<PAGE> 1
Filed with the SEC on January , 1997 Registration No. 333-
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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)
MISSISSIPPI 6711 64-072169
(State or other jurisdiction (Primary Standard Industrial (IRS Employer Identi-
of incorporation or Classification Code Number) fication Number)
organization)
ARLEN L. MCDONALD
210 EAST CAPITOL STREET 210 EAST CAPITOL STREET
POST OFFICE BOX 730 POST OFFICE BOX 730
JACKSON, MISSISSIPPI 39205 JACKSON, MISSISSIPPI 39205
TELEPHONE NUMBER: (601) 354-8497 TELEPHONE NUMBER: (601) 354-8497
(Address, including zip code, (Name, address, including zip
and telephone number, including code, and telephone number,
area code of registrant's including area code of agent
principal executive offices) for service)
Copies to:
L. Keith Parsons, Esq. Lawrence B. Mandala, Esq.
Watkins Ludlam & Stennis, P.A. McGlinchey Stafford Lang
633 North State Street A Professional Limited Liability
Post Office Box 427 Company
Jackson, Mississippi 39205-0427 2777 Stemmons Freeway, Suite 925
Telephone Number: (601) 949-4701 Dallas, Texas 75207
Telephone Number: (214) 860-9731
Approximate date of commencement of proposed sale of securities to the public:
The Effective Date of the merger of First Capital 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
<TABLE>
<CAPTION>
==================================================================================================================================
Proposed Maximum Proposed Maximum Aggregate
Title of Each Class of Amount to be Offering Price Offering Price(2) Amount of
Securities to be Registered Registered(1) Per Unit Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, no par value 1,702,126 NA $10,766,972 $3,712.75
==================================================================================================================================
</TABLE>
(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 First Capital Bancorp, Inc. common stock as of December
31, 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
<TABLE>
<CAPTION>
Caption or Location
in Proxy
Items in Form S-4 Statement/Prospectus
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<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus....................... Cover Page of
Registration Statement;
Cross Reference Sheet;
Cover Page of the Proxy
Statement/Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus........ Available Information;
Incorporation of
Certain Documents by
Reference
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information...................... Summary
4. Terms of the Transaction......... Summary; The 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
10. Information with Respect to
S-3 Registrants.................. Available Information;
Incorporation of
Certain Documents by
Reference
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
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 First Capital Bancorp; First
Capital Bancorp Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Index to First Capital Bancorp
Financial Statements
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; Dissenters' Rights;
Security Ownership of Principal Shareholders and
Management; Experts
19. Information if Proxies, Consents
or Authorizations Are Not to be
Solicited or in an Exchange
Offer............................ Not Applicable
</TABLE>
<PAGE> 4
FIRST CAPITAL BANCORP, INC.
2400 FORSYTHE AVENUE
POST OFFICE BOX 8500
MONROE, LOUISIANA 71201-2939
February __, 1997
To Our Shareholders:
You are cordially invited to attend a Special Meeting (the "Meeting")
of Shareholders of First Capital Bancorp, Inc. ("First Capital Bancorp") to be
held at 1:30 p.m., local time, on March 18, 1997 at the main office of Capital
Bank, 100 Oak Street, Delhi, Louisiana.
At the Meeting, you will be asked to consider and vote upon a proposal
to approve an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of December 26, 1996, by and among Deposit Guaranty Corp. ("Deposit Guaranty"),
a Mississippi corporation, Deposit Guaranty Louisiana Corp. ("DG 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 DG Louisiana, on the one hand, and First
Capital Bancorp and its wholly- owned subsidiary, Capital Bank ("Capital
Bank"), on the other hand, pursuant to which (a) First Capital Bancorp will
merge into DG Louisiana (the "Holding Company Merger") and Capital Bank will
merge into DGNB Louisiana (the "Bank Merger" and together with the Holding
Company Merger, the "Mergers"), and (b) each outstanding share of First Capital
Bancorp common stock will be converted into a number of shares of Deposit
Guaranty common stock as determined pursuant to the Merger Agreement. Details
of the proposal are set forth in the accompanying Proxy Statement/Prospectus,
which you should read carefully.
AFTER CAREFUL CONSIDERATION, THE MERGER AGREEMENT HAS BEEN UNANIMOUSLY
APPROVED BY YOUR BOARD OF DIRECTORS. THE BOARD BELIEVES THE MERGERS ARE IN THE
BEST INTERESTS OF FIRST CAPITAL 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. FURTHERMORE, FIRST CAPITAL BANCORP'S FINANCIAL ADVISOR,
MERCER CAPITAL MANAGEMENT, INC., HAS ISSUED ITS OPINION TO THE EFFECT THAT, AS
OF THE DATE OF SUCH OPINION AND BASED UPON THE CONSIDERATIONS DESCRIBED
THEREIN, THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF FIRST CAPITAL
BANCORP COMMON STOCK PURSUANT TO THE HOLDING COMPANY MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW, TO SUCH SHAREHOLDERS.
The Mergers present an exceptional opportunity for holders of First
Capital Bancorp common stock to join on favorable terms in a combined
enterprise with greater financial resources and a more geographically
diversified business. As a result of the proposed Mergers, you, as a
shareholder of Deposit Guaranty, will own common stock in a bank holding
company whose shares are actively traded on the New York Stock Exchange.
We urge you to read the enclosed materials carefully so that you can
evaluate the Mergers for yourself.
All shareholders are invited to attend the Meeting in person.
However, in order to ensure that your shares will be represented at the
Meeting, please date, sign and promptly return the enclosed proxy card in the
enclosed postage-paid envelope, whether or not you plan to attend the Meeting.
If you attend the Meeting in person, you may, if you wish, vote personally on
all matters brought before the Meeting.
Very truly yours,
F. Ronnie Myrick
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY
<PAGE> 5
FIRST CAPITAL BANCORP, INC.
2400 FORSYTHE AVENUE
POST OFFICE BOX 8500
MONROE, LOUISIANA 71201-2939
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of First Capital Bancorp, Inc.:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of First Capital Bancorp, Inc. ("First Capital Bancorp") will be
held at the main office of Capital Bank, 100 Oak Street, Delhi, Louisiana on
March 18, 1997 at 1:30 p.m., local time, for the purpose of considering and
voting upon the following matters:
1. To consider and vote upon a proposal to approve an Agreement
and Plan of Merger (the "Merger Agreement"), dated as of
December 26, 1996, by and among Deposit Guaranty Corp.
("Deposit Guaranty"), a Mississippi corporation, Deposit
Guaranty Louisiana Corp. ("DG 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
DG Louisiana, on the one hand, and First Capital Bancorp, and
its wholly-owned subsidiary, Capital Bank ("Capital Bank"), a
Louisiana state bank, on the other hand, pursuant to which
(a) First Capital Bancorp will merge into DG Louisiana (the
"Holding Company Merger") and Capital Bank will merge into
DGNB Louisiana (the "Bank Merger"), and (b) each outstanding
share of First Capital Bancorp common stock will be converted
into shares of Deposit Guaranty common stock in accordance
with the terms of the Merger Agreement; and
2. To transact such other business as may lawfully come before
the meeting or any adjournment or postponement thereof.
DISSENTING SHAREHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF
THE BUSINESS CORPORATION LAW OF LOUISIANA WILL BE ENTITLED TO RECEIVE PAYMENT
OF THE FAIR CASH VALUE OF THEIR SHARES IF THE HOLDING COMPANY MERGER IS
EFFECTED UPON APPROVAL BY LESS THAN EIGHTY PERCENT (80%) OF THE TOTAL VOTING
POWER OF FIRST CAPITAL BANCORP.
Two-thirds of the voting power present at the Meeting must approve the
Merger Agreement. Only shareholders of record of First Capital Bancorp common
stock as of the close of business on January 28, 1997, 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 First
Capital Bancorp at any time prior to the voting thereof or by delivery of a
later-dated proxy. 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
George W. Cummings, III
Chief Operating Officer and Secretary
February __, 1997
Monroe, Louisiana
<PAGE> 6
PROSPECTUS PROXY STATEMENT
DEPOSIT GUARANTY CORP. FIRST CAPITAL BANCORP, INC.
___________________ ______________
1,702,126 SHARES OF SPECIAL MEETING OF
COMMON STOCK, NO PAR VALUE SHAREHOLDERS TO BE HELD
MARCH 18, 1997
This Proxy Statement/Prospectus is being furnished to holders of the
common stock of First Capital Bancorp, Inc. ("First Capital Bancorp") in
connection with the solicitation of proxies by the Board of Directors of First
Capital Bancorp for use at its Special Meeting (the "Meeting") of Shareholders
to be held on March 18, 1997. This Proxy Statement/Prospectus and accompanying
proxy cards were first mailed to shareholders of First Capital Bancorp on or
about February _____, 1997.
At the Meeting, the holders of First Capital Bancorp common stock, no
par value ("First Capital Bancorp Common Stock"), will be asked to approve the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 26,
1996, by and among Deposit Guaranty Corp. ("Deposit Guaranty"), a Mississippi
corporation, Deposit Guaranty Louisiana Corp. ("DG Louisiana"), a Louisiana
corporation and a wholly-owned subsidiary of Deposit Guaranty and Deposit
Guaranty National Bank of Louisiana ("DGNB Louisiana"), a wholly-owned
subsidiary of DG Louisiana, on the one hand, and First Capital Bancorp and its
wholly-owned subsidiary, Capital Bank ("Capital Bank"), a Louisiana state bank,
on the other hand, pursuant to which First Capital Bancorp will merge into DG
Louisiana (the "Holding Company Merger") and Capital Bank will merge into DGNB
Louisiana (the "Bank Merger", and together with the Holding Company Merger, the
"Mergers"). Upon consummation of the Mergers, each outstanding share of First
Capital Bancorp Common Stock, other than shares held by First Capital Bancorp's
shareholders who perfect dissenters' rights, will be converted into shares of
Deposit Guaranty common stock, no par value per share ("Deposit Guaranty Common
Stock"), and cash in lieu of any fractional shares, all in accordance with the
terms of the Merger Agreement. For a more complete description of the Merger
Agreement and the terms of the Mergers, see "The Mergers." A conformed copy of
the Merger Agreement is attached to this Proxy Statement/Prospectus as Exhibit
A. For a more complete description of dissenters' rights, see "Dissenters'
Rights."
Deposit Guaranty has filed a Registration Statement on Form S-4 with
the Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
1,702,126 shares of Deposit Guaranty Common Stock to be issued in connection
with the Mergers. This document constitutes a Proxy Statement of First Capital
Bancorp in connection with the Meeting and a Prospectus of Deposit Guaranty
with respect to the shares of Deposit Guaranty Common Stock to be issued upon
consummation of the Mergers. Each of Deposit Guaranty and First Capital
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 concerning the Mergers not contained in this Proxy
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this Proxy
Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction, to
or from any person to whom it is unlawful to make such offer or solicitation of
an offer or proxy solicitation in such jurisdiction. Neither the delivery of
this Proxy Statement/Prospectus nor any distribution of the securities made
under this Proxy Statement/Prospectus shall, under any circumstances, create
any implication that there has been no change in the information set forth
herein since the date of this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus does not cover any resales of Deposit
Guaranty Common Stock to be received by First Capital 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 February ___, 1997.
<PAGE> 7
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 NW, Washington, D.C. 20549 and at the Commission's
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 and they are also available to the public at the web site maintained
by the Commission at "http://www.sec.gov." Copies of such material can also be
obtained from the Commission's Public Reference Section, Judiciary Plaza, 450
Fifth Street NW, Washington, D.C. 20549, at prescribed rates. In addition,
material filed by Deposit Guaranty can be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which
the Deposit Guaranty Common Stock is listed (symbol: DEP).
Deposit Guaranty has filed with the Commission a Registration
Statement on Form S-4 (the "Registration Statement") under the Securities Act
with respect to the common stock offered by this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus does not contain all the information set forth
in the Registration Statement, certain portions of which have been omitted
pursuant to the Rules and Regulations of the Commission, and to which portions
reference is hereby made for further information with respect to Deposit
Guaranty and the securities offered hereby.
AS INDICATED BELOW, THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY
REFERENCE CERTAIN INFORMATION WITH RESPECT TO DEPOSIT GUARANTY, WHICH IS NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH INFORMATION OR
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE WITHOUT CHARGE, UPON THE
WRITTEN OR ORAL REQUEST OF ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED. IN ORDER TO ENSURE TIMELY
DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 11, 1997, 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> 8
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, June 30, 1996 and September 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 First Capital 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> 9
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of the Meeting; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Recommendation of the Board of Directors; Reasons for the Mergers . . . . . . . . . . . . . . . . . . . . . . 3
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Other Conditions to Consummation of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange of First Capital Bancorp Certificates; No Fractional Shares . . . . . . . . . . . . . . . . . . . . 4
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Recent Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
First Capital Bancorp, Inc. and Subsidiary - Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 7
Deposit Guaranty Corp. and Subsidiaries - Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 8
Comparative Per Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Record Date; Voting Rights; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Structure and Terms of the Mergers; Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Escrow of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Background of and Reasons for the Mergers - First Capital Bancorp . . . . . . . . . . . . . . . . . . . . . 14
Reasons for the Mergers - Deposit Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Conditions to the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exchange of First Capital Bancorp Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Amendment; Waiver; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Conduct of Business Pending the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Resales of Deposit Guaranty Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Filing Written Objection and Vote Against the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Notice of the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Written Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Payment and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Cumulative Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Limitations on Directors' and Officers' Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Supermajority Voting Requirements; Business Combinations; Control Shares . . . . . . . . . . . . . . . . . . 27
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Vacancies in the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Amendment of the Articles of Incorporation or Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Shareholder Proposals and Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
INFORMATION CONCERNING FIRST CAPITAL BANCORP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Market Prices and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Ownership of Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Ownership of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FIRST CAPITAL BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . 37
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
INDEX TO FIRST CAPITAL BANCORP FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit A - Agreement and Plan of Merger
Exhibit B - Fairness Opinion of Mercer Capital Management, Inc.
Exhibit C - Section 131 of the Louisiana Business Corporation Law
Exhibit D - Escrow Agreement
</TABLE>
<PAGE> 11
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement/Prospectus and the documents incorporated
herein by reference. This summary is necessarily incomplete and is subject to
and qualified in its entirety by reference to the more detailed information and
financial statements contained elsewhere in this Proxy Statement/Prospectus,
including the Exhibits and the documents incorporated in this Proxy
Statement/Prospectus by reference. Certain capitalized terms used in this
summary are defined elsewhere in this Proxy Statement/Prospectus.
PURPOSE OF THE MEETING
The purpose of the Meeting is to consider and vote upon a proposal to
approve an Agreement and Plan of Merger, dated December 26, 1996 (the "Merger
Agreement"), by and among Deposit Guaranty Corp. ("Deposit Guaranty"), a
Mississippi corporation, its wholly-owned subsidiary, Deposit Guaranty
Louisiana Corp. ("DG Louisiana"), a Louisiana corporation, and DG Louisiana's
wholly-owned subsidiary, Deposit Guaranty National Bank of Louisiana ("DGNB
Louisiana"), a national banking association, on the one hand, and First Capital
Bancorp, Inc. ("First Capital Bancorp"), a Louisiana corporation and its
wholly-owned subsidiary, Capital Bank ("Capital Bank"), a Louisiana state bank,
on the other hand, pursuant to which, among other things, (a) First Capital
Bancorp will be merged into DG Louisiana (the "Holding Company Merger"), (b)
Capital Bank will be merged into DGNB Louisiana (the "Bank Merger" and together
with the Holding Company Merger, the "Mergers"), and (c) on the effective date
of the Mergers (the "Effective Date"), each outstanding share of First Capital
Bancorp common stock, no par value per share ("First Capital Bancorp Common
Stock"), will be converted into a number of shares of common stock, no par
value per share, of Deposit Guaranty ("Deposit Guaranty Common Stock"), as
determined pursuant to the Merger Agreement.
The number of shares of Deposit Guaranty Common Stock to be issued in
exchange for First Capital Bancorp Common Stock will be based on the Exchange
Ratio (as defined below) and the Escrow Shares Exchange Ratio (as defined
below). If the Average Market Price (as defined below) of Deposit Guaranty
Common Stock is greater than or equal to $25.50 per share, the Exchange Ratio
shall equal 1,568,626, less the number of whole shares equal as nearly as
possible to the quotient obtained by dividing 3,000,000 by the Average Market
Price of Deposit Guaranty Common Stock, divided by the total number of shares
of First Capital Bancorp Common Stock issued and outstanding immediately prior
to the Effective Date. If the Average Market Price of Deposit Guaranty Common
Stock is less than or equal to $23.50 per share, the Exchange Ratio shall equal
1,702,126, less the number of whole shares equal as nearly as possible to the
quotient obtained by dividing 3,000,000 by the Average Market Price of Deposit
Guaranty Common Stock, divided by the total number of shares of First Capital
Bancorp Common Stock issued and outstanding immediately prior to the Effective
Date. If the Average Market Price of Deposit Guaranty Common Stock is greater
than $23.50 per share, but less than $25.50 per share, the Exchange Ratio
shall be determined by dividing 40,000,000 by the Average Market Price,
subtracting from the product the number of whole shares equal as nearly as
possible to the quotient obtained by dividing 3,000,000 by the Average Market
Price of Deposit Guaranty Common Stock, and then dividing the result by the
total number of shares of First Capital Bancorp Common Stock issued and
outstanding immediately prior to the Effective Date. The Escrow Shares
Exchange Ratio shall equal the number of whole shares equal as nearly as
possible to the quotient obtained by dividing 3,000,000 by the Average Market
Price of Deposit Guaranty Common Stock and then dividing the result by the
total number of shares of First Capital Bancorp Common Stock issued and
outstanding immediately prior to the Effective Date. The Average Market Price
of the Deposit Guaranty Common Stock shall be the average of the closing per
share trading prices of Deposit Guaranty Common Stock as reported by the New
York Stock Exchange on the New York Stock Exchange composite transactions tape
(adjusted for any stock split or similar transaction) on the ten (10)
consecutive trading days ending on the tenth business day prior to the
Effective Date.
As a result of the Mergers, the business and properties of First
Capital Bancorp will become the business and properties of DG Louisiana, the
business and properties of Capital Bank will become the business and properties
of DGNB Louisiana, and holders of First Capital Bancorp Common Stock will
become shareholders of Deposit Guaranty, except for any such holders who
perfect dissenters' rights.
In connection with the Mergers, the parties to the Merger Agreement
have agreed to enter into an Escrow Agreement (the "Escrow Agreement"), the
form of which is attached hereto as Exhibit D, pursuant to which, among other
1
<PAGE> 12
things, a number of shares of Deposit Guaranty Common Stock equal to the
product of the Escrow Shares Exchange Ratio and the number of shares of First
Capital Bancorp Common Stock issued and outstanding on the Effective Date (the
"Escrow Shares") will be placed into escrow for up to four years and eleven
months subsequent to the Effective Date to cover a specific contingency
involving certain inadvertent violations by Capital Bank of the Bank Secrecy
Act and certain regulations thereunder. The Escrow Shares will have a market
value, based solely upon the Average Market Price, equal to $3 million. It is
anticipated that the Escrow Shares will constitute approximately six to seven
percent of the total number of shares of Deposit Guaranty Common Stock issuable
in the Holding Company Merger. As a result of the arrangements contemplated by
the Escrow Agreement, holders of First Capital Bancorp Common Stock initially
will receive as consideration in the Holding Company Merger a number of shares
of Deposit Guaranty Common Stock based on the Exchange Ratio. The existence
and scope of any releases of shares from escrow to Deposit Guaranty will
determine whether holders of First Capital Bancorp Common Stock subsequently
receive additional shares of Deposit Guaranty Common Stock based upon the
Escrow Shares Exchange Ratio. Notwithstanding the deposit of the Escrow Shares
into escrow, holders of First Capital Bancorp Common Stock with an interest in
the Escrow Shares will be entitled to receive any cash dividends paid by
Deposit Guaranty with respect to such shares, and to direct the voting of such
shares. See "The Mergers -- Escrow of Shares."
DATE, TIME AND PLACE OF THE MEETING; RECORD DATE
A Special Meeting (the "Meeting") of the Shareholders of First Capital
Bancorp will be held on March 18, 1997, at 1:30 p.m., at the main office of
Capital Bank, 100 Oak Street, Delhi, Louisiana. The Board of Directors of
First Capital Bancorp has fixed the close of business on January 28, 1997, as
the record date (the "Record Date") for determining holders of outstanding
shares of First Capital Bancorp Common Stock entitled to notice of and to vote
at the Meeting. Only holders of First Capital Bancorp Common Stock of record
on the books of First Capital Bancorp at the close of business on the Record
Date are entitled to vote at the Meeting or at any adjournment or postponement
thereof. As of the Record Date, there were 460,127 shares of First Capital
Bancorp Common Stock issued and outstanding, each of which is entitled to one
vote. See "Introduction -- General" and "Introduction -- Record Date; Voting
Rights; Proxies."
VOTE REQUIRED
Two-thirds of the total voting power of First Capital Bancorp present
at the Meeting must approve the Merger Agreement. As of the Record Date, the
executive officers and directors of First Capital Bancorp as a group had the
power to vote approximately 105,030 shares of First Capital Bancorp Common
Stock, representing approximately 23% of the outstanding shares, all of which
are expected to be voted in favor of approval of the Merger Agreement.
THE PARTIES
Deposit Guaranty Corp. Deposit Guaranty is a bank holding company
headquartered at 210 East Capitol Street, Jackson, Mississippi 39201, telephone
(601) 354-8497. Its principal subsidiaries are Deposit Guaranty National Bank,
a 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 September 30, 1996, Deposit Guaranty had total assets of $6.2
billion, total deposits of $4.9 billion, total loans of $3.9 billion and
shareholders' equity of $562 million. Based on total assets at September 30,
1996, Deposit Guaranty ranked first among Mississippi-based bank holding
companies.
Deposit Guaranty Louisiana Corp. DG 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
2
<PAGE> 13
the stock of DG Louisiana in February, 1990. Other than its ownership of
Commercial National Bank and DGNB of Louisiana, DG 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, Ascension, Jefferson, St. Tammany and Orleans Parishes
in Louisiana.
First Capital Bancorp, Inc. First Capital Bancorp is a bank holding
company headquartered at 2400 Forsythe Avenue, Monroe, Louisiana 71201-2939,
telephone number (318) 387-2265. Its only subsidiary is Capital Bank. First
Capital Bancorp, through its subsidiary, provides a full complement of consumer
and commercial banking services in Ouachita, Madison, Morehouse and Richland
Parishes in the State of Louisiana. As of September 30, 1996, First Capital
Bancorp had total assets of $186.1 million, total deposits of $162.9 million,
total loans of $135.8 million and shareholders' equity of $12.8 million.
Capital Bank. Capital Bank, a Louisiana state bank, is a full service
commercial bank offering consumer and commercial banking services in four
Northeast Louisiana parishes. It conducts its business through its main office
at 100 Oak Street, Delhi, Louisiana and at five branch offices located in
Monroe, West Monroe, Tallulah and Bastrop, Louisiana. Capital Bank offers an
array of deposit services, including demand accounts, NOW accounts,
certificates of deposit and money market accounts, and provides safe deposit
boxes, night depository, individual retirement accounts and electronic and
drive-in banking services. Capital Bank's lending activities consist
principally of agricultural, real estate, consumer and commercial loans.
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGERS
THE BOARD OF DIRECTORS OF FIRST CAPITAL BANCORP (THE "FIRST CAPITAL
BANCORP BOARD") HAS DETERMINED THAT THE MERGERS ARE IN THE BEST INTERESTS OF
FIRST CAPITAL BANCORP AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF FIRST CAPITAL BANCORP COMMON STOCK VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT. The First Capital Bancorp Board believes that the Mergers provide
significant value to the holders of First Capital Bancorp Common Stock and
enable them to participate in opportunities for growth that the Mergers make
possible.
In recommending approval of the Merger Agreement to the holders of
First Capital Bancorp Common Stock, the First Capital Bancorp Board considered,
among other factors, the financial terms of the Merger Agreement; the liquidity
the Mergers will afford holders of First Capital Bancorp Common Stock; the
respective dividend policies of Deposit Guaranty and First Capital Bancorp;
information concerning the financial condition, results of operation and
prospects of Deposit Guaranty and First Capital Bancorp; the market price of
Deposit Guaranty Common Stock; the tax-free nature of the Mergers to First
Capital Bancorp's shareholders for federal income tax purposes (except to the
extent that cash is received in respect of their shares); the financial terms
of other business combinations in the banking industry; and certain
non-monetary factors. See "The Mergers -- Background of and Reasons for the
Mergers- First Capital Bancorp."
In addition, the First Capital Bancorp Board has received the opinion
of Mercer Capital Management, Inc. ("Mercer Capital") that the consideration
to be received by the holders of First Capital Bancorp Common Stock pursuant to
the Merger Agreement, when taken as a whole, is fair to such shareholders from
a financial point of view. See "The Mergers -- Opinion of Financial Advisor."
The Board of Directors of Deposit Guaranty has approved the Merger
Agreement because it believes that the Merger will enhance Deposit Guaranty's
earnings capacity by enabling it to deliver products and provide services to a
larger geographic customer base and that the combination of Deposit Guaranty
and First Capital Bancorp can take advantage of increased overall efficiencies
and economies of scale. See "The Mergers -- Reasons for the Mergers - Deposit
Guaranty."
3
<PAGE> 14
OPINION OF FINANCIAL ADVISOR
Mercer Capital, First Capital Bancorp's financial advisor, has
rendered its opinion that the consideration to be received by the holders of
First Capital Bancorp Common Stock pursuant to the Merger Agreement, when taken
as a whole, is fair to such shareholders from a financial point of view. The
opinion of Mercer Capital is attached hereto as Exhibit B, and should be read
in its entirety with respect to the procedures followed, assumptions made and
matters considered by Mercer Capital in connection with its opinion. See "The
Mergers -- Opinion of Financial Advisor" for further information regarding,
among other things, the First Capital Bancorp Board's selection of Mercer
Capital and its compensation arrangement in connection with the Mergers.
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 (the "OCC"), be obtained. OCC approval is anticipated in
March, 1997, 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 of the Merger
Agreement by the requisite vote of the holders of First Capital 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
tax-free reorganization under Section 368 of the Internal Revenue Code of 1986
(the "Code"), and the absence of a material adverse change in the financial
condition, results of operations or business of the other party's consolidated
group. See "The Mergers -- Other Conditions to the Mergers" for additional
information concerning the conditions to consummation of the Mergers.
EXCHANGE OF FIRST CAPITAL BANCORP CERTIFICATES; NO FRACTIONAL SHARES
As soon as practicable after the Effective Date, The Bank of New York
(the "Exchange Agent") will mail to each holder of record of First Capital
Bancorp Common Stock, a letter of transmittal and instructions for use in
effecting the surrender of the certificates which, immediately prior to the
Effective Date, represented outstanding shares of First Capital Bancorp Common
Stock in exchange for certificates representing Deposit Guaranty Common Stock.
See "The Mergers -- Exchange of First Capital Bancorp Certificates." Cash will
be paid in lieu of any fractional shares of Deposit Guaranty Common Stock. See
"The Mergers -- Structure and Terms of the Mergers; Escrow." Certificates
representing First Capital Bancorp Common Stock should not be surrendered until
the letter of transmittal is received.
EFFECTIVE DATE
If the Merger Agreement is approved by the requisite vote of the
holders of First Capital Bancorp Common Stock, the Mergers are approved by all
required regulatory agencies and the other conditions to the Mergers are
satisfied or waived (where permissible), the Mergers will become effective at
the date (the "Effective Date") a certificate of merger (the "Certificate of
Merger") is filed with the Secretary of State of Louisiana, or as of such later
date to which Deposit Guaranty and First Capital Bancorp agree, which may be
specified in the Certificate of Merger to be filed with the Louisiana Secretary
of State pursuant to the Business Corporation Law of the State of Louisiana
(the "Louisiana BCL"). It is expected that the Effective Date will occur in
the Spring of 1997; however, there can be no assurance that the conditions to
the Mergers will be satisfied or waived so that the Mergers can be consummated.
See "The Mergers -- Effective Date" and "The Mergers -- Other Conditions to the
Mergers."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of First Capital Bancorp's management and Board of
Directors have interests in the Mergers in addition to their interests as
shareholders of First Capital Bancorp generally. Those interests include,
among others, provisions in the Merger Agreement regarding indemnification and
insurance and eligibility to participate in certain Deposit Guaranty employee
benefit plans. Certain executive officers of First Capital Bancorp also have
an interest in the Mergers
4
<PAGE> 15
as a result of change in control retention and severance provisions in their
existing employment agreements. Pursuant to the Merger Agreement, DG Louisiana
has agreed to honor the retention and severance provisions contained in such
employment agreements. See "The Mergers -- Interests of Certain Persons in the
Mergers."
TERMINATION
Among other reasons, the Merger Agreement may be terminated at any
time prior to the Effective Date (i) in the event the Merger Agreement is not
approved by the shareholders of First Capital Bancorp at the Meeting, (ii) if
the number of shares of First Capital Bancorp Common Stock, the holders of
which perfect dissenters' rights, exceeds ten percent (10%) of the outstanding
shares of First Capital Bancorp Common Stock, or (iii) if the Closing has not
occurred by September 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 by each of the
parties to the Merger Agreement of an opinion of counsel substantially to the
effect that the Mergers will be treated, for federal income tax purposes, as
tax-free reorganizations, with the result that no gain or loss will be
recognized by First Capital Bancorp or by holders of First Capital Bancorp
Common Stock who exchange all of their First Capital Bancorp Common Stock
solely for Deposit Guaranty Common Stock pursuant to the Mergers (except with
respect to cash, if any, received in lieu of fractional shares). First Capital
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
Deposit Guaranty intends to use the pooling of interests method of
accounting to account for the Mergers upon consummation. See "The Mergers --
Accounting Treatment."
DISSENTERS' RIGHTS
Unless the Merger Agreement is approved at the Meeting by the
affirmative vote of 80% or more of the total voting power of First Capital
Bancorp, by complying with the specific procedures required by Louisiana law
and described herein, holders of First Capital Bancorp Common Stock will have
the right to dissent from the Holding Company Merger, in which event, if the
Holding Company Merger is consummated, such shareholders may be entitled to
receive in cash the fair value of their shares of First Capital Bancorp Common
Stock, in lieu of shares of Deposit Guaranty Common Stock issuable under the
Merger Agreement. See "Dissenters' Rights" and Exhibit C hereto.
RECENT MARKET PRICES
On December 24, 1996, the business day preceding the date that Deposit
Guaranty, DG Louisiana, DGNB Louisiana, First Capital Bancorp and Capital Bank
entered into the Merger Agreement, the closing sales price for a share of
Deposit Guaranty Common Stock, as quoted on the New York Stock Exchange, was
$28.75. No assurance can be given as to the market price of Deposit Guaranty
Common Stock on the Effective Date. On January 10, 1997, the closing sales
price for a share of Deposit Guaranty Common Stock was $30.74 and, if such date
had been the Effective Date, the Average Market Price would have been $30.62.
First Capital Bancorp Common Stock is not actively traded, and there
is no established market for First Capital Bancorp Common Stock. At January
21, 1997, there were 309 holders of record of First Capital Bancorp Common
Stock.
SELECTED FINANCIAL DATA
The following selected financial data for Deposit Guaranty and First
Capital Bancorp has been derived from the consolidated financial statements of
Deposit Guaranty and First Capital Bancorp. The selected financial data as of
and for
5
<PAGE> 16
the nine months ended September 30, 1996 and 1995 is derived from unaudited
financial statements. In the opinion of First Capital Bancorp management (in
the case of the First Capital Bancorp financial statements) and Deposit
Guaranty management (in the case of the Deposit Guaranty financial statements),
such unaudited financial statements reflect all adjustments that are necessary
for a fair presentation of the consolidated results of operations and financial
condition of such company for such periods. Results of operations for the
nine-months ended September 30, 1996 and 1995 are not necessarily indicative of
the results for the entire year. The information set forth below should be
read in conjunction with the consolidated financial statements of Deposit
Guaranty and First Capital Bancorp incorporated by reference or included
elsewhere herein, and First Capital Bancorp Management's Discussion and
Analysis of Financial Condition and Results of Operations, included elsewhere
herein.
