related goodwill, when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
SFAS No. 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. The Company adopted SFAS No. 121 effective January
1, 1996 and the effect of adoption was not material.
NOTE E - DEPOSITS
Major classifications of deposits at June 30, 1996 are as follows (in
thousands):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Non-interest bearing demand $ 91,656
Interest bearing demand 73,874
Savings 25,306
Time deposits greater than $100,000 13,587
Other time 69,535
- --------------------------------------------------------------------------------
Total $ 273,958
================================================================================
</TABLE>
F-30
<PAGE> 92
NOTE F - COMMITMENTS AND CONTINGENCIES
A summary of obligations under financial instruments for the six-month period
ended June 30, 1996 which are not reflected in the financial statements is as
follows (in thousands):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Unfunded loan commitments $36,251
Standby letters of credit $ 1,448
- --------------------------------------------------------------------------------
</TABLE>
NOTE G - CHARGE-OFFS AND RECOVERIES AND RESERVE FOR POSSIBLE LOAN LOSSES
Charge-offs and recoveries by type of loan for the six month period ended June
30, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
Charge-offs Recoveries
<S> <C> <C>
- --------------------------------------------------------------------------------
Real estate - mortgages $ - $ 10
Commercial and industrial 672 103
Installment loans to individuals 36 49
- --------------------------------------------------------------------------------
Total $708 $162
================================================================================
</TABLE>
A summary of changes in the reserve for possible loan losses for the six month
period ended June 30, 1996 is as follows (in thousands):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Balance at beginning of year $5,003
Provision charged to operations -
Recoveries 162
Less: Charge-offs (708)
- --------------------------------------------------------------------------------
Balance at end of current period. $4,457
================================================================================
</TABLE>
NOTE H - LONG-TERM DEBT
The Company's long-term debt is held by Deposit Guaranty National Bank in
Mississippi and, at June 30, 1996, the interest rate was 8.25%. In July 1996
the Company prepaid $750,000 of this debt resulting in a remaining balance of
$500,000 which matures in June 1998. Interest expense related to this debt for
the six months ended June 30, 1996 and 1995 was $53,000 and $106,000,
respectively.
F-31
<PAGE> 93
NOTE I - EARNINGS PER COMMON SHARE
Primary earnings per share are computed by dividing income applicable to common
shares by the weighted average number of shares of common stock and common
stock equivalents outstanding for the respective periods using the treasury
method. Common stock equivalents include outstanding management warrants.
Fully diluted earnings per share are calculated by dividing net income by the
weighted average fully diluted common shares and common stock equivalents
outstanding using the treasury method.
For purposes of presentation in the accompanying financial statements, common
stock equivalents computed under the treasury method were valued based on
management's best estimate of the approximate weighted average market value of
the Company's common stock for the respective periods. Historically, the
Company's stock has rarely traded and therefore there are no sources for quoted
market values. Subsequent to June 30, 1996, the Company signed a Merger
Agreement with Deposit Guaranty Corp. valued at approximately $29 per share of
Company common stock (See Note J), thereby creating an imputed market value of
$29 per share for the Company's common stock.
The following is a presentation of earnings per share on an unaudited pro-forma
basis for the three and six month periods ended June 30, 1996 assuming a market
value of $29 per share for the Company's common stock:
<TABLE>
<CAPTION>
Pro-forma, Unaudited
Three-months Six-months
Ended Ended
Earnings Per Share June 30, 1996 June 30,1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Primary $.47 $.94
Fully Diluted $.42 $.83
- --------------------------------------------------------------------------------
</TABLE>
NOTE J - MERGER WITH DEPOSIT GUARANTY CORP.
On August 22, 1996 the Company entered into an Agreement and Plan of Merger
with Deposit Guaranty Corp. ("DGC") whereby the Company and the Bank will merge
with and into DGC's wholly-owned subsidiaries, Deposit Guaranty Louisiana Corp.
and Deposit Guaranty National Bank of Louisiana. The proposed merger is
subject to various conditions, including approval by the shareholders of the
Company and by certain regulatory agencies. The merger agreement contemplates
that each outstanding share of Company Common Stock will be converted into
either (i) .637363 shares of Deposit Guaranty Common Stock or (ii) the right to
receive $29 in cash at the election of the holder of Company Common Stock.
Holders of Company convertible preferred stock will receive consideration
equivalent to the value of 100 shares of Company Common Stock.
Under a formula set forth in the merger agreement, no more than 80% and no less
than 55% of Company shares may be exchanged for Deposit Guaranty Common Stock,
and likewise, no more than 45% and no less than 20% of Company shares may be
exchanged for cash.
F-32
<PAGE> 94
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEPOSIT GUARANTY CORP.,
DEPOSIT GUARANTY LOUISIANA CORP.,
DEPOSIT GUARANTY NATIONAL BANK OF LOUISIANA,
JEFFERSON GUARANTY BANCORP, INC.
AND
JEFFERSON GUARANTY BANK
<PAGE> 95
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 Jefferson Guaranty Bancorp Shares . 2
1.06 Exchange of Shares. . . . . . . . . . . . . . . . 3
1.07 DGC to Make Shares Available . . . . . . . . . . 4
1.08 Shares of DG Louisiana. . . . . . . . . . . . . . 4
1.09 Tax Consequences. . . . . . . . . . . . . . . . . 5
Article II. THE BANK MERGER . . . . . . . . . . . . . . . . . . . . . 5
2.01 The Bank Merger. . . . . . . . . . . . . . . . . 5
2.02 Effective Date. . . . . . . . . . . . . . . . . 5
2.03 Cancellation of Capital Stock of Jefferson
Guaranty Bank. . . . . . . . . . . . . . . . . 5
2.04 Capital Structure of the Receiving Association. 5
2.05 Effects of the Bank Merger. . . . . . . . . . . 5
2.06 Tax Consequences. . . . . . . . . . . . . . . . 6
Article III. REPRESENTATIONS AND WARRANTIES OF JEFFERSON GUARANTY
BANK AND JEFFERSON GUARANTY BANCORP. . . . . . . . . . . . 6
3.01 Corporate Organization. . . . . . . . . . . . . 6
3.02 Capitalization. . . . . . . . . . . . . . . . 6
3.03 Investments; No Subsidiaries. . . . . . . . . . 7
3.04 Loan Portfolio. . . . . . . . . . . . . . . . . 7
3.05 Authority; Enforceability . . . . . . . . . . . 7
3.06 Consents and Approvals. . . . . . . . . . . . . 8
3.07 Financial Statements; Other Reports;
Liabilities . . . . . . . . . . . . . . . . . . 8
3.08 No Broker's Fees. . . . . . . . . . . . . . . . 8
3.09 Title to Properties; Encumbrances. . . . . . . 8
3.10 No Undisclosed Liabilities. . . . . . . . . . . 9
3.11 Absence of Certain Changes or Events. . . . . . 9
3.12 Leases. . . . . . . . . . . . . . . . . . . . . 11
3.13 Trademarks; Trade Names. . . . . . . . . . . . 11
3.14 Compliance with Applicable Law. . . . . . . . . 11
3.15 Absence of Questionable Payments. . . . . . . . 11
3.16 Insurance. . . . . . . . . . . . . . . . . . . 11
3.17 Powers of Attorney; Guarantees. . . . . . . . . 12
3.18 Tax Matters . . . . . . . . . . . . . . . . . 12
3.19 Benefit and Employee Matters. . . . . . . . . . 13
3.20 Contracts and Commitments; No Default . . . . . 13
3.21 Disclosure. . . . . . . . . . . . . . . . . . 15
3.22 Litigation. . . . . . . . . . . . . . . . . . . 15
3.23 Environmental Matters. . . . . . . . . . . . . 15
3.24 Contract Termination Provisions . . . . . . . . 16
Article IV. REPRESENTATIONS AND WARRANTIES OF DGC, DG LOUISIANA
AND DGNB LOUISIANA . . . . . . . . . . . . . . . . . . . . 16
4.01 Corporate Organization. . . . . . . . . . . . . 16
</TABLE>
<PAGE> 96
<TABLE>
<S> <C> <C>
4.02 Capitalization. . . . . . . . . . . . . . . . . 16
4.03 Authority; No Violation. . . . . . . . . . . . 17
4.04 Consents and Approvals. . . . . . . . . . . . . 17
4.05 SEC Documents; Financial Statements;
Liabilities . . . . . . . . . . . . . . . . . . 17
4.06 Litigation. . . . . . . . . . . . . . . . . . . 18
4.07 Legality of DGC Common Stock. . . . . . . . . . 18
4.08 Statements are True and Correct. . . . . . . . 18
4.09 No Shareholder Vote. . . . . . . . . . . . . . 19
4.10 Broker's and Finder's Fee. . . . . . . . . . . 19
4.11 Disclosure . . . . . . . . . . . . . . . . . . 19
Article V. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . 19
5.01 Conduct of Business. . . . . . . . . . . . . . 19
5.02 Limitation on Actions. . . . . . . . . . . . . 20
5.03 Current Information. . . . . . . . . . . . . . 20
5.04 Access to Properties and Records;
Confidentiality . . . . . . . . . . . . . . . . 20
5.05 Interim Financial Statements; SEC Filings. . . 21
5.06 Regulatory Matters. . . . . . . . . . . . . . . 21
5.07 Approval of Shareholders. . . . . . . . . . . . 22
5.08 Compliance with SEC Rules 144 and 145. . . . . 22
5.09 Further Assurances. . . . . . . . . . . . . . . 22
5.10 Public Announcements. . . . . . . . . . . . . . 23
5.11 Benefits. . . . . . . . . . . . . . . . . . . . 23
5.12 Indemnification and Liability Insurance. . . . 23
5.13 Employment and Consulting Agreements. . . . . . 23
Article VI. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . 24
6.01 Conditions to Each Party's Obligations under
this Agreement. . . . . . . . . . . . . . . . . 24
6.02 Conditions to the Obligations of DGC, DG
Louisiana, and
DGNB Louisiana under this Agreement. . . . . 24
6.03 Conditions to the Obligations of Jefferson
Guaranty Bank and Jefferson Guaranty
Bancorp under this Agreement . . . . . . . . . 26
Article VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.01 Time and Place. . . . . . . . . . . . . . . . . 29
7.02 Deliveries at the Closing. . . . . . . . . . . 29
Article VIII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 29
8.01 Termination. . . . . . . . . . . . . . . . . . 29
8.02 Effect of Termination. . . . . . . . . . . . . 30
Article IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 30
9.01 Expenses. . . . . . . . . . . . . . . . . . . . 30
9.02 Notices. . . . . . . . . . . . . . . . . . . . 30
9.03 Parties in Interest. . . . . . . . . . . . . . 31
9.04 Amendment, Extension and Waiver. . . . . . . . 31
9.05 Complete Agreement. . . . . . . . . . . . . . . 31
9.06 Survival . . . . . . . . . . . . . . . . . . . 32
9.07 Defenses Preserved. . . . . . . . . . . . . . . 32
9.08 Counterparts. . . . . . . . . . . . . . . . . . 32
9.09 Governing Law. . . . . . . . . . . . . . . . . 32
9.10 Headings. . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 97
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of August 22, 1996, by and
among Jefferson Guaranty Bancorp, Inc. ("Jefferson Guaranty Bancorp"), a
corporation organized under the laws of the State of Delaware, and its
wholly-owned subsidiary Jefferson Guaranty Bank ("Jefferson Guaranty 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 Deposit Guaranty Louisiana Corp. ("DG
Louisiana"), a corporation organized under the laws of Louisiana, and DG
Louisiana's wholly-owned subsidiary Deposit Guaranty National Bank of Louisiana
("DGNB Louisiana"), 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 Jefferson Guaranty
Bancorp shall be merged into DG Louisiana (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,
Jefferson Guaranty Bank shall be merged into DGNB Louisiana (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"), Jefferson
Guaranty Bancorp shall be merged with and into DG Louisiana 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 Jefferson Guaranty Bancorp shall cease; and DG Louisiana 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, which date shall not be later than the date of Closing as
provided in Section 7.01.
1.03 Effect of the Holding Company Merger. On the Effective Date,
(i) the separate existence of Jefferson Guaranty Bancorp shall cease and
Jefferson Guaranty Bancorp shall be merged with and into DG Louisiana, (ii) DG
Louisiana 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 Jefferson
Guaranty Bancorp, (iii) DG Louisiana shall be responsible for all of the
liabilities and obligations of Jefferson Guaranty Bancorp in the same manner as
if DG Louisiana 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 Jefferson Guaranty Bancorp, (iv) the Holding
Company Merger will not of itself cause a change, alteration or amendment to
the Articles of Incorporation or the Bylaws of DG Louisiana, (v) the Holding
Company Merger will not of itself affect the tenure in office of any officer or
director of DG Louisiana 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,
DG Louisiana 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 DG Louisiana, title to or the
possession of any property or right of Jefferson Guaranty Bancorp 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, Jefferson Guaranty
Bancorp and its proper officers and directors shall be deemed to have granted
to DG Louisiana an irrevocable power of attorney to execute and deliver
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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 DG Louisiana and otherwise to carry out the purposes of
this Agreement; and the proper officers and directors of DG Louisiana are fully
authorized in the name of Jefferson Guaranty Bancorp to take any and all such
action.