6
<PAGE> 17
FIRST CAPITAL BANCORP, INC. AND SUBSIDIARY - SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
September 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 $11,829 $10,668 $14,356 $9,752 $8,665 $7,730 $9,128
Interest expense 4,872 4,511 6,144 3,467 2,740 3,043 4,588
--------------------- ---------------------------------------------------------------
Net interest income 6,957 6,157 8,212 6,285 5,925 4,687 4,540
Provision for possible
loan losses 268 295 271 182 250 403 399
--------------------- ---------------------------------------------------------------
Net interest income after
provision for possible
loan losses 6,689 5,862 7,941 6,103 5,675 4,284 4,141
Other operating income 1,242 1,053 1,437 1,180 1,040 1,473 966
Other operating expenses 5,008 4,830 7,026 4,930 4,268 4,003 3,740
--------------------- ---------------------------------------------------------------
Income before income taxes 2,923 2,085 2,352 2,353 2,447 1,754 1,367
Income tax expense 1,011 386 546 778 818 615 407
--------------------- ---------------------------------------------------------------
Net income $ 1,912 $1,699 $ 1,806 $1,575 $1,629 $1,139 $960
===================== ===============================================================
Net income per share $ 4.16 $3.69 $ 3.93 $3.44 $3.57 $2.50 $2.11
WEIGHTED AVERAGE SHARES
OUTSTANDING 459,990 459,809 459,809 458,142 455,809 455,809 455,809
CASH DIVIDENDS PER SHARE $0.00 $0.00 $0.70 $0.70 $0.25 $0.23 $0.21
STATEMENTS OF CONDITION -
AVERAGES
Total assets $175,649 $152,805 $156,202 $118,096 $107,026 $95,853 $89,976
Earning assets 161,576 139,987 142,706 108,586 98,518 89,008 82,725
Securities 30,574 26,207 25,476 18,840 19,021 21,514 12,415
Loans, net of unearned
income 128,166 108,058 110,687 86,378 78,450 66,260 59,638
Total deposits 151,436 131,931 134,937 97,311 71,514 69,858 69,933
Total stockholders' 11,985 9,751 10,511 8,494 7,955 6,502 5,715
equity
SELECTED RATIOS
Return on average assets 1.45 % 1.48 % 1.16 % 1.33 % 1.52 % 1.19 % 1.07 %
Return on average equity 21.27 23.23 17.18 18.54 20.48 17.52 16.80
Net interest margin - tax
equivalent 5.74 5.86 5.75 5.79 6.01 5.27 5.49
Average loans to deposits 84.63 81.90 82.03 88.76 109.70 94.85 85.28
Allowance for possible
loan losses to loans, net of
unearned income 1.14 1.02 1.21 1.43 1.58 1.70 1.56
Net charge-offs to 0.30 0.04 0.15 0.15 0.21 0.22 0.38
average loans, net of
unearned income
Dividend payout 0.00 0.00 17.81 20.35 7.00 9.20 9.95
Average equity to average
assets 6.82 6.38 6.73 7.19 7.43 6.78 6.35
Leverage ratio 6.75 6.22 6.48 7.01 7.60 7.10 --
Tier I risk-based capital 11.74 10.44 10.85 10.37 10.60 10.70 --
Total risk-based capital 12.81 11.78 12.10 11.62 11.90 11.90 --
</TABLE>
7
<PAGE> 18
DEPOSIT GUARANTY CORP. AND SUBSIDIARIES - SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
September 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 $320,345 $295,049 $ 402,704 $ 307,272 $ 299,327 $ 322,114 $ 382,432
Interest expense 136,448 127,128 173,432 125,881 124,687 155,459 231,473
------------------------ --------------------------------------------------------------
Net interest income 183,897 167,921 229,272 181,391 174,640 166,655 150,959
Provision for possible loan
losses 4,005 2,040 2,160 (4,750) (16,000) 10,378 17,260
------------------------ --------------------------------------------------------------
Net interest income after
provision for possible loan
losses 179,892 165,881 227,112 186,141 190,640 156,277 133,699
Other operating income 86,932 66,179 91,989 93,499 74,781 67,977 61,439
Other operating expense 171,727 149,531 211,452 180,047 171,567 164,470 152,828
------------------------ --------------------------------------------------------------
Income before income taxes 95,097 82,529 107,649 99,593 93,854 59,784 42,310
Income tax expense 30,972 26,472 35,029 32,463 27,302 14,270 10,090
------------------------ --------------------------------------------------------------
Net income $64,125 $56,057 $ 72,620 $ 67,130 $ 66,552 $ 45,514 $ 32,220
======================== ==============================================================
NET INCOME PER SHARE
Primary $1.66 $1.46 $1.89 $1.90 $ 1.89 $ 1.34 $1.02
Fully diluted 1.66 1.46 1.89 1.90 1.89 1.30 .92
WEIGHTED AVERAGE SHARES
OUTSTANDING
Primary 38,620,170 38,282,322 38,431,162 35,336,124 35,299,704 34,067,328 31,599,992
Fully diluted 38,620,170 38,282,322 38,431,162 35,336,124 35,299,704 34,930,564 34,884,776
CASH DIVIDENDS PER SHARE $.52 $.44 $.61 $.53 $.47 $.40 $.39
STATEMENTS OF CONDITION -
AVERAGES
Total assets $5,983,117 $5,468,189 $5,571,697 $4,940,977 $ 4,826,726 $ 4,777,596 $4,814,533
Earning assets 5,358,152 4,877,395 4,961,261 4,413,938 4,333,740 4,275,345 4,329,336
Securities available for sale 1,293,508 51,812 186,194 712,184 1,308,634 --- ---
Investment securities 124,383 1,528,775 1,365,070 718,891 396,011 1,616,658 1,417,299
Loans, net of unearned income 3,731,139 3,178,944 3,273,408 2,581,724 2,293,416 2,261,034 2,411,731
Deposits 4,712,369 4,349,549 4,438,797 3,997,038 3,867,669 3,876,927 3,990,963
Long-term debt 57,307 --- --- --- --- 6,320 24,020
Total stockholders' equity 541,612 488,407 498,023 429,967 367,592 315,833 275,345
SELECTED RATIOS
Return on average assets 1.43% 1.37% 1.30% 1.36% 1.38% .95% .67%
Return on average equity 15.82 15.35 14.58 15.61 18.10 14.41 11.70
Net interest margin - tax
equivalent 4.73 4.73 4.75 4.24 4.18 4.12 3.77
Allowance for possible loan
losses to loans, net of
unearned income 1.58 1.72 1.64 1.95 2.56 3.30 3.74
Net charge-offs (recoveries) to
average loans, net of
unearned income 0.11 0.07 .12 .10 (.14) 1.02 .77
Dividend payout 30.42 29.45 32.01 27.89 24.67 29.96 38.24
Average equity to average assets 9.05 8.93 8.94 8.70 7.62 6.61 5.72
Leverage ratio 8.13 7.95 7.87 8.43 8.13 6.80 5.42
Tier I risk-based capital 11.02 10.91 11.05 12.49 13.28 12.00 9.95
Total risk-based capital 12.27 12.17 12.30 13.75 14.54 13.27 12.11
</TABLE>
8
<PAGE> 19
COMPARATIVE PER SHARE INFORMATION
The following table sets forth certain historical comparative
information and certain pro forma and equivalent pro forma information with
respect to income per share, book value per share and cash dividends per share
for the Deposit Guaranty Common Stock and the First Capital Bancorp Common
Stock. The information that follows should be read in conjunction with the
audited historical financial statements and notes thereto of Deposit Guaranty
incorporated by reference herein and the audited historical financial statements
and notes thereto of First Capital Bancorp included in this Proxy
Statement/Prospectus. The comparative pro forma and equivalent pro forma data
have been included herein for comparative purposes only and do not purport to be
indicative of the results of operations or financial condition that actually
would have resulted had the Mergers occurred at the beginning of the period or
the results of operations or financial condition that may be obtained in the
future.
<TABLE>
<CAPTION>
Pro Forma
------------------------------------------
Deposit
Historical Guaranty and First
--------------------------------- First Capital Capital
First Bancorp Pro Bancorp Pro
Deposit Capital Forma Forma
Per Common Share Guaranty Bancorp Combined Equivalent(a)
----------------------------------- --------------------------------- ------------------------------------------
<S> <C> <C> <C> <C>
NET INCOME (b)
For the nine months ended
September 30, 1996 $1.66 $4.16 $1.64 $5.60
For the year ended
December 31,
1995 1.89 3.93 1.86 6.35
1994 1.90 3.44 1.86 6.35
1993 1.89 3.57 1.85 6.31
CASH DIVIDENDS (c)
For the nine months ended
September 30, 1996 $ .52 --- $ .52 $1.76
For the year ended
December 31,
1995 .61 .70 .61 2.06
1994 .53 .70 .53 1.81
1993 .47 .25 .47 1.59
BOOK VALUE (d)
As of September 30, 1996 $14.46 $27.74 $14.22 $48.48
As of December 31, 1995 13.91 24.47 13.65 46.53
As of December 31, 1994 12.62 19.21 12.32 42.01
As of December 31, 1993 11.20 17.76 10.95 37.33
</TABLE>
(a) First Capital Bancorp pro forma equivalent amounts are computed by
multiplying the pro forma combined amounts by an assumed exchange
ratio. The assumed exchange ratio used in this pro forma presentation
was determined based on the average closing price for the ten trading
days from December 30, 1996 to January 10, 1997. In accordance with
the terms of the Merger Agreement, the actual exchange ratio will be
based on the closing per share trading prices of Deposit Guaranty
Common Stock as reported by the New York Stock Exchange on the New
York Stock Exchange composite transactions tape (adjusted for any
stock split or similar transaction) on the ten (10) consecutive
trading days ending on the tenth business day prior to the Effective
Date.
(b) Net income per common share is based on weighted average common shares
outstanding, adjusted for stock split.
(c) Pro forma cash dividends represent historical cash dividends of
Deposit Guaranty, adjusted for stock split.
(d) Book value per common share, adjusted for stock split, is based on
total period-end shareholders' equity.
9
<PAGE> 20
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of First
Capital Bancorp Common Stock in connection with the solicitation by the Board
of Directors of First Capital Bancorp of proxies for use at a Special Meeting
of Shareholders to be held at 1:30 p.m., local time, on March 18, 1997 at the
main office of Capital Bank, 100 Oak Street, Delhi, Louisiana, and at any
adjournment or postponement thereof.
At the Meeting, shareholders will consider and vote upon a proposal to
approve the Merger Agreement, by and among Deposit Guaranty, DG Louisiana, DGNB
Louisiana, First Capital Bancorp and Capital Bank, pursuant to which First
Capital Bancorp will merge into DG Louisiana, Capital Bank will merge into DGNB
Louisiana and each share of First Capital Bancorp Common Stock issued and
outstanding immediately prior to the Effective Date of the Merger (except
Dissenting Shares, as hereinafter defined) will be converted into and
exchangeable for a number of shares of Deposit Guaranty Common Stock, as
determined pursuant to the Merger Agreement. As a result of the Merger, the
holders of First Capital Bancorp Common Stock (other than holders of Dissenting
Shares) will become shareholders of Deposit Guaranty.
This Proxy Statement/Prospectus constitutes a Proxy Statement of First
Capital 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 First
Capital 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 First Capital Bancorp is
located at 2400 Forsythe Avenue, Monroe, Louisiana 71201-2939, and its
telephone number is (318) 387-2265.
This Proxy Statement/Prospectus is first being mailed to holders of
First Capital Bancorp Common Stock on or about February __, 1997.
RECORD DATE; VOTING RIGHTS; PROXIES
The Board of Directors of First Capital Bancorp has fixed the close of
business on January 28, 1997 as the Record Date for determining holders of
outstanding shares of First Capital Bancorp Common Stock entitled to notice of
and to vote at the Meeting. Only holders of First Capital Bancorp Common Stock
of record on the books of First Capital Bancorp at the close of business on the
Record Date are entitled to vote at the Meeting or at any adjournment or
postponement thereof. Shares of First Capital Bancorp Preferred Stock are not
entitled to vote on the Mergers. As of the Record Date, there were 460,127
shares of First Capital Bancorp Common Stock issued and outstanding, each of
which is entitled to one vote. The presence, in person or by proxy, of a
majority of the total voting power of First Capital Bancorp is necessary to
constitute a quorum of the shareholders to take action at the Meeting. Shares
of First Capital Bancorp Common Stock represented by properly executed proxies
will be voted in accordance with the instructions indicated on the proxies or,
if no instructions are indicated, will be voted FOR the proposal to approve the
Merger Agreement and in the discretion of the proxy holders as to any other
matter which may properly come before the Meeting or any adjournment or
postponement thereof. A shareholder who has given a proxy may revoke it at any
time before it is voted by (a) filing with the Secretary of First Capital
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 approval of two-thirds
of the voting power present at the Meeting. An abstention by a shareholder
present at the Meeting in person or by proxy will have the same effect as a
vote against the Merger Agreement, but failure to return a properly executed
proxy, or a broker submitting a proxy without exercising discretionary
authority with respect to approval of the Merger Agreement will not. As of the
Record Date, the executive officers and directors of First Capital Bancorp as a
group had the power to vote approximately 105,030 shares of First Capital
Bancorp Common Stock, representing approximately 23% of the outstanding shares,
all of which are expected to be voted in favor of approval 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.
10
<PAGE> 21
First Capital 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 First Capital Bancorp in person, or
by telephone, telecopier 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 First
Capital Bancorp Common Stock held of record by such persons, and First Capital
Bancorp may reimburse such custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred in connection therewith. An independent
solicitation firm, The Herman Group, Inc., has been retained by First Capital
Bancorp to assist in the solicitation of proxies for an aggregate fee of $3,500
plus out-of-pocket expenses.
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 of the holders of First Capital
Bancorp Common Stock, First Capital Bancorp will be merged with and into DG
Louisiana, and Capital Bank will be merged with and into DGNB Louisiana. As a
result of the Mergers, the separate corporate existence of First Capital
Bancorp and Capital Bank will cease and the holders of First Capital Bancorp
Common Stock (other than holders of Dissenting 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; ESCROW
Upon consummation of the Mergers, First Capital Bancorp will be merged
with and into DG Louisiana and the First Capital Bancorp Common Stock issued
and outstanding at the Effective Date (other than shares owned by shareholders
who, pursuant to the Louisiana BCL, perfect any right to receive the fair value
of such shares ("Dissenting Shares")) will be converted into and exchangeable
for a number of shares of Deposit Guaranty Common Stock determined by
multiplying the number of such shares by the sum of the Exchange Ratio and the
Escrow Shares Exchange Ratio.
The number of shares of Deposit Guaranty Common Stock to be issued in
exchange for First Capital Bancorp Common Stock will be based on the Exchange
Ratio (as defined below) and the Escrow Shares Exchange Ratio (as defined
below). If the Average Market Price (as defined below) of Deposit Guaranty
Common Stock is greater than or equal to $25.50 per share, the Exchange Ratio
shall equal 1,568,626, less the number of whole shares equal as nearly as
possible to the quotient obtained by dividing 3,000,000 by the Average Market
Price of Deposit Guaranty Common Stock, divided by the total number of shares
of First Capital Bancorp Common Stock issued and outstanding immediately prior
to the Effective Date. If the Average Market Price of Deposit Guaranty Common
Stock is less than or equal to $23.50 per share, the Exchange Ratio shall equal
1,702,126, less the number of whole shares equal as nearly as possible to the
quotient obtained by dividing 3,000,000 by the Average Market Price of Deposit
Guaranty Common Stock, divided by the total number of shares of First Capital
Bancorp Common Stock issued and outstanding immediately prior to the Effective
Date. If the Average Market Price of Deposit Guaranty Common Stock is greater
than $23.50 per share, but less than $25.50 per share, the Exchange Ratio shall
be determined by dividing 40,000,000 by the Average Market Price, subtracting
from the product the number of whole shares equal as nearly as possible to the
quotient obtained by dividing 3,000,000 by the Average Market Price of Deposit
Guaranty Common Stock, and then dividing the result by the total number of
shares of First Capital Bancorp Common Stock issued and outstanding immediately
prior to the Effective Date. The Escrow Shares Exchange Ratio shall equal the
number of whole shares equal as nearly as possible to the quotient obtained by
dividing 3,000,000 by the Average Market Price of Deposit Guaranty Common
Stock, and then dividing the result by the total number of shares of First
Capital Bancorp Common Stock issued and outstanding immediately prior to the
Effective Date. The Average Market Price of the Deposit Guaranty Common Stock
shall be the average of the closing per share trading prices of Deposit
Guaranty Common Stock as reported by the New York Stock Exchange on the New
York Stock Exchange composite transactions tape (adjusted for any stock split
or similar transaction) on the ten (10) consecutive trading days ending on the
tenth business day prior to the Effective Date.
11
<PAGE> 22
The operation of the Exchange Ratio and the Escrow Shares Exchange
Ratio is illustrated by the table below, which shows the effect that various
Average Market Prices would have on the Exchange Ratio and the Escrow Shares
Exchange Ratio, the total number of shares of Deposit Guaranty Common Stock
issuable in the Holding Company Merger, and the aggregate value of such shares
based on the Average Market Price. The table assumes that immediately before
the Effective Date of the Holding Company Merger, a total of 460,127 shares of
First Capital Bancorp Common Stock are outstanding.
<TABLE>
<CAPTION>
Total Number of
Shares of Deposit Average Market Price
Average Market Guaranty Common Stock Times Total Number of
Price of Deposit Issuable Shares Issuable
Guaranty Common Exchange Ratio Escrow Shares (including Escrow (including Escrow
Stock Exchange Ratio Shares) Shares)
<S> <C> <C> <C> <C>
$21.50 3.3960 0.3033 1,702,126 $36,595,709
$22.50 3.4095 0.2898 1,702,126 $38,297,835
$23.50 3.4218 0.2774 1,702,126 $39,999,961
$24.50 3.2822 0.2661 1,632,653 $40,000,000
$25.50 3.1534 0.2557 1,568,626 $39,999,963
$26.50 3.1631 0.2460 1,568,626 $41,568,589
$27.50 3.1720 0.2371 1,568,626 $43,137,215
$28.50 3.1804 0.2288 1,568,626 $44,705,841
$29.50 3.1881 0.2210 1,568,626 $46,274,467
$30.50 3.1954 0.2138 1,568,626 $47,843,093
$31.50 3.2021 0.2070 1,568,626 $49,411,719
</TABLE>
This table is presented for illustration purposes only and no inference is
intended or may be drawn concerning the actual Average Market Price which may
occur or the resulting Exchange Ratio and Escrow Shares Exchange Ratio.
Moreover, the actual market value of a share of Deposit Guaranty Common Stock
at the effective time of the Holding Company Merger and at the time
certificates for those shares are delivered to holders of First Capital Bancorp
Common Stock may be more or less than the Average Market Price used to
determine the Exchange Ratio. Also, the price at which the Deposit Guaranty
Common Stock is trading at or before the time of the Meeting at which holders
of First Capital Bancorp Common Stock will vote on whether to approve the
Holding Company Merger may be higher or lower than the Average Market Price
used to determine the Exchange Ratio, or the market value of Deposit Guaranty
Common Stock at the effective time of the Holding Company Merger or the time
certificates representing such shares are delivered to holders of First Capital
Bancorp Common Stock. First Capital Bancorp's shareholders are urged to obtain
information on the trading price of Deposit Guaranty Common Stock that is more
recent than that provided in this Proxy Statement/Prospectus.
If prior to the Effective Date Deposit Guaranty should split,
reclassify or combine Deposit Guaranty Common Stock, or pay a stock dividend or
other distribution in Deposit Guaranty Common Stock, then the Exchange Ratio
and the Escrow Shares Exchange Ratio shall be appropriately adjusted to reflect
such split, reclassification, combination, dividend or distribution.
The Exchange Ratio was determined by a process of arm's length
negotiations involving the managements of First Capital Bancorp and Deposit
Guaranty and their respective financial advisors. The maximum number of shares
of Deposit Guaranty Common Stock which may be issued upon consummation of the
Mergers (1,702,126 shares) would constitute approximately 4.3% of the shares of
Deposit Guaranty Common Stock outstanding immediately after the Effective Date.
The minimum number of shares of Deposit Guaranty Common Stock which may be
issued upon consummation of the Mergers (1,568,626 shares) would constitute
approximately 4% of the shares of Deposit Guaranty Common Stock outstanding
immediately after the Effective Date. These calculations do not make any
12
<PAGE> 23
adjustment for fractional shares or Dissenting Shares and are based upon the
number of shares of First Capital Bancorp Common Stock and Deposit Guaranty
Common Stock outstanding on the Record Date.
No fractional shares of Deposit Guaranty Common Stock will be issued
in the Mergers. Deposit Guaranty shall combine any fractional share payable to
a holder of First Capital Bancorp Common Stock based on the Exchange Ratio and
any fractional share payable to the same holder of First Capital Bancorp Common
Stock based on the Escrow Shares Exchange Ratio and add the resulting whole
share to the number of shares to be issued to such holder pursuant to the
Exchange Ratio. Deposit Guaranty shall pay in lieu of any remaining fractional
share an amount in cash determined by multiplying (i) the Average Market Price
of Deposit Guaranty Common Stock, by (ii) the fraction of a share of Deposit
Guaranty Common Stock to which such holder would otherwise be entitled.
It is a condition to consummation of the Mergers that all outstanding
shares of First Capital Bancorp Preferred Stock be retired prior to the
Effective Date. Consequently, no provision has been made for the conversion of
such shares in the Mergers.
ESCROW OF SHARES
The following is a summary of the Escrow Agreement, the form of which
is attached hereto as Exhibit D and incorporated herein by reference. The
summary set forth below does not purport to be complete and is qualified in its
entirety by reference to the Escrow Agreement.
The Escrow Agreement provides that, on the Effective Date, a number of
shares of Deposit Guaranty Common Stock equal to the product of the Escrow
Shares Exchange Ratio and the number of shares of First Capital Bancorp Common
Stock issued and outstanding immediately prior to the Effective Date (the
"Escrow Shares") will be deposited with an escrow agent (the "Escrow Agent").
The Escrow Shares will have a market value, based solely upon the Average
Market Price, equal to $3 million. It is anticipated that the Escrow Shares
will constitute between six and seven percent of the total number of shares of
Deposit Guaranty Common Stock issuable in the Holding Company Merger.
The escrow is being established to provide an adjustment to the
consideration to be paid in the Mergers should Deposit Guaranty or any of its
consolidated subsidiaries (the "Deposit Guaranty Consolidated Group") pay a
fine or civil money penalty or an amount in settlement of a claim by the United
States for any such fine or civil money penalty as a result of any violation by
Capital Bank of the Bank Secrecy Act or the Treasury Department regulations
promulgated thereunder prior to the Effective Date of the Mergers (a "Covered
Payment"). In the event of a Covered Payment, Deposit Guaranty may deliver to
the Escrow Agent a certificate demanding that the Escrow Agent transfer to
Deposit Guaranty a number of whole shares equal as nearly as possible to the
amount of the Covered Payment, less the amount of any tax benefit to the
Deposit Guaranty Consolidated Group as a consequence of such Covered Payment,
divided by the Average Market Price of Deposit Guaranty Common Stock (as
defined in the Merger Agreement). The certificate shall specify the amount and
nature of the Covered Payment, the tax treatment of such Covered Payment, the
number of Escrow Shares for which release is demanded, and the basis for the
demand. A copy of the certificate shall be mailed by the Escrow Agent to each
beneficial owner of Escrow Shares within five (5) business days after receipt
thereof by the Escrow Agent, along with a letter of instructions regarding the
procedure for objecting to the release of the Escrow Shares demanded in the
certificate. If beneficial owners having an aggregate interest in the Escrow
Shares greater than ten percent (10%) deliver timely objections to a
certificate to the Escrow Agent, the Escrow Agent shall not release any of the
Escrow Shares to Deposit Guaranty pursuant to the certificate unless and until
the Escrow Agent receives (i) a certified copy of an arbitration award from an
arbitration conducted pursuant to the provisions of the Escrow Agreement,
specifying the number of Escrow Shares, if any, to be released, or (ii) joint
instructions from Deposit Guaranty and beneficial owners holding a majority of
the interest owned by those beneficial owners submitting objections,
instructing the number of Escrow Shares to be released. In the event of any
disagreement among any of the parties to the Escrow Agreement and the
beneficial owners having an aggregate interest greater than ten percent (10%)
regarding any person's rights or obligations thereunder, any party, or
beneficial owners having an aggregate interest greater than ten percent (10%),
may submit the question to an arbitrator to be appointed by the American
Arbitration Association for arbitration in accordance with its rules, whose
determination shall be conclusive and binding on all parties to the Escrow
Agreement and the beneficial owners.
Unless sooner terminated, the escrow shall terminate thirty (30) days
prior to the fifth anniversary of the Effective Date of the Mergers. If (i)
the Treasury Department conducts an investigation of possible violations of
the Bank Secrecy Act and the Treasury Department regulations promulgated
thereunder by Capital Bank covering a period from the earliest date, as of the
time of the investigation, as to which a penalty may be assessed for violations
of the Bank Secrecy Act and the Treasury Department regulations
13
<PAGE> 24
by Capital Bank through December 1, 1995, (ii) the Treasury Department
investigation has been completed, and (iii) Escrow Shares have been delivered
to Deposit Guaranty pursuant to the Escrow Agreement, then Deposit Guaranty
shall so notify the Escrow Agent and the beneficial owners of Escrow Shares,
and the escrow shall terminate. Upon termination of the escrow period, the
Escrow Agent shall promptly exchange the Deposit Guaranty stock certificates in
its name representing the remaining Escrow Shares for certificates in the names
of each of the beneficial owners, in an amount as to a beneficial owner equal
to the number of Escrow Shares then remaining in escrow, multiplied by such
beneficial owner's proportionate interest in the Escrow Shares. No
certificates or scrip representing fractional interests in any Escrow Shares
shall be released by the Escrow Agent. All fractional interests in Escrow
Shares that a person at any time would otherwise be entitled to receive under
the Escrow Agreement shall be disregarded and such person shall only be
entitled to receive the resulting whole number of Escrow Shares.
Notwithstanding the deposit of the Escrow Shares into escrow, holders
of First Capital Bancorp Common Stock with an interest in the Escrow Shares
will be entitled to receive any cash dividends paid by Deposit Guaranty with
respect to such shares, and to direct the voting of such shares.
BACKGROUND OF AND REASONS FOR THE MERGERS - FIRST CAPITAL BANCORP
BACKGROUND. In the last several years, there has been a sharp
increase in the level of interest in and the number of acquisitions of
financial institutions in Louisiana. One of the responsibilities of the First
Capital Bancorp Board is to consider various strategic alternatives, including
whether to affiliate with a larger, more diversified financial organization, as
viable opportunities might arise.
In November and December, 1995, the First Capital Bancorp Board
interviewed several investment banking firms for the purpose of retaining a
financial advisor to assist First Capital Bancorp in evaluating its strategic
alternatives. In early 1996, the First Capital Bancorp Board decided to
postpone the retention of a financial advisor for several months. Management
projected that 1996 income would be improved from 1995 levels. Thus, the First
Capital Bancorp Board believed that, if a decision were made to pursue a
business combination with a larger financial organization, shareholder value
would be enhanced after several months of 1996 income had been recorded by
First Capital Bancorp.
In April, 1996, F. Ronnie Myrick, President and Chief Executive
Officer of First Capital Bancorp, was approached by Deposit Guaranty about the
possibility of a business combination between First Capital Bancorp and Deposit
Guaranty. The interest expressed by Deposit Guaranty was unsolicited by First
Capital Bancorp. Following preliminary discussions between representatives of
First Capital Bancorp and Deposit Guaranty, on June 10, 1996, First Capital
Bancorp engaged Mercer Capital as its financial advisor to assist it in
evaluating and negotiating the possible sale of First Capital Bancorp to
Deposit Guaranty. On June 28, 1996, First Capital Bancorp and Deposit Guaranty
entered into a confidentiality agreement and First Capital Bancorp provided
certain confidential information concerning its business to Deposit Guaranty as
a means of exploring further a possible business combination.
In October, 1996, Deposit Guaranty made a proposal to acquire First
Capital Bancorp. Over the next several weeks, the parties engaged in
negotiations concerning the terms of such a business combination. On October
31, 1996, representatives of Deposit Guaranty and First Capital Bancorp reached
a preliminary agreement on the terms of a business combination, including the
consideration to be received by shareholders of First Capital Bancorp, and
executed a letter of intent, subject to Deposit Guaranty's completion of due
diligence, approval by First Capital Bancorp's and Deposit Guaranty's
respective boards of directors, execution of a definitive agreement among the
parties and certain other conditions. Following execution of the letter of
intent, Deposit Guaranty conducted a review of First Capital Bancorp's and
Capital Bank's books and records, and representatives of First Capital Bancorp
and Deposit Guaranty, and their respective advisors, negotiated the terms of
the Merger Agreement, subject to approval by each party's board of directors.
The Mergers and Merger Agreement were considered by the Boards of
Directors of First Capital Bancorp and Capital Bank at a joint special meeting
held for that purpose on December 16, 1996. At the meeting, representatives of
Mercer Capital advised the Boards regarding the proposed Mergers. Based upon
the foregoing and their analysis of the Mergers and Merger Agreement, the First
Capital Bancorp Board and the Capital Bank Board each determined that the
Mergers were in the best interests of First Capital Bancorp and Capital Bank
and their respective shareholders and approved the Merger Agreement, subject to
such changes therein and additions thereto as the President and Chief Executive
Officer or the Chief Operating Officer of First Capital Bancorp, and the
Chairman and Chief Executive Officer or the President and Chief Operating
Officer of Capital Bank, with the advice of counsel, approved.
14
<PAGE> 25
Following the December 16, 1996 meeting, representatives of Deposit
Guaranty and First Capital Bancorp negotiated the terms of the Merger Agreement
relating to the escrow. The Boards of Directors of First Capital Bancorp and
Capital Bank conducted another joint special meeting on December 23, 1996 for
the purpose of considering the Mergers and Merger Agreement, as revised to
include provisions for the escrow. At the meeting, representatives of Mercer
Capital again advised the Boards regarding the proposed Mergers. Based upon
the foregoing and their analysis of the Mergers and Merger Agreement, the First
Capital Bancorp Board and the Capital Bank Board approved the Mergers and
Merger Agreement.
REASONS FOR THE MERGERS. In reaching its decision that the Mergers
are in the best interests of First Capital Bancorp and its shareholders, the
First Capital Bancorp Board consulted with its financial and other advisors, as
well as with First Capital Bancorp's management, and considered a number of
factors, including without limitation, the following:
(a) The financial condition and results of operations of, and
prospects for, each of Deposit Guaranty and First Capital Bancorp, and the
market price of Deposit Guaranty Common Stock;
(b) The respective dividend policies of Deposit Guaranty and First
Capital Bancorp;
(c) The amount and type of consideration to be received by the
holders of First Capital Bancorp Common Stock pursuant to the Merger Agreement,
and the financial terms of other business combinations in the banking industry;
(d) The Deposit Guaranty Common Stock to be received pursuant to the
Merger Agreement will be listed for trading on the New York Stock Exchange and
provide holders of First Capital Bancorp Common Stock with liquidity that
presently is unavailable to such holders because an active trading market does
not exist for the First Capital Bancorp Common Stock;
(e) The Mergers will allow holders of First Capital Bancorp Common
Stock to become shareholders of Deposit Guaranty, a regional bank holding
company that was, as of June 30, 1996, the seventy-second (72nd) largest bank
holding company in the United States;
(f) Each of the Mergers is expected to qualify as a tax-free
reorganization so that neither First Capital Bancorp nor its shareholders
(except to the extent that cash is received in respect of their shares) will
recognize any gain in the transaction (see "The Mergers -- Certain Federal
Income Tax Consequences"); and
(g) The opinion received from Mercer Capital that the consideration
to be received by the holders of First Capital Bancorp Common Stock pursuant to
the Merger Agreement, when taken as a whole, is fair to such shareholders from
a financial point of view (see "The Mergers -- Opinion of Financial Advisor").
The First Capital Bancorp Board did not assign any specific or relative
weight to the foregoing factors in its considerations. The First Capital
Bancorp Board believes that the Mergers will provide significant value to the
holders of First Capital Bancorp Common Stock and will enable them to
participate in opportunities for growth that the First Capital Bancorp Board
believes the Mergers make possible.
BASED ON THE FOREGOING, THE FIRST CAPITAL BANCORP BOARD UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
FIRST CAPITAL BANCORP COMMON STOCK VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
REASONS FOR THE MERGERS - DEPOSIT GUARANTY
The Deposit Guaranty Board of Directors believes that by expanding
Deposit Guaranty's customer base into the northeastern 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 First Capital Bancorp will allow Deposit Guaranty and First
Capital 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 First Capital Bancorp; the compatibility and complimentary nature of the
respective businesses and managerial philosophies of Deposit Guaranty and First
Capital Bancorp; and the relative prices paid in recent acquisitions of
financial institutions.
15
<PAGE> 26
OPINION OF FINANCIAL ADVISOR
GENERAL. Pursuant to an engagement letter dated June 10, 1996 (the
"Engagement Letter"), First Capital Bancorp engaged Mercer Capital to act as
its financial advisor in connection with the possible sale of First Capital
Bancorp to Deposit Guaranty. Mercer Capital is a nationally recognized
business valuation and financial advisory consulting firm and is regularly
engaged in the valuation of financial institutions and other businesses in
connection with mergers and other business combinations, and in business
valuations for corporate and other purposes. First Capital Bancorp selected
Mercer Capital as its financial advisor on the basis of its experience and
expertise in transactions similar to the Mergers, its reputation in the banking
community, and its previous experience in conducting valuations of First
Capital Bancorp Common Stock on behalf of the Capital Bank Employee Stock
Ownership Plan.
At the December 16, 1996 and December 23, 1996 meetings of the First
Capital Bancorp Board, Mercer Capital delivered its oral opinion, subsequently
confirmed in writing, that the consideration to be received by the holders of
First Capital Bancorp Common Stock pursuant to the Merger Agreement, when taken
as a whole, is fair to such shareholders from a financial point of view. No
limitations were imposed by First Capital Bancorp on Mercer Capital with
respect to the investigations made or procedures followed in rendering its
opinion. The full text of Mercer Capital's written opinion to the First
Capital Bancorp Board of Directors, which sets forth the assumptions made,
matters considered, and limitations of the review by Mercer Capital, is
attached hereto as Exhibit B and is incorporated herein by reference and should
be read carefully and in its entirety in connection with this Proxy
Statement/Prospectus. The following summary of Mercer Capital's opinion is
qualified in its entirety by reference to the full text of the opinion. Mercer
Capital's opinion is addressed to the First Capital Bancorp Board of Directors
only and does not constitute a recommendation to any shareholder of First
Capital Bancorp as to how such shareholder should vote at the Special Meeting.
In connection with its opinion, Mercer Capital, among other things: (i)
reviewed certain publicly available financial and other data with respect to
Deposit Guaranty and certain financial and other data with respect to First
Capital Bancorp, including the consolidated financial statements for recent
years and interim periods to September 30, 1996, and certain other relevant
financial and operating data relating to First Capital Bancorp and Deposit
Guaranty made available to Mercer Capital from published sources and from the
internal records of First Capital Bancorp; (ii) reviewed the Merger Agreement;
(iii) reviewed certain historical market prices and trading volumes of Deposit
Guaranty Common Stock on The Nasdaq Stock Market and New York Stock Exchange;
(iv) compared Deposit Guaranty from a financial point of view with proxies for
certain other companies in the banking industry that Mercer Capital deemed to
be relevant; (v) considered the financial terms, to the extent publicly
available, of selected recent business combinations of companies in the banking
industry that Mercer Capital deemed to be comparable, in whole or in part, to
the Mergers; (vi) reviewed and discussed with representatives of the management
of First Capital Bancorp and Deposit Guaranty certain information of a business
and financial nature regarding First Capital Bancorp and Deposit Guaranty,
furnished to Mercer Capital by First Capital Bancorp and Deposit Guaranty,
including financial forecasts and related assumptions of First Capital Bancorp;
(vii) made inquiries regarding and discussed the Merger Agreement and other
matters related thereto with First Capital Bancorp's counsel; and (viii)
performed such other analyses and examinations as Mercer Capital deemed
appropriate.
In connection with its review, Mercer Capital did not independently
verify any of the foregoing information, and relied on such information and
assumed such information was complete and accurate in all material respects.
With respect to the financial forecasts for First Capital Bancorp provided to
Mercer Capital by First Capital Bancorp's management, Mercer Capital assumed
for purposes of its opinion that such forecasts were reasonably prepared on
bases reflecting the best available estimates and judgments of First Capital
Bancorp's management at the time of preparation as to the future financial
performance of First Capital Bancorp and provided a reasonable basis upon which
Mercer Capital could form its opinion. Mercer Capital also assumed that there
were no material changes in First Capital Bancorp's or Deposit Guaranty's
assets, financial condition, results of operations, business or prospects since
the respective dates of the last financial statements made available to Mercer
Capital. In addition, Mercer Capital did not review any individual credit
files, did not make an independent evaluation, appraisal or physical inspection
of the assets or individual properties of First Capital Bancorp or Deposit
Guaranty, and was not furnished with any such appraisals. Further, Mercer
Capital's opinion was based on economic, monetary and market conditions
existing as of December 16, 1996 and December 23, 1996, and on the assumption
that the Mergers will be consummated in accordance with the terms of the Merger
Agreement, without any amendment thereto and without waiver by First Capital
Bancorp of any of the conditions to its obligations thereunder.
Set forth below is a brief summary of the reports presented by Mercer
Capital to the First Capital Bancorp Board of Directors on December 16, 1996
and December 23, 1996 in connection with its opinion.
16
<PAGE> 27
TRANSACTION OVERVIEW. Mercer Capital noted that under the terms of the
Merger Agreement, First Capital Bancorp Common Stock will be converted into
Deposit Guaranty Common Stock based upon the following: (a) 1,702,126 shares of
Deposit Guaranty Common Stock will be issued if the Average Market Price is
less than $23.50 per share; (b) 1,568,626 shares of Deposit Guaranty Common
Stock will be issued if the Average Market Price is greater than $25.50 per
share; or (c) $40,000,000 worth of Deposit Guaranty Common Stock will be issued
if the Average Market Price is between $23.50 per share and $25.50 per share.
In each case, a number of shares of Deposit Guaranty Common Stock equal to
3,000,000 divided by the Average Market Price will become subject to the Escrow
Agreement.
Based upon the terms of the Merger Agreement and the approximate trading
value of Deposit Guaranty Common Stock on the date the preliminary fairness
opinion was rendered ($29.50 per share), and assuming that all Escrow Shares
ultimately will be released to First Capital Bancorp shareholders, Mercer
Capital calculated that the implied value of the proposed Holding Company
Merger was $46.3 million, or $100.60 per share. Mercer Capital noted that this
implied value represented 351% of First Capital Bancorp's September 30, 1996
book value, 351% of its tangible book value, 18.6x estimated 1996 consolidated
earnings of approximately $2.5 million before giving consideration to merger
related expenses, 24.0% of assets, and a premium (i.e., price in excess of
tangible book value) to estimated core deposits of 21.6%. Mercer Capital
emphasized, however, that the ultimate value to be received by First Capital
Bancorp shareholders was contingent upon the market value of Deposit Guaranty's
Common Stock during the calculation period and receipt of the Escrow Shares.
COMPARABLE TRANSACTION ANALYSIS. Mercer Capital reviewed the prices
paid for various banks which have been acquired based upon certain available
public information as compiled by SNL Securities. Mercer Capital noted that
most banking transactions are measured in terms of the price/book ("P/B"),
price/tangible book ("P/TB"), price/earnings ("P/E"), price/assets ("P/A") and
tangible book premium/core deposit ("TBP/CD") ratios.
The bank acquisition data was divided into the following six groups: (1)
aggregate national acquisition data; (2) banks based in the Southeast; (3)
banks based in the Southwest; (4) Louisiana banks; (5) banks with a return on
equity ("ROE") greater than 17%; and (6) banks with assets of $150 million to
$250 million. For each group, average and median P/E, P/B, P/TB, P/A and
TBP/CD ratios were calculated for calendar years 1991-1995 and the year-to-date
period ended December 1, 1996. The 1996 median P/E ratio and average P/B,
P/TB, P/A and TBP/CD ratios were then multiplied by First Capital Bancorp's
respective estimated fiscal year 1996 earnings and September 30, 1996 book
value, tangible book value, assets and core deposits to develop an overall
indicated range of value for First Capital Bancorp. A summary of Mercer
Capital's analysis is presented in the table below.
<TABLE>
<CAPTION>
Transaction Multiples
---------------------------------------------------------------------------------
Tangible Book
Price/ Price/ Price/ Price/ Premium/Core
Earnings Book Tangible Book Assets Deposits
------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
National Averages 16.6 193% 196% 18.5% 10.8%
Southeast Averages 19.1 194% 199% 19.7% 12.0%
Southwest Averages 13.6 199% 203% 18.6% 12.3%
Louisiana Averages 16.5 218% 218% 21.1% 14.5%
High ROE Bank Averages 10.8 214% 224% 18.6% 13.1%
$150MM-$250MM Asset Averages 18.5 205% 209% 18.9% 11.7%
HIGH 19.1 218% 224% 21.1% 14.5%
AVERAGE 15.3 204% 208% 19.3% 12.5%
MEDIAN 16.5 199% 203% 18.6% 12.3%
LOW 13.6 193% 196% 18.5% 10.8%
</TABLE>
<TABLE>
<CAPTION>
Implied Acquisition Values
---------------------------------------------------------------------------------
Tangible Book
Price/ Price/ Price/ Price/ Premium/Core
Earnings Book Tangible Book Assets Deposits
------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
National Averages $ 90.00 $ 53.00 $ 54.00 $ 75.00 $ 64.00
Southeast Averages 103.00 54.00 55.00 80.00 68.00
Southwest Averages 73.00 55.00 56.00 75.00 69.00
Louisiana Averages 89.00 60.00 60.00 85.00 77.00
High ROE Bank Averages 58.00 59.00 62.00 75.00 72.00
$150MM-$250MM Asset Averages 100.00 57.00 58.00 76.00 67.00
</TABLE>
17
<PAGE> 28
<TABLE>
<S> <C> <C> <C> <C> <C>
HIGH 103.00 60.00 62.00 85.00 77.00
AVERAGE 86.00 56.00 58.00 78.00 70.00
MEDIAN 90.00 56.00 57.00 76.00 69.00
LOW 58.00 53.00 54.00 75.00 64.00
</TABLE>
Mercer Capital's analysis indicated an overall range of value of First
Capital Bancorp of $53.00 to $103.00 per share of First Capital Bancorp Common
Stock. The overall median indicated values ranged from $57.00 to $90.00 per
share of First Capital Bancorp Common Stock. Mercer Capital noted that the
implied price for First Capital Bancorp of $100.60 per share of First Capital
Bancorp Common Stock, based upon Deposit Guaranty's then trading price of
$29.50 per share, fell at the upper end of the cited range.
DILUTION ANALYSIS. A dilution analysis was conducted whereby
hypothetical non-dilutive prices for First Capital Bancorp were generated under
the assumption that various potential buyers would structure an offer so that
First Capital Bancorp's pro forma earnings per share would equal that of the
assumed buyer based solely on the shares issued to First Capital Bancorp's
shareholders.
The valuation analysis was based upon hypothetical non-dilutive
mergers with Deposit Guaranty, Hibernia Corporation, First Commerce
Corporation, Regions Financial Corporation, Banc One Corporation and Hancock
Holding Company. The analysis calculated a range of values for each assumed
buyer based upon First Capital Bancorp's estimated 1996 earnings, plus
after-tax cost savings that a buyer might realize. Expense savings were
assumed to range from 0% to 40% of First Capital Bancorp's non-interest
operating expenses.
The analysis indicated an overall range of $68.00 (0% expense savings)
to $127.00 per share of First Capital Bancorp Common Stock (40% expense
savings). Mercer Capital noted that the implied pricing of Deposit Guaranty's
offer fell slightly above the mid-point of the range. Mercer Capital further
noted that the implicit assumption in the analysis is that the buyer "pays" the
seller for all expense savings and no revenues are lost in the acquisition.
CONTRIBUTION ANALYSIS. Mercer Capital compared the relative
contribution First Capital Bancorp and Deposit Guaranty will make to the pro
forma organization based upon September 30, 1996 balance sheet data and
trailing 12 month net income. Mercer Capital noted that First Capital Bancorp
shareholders collectively will own 3.9% of the Deposit Guaranty Common Stock,
assuming 1,568,626 shares of Deposit Guaranty Common Stock are issued in the
Holding Company Merger and that all Escrow Shares ultimately are released. By
way of comparison, First Capital Bancorp will contribute approximately 2.2% of
the equity, 3.4% of the loans and 3.2% of the deposits to the pro forma
organization. In addition, First Capital Bancorp would contribute
approximately 2.7% of the stated earnings and 3.8% of the pro forma earnings to
the pro forma organization, assuming cost savings approximate 20% of First
Capital Bancorp's non-interest operating expenses.
DISCOUNTED CASH FLOW ANALYSIS. A discounted cash flow ("DCF")
analysis was prepared to develop an estimate of value First Capital Bancorp
shareholders might realize assuming a merger was delayed one and two years.
Indications of value derived using the DCF method reflect interim cash flows
(dividends) and a terminal cash flow (the value of First Capital Bancorp at the
end of the projection period), both discounted to the present at an appropriate
required rate of return.
For purposes of the analysis, projected dividends for 1997 and 1998
assumed that First Capital Bancorp's existing dividend of $0.70 per share would
be maintained. The terminal value for the one year projections was based upon
a range of net income in 1997 of $2.7 million to $3.3 million, multiplied by a
P/E ratio of 12.0x to 18.0x. The terminal value in the two year projections
was based upon a range of net income of $3.0 million to $3.6 million,
multiplied by a P/E ratio of 12.0x to 18.0x. The terminal values and interim
dividends were discounted to present values at a rate of 15%.
Mercer Capital calculated a range of present values for the one year
projections of $62.00 to $113.00 per share of First Capital Bancorp Common
Stock, and a range of present values for the two year projections of $60.00 to
$108.00 per share of First Capital Bancorp Common Stock. Mercer Capital noted
that the implied value of the proposed Holding Company Merger with Deposit
Guaranty (approximately $100.00 per share, including the Escrow Shares)
compared favorably with the range of value derived from the DCF analysis.
Further, it was noted that by delaying a sale in an effort to realize more
value that First Capital Bancorp's shareholders could risk losing value if
market and/or economic conditions changed, if management's projected
performance was not achieved, or other similar events occurred.
18
<PAGE> 29
PRO FORMA ANALYSIS OF PER SHARE DATA. Mercer Capital analyzed changes
in pro forma dividends per share, earnings per share and book value per share
from the perspective of holders of First Capital Bancorp Common Stock. Mercer
Capital did not represent or warrant that the actual pro forma data reflected
in the Proxy Statement/Prospectus mailed to First Capital Bancorp shareholders
would reflect that which was developed in its analysis. Mercer Capital noted
that the proposed terms of the Mergers would result in a substantial increase
in earnings and book value per share for holders of First Capital Bancorp
Common Stock. Mercer Capital calculated that such shareholders would benefit
from an increase in dividends to $2.73 per share from $0.70 per share as a
consequence of the Mergers, based upon Deposit Guaranty's current annualized
quarterly dividend of $0.80 per share and the proposed terms of the Mergers.
REVIEW OF DEPOSIT GUARANTY. Using public and other available
information, Mercer Capital compared the historical financial performance and
current market pricing of Deposit Guaranty with the following: (1) publicly
traded bank holding companies based in Mississippi, Alabama, Arkansas,
Louisiana and Tennessee; (2) publicly traded bank holding companies with $5
billion to $15 billion of assets; and (3) aggregate data for all publicly
traded bank holding companies. None of the companies considered in the
comparison analysis are identical to Deposit Guaranty. Mercer Capital noted
that, in general, Deposit Guaranty could be characterized as more profitable
than the comparable group medians, while its public market price in terms of
P/E, P/B, P/TB and dividend yield ratios were comparable to the median
statistics. A summary of Mercer Capital's comparisons is presented below.
<TABLE>
<CAPTION>
$5-$15 Billion
Deposit Regional Bank Bank Holding National Bank
Guaranty Holding Company Company Holding Company
Pricing Data Multiples Multiples Multiples Multiples
---------------------------------- ---------------- -------------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Earnings Per Share (LTM) 14.1 14.6 14.5 14.3
Earnings Per Share (96E) 13.5 13.4 13.5 13.4
Earnings Per Share (97E) 12.7 12.4 12.5 12.0
Book Value Per Share 204% 185% 217% 181%
Tangible Book Value Per Share 241% 200% 239% 197%
Annualized Quarterly Dividend 2.71% 2.58% 2.70% 2.15%
PROFITABILITY SUMMARY
----------------------------------
Return on Average Equity (LTM) 15.00% 13.40% 14.60% 13.00%
Return on Average Assets (LTM) 1.35% 1.21% 1.25% 1.18%
Efficiency Ratio 63.30% 60.00% 59.10% 60.40%
Payout Ratio 37.00% 35.00% 36.00% 32.00%
</TABLE>
The summary set forth above does not purport to be a complete
description of the presentation by Mercer Capital to the First Capital Bancorp
Board of Directors or of the analyses performed by Mercer Capital. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. Mercer Capital believes that its analyses and
the summary set forth above must be considered as a whole and that selecting a
portion of its analyses and factors would create an incomplete view of the
process underlying the analyses set forth in its presentation to the First
Capital Bancorp Board of Directors. In addition, Mercer Capital may have given
certain analyses more or less weight than other analyses, and may have deemed
various assumptions more or less probable than other assumptions, so that the
ranges of valuations resulting from any particular analysis described above
should not be taken to be Mercer Capital's view of the actual value of First
Capital Bancorp or the combined companies. The fact that any specific analysis
has been referred to in the summary above is not meant to indicate that such
analysis was given greater weight than any other analysis.
In performing its analyses, Mercer Capital made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of First Capital
Bancorp or Deposit Guaranty. The analyses performed by Mercer Capital are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. Such
analyses were prepared solely as part of Mercer Capital's analysis of the
fairness of the consideration to be received by the holders of First Capital
Bancorp Common Stock in the Holding Company Merger. The analyses do not
purport to be appraisals or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade at the present
time or any time in the future. Mercer Capital used in its analyses various
projections of future performance prepared by the management of First Capital
Bancorp. The projections are based on numerous variables and assumptions which
are inherently unpredictable and must be considered not certain of occurrence
as projected. Accordingly, actual results could vary significantly from those
set forth in such projections.
19
<PAGE> 30
As described above, Mercer Capital's opinion and presentation to the
First Capital Bancorp Board were among the many factors taken into
consideration by the Board in making its determination to approve the Merger
Agreement.
Pursuant to the Engagement Letter, First Capital Bancorp paid Mercer
Capital an initial fee of $15,000. If the Mergers are consummated, Mercer
Capital will be paid an additional fee equal to 0.25% of the total
consideration involved in the Holding Company Merger. First Capital Bancorp
has also agreed to reimburse Mercer Capital for its reasonable out-of-pocket
expenses in an amount not to exceed $7,500 without the prior consent of First
Capital Bancorp. First Capital Bancorp has agreed to indemnify Mercer Capital
and its partners, employees, consultants, agents and representatives against
certain liabilities, including liabilities under the federal securities laws.
In 1995 and 1996 First Capital Bancorp paid approximately $17,000 to Mercer
Capital for various services. Otherwise, neither Deposit Guaranty nor First
Capital Bancorp has paid Mercer Capital any other fees during the last two
years.
EFFECTIVE DATE
The Mergers will be consummated and become effective at the time a
certificate of merger (the "Certificate of Merger") is filed with the Secretary
of State of Louisiana, or as of such later date or time to which Deposit
Guaranty and First Capital Bancorp agree, which may be specified in the
Certificate of Merger. Unless Deposit Guaranty and First Capital Bancorp
otherwise agree, the Mergers will be consummated as soon as practicable
following receipt of First Capital Bancorp shareholder and necessary regulatory
approvals and satisfaction or waiver of the other conditions to the Mergers.
It is expected that the Effective Date will occur in the Spring of 1997;
however, there can be no assurance that the conditions to the Mergers will be
satisfied or waived so that the Mergers can be consummated. See "The Mergers
- -- Regulatory Approvals" and "The Mergers -- 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 March, 1997, 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 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 approval of the Merger Agreement by the requisite vote
of the holders of First Capital Bancorp Common Stock and regulatory approval of
the Mergers, the respective obligations of each party under the Merger
Agreement are subject, among other conditions, to (i) the absence of any order,
decree or injunction of a court or agency of competent jurisdiction enjoining
or prohibiting consummation of the Mergers, (ii) receipt of an opinion of
Watkins Ludlam & Stennis, P.A. substantially to the effect that the
transactions contemplated by the Merger Agreement will be treated for federal
income tax purposes as a tax-free reorganization under Section 368 of the Code,
(iii) the condition that on the date of closing the representations and
warranties made in the Merger Agreement by each party are true and correct in
all material respects, (iv) the condition that prior to the Effective Date
there not have been a material adverse change in the financial condition,
results of operations or business of the other party's consolidated group and
(v) the receipt of customary legal opinions. The obligation of Deposit
Guaranty to consummate the Mergers is also conditioned upon receipt of an
opinion of KPMG Peat Marwick LLP to the effect that the Mergers may be
accounted for as a pooling of interests under generally accepted accounting
principles. This condition may be waived by Deposit Guaranty.
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
INDEMNIFICATION. The Merger Agreement provides that DG Louisiana
shall indemnify the former directors, officers, employees and agents of First
Capital 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 First Capital 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 Capital 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 Capital Bank's Articles of
Incorporation and Bylaws. DG Louisiana and DGNB Louisiana have agreed to use
their best efforts to maintain First Capital Bancorp's and Capital Bank's
existing directors' and officers' liability insurance policies (or a policy
providing at least comparable coverage) for a period of five (5)
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years after the Effective Date of the Mergers. The Merger Agreement also
provides for indemnification by Deposit Guaranty of First Capital 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 First Capital Bancorp or Capital 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 First Capital Bancorp and Capital Bank under Deposit Guaranty's
benefit plans for which they are eligible, as soon as practicable after the
Effective Date. There will be no waiting period for coverage of eligible
participants under any health or group term life benefit plan, and no employee
will be denied benefits under any such plan for pre- existing conditions. All
prior years of service of Capital 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 Capital Bank employee
who, immediately prior to the Effective Date, is covered by or is a participant
in a Capital 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.
RETENTION AND SEVERANCE ARRANGEMENTS. Mr. F. Ronnie Myrick, the
President and Chief Executive Officer of First Capital Bancorp and the Chairman
and Chief Executive Officer of Capital Bank, Mr. George W. Cummings, III, the
Chief Operating Officer and Secretary of First Capital Bancorp and the
President and Chief Operating Officer of Capital Bank, and Ms. Bobbie W.
Williams, the Chief Financial Officer and Assistant Secretary of First Capital
Bancorp and the Senior Vice President, Chief Financial Officer and Cashier of
Capital Bank, each have employment agreements with Capital Bank that provide
for certain retention payments upon the consummation of a "Change in Control"
of First Capital Bancorp or Capital Bank (such term, as defined in the
employment agreements, includes the Mergers). Mr. Myrick also serves as a
director of First Capital Bancorp and Capital Bank and Mr. Cummings also serves
as a director of Capital Bank.
Pursuant to their employment agreements, each of the above-referenced
executive officers of First Capital Bancorp and Capital Bank will be entitled
to a retention payment equal to two years of his or her base pay at the rate in
effect on the Effective Date of the Mergers, provided such executive officer
remains in the employ of Capital Bank until the Effective Date of the Mergers,
continues to perform his or her duties at the level of competence Capital Bank
has come to expect of him or her, and aids in the preparation for the Mergers,
to the extent reasonably requested by Capital Bank.
Each such employment agreement also provides that, if the executive
officer is terminated during the term of the agreement without "Cause," or
terminates his or her employment for "Good Reason," each as defined in the
agreement, such executive officer will receive severance benefits equal to his
or her full base salary for twelve months, in a single lump sum payment at the
annual rate in effect on the date of termination, a bonus at the conclusion of
the fiscal year that falls within the twelve months following the date of
termination in an amount equal to such executive officer's annual bonus during
the fiscal year immediately preceding termination, all group plan benefits for
twelve months following termination and all employee benefits to which he or
she has a vested right.
Pursuant to the Merger Agreement, DGNB Louisiana has agreed to honor
the retention and severance provisions of the foregoing employment agreements,
regardless of whether the Mergers are consummated prior to the expiration of
the terms of such agreements, each of which is scheduled to expire on December
31, 1997. DGNB Louisiana will also provide severance benefits to other former
employees of Capital Bank that are at least equivalent to the benefits that
would have been provided under the severance policy applicable to DGNB
Louisiana.
EXCHANGE OF FIRST CAPITAL BANCORP CERTIFICATES
On the Effective Date, each holder of First Capital Bancorp Common
Stock will cease to have any rights as a shareholder of First Capital Bancorp
and his or her sole rights will pertain to the shares of Deposit Guaranty
Common Stock to which such holder's shares of First Capital Bancorp Common
Stock shall have been converted pursuant to the Mergers, except for the right
to receive cash for any fractional shares and except for any such shareholder
who exercises statutory dissenters' rights.
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Within ten (10) days after the effective date of the Mergers, the
Exchange Agent for the Deposit Guaranty Common Stock will mail to each holder
of record of First Capital Bancorp Common Stock a letter of transmittal and
instructions for effecting the surrender of the stock certificates which,
immediately prior to the Effective Date, represented outstanding shares of
First Capital Bancorp Common Stock in exchange for certificates representing
shares of Deposit Guaranty Common Stock. SHAREHOLDERS OF FIRST CAPITAL BANCORP
ARE REQUESTED NOT TO SURRENDER THEIR FIRST CAPITAL BANCORP CERTIFICATES FOR
EXCHANGE UNTIL SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. 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: (i) a
certificate representing that number of whole shares of Deposit Guaranty Common
Stock, as defined below, to which such holder of First Capital Bancorp Common
Stock shall have become entitled pursuant to the provisions hereof (other than
the portion of such shares of Deposit Guaranty Common Stock that comprise
Escrow Shares), and (ii) a check representing the amount of cash in lieu of
fractional shares, if any, which such holder has the right to receive in
respect of the certificates surrendered, and such certificates shall forthwith
be canceled.
Deposit Guaranty will not pay former shareholders of First Capital
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 ownership of shares
of First Capital Bancorp Common Stock along with a properly completed letter of
transmittal.
First Capital Bancorp's shareholders who cannot locate their
certificates are urged to promptly contact the Secretary of First Capital
Bancorp at 2400 Forsythe Avenue, Post Office Box 8500, Monroe, Louisiana
71201-2939, telephone number (318) 387-2265. 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 First Capital Bancorp and Deposit Guaranty and their
transfer agents and registrars against any claim that may be made against First
Capital Bancorp or Deposit Guaranty by the owner of the certificate(s) alleged
to have been lost or destroyed. First Capital 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 First Capital 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 First Capital Bancorp by written agreement of
First Capital Bancorp and Deposit Guaranty, except that no amendment may be
made after First Capital Bancorp shareholder approval that by law would require
further shareholder approval unless such further shareholder approval is
obtained.
The Merger Agreement provides that either party may (i) extend the
time for performance of any of the obligations or other acts of the other
parties, (ii) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement or in any document delivered pursuant to the
Merger Agreement or (iii) waive compliance with any of the agreements or
conditions contained in the Merger Agreement other than the satisfaction of all
requirements prescribed by law for consummation of the Mergers and receipt of
the tax opinion required by the Merger Agreement.
The Merger Agreement may be terminated at any time prior to the
Effective Date (i) by mutual written consent of the parties, properly
authorized by their respective Boards of Directors; (ii) by Deposit Guaranty,
DG Louisiana and DGNB Louisiana, if at the time of such termination there shall
have been any material adverse change in the financial condition, results of
operations, business or prospects of First Capital Bancorp or Capital Bank
since September 30, 1996; (iii) by First Capital Bancorp and Capital Bank, if
at the time of such termination there shall have been any material adverse
change in the financial condition, results of operations, business or prospects
of Deposit Guaranty since September 30, 1996; (iv) by any party to the Merger
Agreement, 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 Mergers violate the antitrust
laws of the United States; (v) by any party to the Merger Agreement, if at the
Meeting, the Merger Agreement shall not have been approved by the required
vote; (vi) by Deposit Guaranty, DG Louisiana and DGNB Louisiana, in the event
there are dissenting shareholders who hold more than ten percent (10%) of the
shares of First Capital Bancorp Common Stock; or (vii) by any party to the
Merger Agreement if closing shall not have occurred by September 30, 1997.
CONDUCT OF BUSINESS PENDING THE MERGERS
The Merger Agreement provides that Capital Bank and First Capital
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 Capital Bank nor First Capital
Bancorp shall (i) increase by more than ten percent (10%) the compensation
payable by Capital Bank or First Capital Bancorp to any of its directors,
officers, agents, consultants, or any of its employees whose total compensation
after
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such increase would be in excess of $25,000 per annum, grant or pay any
extraordinary bonus, percentage compensation, service award or other like
benefit to any such director, officer, agent, consultant or employee, or make
or agree to any extraordinary welfare, pension, retirement or similar payment
or arrangement for the benefit of any such director, officer, agent, consultant
or employee, (ii) sell or dispose of material assets except in the ordinary
course of business, (iii) enter into any new capital commitments or make any
capital expenditures, except commitments or expenditures within existing
operating and capital budgets or otherwise in the ordinary course of business
or (iv) authorize or issue any additional shares of any class of its capital
stock or any securities exchangeable for or convertible into any such shares or
any options or rights to acquire any such shares, or otherwise authorize or
affect any change in its capitalization. In addition, no dividends shall be
paid by First Capital Bancorp.
In addition, First Capital Bancorp has agreed that, without the prior
approval of Deposit Guaranty, it will not solicit or encourage inquiries or
proposals with respect to, or, 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, First Capital Bancorp or any subsidiary thereof, or any
business combination with First Capital Bancorp or any subsidiary thereof, and
shall instruct its officers, directors, agents and affiliates to refrain from
doing any of the above; provided, however, that this restriction shall not
prohibit the Board of Directors of First Capital Bancorp from furnishing
information to or entering into discussions or negotiations with any person or
entity that makes an unsolicited proposal to acquire First Capital Bancorp
pursuant to a merger, consolidation, share exchange, purchase of a substantial
portion of the assets, business combination or other similar transaction, if
the Board of Directors of First Capital Bancorp determines in good faith that
such action is required for the Board of Directors to comply with its fiduciary
duties to shareholders. If First Capital Bancorp furnishes information to or
enters into discussions or negotiations with another party prior to September
30, 1997, and enters into a definitive agreement with such party prior to March
31, 1998, then First Capital Bancorp shall pay Deposit Guaranty a fee of
$100,000, unless the Merger Agreement is terminated by Deposit Guaranty, DG
Louisiana or DGNB Louisiana based on material adverse change in the financial
condition, results of operations, business or prospects of First Capital
Bancorp or Capital Bank prior to First Capital Bancorp entering into a
definitive agreement with such party.
RESALES OF DEPOSIT GUARANTY COMMON STOCK
The shares of Deposit Guaranty Common Stock to be issued to the
holders of First Capital Bancorp Common Stock pursuant to the Merger Agreement
have been 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 First Capital Bancorp within the meaning of Rule 145 under the
Securities Act. In general, affiliates of First Capital Bancorp include its
executive officers and directors and any person who controls, is controlled by
or is under common control with First Capital Bancorp. Holders of First Capital
Bancorp Common Stock who are affiliates of First Capital 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 First Capital 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 months, (ii) such Deposit Guaranty Common Stock is sold in
a "broker's transaction," which is defined in Rule 144 under the Securities Act
as a sale in which (a) the seller does not solicit or arrange for orders to buy
the securities, (b) the seller does not make any payment other than to the
broker, (c) the broker does no more than execute the order and receive a normal
commission and (d) the broker does not solicit customer orders to buy the
securities and (iii) such sale and all other sales made by such person within
the preceding three months do not exceed the greater of (x) one percent (1%) of
the outstanding shares of Deposit Guaranty Common Stock or (y) the average
weekly trading volume of Deposit Guaranty Common Stock on the New York Stock
Exchange during the four-week period preceding the sale. Any affiliate of First
Capital Bancorp who is not an affiliate of Deposit Guaranty after the Mergers
may sell Deposit Guaranty Common Stock without restriction following the second
anniversary of the Effective Date.
First Capital 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 First Capital 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.
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EXPENSES AND FEES
All legal and other costs and expenses incurred in connection with the
Mergers and the transactions contemplated thereby will be paid by the party
incurring such costs and expenses, regardless of whether the Mergers are
consummated.
ACCOUNTING TREATMENT
The Mergers, if consummated as proposed, will qualify as a pooling
of interests for accounting and financial reporting purposes. Accordingly,
under generally accepted accounting principles, the assets and liabilities of
First Capital Bancorp will be combined with those of Deposit Guaranty and
carried forward at book values. In addition, the statements of operations of
First Capital Bancorp will be combined with the statements of operations of
Deposit Guaranty on a retroactive basis. The obligation of Deposit Guaranty
to consummate the Mergers is conditioned, among other matters, upon receipt of
an opinion of KPMG Peat Marwick LLP to the effect that the Mergers may be
accounted for as a pooling of interests under generally accepted accounting
principles. This condition may be waived by Deposit Guaranty.
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, as amended (the "Code"), the regulations thereunder, judicial
authority, and administrative rulings and practice as of the date hereof, any
of which is subject to change. Consummation of the Mergers is conditioned on
the receipt by Deposit Guaranty, DG Louisiana, DGNB Louisiana, First Capital
Bancorp and Capital Bank of an opinion of counsel to Deposit Guaranty to the
effect that the Mergers will be treated, for federal income tax purposes, as
tax-free reorganizations under Section 368(a) of the Code.
Any First Capital Bancorp shareholder who, pursuant to the Mergers,
exchanges all of the First Capital Bancorp Common Stock that such holder owns
solely for Deposit Guaranty Common Stock will not recognize any gain or loss
upon such exchange. The aggregate tax basis of Deposit Guaranty Common Stock
received by such a holder in exchange for First Capital Bancorp Common Stock
will equal such holder's tax basis in the First Capital Bancorp Common Stock
surrendered. If such shares of First Capital Bancorp Common Stock are held as
capital assets at the Effective Date, the holding period of the Deposit
Guaranty Common Stock received will include the holding period of the First
Capital Bancorp Common Stock surrendered therefor. First Capital 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.
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 First Capital 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 Section 302(a) of the Code, provided
that such deemed redemption is not "substantially disproportionate" with
respect to such First Capital Bancorp shareholder or is "not essentially
equivalent to a dividend." If the Deposit Guaranty Common Stock represents a
capital asset in the hands of the shareholder, then the shareholder will
generally recognize capital gain or loss on such a deemed redemption of the
fractional share in an amount determined by the difference between the amount
of cash received for such fractional share and the shareholder's tax basis in
the fractional share.
First Capital Bancorp's shareholders who perfect dissenters' rights
will be treated as having received the fair value of the First Capital Bancorp
Common Stock, as determined in the dissenters' rights proceeding, in redemption
of the First Capital Bancorp Common Stock subject to the proceeding. Such
deemed redemption will be subject to Section 302(a) of the Code, if such deemed
redemption is "substantially disproportionate" with respect to the First
Capital Bancorp shareholder who exercises dissenters' rights, is "not
essentially equivalent to a dividend," or is a complete termination of the
dissenting shareholder's interest in First Capital Bancorp, with the result
that a holder who exercises dissenters' rights will recognize gain or loss
equal to the difference between the amount realized and such holder's tax basis
in the First Capital Bancorp Common Stock subject to the proceeding. Any such
gain or loss recognized on such redemption will be treated as capital gain or
loss if the First Capital Bancorp Common Stock with respect to which
dissenters' rights were exercised were held as capital assets. Each First
Capital Bancorp shareholder who contemplates exercising dissenters' rights
should consult a tax advisor as to the possibility that all or a portion of the
payment received pursuant to the dissenters' rights proceeding will be treated
as dividend income.
Unless an exemption applies under the applicable law and regulations,
the Exchange Agent will be required to withhold thirty-one percent (31%) of any
cash payments to which a shareholder
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or other payee is entitled pursuant to the Mergers unless the shareholder or
other payee provides its taxpayer identification number (social security number
or employer identification number) and certifies that such number is correct.
Each shareholder and, if applicable, each other payee should complete and sign
the substitute Form W-9 included as part of the letter of transmittal so as to
provide the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is established in a
manner satisfactory to Deposit Guaranty and the Exchange Agent.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS WITHOUT REGARD TO THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH FIRST CAPITAL BANCORP SHAREHOLDER. FIRST
CAPITAL BANCORP'S SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS
TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGERS, INCLUDING THE
APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
DISSENTERS' RIGHTS
Under Section 131 of the Louisiana BCL (a copy of which is attached
hereto as Exhibit C), any holder of record of shares of First Capital Bancorp
Common Stock who files a written objection to the Mergers prior to or at the
Meeting at which the vote on the Mergers is taken, and who votes against the
Mergers, may demand in writing that such shareholder be paid in cash the fair
cash value of such shares, as of the day before the Meeting, as determined by
agreement between the shareholder and DG Louisiana or by a state district court
in Ouachita Parish, Louisiana, if the shareholder and DG Louisiana are unable
to agree upon the fair cash value ("Dissenters' Rights"). INTERESTED PARTIES
SHOULD NOTE THAT, IF THE MERGER AGREEMENT IS APPROVED BY EIGHTY PERCENT (80%)
OR MORE OF THE OUTSTANDING SHARES OF FIRST CAPITAL BANCORP COMMON STOCK,
SECTION 131 OF THE LOUISIANA BCL PROVIDES THAT NO FIRST CAPITAL BANCORP
SHAREHOLDER WILL HAVE DISSENTERS' RIGHTS. A person who is a beneficial owner,
but not a registered owner, of shares of First Capital Bancorp Common Stock who
wishes to exercise the rights of a dissenting shareholder under the Louisiana
BCL cannot do so in his own name and should have the record ownership of the
shares transferred to his or her name or instruct the record owner thereof to
take all required action to comply on his behalf with the procedures under
Section 131 of the Louisiana BCL.
Any shareholder of record contemplating exercising Dissenters' Rights
is urged to review carefully the provisions of Section 131 of the Louisiana
BCL, particularly the procedural steps required to perfect Dissenters' Rights
thereunder. DISSENTERS' RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF
SECTION 131 ARE NOT FULLY SATISFIED.