1.05 Conversion of Jefferson Guaranty Bancorp Shares. (a)
Conversion. Subject to the provisions of this Section 1.05 and of Section
1.06(e), each share of common voting stock of Jefferson Guaranty Bancorp
("Jefferson Guaranty Bancorp Common Stock") and each share of preferred
non-voting stock of Jefferson Guaranty Bancorp ("Jefferson Guaranty Bancorp
Preferred Stock"), issued and outstanding immediately prior to the Effective
Date, other than shares owned by shareholders who, pursuant to the Delaware
General Corporation Law, 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 consideration
specified in Paragraphs (c) and (d) of this Section 1.05.
(b) Definitions. As used in this Agreement, the following terms
shall have the meanings specified below.
(i) "DGC Common Stock" - DGC's common stock, no par value.
(ii) "Transaction Value" - Twenty-nine dollars ($29.00)
times the JGB Units.
(iii) "JGB Units" - The sum of the number of shares of
Jefferson Guaranty Bancorp Common Stock outstanding on the Effective Date and
100 times the number of shares of Jefferson Guaranty Bancorp Preferred Stock
outstanding on the Effective Date.
(iv) "Stock Unit" - .637363 shares of DGC Common Stock.
(v) "Cash Unit" - Twenty-nine dollars ($29.00).
(vi) "Stock Election Percentage" - The quotient of the
total number of Stock Units elected divided by the JGB Units.
(vii) "Adjusted Stock Election Percentage" - The greater of
the Stock Election Percentage and .55.
(viii) "Total DGC Stock" - A number of shares of DGC Common
Stock determined by multiplying the Transaction Value by the lesser of (x) the
Adjusted Stock Election Percentage and (y) .80, and then dividing the product
by 45.50.
(ix) "Total DGC Cash" - Cash in an amount equal to the
Transaction Value times the result of 1.00 minus the multiplier used to
determine the Total DGC Stock.
(c) Exchange Ratio. Each share of Jefferson Guaranty Bancorp
Common Stock outstanding on the Effective Date will be converted into either
one Stock Unit or one Cash Unit, at the election of the shareholder, subject to
the other terms of this Section 1.05, and each share of Jefferson Guaranty
Bancorp Preferred Stock outstanding on the Effective Date will be converted
into either 100 Stock Units or 100 Cash Units, at the election of the
shareholder, subject to the other terms of this Section 1.05.
(d) Election Procedures. In making and honoring elections
pursuant to Paragraph (c) of this Section 1.05, the following rules shall
apply:
(i) In allocating shares of DGC Common Stock and cash among
electing shareholders,
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(A) Each shareholder of Jefferson Guaranty
Bancorp Common Stock shall be entitled to
elect as many Stock Units and as many Cash
Units as he or she chooses, so long as the
total number of Units elected is equal to the
total number of shares of Common Stock held by
him and converted in the Holding Company
Merger. Each shareholder of Jefferson
Guaranty Bancorp Preferred Stock shall be
entitled to elect as many Stock Units and as
many Cash Units as he or she chooses, so long
as the total number of Units elected is equal
to 100 times the total number of shares of
Jefferson Guaranty Bancorp Preferred Stock
held by him and converted in the Holding
Company Merger. If a shareholder makes an
election but elects more Units than he or she
is entitled to elect the excess will be
eliminated by first reducing the number of
Stock Units elected, and thereafter, if
necessary, reducing the number of Cash Units
elected. If a shareholder elects fewer Units
than he or she is entitled to elect, the
deficit will be eliminated by increasing the
number of Cash Units elected and, thereafter,
if necessary, increasing the number of Stock
Units elected.
(B) To the extent the sum of all Cash Unit
elections exceeds the Total DGC Cash, Stock
Units will be allocated pro rata to the
electing shareholders instead of Cash Units to
the extent of the oversubscription; and to the
extent all Stock Unit elections exceed the
Total DGC Stock, Cash Units will be allocated
pro rata to the electing shareholders instead
of Stock Units to the extent of the
oversubscription.
(ii) A shareholder who does not make an election or does
not make an election by the election deadline will be
deemed to have made a Cash Unit election with respect
to all of his or her shares.
(iii) The election deadline is the date of the shareholders
meeting of Jefferson Guaranty Bancorp held to approve
this Agreement.
(iv) Elections may not be changed after the election
deadline.
(v) A warrant holder may make an election as to shares of
Jefferson Guaranty Bancorp Common Stock to be received
upon the exercise of a warrant and which election is
contingent upon the exercise of a warrant.
(vi) For the purposes of calculating the Total DGC Cash and
making the adjustment required by Section
1.05(d)(i)(B) only, a shareholder who exercises
dissenters' rights will be deemed to have made a Cash
Unit election with respect to all of his or her
shares.
(e) 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 number of shares that a Jefferson Guaranty Bancorp shareholder is entitled
to receive shall be appropriately adjusted to reflect such split, combination,
dividend or distribution.
1.06 Exchange of Shares. (a) At the time the Proxy Statement
referred to in Section 5.06(a) is mailed to the shareholders of Jefferson
Guaranty Bancorp, or as soon as practicable thereafter, 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 Jefferson
Guaranty Bancorp Common Stock or Jefferson Guaranty Bancorp Preferred Stock
(the "Certificates"), and to each holder of warrants to acquire Jefferson
Guaranty Bancorp Common Stock, 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
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<PAGE> 100
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for the consideration determined
pursuant to Section 1.05. 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 and the amount of cash to which such holder of Jefferson Guaranty
Bancorp Common Stock or Jefferson Guaranty Bancorp Preferred 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 Jefferson Guaranty Bancorp.
Within five (5) business days after the Effective Date, the Exchange Agent will
mail the certificates and the amount of cash consideration to which they are
entitled to those holders who have delivered properly executed letters of
transmittal and their certificates to the Exchange Agent no later than two (2)
business days prior to the Effective Date and complied with all conditions set
forth in the letter of transmittal.
(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 Jefferson Guaranty Bancorp of the shares of Jefferson
Guaranty Bancorp Common Stock or Jefferson Guaranty Bancorp Preferred 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 the
consideration specified in Section 1.05.
(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 Jefferson Guaranty Bancorp
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.
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 Jefferson Guaranty Bancorp.
1.08 Shares of DG Louisiana. The shares of capital stock of DG
Louisiana outstanding immediately prior to the Effective Date shall not be
changed or converted by virtue of the Holding Company Merger.
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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") by
reason of Code Section 368(a)(2)(D), 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), Jefferson Guaranty Bank shall be merged with and into
DGNB Louisiana under the Articles of Association of DGNB Louisiana, 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, DGNB Louisiana, 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 Jefferson Guaranty Bank conducted business immediately prior to the
Effective Date). The Articles of Association of DGNB Louisiana shall not be
altered or amended by virtue of the Bank Merger, and the incumbency of the
directors and officers of DGNB Louisiana shall not be affected by the Bank
Merger nor shall any person succeed to such positions by virtue of the Bank
Merger. DGNB Louisiana 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"). Jefferson Guaranty Bank and DGNB Louisiana 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 Jefferson Guaranty Bank. On
the Effective Date, by virtue of the Bank Merger, all shares of the capital
stock of Jefferson Guaranty 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, DGNB Louisiana had capital of $2,341,210 divided into
234,121 shares of common stock, each of $10 par value ("DGNB Louisiana Common
Stock"), surplus of $3,603,351 and undivided profits, including capital
reserves, of $12,480,851. As of December 31, 1995, Jefferson Guaranty Bank had
capital of $1,375,217.50 divided into 550,087 shares of common stock, each of
$2.50 par value, surplus of $14,972,000 and undivided profits, including
capital reserves, of $3,879,000.
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 in any other
mergers consummated after December 31, 1995 and prior to the Effective Date,
and undivided profits, including capital reserves, which when combined with
capital and surplus will be equal to the capital structure of DGNB Louisiana,
as set forth above, adjusted, however, for the results of operations of DGNB
Louisiana 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 DGNB Louisiana, the Receiving Association, and such Receiving
Association shall be deemed to be the same corporation as each bank or banking
association participating in the Bank Merger. All rights, franchises and
interests of the individual Merging Associations in and to every type of
property (real, personal and mixed) and choses in action shall be transferred
to and vested in the Receiving Association by
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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 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
JEFFERSON GUARANTY BANK AND JEFFERSON GUARANTY BANCORP
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp hereby make the
following representations and warranties to DGC, DGNB Louisiana, and DG
Louisiana:
3.01 Corporate Organization. (a) Jefferson Guaranty Bank is a
banking association duly organized, validly existing and in good standing under
the laws of the State of Louisiana. Jefferson Guaranty 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) Jefferson Guaranty Bancorp is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Jefferson Guaranty Bancorp 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 failure to so qualify would have a material adverse
effect on its financial condition, results of operations, business or
prospects.
3.02 Capitalization. (a) The authorized capital stock of
Jefferson Guaranty Bank consists of 850,000 shares of common stock, $2.50 par
value (the "Jefferson Guaranty Bank Common Stock"). At the close of business
on June 30, 1996, there were 550,087 shares of Jefferson Guaranty Bank Common
Stock issued and outstanding and no shares held in Jefferson Guaranty Bank's
treasury. Except as set forth on Schedule 3.02 hereto, all issued and
outstanding shares of Jefferson Guaranty Bank Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable (except as
provided in La. R.S. 6:262) and free of preemptive rights with no personal
liability attaching to the ownership thereof. Except as set forth on Schedule
3.02 hereof, Jefferson Guaranty Bank has not issued any additional shares of
Jefferson Guaranty Bank Common Stock since June 30, 1996, 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 Jefferson Guaranty Bank Common Stock or any security
representing the right to purchase or otherwise receive any Jefferson Guaranty
Bank Common Stock. Jefferson Guaranty Bancorp has good, valid and marketable
title to, the Jefferson Guaranty 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, except as provided
in La. R.S. 6:262. The Louisiana Commissioner of Financial Institutions has
taken no action pursuant to Section 6:262A.
(b) The authorized capital stock of Jefferson Guaranty Bancorp
consists of 5,000,000 shares of Jefferson Guaranty Bancorp Common Voting Stock,
500,000 shares of Class A Nonvoting Stock, and 16,200 shares of Series
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C Cumulative Convertible Preferred Stock, with a stated value of $1,000 per
share. At the close of business on June 30, 1996, there were 1,244,375 shares
of Jefferson Guaranty Bancorp Common Voting Stock and 3,484 shares of Series C
Cumulative Convertible Preferred Stock issued and outstanding, which are
convertible into 348,400 shares of Jefferson Guaranty Bancorp Common Voting
Stock . As of the date of this Agreement, warrants to acquire 266,000 shares
of Jefferson Guaranty Bancorp Common Voting Stock are outstanding, all of which
shall be exercised or purchased for cash on or before the Effective Date.
Except as set forth on Schedule 3.02 hereto, all issued and outstanding shares
of Jefferson Guaranty Bancorp 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, Jefferson Guaranty Bancorp has not issued any
additional shares of Jefferson Guaranty Bancorp Common Stock since June 30,
1996, and, except as set forth in this Section 3.02 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 Jefferson Guaranty Bancorp Common Stock or any security representing the
right to purchase or otherwise receive any Jefferson Guaranty Bancorp Common
Stock.
3.03 Investments; No Subsidiaries. The "Jefferson Guaranty
Consolidated Group," as such term is used in this Agreement, consists of
Jefferson Guaranty Bancorp and Jefferson Guaranty Bank. Except as set forth on
Schedule 3.03 hereof, neither Jefferson Guaranty Bank nor Jefferson Guaranty
Bancorp 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 Jefferson Guaranty Bank may
have acquired as a result of foreclosure or collection and is as of the date
hereof holding subject to sale and except for any interest or investment held
in a fiduciary capacity.
3.04 Loan Portfolio. All loans, discounts and financing leases
(in which any member of the Jefferson Guaranty Consolidated Group is lessor)
reflected on the Jefferson Guaranty 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 Jefferson Guaranty Consolidated Group, (b) are evidenced in all
material respects by genuine notes, agreements or other evidences of
indebtedness and (c) to the extent secured, have, in all material respects,
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 Jefferson Guaranty 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 Jefferson Guaranty 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; Enforceability. Each of Jefferson Guaranty Bank
and Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bank
have been duly and validly approved by the Board of Directors of Jefferson
Guaranty Bank, and, except for approval by Jefferson Guaranty Bancorp as the
sole shareholder of Jefferson Guaranty Bank, no other corporate proceedings on
the part of Jefferson Guaranty Bank are necessary to consummate the
transactions so contemplated. The Board of Directors of Jefferson Guaranty
Bancorp has duly and validly approved this Agreement and the transactions
contemplated hereby and has authorized the execution and delivery of this
Agreement by Jefferson Guaranty Bancorp, and, except for the approval of this
Agreement by its shareholders, no other corporate proceedings on the part of
Jefferson Guaranty Bancorp are necessary to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by Jefferson Guaranty Bank and Jefferson Guaranty Bancorp and constitutes a
valid and binding obligation of Jefferson Guaranty Bank and of Jefferson
Guaranty Bancorp 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.