Set forth below is a summary of the procedures relating to the
exercise of Dissenters' Rights. The following summary does not purport to be a
complete statement of the provisions of Section 131 of the Louisiana BCL and is
qualified in its entirety by reference to Exhibit C hereto and to any
amendments to such sections as may be adopted after the date of this Proxy
Statement/Prospectus.
FILING WRITTEN OBJECTION AND VOTE AGAINST THE MERGERS
To exercise the right of dissent, a shareholder (each a "Dissenter")
must (i) deliver to First Capital Bancorp a written objection to the Merger
Agreement prior to or at the Meeting AND ALSO (ii) vote the shares of First
Capital Bancorp Common Stock held by him (in person or by proxy) against the
Merger Agreement at the Meeting. Neither a vote against the Merger Agreement
nor a specification in a proxy to vote against the Merger Agreement will in and
of itself constitute the necessary written objection to the Merger Agreement.
Moreover, by voting in favor of, or abstaining from voting on, the Merger
Agreement, or by returning the enclosed proxy without instructing the proxy
holders to vote against the Merger Agreement, a shareholder waives his or her
rights under Section 131 of the Louisiana BCL.
NOTICE OF THE EFFECTIVE DATE
If the Merger Agreement is approved by less than eighty percent (80%)
of the outstanding shares of First Capital Bancorp Common Stock, then, promptly
after the Effective Date, notice will be given to each Dissenter that the
Mergers have become effective. The notice shall be sent by registered mail,
addressed to the Dissenter at such Dissenter's last address on First Capital
Bancorp's records immediately prior to the Effective Date.
WRITTEN DEMAND
Within twenty (20) days after the mailing of such notice, a Dissenter
must file with DG Louisiana a demand in writing (the "Demand") for payment of
the fair cash value of such Dissenter's shares as of the day prior to the
Meeting, stating the amount demanded
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and a post office address to which DG Louisiana may reply. Simultaneously with
the filing of the Demand, the Dissenter shall also deposit the certificate(s)
representing his shares of First Capital Bancorp Common Stock (duly endorsed
and transferred to DG Louisiana upon the sole condition that the certificate(s)
will be delivered to DG Louisiana upon payment of the value of the shares in
accordance with Section 131 of the Louisiana BCL) in escrow with a chartered
bank or trust company located in Ouachita Parish, Louisiana (the "Escrow
Bank"). Along with the Demand, the Dissenter shall deliver to DG Louisiana a
written acknowledgment of the Escrow Bank that it holds such certificate(s),
endorsed as specified above.
A Dissenter who fails to satisfy any of the foregoing conditions
within the proper time periods will conclusively be presumed to have acquiesced
to the Mergers and will forfeit any right to seek payment pursuant to Section
131 of the Louisiana BCL.
APPRAISAL
If DG Louisiana does not agree to the amount demanded by the
Dissenter, or does not agree that any payment is due, it will, within twenty
(20) days after receipt of such Demand and acknowledgment, notify such
Dissenter in writing of either (i) the value it will agree to pay, or (ii) its
belief that no payment is due. If the Dissenter does not agree to accept the
offered amount, or disagrees with DG Louisiana's assertion that no payment is
due, he must within sixty (60) days after the receipt of such notice file suit
against DG Louisiana in state court in Ouachita Parish, Louisiana for a
judicial determination of the fair cash value of his shares. Any Dissenter who
is entitled to file such suit may, within such 60-day period but not
thereafter, intervene as a plaintiff in any suit filed against DG Louisiana by
another former shareholder of First Capital Bancorp for a judicial
determination of the fair cash value of such other shareholder's shares. If a
Dissenter fails to bring or to intervene in such a suit within the applicable
sixty-day period, the Dissenter will be deemed to have consented to accept
either DG Louisiana's statement that no payment is due or, if DG Louisiana does
not contend that no payment is due, to accept the value of his shares specified
by DG Louisiana in its notice of disagreement (the "Notice of Disagreement").
Shareholders considering exercising Dissenters' Rights should bear in
mind that the fair cash value of their shares determined under Section 131 of
the Louisiana BCL could be more than, the same as or less than the
consideration they would otherwise receive pursuant to the Merger Agreement if
they do not seek such rights, and that opinions of financial advisors as to
fairness are not opinions as to fair cash value under Section 131 of the
Louisiana BCL.
Any Dissenter who has duly filed a Demand in compliance with Section
131 of the Louisiana BCL will, after filing the Demand, cease to have any of
the rights of a shareholder, except those rights generally provided to
Dissenters under Section 131 of the Louisiana BCL.
A Dissenter has the right to voluntarily withdraw his or her Demand
and to accept the terms offered in the Merger Agreement at any time before DG
Louisiana gives its Notice of Disagreement, but thereafter the Dissenter may
withdraw his or her Demand only with the consent of DG Louisiana. If a Demand
is properly withdrawn, or the Dissenter otherwise loses his Dissenters' Rights,
a Dissenter shall only be entitled to receive the consideration offered
pursuant to the Merger Agreement.
PAYMENT AND COSTS
If upon the filing of a suit or intervention against DG Louisiana by a
Dissenter pursuant to Section 131 of the Louisiana BCL, DG Louisiana deposits
with the court the amount, if any, which it specified in its Notice of
Disagreement, and if in that notice DG Louisiana offered to pay such amount to
the Dissenter on demand, then the costs (not including legal fees) of the suit
or intervention will be taxed against the Dissenter if the amount finally
awarded to the Dissenter, exclusive of interest and costs, is equal to or less
than the amount so deposited; otherwise, the costs (not including legal fees)
will be assessed against DG Louisiana.
NOTICES
Prior to the Effective Date, dissenting shareholders of First Capital
Bancorp should send any communications regarding their rights to George W.
Cummings, III, Secretary, First Capital Bancorp, Inc., 2400 Forsythe Avenue,
Post Office Box 8500, Monroe, Louisiana 71201-2939. On or after the Effective
Date, dissenting shareholders should send any communications regarding their
rights to Richard H. Sale, Secretary, Deposit Guaranty Louisiana Corp., 333
Texas Street, P. O. Box 21119, Shreveport, Louisiana 71136-6060. All such
communications should be signed by or on behalf of the dissenting shareholder
in the form in which his or her shares are registered on the books of First
Capital Bancorp. Deposit Guaranty, DG Louisiana and DGNB Louisiana have the
right to terminate the Merger Agreement if the number of shares of First
Capital Bancorp Common Stock as to which holders thereof are legally entitled
to assert Dissenters' Rights exceeds ten percent (10%) of the outstanding
shares of First Capital Bancorp Common Stock. See "The Mergers -- Amendment;
Waiver; Termination."
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ANY FIRST CAPITAL BANCORP SHAREHOLDER WHO DESIRES TO EXERCISE
DISSENTERS' RIGHTS SHOULD CAREFULLY REVIEW THE LOUISIANA BCL AND IS URGED TO
CONSULT SUCH SHAREHOLDER'S LEGAL ADVISOR BEFORE EXERCISING OR ATTEMPTING TO
EXERCISE SUCH RIGHTS.
COMPARATIVE RIGHTS OF SHAREHOLDERS
First Capital Bancorp is incorporated in the State of Louisiana and
Deposit Guaranty is incorporated in the State of Mississippi. If the Mergers
are consummated, holders of First Capital Bancorp Common Stock, whose rights as
shareholders are currently governed by Louisiana law and by the First Capital
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 holders of First
Capital Bancorp Common Stock and shareholders of Deposit Guaranty are set forth
below. This summary is not intended to be relied upon as an exhaustive list or
a detailed description of the provisions discussed and is qualified in its
entirety by the Louisiana BCL and the Mississippi Business Corporation Act (the
"Mississippi BCA") and by the Articles of Incorporation and Bylaws of each of
First Capital Bancorp and Deposit Guaranty, respectively, to which holders of
First Capital Bancorp Common Stock are referred.
CUMULATIVE VOTING RIGHTS
FIRST CAPITAL BANCORP. Each outstanding share of First Capital
Bancorp Common Stock is entitled to one vote on each matter submitted to a vote
of shareholders. The First Capital Bancorp Articles do not provide for
cumulative voting in the election of directors.
DEPOSIT GUARANTY. Pursuant to the Mississippi BCA and Deposit
Guaranty's Bylaws, each outstanding share of Deposit Guaranty stock is entitled
to one (1) vote on each matter submitted to a vote. However, in connection
with the election of directors, holders of Deposit Guaranty Common Stock have
cumulative voting rights. Pursuant to the Deposit Guaranty Bylaws, every
shareholder entitled to vote in the election of directors shall have the right
to vote, in person or by proxy, the number of shares owned by him for as many
persons as there are directors to be elected, or to cumulate his votes by
giving one (1) candidate the number of votes equal to the number of directors
to be elected multiplied by the number of his shares, or by distributing such
votes on the same principle among any number of candidates.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
FIRST CAPITAL BANCORP. The First Capital Bancorp Articles provide
that no director or executive officer of First Capital Bancorp may be held
personally liable to First Capital Bancorp or its shareholders for monetary
damages for breach of his or her fiduciary duty as a director or executive
officer, except for liability for: (i) breach of the director's or officer's
duty of loyalty to First Capital Bancorp or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) unlawful dividends or certain other unlawful
distributions and (iv) any transaction from which the director or executive
officer derived an improper personal benefit.
DEPOSIT GUARANTY. Deposit Guaranty's Articles and Bylaws do not
contain any provision limiting the personal liability of Deposit Guaranty's
directors and officers for monetary damages resulting from breach of fiduciary
duty.
SUPERMAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS; CONTROL SHARES
FIRST CAPITAL BANCORP. The Louisiana BCL states that mergers,
consolidations and sales of all or substantially all of the assets of a
Louisiana corporation must be approved by the shareholders by vote of at least
two- thirds of the voting power present, or such larger or smaller vote (not
less than a majority) of the voting power present or the total voting power as
the corporation's articles may require. Under the Louisiana BCL, share
exchanges require a similar shareholder vote by each class or series included
in the exchange. The First Capital Bancorp Articles provide that a merger,
consolidation or other business combination may be approved by the vote of the
holders of two- thirds of the voting shares present at a meeting of the
shareholders called for such purpose.
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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
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
FIRST CAPITAL BANCORP. The First Capital Bancorp Articles and Bylaws
do not contain provisions relating to the removal of directors. Under the
Louisiana BCL, directors of First Capital Bancorp may be removed from office,
with or without cause, by the vote of a majority of the total voting power of
the corporation at a meeting called for that purpose. In addition, the First
Capital Bancorp Board may declare the office of a director vacant if he or she
is interdicted, adjudicated incompetent or bankrupt, or becomes incapacitated
by illness or other infirmity to perform his or her duties for six months or
longer.
DEPOSIT GUARANTY. Deposit Guaranty's Articles provide that Deposit
Guaranty shareholders may remove a director with or without cause, but only at
a meeting expressly called for that purpose and upon the affirmative vote of
the holders of at least eighty percent (80%) of the voting power of all shares
of stock entitled to vote generally in the election of directors, and in the
event that less than the entire Board is to be removed, not one of the
directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the class
of directors of which he is a part.
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BOARD OF DIRECTORS
FIRST CAPITAL BANCORP. The Board of Directors of First Capital
Bancorp is not divided into classes.
DEPOSIT GUARANTY. The Board of Directors of the Company is divided
into three (3) classes - Class A, Class B, and Class C. Class A and Class C
each consists of four (4) directors. Class B consists of three (3) directors.
The term of the Class A directors will expire at the 1999 Annual Meeting, the
term of the Class B directors will expire at the 1997 Annual Meeting, and the
term of the Class C directors will expire at the 1998 Annual Meeting.
VACANCIES IN THE BOARD OF DIRECTORS
FIRST CAPITAL BANCORP. Under the Bylaws of First Capital Bancorp,
if the office of a director becomes vacant for any reason, a majority of the
remaining directors, even if such remaining directors constitute less than a
quorum, may fill the vacancy.
DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, any vacancy,
including one occurring as a result of an increase in the number of directors,
may be filled only by the shareholders.
AMENDMENT OF THE ARTICLES OF INCORPORATION OR BYLAWS
FIRST CAPITAL BANCORP. Except as otherwise required by law or
permitted by the First Capital Bancorp Articles, such Articles may be amended
by a majority vote of the First Capital Bancorp Common Stock present and
represented at a shareholders meeting, the notice of which sets forth the
proposed amendment and a summary of the changes to be made thereby. The First
Capital Bancorp Bylaws may be amended by the vote of a majority of the entire
First Capital Bancorp Board, subject to the right of the shareholders to change
or repeal any Bylaws.
DEPOSIT GUARANTY. Under the Mississippi BCA, the board of directors
has the power to amend or repeal the bylaws of a Mississippi corporation such
as Deposit Guaranty, unless such power is expressly reserved for the
shareholders. Deposit Guaranty's Articles provide that an amendment to the
Bylaws relating to composition of the Board of Directors and removal of
directors must be approved by the affirmative vote of at least eighty percent
(80%) of the shareholders (the same proportion required in order to effect the
removal of a director), excluding (except for purposes of determining whether a
quorum is present) those shares beneficially owned by any Interested
Shareholder. The affirmative vote of at least eighty percent (80%) of the
shareholders is also required to amend the provisions of the Articles of
Incorporation requiring a supermajority approval of Business Combinations.
Amendments to the Articles of Incorporation that result in Dissenters' Rights
require the affirmative vote of a majority of the outstanding shares entitled
to vote on the amendment. Otherwise, the Articles of Incorporation may be
amended by a majority vote of the shares present at a meeting where a quorum is
present.
SPECIAL MEETINGS OF SHAREHOLDERS
FIRST CAPITAL BANCORP. Under the First Capital Bancorp Bylaws,
special meetings of the shareholders, for any purpose or purposes, may be
called by the President or the Board of Directors. The Bylaws further provide
that any shareholder or shareholders holding in the aggregate not less than 25%
of the total voting power of First Capital Bancorp may request that the
Chairman, President or Secretary call a special meeting of shareholders at such
time as the Secretary may fix, not less than 15 nor more than sixty days after
the receipt of the request. If the Secretary fails to fix a time for, or
provide for, such a meeting, the shareholder or shareholders submitting the
request may do so.
DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, special meetings
of the shareholders, for any purpose or purposes, may be called by the Chairman
of the Board, the President or the Board of Directors, or upon the written
request of shareholders holding in the aggregate not less than ten percent
(10%) of the total voting power entitled to vote on an issue.
SHAREHOLDER PROPOSALS AND NOMINATIONS
FIRST CAPITAL BANCORP. Neither First Capital Bancorp's Articles nor
Bylaws provide procedures with respect to submission of shareholder proposals
for consideration at a shareholders' meeting. The First Capital Bancorp Bylaws
state that nominations by shareholders of persons for election as directors
must be made in writing, setting forth the name, address and principal
occupation of the proposed nominee, the name and residence address of the
nominating shareholder, and the number of shares owned by the nominating
shareholder. Such nominations must be submitted to the President of First
Capital Bancorp not less than 30 days nor more than 50 days prior to the annual
meeting of shareholders.
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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.
AUTHORIZED CAPITAL
FIRST CAPITAL BANCORP. The authorized capital stock of First Capital
Bancorp consists of 2,000,000 shares of First Capital Bancorp Common Stock and
60 shares of First Capital Bancorp Preferred Stock.
DEPOSIT GUARANTY. Deposit Guaranty has 100,000,000 shares of
authorized common stock having no par value, 25,000,000 Class A Voting
Preferred Stock having no par value and 25,000,000 Class B Non-Voting Preferred
having no par value. Holders of Preferred Stock shall be entitled to receive
dividends subject to statutory restrictions, when and as declared by the Board
of Directors, and at such periods as shall be fixed by the Board of Directors.
The Board of Directors has the power to establish the number of shares of each
series, redemption rights, dividend rights, conversion rights, and other
preferences of such preferred stock. No shares of preferred stock are
currently issued and outstanding.
INFORMATION CONCERNING FIRST CAPITAL BANCORP
DESCRIPTION OF BUSINESS
First Capital Bancorp, a Louisiana corporation and a registered bank
holding company under the Federal Bank Holding Company Act of 1956 (the "BHC
Act"), was incorporated in 1981 to acquire the outstanding stock of Capital
Bank. First Capital Bancorp has no other subsidiaries. At September 30, 1996,
First Capital Bancorp had total consolidated assets of approximately $186.1
million and shareholders' equity of approximately $12.8 million. First Capital
Bancorp's principal executive office is located at 2400 Forsythe Avenue,
Monroe, Louisiana 71201-2939, and its telephone number is (318) 387-2265.
Capital Bank was organized as a national banking association in 1934
and was converted into a Louisiana state bank in 1981. Capital Bank provides
full-service consumer and commercial banking services in Ouachita, Madison,
Morehouse and Richland Parishes in the State of Louisiana, through its main
banking office at 100 Oak Street, Delhi, Louisiana, and at five full service
branches located in Monroe, West Monroe, Tallulah and Bastrop, Louisiana.
Deposits of Capital Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") up to applicable legal limits. Capital Bank offers an
array of deposit services, including demand accounts, NOW accounts,
certificates of deposit, and money market accounts, and provides safe deposit
boxes, night depository, individual retirement accounts and electronic and
drive-in banking services. Capital Bank's lending activities consist
principally of agricultural, real estate, consumer and commercial loans. At
September 30, 1996, Capital Bank had total deposits of approximately $163.6
million.
Capital Bank's deposits represent a cross-section of the area's
economy and there is no material concentration of deposits from any single
customer or group of customers. Capital Bank's loan portfolio contains a
concentration of agricultural loans. A concentration is defined as amounts
loaned to a multiple number of borrowers engaged in similar activities, which
could cause them to be similarly impacted by economic or other conditions,
where the amount exceeds 10% of total loans. At September 30, 1996, Capital
Bank had outstanding approximately $46.9 million of loans to borrowers engaged
in agricultural business, which represented 34.6% of Capital Bank's total
outstanding loans on such date.
The volume of agricultural lending by Capital Bank results in seasonal
variations in Capital Bank's financial condition and results of operations. A
majority of Capital Bank's agricultural loans are crop production loans. The
primary crops grown by Capital Bank's agricultural borrowers are cotton, corn
and soybeans. Such borrowers typically begin borrowing money under crop
production loans in the Spring. Loan volumes generally peak in August and
September. Loans generally are repaid as crops are harvested in October and
early November. Capital Bank uses Federal Home Loan Bank advances and the
Federal Reserve Board Seasonal Borrowing Program to fund the Summer increases
in loan volume. Additionally, Capital Bank offers certificates of deposits
during the Summer months at rates slightly above market, with maturities
similar to those of Capital Bank's outstanding crop production loans.
PROPERTY
The executive offices of First Capital Bancorp and Capital Bank,
located at 2400 Forsythe Avenue, Monroe, Louisiana, and 100 Oak Street, Delhi,
Louisiana, respectively, are owned by Capital Bank and are not subject to
mortgages. Capital Bank also owns
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the building and land where each of its branches is located, except for the
Bastrop Branch, which is located on leased premises under a lease that expires
in November 1997, subject to Capital Bank's option to renew the lease for a
one-year period. During 1996, Capital Bank purchased a building and land in
Bastrop, Louisiana for the purpose of relocating the Bastrop Branch during
1997. None of the properties owned by Capital Bank is subject to a mortgage.
EMPLOYEES
First Capital Bancorp and Capital Bank have, in the aggregate,
approximately 71 full-time and 11 part-time employees and considers its
relationship with its employees to be good. None of First Capital Bancorp's or
Capital Bank's employees are subject to a collective bargaining agreement.
COMPETITION
First Capital Bancorp's general market area consists of Ouachita,
Madison, Morehouse and Richland Parishes in the State of Louisiana. This
four-parish area has an approximate population of 200,000 and contains numerous
banks and other financial institutions. The Bank experiences substantial
competition in attracting and retaining deposits and making loans.
The primary factors in competing for deposits are interest rates, the
quality and range of financial services offered, convenience of office
locations and office hours. Competition for loan customers is generally a
function of interest rates, loan origination fees and other charges,
restrictive covenants and compensating balances and other services offered.
First Capital Bancorp competes with numerous other commercial banks, savings
associations and credit unions for customer deposits, as well as with a broad
range of financial institutions in consumer and commercial lending activities.
In addition to banks and savings associations, other businesses in the
financial services industry compete with First Capital Bancorp for retail and
commercial deposit funds and for retail and commercial loan business.
Competition for loans and deposits is intense among the financial
institutions in the area, and has increased due to recent acquisitions of
community banks by regional holding companies with greater resources than those
of First Capital Bancorp. The size of these institutions allows certain
economies of scale that permit their operation on a narrower profit margin than
would be appropriate for First Capital Bancorp.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Interstate Banking Act") authorized the acquisition of banks in any
state by bank holding companies, subject to compliance with federal and state
antitrust laws, the Community Reinvestment Act ("CRA") and specific deposit
concentration limits. The Interstate Banking Act removes most state barriers
to interstate acquisitions of banks and ultimately will permit multistate
banking operations to merge into a single bank. Enactment of the Interstate
Banking Act may result in increased competition from out of state financial
institutions and their holding companies. See "Information Concerning First
Capital Bancorp -- Supervision and Regulation."
MARKET PRICES AND DIVIDENDS
MARKET PRICES. First Capital Bancorp Common Stock is not traded on
any exchange or in any other established public trading market. There are no
bid or asked prices available for First Capital Bancorp Common Stock.
At Janaury 21, 1997, there were 309 shareholders of First Capital
Bancorp.
CASH DIVIDENDS. First Capital Bancorp paid cash dividends of $0.70
per share in each of 1996, 1995 and 1994. First Capital Bancorp has agreed in
the Merger Agreement that it will not pay any dividend prior to the Closing of
the Mergers without the consent of Deposit Guaranty.
First Capital Bancorp may pay dividends out of its surplus, unless it
is insolvent or the dividend payment would render it insolvent. In the absence
of surplus, it may pay dividends out of its net profits for the current year or
previous year or both, unless (i) its assets are, or would upon payment of the
dividend be, exceeded by its liabilities or (ii) its net assets are below or
the dividend would reduce its net assets below the aggregate amount payable on
liquidation based upon the issued shares, if any, which have a preferential
right to participate in the corporation's assets in the event of liquidation.
Substantially all of the funds available to First Capital Bancorp to
pay dividends to its shareholders are derived from dividends paid to it by
Capital Bank, which are subject to certain legal restrictions. With respect to
Capital Bank, the prior approval of the Louisiana Commissioner of Financial
Institutions (the "Commissioner") is required if the total of all dividends
declared in any one year
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will exceed the sum of its net profits of that year and net profits of the
immediately preceding year. Additionally, dividends may not be declared or
paid by a Louisiana state bank unless the bank has unimpaired surplus equal to
50% of the outstanding capital stock of the bank, and no dividend payment may
reduce the bank's unimpaired surplus below 50%. At September 30, 1996, Capital
Bank had approximately $3,877,000 available for the payment of dividends to
First Capital Bancorp without prior approval of the Commissioner.
LEGAL PROCEEDINGS
First Capital Bancorp and Capital Bank normally are parties to and
have pending routine litigation arising from their regular business activities
of furnishing financial services, including providing credit and collecting
secured and unsecured indebtedness. In some instances, such litigation
involves claims or counterclaims against First Capital Bancorp and Capital
Bank, or either of them. As of September 30, 1996, First Capital Bancorp and
Capital Bank did not have any litigation pending.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. Set forth below is a summary description of certain
laws which relate to the regulation of First Capital Bancorp and Capital Bank.
The description does not purport to be complete and is qualified in its
entirety by reference to the applicable laws and regulations.
FIRST CAPITAL BANCORP. First Capital Bancorp is subject to regulation
under the Louisiana Banking Law ("LBL") and the BHC Act. First Capital Bancorp
is required to file with the Federal Reserve Board quarterly and annual reports
and such additional information as the Federal Reserve Board may require
pursuant to the BHC Act. The Federal Reserve Board may conduct examinations of
First Capital Bancorp and its subsidiaries. The Commissioner imposes similar
reporting and examination requirements upon First Capital Bancorp under the
LBL.
The Federal Reserve Board may require that First Capital Bancorp
terminate an activity or terminate control of or liquidate or divest certain
subsidiaries or affiliates when the Federal Reserve Board believes the activity
or the control of the subsidiary or affiliate constitutes a significant risk to
the financial safety, soundness or stability of any of its banking
subsidiaries. The Federal Reserve Board also has the authority to regulate
provisions of certain bank holding company debt, including authority to impose
interest ceilings and reserve requirements on such debt. Under certain
circumstances, First Capital Bancorp must file written notice and obtain
approval from the Federal Reserve Board prior to purchasing or redeeming its
equity securities.
Under the BHC Act and regulations adopted by the Federal Reserve
Board, a bank holding company and its non- banking subsidiaries are prohibited
from requiring certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services. Further, First
Capital Bancorp is required by the Federal Reserve Board to maintain certain
levels of capital. See "First Capital Bancorp Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Capital Adequacy."
First Capital Bancorp is required to obtain the prior approval of the
Federal Reserve Board for the acquisition of more than five percent of the
outstanding shares of any class of voting securities or substantially all of
the assets of any bank or bank holding company. Prior approval of the Federal
Reserve Board is also required for the merger or consolidation of First Capital
Bancorp and another bank holding company.
First Capital Bancorp is prohibited by the BHC Act, except in certain
statutorily prescribed instances, from acquiring direct or indirect ownership
or control of more than five percent of the outstanding voting shares of any
company that is not a bank or bank holding company and from engaging directly
or indirectly in activities other than those of banking, managing or
controlling banks or furnishing services to its subsidiaries. However, First
Capital Bancorp may, subject to the prior approval of the Federal Reserve
Board, engage in any, or acquire shares of companies engaged in, activities
that are deemed by the Federal Reserve Board to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
In making any such determination, the Federal Reserve Board is required to
consider whether the performance of such activities by First Capital Bancorp or
an affiliate can reasonably be expected to produce benefits to the public, such
as greater convenience, increased competition or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest or unsound banking
practices.
Under Federal Reserve Board regulations, a bank holding company is
required to serve as a source of financial and managerial strength to its
subsidiary banks and may not conduct its operations in an unsafe or unsound
manner. In addition, it is the Federal Reserve Board's policy that, in serving
as a source of strength to its subsidiary banks, a bank holding company should
stand ready to use available resources to provide adequate capital funds to its
subsidiary banks during periods of financial stress or adversity and should
maintain
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the financial flexibility and capital-raising capacity to obtain additional
resources for assisting its subsidiary banks. A bank holding company's failure
to meet its obligations to serve as a source of strength to its subsidiary
banks will generally be considered by the Federal Reserve Board to be an unsafe
and unsound banking practice or a violation of the Federal Reserve Board's
regulations or both. This doctrine has become known as the "source of strength
doctrine." Although the United States Court of Appeals for the Fifth Circuit
found the Federal Reserve Board's source of strength doctrine invalid in 1990,
stating that the Federal Reserve Board had no authority to assert the doctrine
under the BHC Act, the decision was reversed by the United States Supreme Court
on procedural grounds. The validity of the source of strength doctrine is
likely to continue to be the subject of litigation until definitively resolved
by the courts or by Congress.
CAPITAL BANK. Capital Bank is subject to primary supervision,
examination and regulation by the Commissioner and the FDIC. If, as a result
of an examination of a bank, the FDIC should determine that the financial
condition, capital resources, asset quality, earnings prospects, management,
liquidity or other aspects of the bank's operations are unsatisfactory or that
the bank or its management is violating or has violated any law or regulation,
various remedies are available to the FDIC. Such remedies include the power to
enjoin "unsafe or unsound practices," to require affirmative action to correct
any conditions resulting from any violation or practice, to issue an
administrative order that can be judicially enforced, to direct an increase in
capital, to restrict the growth of the bank, to assess civil monetary
penalties, to remove officers and directors, and to terminate a bank's deposit
insurance.
Various requirements and restrictions under the laws of the United
States and the State of Louisiana affect operations of Capital Bank. Federal
and Louisiana statutes and regulations relate to many aspects of the Bank's
operations, including reserves against deposits, interest rates payable on
deposits, loans or investments, mergers and acquisitions, borrowings,
dividends, locations of branch offices, capital requirements and disclosure
obligations to depositors and borrowers. Further, the Bank is required to
maintain certain levels of capital. See "First Capital Bancorp Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Capital Adequacy." The deposits of the Bank are insured by the FDIC in the
manner and to the extent provided by law.
RESTRICTIONS ON TRANSFERS OF FUNDS TO FIRST CAPITAL BANCORP BY CAPITAL
BANK. First Capital Bancorp is a legal entity separate and distinct from
Capital Bank. First Capital Bancorp's ability to pay cash dividends is limited
by Louisiana law. There also are statutory and regulatory limitations on the
amount of dividends which may be paid to First Capital Bancorp by Capital Bank.
Louisiana law restricts the amount available for cash dividends by state banks
without approval by the Commissioner. See "Information Concerning First
Capital Bancorp -- Market Prices and Dividends." The amount of dividends that
could be paid by Capital Bank to First Capital Bancorp without prior approval
at September 30, 1996 equaled approximately $3,877,000.
The FDIC and Federal Reserve Board also have authority to prohibit
Capital Bank from engaging in what, in their respective opinion, constitutes an
unsafe or unsound practice in conducting Capital Bank's business. It is
possible, depending upon the financial condition of Capital Bank and other
factors, that the FDIC or Federal Reserve Board could assert that the payment
of dividends or other payments might, under some circumstances, be such an
unsafe or unsound practice. Further, the FDIC and Federal Reserve Board have
established guidelines with respect to the maintenance of appropriate levels of
capital by banks or bank holding companies under their jurisdiction.
Compliance with the standards set forth in such guidelines and other provisions
of federal law could limit the amount of dividends which Capital Bank or First
Capital Bancorp may pay.
Substantially all of First Capital Bancorp's revenues, on an
unconsolidated basis, including funds available for the payment of dividends
and other operating expenses, are the result of dividends paid by Capital Bank.
Capital Bank is subject to certain restrictions imposed by federal law
on any extensions of credit to, or the issuance of a guarantee or letter of
credit on behalf of, First Capital Bancorp or other affiliates, the purchase of
or investments in stock or other securities thereof, the taking of such
securities as collateral for loans and the purchase of assets of First Capital
Bancorp or other affiliates. Such restrictions prevent First Capital Bancorp
and such other affiliates from borrowing from Capital Bank unless the loans are
secured by marketable obligations of designated amounts. Further, such secured
loans and investments by Capital Bank to or in First Capital Bancorp or to or
in any other affiliate is limited to 10 percent of Capital Bank's capital and
surplus (as defined by federal regulations) and such secured loans and
investments are limited, in the aggregate, to 20 percent of Capital Bank's
capital and surplus (as defined by federal regulations). Additional
restrictions on transactions with affiliates may be imposed on Capital Bank
under other provisions of federal law.
PROMPT CORRECTIVE ACTION AND OTHER ENFORCEMENT MECHANISMS. Federal
law requires each federal banking agency to take prompt corrective action to
resolve the problems of insured depository institutions, including but not
limited to those that fall below one or more prescribed minimum capital ratios.
The law requires each federal banking agency to promulgate regulations defining
the following five categories in which an insured depository institution will
be placed, based on the level of its capital ratios: well capitalized,
33
<PAGE> 44
adequately capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized. At September 30, 1996 and December 31, 1995 and
1994, Capital Bank was categorized as "well capitalized."
In addition to measures taken under the prompt corrective action
provisions, commercial banking organizations may be subject to potential
enforcement actions by federal regulators for unsafe or unsound practices in
conducting their businesses or for violations of any law, rule, regulation or
any condition imposed in writing by the agency or any written agreement with
the agency. Enforcement actions may include the imposition of a conservator or
receiver, the issuance of a cease and desist order that can be judicially
enforced, the termination of insurance of deposits (in the case of a depository
institution), the imposition of civil money penalties, the issuance of
directives to increase capital, the issuance of formal and informal agreements,
the issuance of removal and prohibition orders against institution-affiliated
parties and the enforcement of such actions through injunctions or restraining
orders based upon a judicial determination that the agency would be harmed if
such equitable relief was not granted.
SAFETY AND SOUNDNESS STANDARDS. In July 1995, the federal banking
agencies adopted final guidelines establishing standards for safety and
soundness, as required by the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA"). The guidelines set forth operational and managerial
standards relating to internal controls, information systems and internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth and compensation, fees and benefits. Guidelines for asset quality and
earnings standards will be adopted in the future. The guidelines establish the
safety and soundness standards that the agencies will use to identify and
address problems at insured depository institutions before capital becomes
impaired. If an institution fails to comply with a safety and soundness
standard, the appropriate federal banking agency may require the institution to
submit a compliance plan. Failure to submit a compliance plan or to implement
an accepted plan may result in enforcement action.
INTERSTATE BANKING AND BRANCHING. Under the Interstate Banking Act, a
bank holding company that is adequately capitalized and managed may obtain
approval under the BHC Act to acquire an existing bank located in another state
without regard to state law. A bank holding company would not be permitted to
make such an acquisition if, upon consummation, it would control (a) more than
10% of the total amount of deposits of insured depository institutions in the
United States or (b) 30% or more of the deposits in the state in which the bank
is located. A state may limit the percentage of total deposits that may be
held in that state by any one bank or bank holding company if application of
such limitation does not discriminate against out-of-state banks. An
out-of-state bank holding company may not acquire a state bank in existence for
less than a minimum length of time that may be prescribed by state law except
that a state may not impose more than a five year existence requirement.
The Interstate Banking Act also permits, beginning June 1, 1997,
mergers of insured banks located in different states and conversion of the
branches of the acquired bank into branches of the resulting bank. Each state
may permit such combinations earlier than June 1, 1997, and may adopt
legislation to prohibit interstate mergers after that date in that state or in
other states by that state's banks. The same concentration limits discussed in
the preceding paragraph apply. Louisiana has not adopted legislation to "opt
out" of interstate mergers. The Interstate Banking Act also permits a national
or state bank to establish branches in a state other than its home state if
permitted by the laws of that state, subject to the same requirements and
conditions as for a merger transaction.
The Interstate Banking Act will likely increase competition from
out-of-state banks in the markets in which First Capital Bancorp operates,
although it is difficult to assess the impact that such increased competition
may have on First Capital Bancorp's operations.
COMMUNITY REINVESTMENT ACT. Under the CRA, a bank's applicable
regulatory authority (which is the FDIC for Capital Bank) is required to assess
the record of each financial institution which it regulates to determine if the
institution meets the credit needs of its entire community, including low- and
moderate-income neighborhoods served by the institution, and to take that
record into account in its evaluation of any application made by such
institution for, among other things, approval of the acquisition or
establishment of a branch or other deposit facility, an office relocation, a
merger or the acquisition of shares of capital stock of another financial
institution. The regulatory authority prepares a written evaluation of an
institution's record of meeting the credit needs of its entire community and
assigns a rating. Capital Bank has undertaken significant actions to comply
with the CRA. Capital Bank received a "satisfactory" rating in its most recent
review by federal regulators with respect to its compliance with the CRA.
34
<PAGE> 45
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the Record Date, certain
information concerning each person known by First Capital Bancorp to be the
beneficial owner of more than five percent of the outstanding First Capital
Bancorp Common Stock, First Capital Bancorp's only class of voting securities.
<TABLE>
<CAPTION>
Number of
Name and Address Shares Owned Percentage
of Beneficial Owner Beneficially(1) of Class
------------------- ------------ ----------
<S> <C> <C>
F. Ronnie Myrick 56,946 (2) 12.38%
3319 West Deborah
Monroe, LA 71201
Doris Prisock Dupree 33,308 (3) 7.24%
208 Shady Lane
Delhi, LA 71232
J. Kenneth Newton 24,500 5.33%
P.O. Box 980
Ruston, LA 71270
</TABLE>
- -------------------------
(1) Except as otherwise noted, the shareholders listed possess sole voting
and investment power, subject to applicable community property laws.
(2) Includes 44,043 shares held of record by Mr. Myrick, 10,710 shares
held of record by CentBank & Co. as trustee for Mr. Myrick's
individual retirement account, and 2,193 shares held of record by
CentBank & Co. as trustee for the Capital Bank Employee Stock
Ownership Plan.
(3) Includes 28,522 shares held of record by Mrs. Dupree, 150 shares held
of record by John E. Dupree, Jr., Mrs. Dupree's husband, 2,636 shares
held of record by Mrs. Dupree as custodian for Holly Elizabeth Dupree
and 2,000 shares held of record by Mrs. Dupree as custodian for
Christine Nicole Dupree.
35
<PAGE> 46
OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, certain
information with respect to the beneficial ownership of the outstanding shares
of First Capital Bancorp Common Stock and First Capital Bancorp Preferred Stock
by: (i) each director of First Capital Bancorp; (ii) the Chief Executive
Officer of First Capital Bancorp (who is also a director); (iii) each executive
officer of First Capital Bancorp whose total annual salary and bonus exceeds
$100,000; and (iv) all directors and executive officers of First Capital
Bancorp as a group.
<TABLE>
<CAPTION>
Number of
Class of Shares Owned Percentage
Name of Beneficial Owner Stock Beneficially(1) of Class
------------------------ ----------- ------------ ----------
<S> <C> <C> <C>
Charles A. Black Common 16,120(2) 3.50%
George W. Cummings, III Common 2,446(3) *
F. Ronnie Myrick Common 56,946(4) 12.38%
J. Kenneth Newton Common 24,500 5.33%
Ruth Prisock Common 3,037(5) *
Bobbie W. Williams Common 1,981(6) *
All Directors and Executive
Officers as a Group (6 persons) Common 105,030 22.83%
</TABLE>
- -------------------------
* Less than one percent of class
(1) Except as otherwise noted, the shareholders listed possess sole voting
and investment power, subject to applicable community property laws.
(2) Includes 13,437 shares held of record by Mr. Black, 600 shares held of
record by Patty Sue Black, Mr. Black's wife, and 2,083 shares held of
record by Macon Cattle Company, a partnership of which Mr. Black is a
partner. Mr. Black also owns 1 share of Preferred Stock, which
represents 7.69% of the outstanding shares of Preferred Stock.
(3) Includes 110 shares held of record by Mr. Cummings, 636 shares held of
record by CentBank & Co. as trustee for Mr. Cummings' individual
retirement account, and 1,700 shares held of record by CentBank & Co.
as trustee for the Capital Bank Employee Stock Ownership Plan.
(4) Includes 44,043 shares held of record by Mr. Myrick, 10,710 shares
held of record by CentBank & Co. as trustee for Mr. Myrick's
individual retirement account, and 2,193 shares held of record by
CentBank & Co. as trustee for the Capital Bank Employee Stock
Ownership Plan. Mr. Myrick also owns 1 share of Preferred Stock, which
represents 7.69% of the outstanding shares of Preferred Stock.
(5) Includes 3,037 shares held of record by CentBank & Co. as trustee for
Mrs. Prisock's individual retirement account. Does not include 17,490
shares held of record by Clovis Prisock, Mrs. Prisock's late husband,
or 4,214 shares held of record by CentBank & Co. as trustee for Mr.
Prisock's individual retirement account. Clovis Prisock, Mrs.
Prisock's late husband, owned 1 share of First Capital Bancorp
Preferred Stock.
(6) Includes 5 shares held of record by Ms. Williams, 680 shares held of
record by CentBank & Co. as trustee for Ms. Williams' individual
retirement account, and 1,296 shares held of record by CentBank & Co.
as trustee for the Capital Bank Employee Stock Ownership Plan.
36
<PAGE> 47
FIRST CAPITAL BANCORP MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
First Capital Bancorp reported net income of $1,912,000 for the nine
months ended September 30, 1996, which represents a 12.5% increase from the net
income of $1,699,000 for the comparable period in 1995. Net income per share
was $4.16 for the nine months ended September 30, 1996 and $3.69 for the same
period in 1995. First Capital Bancorp's net income for 1995 was $1,806,000, a
14.7% increase from 1994 net income of $1,575,000. Net income per share was
$3.93 in 1995 and $3.44 in 1994.
The improvements in net income between the first nine months of 1996
and the first nine months of 1995, and over the two years ended December 31,
1995, were principally attributable to increases in average earning assets.
Net interest income during the first nine months of 1996 increased
$800,000 to $6,957,000, which represents a 13.0% increase over the same period
of 1995. Net interest income in 1995 increased 30.7% from 1994, from
$6,285,000 to $8,212,000. The primary reasons for the increase from the first
nine months of 1995 to the comparable period in 1996 were increases in average
earning assets. The increase from 1994 to 1995 is principally attributable to
volume change, although improved yields on earning assets also contributed
favorably.
At September 30, 1996, First Capital Bancorp had total assets and
deposits of $185,549,000 and $162,933,000, respectively, which represented
increases of 13.4% and 12.3%, respectively, from amounts reported at December
31, 1995. Loans, net of the reserve for possible loan losses, were
$134,303,000 at September 30, 1996, an increase of 26.4% from the amount
reported at the end of 1995. The increase in assets as of September 30, 1996
when compared to December 31, 1995 is principally due to increased loan volume.
Loan demand is historically higher in the third quarter because of the
seasonality in First Capital Bancorp's agricultural loan portfolio.
The following table sets forth certain information regarding First
Capital Bancorp's results of operations for the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
------------------------- ---------------------
1996 1995 1995 1994
------------ ----------- ---------- ---------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net income $1,912 $1,699 $1,806 $1,575
Net income per share * $4.16 $3.69 $3.93 $3.44
Return on average assets 1.45% 1.48% 1.16% 1.33%
Return on average equity 21.27% 23.23% 17.18% 18.54%
Average equity to average assets 6.82% 6.38% 6.73% 7.19%
Dividend pay-out ratio -- -- 17.81% 20.35%
</TABLE>
* Per share data are based upon a weighted average number of shares
outstanding of 459,990 shares for the nine months ended September 30,
1996, 459,809 shares for the nine months ended September 30, 1995 and the
year ended December 31, 1995, and 458,142 for the year ended December 31,
1994.
A more detailed review of First Capital Bancorp's financial condition
and results of operations for the years ended December 31, 1995 and 1994 and
the nine months ended September 30, 1996 and 1995 follows. This discussion and
analysis should be read in conjunction with First Capital Bancorp's financial
statements and the notes thereto appearing elsewhere in this Proxy
Statement/Prospectus.
RESULTS OF OPERATIONS
NET INTEREST INCOME. The principal component of First Capital
Bancorp's net earnings is net interest income, which is the difference between
interest and fees earned on interest-earning assets and interest paid on
deposits and borrowed funds. Net interest income, when expressed as a
percentage of total average interest-earning assets, is referred to as net
interest margin. Net interest income for the nine months ended September 30,
1996 increased to $6,957,000 from $6,157,000 recorded for the comparable period
in 1995, an increase of 13.0%. 1995 net interest income of $8,212,000
represents an increase of $1,927,000, or 30.7%, from net interest income
37
<PAGE> 48
of $6,285,000 reported for the year ended December 31, 1994. The improvements
in 1996 and 1995 were primarily the result of increases in average earning
assets.
Average interest-earning assets were $161,576,000 for the nine months
ended September 30, 1996, $142,706,000 for the year ended December 31, 1995 and
$108,586,000 for the year ended December 31, 1994. Interest-earning assets
were up significantly in 1996 due to strong loan demand. Average loans, First
Capital Bancorp's highest yielding assets, rose 28.1% from 1994 to 1995 and
15.8% from the year ended December 31, 1995 to the nine months ended September
30, 1996. Net interest margin decreased only one basis point to 5.74% for the
nine months ended September 30, 1996 from 5.75% recorded for the year 1995.
1995 net interest margin represented a 4 basis point decrease from 1994 net
interest margin of 5.79%.
First Capital Bancorp's net interest income is affected by the change
in the amount and mix of interest-earning assets and interest-bearing
liabilities, and by changes in yields earned on assets and rates paid on
deposits and other borrowed funds. The following table sets forth certain
information concerning average interest-earning assets and interest-bearing
liabilities and the yields and rates thereon for the periods presented.
Average balances are computed using year to date average balances.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
------------------------------------ ---------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- ----------- --------- --------- ----------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans $ 110,687 $ 12,364 11.17% $ 86,378 $ 8,582 9.94%
Interest-bearing deposits
with financial institutions 729 44 6.04% 1,807 82 4.54%
Securities 25,476 1,607 6.31% 18,840 1,021 5.42%
Federal funds sold 5,814 341 5.87% 1,561 67 4.29%
---------- ----------- --------- -----------
Total interest-earning assets $ 142,706 $ 14,356 10.06% $ 108,586 $ 9,752 8.98%
========== ----------- ========= -----------
INTEREST-BEARING LIABILITIES:
DEPOSITS:
Money market demand $ 22,072 $ 620 2.81% $ 20,973 $ 577 2.75%
Savings and other interest-bearing demand 3,463 73 2.11% 3,033 69 2.27%
Time deposits 86,431 4,920 5.69% 56,232 2,315 4.12%
BORROWINGS:
Short-term borrowings 2,726 159 5.83% 2,984 175 5.86%
Long-term borrowings 6,896 372 5.39% 7,294 331 4.54%
---------- ----------- --------- -----------
Total interest-bearing liabilities $ 121,588 $ 6,144 5.05% $ 90,516 $ 3,467 3.83%
========== ----------- ========= -----------
Net interest income $ 8,212 $ 6,285
=========== ===========
Net interest margin 5.75% 5.79%
</TABLE>
38
<PAGE> 49
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 change attributable to volume change and rate
change for the periods indicated. The change in interest income due to both
volume change and rate change has been allocated to volume change.
<TABLE>
<CAPTION>
Years Ended December 31, 1995 and 1994 Years Ended December 31, 1994 and 1993
Increase (Decrease) Due to Changes in Increase (Decrease) Due to Changes in
------------------------------------------- ----------------------------------------------
Volume Rate Net Change Volume Rate Net Change
------------ ------------ ------------- ------------- ------------ ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans $ 2,717 $ 1,065 $ 3,782 $ 788 $ 441 $ 1,229
Interest-bearing deposits
with financial institutions (51) 13 (38) 58 (18) 40
Securities 419 167 586 (10) (230) (240)
Federal funds sold 249 25 274 69 (11) 58
----------- ----------- ------------ ------------ ----------- --------------
Total $ 3,334 $ 1,270 $ 4,604 $ 905 $ 182 $ 1,087
----------- ----------- ------------ ------------ ----------- --------------
INTEREST-BEARING LIABILITIES:
Money market demand $ 30 $ 13 $ 43 $ 101 $ (17) $ 84
Savings and other interest-
bearing deposits 9 (5) 4 (97) (8) (105)
Time deposits 1,720 885 2,605 439 250 689
Borrowings:
Short-term borrowings $ (15) $ (1) $ (16) $ 175 $ - $ 175
Long-term borrowings (18) 59 41 114 (230) (116)
----------- ----------- ------------ ------------ ----------- --------------
Total 1,726 951 2,677 732 (5) 727
----------- ----------- ------------ ------------ ----------- --------------
Interest differential $ 1,608 $ 319 $ 1,927 $ 173 $ 187 $ 360
=========== =========== ============ ============ =========== ==============
</TABLE>
PROVISION FOR LOAN LOSSES. The provision for loan losses is the
periodic charge to earnings for potential losses in the loan portfolio. The
amounts provided for loan losses are determined by management after evaluations
of the loan portfolio. This evaluation process requires that management apply
various judgments, assumptions and estimates concerning the impact certain
factors may have on amounts provided. Factors considered by management in its
evaluation process include known and inherent losses in the loan portfolio, the
current economic environment, the composition of and risk in the loan
portfolio, prior loss experience and underlying collateral values. While
management considers the amounts provided through September 30, 1996 to be
adequate, subsequent changes in these factors and related assumptions may
warrant significant adjustments in amounts provided, based on conditions
prevailing at the time. In addition, various regulatory agencies, as an
integral part of the examination process, review First Capital Bancorp's
allowance for loan losses. Such agencies may require First Capital Bancorp to
make additions to the allowance based on their judgments of information
available to them at the time of their examinations.
The provision for loan losses for the nine months ended September 30,
1996 and 1995 was $268,000 and $295,000, respectively. The provision for loan
losses for the years ended December 31, 1995 and 1994 was $271,000 and
$182,000, respectively.
NON-INTEREST INCOME. Non-interest income, excluding securities
transactions, was $1,245,000 for the nine months ended September 30, 1996,
compared to $1,079,000 for the comparable period of 1995. Non-interest income,
excluding securities transactions, was $1,463,000 for the year ended December
31, 1995, compared to $1,123,000 for 1994. The increase in non-interest income
from September 30, 1995 to the comparable period in 1996 was attributable
primarily to increased deposit service charges resulting from an increase in
the number of demand deposit accounts. Additionally, First Capital Bancorp
offered a one year free checking program in 1995. These accounts began earning
service charges in 1996.
NON-INTEREST EXPENSE. Non-interest expense for the nine months ended
September 30, 1996 and 1995 was $5,008,000 and $4,830,000, respectively, a 3.7%
increase. Non-interest expense for the year ended December 31, 1995 increased
to $7,026,000 from $4,930,000 in 1994. The increase in non-interest expense
during these periods was attributable principally to significant expenditures
made to upgrade Capital Bank's facilities and data processing capabilities. In
addition, staffing increased from approximately 60 in 1994 to about 85 in 1995.
Marketing and advertising expense also increased from 1994 to 1995.
Non-interest expense at September 30, 1996 and 1995 does not reflect amounts
related to year-end bonuses which are generally paid in December of each year.
Such amounts are not determined until the final month of each year. Total
recurring bonuses paid in the fourth quarter of 1996 were $432,000, and 328,000
for 1995.
39
<PAGE> 50
INCOME TAXES. First Capital Bancorp's provision for income taxes was
$1,011,000 for the nine months ended September 30, 1996, compared to $386,000
for the nine months ended September 30, 1995. Such provision was $546,000 for
1995 compared to $778,000 for 1994. Income tax expense for 1995 included a
change in the beginning-of-the-year balance of the valuation allowance for
deferred tax assets of $323,000.
FINANCIAL CONDITION
The following table sets forth the Company's average assets,
liabilities and shareholders' equity and the percentage distribution of these
items for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
Nine Months Ended -----------------------------------------------------
September 30, 1996 1995 1994
----------------------- ----------------------- --------------------------
Average Average Average
Balance Percent Balance Percent Balance Percent
----------- --------- ----------- --------- ----------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash and due from banks $ 5,686 3.23% $ 4,839 3.09% $ 3,840 3.25%
Interest-bearing deposits with
financial institutions 520 0.30% 729 0.47% 1,807 1.53%
Securities 30,574 17.41% 25,476 16.31% 18,840 15.95%
Federal funds sold 2,316 1.32% 5,814 3.72% 1,561 1.32%
Loans (net of allowance for
credit losses) 126,784 72.18% 109,353 70.01% 85,152 72.11%
Other assets 9,769 5.56% 9,991 6.40% 6,896 5.84%
----------- --------- ----------- --------- ----------- ------------
Total assets $ 175,649 100.00% $ 156,202 100.00% $ 118,096 100.00%
=========== ========= =========== ========= =========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Demand deposits $ 27,029 15.39% $ 22,971 14.71% $ 17,073 14.46%
Interest-bearing deposits 124,407 70.83% 111,966 71.68% 80,238 67.94%
Other liabilities 12,228 6.96% 10,754 6.88% 12,291 10.41%
----------- --------- ----------- --------- ----------- ------------
Total liabilities $ 163,664 93.18% $ 145,691 93.27% $ 109,602 92.81%
Shareholders' equity 11,985 6.82% 10,511 6.73% 8,494 7.19%
----------- --------- ----------- --------- ----------- ------------
Total liabilities and
shareholders' equity $ 175,649 100.00% $ 156,202 100.00% $ 118,096 100.00%
=========== ========= =========== ========= =========== ============
</TABLE>
TOTAL ASSETS. At September 30, 1996, total assets were approximately
$185,549,000, compared to $163,671,000 at December 31, 1995 and $135,611,000 at
December 31, 1994. Total average assets for the nine months ended September
30, 1996 were $175,649,000, an increase of 12.4%, from the $156,202,000 average
for the year ended December 31, 1995. The increases in average assets during
the first nine months of 1996 and the year ended December 31, 1995 reflect
increased loan demand.
SECURITIES. At September 30, 1996, First Capital Bancorp's securities
portfolio aggregated $31,999,000, an increase of $215,000 from the $31,784,000
reported at December 31, 1995, which reflects an increase of $12,201,000 from
the $19,583,000 reported at December 31, 1994. The increase in securities from
1994 to 1995 was principally attributable to increases in deposits over the
period.
40
<PAGE> 51
The following table sets forth the composition of First Capital
Bancorp's securities portfolio at the end of each period presented.
<TABLE>
<CAPTION>
September 30, 1996
------------------------------------------------------------------------
Gross
Gross Unrealized Unrealized
AVAILABLE FOR SALE Amortized Cost Gains Losses Market Value
------------------ -------------- ---------------- ------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasuries $11,954 $187 $ -- $12,141
U.S. Government agencies 14,008 80 -- 14,088
Mortgage backed securities 4,546 -- (44) 4,502
Other securities 1,268 -- 1,268
------------------------------------------------------------------------
Total $31,776 $267 ($44) $31,999
========================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31,
----------------------------- -----------------------------
1995 1994
----------------------------- -----------------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
----------------------------- -----------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Available for Sale
- ------------------
U.S. Treasuries $ 14,938 $ 15,455 $ 11,990 $ 11,699
U.S. Government agencies 12,013 12,350 998 935
Municipal securities - - 16 16
Mortgage backed securities 3,153 3,139 2,394 2,235
Other securities 840 840 682 682
------------ ---------- ------------ ------------
Total $ 30,944 $ 31,784 $ 16,080 $ 15,567
============ ========== ============ ============
Held to Maturity
- ----------------
U.S. Treasuries $ - $ - $ 4,016 $ 3,925
U.S. Government agencies - - - -
Municipal securities - - - -
Mortgage backed securities - - - -
Other securities - - - -
------------ ---------- ------------ ------------
Total $ - $ - $ 4,016 $ 3,925
============ ========== ============ ============
</TABLE>
41
<PAGE> 52
The following table presents selected contractual maturity data for
the available-for-sale securities in First Capital Bancorp's portfolio at
December 31, 1995.
<TABLE>
<CAPTION>
After One Year After Five Years
One Year or Less Through Five Years Through Ten Years After Ten Years
---------------------- -------------------------- -------------------- ------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
--------- ---------- ----------- ------------ ----------- ------ ---------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasuries $ 3,002 5.122% $ 11,936 6.734% $ - $ -
U.S. Government agencies 3,004 5.361% 9,009 6.665% - -
Mortgage backed securities - 1,971 - $ 1,182 5.980%
Other securities 840 6.450% - 5.710% - -
--------- ------- ----------- ----------- ----------
Total $ 6,846 $ 22,916 $ - $ 1,182
========= =========== =========== ==========
</TABLE>
See Note 2 to First Capital Bancorp's Financial Statements appearing
elsewhere in this Proxy Statement/Prospectus for information concerning the
amortized cost and estimated fair values of First Capital Bancorp's securities
at December 31, 1995 and 1994.
LOANS. First Capital Bancorp engages in real estate, agricultural,
commercial and consumer lending. The lending activities of First Capital
Bancorp are guided by the basic lending policy established by its Board of
Directors. Each loan is evaluated based on, among other things, character and
leverage capacity of the borrower, cash flow, collateral, market conditions for
the borrower's business or project and prevailing economic trends and
conditions.
The following table sets forth the type and amount of loans outstanding
as of the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
---------------- ---------------------------------
1996 1995 1994
---------------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Farmland/Agricultural Production $ 46,934 $ 31,154 $ 19,317
Commercial/Industrial 17,173 16,177 13,062
Commercial Real Estate 25,291 18,706 15,837
Residential Real Estate 31,601 28,421 25,937
Consumer/Installment 14,768 13,104 14,473
---------------- ----------- -----------
Total loans $ 135,767 $ 107,562 $ 88,626
============== =========== ===========
</TABLE>
Except as otherwise set forth in the table above, as of September 30,
1996, First Capital Bancorp did not have any concentration of loans in any
particular industry exceeding 10% of total outstanding loans. A concentration
is defined as amounts loaned to a multiple number of borrowers engaged in
similar activities, which would cause them to be similarly impacted by economic
or other conditions, where the amount exceeds 10% of total outstanding loans.
At September 30, 1996, loans were $135,767,000, as compared to
$107,562,000 at December 31, 1995 and $88,626,000 at December 31, 1994.
Average loans have increased over these periods as well, from $86,378,000 and
$110,687,000, respectively, for 1994 and 1995, to $128,166,000 for the nine
months ended September 30, 1996. These increases were the result of a
strengthening local economy and First Capital Bancorp's ability to take
advantage of market opportunities created by the acquisition of several
community banks by regional bank holding companies. First Capital Bancorp's
average loan to deposit ratio was 84.6% during the first nine months of 1996 as
compared to 82.0% and 88.8% during 1995 and 1994, respectively.
At September 30, 1996, agricultural, residential real estate,
commercial real estate, commercial/industrial and consumer/installment loans
comprised approximately 34.6%, 23.3%, 18.6%, 12.6% and 10.9%, respectively, of
total outstanding loans. This compares to 29.0%, 26.4%, 17.4%, 15.0% and 12.2%
categorized as agricultural, residential real estate, commercial real estate,
commercial/industrial and consumer/installment loans, respectively, at December
31, 1995 and 21.8%, 29.3%, 17.9%, 14.7% and 16.3% categorized as agricultural,
residential real estate, commercial real estate, commercial/industrial and
consumer/installment loans, respectively, at December 31, 1994.
42
<PAGE> 53
The following table provides information concerning loan portfolio
maturity as of December 31, 1995. Loan portfolio maturity by type of loan as
presented in the table above is not readily available.
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
ONE YEAR OR LESS:
Floating interest rate $ 52,690
Fixed interest rate 30,913
AFTER ONE YEAR THROUGH FIVE YEARS:
Floating interest rate 590
Fixed interest rate 19,754
AFTER FIVE YEARS:
Floating interest rate -
Fixed interest rate 3,615
-----------
TOTAL $ 107,562
===========
</TABLE>
NONACCRUAL, PAST DUE AND MODIFIED LOANS. The performance of First
Capital Bancorp's loan portfolio is evaluated regularly by Senior Management
and the Board of Directors. Interest on loans is accrued daily as earned. A
loan is generally placed on nonaccrual status when principal or interest is
past due 90 days or more, except on government guaranteed loans or when
management determines the loan remains likely to be fully collectible. Upon
being placed on nonaccrual status, the accrual of income from a loan is
discontinued and previously accrued but unpaid current period interest is
reversed against income. Prior period interest is charged to the allowance for
loan losses. Each loan that is 90 days or more past due is evaluated to
determine its collectibility and the adequacy of its collateral.
The following table sets forth the amount of First Capital Bancorp's
nonperforming loans (nonaccrual loans and loans past due 90 days or more and
still accruing interest) and loans with modified terms as of the dates
indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $ 609 $ 164
Loans past due 90 days or more and
still accruing interest 1,373 484
Renegotiated debt, still accruing
interest - -
</TABLE>
As a percent of total loans, loans past due 90 days or more and not on
nonaccrual status were 1.28% and .55% of total loans at December 31, 1995 and
1994, respectively. Nonaccrual loans were .56% at year-end 1995 and .18% at
year- end 1994. There were no loans with modified terms at December 31, 1995
and 1994. If loans classified as nonperforming at year-end 1995 and 1994 had
performed in accordance with their original terms, interest income would not
have increased by material amounts. Income recognized on nonaccrual loans was
$68,000 and $18,000 for 1995 and 1994, respectively.
As of September 30, 1996, First Capital Bancorp was not aware of any
other loans where known information about possible credit problems of the
borrower caused management to have serious doubts as to the ability of such
borrowers to comply with the loan repayment terms. First Capital Bancorp's
primary regulators and third party loan review consultants review the loan
portfolio as part of their regular examinations and their assessment of
specific credits, based on information available to them at the time of their
examination, may affect the level of First Capital Bancorp's non-performing
loans. Additionally, the loan portfolio is regularly monitored by Senior
Management and the Board. Accordingly, there can be no assurance that other
loans will not be placed on nonaccrual, become 90 days or more past due, or
have terms modified in the future.
ALLOWANCE FOR LOAN LOSSES. A certain degree of risk is inherent in
the extension of credit. Management has credit policies in place to monitor
and attempt to control the level of loan losses and nonperforming loans. One
product of First Capital Bancorp's credit risk management is the maintenance of
the allowance for loan losses at a level considered by management to be
adequate to absorb estimated known and inherent losses in the existing
portfolio, including commitments and standby letters of credit. The allowance
for loan losses is established through charges to operations in the form of
provisions for loan losses.
43
<PAGE> 54
The allowance is based upon a regular review of current economic
conditions which might affect a borrower's ability to pay, underlying
collateral values, risk in and the composition of the loan portfolio, and prior
loss experience. Loans that are deemed to be uncollectible are charged-off and
deducted from the allowance. The provision for loan losses and recoveries on
loans previously charged-off are added to the allowance.
The following table sets forth First Capital Bancorp's loan loss
experience and certain information relating to its allowance for loan losses as
of the dates and for the periods indicated.
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------------------
1995 1994
------------- ------------
(Dollars in thousands)
<S> <C> <C>
Average loans outstanding $ 110,687 $ 86,378
Balance of allowance for credit losses
at beginning of period 1,232 1,182
Charge offs:
Commercial loans (81) (92)
Consumer loans (104) (58)
Recoveries 24 18
----------- ----------
Net charge-offs (161) (132)
----------- ----------
Provisions charged to expense 271 182
----------- ----------
Balance of allowance for credit losses
at end of period $ 1,342 $ 1,232
=========== ==========
Ratio of net charge-offs to average
loans outstanding 0.15% 0.15%
</TABLE>
The allowance for loan losses was $1,464,000 or 1.14% of average
loans, $1,342,000 or 1.21% of average loans, and $1,232,000 or 1.43% of average
loans at September 30, 1996, December 31, 1995 and December 31, 1994,
respectively. Net charged-off loans during this period were $146,000 during
the first nine months of 1996, compared to $161,000 and $132,000 in 1995 and
1994, respectively.
Management believes that the allowance for loan losses at September
30, 1996 is adequate to absorb the known and inherent risks in the loan
portfolio at that time. However, no assurance can be given that future changes
in economic conditions that might adversely affect First Capital Bancorp's
principal market area, borrowers or collateral values, and other circumstances
will not result in increased losses in First Capital Bancorp's loan portfolio
in the future.
First Capital Bancorp's lending activities involve loans with varying
degrees of credit risk. In underwriting residential real estate mortgage
loans, First Capital Bancorp evaluates both the borrower's ability to make
monthly payments and the value of the property securing the loan. Most
properties securing real estate loans made by First Capital Bancorp are
appraised by independent appraisers. First Capital Bancorp generally requires
borrowers to obtain an attorney's title opinion and/or title insurance, and
fire and property insurance (including flood insurance, if necessary) in an
amount not less than the amount of the loan. Certain of such loans are sold by
First Capital Bancorp in the secondary mortgage market.
First Capital Bancorp's agricultural lending consists primarily of
loans made to farmers with 90% Farm Service Administration guarantees. First
Capital Bancorp considers the guaranteed portion of these loans to have very
little risk. The unguaranteed portion of these loans presents a higher level
of risk than loans secured by residential real estate, because the financial
condition of these borrowers is not as strong as that of borrowers whose loans
are secured by residential real estate.
First Capital Bancorp's commercial lending activities generally
involve owner-occupied office or industrial buildings, equipment financing, and
working capital loans. Such loans may present a higher level of risk than
loans secured by residential real estate. This greater risk is due to several
factors, including the concentration of principal in a limited number of loans
and borrowers, and the effect of general economic conditions. Furthermore, the
repayment of commercial loans is typically dependent upon the successful
operation of and cash flows generated by the borrower's business. If the cash
flow from the business is reduced, the borrower's ability to repay the loan may
be impaired.
44
<PAGE> 55
First Capital Bancorp's construction lending consists principally of
interim construction loans for one-to- four-family residential properties, the
permanent financing for which First Capital Bancorp typically pre-sells in the
secondary mortgage market. If sold in the secondary market, underwriting
criteria for such loans generally are the same as the guidelines used by First
Capital Bancorp for originating permanent residential mortgage loans. Because
of the relatively short (typically six-month) term of First Capital Bancorp's
construction loans, such loans are subject to less risk than longer term
construction loans where monitoring of the progress of the project may be
particularly difficult.
First Capital Bancorp offers a variety of consumer loans to
individuals. Consumer loans may entail greater credit risk than do residential
mortgage loans, particularly in the case of consumer loans which are unsecured
or are secured by rapidly depreciable assets, such as automobiles and boats.
In such cases, any repossessed collateral for a defaulted consumer loan may not
provide an adequate source of repayment of the outstanding loan balance as a
result of the greater likelihood of damage or loss or as a result of
depreciation. In addition, consumer loan collections are dependent on the
borrower's continuing financial stability, and thus are more likely to be
affected by adverse personal circumstances. Furthermore, the application of
various federal and state laws, including bankruptcy and insolvency laws, may
limit the amount which can be recovered on such loans.
First Capital Bancorp does not allocate the allowance for loan losses
among its various loan categories, other than government guaranteed loans for
which a specific reserve is established. The amount of the allowance should
not be interpreted as an indication of future credit trends or that losses in
an amount comparable to the allowance will occur.
DEPOSITS. Deposits are the primary source of funding for First
Capital Bancorp's earning assets. Total deposits at September 30, 1996 and at
the end of 1995 and 1994 were approximately $162,933,000, $145,123,000, and
$118,705,000, respectively. Time certificates of deposit of $100,000 or more,
which were approximately $7,124,000 at December 31, 1995, had remaining
maturities as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
MATURING WITHIN:
Three months or less $ 2,660
Over three months to six months 2,550
Over six months to twelve months 1,514
Over twelve months 400
---------
Total $ 7,124
=========
</TABLE>
Average deposit balances are summarized for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
AVERAGE AVERAGE
1995 RATE 1994 RATE
--------- --------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Demand deposits $ 22,971 0.00% $ 17,073 0.00%
Money market demand 22,072 2.81% 20,973 2.75%
Savings and other interest-
bearing demand deposits 3,463 2.11% 3,033 2.27%
Time deposits 86,431 5.69% 56,232 4.12%
--------- ---------
Total $ 134,937 $ 97,311
========= =========
</TABLE>
At September 30, 1996 and December 31, 1995, First Capital Bancorp had
no brokered deposits.
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
45
<PAGE> 56
fixed-rate assets and liabilities, change pricing schedules, and adjust
maturities through sales and purchases of securities available-for-sale as a
means of limiting interest rate risk.
The degree of interest rate sensitivity is not equal for all types of
assets and liabilities. First Capital Bancorp's experience has indicated that
the repricing of interest-bearing demand, savings and money market accounts
does not move with the same magnitude as general market rates. Additionally,
these deposit categories, along with non- interest demand, have historically
been stable sources of funds to First Capital Bancorp, which indicates a much
longer implicit maturity than their contractual availability. First Capital
Bancorp's cumulative gap to total assets at September 30, 1996 was (2.74%)
within the six-month period. A negative gap implies that earnings would
decrease in a rising interest rate environment and increase in a falling
interest rate environment.
LIQUIDITY. First Capital Bancorp seeks to manage its liquidity
position to attempt to ensure that sufficient funds are available to meet
customers' needs for borrowing and deposit withdrawals. Liquidity is derived
from both the asset and liability sides of the balance sheet. Asset liquidity
arises from the ability to convert assets to cash and self-liquidation or
maturity of assets. Liquid asset balances include cash, interest-bearing
deposits with financial institutions, short-term investments and federal funds
sold. Liability liquidity arises from a diversity of funding sources as well
as from the ability of First Capital Bancorp to attract deposits of varying
maturities. If First Capital Bancorp were limited to only one source of
funding or all its deposits had the same maturity, its liquidity position would
be adversely impacted.