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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 Jefferson Guaranty Bank and Jefferson Guaranty Bancorp any third party is
necessary in connection with (i) the execution and delivery by Jefferson
Guaranty Bank or Jefferson Guaranty Bancorp of this Agreement, or (ii) the
consummation by Jefferson Guaranty Bancorp or Jefferson Guaranty Bank of the
Mergers and the other transactions contemplated hereby.
3.07 Financial Statements; Other Reports; Liabilities. (a) The
consolidated financial statements of Jefferson Guaranty Bancorp and its
consolidated subsidiaries (collectively, the "Jefferson Guaranty Financial
Statements") for the fiscal years ended December 31, 1993 through 1995 have
been audited by Arthur Andersen, LLP., certified public accountants 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 Jefferson Guaranty Bancorp and its
consolidated subsidiaries at such dates and the results of operations and cash
flows for the periods then ended. The consolidated financial statements of
Jefferson Guaranty Bancorp and its consolidated subsidiaries for the six months
ended June 30, 1996 ("Jefferson Guaranty Interim Financial Statements") have
been prepared in accordance with generally accepted accounting principles and,
except omitting substantially all of the disclosures and the statements of cash
flows, applied on a basis consistent with prior periods, and present fairly the
financial position of Jefferson Guaranty Bancorp and its consolidated
subsidiaries at such date and the results of operations and cash flows for the
period then ended and reflect all adjustments (consisting only of normal
recurring adjustments) that are necessary for a fair statement of the results
for the interim period presented therein. Neither Jefferson Guaranty Bancorp
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 Jefferson Guaranty Interim Financial Statements (the "Jefferson Guaranty
Latest Balance Sheet"), or as may have been incurred or may have arisen since
the date of the Jefferson Guaranty Latest Balance Sheet in the ordinary course
of business, and except for those liabilities, commitments, debts, and
obligations set forth in Schedule 3.10.
(b) Since the date of the Jefferson Guaranty Latest Balance Sheet,
there has been no change that has had or is likely to have a material adverse
effect on the financial condition, results of operations, business or prospects
of the Jefferson Guaranty Consolidated Group, taken as a whole, excluding
changes in banking laws or regulations that affect banking institutions
generally.
(c) Jefferson Guaranty Bancorp has delivered to DGC, DG Louisiana
and DGNB Louisiana 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, 1995 of each member of the Jefferson Guaranty
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, 1993, of each member of the
Jefferson Guaranty 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 Jefferson Guaranty Bank, Jefferson Guaranty
Bancorp 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.
3.09 Title to Properties; Encumbrances. Except as set forth in
Schedule 3.09 hereto, Jefferson Guaranty Bank and Jefferson Guaranty Bancorp
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 Jefferson Guaranty Latest Balance Sheet, other than any of such properties
or assets which have been sold or otherwise disposed of since the
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date of the Jefferson Guaranty 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 subject thereto or affected thereby or otherwise impair
the business operations conducted or contemplated by Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp, (iii) mortgages and encumbrances which secure
indebtedness, which is properly reflected in the Jefferson Guaranty 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 Jefferson
Guaranty 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 Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp, and all buildings, structures and fixtures used by
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp 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 Jefferson
Guaranty Bank nor Jefferson Guaranty Bancorp has received any notification of
any violation (which has not been cured) of any material 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 Jefferson Guaranty Bank nor
Jefferson Guaranty Bancorp 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 Jefferson Guaranty Latest Balance Sheet or disclosed in the
notes thereto or (ii) incurred since the date of the Jefferson Guaranty Latest
Balance Sheet in the ordinary course of business and consistent with past
practice, which liabilities or obligations are, either individually or in the
aggregate, material to the Jefferson Guaranty Bancorp Consolidated Group, taken
as a whole.
3.11 Absence of Certain Changes or Events. (a) Except as set
forth in Schedule 3.11 hereto, since the date of the Jefferson Guaranty Latest
Balance Sheet, there has not been:
i) any material adverse change in the business,
operations, properties, assets or financial condition of the Jefferson
Guaranty Bancorp Consolidated Group, or any event which has had or
will have a material adverse effect on any of the foregoing excluding
changes in banking laws or regulations that affect banking institutions
generally;
ii) any loss, damage, destruction or other casualty
materially and adversely affecting any of the properties, assets or
business of the Jefferson Guaranty Bancorp Consolidated Group (whether
or not covered by insurance);
iii) any increase of more than ten percent (10%) in the
compensation payable by Jefferson Guaranty Bank or Jefferson Guaranty
Bancorp to any of their directors, officers, agents, consultants, or
any of their employees whose total compensation after such increase
was in excess of $50,000 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
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp for the benefit
of any such director, officer, agent, consultant or employee;
iv) any change in any method of accounting or accounting
practice of Jefferson Guaranty Bank or Jefferson Guaranty Bancorp;
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v) any non-performing assets of $25,000 or more to
include non-accrual loans, renegotiated loans and other real estate;
or
vi) any agreement or understanding, whether in writing or
otherwise, of Jefferson Guaranty Bank or Jefferson Guaranty Bancorp
to do any of the foregoing.
(b) Except as set forth in Schedule 3.11 hereto, since the date of
the Jefferson Guaranty Latest Balance Sheet, neither Jefferson Guaranty Bank
nor Jefferson Guaranty Bancorp 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;
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 the indebtedness of Jefferson
Guaranty Bancorp to Deposit Guaranty National Bank, current
liabilities shown on the Jefferson Guaranty Latest Balance Sheet and
current liabilities incurred since the date of the Jefferson Guaranty
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) dividends by Jefferson Guaranty
Bancorp to holders of Series C Cumulative Convertible Preferred Stock
in the amount of $20.00 per share per quarter for any complete
calendar quarter ending on or before the Effective Date and, with
respect to a calendar quarter not completed on the Effective Date, if
the Effective Date is after the record date for the payment of
dividends on DGC Common Stock for such quarter, an additional amount
determined by multiplying $20.00 by a fraction the numerator of which
is the number of days in such quarter prior to the Effective Date and
the denominator of which is 90, and (ii) dividends by Jefferson
Guaranty Bank to Jefferson Guaranty Bancorp to pay necessary and
routine expenses of Jefferson Guaranty Bancorp, authorized dividends
of Jefferson Guaranty Bancorp, and the indebtedness of Jefferson
Guaranty Bancorp to Deposit Guaranty National Bank;
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
Jefferson Guaranty Bank, Jefferson Guaranty Bancorp 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
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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 Jefferson Guaranty Bank or Jefferson Guaranty
Bancorp, 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
Jefferson Guaranty Bank's or Jefferson Guaranty Bancorp'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 Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp or in which they have any interest. Jefferson
Guaranty Bank and Jefferson Guaranty Bancorp 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 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 Jefferson Guaranty Bank or Jefferson Guaranty Bancorp does not
infringe on the rights of any person.
3.14 Compliance with Applicable Law. Jefferson Guaranty Bank and
Jefferson Guaranty Bancorp 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 would result in a material
limitation on the conduct of the Jefferson Guaranty Bancorp Consolidated
Group's business, or would cause Jefferson Guaranty Bank or Jefferson Guaranty
Bancorp to incur a substantial financial penalty); and, except as set forth in
Schedule 3.14 hereto, neither Jefferson Guaranty Bank nor Jefferson Guaranty
Bancorp 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. Jefferson Guaranty Bank
and Jefferson Guaranty Bancorp have not, and, to the knowledge of Jefferson
Guaranty Bank or Jefferson Guaranty Bancorp, no director, officer, agent,
employee, consultant or other person acting on behalf of, Jefferson Guaranty
Bank or Jefferson Guaranty Bancorp has, (a) used any Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp corporate funds, or
established or maintained any unlawful or unrecorded accounts with funds
received from Jefferson Guaranty Bank or Jefferson Guaranty Bancorp.
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 Jefferson Guaranty Bank or Jefferson Guaranty Bancorp or in which
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp is named as the insured
party. All such policies are valid, enforceable and in full force and effect,
and no member of the Jefferson Guaranty 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 Jefferson
Guaranty Bank's and Jefferson Guaranty Bancorp's property and the conduct of
their businesses is in such amounts and against such risks as are usually
insured against by institutions
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of similar size operating similar properties and businesses in the State of
Louisiana and, in the opinion of management of Jefferson Guaranty Bancorp or
Jefferson Guaranty Bank, as the case may be, are adequate for the conduct of
Jefferson Guaranty Bank's and Jefferson Guaranty Bancorp's businesses. Except
as set forth in Schedule 3.16 hereto, within the past five (5) years, neither
Jefferson Guaranty Bank nor Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bank nor Jefferson Guaranty Bancorp has given any power of
attorney to any person to act on its behalf, nor 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. Except as set forth in Schedule 3.18, Jefferson
Guaranty Bank and Jefferson Guaranty Bancorp 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 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 Jefferson Guaranty 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 Jefferson Guaranty Consolidated Group,
all material Returns required to be filed by or on behalf of members of the
Jefferson Guaranty Consolidated Group have been duly filed and, to the
knowledge of the Jefferson Guaranty 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 material amount of Taxes are payable by
the Jefferson Guaranty 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 Jefferson Guaranty 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 owing to any employee, creditor, independent
contractor, or other third party. There are no liens on any of the assets of
any member of the Jefferson Guaranty Consolidated Group with respect to Taxes,
other than liens for Taxes not yet due and payable or for Taxes that a member
of the Jefferson Guaranty Consolidated Group is contesting in good faith
through appropriate proceedings and for which appropriate reserves have been
established.
(c) The Returns of the Jefferson Guaranty Consolidated Group have
never been audited by a government or taxing authority, nor to the knowledge of
the Jefferson Guaranty Consolidated Group, is any such audit in process,
pending or threatened. To the knowledge of the Jefferson Guaranty Consolidated
Group, no material deficiencies exist or have been asserted or are expected to
be asserted with respect to Taxes of the Jefferson
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Guaranty Consolidated Group, and no member of the Jefferson Guaranty
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 Jefferson Guaranty Consolidated Group is a party to any action or
proceeding for assessment or collection of Taxes, nor to the knowledge of the
Jefferson Guaranty Consolidated Group, has such event been asserted or
threatened against any member of the Jefferson Guaranty 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 Jefferson Guaranty 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 Jefferson Guaranty
Bancorp or Jefferson Guaranty Bank, for the benefit of any of the present or
former directors, officers, or other employees of Jefferson Guaranty Bank and
Jefferson Guaranty Bancorp. 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 Jefferson Guaranty Consolidated Group.
Except as set forth in Schedule 3.19(a), all "employee benefit plans"
maintained by Jefferson Guaranty Bank or Jefferson Guaranty Bancorp (all such
plans being listed in Schedule 3.19(a) hereto) (collectively, the "Jefferson
Guaranty Bank Plans") are in material compliance with the provisions of ERISA
and the applicable provisions of the Code. No member of the Jefferson Guaranty
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 Jefferson Guaranty 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
Jefferson Guaranty Bancorp, Jefferson Guaranty Bank or DGC, DG Louisiana or
DGNB Louisiana. The Jefferson Guaranty Bank 401(k) Plan has been determined to
be "qualified" within the meaning of Section 401(a) of the Code and neither
Jefferson Guaranty Bank nor Jefferson Guaranty Bancorp knows of any fact which
would adversely affect the qualified status of such plan. Jefferson Guaranty
Bancorp 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 Jefferson Guaranty 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.
(b) Except as set forth in Schedule 3.19(b) hereto, (i) each of
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp, (iv) no representation
question exists respecting the employees of Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp, (v) no grievance which would have a material
adverse effect on the Jefferson Guaranty Bancorp Consolidated Group or the
conduct of its 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 Jefferson Guaranty
Bank or Jefferson Guaranty Bancorp restricts them from closing any of their
operations, and (vii) neither Jefferson Guaranty Bank nor Jefferson Guaranty
Bancorp has experienced any work stoppage or other material labor difficulty
during the last five (5) years.