First Capital Bancorp's funding source is primarily its deposit base
which is comprised of interest-bearing and noninterest-bearing accounts,
augmented through federal funds purchased, Federal Home Loan Bank borrowings,
and other short-term borrowings, which are interest-bearing. First Capital
Bancorp's non-interest bearing demand deposits are, by their very nature,
subject to withdrawal upon demand. Declines in one form of funding source
require First Capital Bancorp to obtain funds from another source. If First
Capital Bancorp were to experience a decline in noninterest- bearing demand
deposits and was to have a significant increase in loan volume without a
commensurate increase in such deposits, it would utilize alternative sources of
funds, probably at higher cost, to maintain its liquidity and to meet its loan
funding needs. This would place downward pressure on First Capital Bancorp's
net interest margin and might have a negative impact on First Capital Bancorp's
liquidity position.
First Capital Bancorp's liquidity expressed as a percentage of net
liquid assets to net liabilities was 38.67% and 41.56% at September 30, 1996
and December 31, 1995, respectively.
CAPITAL ADEQUACY. At September 30, 1996, First Capital Bancorp's
total shareholders' equity was $12,760,000, an increase of 13.4 from
$11,257,000 at December 31, 1995. Book value per common share is presented in
the table below.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
---------------- ----------------------------------
1996 1995 1994
---------------- ------------ --------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Shares outstanding 460 460 460
Shareholders' equity $ 12,760 $ 11,257 $ 8,835
Book value per common share $ 27.74 $ 24.47 $ 19.21
</TABLE>
Adequate levels of capital are necessary over time to sustain growth
and absorb losses. In the case of banks and bank holding companies, capital
levels must also meet minimum regulatory requirements. All risk-based and
other capital ratios improved from year-end 1994 to 1995 and from year-end 1995
to September 30, 1996, and remain well above regulatory minimums. At September
30, 1996, Tier I capital was 11.74% of risk-weighted assets and total capital
was 12.81% of risk-weighted assets, compared to the regulatory minimums of 4.0%
and 8.0%, respectively. First Capital Bancorp's regulatory leverage ratio,
which compares Tier I capital to adjusted total assets, was 6.75% at September
30, 1996, compared to the regulatory minimum of 4.0%. Under present
regulations, First Capital Bancorp was classified as "well-capitalized" based
upon its capital ratios at September 30, 1996 and December 31, 1995 and 1994.
The following table sets forth First Capital Bancorp's risk based capital and
capital ratios at year-end 1995 and 1994.
46
<PAGE> 57
<TABLE>
<CAPTION>
Regulatory
"Well Capitalized"
December 31, Requirement
---------------------------- ---------------------
1995 1994
---------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
CAPITAL:
Tier I $ 10,703 $ 9,219
Tier II 1,233 1,111
---------- ---------
Total capital $ 11,936 $ 10,330
========== =========
Risk-weighted assets $ 98,665 $ 88,871
RATIOS:
Tier I capital to risk-weighted assets 10.85% 10.37% 6.00%
Tier II capital to risk-weighted 1.25% 1.25% -
assets
Total capital to risk-weighted
assets 12.10% 11.62% 10.00%
Leverage ratio 6.48% 7.01% 5.00%
</TABLE>
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.
The consolidated financial statements of First Capital Bancorp as of
December 31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995, have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, also included 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, 1993 consolidated financial statements
refers to changes in the methods of accounting for securities and income taxes.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Board of
Directors of First Capital 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.
47
<PAGE> 58
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS OF FIRST CAPITAL BANCORP, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of
December 31, 1995 and 1994
and September 30, 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for
the Years Ended December 31, 1995,
1994 and 1993 and the Nine Months
ended September 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Changes in Stockholders'
Equity for the Years Ended
December 31, 1995, 1994 and 1993
and the Nine Months ended
September 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows for
the Years Ended December 31, 1995,
1994 and 1993 and the Nine Months
ended September 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . F-8
</TABLE>
<PAGE> 59
Independent Auditors' Report
The Board of Directors
First Capital Bancorp., Inc.:
We have audited the accompanying consolidated balance sheets of First Capital
Bancorp., Inc. and subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in stockholders' equity, and
cash flows for each of the years in the three year period ended December 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Capital
Bancorp., Inc. and subsidiary as of December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the years in the three
year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in note 2 to the consolidated financial statements, the Company
changed its method of accounting for securities to adopt the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities, as of December 31, 1993. Also as
discussed in note 6 to the consolidated financial statements, the Company
changed its method of accounting for income taxes to adopt the provisions of
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, in 1993.
KPMG Peat Marwick LLP
January 19, 1996
Shreveport, Louisiana
F-2
<PAGE> 60
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Consolidated Balance Sheets
(dollars in thousands, except share and per share amounts)
December 31, 1995 and 1994
and
September 30, 1996
<TABLE>
<CAPTION>
(Unaudited)
September 30,
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 6,717 $ 7,830 $ 5,412
Interest-bearing deposits with depository institutions 121 1,240 2,552
Federal funds sold 3,065 6,700 12,450
--------------- --------------- ---------------
Cash and cash equivalents 9,903 15,770 20,414
Securities:
Available-for-sale 31,999 31,784 15,567
Held-to-maturity -- -- 4,016
Loans, net 134,303 106,220 87,394
Bank premises and equipment, net 4,600 4,717 4,827
Accrued interest receivable 3,264 3,179 2,017
Other real estate 7 186 506
Other assets 1,473 1,815 870
--------------- --------------- ---------------
$ 185,549 $ 163,671 $ 135,611
=============== =============== ===============
Liabilities and Stockholders' Equity
Deposits:
Demand $ 27,654 $ 27,951 $ 21,847
Savings and interest-bearing transaction accounts 35,668 28,329 22,710
Time 99,611 88,843 74,148
--------------- --------------- ---------------
Total deposits 162,933 145,123 118,705
Accrued interest payable 970 772 500
Accrued expenses and other liabilities 536 349 159
Notes and debentures payable -- -- 764
Federal Home Loan Bank advances 8,350 6,170 6,648
--------------- --------------- ---------------
172,789 152,414 126,776
--------------- --------------- ---------------
Stockholders' equity:
Preferred stock, par value $1,000 per share; authorized
60 shares; issued and outstanding 12 shares in 1995 and 13
shares in 1994 13 12 13
Common stock, no par value, stated value of $1 per share;
authorized 2,000,000 shares; issued and outstanding 460 460 460
459,990 shares in 1995 and 459,809 shares in 1994 1,689 1,689 1,689
Surplus 10,454 8,542 7,057
Retained earnings
Net unrealized gain (loss) on securities available 144 554 (338)
for sale, net of taxes -- -- (46)
--------------- --------------- --------------
Employee Stock Ownership Plan commitment 12,760 11,257 8,835
Total stockholders' equity
Commitments and contingencies
--------------- --------------- --------------
$ 185,549 $ 163,671 $ 135,611
=============== =============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 61
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
Years ended December 31, 1995, 1994 and 1993
and
Nine Months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
(Unaudited)
Nine Months
Ended September 30,
-------------------------
1996 1995 1995 1994 1993
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 10,211 $ 9,145 $ 12,327 $ 8,553 $ 7,339
Securities 1,448 1,156 1,607 1,021 1,261
Interest-bearing deposits with depository institutions 22 32 44 82 42
Federal funds sold 98 295 341 67 9
50 40 37 29 14
Other ---------- ---------- --------- ----------- -----------
11,829 10,668 14,356 9,752 8,665
---------- ---------- --------- ----------- -----------
Total interest income
Interest expense:
Savings and interest-bearing transaction accounts 671 513 693 646 667
Time deposits 3,772 3,587 4,920 2,315 1,626
Other 429 411 531 506 447
---------- ---------- --------- ----------- -----------
Total interest expense 4,872 4,511 6,144 3,467 2,740
---------- ---------- --------- ----------- -----------
Net interest income 6,957 6,157 8,212 6,285 5,925
Provision for loan losses 268 295 271 182 250
---------- ---------- --------- ----------- -----------
Net interest income after provisions for loan losses 6,689 5,862 7,941 6,103 5,675
---------- ---------- --------- ----------- -----------
Other operating income:
Service charges, fees, and commissions 1,136 840 1,193 1,007 918
Gain (loss) on securities transactions, net (3) (26) (26) 57 1
Other income 109 239 270 116 121
---------- ---------- --------- ----------- -----------
Total other operating income 1,242 1,053 1,437 1,180 1,040
---------- ---------- --------- ----------- -----------
Other operating expenses:
Salaries and employee benefits 2,332 2,101 3,237 2,173 2,055
Occupancy and equipment 827 807 1,086 743 668
Legal and professional 270 198 365 282 150
Other 1,579 1,724 2,338 1,732 1,395
---------- ---------- --------- ----------- -----------
Total other operating expenses 5,008 4,830 7,026 4,930 4,268
---------- ---------- --------- ----------- -----------
Income before income tax expense 2,923 2,085 2,352 2,353 2,447
Income tax expense 1,011 386 546 778 818
---------- ---------- --------- ----------- -----------
Net income $ 1,912 $ 1,699 $ 1,806 $ 1,575 $ 1,629
========== ========== ========= =========== ===========
Net income per common share $ 4.16 $ 3.69 $ 3.93 $ 3.44 $ 3.57
========== ========== ========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 62
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY Page 1 of 2
Consolidated Statements of Changes in Stockholders' Equity
(dollars in thousands, except per share amounts)
Years ended December 31, 1995, 1994 and 1993
and
Nine Months ended September 30, 1996 (unaudited)
<TABLE>
<CAPTION>
Preferred Common Retained
stock stock Surplus earnings
------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1992 $ 15 $ 456 $ 1,613 $ 4,288
Net income -- -- -- 1,629
Cash dividends ($.25 per share) -- -- -- (114)
Net unrealized loss on available-
for-sale securities from implementation of
change in accounting for securities, net of tax -- -- -- --
Change in ESOP commitment -- -- -- --
Repurchase and retirement of preferred stock (1) -- -- --
------------ ---------- --------- ----------
Balances at December 31, 1993 14 456 1,613 5,803
Net income -- -- -- 1,575
Cash dividends ($.70 per share) -- -- -- (321)
Net unrealized loss on available-
for-sale securities, net of tax -- -- -- --
Change in ESOP commitment -- -- -- --
Issuance of 4,000 shares of common stock -- 4 76 --
Repurchase and retirement of preferred stock (1) -- -- --
------------ ---------- --------- ----------
Balances at December 31, 1994 13 460 1,689 7,057
Net income -- -- -- 1,806
Cash dividends ($.70 per share) -- -- -- (321)
Net unrealized gain on available-for-sale
securities, net of tax -- -- -- --
Change in ESOP commitment -- -- -- --
Repurchase and retirement of preferred stock (1) -- -- --
------------ ---------- --------- ----------
Balances at December 31, 1995 $ 12 $ 460 $ 1,689 $ 8,542
------------ ---------- --------- ----------
<CAPTION>
Net unrealized
gain (loss)
on securities Total
available ESOP stockholders'
for sale commitment equity
--------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1992 $ -- $ -- $ 6,372
Net income -- -- 1,629
Cash dividends ($.25 per share) -- -- (114)
Net unrealized loss on available-
for-sale securities from implementation of
change in accounting for securities, net of tax 302 -- 302
Change in ESOP commitment -- (91) (91)
Repurchase and retirement of preferred stock -- -- (1)
-------------- ------------ -------------
Balances at December 31, 1993 302 (91) 8,097
Net income -- -- 1,575
Cash dividends ($.70 per share) -- -- (321)
Net unrealized loss on available-
for-sale securities, net of tax (640) -- (640)
Change in ESOP commitment -- 45 45
Issuance of 4,000 shares of common stock -- -- 80
Repurchase and retirement of preferred stock -- -- (1)
-------------- ------------ -------------
Balances at December 31, 1994 (338) (46) 8,835
Net income -- -- 1,806
Cash dividends ($.70 per share) -- -- (321)
Net unrealized gain on available-for-sale
securities, net of tax 892 -- 892
Change in ESOP commitment -- 46 46
Repurchase and retirement of preferred stock -- -- (1)
-------------- ------------ -------------
Balances at December 31, 1995 $ 554 $ -- $ 11,257
-------------- ------------ -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 63
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY Page 2 of 2
Consolidated Statements of Changes in Stockholders' Equity
(dollars in thousands, except per share amounts)
Years ended December 31, 1995, 1994 and 1993
and
Nine Months ended September 30, 1996 (unaudited)
<TABLE>
<CAPTION>
Preferred Common Retained
stock stock Surplus earnings
------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995 $ 12 $ 460 $ 1,689 $ 8,542
Net income (unaudited) -- -- -- 1,912
Net unrealized gain on available-for-sale
securities, net of tax (unaudited) -- -- -- --
Issuance of one share of preferred stock
(unaudited) 1 -- -- --
------------ ---------- --------- ----------
Balances at September 30, 1996 (unaudited) $ 13 $ 460 $ 1,689 $ 10,454
============ ========== ========= ==========
<CAPTION>
Net unrealized
gain (loss)
on securities Total
available ESOP stockholders'
for sale commitment equity
--------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995 $ 554 $ -- $ 11,257
Net income (unaudited) -- -- 1,912
Net unrealized gain on available-for-sale
securities, net of tax (unaudited) (410) -- (410)
Issuance of one share of preferred stock
(unaudited) -- -- 1
-------------- ------------ -------------
Balances at September 30, 1996 (unaudited) $ 144 $ -- $ 12,760
============== ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 64
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(dollars in thousands)
Years ended December 31, 1995, 1994 and 1993 and
Nine Months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
(Unaudited) Nine Months
Ended September 30,
-------------------------
1996 1995 1995 1994 1993
------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income $ 1,912 $ 1,699 $ 1,806 $ 1,575 $ 1,629
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 268 295 271 182 250
Deferred income tax benefit (31) (207) (375) -- (91)
Loss (gain) on sale of available-for-sale securities 3 26 26 (57) (1)
Net loss on sales of premises and equipment -- -- -- 1 (13)
Provision for depreciation and amortization 480 466 631 393 343
Net amortization of investment security premiums 20 (2) (7) 79 129
Changes in assets and liabilities:
Accrued interest receivable (85) (1,559) (1,162) (452) (286)
Other assets (117) (976) (745) (275) 122
Accrued interest payable 198 536 272 190 10
Accrued expenses and other liabilities 786 535 (95) 5 (84)
----------- --------- --------- --------- -----------
Net cash provided by operating activities 3,434 813 622 1,641 2,008
----------- --------- --------- --------- -----------
Investing activities:
Proceeds from maturities of available-for-sale 1,769 1,229 1,229 5,871 11,470
securities 4,999 4,977 4,977 3,645 4,020
Proceeds from sale of available-for-sale securities (7,627) (6,830) (11,067) (6,006) (13,716)
Purchases of available-for-sale securities -- (6,007) (6,007) (4,016) --
Purchase of securities held to maturity (28,371) (42,025) (19,232) (14,242) (11,501)
Net increase in loans (405) (490) (545) (1,709) (2,048)
Purchases of premises and equipment 42 24 24 9 40
Proceeds from sales of premises and equipment 301 437 437 183 55
----------- --------- --------- --------- -----------
Proceeds from sales of other assets (29,292) (48,685) (30,184) (16,265) (11,680)
----------- --------- --------- --------- -----------
Net cash used by investing activities
Financing activities:
Net increase in demand, savings, and interest-bearing
transaction accounts 7,042 2,405 11,723 3,283 3,284
Net increase in time deposits 10,768 20,420 14,695 28,261 574
Increase in short term borrowings -- 10,825 -- -- --
Cash dividends -- -- (321) (321) (114)
Proceeds from the issuance of (payments
to retire) preferred stock 1 -- (1) (1) (1)
Proceeds from the issuance of common stock -- -- -- 80 --
Increase (decrease) in notes payable -- (759) (700) 700 450
Principal payments on notes and debentures payable -- -- -- (450) (934)
Increase in Federal Home Loan Bank advances 2,180 -- -- -- 8,229
Payments on Federal Home Loan Bank advances -- (150) (478) (1,317) (264)
----------- --------- --------- --------- -----------
Net cash provided by financing activities 19,991 32,741 24,918 30,235 11,224
----------- --------- --------- --------- -----------
Increase (decrease) in cash and cash equivalents (5,867) 15,131 (4,644) 15,611 1,552
Cash and cash equivalents at beginning of year 15,770 20,414 20,414 4,803 3,251
----------- --------- --------- --------- -----------
Cash and cash equivalents at end of period $ 9,903 $ 5,283 $ 15,770 $ 20,414 $ 4,803
=========== ========= ========= ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 65
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS - First Capital BanCorp., Inc. (the "Company") through its
wholly owned subsidiary, Capital Bank (the "Bank"), provides a full
range of banking services to individual and corporate customers in
northeast Louisiana. The Company and the Bank are subject to
regulations of certain federal agencies and the Bank is regulated
by the State Commissioner of Financial Institutions. Both the
Company and the Bank undergo periodic examinations by those
regulatory authorities.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION - The
accompanying consolidated financial statements include the accounts
of the Company and the Bank. All significant intercompany balances
and transactions have been eliminated.
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and
income and expenses for the period. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for loan losses
and the valuation of other real estate acquired in connection with
foreclosures or in satisfaction of loans. In connection with the
determination of the allowances for loan losses and the valuation
of other real estate, management obtains independent appraisals for
significant properties.
CASH AND CASH EQUIVALENTS - For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, amounts due from banks,
interest-bearing demand deposits with depository institutions, and
federal funds sold. Generally, federal funds are sold for one-day
periods.
SECURITIES - The Company classifies its debt and marketable equity
securities in one of three categories: trading, available-for-sale,
or held-to-maturity. Trading securities are bought and held
principally for the purpose of selling them in the near term.
Held-to-maturity securities are those securities in which the
Company has the ability and intent to hold the security until
maturity. All other securities not included in trading or
held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost,
adjusted for the amortization or accretion of premiums or
discounts. Unrealized holding gains and losses on trading
securities are included in earnings. Unrealized holding gains and
losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as a
separate component of stockholders' equity until realized.
Transfers of securities between categories are recorded at fair
value at the date of transfer. See note 2 for discussion of
transfers made during 1995.
A decline in the market value of any available-for-sale or
held-to-maturity security below cost that is deemed other than
temporary is charged to earnings resulting in the establishment of
a new cost basis for the security. See note 2 for discussion of
transfers made during 1995.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to yield using the effective
interest method. Dividend and interest income are recognized when
earned. Realized gains and losses for securities classified as
available-for-sale and held-to-maturity are included in earnings
and are derived using the specific identification method for
determining the cost of securities sold.
F-8
(Continued)
<PAGE> 66
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loans are stated at the
principal amount outstanding with appropriate reduction for
unearned discount and the allowance for loan losses. Interest on
commercial, real estate, agricultural, and certain installment
loans is accrued as earned. Interest on other installment loans is
deferred and recognized under the sum-of-the-digits method, which
generally results in level rates of return on principal balances
outstanding.
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114 (Statement 114), Accounting by
Creditors for Impairment of a Loan as amended by Statement 118,
Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures. Statements 114 and 118 address the
accounting treatment of certain impaired loans. A loan is
considered impaired when based upon current information, it is
probable that a creditor will be unable to collect amounts due. If
a loan is impaired, then impairment is measured by (1) the present
value of expected future cash flows discounted at the loan's
original effective interest rate, or (2) the market price of
impaired loans, or (3) the fair value of collateral. Statements 114
and 118 do not apply to large groups of smaller balance-homogenous
loans that are collectively evaluated for impairment or loans that
are measured at fair value. The implementation of Statements 114
and 118 did not have a material effect on the financial condition
or results of operations of the Company.
The accrual of income on loans is generally discontinued and all
interest income previously accrued and unpaid is deducted from
income when a loan becomes more than ninety days delinquent, or
when certain factors indicate reasonable doubt as to the timely
collectibility of all amounts due. A loan may remain on accrual
status if it is in the process of collection and is either well
secured or guaranteed. Generally, nonaccruing loans are returned
to an accrual status only when none of the principal or interest is
due and unpaid and the full collectibility of the outstanding loan
balance is reasonably assured. Cash receipts on nonaccruing loans
are generally applied to the principal balance until the remaining
balance is considered fully collectible.
In determining the amount of the allowance for loan losses, management
is required to make estimates and assumptions that affect the
amount of the allowance on the balance sheet and related provision
on the statement of income. These estimates are particularly
susceptible to change. The allowance for loan losses is maintained
at a level considered by management to be adequate to provide for
potential loan losses. Management, in determining the adequacy of
the allowance for loan losses, takes into consideration
examinations conducted by bank supervisory authorities, results of
internal review procedures, prior loan loss experience, and an
assessment of current and anticipated future economic conditions on
the loan portfolio. The allowance is established through a
provision for loan losses charged to expense. Loans are charged
against the allowance when management believes that the
collectibility of the principal is unlikely. All known losses have
been charged off. Recoveries of amounts previously charged off are
credited to the allowance.
While management use available information to recognize losses on
loans, future additions to the allowance may be necessary based on
changes in economic conditions. In addition, various regulatory
agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses. Such
agencies may require the Bank to recognize additions to the
allowance based on their judgments about information available to
them at the time of their examination.
BANK PREMISES AND EQUIPMENT - Bank premises and equipment are carried
at cost, less accumulated depreciation. Depreciation of bank
premises and equipment is provided over the estimated useful lives
of the respective assets through both straight-line and accelerated
methods. Maintenance and repairs are charged to expense as
incurred, and renewals and betterments are capitalized. When
property and equipment is retired or otherwise disposed of, the
cost of the asset and the related accumulated depreciation are
removed from the accounts and the resulting gain or loss is
recognized.
OTHER REAL ESTATE - Other real estate represents property acquired
through foreclosure or deeded to the Bank in lieu of foreclosure on
real estate mortgage loans on which the borrowers have defaulted.
F-9
(Continued)
<PAGE> 67
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Amounts recorded as other real estate are carried at the lower of
the Bank's cost of acquisition or the asset's fair value less
estimated selling costs. Reductions in the balance of other real
estate at the date of acquisition are charged to the allowance for
loan losses. Any subsequent write-downs to reflect current fair
value are charged to other operating expense. Subsequent gains or
losses on the sale of these assets are credited or charged to
earnings.
INCOME TAXES - The Company and the Bank file a consolidated federal
tax return. Income taxes and benefits are generally allocated based
on each company's contribution to the total federal tax liability.
The Company accounts for income taxes under the asset and liability
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 and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
NET INCOME PER COMMON SHARE - Net income per common share is
calculated based on the weighted average number of common shares
outstanding during each year. The weighted average number of
shares outstanding during 1995, 1994 and 1993 were 459,809, 458,142
and 455,809, respectively.
INTERIM FINANCIAL INFORMATION (UNAUDITED) - In the opinion of
management, the accompanying unaudited consolidated financial
information of the Company contains all adjustments, consisting
only of those of a normal recurring nature, necessary to present
fairly the Company's financial position as of September 30, 1996
and the results of its operations and cash flows for the nine month
periods ended September 30, 1995 and 1996. These results are not
necessarily indicative of the results to be expected for the full
fiscal year.
F-10
(Continued)
<PAGE> 68
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(2) SECURITIES
As of December 31, 1993, the Company adopted the provisions of
Statement 115. As part of the adoption of Statement 115, the
Company classified all of its then held securities as
available-for-sale. Accordingly, at December 31, 1993, the
carrying value of its securities was increased $457,000. In
addition, a deferred income tax liability of $155,000 was recorded
and stockholders' equity was increased by $302,000.
The amortized cost and estimated market values (carrying value) of
securities available-for-sale at December 31, 1995 and 1994, are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
December 31, 1995
----------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
Cost gains losses value
-------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 26,951 854 -- 27,805
Mortgage-backed securities 3,153 -- (14) 3,139
Other securities 840 -- -- 840
-------------- ----------- ----------- ------------
$ 30,944 854 (14) 31,784
============== =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
----------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
-------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 12,988 -- (354) 12,634
Obligations of states and
political subdivisions 16 -- -- 16
Mortgage-backed securities 2,394 -- (159) 2,235
Other securities 682 -- -- 682
-------------- ----------- ----------- ------------
$ 16,080 -- (513) 15,567
============== =========== =========== ============
</TABLE>
The amortized cost (carrying value) and estimated market values of
securities held to maturity at December 31, 1994, are as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
-------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 4,016 -- (91) 3,925
============== ============ =========== ===========
</TABLE>
F-11
(Continued)
<PAGE> 69
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
The amortized cost and estimated market value of securities
available-for-sale at December 31, 1995, by contractual maturity, are
shown below (in thousands of dollars). Expected maturities will differ
from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Securities
Available-for-Sale
-------------------------------------
Amortized Estimated
cost market value
----------------- -----------------
<S> <C> <C> <C>
Due in one year or less $ 6,006 6,005
Due after one year through five years 20,945 21,800
Mortgage-backed securities 3,153 3,139
Other 840 840
----------------- -----------------
$ 30,944 31,784
================= =================
</TABLE>
Included in other securities at December 31, 1995 and 1994, are $836,000
and $678,000, respectively, in Federal Home Loan Bank stock which
is recorded at original cost. The investment is required as part
of the Federal Home Loan Bank advance agreement and is pledged as
collateral against amounts advanced. The amount of the required
investment is a percentage of total amounts advanced by the Federal
Home Loan Bank.
Securities having a carrying value of $19,436,000 and $10,005,000 at
December 31, 1995 and 1994, respectively, were pledged to secure
public funds on deposit and for other purposes as required or
permitted by law.
Proceeds from sales of available-for-sale securities were $4,977,000,
$3,645,000 and $4,020,000 during 1995, 1994 and 1993, respectively.
Gross losses of $26,000 and $8,000 were realized on those sales
during 1995 and 1994, respectively. There were no gains on sales
of securities during 1995. Gross gains of $65,000 and $1,000 were
realized on sales of those securities during 1994 and 1993,
respectively.
During 1995 the Bank transferred securities having an amortized cost of
$10,019,000 from its held-to-maturity portfolio to its
available-for-sale portfolio. At the time of the transfer, these
securities had net unrealized gains of approximately $393,000. This
transfer was made during the one time window of opportunity allowed
by the Financial Accounting Standards Board for the re-allocation
of held-to-maturity and available-for-sale investment security
portfolios as the result of management re-evaluating its investment
security portfolio allocations.
F-12
(Continued)
<PAGE> 70
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of the Bank's loan portfolio is as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
December 31,
1995
-------------
1994
-------
<S> <C> <C>
Real estate $53,568 46,930
Agricultural 24,301 13,818
Commercial and industrial 16,177 13,063
Installment 11,977 12,439
Other 1,700 2,773
------------ -----------
107,723 89,023
Unearned discount (161) (397)
Allowance for loan losses (1,342) (1,232)
------------ -----------
Net loans $106,220 87,394
============ ===========
</TABLE>
A summary of changes in the allowance for loan losses follows (in thousands of
dollars):
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
----------- ------------- -----------
<S> <C> <C> <C>
Balance, January 1 $1,232 1,182 1,082
Provisions charged to operating expense 271 182 250
Loans charged off (185) (150) (263)
Recoveries on loans 24 18 113
---------- ------------ ----------
Balance, December 31 $1,342 1,232 1,182
========== ============= ==========
</TABLE>
At December 31, 1995, 1994 and 1993, the Bank had discontinued the
accrual of interest on loans aggregating $609,000, $164,000 and
$193,000, respectively. Net interest income for 1995, 1994 and
1993 would have been higher by $68,000, $18,000 and $17,000,
respectively, had interest been accrued at contractual rates on
these nonperforming loans.
During 1995, 1994 and 1993, the Bank reduced loans through the
repossession of other real estate in the amounts of $35,704,
$283,000 and $203,000, respectively.
At December 31, 1995, the recorded investment in impaired loans was
approximately $609,000. The average recorded investment in
impaired loans during the year approximated $493,000. The total
allowance for loan losses related to these loans was $108,300 as of
December 31, 1995. Interest income recognized during the year on
these impaired loans approximated $5,200.
The Bank has no commitment to lend additional funds to debtors whose
terms have been modified in a troubled debt restructuring.
At December 31, 1995 and 1994, the aggregate amounts of loans
receivable from directors, executive officers, and entities in which
these individuals are principals amounted to $3,204,000 and
$2,310,000, respectively. During 1995, these officers, directors,
and their related entities made payments of $420,000 and secured
additional loans of $1,314,000. In the opinion of management, all
of the transactions entered into between the Bank and these parties
were made on substantially the same terms as those prevailing at the
time of comparable transactions with other parties.
F-13
(Continued)
<PAGE> 71
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(4) BANK PREMISES AND EQUIPMENT
Bank premises and equipment at December 31, 1995 and 1994, are
summarized as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Estimated
Useful Lives 1995 1994
----------------- ---------- -----------
<S> <C> <C> <C>
Land -- $ 1,294 1,294
Banking house and land improvements 5-23 years 2,935 2,854
Furniture, fixtures, and equipment 3-15 years 3,617 3,200
--------- ----------
7,846 7,348
Accumulated depreciation (3,129) (2,521)
--------- ----------
$ 4,717 4,827
========= ==========
</TABLE>
Depreciation expense was $631,000, $393,000 and $359,000 for 1995,
1994 and 1993, respectively.
(5) TIME DEPOSITS
Included in time deposits at December 31, 1995 and 1994, were
$7,124,000 and $8,559,000, respectively, of certificates of deposit
in denominations of $100,000 or more. Interest expense on time
deposits of $100,000 or more totaled $293,000, $181,000 and $208,000
for the years ended December 31, 1995, 1994 and 1993, respectively.
(6) INCOME TAXES
Income tax expense included in the consolidated statements of
operations consisted of the following (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Current $ 921 778 909
Deferred benefit (375) -- (91)
--------- --------- ---------
$ 546 778 818
========= ========= =========
</TABLE>
The significant components of deferred income tax benefit for the
years ended December 31, 1995, 1994 and 1993, are as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Deferred tax benefit (exclusive of the effects of other
components listed below) $ (52) (17) (86)
Change in beginning-of-the-year balance of the
valuation allowance for deferred tax assets (323) 17 (5)
--------- --------- ---------
$ (375) -- (91)
========= ========= =========
</TABLE>
F-14
(Continued)
<PAGE> 72
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
The actual income tax expense differs from the expected tax expense
(computed by applying the U.S. federal corporate rate of 34% to
income before taxes) as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Expected federal income tax expense $ 800 800 832
Change in beginning-of-the-year balance
of the valuation allowance for deferred
tax assets (323) 17 (5)
Other, net 69 (39) (9)
---------- --------- ---------
Income tax expense $ 546 778 818
========== ========= =========
Effective tax rate 23.2% 33.1 33.4
========== ========= =========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1995 and 1994, are presented below (in thousands of
dollars):
<TABLE>
<CAPTION>
1995 1994
-------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 313 145
Other real estate 59 139
Net operating loss carryforward 124 213
Bank premises and equipment-depreciation 36 19
Unrealized losses on available-for-sale securities -- 175
Other 25 --
-------- ----------
Total gross deferred tax assets 557 691
Less valuation allowance -- 323
-------- ----------
Net deferred tax assets $557 368
-------- ----------
Deferred tax liabilities:
Securities -- discount accretion 3 --
Unrealized gains on available-for-sale securities 285 --
Other -- 14
-------- ----------
Total gross deferred tax liabilities 288 14
-------- ----------
Net deferred tax asset $ 269 354
======== ==========
</TABLE>
The Company's valuation allowance for deferred assets as of January 1,
1995, 1994 and 1993, was $323,000, $306,000 and $311,000,
respectively. The net change in the total valuation allowance for
the years ended December 31, 1995, 1994 and 1993, was a decrease of
$323,000, an increase of $17,000 and a decrease of $5,000,
respectively. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax
liabilities and projected future taxable income in making this
assessment. Subsequently recognized tax benefits relating to the
valuation allowance for deferred tax assets as of December 31,
1994, was included as an income benefit in the consolidated
statement of operations in 1995.
F-15
(Continued)
<PAGE> 73
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
The Company has net operating loss carryforwards remaining, which relate to
net operating losses obtained with the acquisition of Security
Bancshares, Inc. As of December 31, 1995, these carryforwards
amounted to $564,000. These net operating losses are limited by
Internal Revenue Code Section 382. As such, only $367,200 of the
net operating losses will be available to offset taxable income
through the year 2001. The Company has recorded the benefit for the
future utilization of these net operating loss carryforwards as a
deferred tax asset.
(7) NOTES AND DEBENTURES PAYABLE AND FEDERAL HOME LOAN BANK ADVANCES
Notes and debentures payable and Federal Home Loan Bank advances
consist of the following at December 31, 1995 and 1994 (in thousands
of dollars):
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Note payable to an unaffiliated bank due in a single
payment at a New York bank's prime rate (8.5% at
December 31, 1994) $ - 700
Mandatory convertible capital notes discounted to
yield 10.5% through 1995 -- 18
Employee Stock Ownership Plan commitment
consisting of a note payable to an unaffiliated bank
in annual principal installments of $45,666
through 1995, plus interest at 8% -- 46
--------- ---------
-- 764
Federal Home Loan Bank advances 6,170 6,648
--------- ---------
$ 6,170 7,412
========= =========
</TABLE>
At December 31, 1994, the Company had outstanding mandatory convertible
capital notes with a face value of $190,000. In conjunction with the
October 13, 1989, acquisition of Security Bancshares, the carrying
values of the notes were discounted to yield 10.5% over their terms.
The notes matured during 1995, and were payable by conversion into 181
shares of the Company's common stock. Pursuant to the merger agreement,
the notes were converted into 181 shares of the Company's common stock.
The advances from the Federal Home Loan Bank are secured by a blanket
floating lien covering the Company's investment in Federal Home Loan
Bank stock totaling $836,000, balances held in deposit accounts at the
Federal Home Loan Bank, all first mortgage loans and deeds of trust on
one-to-four family residential dwellings, and all mortgage-backed
securities. The advances accrue interest at contractual rates of 4.54%
to 8.04% per annum and are due in monthly installments of approximately
$137,000, including interest. The advances are scheduled to amortize
through various dates between 1995 and 2004.
(8) EMPLOYEE BENEFIT PLANS
The Company has a profit sharing plan that covers all employees of the
Company and the Bank with one year of service, with full vesting after
seven years. Contributions to the profit sharing plan are determined at
the discretion of the Board of Directors. Contributions to the profit
sharing plan for the years ended December 31, 1995, 1994 and 1993, were
$33,000, $28,000 and $31,000, respectively.
The Company also has an Employee Stock Ownership Plan (ESOP) covering all
employees of the Company and the Bank with one year of service.
Contributions are made at the discretion of the Board of Directors.
Contributions to the ESOP totaled $90,000, $51,000 and $54,000 in 1995,
1994 and 1993, respectively.
At December 31, 1994, the ESOP had outstanding a note payable to an
unaffiliated bank in the amount of approximately $46,000, which was
guaranteed by the Company. Interest on this debt amounted to $6,400
F-16
(Continued)
<PAGE> 74
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
and $8,500 during the years ended December 31, 1994 and 1993,
respectively. All interest payments were made by the Bank. The
borrowing was secured by 10,453 shares of the Company's common stock.
At December 31, 1995, 1994 and 1993, the ESOP owned 17,082 shares of the
Company's common stock.
(9) REGULATORY MATTERS
Banking regulations limit the amount of dividends that the Bank may pay
without prior approval of the Bank's regulatory agency. The Bank is
required to obtain such approval if dividends declared in any one year
exceed the profits (net income, net of actual losses on loans,
investments, and other assets) of that year combined with the net
retained profits of the preceding year. In addition to the formal
statutes and regulations, regulatory authorities also consider the
adequacy of the Bank's total capital in relation to its assets,
deposits, and other such items. Prior approval of the regulatory
authorities will be required during 1996 if the amount to be paid as
dividends exceeds profits for the period, plus 1995 retained profits of
$1,538,000. Dividends paid by the Bank represent the Company's main
source of funds.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
was signed into law on December 19, 1991. The prompt corrective actions
of the FDICIA place restrictions on any insured depository institution
that does not meet certain requirements, including minimum capital
ratios. The restrictions are based on an institution's FDICIA defined
capital category and become increasingly more severe as an institution's
capital category declines. In addition to the prompt corrective action
requirements, the FDICIA includes significant changes to the legal and
regulatory environment for insured depository institutions, including
reductions in insurance coverage for certain kinds of deposits,
increased supervision by the federal regulatory agencies, increased
reporting requirements for insured institutions, and new regulations
concerning internal controls, accounting, and operations.
The prompt corrective action regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in
declining order, are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized." To be considered "well capitalized," an institution
is required to have at least a 5% leverage ratio, a 6% Tier I risk-based
capital ratio, and a 10% total risk-based capital ratio. However, the
regulatory agencies may impose higher minimum standards on individual
institutions or may downgrade an institution from one category because
of safety and soundness concerns.
At December 31, 1995, the Bank's leverage ratio was 7.49%, Tier I
risk-based ratio was 11.01%, and total risk-based ratio was 12.33%.
(10) SUPPLEMENTAL CASH FLOW INFORMATION
During 1995, 1994 and 1993, the Company and the Bank paid to depositors and
other creditors interest of $5,872,000, $3,276,000 and $2,730,000,
respectively. Also during 1995, 1994 and 1993, the Company paid income
taxes of $1,125,000, $890,000 and $905,000, respectively.
(11) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend
credit and standby letters of credit and financial guarantees. Those
instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the balance sheet. The
contractual or notional amounts of those instruments reflect the extent
of involvement the Bank has in particular classes of financial
instruments.
F-17
(Continued)
<PAGE> 75
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
The Bank's exposure to credit loss, in the event of nonperformance by
the other party to the financial instrument for commitments to
extend credit and standby letters of credit and financial guarantees
written, is represented by the contractual or notional amount of
those instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for
on-balance-sheet instruments.
<TABLE>
<CAPTION>
Contractual or
notional amount
at December 31, 1995
-------------------------
(in thousands)
<S> <C>
Financial instruments whose contract amounts represent
credit risk:
Commitments to extend credit $ 12,555
Standby letters of credit and financial guarantees 543
written
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's creditworthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Bank upon
extension of credit, is based on management's credit evaluation of the
counterparty. Collateral held varies but may include accounts
receivable; inventory; property, plant, and equipment; crop liens; real
estate; and income-producing commercial properties.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the Bank to guarantee the performance of a
customer to a third party. Those guarantees are primarily issued to
support public and private short-term borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the
same as that involved in extending loan facilities to customers. The
Bank holds collateral supporting those commitments for which collateral
is deemed necessary.
The Bank originates and sells mortgage loans to other financial
institutions with certain recourse provisions. These provisions require
the Bank to repurchase the loan should the borrower be in default within
a specified period of time, subsequent to the sale of the mortgage.
Most of the recourse provisions are in effect from three to six months
following the date the loan is sold to the investor. No such amounts
were outstanding at December 31, 1995.
(12) CONCENTRATION OF CREDIT RISK
The Bank grants real estate, commercial, industrial, and agricultural loans
to customers primarily in northeast Louisiana. Although the Bank has a
diversified loan portfolio, a substantial portion (approximately 50%) of
its loans, although not necessarily originated for the purposes of real
estate acquisition, are secured by real estate and its ability to fully
collect its loans could depend upon the real estate market in this
region. The Bank typically requires collateral sufficient in value to
cover the principal amount of the loan. Such collateral is evidenced by
mortgages on property held and readily accessible to the Bank.
Certain of the Bank's real estate, agricultural, and commercial and
industrial loans totaling $23,080,000 were made as a part of the Farmers
Home Administration's program for lending to the agricultural industry.
These loans are generally 90% guaranteed as to principal and interest.
F-18
(Continued)
<PAGE> 76
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(13) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1995. Statement
of Financial Accounting Standards No. 107, Disclosures about Fair Value
of Financial Instruments, defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties.
<TABLE>
<CAPTION>
December 31, 1995
---------------------------
Carrying Fair
Amount Value
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 15,770 15,770
Securities available-for-sale 31,784 31,784
Loans 106,220 109,151
Accrued interest receivable 3,179 3,179
Financial liabilities:
Deposits 145,125 144,981
Accrued interest payable 772 772
Federal Home Loan Bank advances 6,170 6,179
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
SECURITIES AVAILABLE-FOR-SALE - The fair value of securities
available-for-sale is estimated based on bid prices published in
financial newspapers or bid quotations received from securities dealers.
LOANS - Fair values are estimated for portfolio of loans that have similar
financial characteristics. Loans are segregated by type and maturity
for purposes of measurement. Each loan category is further segmented
into fixed and adjustable rate interest terms and by performing and
nonperforming categories.
The fair value of performing loans is calculated by discounting scheduled
cash flows through the estimated maturity using estimated market
discount rates that reflect the credit and interest rate risk inherent
in the loan. The estimate of maturity is based on the Company's
historical experience with repayments for each loan classification,
modified, as required, by an estimate of the effect of current economic
and lending conditions. For purposes of estimating fair value, loans
with a remaining maturity of three months or less and adjustable rate
loans are assumed to be carried at approximate fair value due to
repricing at current market rates.
Fair value for significant nonperforming loans is based on recent external
appraisals. If appraisals are not available, estimated cash flows are
discounted using a rate commensurate with the risk associated with the
estimated cash flows. Assumptions regarding credit risk, cash flows,
and discount rates are judgmentally determined using available market
information and specific borrower information.
DEPOSITS - The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, savings, and interest-bearing
transaction accounts is equal to the amount payable on demand. The fair
value of certificates of deposit is based on the discounted value of
contractual cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining maturities.
FEDERAL HOME LOAN BANK ADVANCES - The fair value of the Company's federal
home loan bank advances is estimated by discounting the future cash
flows of each instrument at rates currently offered to the Company for
similar debt instruments of comparable maturities by the Federal Home
Loan Bank.
F-19
(Continued)
<PAGE> 77
FIRST CAPITAL BANCORP., INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
OTHER CATEGORIES OF FINANCIAL INSTRUMENTS - The carrying amount of cash and
cash equivalents and accrued interest approximate fair value because of
the short maturity of these instruments. The fair value of off-balance
sheet instruments such as commitments to extend credit and standby
letters of credit are not material.
LIMITATIONS - Fair value estimates are made at a specific point in time,
based on relevant market information and information about the financial
instrument. These estimates do not reflect any premium or discount that
could result from offering for sale at one time the Company's entire
holdings of a particular financial instrument. Because no market exists
for a significant portion of the Company's financial instruments, fair
value estimates are based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that
are not considered financial instruments.
(14) CONTINGENCIES
In December 1995, Capital Bank voluntarily reported to the U.S. Treasury
Department a number of inadvertent violations of the Bank Secrecy Act
and the regulations thereunder that occurred at Capital Bank between
November 1994 and August 1995. The Treasury Department has taken no
action in response to Capital Bank's report, although a possibility
exists that civil money penalties could be imposed. Management is unable
to determine the likelihood that penalties will be imposed or the amount
of any such penalties, but does not believe that the ultimate
disposition of this matter will have a material adverse effect on the
Company's or the Bank's financial condition.
There are various claims and legal actions arising in the ordinary course
of business involving the Company and/or the Bank. In the opinion of
management of the Company and the Bank, the ultimate disposition of
these matters will not have a material adverse effect on the Company's
or the Bank's financial condition.
F-20
(Continued)
<PAGE> 78
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEPOSIT GUARANTY CORP.,
DEPOSIT GUARANTY LOUISIANA CORP.,
DEPOSIT GUARANTY NATIONAL BANK OF LOUISIANA,
FIRST CAPITAL BANCORP, INC.
AND
CAPITAL BANK
<PAGE> 79
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Conversion of FCB Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 Anti-Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.07 Exchange of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.08 Shares of DG Louisiana. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Article II. THE BANK MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 The Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.03 Cancellation of Capital Stock of Capital Bank. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.04 Capital Structure of the Receiving Association. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.05 Effects of the Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.06 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Article III. REPRESENTATIONS AND WARRANTIES OF CAPITAL BANK AND FCB . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.03 Investments; No Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.04 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.05 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.06 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.07 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.08 No Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.09 Title to Properties; Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Trademarks; Trade Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 [Reserved.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Powers of Attorney; Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Benefit and Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Contracts and Commitments; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.22 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.23 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.24 Contract Termination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Article IV. REPRESENTATIONS AND WARRANTIES OF DGC, DG LOUISIANA AND DGNB LOUISIANA . . . . . . . . . . . . . . . . 19
4.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 80
<TABLE>
<S> <C>
4.02 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.03 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.04 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.05 Legality of DGC Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.06 SEC Documents; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.07 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.08 No Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.09 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.10 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article V. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.01 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.02 Limitation on Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.03 Current Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.04 Access to Properties and Records; Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 24
5.05 Interim Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.06 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.07 Approval of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.08 Compliance with SEC Rules 144 and 145. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.09 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.11 Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.13 Post-Merger Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.14 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.15 Retirement of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.16 Severance and Employments Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Article VI. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.01 Conditions to Each Party's Obligations under this Agreement. . . . . . . . . . . . . . . . . . 30
6.02 Conditions to the Obligations of DGC, DG Louisiana, and DGNB
Louisiana under this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.03 Conditions to the Obligations of Capital Bank and FCB under this
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Article VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.01 Time and Place. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.02 Deliveries at the Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Article VIII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Article IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.01 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.03 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.04 Amendment, Extension and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.05 Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.06 Non-Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 40
9.07 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
<PAGE> 81
<TABLE>
<S> <C> <C>
9.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.09 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
<PAGE> 82
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 26, 1996, by and
among First Capital Bancorp, Inc. ("FCB"), a corporation organized under the
laws of the State of Louisiana, and its wholly-owned subsidiary Capital Bank
("Capital 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 FCB 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, Capital 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.
I.
THE HOLDING COMPANY MERGER
1.01 Holding Company Merger. In accordance with the applicable
provisions of the Louisiana Business Corporation Law ("LBCL"), FCB 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 FCB 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 and time (the "Effective
Date") set forth in the certificate of merger filed in the office of the
Secretary of State of Louisiana.
1.03 Effect of the Holding Company Merger. On the Effective Date, (i)
the separate existence of FCB shall cease and FCB 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 FCB, (iii) DG Louisiana shall be responsible for all of the liabilities and
obligations of FCB 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
FCB, (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 FCB 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, FCB and its proper officers and directors
shall be deemed to have granted to DG Louisiana an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in DG
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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 FCB to take any and all such action.
1.05 Conversion of FCB Shares. Except for shares as to which
dissenters' rights have been perfected and not withdrawn or otherwise forfeited
under Section 131 of the LBCL and shares of common stock, no par value of FCB
("FCB Common Stock") held by FCB or any member of its consolidated group (other
than in a fiduciary capacity), which shall by reason of the Holding Company
Merger be cancelled, and subject to the provisions of Section 1.07(e) relating
to fractional shares, at the Effective Date by reason of the Holding Company
Merger, each issued and outstanding share of FCB Common Stock shall be
converted into and become that number of shares of the common stock, no par
value, of DGC ("DGC Common Stock") determined by multiplying the number of FCB
shares by each of the Exchange Ratio and the Escrow Shares Exchange Ratio as
determined in this Section 1.05. The Exchange Ratio shall be determined as
follows:
(a) In the event the Average Market Price of DGC Common Stock is
greater than or equal to $25.50 per share, the Exchange Ratio shall equal
1,568,626, less the number of whole shares equal as nearly as possible to the
quotient obtained by dividing 3,000,000 by the Average Market Price of DGC
Common Stock, divided by the total number of shares of FCB Common Stock issued
and outstanding immediately prior to the Effective Date;
(b) In the event the Average Market Price of DGC Common Stock is less
than or equal to $23.50 per share, the Exchange Ratio shall equal 1,702,126,
less the number of whole shares equal as nearly as possible to the quotient
obtained by dividing 3,000,000 by the Average Market Price of DGC Common Stock,
divided by the total number of shares of FCB Common Stock issued and
outstanding immediately prior to the Effective Date; or
(c) In the event the Average Market Price of DGC Common Stock is
greater than $23.50 per share, but less than $25.50 per share, the Exchange
Ratio shall be determined by dividing 40,000,000 by the Average Market Price,
subtracting from the product the number of whole shares equal as nearly as
possible to the quotient obtained by dividing 3,000,000 by the Average Market
Price of DGC Common Stock, and then dividing the result by the total number of
shares of FCB Common Stock issued and outstanding immediately prior to the
Effective Date.
The Escrow Shares Exchange Ratio shall equal the number of whole shares
equal as nearly as possible to the quotient obtained by dividing 3,000,000 by
the Average Market Price of DGC Common Stock divided by the total number of
shares of FCB Common Stock issued and outstanding immediately prior to the
Effective Date.
The "Average Market Price" of the DGC Common Stock shall be the average
of the closing per share trading prices of DGC Common Stock as reported by the
New York Stock Exchange on the New York Stock Exchange composite transactions
tape (adjusted for any stock split or similar transaction) on the ten (10)
consecutive trading days ending on the tenth business day prior to the
Effective Date.
1.06 Anti-Dilution. If prior to the Effective Date DGC should split,
reclassify or combine DGC Common Stock, or pay a stock dividend or other
distribution in DGC Common Stock, then the Exchange Ratio and the Escrow Shares
Exchange Ratio shall be appropriately adjusted to reflect such split,
reclassification, combination, dividend or distribution.
1.07 Exchange of Shares. (a) Within ten (10) days after the
Effective Date, Deposit Guaranty National Bank, acting as exchange agent (the
"Exchange Agent"), shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Date represented issued
and outstanding shares of FCB Common Stock (the "Certificates"), a form letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing DGC
Common Stock and the cash in lieu of fractional shares, if any, into which the
shares of FCB Common Stock represented by such Certificates shall have been
converted pursuant to this Agreement (other than the portion of such shares of
DGC Common Stock that
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<PAGE> 84
comprise Escrow Shares, as defined below). 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: (i) a certificate representing that number of
whole shares of DGC Common Stock, as defined below, to which such holder of FCB
Common Stock shall have become entitled pursuant to the provisions hereof
(other than the portion of such shares of DGC Common Stock that comprise Escrow
Shares, as defined below), and (ii) a check representing the amount of cash in
lieu of fractional shares, if any, which such holder has the right to receive
in respect of the Certificate surrendered, and such Certificate shall forthwith
be canceled. Lost Certificates shall be treated in accordance with the
existing procedures of FCB.
(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 FCB of the shares of FCB Common Stock which are outstanding
immediately prior to the Effective Date. If, after the Effective Date,
Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be canceled and exchanged for certificates
representing shares of DGC Common Stock as provided herein.
(e) No certificates or scrip representing fractional shares of DGC
Common Stock shall be issued upon the surrender for exchange of 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. DGC shall combine any fractional share payable to a holder
of FCB Common Stock based on the Exchange Ratio and any fractional share
payable to the same holder of FCB Common Stock based on the Escrow Shares
Exchange Ratio and add the resulting whole share to the number of shares to be
issued to such holder pursuant to the Exchange Ratio. DGC shall pay in lieu of
any remaining fractional share an amount in cash determined by multiplying (i)
the Average Market Price of DGC Common Stock, by (ii) the fraction of a share
of DGC Common Stock to which such holder would otherwise be entitled.
(f) On the Effective Date the Exchange Agent shall deposit with the
escrow agent under an escrow agreement in the form attached hereto as Schedule
1.07(f) (the "Escrow Agreement") a number of shares of DGC Common Stock equal
to the product of the Escrow Shares Exchange Ratio and the number of shares of
FCB Common Stock issued and outstanding immediately prior to the Effective Date
(the "Escrow Shares"). The Escrow Shares shall be held by the escrow agent
during the period and for the purposes specified in the Escrow Agreement, and
shall be released to the former holders of Certificates or DGC, or both, as the
case may be, only in accordance with the terms thereof.
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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<PAGE> 85
1.09 Tax Consequences. It is intended that the Holding Company Merger
shall constitute a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), and
that this Agreement shall constitute a "plan of reorganization" within the
meaning of Section 368 of the Code.
II.
THE BANK MERGER
2.01 The Bank Merger. On the Effective Date (as defined in Section
2.02 hereof), Capital 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 effects
provided in, 12 U.S.C. Section 215a and La. R.S. Sections
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 Capital 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. Section 6:352 and make appropriate filings with the Office of the
Comptroller of the Currency (the "OCC"). Capital 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 Capital Bank. On the Effective
Date, by virtue of the Bank Merger, all shares of the capital stock of Capital
Bank shall be canceled 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 September
30, 1996, DGNB Louisiana had capital of $2,341,210 divided into 234,121 shares
of common stock authorized, each of $10 par value ("DGNB Louisiana Common
Stock"), surplus of $31,231,554 and undivided profits, including capital
reserves, of $15,753,998, and net unrealized loss on available for sale
securities of $1,104,166. As of September 30, 1996, Capital Bank had capital
of $375,000 divided into 75,000 shares of common stock authorized, each of
$5.00 par value, surplus of $5,625,000 and undivided profits, including capital
reserves, of $6,157,963, and net unrealized gains on available-for-sale
securities of $143,820.
If accounted for under the pooling method, at 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 at the
Effective Date, the Receiving Association shall have a surplus of $37,231,554
and undivided profits, including capital reserves, which when combined with
capital and surplus will be equal to the combined capital structures of Capital
Bank and DGNB Louisiana, as set forth above, adjusted, however, for the results
of operations and for other acquisitions consummated between September 30, 1996
and the Effective Date.
If accounted for under the purchase method, at 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 $31,234,554,
plus the value of the consideration to be paid by DGC in the Holding Company
Merger, and undivided profits, including capital reserves, which when combined
with capital and surplus will be equal to the capital structure of DGNB
Louisiana, as set forth above, adjusted,
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<PAGE> 86
however, for the results of operations of DGNB Louisiana and for other
acquisitions consummated between between September 30, 1996 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 virtue of the Bank Merger without
any deed or other transfer. The Receiving Association, upon the Bank Merger
and without any order or other action on the part of any court or otherwise,
shall hold and enjoy all rights of property, franchises and interests,
including appointments, designations and nominations, and all other rights and
interests as trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, and in every other fiduciary capacity, in the same manner
and to the same extent as such rights, franchises and interests were held or
enjoyed by any one of the Merging Associations at the time of the Bank Merger,
subject to the conditions specified in 12 U.S.C. Section 215a(f). The
Receiving Association shall, from and after the Effective Date, be liable for
all liabilities of the Merging Associations.
2.06 Tax Consequences. It is intended that the Bank Merger shall
constitute a tax-free reorganization within the meaning of Section 368(a)(1)(A)
of the Code and that this Agreement shall constitute a "plan of reorganization"
within the meaning of Section 368 of the Code.
III.
REPRESENTATIONS AND WARRANTIES OF
CAPITAL BANK AND FCB
Capital Bank and FCB hereby make the following representations and
warranties to DGC, DGNB Louisiana, and DG Louisiana:
3.01 Corporate Organization. (a) Capital Bank is a banking
association duly organized, validly existing and in good standing under the
laws of the State of Louisiana. Capital Bank 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.
(b) FCB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana. FCB 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 as a foreign corporation in each jurisdiction in which the failure
to be so licensed or qualified would have a material adverse effect on the
financial condition, results of operations or business of FCB and Capital Bank,
taken as a whole.
3.02 Capitalization. (a) The authorized capital stock of Capital Bank
consists of 75,000 shares of common stock, $5.00 par value (the "Capital Bank
Common Stock"). At the close of business on September 30, 1996, there were
75,000 shares of Capital Bank Common Stock issued and outstanding and no shares
held in Capital Bank's treasury. Except as set forth on Schedule 3.02 hereto,
all issued and outstanding shares of Capital Bank Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable (except as
provided in La. R.S. Section 6:262) and free of preemptive rights. Except as
set forth on Schedule 3.02 hereof, Capital Bank has not issued any additional
shares of Capital Bank Common Stock since September 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 Capital Bank Common Stock or any security representing the
right to purchase or otherwise receive any Capital Bank Common Stock. FCB has
good, valid and marketable title to the Capital 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.
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(b) The authorized capital stock of FCB consists of 2,000,000 shares
of FCB Common Stock and 60 shares of FCB Preferred Stock. At the close of
business on September 30, 1996, there were 459,990 shares of FCB Common Stock
and 13 shares of FCB Preferred Stock issued and outstanding. Except as set
forth on Schedule 3.02 hereto, all issued and outstanding shares of FCB Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. Except as set forth on Schedule
3.02 hereof, FCB has not issued any additional shares of FCB Common Stock since
September 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 FCB Common
Stock or any security representing the right to purchase or otherwise receive
any FCB Common Stock.
3.03 Investments; No Subsidiaries. The "FCB Consolidated Group," as
such term is used in this Agreement, consists of FCB and Capital Bank. Except
as set forth on Schedule 3.03 hereof, neither Capital Bank nor FCB has any
subsidiaries or equity interest in any corporation, partnership, joint venture
or other entity, except for such equity interest which Capital Bank may have
acquired as a result of foreclosure and is as of the date hereof holding
subject to sale.
3.04 Loan Portfolio. All loans, discounts and financing leases (in
which any member of the FCB Consolidated Group is lessor) reflected on the FCB
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 FCB Consolidated Group,
(b) are evidenced by genuine notes, agreements or other evidences of
indebtedness and (c) to the extent secured, have been secured by valid liens
and security interests which have been perfected. Set forth in Schedule 3.04
hereto is a true and complete list of all real property in which Capital 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 Capital Bank with an unpaid balance of $25,000 or more in which a
material default has occurred and is continuing on the date hereof. A material
default for purposes of this Section 3.04 includes, without limitation, the
failure to pay indebtedness or an installment thereof more than sixty (60) days
after it is due and payable.
3.05 Authority; No Violation. Each of Capital Bank and FCB 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
Capital Bank have been duly and validly approved by the Board of Directors of
Capital Bank, and, except for approval by FCB as the sole shareholder of
Capital Bank, no other corporate proceedings on the part of Capital Bank are
necessary to consummate the transactions so contemplated. The Board of
Directors of FCB has duly and validly approved this Agreement and the
transactions contemplated hereby and has authorized the execution and delivery
of this Agreement by FCB, and, except for the approval of this Agreement by its
shareholders, no other corporate proceedings on the part of FCB are necessary
to consummate the transactions so contemplated. This Agreement has been duly
and validly executed and delivered by Capital Bank and FCB and (assuming due
authorization, execution and delivery by DGC, DG Louisiana and DGNB Louisiana)
constitutes a valid and binding obligation of Capital Bank and of FCB
enforceable against each in accordance with its terms, except that enforcement
may be limited by bankruptcy, reorganization, insolvency and other similar laws
and court decisions relating to or affecting the enforcement of creditors'
rights generally and by general equitable principles.
3.06 Consents and Approvals. Except as set forth on Schedule 3.06, no
consents or approvals of any third party are necessary in connection with (i)
the execution and delivery by FCB and Capital Bank of this Agreement or (ii)
the consummation by FCB and Capital Bank of the Mergers and the other
transactions contemplated hereby.
3.07 Financial Statements. (a) The consolidated financial statements
of FCB and its consolidated subsidiaries (collectively, the "FCB Financial
Statements") for the fiscal years ended December 31, 1993 through 1995 have
been audited by KPMG Peat Marwick, LLP, certified public accountants in
accordance with generally accepted
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<PAGE> 88
auditing standards, have been prepared in accordance with generally accepted
accounting principles and, except as disclosed therein, have been applied on a
basis consistent with prior periods, and present fairly the financial position
of FCB 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 FCB and its consolidated subsidiaries for the nine
months ended September 30, 1996 ("FCB Interim Financial Statements") have been
prepared in accordance with generally accepted accounting principles (except
that substantially all of the disclosures and the statements of cash flows have
been omitted), applied on a basis consistent with prior periods, and present
fairly the financial position of FCB and its consolidated subsidiaries at such
date and the results of operations 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 FCB 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 FCB Interim Financial Statements (the "FCB Latest
Balance Sheet"), or as may have been incurred or may have arisen since the date
of the FCB 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) FCB 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 FCB 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 FCB 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 set forth in Schedule 3.08 hereto,
neither Capital Bank, FCB 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, Capital Bank and FCB 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 FCB Latest Balance Sheet,
other than any of such properties or assets which have been sold or otherwise
disposed of since the date of the FCB 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 Capital Bank or FCB, (iii) mortgages and encumbrances which secure
indebtedness, which is properly reflected in the FCB Latest Balance Sheet, and
(iv) liens arising as a matter of law in the ordinary course of business with
respect to obligations incurred after the date of the FCB 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 Capital Bank or FCB, and all buildings, structures and
fixtures used by Capital Bank or FCB 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 Capital Bank nor FCB 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.
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3.10 No Undisclosed Liabilities. Except as set forth in Schedule 3.10
hereto, as of the date hereof neither Capital Bank nor FCB 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 FCB Latest Balance Sheet or
disclosed in the notes thereto or (ii) incurred since the date of the FCB
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 FCB 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 FCB Latest Balance Sheet, there has
not been:
i) any material adverse change in the business, results of
operations, financial condition or prospects of Capital Bank or FCB, or
any event which has had or will have a material adverse effect on any of
the foregoing;
ii) any loss, damage, destruction or other casualty affecting
any of the properties, assets or business of Capital Bank or FCB or any
of their subsidiaries (whether or not covered by insurance) in an
amount, individually or in the aggregate, in excess of $25,000;
iii) any increase of more than ten percent (10%) in the
compensation payable by Capital Bank or FCB to any of their directors,
officers, agents, consultants, or any of their employees whose total
compensation after such increase was in excess of $25,000 per annum, or
any extraordinary bonus, percentage compensation, service award or other
like benefit granted, made or accrued to the credit of any such
director, officer, agent, consultant or employee, or any extraordinary
welfare, pension, retirement or similar payment or arrangement made or
agreed to by Capital Bank or FCB for the benefit of any such director,
officer, agent, consultant or employee;
iv) any change in any method of accounting or accounting
practice of Capital Bank or FCB;
v) any loan in excess of $25,000 or portion thereof
rescheduled as to payments thereon, subject to a moratorium on payment
thereof or written off by Capital Bank or FCB as uncollectible; or
vi) any agreement or understanding, whether in writing or
otherwise, of Capital Bank or FCB to do any of the foregoing.
(b) Except as set forth in Schedule 3.11 hereto, since the date of
the FCB Latest Balance Sheet, neither Capital Bank nor FCB 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 $25,000 as to each such lien, encumbrance, obligation or
liability, other than current liabilities shown on the FCB Latest
Balance Sheet and current liabilities incurred since the date of the FCB
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;
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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, other than dividends by Capital Bank to FCB to the
extent necessary to pay necessary and routine expenses of FCB;
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) sold, assigned, transferred or permitted to lapse any
patents, trademarks, trade names, copyrights or other similar assets,
including applications for registration or licenses thereof;
vii) 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
Capital Bank, FCB 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;
viii) entered into any collective bargaining agreements; or
ix) 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 Capital Bank or FCB, 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 Capital Bank's or FCB'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; and (c) neither
Capital Bank nor FCB is a lessee under a lease having an unexpired term greater
than 36 months that requires Capital Bank or FCB to make payments for the use
of any property at rates currently higher than prevailing market rates for
similar properties in the localities where such properties are located.
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 for
registration thereof and licenses therefor) owned by Capital Bank or FCB or in
which they have any interest. To their knowledge, Capital Bank and FCB 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 set forth on such Schedule or challenging or
questioning the validity or effectiveness of any license or agreement relating
to the same, nor to the knowledge of FCB and Capital Bank is there any valid
basis for any such claim, challenge or question, and to the knowledge of FCB
and Capital Bank, use of such trademarks, trade names and copyrights by Capital
Bank or FCB does not infringe on the rights of any person.
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3.14 Compliance with Applicable Law. Except as set forth in Schedule
3.14, Capital Bank and FCB hold all licenses, franchises, permits and other
governmental authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied in all
material respects with and are not in default in any respect under any,
applicable statutes, laws, ordinances, rules, regulations, and orders of all
federal, state and local governmental bodies, agencies and subdivisions having,
asserting or claiming jurisdiction over them or over any part of their
operations (to the extent that such default could result in a material
limitation on the conduct of Capital Bank's or FCB's business, or could cause
Capital Bank or FCB to incur a substantial financial penalty).
3.15 [Reserved.]
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 Capital Bank or FCB or in which Capital Bank or FCB is named as the
insured party. All such policies are valid, enforceable and in full force and
effect, and no member of the FCB 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 Capital Bank's and
FCB's property and the conduct of their businesses is in such amounts and
against such risks as are usually insured against by institutions of similar
size operating similar properties and businesses in the State of Louisiana and,
in the opinion of management of FCB or Capital Bank, as the case may be, are
adequate for the conduct of Capital Bank's and FCB's businesses. Except as set
forth in Schedule 3.16 hereto, within the past five (5) years, neither Capital
Bank nor FCB 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 Capital Bank
nor FCB has given any power of attorney to any person to act on its behalf, or
has any obligation or liability, either actual, accruing or contingent, as
guarantor, surety, cosigner, endorser, co- maker or indemnitor in respect of
the obligation of any person, corporation, partnership, joint venture,
association, organization or other entity, which is still in effect.
3.18 Tax Matters. Capital Bank and FCB 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 FCB 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 FCB Consolidated Group, all Returns
required to be filed by or on behalf of members of the FCB Consolidated Group
have been duly filed and, to the knowledge of the FCB Consolidated Group, such
Returns are true, complete and correct in all material respects. All Taxes
shown to be payable on the
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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 FCB Consolidated Group with respect to items or periods covered by such
Returns or with respect to any period ending prior to the date of this
Agreement. Each member of the FCB Consolidated Group has withheld and paid
over all Taxes required to have been withheld and paid over, and complied in
all material respects 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 FCB Consolidated Group with respect to Taxes, other than
liens for Taxes not yet due and payable or for Taxes that a member of the FCB
Consolidated Group is contesting in good faith through appropriate proceedings
and for which appropriate reserves have been established.
(c) The Returns of the FCB Consolidated Group have not been audited
in the past five (5) years by a government or taxing authority, nor to the
knowledge of the FCB Consolidated Group, is any such audit in process, pending
or threatened. To the knowledge of the FCB Consolidated Group, no material
deficiencies exist or have been asserted or are expected to be asserted with
respect to Taxes of the FCB Consolidated Group, and no member of the FCB
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 prior to
the date hereof. No member of the FCB Consolidated Group is a party to any
action or proceeding for assessment or collection of Taxes, nor to the
knowledge of the FCB Consolidated Group, has such event been asserted or
threatened against any member of the FCB 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 FCB Consolidated Group.
3.19 Benefit and Employee Matters. (a) Schedule 3.19(a) lists all
written 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 written employee benefit,
incentive and welfare policies, contracts, plans and arrangements, and all
trust agreements related thereto established or maintained by FCB or Capital
Bank, for the benefit of any of the present or former directors, officers, or
other employees of Capital Bank and FCB. 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 FCB Consolidated Group.
Except as set forth in Schedule 3.19(a) hereto, neither Capital Bank nor FCB
maintains or contributes to any "employee benefit plan," as such term is
defined in Section 3 of ERISA. Except as set forth in Schedule 3.19(a), all
"employee benefit plans" maintained by Capital Bank or FCB (all such plans
being listed in Schedule 3.19(a) hereto) (collectively, the "Capital Bank
Plans") are in material compliance with the provisions of ERISA and the
applicable provisions of the Code. No member of the FCB 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 FCB 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 FCB, Capital Bank or DGC, DG Louisiana or DGNB
Louisiana. No member of the FCB 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, during the last
five (5) years, neither Capital Bank nor FCB has been or is a party to any
collective bargaining or other labor contract. During the last five (5) years,
there has not been, there is not presently pending or existing, and there is
not threatened, (i) any strike, slowdown, picketing, or work stoppage, (ii) any
proceeding against or affecting Capital Bank or FCB relating to the alleged
violation of any legal requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting Capital Bank or FCB or
their premises, or (iii) any application for certification of a collective
bargaining agent. No event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. There is no
lockout of any employees by Capital Bank and FCB, and no such action is
contemplated by either of them. Capital Bank and FCB have complied in all
material respects with all legal requirements relating to employment, equal
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employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes, and
occupational safety and health. Neither Capital Bank nor FCB is liable for the
payment of any material compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing legal requirements.