3.20 Contracts and Commitments; No Default. (a) The following
information relating to Jefferson Guaranty Bank and Jefferson Guaranty Bancorp
has been made available to DGC, DG Louisiana or DGNB Louisiana:
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i) to the extent permitted by law, any bank regulatory
agency reports relating to the examination of Jefferson Guaranty Bank
which have been made available to Jefferson Guaranty Bank or Jefferson
Guaranty Bancorp for the past five (5) years;
ii) the name of each bank with which Jefferson Guaranty
Bank or Jefferson Guaranty Bancorp 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
Jefferson Guaranty Bank or Jefferson Guaranty Bancorp 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 other than
certificates of deposit or other depository instruments;
iv) any loans, including any other credit arrangements by
Jefferson Guaranty Bank, to any holder of ten percent (10%) or more of
Jefferson Guaranty Bancorp Common Stock, to any of Jefferson Guaranty
Bank's or Jefferson Guaranty Bancorp's directors or executive
officers, to any members of the immediate families of any of Jefferson
Guaranty Bank's or Jefferson Guaranty Bancorp's directors or executive
officers or to any corporation, firm or other organization in which
any of such directors or executive officers holds more than a ten
percent (10%) equity interest; and
v) any pending application, including any documents or
materials relating thereto, which has been filed by Jefferson Guaranty
Bank or Jefferson Guaranty Bancorp 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 Jefferson
Guaranty Bank nor Jefferson Guaranty Bancorp is a party to or bound by, nor
have any bids or proposals been made by or to Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp 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;
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; or
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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 Jefferson Guaranty Bank and Jefferson Guaranty Bancorp
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 Jefferson Guaranty Bank or Jefferson Guaranty Bancorp,
which default would have a material adverse effect on the business, operations,
properties, assets or financial condition of the Jefferson Guaranty Bancorp
Consolidated Group, and neither Jefferson Guaranty Bank nor Jefferson Guaranty
Bancorp has received notice of any such default, nor has Jefferson Guaranty
Bank or Jefferson Guaranty Bancorp 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 the Jefferson Guaranty Bancorp Consolidated Group have been
disclosed to DGC, DG Louisiana and DGNB Louisiana 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, DG Louisiana or DGNB Louisiana 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, DG Louisiana
and DGNB Louisiana.
3.22 Litigation. Except (a) that are not material individually or
in the aggregate to the Jefferson Guaranty Bancorp Consolidated Group, taken as
a whole, or (b) as listed on Schedule 3.22, there are no actions, suits,
proceedings, arbitrations or investigations pending or, to the knowledge of
Jefferson Guaranty Bancorp or Jefferson Guaranty Bank, threatened, before any
court, any governmental agency or instrumentality or any arbitration panel,
against or affecting Jefferson Guaranty Bancorp or Jefferson Guaranty Bank or
any of their subsidiaries or any of the directors, officers, or employees of
the foregoing, and to the knowledge of Jefferson Guaranty Bancorp or Jefferson
Guaranty 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 the
Jefferson Guaranty Bancorp Consolidated Group. Neither Jefferson Guaranty
Bancorp or Jefferson Guaranty 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,
Jefferson Guaranty Bancorp and Jefferson Guaranty 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 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 the Jefferson Guaranty Bancorp
Consolidated Group.
(b) To the knowledge of each, all property owned, leased, operated
or managed by Jefferson Guaranty Bancorp or Jefferson Guaranty Bank, or in
which Jefferson Guaranty Bancorp or Jefferson Guaranty Bank has any interest,
including any mortgage or security interest ("Business Property"), and all
businesses and operations
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conducted on any of the Business Property (whether by Jefferson Guaranty
Bancorp or Jefferson Guaranty 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 the Jefferson
Guaranty Bancorp Consolidated Group.
(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
Jefferson Guaranty Bancorp or Jefferson Guaranty 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 the Jefferson Guaranty Bancorp Consolidated Group, 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 the Jefferson Guaranty Bancorp Consolidated Group.
3.24 Contract Termination Provisions. Except for those contracts
set forth in Schedule 3.24 hereto, all contracts between Jefferson Guaranty
Bank or Jefferson Guaranty Bancorp and any employee thereof or independent
contractor thereto shall, by the terms of such contracts or a written addendum
thereto, be terminable by DGC, DG Louisiana or DGNB Louisiana 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, DG LOUISIANA
AND DGNB LOUISIANA
DGC, DG Louisiana and DGNB Louisiana represent and warrant to
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp as follows:
4.01 Corporate Organization. DGC and DG Louisiana are corporations
duly organized, validly existing and in good standing under the laws of the
States of Mississippi and Louisiana, respectively, and DGNB Louisiana is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States. DGC, DG Louisiana, and DGNB
Louisiana, respectively, have the corporate power and authority (and DGNB
Louisiana 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 100,000,000 shares of DGC Common Stock, 25,000,000 shares of Class A Voting
Preferred Stock, no par value, and 25,000,000 shares of Class B Non-Voting
Preferred Stock, no par value (collectively, "the DGC Preferred Stock"). At
the close of business on June 30, 1996, there were 19,657,816 shares of DGC
Common Stock issued and outstanding and no shares of DGC Preferred Stock had
been issued. In addition, options to acquire 435,152 shares of DGC Common
Stock were outstanding. The authorized capital stock of DG Louisiana consists
of 5,000,000 shares, no par value. At the close of business on June 30, 1996,
there were 4,200,000 shares of DG Louisiana Common Stock issued and
outstanding,
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one hundred percent (100%) of which shares were owned by DG Louisiana. 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, DG Louisiana, and DGNB
Louisiana, 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, DG Louisiana, and DGNB Louisiana, or
a majority thereof, and DGC as the sole shareholder of DG Louisiana, 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 DG
Louisiana, as the sole shareholder of DGNB Louisiana, no other corporate
proceedings on the part of DGC, DG Louisiana, or DGNB Louisiana are necessary
or desirable to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by DGC, DG Louisiana, and
DGNB Louisiana and constitutes a valid and binding obligation of each of DGC,
DG Louisiana, and DGNB Louisiana, enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by DGC,
DG Louisiana, or DGNB Louisiana nor the consummation by DGC, DG Louisiana, or
DGNB Louisiana of the transactions contemplated hereby, nor compliance by DGC,
DG Louisiana, or DGNB Louisiana with any of the provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of DGC, or
DG Louisiana, or the Articles of Association or Bylaws of DGNB Louisiana, (ii)
to the best knowledge of DGC, DG Louisiana, and DGNB Louisiana violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to DGC, DG Louisiana, DGNB Louisiana, or any of their
subsidiaries or any of their respective properties or assets, or (iii) to the
best knowledge of DGC, DG Louisiana, and DGNB Louisiana 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, DG
Louisiana, DGNB Louisiana, 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, DG Louisiana, DGNB Louisiana, 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, DG Louisiana, DGNB Louisiana
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 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, DG Louisiana, and DGNB Louisiana 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 Jefferson Guaranty Bancorp. The DGC SEC
Documents complied 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
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none of the DGC SEC Documents contained 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.
(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 to DGC and its
consolidated subsidiaries (the "DGC Consolidated Group"), taken as a whole, or
(c) as listed on Schedule 4.06, there are no actions, suits, proceedings,
arbitrations or investigations pending or, to the knowledge of the DGC
Consolidated Group, threatened, before any court, any governmental agency or
instrumentality or any arbitration panel, against or affecting the DGC
Consolidated Group or any of the directors, officers, or employees of the
foregoing, and to the knowledge of the DGC Consolidated Group 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 the DGC Consolidated Group.
The DGC Consolidated Group is not 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 Jefferson Guaranty Bancorp 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 Jefferson Guaranty
Bancorp, 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 Jefferson Guaranty Bancorp 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.
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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 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, DG Louisiana or DGNB Louisiana 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, DG
Louisiana or DGNB Louisiana 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, which will not be unreasonably withheld during the
period from the date of this Agreement to the Effective Date:
(a) Jefferson Guaranty Bank and Jefferson Guaranty Bancorp will
conduct their businesses and engage in transactions only in the ordinary course
and consistent with prudent banking practice.
(b) Except as set forth on Schedule 5.01(b) neither Jefferson
Guaranty Bancorp nor Jefferson Guaranty Bank shall (i) increase by more than
ten percent (10%) the compensation payable by Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp to any of its directors, officers, agents,
consultants, or any of its employees whose total compensation after such
increase would be in excess of $50,000 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 Jefferson Guaranty Bancorp nor Jefferson Guaranty
Bank shall sell or dispose of material assets except in the ordinary course of
business.
(d) Neither Jefferson Guaranty Bancorp nor Jefferson Guaranty
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) Except with respect to the issuance of shares of Jefferson
Guaranty Bancorp Common Stock upon exercise of warrants or conversion of
Jefferson Guaranty Bancorp Preferred Stock outstanding on the date hereof,
neither Jefferson Guaranty Bank nor Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bank or
Jefferson Guaranty Bancorp otherwise authorize or affect any change in its
capitalization.
(f) No dividends shall be paid by Jefferson Guaranty Bancorp
except for dividends to holders of Series C Cumulative Convertible Preferred
Stock in the amount of $20.00 per share per quarter for any complete calendar
quarter ending on or before the Effective
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Date and, with respect to a calendar quarter not completed on the Effective
Date, if the Effective Date is after the record date for the payment of
dividends on DGC Common Stock for such quarter, an additional amount determined
by multiplying $20.00 by a fraction the numerator of which is the number of
days in such quarter prior to the Effective Date and the denominator of which
is 90. No dividends shall be paid by Jefferson Guaranty Bank except dividends
by Jefferson Guaranty Bank to Jefferson Guaranty Bancorp to the extent
necessary to pay necessary and routine expenses of Jefferson Guaranty Bancorp,
authorized dividends of Jefferson Guaranty Bancorp, and the indebtedness of
Jefferson Guaranty Bancorp to Deposit Guaranty National Bank.
5.02 Limitation on Actions. Prior to the Effective Date or until
the termination of this Agreement, Jefferson Guaranty Bancorp shall not,
without the prior approval of the chief executive officer of DGC,
(a) solicit or encourage inquiries or proposals with respect to; or
(b) except to the extent required, in the opinion of its counsel,
by its legal obligations, 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, Jefferson Guaranty Bancorp or any subsidiary thereof, or any business
combination with Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bancorp from taking any action
that in the opinion of counsel to Jefferson Guaranty Bancorp is required by
law.
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp agree to notify
DGC by telephone within twenty-four hours (24) 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 Jefferson Guaranty Bank or Jefferson Guaranty Bancorp
by another party.
5.03 Current Information. During the period from the date of this
Agreement to the Effective Date, Jefferson Guaranty Bank and Jefferson Guaranty
Bancorp 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, (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 $250,000, (viii) notification and
written details involving new loan products and/or loan programs, (ix) loan
applications for new or renewed loans, lines of credit or commitment of $50,000
or more, (x) all loan review reports, (xi) reconciliation of allowance for loan
and lease losses to include gross chargeoffs, recoveries and net chargeoffs,
(xii) written explanation of any gross chargeoff greater than $100,000, (xiii)
analysis of adequacy of allowance for loan and lease losses, and (xiv) such
other information regarding specific loans, the loan portfolio and management
of the loan portfolio as may be requested. Jefferson Guaranty Bank and
Jefferson Guaranty Bancorp 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 the parties and their counsel to prepare regulatory
submissions, and for other relevant purposes, each party shall permit the other
party reasonable access to their properties during normal business hours, and
shall disclose and make available to the other party and its agents the
following books, papers and records relating to their assets, stock ownership,
properties, operations, obligations and liabilities: (i) with respect to
Jefferson Guaranty Bancorp and Jefferson Guaranty Bank, 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
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authority; litigation files; compensatory plans affecting its employees; and
any other materials pertaining to business activities, projects or programs in
which DGC, DG Louisiana, and DGNB Louisiana may have a reasonable interest in
light of the proposed Mergers, and (ii) with respect to DGC, DG Louisiana, and
DGNB, those documents and records set forth in Schedule 5.04. No party 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 party 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, each party shall return 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 three (3) years from the date the proposed Mergers are abandoned and shall
not apply to (a) any information which (i) a party can establish by convincing
evidence was already in its possession prior to the disclosure thereof by
another party, (ii) was then generally known to the public or set forth in
public records, (iii) became known to the public through no fault of the party,
or (iv) was 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; SEC Filings. (a) 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, Jefferson Guaranty Bank
and Jefferson Guaranty Bancorp will deliver to DGC copies of their monthly
financial statements. DGC shall deliver to Jefferson Guaranty Bancorp, within
five (5) days after filing, all reports or statements filed with the SEC by
DGC, including any Quarterly Report on Form 10-Q, Annual Report on Form 10-K,
Current Report on Form 8-K, and any registration statement, proxy statement, or
annual report to stockholders.
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 Jefferson Guaranty Bancorp shareholders in connection with the
meeting to be called to consider and vote upon the Holding Company Merger and
to consider and vote upon the acceleration of warrants and the purchase of
warrants held by warrant holders of Jefferson Guaranty Bancorp Common Stock in
a manner necessary to meet the exception to Section 280G of the Code, as
amended, provided in Section 280(G)(b)(5) thereof and applicable regulations
thereunder (the "Parachute Exception"), 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) The parties shall cooperate in preparing the Registration
Statement and the Proxy Statement, including but not limited to all disclosures
that are necessary or appropriate to comply with the Parachute Exception.
Jefferson Guaranty Bancorp 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.
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(d) DGC will indemnify and hold harmless Jefferson Guaranty
Bancorp, each of its directors, each of its officers and each person, if any,
who controls Jefferson Guaranty Bancorp 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 or the Securities Exchange Act of 1934, 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 Proxy 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 Proxy Statement or any such
amendment or supplement in reliance upon or in conformity with information
furnished to DGC by or on behalf of the Jefferson Guaranty 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 Jefferson Guaranty Bancorp 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.
5.07 Approval of Shareholders. Jefferson Guaranty Bancorp 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) except to the extent it
is prohibited from doing so in the opinion of its counsel by its legal
obligations, 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, DG Louisiana, and DGNB Louisiana with respect to each of the
foregoing matters. Jefferson Guaranty Bancorp, as the sole shareholder of
Jefferson Guaranty Bank, shall approve this Agreement and the Bank Merger. DG
Louisiana, as the sole shareholder of DGNB Louisiana, shall approve this
Agreement and the Bank Merger.
5.08 Compliance with SEC Rules 144 and 145. Jefferson Guaranty
Bancorp 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
Jefferson Guaranty Bancorp 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 ("Jefferson Guaranty Bancorp
Affiliates"). Jefferson Guaranty Bancorp shall use its best efforts to cause
all Jefferson Guaranty Bancorp 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
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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, DG Louisiana, DGNB Louisiana,
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp 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. From and after the Effective Date, DGC will,
subject to compliance with applicable legal and regulatory requirements,
provide coverage for all Jefferson Guaranty 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 Jefferson Guaranty
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 Jefferson Guaranty Bank employee who, immediately prior to the
Effective Date, is covered by or is a participant in a Jefferson Guaranty Bank
employee benefit plan listed in Schedule 3.19 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.
5.12 Indemnification and Liability Insurance. (a) From and after
the Effective Date, DG Louisiana shall indemnify, defend, and hold harmless the
former directors, officers, employees and agents of Jefferson Guaranty Bancorp
(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, 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 Jefferson Guaranty Bancorp's Articles of
Incorporation and Bylaws as in effect on the date hereof, whichever is greater.
(b) From and after the Effective Date, DGNB Louisiana shall
indemnify, defend, and hold harmless the former directors, officers, employees
and agents of Jefferson Guaranty 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 Jefferson Guaranty Bank's
Articles of Incorporation and Bylaws as in effect on the date hereof, whichever
is greater.
(c) DGNB Louisiana and DG Louisiana shall use its best efforts to
maintain the existing directors' and officers' liability insurance policy of
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp, 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 DGNB Louisiana
and DG Louisiana 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.
5.13 Employment and Consulting Agreements. On or before the
Effective Date, DGNB Louisiana shall enter into an employment agreement with A.
Peyton Bush, III on terms satisfactory to the parties. DGNB Louisiana
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shall enter into a consulting agreement with Harold N. Garic on terms
satisfactory to the parties, after the termination of his employment with DGNB
Louisiana.
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 Jefferson Guaranty Bancorp Common Stock,
voted at the special meeting of shareholders of Jefferson Guaranty Bancorp
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, DG Louisiana, DGNB Louisiana, Jefferson Guaranty Bancorp
and Jefferson Guaranty Bank shall have received an opinion of Messrs. Watkins
Ludlam & Stennis, P.A., dated the date of Closing substantially to the effect
that the transactions contemplated by this Agreement will be treated for
federal income tax purposes as a reorganization under Section 368 of the Code,
with the result that, among other things, no gain or loss will be recognized by
shareholders of Jefferson Guaranty Bancorp who receive DGC Common Stock solely
in exchange for their Jefferson Guaranty Bancorp Common Stock or Jefferson
Guaranty Bancorp Preferred Stock surrendered in the Holding Company Merger, and
that those shareholders of Jefferson Guaranty Bancorp who receive cash and DGC
Common Stock could recognize gain or dividend income, but in any event such
gain or dividend income would not exceed the amount of cash received.
(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, DG Louisiana, and DGNB
Louisiana under this Agreement. The obligations of DGC, DG Louisiana, and
DGNB Louisiana 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, DG Louisiana, and DGNB
Louisiana:
(a) Each of the obligations of Jefferson Guaranty Bank and
Jefferson Guaranty Bancorp 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 in all material respects; and the representations and
warranties of Jefferson Guaranty Bank and Jefferson Guaranty Bancorp 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
except for inaccuracies in such representations and warranties that are not
material individually or in the aggregate to the financial condition, results
of operations, business or prospects of the Jefferson Guaranty Bancorp
Consolidated Group, taken as a whole) and DGC, DG Louisiana, and DGNB
Louisiana shall have received a certificate to that effect signed by the
president and the chief financial officer of Jefferson Guaranty Bank and
Jefferson Guaranty Bancorp.
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(b) All action required to be taken by, or on the part of,
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp to authorize the
execution, delivery and performance of this Agreement by Jefferson Guaranty
Bank and Jefferson Guaranty Bancorp and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Boards of
Directors of Jefferson Guaranty Bank and Jefferson Guaranty Bancorp and DGC,
DG Louisiana, and DGNB Louisiana 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 Jefferson
Guaranty Bank and Jefferson Guaranty Bancorp, which are necessary in connection
with the consummation of the Mergers by Jefferson Guaranty Bancorp and
Jefferson Guaranty Bank and the other transactions contemplated hereby.
(d) DGC, DG Louisiana, and DGNB Louisiana shall have received an
opinion from Messrs. Coleman, Johnson & Artigues, counsel to Jefferson Guaranty
Bank and Jefferson Guaranty Bancorp, dated the date of the Closing, in form
satisfactory to DGNB Louisiana, DGC, and DG Louisiana to the effect that:
i) Jefferson Guaranty Bancorp is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted. Jefferson Guaranty 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 Jefferson Guaranty Bancorp and Jefferson
Guaranty 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 Jefferson Guaranty
Bancorp consists of 5,000,000 shares of Jefferson Guaranty Bancorp
Common Voting Stock, 500,000 shares of Class A Nonvoting Common Stock,
and 16,200 shares of Series C Cumulative Convertible Preferred Stock,
with a stated value of $1,000 per share, of which, as of June 30,
1996, 1,244,375 shares of Jefferson Guaranty Bancorp Common Voting
Stock and 3,484 shares of Series C Cumulative Convertible Preferred
Stock have been duly issued, are presently outstanding and are fully
paid and non-assessable;
iv) The authorized capital stock of Jefferson Guaranty
Bank consists of 850,000 shares of Jefferson Guaranty Bank Common
Stock of which, as of June 30, 1996, 550,087 were issued and
outstanding; all of such outstanding shares are validly issued, fully
paid and non-assessable;
v) The execution and delivery by Jefferson Guaranty
Bancorp and Jefferson Guaranty Bank of this Agreement, consummation by
Jefferson Guaranty Bancorp and Jefferson Guaranty Bank of the
transactions contemplated hereby and compliance by Jefferson Guaranty
Bancorp and Jefferson Guaranty Bank with the provisions hereof will
not violate the Articles of Incorporation of Jefferson Guaranty
Bancorp or Jefferson Guaranty 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 Jefferson
Guaranty Bancorp or Jefferson Guaranty Bank is a party or to which
they may be subject; and
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DGC, DG Louisiana and DGNB Louisiana shall have received an
opinion from Messrs. Correro Fishman Haygood Phelps Weiss Walmsley &
Casteix, L.L.P., counsel to Jefferson Guaranty Bank and Jefferson
Guaranty Bancorp, dated the date of the Closing, in form satisfactory
to DGNB Louisiana, DGC and DG Louisiana to the effect that:
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 Jefferson Guaranty Bancorp and
Jefferson Guaranty Bank may rely, to the extent they deem appropriate, upon
certificates of officers of Jefferson Guaranty Bancorp and Jefferson Guaranty
Bank, provided, such certificates are delivered to DGC, DG Louisiana and DGNB
Louisiana 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
Jefferson Guaranty Bancorp or Jefferson Guaranty Bank from the date of the
Jefferson Guaranty Latest Balance Sheet to the Closing.
(f) Jefferson Guaranty Bancorp shall have used it bests efforts to
cause all Jefferson Guaranty Bancorp 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.
(g) Prior to the Effective Date, all outstanding warrants to
acquire shares of Jefferson Guaranty Bancorp Common Stock listed on Schedule
6.02(g)-A shall have been exercised or purchased for cash, and all outstanding
warrants to acquire shares of Jefferson Guaranty Bancorp Common Stock listed on
Schedule 6.02(g)-B shall have been purchased for cash,
(h) On or before the Effective Date, DGNB Louisiana shall have
entered into an employment agreement with A. Peyton Bush, III on terms
satisfactory to the parties.
Jefferson Guaranty Bank and Jefferson Guaranty Bancorp will furnish
DGC, DG Louisiana, and DGNB Louisiana 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, DG Louisiana, and DGNB Louisiana may
reasonably request.
6.03 Conditions to the Obligations of Jefferson Guaranty Bank and
Jefferson Guaranty Bancorp under this Agreement. The obligations of Jefferson
Guaranty Bank and Jefferson Guaranty Bancorp 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 Jefferson
Guaranty Bank and Jefferson Guaranty Bancorp:
(a) Each of the obligations of DGC, DG Louisiana, or DGNB
Louisiana, 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 in all material respects; and the representations and
warranties of DGC, DG Louisiana, and
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DGNB Louisiana 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 except for inaccuracies in such
representations and warranties that are not material individually or in the
aggregate to the financial condition, results of operations, business or
prospects of the DGC Consolidated Group, taken as a whole) and Jefferson
Guaranty Bank and Jefferson Guaranty Bancorp shall have received certificates
to that effect signed by the presidents and chief financial officers of DGC, DG
Louisiana, and DGNB Louisiana, respectively.
(b) All action required to be taken by, or on the part of, DGC, DG
Louisiana, and DGNB Louisiana to authorize the execution, delivery and
performance of this Agreement of DGC, DG Louisiana, and DGNB Louisiana and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Boards of Directors of DGC, DG Louisiana, and DGNB
Louisiana, respectively, and Jefferson Guaranty Bank and Jefferson Guaranty
Bancorp shall have received certified copies of the resolutions evidencing such
authorization.
(c) There shall not have occurred any material adverse change in
the financial condition, results of operations, business or prospects of DGC,
DG Louisiana or DGNB Louisiana from the date of the DGC Latest Balance Sheet to
the Closing.
(d) Jefferson Guaranty Bancorp and Jefferson Guaranty Bank shall
have received from Messrs. Watkins, Ludlam and Stennis, P.A., counsel for DGC,
DG Louisiana and DGNB Louisiana (or as to certain matters involving Louisiana
law from Louisiana counsel to DGC, DG Louisiana and DGNB Louisiana), an
opinion, dated as of the Closing, in form and substance satisfactory to
Jefferson Guaranty Bancorp and Jefferson Guaranty 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. DG
Louisiana 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. DGNB Louisiana is
a national banking association duly organized, validly existing and in
good standing under the laws of the United States and (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 United States, 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, DG Louisiana, and DGNB Louisiana, and
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
100,000,000 shares of DGC Common Stock, 25,000,000 shares of Class A
Voting Preferred Stock, no par value, and 25,000,000 shares of Class B
Non- Voting Preferred Stock, no par value of which, as of June 30,
1996, 19,657,816 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 Jefferson
Guaranty Bancorp 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 Jefferson Guaranty
Bancorp Common Stock;
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iv) The authorized capital stock of DG Louisiana consists
of 5,000,000 shares of DG Louisiana Common Stock, of which, as of June
30, 1996, 4,200,000 shares have been duly issued, are presently
outstanding and are fully paid and non-assessable;
v) The authorized capital stock of DGNB Louisiana consists
of 234,121 shares of DGNB Louisiana Common Stock of which, as of June
30, 1996, 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, DG Louisiana, and
DGNB Louisiana of this Agreement, consummation by DGC, DG Louisiana,
and DGNB Louisiana of the transactions contemplated hereby and
compliance by DGC, DG Louisiana, and DGNB Louisiana with the
provisions hereof will not violate the Articles of Incorporation or
Association of DGC, DG Louisiana, and DGNB Louisiana 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, DG Louisiana, and DGNB Louisiana 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 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, DG Louisiana and DGNB Louisiana
may rely, to the extent they deem appropriate, upon certificates of officers of
DGC, DG Louisiana, and DGNB Louisiana, provided, such certificates are
delivered to Jefferson Guaranty Bancorp and Jefferson Guaranty Bank prior to
the Closing or attached to the opinion of counsel.
DGC, DG Louisiana, and DGNB Louisiana will furnish Jefferson Guaranty
Bank and Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bank and Jefferson Guaranty
Bancorp may reasonably request.
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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 a date that is
the later of: (a) January 3, 1997, or (b) a date selected by DGC which shall be
within five (5) days after the later of (i) the expiration of any applicable
waiting period in connection with any regulatory approval and (ii) the receipt
of all other required approvals; provided, however, that the Closing may take
place at such other place, at such other time, or on such other date as DGC, DG
Louisiana, DGNB Louisiana, Jefferson Guaranty Bancorp and Jefferson Guaranty
Bank may mutually agree upon for the Closing to take place.
7.02 Deliveries at the Closing. Subject to the provisions of
Articles VI and VIII hereof, at the Closing there shall be delivered to DGC, DG
Louisiana, DGNB Louisiana, Jefferson Guaranty Bancorp and Jefferson Guaranty
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 Jefferson Guaranty Bancorp:
(a) by mutual written consent of the parties, properly authorized
by their respective Boards of Directors;
(b) by DGC, DG Louisiana, and DGNB Louisiana, if at the time of
such termination there shall be a material adverse change in the consolidated
financial condition of Jefferson Guaranty Bank or Jefferson Guaranty Bancorp
from that set forth in the Jefferson Guaranty Financial Statements for the
period ended June 30, 1996;
(c) by Jefferson Guaranty Bank and Jefferson Guaranty Bancorp, if
at the time of such termination there shall be a material adverse change in the
consolidated financial condition of DGC, DG Louisiana and DGNB Louisiana from
that set forth in the DGC Latest Balance Sheet;
(d) 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;
(e) by any party hereto, if at the special meeting of shareholders
to be called by Jefferson Guaranty Bancorp 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 Jefferson Guaranty Bancorp
Common Stock voted at the special meeting of shareholders of Jefferson Guaranty
Bancorp called pursuant to Section 5.07 hereof;
(f) by DGC, DG Louisiana, and DGNB Louisiana, in the event there
are dissenting shareholders who hold more than ten percent (10%) of the shares
of Jefferson Guaranty Bancorp Common Stock; or
(g) by any party hereto if Closing shall not have occurred by
June 30, 1997.
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8.02 Effect of Termination. In the event of termination of this
Agreement by either DGC, DG Louisiana, DGNB Louisiana, Jefferson Guaranty
Bancorp or Jefferson Guaranty 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 Jefferson Guaranty
Bank, Jefferson Guaranty Bancorp, DGC, DG Louisiana, DGNB Louisiana, 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 Jefferson Guaranty Bancorp
terminates or seeks to terminate this Agreement without cause, or if the
shareholders of Jefferson Guaranty Bancorp fail to approve the transaction
because of action taken by an officer or director of Jefferson Guaranty Bancorp
upon advice of counsel pursuant to Section 5.02(b), Jefferson Guaranty Bancorp
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, DG Louisiana, or DGNB Louisiana, 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
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
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(b) If to Jefferson Guaranty Bank or Jefferson Guaranty Bancorp, to:
Jefferson Guaranty Bancorp, Inc.
3525 North Causeway Boulevard
Metairie, Louisiana 70002
Attention: A. Peyton Bush, III
Fax Number: (504) 838-4555
Copy to:
Coleman, Johnson & Artigues
321 St. Charles Avenue
Tenth Floor Suite
New Orleans, Louisiana 70130
Attn: Mr. Charles B. Johnson
Fax Number: (504) 525-9464
Correro Fishman Haygood Phelps
Weiss Walmsley & Casteix, L.L.P.
201 St. Charles Avenue
47th Floor
New Orleans, Louisiana 70170-4700
Attn: Anthony J. Correro, III
Fax Number: (504) 586-5250
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 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 Jefferson Guaranty Bancorp shareholders, DGC, DG
Louisiana, DGNB Louisiana, Jefferson Guaranty Bancorp and Jefferson Guaranty
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 1.05 hereof, after any
approval of the Holding Company Merger by the shareholders of Jefferson
Guaranty Bancorp, 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
Jefferson Guaranty Bancorp). 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
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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.
9.06 Survival. Except for the representations, warranties and
agreements of any party hereto to any other party hereto contained in Articles
1 and 2, Sections 3.05, 4.03, 4.07, 5.06(d) and (e), 5.11, 5.12, 5.13, and
9.03, which shall survive the Closing and Effective Date until performed or
until the applicable period of limitations with respect thereto shall have
expired, the representations, warranties and other agreements of any party
hereto to any other party hereto (as well as any representations and warranties
made in any other document related hereto, including without limitation any
certificate delivered in connection with this Agreement) shall expire with, and
be terminated and extinguished by, the effectiveness of the Merger and shall
not survive the Effective Date.
9.07 Defenses Preserved. Except as provided in Sections 9.06 and
9.07, the sole right and remedy arising from a misrepresentation or breach of a
warranty made by any party hereto to any other party hereto shall be the right
to refuse to consummate the Mergers as provided for in Sections 6.02 and 6.03;
provided, however, that no representation or warranty given by the parties
hereto or any member of its consolidated group shall be deemed to be terminated
or extinguished so as to deprive the parties hereto or their respective
directors and officers, and no representation or warranty given by the parties
hereto shall be deemed to be terminated or extinguished so as to deprive the
former directors and officers of the parties hereto, of any defense in law or
equity that they otherwise would have to any claim against them by any person,
including, without limitation, any shareholder or former shareholder of the
parties hereto. The survival of representations and warranties pursuant to
this Section shall be solely for the purpose of affording defenses as described
herein and shall not create, and shall not be construed to create, a cause or
right of action or other right (whether direct, indirect or third-party) in any
person. Nothing in Section 9.06 or Section 9.07 shall be deemed to be a waiver
of any claim for intentional misrepresentation or fraud.
9.08 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.
9.09 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.
9.10 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.
32
<PAGE> 129
IN WITNESS WHEREOF, a majority of the members of the Boards of
Directors of DGNB Louisiana and Jefferson Guaranty 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, DG Louisiana, and
Jefferson Guaranty Bancorp 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: DEPOSIT GUARANTY LOUISIANA CORP.
- ------------------------------- By
Secretary President
Attest: DEPOSIT GUARANTY NATIONAL BANK OF
LOUISIANA
- ------------------------------- By
Secretary President
(Seal of Bank)
<PAGE> 130
Attest: JEFFERSON GUARANTY BANCORP, INC.
- ------------------------------- By
Secretary President
Attest: JEFFERSON GUARANTY BANK
- ------------------------------- By
Secretary President
(Seal of Bank)
<PAGE> 131
EXHIBIT B
Section 262 of the Delaware General Corporation Law
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this
State who holds shares of Stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to Section 228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of his shares of Stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of Stock in a
Stock corporation and also a member of record of a nonstock corporation; the
words "Stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of Stock of a corporation, which Stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class
or series of Stock of a constituent corporation in a merger or consolidation to
be effected pursuant to Sections 25l (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which Stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights shall be
available for any shares of Stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of
Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class or
series of Stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
Stock anything except:
a. Shares of Stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of Stock of any other corporation, or depository receipts
in respect thereof, which shares of Stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this paragraph;
or
d. Any combination of the shares of Stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts described
in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the Stock of a subsidiary Delaware
corporation party to a merger effected under Section 253 of this title is not
owned by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its Stock as a result of an amendment to its certificate
of
<PAGE> 132
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include
in such notice a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of his
shares. Such demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not voted
in favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section
228 or 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation,
and shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all
such holders of any class or series of stock of a constituent corporation that
are entitled to appraisal rights. Such notice may, and, if given on or after
the effective date of the merger or consolidation, shall, also notify
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that, if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the Stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the
<PAGE> 133
terms offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who has complied
with the requirements of subsections (a) and (d) hereof, upon written request,
shall be entitled to receive from the corporation surviving the merger or
resulting from the consolidation a statement setting forth the aggregate number
of shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after his written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under subsection
(d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by l or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold Stock represented by certificates to
submit their certificates of Stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted his certificates of Stock to the Register
in Chancery, if such is required, may participate fully in all proceedings
until it is finally determined that he is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated Stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such Stock. The Court's decree may
be enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
<PAGE> 134
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such Stock for any purpose or to
receive payment of dividends or other distributions on the Stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of his
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
262, L. '94, eff. 7-1-94.)
<PAGE> 135
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:
Exhibit Number Description
-------------- -----------
2 Agreement and Plan of Merger dated as of
August 22, 1996, 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 Arthur Andersen, LLP, independent
accountants.
23(c) Consent of Watkins Ludlam & Stennis, P.A. is
contained in their opinion filed as Exhibit 5
to this Registration Statement.
24 Power of attorney included as part of
signature page.
99 Form of Proxy and Election Form.
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
<PAGE> 136
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 (1) 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> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Deposit
Guaranty certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this
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 15
day of October, 1996.
DEPOSIT GUARANTY CORP.
BY: /s/ E.B. ROBINSON, JR.
----------------------------------
- ------------------ E. B. Robinson, Jr.
Chairman of the Board and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, each person whose signature appears
below constitutes and appoints E. B. Robinson, Jr., Howard L. McMillan, Jr.,
and J. Clifford Harrison, and each of them (with full power to act alone), his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for him and on his behalf and in his name, place and stead,
in any and all capacities, to sign, execute and affix his name and signature to
and file any and all documents relating to the registration under the
Securities Act of 1933 of shares of Deposit Guaranty Common Stock for issuance
to the shareholders of Jefferson Guaranty Bancorp, Inc. in accordance with the
Merger Agreement, and do hereby grant to said attorneys, and each of them full
power and authority to do and perform each and every act and thing necessary to
be done in and about the premises in order to effectuate such registration as
fully to all intents and purposes as he might do personally, and do hereby
ratify and confirm all that said attorneys, or any of them, may lawfully do or
cause to be done by virtue hereof. The documents referred to include a
Registration Statement under the Securities Act of 1933 on Form S-4, and any
amendments (including post effective amendments) thereto, and all documents
deemed necessary or desirable by said attorneys-in-fact to be filed with
departments or agencies of the several states regulating the qualification or
registration of securities under Blue Sky laws of said states, together with
any and all documents and all exhibits relating to the registration statement,
amendments, or exhibits required to be filed with any administrative or
regulatory agency or authority.
Pursuant to the requirements of the Securities Act of 1933, this
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, JR Chairman of the Board October 15, 1996
- ------------------------------- and Director (Principal
E. B. Robinson, JR. Executive Officer)
/s/ HOWARD L. MCMILLAN, JR. President and Director October 15, 1996
- -------------------------------
Howard L. McMillan, JR.
/s/ ARLEN L. MCDONALD Executive Vice President October 15, 1996
- ------------------------------- (Principal Financial
Arlen L. McDonald Officer)
/s/ STEPHEN E. BARKER Controller (Principal October 15, 1996
- ------------------------------- Accounting Officer)
Stephen E. Barker
</TABLE>
<PAGE> 138
<TABLE>
<S> <C> <C>
/s/MICHEAL B. BEMIS
- ------------------------------- Director October 15, 1996
Michael B. Bemis
- ------------------------------- Director October __, 1996
Richard H. Bremer
/s/WARREN A. HOOD, JR.
- ------------------------------- Director October 15, 1996
Warren A. Hood, Jr.
/s/CHARLES L. IRBY
- ------------------------------- Director October 15, 1996
Charles L. Irby
/s/RICHARD D. MCRAE, JR.
- ------------------------------- Director October 15, 1996
Richard D. McRae, Jr.
/s/W.R. NEWMAN, III
- ------------------------------- Director October 15, 1996
W. R. Newman, III
/s/JOHN N. PALMER
- ------------------------------- Director October 15, 1996
John N. Palmer
/s/STEVEN C. WALKER
- ------------------------------- Director October 15, 1996
Steven C. Walker
/s/J. KELLEY WILLIAMS
- ------------------------------- Director October 15, 1996
J. Kelley Williams
</TABLE>
<PAGE> 139
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2 Agreement and Plan of Merger dated as of August 22, 1996,
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 Arthur Andersen, LLP, independent accountants.
23(c) Consent of Watkins Ludlam & Stennis, P.A. is contained in
their opinion filed as Exhibit 5 to this Registration
Statement.
24 Power of attorney included as part of signature page.
99 Form of Proxy and Election Form.
</TABLE>
<PAGE> 1
October 16, 1996
Board of Directors
Deposit Guaranty Corp.
210 East Capitol Street
Jackson, Mississippi 39201
Gentlemen:
We have acted as counsel to Deposit Guaranty Corp. in connection with
the preparation of its Registration Statement on Form S-4 for registration of
890,009 shares of Common Stock, no par value, under the Securities Act of 1933.
Such shares are to be issued pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of August 22, 1996, by and among Deposit Guaranty
Corp., Deposit Guaranty Louisiana Corp., Deposit Guaranty National Bank of
Louisiana, Jefferson Guaranty Bancorp, Inc. and Jefferson Guaranty Bank.
We have examined the Merger Agreement, the Articles of Incorporation
and the amendments thereto of Deposit Guaranty Corp., and such other documents
as we deemed relevant.
Based on the foregoing, it is our opinion that the 890,009 shares of
Common Stock of Deposit Guaranty Corp. to be registered under the Securities
Act of 1933, when issued pursuant to the Merger Agreement will be legally
issued, fully paid and non-assessable shares of Common Stock of Deposit
Guaranty Corp.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Opinion" in the Proxy Statement comprising Part I of the Registration
Statement.
Sincerely,
WATKINS LUDLAM & STENNIS, P.A.
<PAGE> 1
EXHIBIT 8
OPINION OF WLS, P.A.
RE: TAX MATTERS
FORM OF TAX OPINION TO BE GIVEN AT CLOSING
The tax opinion will contain the following individual opinions
(or opinions substantially similar thereto):
A. With respect to the Holding Company Merger:
1. Provided the proposed Merger of Jefferson Guaranty Bancorp with
and into Deposit Guaranty Louisiana qualifies as a statutory
merger under applicable Louisiana law, the acquisition by
Deposit Guaranty Louisiana of substantially all of the assets of
Jefferson Guaranty Bancorp in exchange for shares of Deposit
Guaranty Common Stock and the assumption of liabilities of
Jefferson Guaranty Bancorp will constitute a reorganization
within the meaning of Code section 368(a)(1)(A) and section
368(a)(2)(D).
For purposes of this opinion, "substantially all" means at least
90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets of
Jefferson Guaranty Bancorp held immediately prior to the Merger.
Deposit Guaranty, Deposit Guaranty Louisiana and Jefferson
Guaranty Bancorp will each be "a party to a reorganization"
within the meaning of section 368(b) of the Code.
2. No gain or loss will be recognized by Jefferson Guaranty Bancorp
upon the transfer of substantially all of its assets to Deposit
Guaranty Louisiana in exchange for Deposit Guaranty Common
Stock and cash (all of which will be distributed to Jefferson
Guaranty Bancorp's shareholders), and the assumption by Deposit
Guaranty Louisiana of the liabilities of Jefferson Guaranty
Bancorp (Code sections 361(a) and 357(a)).
3. No gain or loss will be recognized by either Deposit Guaranty
or Deposit Guaranty Louisiana on the receipt by Deposit Guaranty
Louisiana of substantially all of the assets of Jefferson
Guaranty Bancorp in exchange for the Deposit Guaranty
Consideration, and the assumption by Deposit Guaranty Louisiana
of the liabilities of Jefferson Guaranty Bancorp and the
liabilities to which the transferred assets are subject (Rev.
Rul. 57-278, 1957-1 C.B.124).
4. The basis of the assets of Jefferson Guaranty Bancorp in the
hands of Deposit Guaranty Louisiana will be, in each instance,
the same as the basis of those assets in the hands of Jefferson
Guaranty Bancorp immediately prior to the Merger (Code section
362(b)).
5. The holding period of Jefferson Guaranty Bancorp's assets in the
hands of Deposit Guaranty Louisiana will, in each instance,
include the period during which such assets were held by
Jefferson Guaranty Bancorp (Code section 1223(2)).
6. No gain or loss will be recognized by any shareholders of
Jefferson Guaranty Bancorp who receive solely Deposit Guaranty
Common Stock (including fractional share interests to which they
may be entitled) solely in exchange for their Jefferson Guaranty
Bancorp Common Stock (Code section 354(a)(1)). However, any
Jefferson Guaranty Bancorp shareholders who receive Deposit
Guaranty Common Stock and cash in exchange for their Jefferson
Guaranty Bancorp Common Stock or Jefferson Guaranty Bancorp
Preferred Stock will recognize gain, if any, but not in excess,
in each instance, of the sum of such cash received (Code section
356(a)(1)). Any gain recognized by a shareholder of Jefferson
Guaranty Bancorp will be characterized as a capital gain if the
Jefferson Guaranty Bancorp stock is a capital asset in the hands
of such shareholder and the receipt of the cash does not have
"the effect of the distribution of a dividend" within the
meaning of section 356(a)(2) of the Code as interpreted by the
United States Supreme Court in Commissioner v. Clark, 489 U.S.
726 (1989). Pursuant to Clark, it will be assumed that Deposit
Guaranty issued all stock to each of the Jefferson Guaranty
Bancorp shareholders and then Deposit Guaranty
<PAGE> 2
redeemed a portion of such stock for the amount of cash that was
actually issued. If that hypothetical redemption satisfies any
of the tests of section 302(b) of the Code, the hypothetical
redemption will be treated as an exchange. Otherwise, the
receipt of the cash will be treated as a dividend under section
356(a)(2) of the Code. In the present case, it is expected that
the Jefferson Guaranty Bancorp shareholders will be able to
satisfy one or more of the tests of section 302(b) of the Code,
thus resulting in capital gains treatment. However, the
application of such provisions is dependent upon each
shareholders' facts and circumstances and is affected by the
attribution rules of section 318 of the Code. Consequently,
shareholders should seek independent tax advice as to the tax
effect of the Holding Company Merger, including the receipt of
the cash, to them. No loss will be recognized pursuant to Code
section 356(c).
7. The basis of the Deposit Guaranty Common Stock to be received by
the Jefferson Guaranty Bancorp shareholders (including any
fractional share interests to which they may be entitled) will
be, in each instance, the same as the basis of the Jefferson
Guaranty Bancorp Common Stock of Jefferson Guaranty Bancorp
Preferred Stock surrendered in exchange therefor, decreased by
the amount of cash received, and increased by (i) the amount
that is treated as a dividend, and (ii) any gain recognized on
the exchange (not including any portion of the gain that is
treated as a dividend) (Code section 358(a)(1)).
8. The holding period of the Deposit Guaranty Common Stock to be
received by the Jefferson Guaranty Bancorp shareholders
(including any fractional share interests to which they may be
entitled) will include, in each case, the period during which
the Jefferson Guaranty Bancorp Common Stock or Jefferson
Guaranty Bancorp Preferred Stock surrendered in exchange
therefor was held, provided that the Jefferson Guaranty Bancorp
Common Stock or Jefferson Guaranty Bancorp Preferred Stock is
held as a capital asset in the hands of the Jefferson Guaranty
Bancorp shareholder on the date of the Merger (Code section
1223(1)).
9. The payment of cash to Jefferson Guaranty Bancorp shareholders
in lieu of fractional shares of Deposit Guaranty Common Stock
will be treated for federal income tax purposes as if the
fractional shares were distributed as part of the reorganization
exchange and then redeemed by Deposit Guaranty. The cash
payments will be treated as having been received as
distributions in redemption of such stock, subject to the
provisions and limitations of section 302 of the Code (Rev. Rul.
66-365, 1966-2 C.B. 116; Rev. Proc. 77-41, 1977-2 C.B. 574).
B. With respect to the Bank Merger:
1. Provided that the Merger of Jefferson Guaranty Bank into DGNB
Louisiana qualifies as a statutory merger under applicable
state or federal law, the proposed Bank Merger will be a
reorganization within the meaning of section 368(a)(1)(A) of
the Code. Jefferson Guaranty Bank and DGNB Louisiana will each
be "a party to a reorganization" within the meaning of Code
section 368(b)(2).
2. No gain or loss will be recognized by Jefferson Guaranty Bank
upon the transfer of all of its assets to DGNB Louisiana in
constructive exchange for DGNB Louisiana Common Stock issued to
Deposit Guaranty Louisiana and the assumption by DGNB Louisiana
of the liabilities of Jefferson Guaranty Bank (Code sections
361(a) and 357(a)).
3. No gain or loss will be recognized by DGNB Louisiana upon the
receipt by DGNB Louisiana of all of the assets of Jefferson
Guaranty Bank in constructive exchange for DGNB Louisiana
Common Stock issued to Deposit Guaranty Louisiana and the
assumption by DGNB Louisiana of the liabilities of Jefferson
Guaranty Bank and the liabilities to which the transferred
assets are subject (Rev. Rul. 57-278, 1957-1 C.B. 124).
<PAGE> 3
4. No gain or loss will be recognized by Deposit Guaranty or Deposit
Guaranty Louisiana as a result of the Bank Merger and the surrender of
the Jefferson Guaranty Bank Common Stock in constructive exchange for
the DGNB Louisiana Common Stock.
5. The basis of the assets of Jefferson Guaranty Bank in the hands of DGNB
Louisiana will, in each case, be the same as the basis of those assets
in the hands of Jefferson Guaranty Bank immediately prior to the Bank
Merger (Code section 362(b)).
6. The holding period of the assets of Jefferson Guaranty Bank in the
hands of DGNB Louisiana will, in each instance, include the period
for which such assets were held by Jefferson Guaranty Bank (Code
section 1223(2)).
<PAGE> 1
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Deposit Guaranty Corp.:
We consent to the use of our audit report dated February 6, 1996 on
the consolidated financial statements of Deposit Guaranty Corp. and
subsidiaries as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995 incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
Our report refers to a change in the method of accounting for debt securities.
KPMG PEAT MARWICK LLP
Jackson, Mississippi
October 15, 1996
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated January 24, 1996 with respect to the financial statements of
Jefferson Guaranty Bancorp, Inc. as of December 31, 1995, 1994 and 1993 and for
the years then ended, and to all references to our Firm included in this
registration statement and prospectus.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
October 15, 1996
<PAGE> 1
COMMON STOCK
JEFFERSON GUARANTY BANCORP, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 3, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) ___________________________________,
or either of them, the proxy of the undersigned, with full power of
substitution, to represent the undersigned at the Special Meeting of
Shareholders of Jefferson Guaranty Bancorp, Inc. ("the Company") to be held on
December 3, 1996, and any adjournment(s) thereof, and to vote all shares of
Common Stock of the Company the undersigned is entitled to vote at the meeting:
1. Upon the proposal to approve an Agreement and Plan of Merger
(the "Agreement"), dated as of August 22, 1996, among Deposit Guaranty
Corp. ("DGC"), Deposit Guaranty Louisiana Corp. ("DGLA") and Deposit
Guaranty National Bank of Louisiana ("DGNB"), on the one hand, and the
Company and Jefferson Guaranty Bank ("JGB") on the other hand,
pursuant to which (a) the Company will merge into DGLA (the "Merger")
and JGB will merge into DGNB (the "Bank Merger"), and (b) each
outstanding share of Company Common Stock will be converted into
either .637363 shares of DGC common stock or the right to receive
$29.00 in cash, and (ii) each share of JGB Preferred Stock will be
converted into either 63.7363 shares of DGC common stock or the right
to receive $2,900.00 in cash, in each case at the election of the
holder of the Company shares in accordance with the terms of the
Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Upon approval of the purchase by the Company of warrants to
purchase 56,284 shares of Company Common Stock held by A. Peyton Bush
for the consideration described in the accompanying Proxy
Statement/Prospectus and to pay a $210,000 bonus to A. Peyton Bush
immediately prior to consummation of the Merger and the Bank Merger.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may
properly come before the Meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSALS DESIGNATED HEREIN.
Dated:
---------------
- ------------------------------------
- ------------------------------------
Signature of Shareholder(s)
PLEASE SIGN YOUR NAME HERE EXACTLY AS IT APPEARS ON YOUR STOCK
CERTIFICATES. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE.
<PAGE> 2
PREFERRED STOCK
JEFFERSON GUARANTY BANCORP, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 3, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) ______________________________, or
either of them, the proxy of the undersigned, with full power of substitution,
to represent the undersigned at the Special Meeting of Shareholders of Jefferson
Guaranty Bancorp, Inc. ("the Company") to be held on December 3, 1996, and any
adjournment(s) thereof, and to vote all shares of Preferred Stock of the Company
the undersigned is entitled to vote at the meeting:
1. Upon approval of the purchase by the Company of warrants to
purchase 56,284 shares of Company Common Stock held by A. Peyton Bush
for the consideration described in the accompanying Proxy
Statement/Prospectus and to pay a $210,000 bonus to A. Peyton Bush
immediately prior to consummation of the Merger and the Bank Merger.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, upon such other business as may
properly come before the Meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSALS DESIGNATED HEREIN.
Dated:
---------------
------------------------------------
------------------------------------
Signature of Shareholder(s)
PLEASE SIGN YOUR NAME HERE EXACTLY AS IT APPEARS ON YOUR STOCK CERTIFICATES.
JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL TITLE.
<PAGE> 3
LETTER OF TRANSMITTAL AND ELECTION FORM
FOR EXCHANGE OF STOCK OF JEFFERSON GUARANTY BANCORP, INC.
THE ACCOMPANYING INSTRUCTIONS SHOULD BE READ CAREFULLY BEFORE THIS FORM IS
COMPLETED.
Print Name and Address
of Registered Owner (s):
===========================================
Description of JGB
Shares Transmitted*
-------------------------------------------
- ---------------------------- Common
Certificate or Number of
- ---------------- Number Preferred JGB Shares
-------------------------------------------
- ---------------------------- -------------------------------------------
- ---------------- -------------------------------------------
- ---------------------------- -------------------------------------------
- ---------------- -------------------------------------------
- ---------------------------- ===========================================
*Please attach additional signed sheets
- ---------------- if necessary.
- ----------------------------
- ----------------
To: Deposit Guaranty Corp.
c/o Jefferson Guaranty Bank
3525 North Causeway Blvd.
Metairie, LA 70002
Attn: Harold N. Garic
Pursuant to the Agreement and Plan of Merger (the "Plan") between
Jefferson Guaranty Bancorp, Inc. ("JGB") and Deposit Guaranty Corp. ("DGC"), as
the registered holder or assignee of the above shares represented by the stock
certificate(s) referred to above, I hereby transmit them for exchange for
certificate(s) of DGC common stock, cash or a combination of the two pursuant
to the Election included herein. I hereby represent and warrant that I have
full power and authority to assign the shares and make the Election and will,
upon request, execute and deliver any additional documents deemed by DGC to be
necessary or desirable to complete the exchange. All authority herein
conferred will survive my death or incapacity, and any of my obligations
hereunder shall be binding on my heirs, personal representatives, successors,
and assigns.
ELECTION
IMPORTANT: TO BE EFFECTIVE, YOUR ELECTION MUST BE RECEIVED BY JGB NO LATER
THAN 8:00 A.M., NEW ORLEANS TIME, ON DECEMBER 3, 1996
Subject to the terms of the Plan, I hereby elect, as indicated below,
to have my shares of stock of JGB ("JGB Stock") represented by the
certificate(s) identified herein converted at the effective time of the Merger
referred to in the Plan into (CHECK ONE BOX ONLY):
[ ] (1) ALL CASH ELECTION. Cash in the amount of $29 per
share of JGB Common Stock and $2,900 per share of JGB Preferred Stock
(the "All Cash Election"); or
[ ] (2) ALL STOCK ELECTION. .637363 shares of DGC Common
Stock per share of JGB Common Stock and 63.7363 shares of DGC Common
Stock per share of JGB Preferred Stock (the "All Stock Election"); or
[ ] (3) COMBINATION ELECTION. A combination of DGC Common
Stock and cash as described below (the "Combination Election") (Use
the lines below to indicate which certificate(s) listed above you wish
to be converted to cash and which to DGC Common Stock. If you prefer
all certificates to be converted in the same proportions, you may
simply state the percentage of your total consideration you wish to be
payable in cash and the percentage you wish to be payable in DGC
Common Stock).
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
<PAGE> 4
NOTE: THE TAX CONSEQUENCES OF AN ELECTION CAN VARY DEPENDING ON THE
ELECTION CHOSEN. FOR INFORMATION ON THE FEDERAL INCOME TAX
CONSEQUENCES OF EACH TYPE OF ELECTION, SEE "THE MERGERS -- CERTAIN
FEDERAL INCOME TAX CONSEQUENCES" IN THE PROXY STATEMENT/PROSPECTUS.
STOCKHOLDERS SHOULD CONSULT THEIR OWN ADVISORS AS TO THE TAX
CONSEQUENCES OF THE MERGER TO SUCH HOLDERS, INCLUDING STATE AND
LOCAL TAX EFFECTS.
[ ] Check here if this is a revocation of an earlier Election and a change
of Election.
[ ] Check here if this is a joint Election relating to JGB Stock held in
more than one name. See Election Instruction 1c.
TRANSMITTAL
Unless otherwise indicated herein under Special Exchange Instructions
below, please issue any shares of DGC common stock and cash to which I am
entitled into my name and send the certificate(s) for any shares to me at the
address shown on JGB's stock records.
<TABLE>
<S> <C>
Special Exchange Instructions Special Delivery Instructions
To be completed only if certificate(s) for DGC To be completed only if certificate(s) for DGC
common stock, and check, if any, are to be common stock, and check, if any, issued in the
issued in the name of and sent to someone other name of the undersigned are to be sent to
than the undersigned. someone other than the undersigned or to an
address other than that shown below.
Issue DGC stock certificate(s) and check, if any,
in the name of:
Name Mail DGC stock certificate(s), and check, if
------------------------------------------ any, to:
(Please print)
Address Name
---------------------------------------- -----------------------------------------
(Please print)
----------------------------------------------- Address
---------------------------------------
-----------------------------------------------
Zip Code ----------------------------------------------
----------------------------------------------- ----------------------------------------------
Tax Identification No. or Social Security No. Zip Code
</TABLE>
PLEASE SIGN BELOW (includes Substitute Form W-9)
Under penalties of perjury, I certify (i) that the number shown below is my
correct Taxpayer Identification Number (TIN) and (ii) that I am not subject to
backup withholding, either because I have not been notified that I am subject
to backup withholding, or because the IRS has notified me that I am no longer
subject to backup withholding. (NOTE: You must strike out clause (ii) if you
have been notified that you are subject to backup withholding and you have not
received a notice from the IRS advising you that backup withholding has been
terminated.)
Tax Identification or
Social Security No.
-------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
(Signature (s) of Shareholder (s))
Dated:
--------------------------------------------
Name (s)
------------------------------------------
- ----------------------------------------------------
(Please Print)
<PAGE> 5
Capacity (if applicable)
---------------------------------
Address
--------------------------------------------------
- ---------------------------------------------------------
Zip Code
Signature (s) Guaranteed By:
----------------------------------------
(If required - See Transmittal Instruction 2)
- ---------------------------------
(Must be signed by registered holder (s) as name (s) appear on stock
certificate (s) or by person (s) authorized to become registered holders by
certificates and documents transmitted. If signing is by trustee, executor,
administrator, guardian, attorney-in-fact, officer of corporation or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Transmittal Instruction 2.)
------------------------------
ELECTION INSTRUCTIONS
1. Special Conditions
a. Time in Which to Make An Election. To be effective, an
Election on this Form (or a facsimile hereof), properly completed, must be
received by JGB no later than 8:00 A.M., New Orleans time, on November 20, 1996
("Election Deadline"). A holder of JGB Stock whose Election is not so
received will be considered a Non-Electing Stockholder. See Election
Instruction 3 below.
b. Change or Revocation of Election. A person who has made an
Election may at any time prior to the Election Deadline change his Election by
submitting a revised Election on this Form (or a facsimile thereof), properly
completed and signed, that is received prior to the Election Deadline.
c. Joint Elections. For purposes of Elections, holders of JGB
Stock who join in making a joint Election will be considered to be a single
holder of JGB Stock. Joint Elections may be submitted only by (i) persons who
hold certificates registered in different forms of the same name (e.g., "John
Smith" on one certificate and "J. Smith" on another), (ii) persons holding
certificates in their names and certificates as custodian for minor children or
trustee of a trust of which they or their minor children are the sole
beneficiaries, (iii) parents with respect to certificates registered in their
names and certificates registered in the names of their minor children, (iv)
persons holding certificates in their names and certificates jointly with their
spouses, (v) persons who hold certificates in their names and in IRA accounts,
or (vi) persons holding certificates in their own names and through a nominee
such as a corporation of which they own all outstanding shares. If this
Election is submitted as a joint Election, each record holder of JGB Stock
covered hereby must properly sign this Form in accordance with Transmittal
Instruction 2, attaching additional sheets if necessary. The signatures of
such holders will be deemed to constitute a certificate that the persons
submitting a joint Election are eligible to do so.
2. All Cash, All Stock, and Combination Elections
a. All Cash Election. Each holder of JGB Stock may elect to have
all of such holder's shares of JGB Stock converted, upon consummation of the
Merger, solely into the right to receive in cash $29 per share of JGB Common
Stock and $2,900 per share of JGB Preferred Stock by checking the All Cash
Election box, subject to possible adjustment as described in Election
Instruction 4.
b. All Stock Election. Each holder of JGB Stock may elect to have
all of such holder's shares of JGB Stock converted, upon consummation of the
Merger, solely into shares of DGC Common Stock, at the exchange ratio of
.637363 shares of DGC Common Stock per share of JGB Common Stock and 63.7363
shares of DGC Common Stock per share of JGB Preferred Stock, by checking the
All Stock Election box, subject to possible adjustment as described in Election
Instruction 4.
c. Combination Election. Each holder of JGB Stock may elect to
have a portion of such holder's shares of JGB Stock converted, upon
consummation of the Merger, into the right to receive cash ($29 per share in
the case of JGB Common Stock and $2,900 per share in the case of JGB Preferred
Stock), and a portion converted into shares of DGC Common Stock (.637363 shares
of DGC Common Stock per share of JGB Common Stock and 63.7363 shares per share
of JGB Preferred Stock) by checking the Combination Election box and providing
instructions as to the combination of DGC Common Stock and cash elected,
subject to possible adjustment as described in Election Instruction 4.
3. Shares As to Which No Election is Made
A holder of JGB Stock who does not make a valid Election or who
properly revokes his Election without making a new Election ("Non-Electing
Stockholder") or who fails to make a valid Election for all of his JGB Stock
will be deemed to have made the Cash Election with respect to the unelected
shares and will have such unelected shares converted into cash, subject to
possible adjustment as described in Election Instruction 4.
<PAGE> 6
4. Possible Adjustments
a. If a JGB stockholder makes a Combination Election with respect to
more than the number of shares of JGB Stock he owns, the excess will be
eliminated by first reducing the number of shares of DGC Common Stock elected
and thereafter, if necessary, reducing the amount of cash elected. If the
shareholder makes any Election with respect to fewer shares of JGB Stock than
he owns, he or she will be deemed to have elected cash with respect to the
shares as to which he or she did not make an election.
b. The Plan generally provides that not more than 80% and not less
than 55% of the total JGB stock, as defined, may be exchanged for DGC Common
Stock, and not more than 45% or less than 20% may be exchanged for cash. If as
a result of Elections the number of shares of DGC Common Stock elected or the
total amount of cash elected would exceed these limitations, then cash or DGC
Common Stock, as the case may be, will be allocated pro rata among all electing
shareholders so that the limitations will not be exceeded.
c. No fractional shares of DGC Common Stock will be issued.
Rather, cash will be paid in lieu of any fractional share interest to which any
JGB stockholder would be entitled.
TRANSMITTAL INSTRUCTIONS
1. DELIVERY OF FORM AND CERTIFICATE (S)
Stock certificate (s) for all shares of JGB Stock together with this
Form, properly completed and duly executed, and any other documents required by
this Form, should be mailed or delivered to the address set forth herein. The
method of delivery is at the option and risk of the stockholder. If delivery
is by mail, it is recommended that registered mail with return receipt
requested, properly insured, be used. If the space provided on Page 1 of this
Form is inadequate, the certificate number (s) and number of JGB share (s)
should be listed on a separate signed schedule and attached hereto.
2. SIGNATURE (S) ON FORM, STOCK POWERS AND ENDORSEMENTS, GUARANTEE OF
SIGNATURES
If this Form is signed by the registered holder of the certificate(s)
transmitted herewith, the signature must correspond with the name as written on
the face of the certificate(s) without alteration, enlargement, or any change
whatsoever. If the certificate(s) are owned of record by two or more joint
owners, all such owners must sign.
If any shares of JGB Stock transmitted herewith are registered in
different names on several certificate(s), it will be necessary to complete,
sign and submit as many separate Forms as there are different registrations of
certificate(s).
When this Form is signed by the registered holder or holders of the
certificate(s) listed and transmitted herewith, no endorsements of
certificate(s) or separate stock powers are required. If, however, the
certificate(s) for any shares of DGC Common Stock or checks for any cash
payments are to be issued in the name of a person other than the registered
holder, then endorsement of certificate(s) transmitted herewith or separate
stock powers are required.
If this Form is signed by a person other than the registered holder or
holders of the certificate(s) listed, the certificate(s) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holder or holders appear on the certificate(s).
If this Form or any certificate(s) or such powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
DGC of their authority so to act must be submitted.
Signatures on certificate(s) or on separate stock powers required by
this Transmittal Instruction 2 must be guaranteed by a member of a registered
national securities exchange or the National Association of Security Dealers,
Inc. or by a commercial bank or trust company in the United States ("Guarantor
Institution"). Signatures must be guaranteed by a Guarantor Institution unless
the shares of JGB Stock are transmitted by a registered holder of such shares
who has not completed either of the boxes entitled Special Exchange
Instructions or Special Delivery Instructions on this Form.
3. TRANSFER TAXES
If any transfer or other taxes may become payable by reason of the
issuance of any certificates representing shares of DGC Common Stock in any
name other than that of the registered holder of the JGB certificate, such
transferee or assignee must pay such tax to DGC or must establish to DGC's
reasonable satisfaction that such tax has been paid or is not payable.
4. CORRECTION OF OR CHANGE IN NAME
For a correction of name or for a change in name which does not
involve a change of ownership, please complete the Special Exchange
Instructions box on page 2 of this Form and proceed as follows: for a change in
name by marriage, etc., the JGB certificate(s) should be endorsed, e.g., "Mary
Brown, now by marriage Mary Smith," with the endorsement signature guaranteed
as described in Transmittal Instruction 2. For a correction in name, the JGB
certificate(s) should be endorsed, e.g., "James E. Brown, incorrectly inscribed
as J. E. Brown, " with the endorsement signature guaranteed as described in
Transmittal Instruction 2.
<PAGE> 7
5. DESTROYED, LOST, OR STOLEN CERTIFICATE
If certificate(s) for JGB Stock have been destroyed, lost or stolen,
in lieu of delivering or surrendering such certificates(s), registered holders
of such certificate(s) may furnish evidence satisfactory to DGC, in its
discretion, of the ownership of and the destruction, loss, or theft of such
certificates; furnish to DGC indemnity satisfactory to it, in its discretion;
and comply with such other reasonable regulations as DGC may prescribe.
6. BACKUP WITHHOLDING
Each stockholder is required to provide a correct Taxpayer
Identification Number on Substitute Form W-9 and to indicate that the
stockholder is not subject to withholding, if applicable. Under federal income
tax laws, payers must generally withhold 31% of taxable interest, dividend, and
certain other payments if you fail to furnish payers with the correct Taxpayer
Identification Number (referred to as backup withholding). To avoid backup
withholding, be sure to provide the correct Taxpayer Identification Number of
the record owner of the account. If the account belongs to an individual, the
social security number is the taxpayer identification number.
7. ADDITIONAL COPIES; QUESTIONS
Additional copies of this Form may be made by photocopy or obtained
from JGB at the address set forth on the first page hereof or by telephone to
Harold N. Garic at (504) 838-4558. Any questions concerning the exchange
procedures or the completion of this Form may be directed to Mr. Garic at this
telephone number.