3.20 Contracts and Commitments; No Default. (a) The following
information relating to Capital Bank and FCB has been made available to DGC, DG
Louisiana or DGNB Louisiana:
i) to the extent permitted by law, any bank regulatory agency
reports relating to the examination of Capital Bank which have been made
available to Capital Bank or FCB for the past five (5) years;
ii) the name of each bank with which Capital Bank or FCB 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
Capital Bank or FCB 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 and
other depository instruments);
iv) any loans, including any other credit arrangements by
Capital Bank, to any holder of ten percent (10%) or more of FCB Common
Stock, to any of Capital Bank's or FCB's directors or executive
officers, to any members of the immediate families of any of Capital
Bank's or FCB's directors or executive officers or to any corporation,
firm or other organization in which any of such directors or executive
officers has, directly or indirectly, beneficial ownership of more than
ten percent (10%); and
v) any pending application, including any documents or
materials relating thereto, which has been filed by Capital Bank or FCB
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 Capital Bank
nor FCB is a party to or bound by, nor have any bids or proposals been made by
or to Capital Bank or FCB 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,
other than the contracts or arrangements referred to in Schedule 3.19(a)
and Schedule 3.24;
iii) collective bargaining or union contract or agreement;
iv) contract, commitment or arrangement by Capital Bank or
FCB, as borrower, 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 by Capital Bank or FCB, as
lender in an amount greater than $100,000;
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vi) contract or agreement for the future purchase by it of any
materials, equipment, services, or supplies, which is not in the
ordinary course of business, and has a term of more than twelve (12)
months (including periods covered by any option to renew by either
party);
vii) contract containing covenants purporting to limit its
freedom to compete;
viii) contract or commitment for the acquisition, construction
or refurbishment of any property, plant or equipment, other than
contracts and commitments for the acquisition, construction or
refurbishment of any property, plant or equipment not in excess of
$20,000 for any one establishment or $50,000 in the aggregate.
(c) Capital Bank and FCB have performed in all material respects all
the obligations required to be performed by them under any material contract,
agreement, arrangement, commitment or other instrument to which they are 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
Capital Bank or FCB, which default would have a material adverse effect on the
business, results of operations or financial condition, and neither Capital
Bank nor FCB has received notice of any such default, nor has Capital Bank or
FCB 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. No representation or warranty contained in this
Agreement, and no statement contained in any schedule or certificate, list or
other writing furnished to DGC or 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 and DGNB
Louisiana.
3.22 Litigation. Except as listed on Schedule 3.22, there are no
actions, suits, proceedings, arbitrations or investigations pending or, to the
knowledge of FCB or Capital Bank, threatened, before any court, any
governmental agency or instrumentality or any arbitration panel, against or
affecting FCB or Capital Bank or any of their subsidiaries or any of the
directors, officers, or employees of the foregoing, which would, if adversely
determined, have a material adverse effect on the financial condition, results
of operations or business of FCB and Capital Bank, taken as a whole, and to the
knowledge of FCB or Capital 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 financial condition, results of operations or business of
FCB or Capital Bank. Neither FCB or Capital 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, FCB
and Capital 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. Section 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 FCB and Capital Bank.
(b) To the best knowledge of each, all property owned, leased,
operated or managed by FCB or Capital Bank, or in which FCB or Capital Bank has
any interest, including any mortgage or security interest ("Business
Property"), and all businesses and operations conducted on any of the Business
Property (whether by FCB or Capital
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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 FCB or Capital Bank.
(c) To the best knowledge of each, there is no judicial,
administrative, arbitration or other similar proceeding pending or threatened
before any court, governmental agency, authority or other forum in which FCB or
Capital 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 FCB or Capital Bank,
and to the knowledge of each there is no reasonable basis for any such
proceeding. The term "Hazardous Substance" means any pollutant, contaminant,
or toxic or hazardous substance, chemical, or waste defined, listed or
regulated by any Environmental Law (and specifically shall include, but not be
limited to, asbestos, polychlorinated biphenyls, and petroleum and petroleum
products).
(d) To the best knowledge of each, there has been no release or
threatened release of a Hazardous Substance in, on, under, or affecting any of
its Business Property, except such release or threatened release that is not
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the financial condition, results of operations, business or prospects
of FCB or Capital Bank.
3.24 Contract Termination Provisions. Except for those contracts set
forth in Schedule 3.24 hereto, all contracts between Capital Bank or FCB 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.
IV.
REPRESENTATIONS AND WARRANTIES OF DGC, DG LOUISIANA
AND DGNB LOUISIANA
DGC, DG Louisiana and DGNB Louisiana represent and warrant to Capital
Bank and FCB 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, and DGC and DG Louisiana are duly licensed and qualified
to do business as a foreign corporation in each jurisdiction in which the
failure to be so licensed would have a material adverse effect on the financial
condition, results of operations or business of DGC and its subsidiaries, taken
as a whole.
4.02 Capitalization. The authorized capital stock of DGC consists of
100,000,000 shares of DGC Common Stock and 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 September 30, 1996 (adjusted for the two-for-one stock
split effected in December, 1996), there were 38,864,032 shares of DGC Common
Stock issued and outstanding and no shares of DGC Preferred Stock had been
issued. In addition, as of September 30, 1996 (adjusted for the two-for-one
stock split effected in December, 1996), options to acquire 796,304 shares of
DGC Common Stock were outstanding and DGC had commitments to issue up to
2,200,560 shares of DGC Common Stock in connection with pending acquisitions.
The authorized capital stock of DG Louisiana consists of
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5,000,000 shares, no par value. At the close of business on September 30,
1996, there were 1,000 shares of DG Louisiana Common Stock issued and
outstanding, one hundred percent (100%) of which shares were owned by DGC. The
authorized capital stock of DGNB Louisiana consists of 234,121 shares of DGNB
Louisiana Common Stock. At the close of business on September 30, 1996, there
were 234,121 shares of DGNB Louisiana Common Stock issued and outstanding, 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
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 FCB
Common Stock, and except for the restrictions set forth in the Escrow
Agreement. 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 against each 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, results of operations or financial condition of DGC and
its consolidated subsidiaries (the "DGC Consolidated Group") or any of their
respective subsidiaries.
4.04 Consents and Approvals. Except as set forth on Schedule 4.04, no
consents or approvals of any third party 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 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.
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4.06 SEC Documents; Financial Statements. (a) DGC has timely filed
all required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1994 (the "DGC SEC Documents"), complete copies of which
have been provided to FCB. As of their respective dates, the DGC SEC
Documents (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the 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, changes in shareholder's equity 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. Except as and to the extent set
forth on the consolidated balance sheet of DGC and the DGC subsidiaries at
September 30, 1996 (the "DGC Latest Balance Sheet"), or as otherwise set forth
in the DGC SEC Documents, neither DGC nor any of the DGC subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of DGC or in the notes thereto, prepared in
accordance with generally accepted accounting principles consistently applied,
except liabilities arising in the ordinary course of business since such date.
(c) Since the date of the DGC Latest Balance Sheet, there has not
been any material adverse change in the business, results of operations, or
financial condition of the DGC Consolidated Group, or any event which has had
or will have a material adverse effect on any of the foregoing.
4.07 Litigation. Except as disclosed by DGC in any report filed by it
with the SEC prior to the date of this Agreement, there are no material
actions, suits, proceedings, arbitrations or investigations pending or, to the
knowledge of DGC and its subsidiaries, threatened against DGC or its
consolidated subsidiaries which are required to be disclosed pursuant to Items
3 and 5 of Form 8-K, Items 1 and 5 of Form 10-Q and Item 103 of Regulation S-K
of the SEC's Rules and Regulations, and, to the knowledge of DGC and its
subsidiaries, no facts or circumstances exist that would form the basis for
such actions, suits, proceedings, arbitrations or investigations.
4.08 No Broker's Fees. 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.
4.09 Compliance with Law. DGC holds all licenses, franchises, permits
and other governmental authorizations necessary for the lawful conduct of its
business under and pursuant to all, and has complied in all material respects
with and is 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 it or over any part of its operations (to the extent that
such default could result in a material limitation on the conduct of DGC's
business, or could cause DGC to incur a substantial financial penalty).
4.10 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any schedule or certificate, list or
other writing furnished to Capital Bank and FCB 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
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representations and warranties herein contained not misleading has been
withheld from, or has not been delivered in writing to, Capital Bank and FCB.
V.
COVENANTS OF THE PARTIES
5.01 Conduct of Business. Except with the consent of DGC, during the
period from the date of this Agreement to the Effective Date:
(a) Capital Bank and FCB will conduct their businesses and engage in
transactions only in the ordinary course and consistent with prudent banking
practice.
(b) Neither FCB nor Capital Bank shall (i) increase by more than ten
percent (10%) the compensation payable by Capital Bank or FCB to any of its
directors, officers, agents, consultants, or any of its employees whose total
compensation after such increase would be in excess of $25,000 per annum, (ii)
grant or pay any extraordinary bonus, percentage compensation, service award or
other like benefit to any such director, officer, agent, consultant or
employee, or (iii) make or agree to any extraordinary welfare, pension,
retirement or similar payment or arrangement for the benefit of any such
director, officer, agent, consultant or employee.
(c) Neither FCB nor Capital Bank shall sell or dispose of material
assets except in the ordinary course of business.
(d) Neither FCB nor Capital Bank shall enter into any new capital
commitments or make any capital expenditures, except commitments or
expenditures within existing operating and capital budgets or otherwise in the
ordinary course of business.
(e) Neither Capital Bank nor FCB 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 Capital Bank or FCB otherwise authorize
or effect any change in its capitalization.
(f) No dividends shall be paid by FCB. No dividends shall be paid by
Capital Bank except dividends by Capital Bank to FCB to pay necessary and
routine expenses of FCB.
5.02 Limitation on Actions. Prior to the Effective Date or until the
termination of this Agreement, FCB 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) 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,
FCB or any subsidiary thereof, or any business combination with FCB 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 in this paragraph
shall prohibit the Board of Directors of FCB from furnishing information to or
entering into discussions or negotiations with any person or entity that makes
an unsolicited proposal to acquire FCB pursuant to a merger, consolidation,
share exchange, purchase of a substantial portion of the assets, business
combination or other similar transaction, if the Board of Directors of FCB
determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties to shareholders. If FCB
furnishes information to or enters into discussions or negotiations with
another party prior to September 30, 1997, and (ii) FCB enters into a
definitive agreement with such party prior to March 31, 1998, then FCB shall
pay DGC a fee of $100,000,
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unless the Agreement is terminated by DGC, DG Louisiana, or DGNB Louisiana
pursuant to Section 8.01(b) prior to FCB entering into a definitive agreement
with such party.
Capital Bank and FCB agree to notify DGC by telephone within twenty-four
(24) hours of receipt of any inquiry with respect to a proposed merger,
consolidation, assets acquisition, tender offer or other takeover transaction
with another person or receipt of a request for information from the FDIC, OCC
or other governmental authority with respect to a proposed acquisition of
Capital Bank or FCB by another party.
5.03 Current Information. (a) During the period from the date of
this Agreement to the Effective Date, Capital Bank and FCB 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) a listing of all new and renewed loans, and loan
applications on new loans in an amount greater than $50,000 and on renewed
loans that have changes in substantive terms and conditions, (iii) delinquency
reports, (iv) a listing of loan extensions (v) to the extent possible, loan
policy exceptions, loan documentation exceptions, and financial statement
exceptions, (vi) watch list reports, (vii) all written communications
concerning problem loan accounts greater than $50,000, (viii) notification and
written details involving new loan products and/or loan programs, and (ix) such
other information regarding specific loans, the loan portfolio and management
of the loan portfolio as may be requested. Capital Bank and FCB 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.
(b) DGC will provide FCB with: (i) prompt written notice of any
material adverse change in the financial condition, results of operations or
business of the DGC Consolidated Group, and (ii) as soon as they become
available and are publicly disclosed, copies of any reports filed by DGC with
the SEC.
5.04 Access to Properties and Records; Confidentiality. (a) Upon
reasonable notice and subject to applicable laws relating to the disclosure of
information by them, Capital Bank and FCB shall permit DGC reasonable access to
their properties during normal business hours, and shall disclose and make
available to DGC and its agents such books, papers and records relating to
their assets, stock ownership, properties, operations, obligations and
liabilities as DGC may reasonably request, including, but not limited to: their
books of account (including their general ledgers); tax records; minute books
of directors' and shareholders' meetings; charter documents; bylaws; material
contracts and agreements; filings with any regulatory authority; litigation
files; compensatory plans affecting its employees; and any other materials
pertaining to business activities, projects or programs in which the other
parties may have a reasonable interest in light of the proposed Mergers. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with the operation of the business of the FCB Consolidated Group. No
member of the FCB Consolidated Group shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of any customer or other person, would jeopardize the
attorney-client privilege of the institution in possession or control of such
information, or would contravene any law, rule, regulation, order, judgment,
decree or binding agreement. The parties will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished by any member of the FCB Consolidated
Group pursuant hereto shall be treated as the sole property of the party
furnishing the information until consummation of the Mergers contemplated
hereby and, if such Mergers shall not occur, DGC, DG Louisiana, and DGNB
Louisiana shall return to FCB 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 and shall
cause its employees, agents and representatives to comply with the foregoing
confidentiality obligations, and shall be responsible for the breach of any
such obligations by such employees, agents and representatives. The obligation
to keep such information confidential shall continue for two (2) years from the
date
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the proposed Mergers are abandoned and shall not apply to (a) any information
which (i) DGC, DG Louisiana and DGNB Louisiana can establish by convincing
evidence was already in its possession prior to the disclosure thereof by FCB
or Capital Bank, (ii) was then generally known to the public or set forth in
public records, (iii) became known to the public through no fault of DGC, DG
Louisiana or DGNB Louisiana, 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. 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, Capital Bank and FCB will deliver to DGC
copies of their monthly financial statements.
5.06 Regulatory Matters. (a) Each of the parties to this Agreement
will cooperate with the other parties and use its best efforts to (i) procure
all necessary consents and approvals of third parties, (ii) complete all
necessary filings, registrations, applications, schedules and certificates,
(iii) satisfy all requirements prescribed by law for, and all conditions set
forth in this Agreement to, the consummation of the Mergers and the
transactions contemplated hereby, and (iv) effect the transactions contemplated
by this Agreement.
(b) Each of the parties to this Agreement will cooperate in the
preparation of the Registration Statement referred to in Section 5.06(c) below
and a proxy statement of FCB (the "Proxy Statement") which complies with the
requirements of the Securities Act, the rules and regulations promulgated
thereunder and other applicable federal and state laws, for the purpose of
submitting this Agreement and the transactions contemplated hereby to FCB's
shareholders for approval. Each of the parties to this Agreement will as
promptly as practicable after the date hereof furnish all such data and
information relating to it and its subsidiaries as any of the other parties may
reasonably request for the purpose of including such data and information in
the Registration Statement and the Proxy Statement. It shall be a condition to
FCB's obligation to mail the Proxy Statement that FCB shall have received an
opinion of its financial advisor, dated within ten (10) days prior to the date
of the Proxy Statement, to the effect that, as of the date thereof, the
consideration to be received by the holders of FCB Common Stock pursuant to the
Holding Company Merger is fair to such shareholders from a financial point of
view.
(c) DGC shall prepare and file a registration statement with the SEC
on Form S-4 under the Securities Act (the "Registration Statement"), which will
include the Proxy Statement, 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.
(d) DGC will indemnify and hold harmless FCB, each of its directors,
each of its officers and each person, if any, who controls FCB 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 FCB
Consolidated Group for use therein.
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(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 FCB 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.
(f) DGC will use its best efforts to prepare, as promptly as
practicable, all necessary documentation, to effect all necessary regulatory
applications and filings and 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.
5.07 Approval of Shareholders. (i) FCB will 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) its Board of Directors will 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, subject to any action taken by, or upon the
authority of, such Board of Directors in the exercise of its good faith
judgment as to its fiduciary duties to its shareholders, and (iii) FCB will
cooperate and consult with DGC, DG Louisiana, and DGNB Louisiana with respect
to each of the foregoing matters. FCB, as the sole shareholder of Capital
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. FCB 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 FCB as that term is
defined in Rule 144 under the Securities Act and who will become beneficial
owners of Common Stock of DGC pursuant to the Holding Company Merger ("FCB
Affiliates"). FCB shall use its best efforts to cause all FCB 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
and, unless waived by DGC, with such restrictions as are necessary to permit
the Mergers to be treated for accounting purposes as a pooling of interests.
5.09 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Effective Date any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary or
desirable action.
5.10 Public Announcements. DGC, DG Louisiana, DGNB Louisiana, Capital
Bank and FCB 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 written consent of all parties hereto. Each party hereto shall
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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 Capital Bank employees under all DGC employee benefit plans
for which they are eligible, as soon as practicable after the Effective Date.
For eligible participants, there shall be no waiting period for coverage under
any health or group term life benefit plan, and no employee shall be denied
benefits under any health or group term life benefit plan for pre-existing
conditions. All prior years of service of Capital 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 Capital Bank
employee who, immediately prior to the Effective Date, is covered by or is a
participant in a Capital 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. (a) From and after the Effective Date, DG
Louisiana shall indemnify, defend, and hold harmless the former directors,
officers, employees and agents of FCB (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 or alleged actions or omissions of such
persons occurring (or alleged to have occurred) at or prior to the Effective
Date (including the transactions contemplated by this Agreement) to the full
extent permitted under Louisiana Law or by FCB'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 Capital 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 or alleged actions or omissions of such persons occurring
(or alleged to have occurred) at or prior to the Effective Date (including the
transactions contemplated by this Agreement) to the full extent permitted under
Louisiana Law or by Capital Bank's Articles of Incorporation and Bylaws as in
effect on the date hereof, whichever is greater.
(c) Each of DGNB Louisiana and DG Louisiana shall use its best
efforts to maintain the existing directors' and officers' liability insurance
policy of Capital Bank and FCB, 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.
(d) The rights granted to the Holding Company Indemnified Parties and
the Bank Indemnified Parties hereby shall be contractual rights inuring to the
benefit of all such parties and shall survive this Agreement and the Mergers,
and any merger, consolidation or reorganization of DGC.
5.13 Post-Merger Financial Information. During the six-month period
following the Effective Date, DGC shall file all Forms 10-Q and 10-K required
to be filed by it with the SEC timely and will issue press releases concerning
earnings in accordance with its established practice.
5.14 Listing Application. DGC shall promptly prepare and submit to
the New York Stock Exchange a listing application covering the shares of DGC
Common Stock issuable in the Holding Company Merger, and shall use
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its best efforts to obtain, prior to the Effective Date, approval for the
listing of such DGC Common Stock for trading on the New York Stock Exchange
upon official notice of issuance.
5.15 Retirement of Stock. Prior to the Effective Date, FCB shall
retire all outstanding shares of FCB Preferred Stock at a cost not exceeding
the par value of the FCB Preferred Stock.
5.16 Severance and Employment Agreements. After the Effective Date,
DGNB Louisiana will honor the severance and retention payment provisions of the
employment agreements described in Schedule 5.16 regardless of whether the
Mergers are consummated prior to the expiration of the terms of such
agreements, and will provide severance benefits to former employees of Capital
Bank that are at least equivalent to the benefits that would have been provided
under the severance policy applicable to DGNB Louisiana, provided that persons
who are paid severance benefits pursuant to an employment agreement described
in Schedule 5.16 shall not be entitled to any severance benefits other than
those set forth in the employment agreement. FCB and Capital Bank agree not to
extend the term of any employment agreement described in Schedule 5.16, and to
provide any notice required to prevent the automatic extension of the term of
any employment agreement described in Schedule 5.16.
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 two-thirds of the voting power present at the special
meeting of shareholders of FCB called pursuant to Section 5.07 hereof, and by
the sole shareholders of Capital Bank, DG Louisiana and DGNB Louisiana.
(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, FCB and Capital Bank shall
have received an opinion of Messrs. Watkins Ludlam & Stennis, P.A., in form and
substance satisfactory to such parties and their counsel, substantially to the
effect that the transactions contemplated by this Agreement will be treated for
federal income tax purposes as tax-free reorganizations under Section 368 of
the Code.
(d) A Registration Statement relating to the shares of DGC Common
Stock to be issued pursuant to this Agreement shall have become effective under
the Securities Act and shall not be subject to any stop order nor shall have
any proceedings for that purpose been initiated. 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, and all statutory requirements for the valid consummation of the
transactions contemplated by this Agreement shall have been fulfilled.
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:
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(a) Each of the obligations of Capital Bank and FCB required to be
performed by it at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with, and the
representations and warranties of Capital Bank and FCB contained in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Date as though made at and as of the
Effective Date (except as otherwise contemplated by this Agreement) and DGC, DG
Louisiana and DGNB Louisiana shall have received a certificate to that effect
signed by the president of Capital Bank and FCB.
(b) All action required to be taken by, or on the part of, Capital
Bank and FCB to authorize the execution, delivery and performance of this
Agreement by Capital Bank and FCB and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Boards of
Directors of Capital Bank, and FCB, 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 Capital Bank
and FCB, which are necessary in connection with the consummation of the Mergers
by FCB and Capital Bank and the other transactions contemplated hereby.
(d) DGC, DG Louisiana and DGNB Louisiana shall have received an
opinion from McGlinchey Stafford Lang, A Professional Limited Liability
Company, counsel to Capital Bank and FCB, dated the date of the Closing, in
form and substance satisfactory to DGNB Louisiana, DGC and DG Louisiana to the
effect that:
i) FCB is a corporation duly organized, validly existing and
in good standing under the laws of the State of Louisiana and has all
requisite corporate power and authority to own or lease its properties
and to carry on its business as now being conducted. Capital Bank is a
state banking corporation duly organized, validly existing and in good
standing under the laws of Louisiana and (a) has all requisite corporate
power to own or lease 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 FCB and Capital Bank and is a valid and
binding agreement 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 FCB consists of 2,000,000
shares of FCB Common Stock and 60 shares of FCB Preferred Stock, of
which, as of September 30, 1996, all shares described in Section 3.02 of
this Agreement as issued and outstanding have been duly authorized and
validly issued and are fully paid and non- assessable;
iv) The authorized capital stock of Capital Bank consists of
75,000 shares of Capital Bank Common Stock of which, as of September 30,
1996, all shares described in Section 3.02 of this Agreement as issued
and outstanding have been duly authorized and validly issued and are
fully paid and non-assessable (except as provided in La. R.S. Section
6:262);
v) The execution and delivery by FCB and Capital Bank of this
Agreement, consummation by FCB and Capital Bank of the transactions
contemplated hereby and compliance by FCB and Capital Bank with the
provisions hereof will not violate the Articles of Incorporation of FCB
or Capital Bank or violate, result in a breach of, or constitute a
default under, any material lease, mortgage, contract, agreement,
instrument, judgment, order or decree known to us to which FCB or
Capital Bank is a party or to which they are subject;
23
<PAGE> 105
vi) Such counsel has participated in several conferences with
representatives of the parties to 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 or
omitted therefrom, as to which no opinion need be rendered).
As to matters of fact, counsel to FCB and Capital Bank may rely, to the
extent they deem appropriate, upon certificates of officers of FCB and Capital
Bank, provided such certificates are delivered to DGC 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 FCB or
Capital Bank from the date of the FCB Latest Balance Sheet to the Closing.
(f) FCB shall have used it bests efforts to cause all FCB 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 and, unless
waived by DGC, with such restrictions as are necessary to permit the Mergers to
be treated for accounting purposes as a pooling of interests.
(g) DGC shall have received an opinion of KPMG Peat Marwick, in form
and substance satisfactory to DGC, and substantially to the effect that on the
basis of a review of this Agreement and all of the circumstances related
thereto, in the opinion of KPMG Peat Marwick under Accounting Principles Board
Opinion No. 16, the Mergers may be accounted for as a pooling of interests.
(h) FCB shall have retired all outstanding shares of FCB Preferred
Stock at a cost not exceeding the par value of the FCB Preferred Stock.
Capital Bank and FCB 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 Capital Bank and FCB under this
Agreement. The obligations of Capital Bank and FCB 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 Capital
Bank and FCB:
(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 and the representations and warranties of DGC, DG Louisiana and
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 Capital Bank and FCB shall have received
certificates to that effect signed by the presidents of DGC, DG Louisiana and
DGNB Louisiana, respectively.
24
<PAGE> 106
(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 Capital Bank and FCB 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 the DGC
Consolidated Group from the date of the DGC Latest Balance Sheet to the
Closing.
(d) FCB and Capital 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 FCB and Capital 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 bank 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 a
valid and binding agreement 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. All corporate acts required on the part of DGC,
DG Louisiana and DGNB Louisiana for the consummation of the Mergers have
been taken. Upon filing of the Certificate of Merger attached as Exhibit
A hereto with the Secretary of State of Louisiana, the Holding Company
Merger will be effective as of the Effective Date. The Bank Merger will
be effective as of the date specified in the notice to the OCC
specifying the effective date required by OCC procedures;
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 September 30,
1996, all shares described in Section 4.02 of this Agreement as issued
and outstanding have been duly authorized and validly issued and are
fully paid and non-assessable. All shares of DGC Common Stock to be
issued to holders of FCB 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 FCB Common Stock, and
except for the restrictions set forth in the Escrow Agreement;
iv) 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, as the case may
be, 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,
25
<PAGE> 107
instrument, judgment, order or decree to which DGC, DG Louisiana and
DGNB Louisiana is a party or to which they may be subject;
v) the Registration Statement became effective prior to the
mailing of the Proxy Statement, and to such counsel's knowledge, no stop
order suspending its effectiveness has been issued nor have any
proceedings for that purpose been instituted nor are any such
proceedings threatened;
vi) 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
vii) 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 FCB and Capital Bank prior to the Closing or attached to the opinion of
counsel.
(e) FCB shall have received an opinion of its financial advisor
referred to in Schedule 3.08, dated within ten (10) days prior to the date of
the Proxy Statement, in form and substance satisfactory to FCB, to the effect
that, as of the date thereof, the consideration to be received by holders of
FCB Common Stock pursuant to the Holding Company Merger is fair to such
shareholders from a financial point of view.
(f) The shares of DGC Common Stock which shall be issued to the
holders of FCB Common Stock upon consummation of the Holding Company Merger
shall have been approved for listing for trading on the New York Stock Exchange
upon official notice of issuance.
DGC, DG Louisiana and DGNB Louisiana will furnish Capital Bank and FCB
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
Capital Bank and FCB may reasonably request.
26
<PAGE> 108
VII.
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and
VIII hereof, the Closing of the transactions contemplated hereby shall take
place at the offices of DGC, One Deposit Guaranty Plaza, 210 East Capitol
Street, Jackson, Mississippi 39205 at 9:00 A.M., local time, on the last
business day of the month after all of the conditions contained in Section
6.01(a) and Section 6.01(e) are satisfied or at such other place, at such other
time, or on such other date as DGC, DG Louisiana, DGNB Louisiana, FCB and
Capital 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, FCB and Capital Bank the opinions, certificates, and
other documents and instruments required to be delivered under Article VI
hereof, and the parties shall take such further action as is required to effect
the Mergers.
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 FCB:
(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 have been any material adverse change in the financial
condition, results of operations, business or prospects of FCB or Capital Bank
from the date of the FCB Latest Balance Sheet;
(c) by FCB and Capital Bank, if at the time of such termination there
shall have been any material adverse change in the financial condition, results
of operations, business or prospects of DGC from the date of 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 FCB pursuant to this Agreement, this Agreement shall not have been
approved by the required vote at the special meeting of shareholders of FCB
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
FCB Common Stock;
(g) by any party hereto if Closing shall not have occurred by
September 30, 1997.
8.02 Effect of Termination. In the event of termination of this
Agreement by either DGC, DG Louisiana, DGNB Louisiana, FCB or Capital 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 Capital Bank, FCB, DGC, DG Louisiana, DGNB Louisiana
or their respective officers or directors.
27
<PAGE> 109
IX.
MISCELLANEOUS
9.01 Expenses. 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 regardless of whether
the Mergers are consummated.
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 Corp.
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
(b) If to Capital Bank or FCB, to:
First Capital Bancorp, Inc.
2400 Forsythe Avenue
Monroe, Louisiana 71201-2939
Attn.: George W. Cummings
Fax Number: (318) 325-1718
Copy to:
B. Franklin Martin, III, Esq.
McGlinchey Stafford Lang
A Professional Limited Liability Company
643 Magazine Street
New Orleans, Louisiana 70130
Fax Number: (504) 596-2879
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.
28
<PAGE> 110
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, except as expressly provided herein.
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 FCB shareholders, DGC, DG Louisiana, DGNB Louisiana,
FCB and Capital 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 the
conditions set forth in Section 6.01 hereof); provided, however, that, except
as explicitly set forth in Section 1.01 hereof, after any approval of the
Holding Company Merger by the shareholders of FCB, 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 FCB. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
9.05 Complete Agreement. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, warranties, covenants
or undertakings other than those expressly set forth herein or therein. This
Agreement supersedes all prior agreements and understandings between the
parties, both written and oral, with respect to its subject matter.
9.06 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Date, or the earlier termination of this Agreement pursuant to Article VIII
hereof. Each party hereby agrees that its sole right and remedy with respect
to any breach of a representation or a warranty by the other party shall be to
not consummate the transactions described herein if such breach results in the
nonsatisfaction of a condition set forth in Section 6.02(a) or 6.03(a) hereof,
provided, however, that the foregoing shall not be deemed a waiver of any claim
for intentional misrepresentation or fraud.
9.07 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.08 Governing Law. This Agreement shall be governed by the laws of
the State of Louisiana, without giving effect to the principles of conflicts of
laws thereof.
9.09 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
29
<PAGE> 111
IN WITNESS WHEREOF, a majority of the members of the Boards of Directors
of DGNB Louisiana and Capital 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 FCB 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: FIRST CAPITAL BANCORP, INC.
By
- ------------------------------
Secretary President
[EXECUTION BELOW BY DEPOSIT GUARANTY NATIONAL BANK OF LOUISIANA AND CAPITAL
BANK]
Attest: DEPOSIT GUARANTY NATIONAL BANK
OF LOUISIANA
By
- ------------------------------
Secretary Chairman
(Seal of Bank)
Attest: CAPITAL BANK
By
- ------------------------------
Cashier President
(Seal of Bank)
<PAGE> 112
EXHIBIT B
OPINION OF MERCER CAPITAL MANAGEMENT, INC.
<PAGE> 113
[MERCER CAPITAL LETTERHEAD]
_________, 1997
The Board of Directors
c/o Mr. F. Ronnie Myrick
President and Chief Executive Officer
First Capital Bancorp, Inc.
2400 Forsythe Avenue
Monroe, Louisiana 71201-2939
Re: Fairness Opinion Regarding the Proposed Acquisition of First Capital
Bancorp, Inc., by Deposit Guaranty Corp.
Dear Directors:
Mercer Capital Management, Inc. ("Mercer Capital") has been retained by the
Board of Directors of First Capital Bancorp, Inc. ("First Capital") to issue a
fairness opinion for the proposed merger between First Capital and Deposit
Guaranty Corp. ("Deposit Guaranty"). A representative of Mercer Capital
previously presented an oral, preliminary fairness opinion to the Board of
Directors on December 16, 1996 and December 23, 1996. The fairness opinion is
issued from a financial point of view on behalf of First Capital shareholders.
Under the terms of the Agreement and Plan of Merger by and among Deposit
Guaranty Corp., Deposit Guaranty Louisiana Corp., Deposit Guaranty National
Bank of Louisiana, First Capital Bancorp, Inc., and Capital Bank ("the
Agreement"), dated December 26, 1996, First Capital will be merged into Deposit
Guaranty Louisiana Corp. and Capital Bank will be merged into Deposit Guaranty
National Bank of Louisiana. Upon consummation of the mergers, First Capital
Common Stock will be converted into Deposit Guaranty Common Stock based upon
the following: (a) 1,702,126 shares of Deposit Guaranty Common Stock if Deposit
Guaranty's "average market price" is less than $23.50 per share; (b) 1,568,626
shares of Deposit Guaranty Common Stock if the average market price is greater
than $25.50 per share; or (c) $40,000,000 worth of Deposit Guaranty Common
Stock if the average market price is between $23.50 per share and $25.50 per
share. In each case, a number of shares of Deposit Guaranty Common Stock equal
to $3,000,000 divided by the average market price will be subject to the Escrow
Agreement. The average market price is defined in the Agreement as the average
closing price of Deposit Guaranty's Common Stock as reported by the New York
Stock Exchange for the ten trading days ending ten days before the effective
date.
<PAGE> 114
The Board of Directors
c/o Mr. F. Ronnie Myrick
________, 1997
Page two
Based upon the terms of the Agreement and the approximate trading value of
Deposit Guaranty's Common Stock on the date the oral fairness opinion was
rendered ($29.50 per share), and assuming that all escrow shares will
ultimately be released to First Capital shareholders, the implied value of the
proposed merger is $46.3 million, or $100.60 per share. The price represented
351% of First Capital's September 30, 1996 book value, 351% of tangible book
value, 18.6x estimated 1996 consolidated earnings of approximately $2.5 million
before giving consideration to merger related expenses. The ultimate value of
the merger to First Capital stockholders will be contingent upon the market
value of Deposit Guaranty's Common Stock during the calculation period and
receipt of the escrow shares. As part of the engagement, representatives of
Mercer Capital visited with First Capital management on numerous occasions and
with Deposit Guaranty management in Jackson, Mississippi. Mercer Capital also
assisted in negotiating the primary financial terms of the Agreement. Factors
considered in rendering the opinion include:
1. Terms of the Agreement;
2. The process by which the Agreement was negotiated;
3. The valuation analysis of First Capital presented by Mercer Capital to
the Board of Directors at the December 16, 1996 meeting;
4. An analysis of the estimated pro-forma changes in book value per
share, earnings per share, and dividends per share from the
perspective of the First Capital shareholders;
5. A review of Deposit Guaranty's historical financial performance,
historical stock pricing, the liquidity of its shares and current
pricing in relation to other publicly traded bank holding companies
based in the U.S.;
6. Tax consequences of the merger for First Capital shareholders; and,
7. Restrictions placed on Deposit Guaranty shares received in the merger.
Mercer Capital did not compile nor audit First Capital's or Deposit Guaranty's
financial statements, nor have we independently verified the information
reviewed. We have relied upon such information as being complete and accurate
in all material respects. We have not made an independent valuation of the
loan portfolio, adequacy of the loan loss reserve or other assets or
liabilities of either institution.
<PAGE> 115
The Board of Directors
c/o Mr. F. Ronnie Myrick
________, 1997
Page three
Our opinion does not constitute a recommendation to any shareholder as to how
the shareholder should vote on the proposed merger; nor have we expressed any
opinion as to the prices at which any security of Deposit Guaranty or First
Capital might trade in the future.
Based upon our analysis of the proposed transaction, it is our opinion that the
consideration to be received by the holders of First Capital Common Stock is
fair, from a financial point of view, to the common shareholders of First
Capital.
Sincerely yours,
MERCER CAPITAL MANAGEMENT, INC.
Jeff K. Davis, ASA, CFA
Vice President
<PAGE> 116
EXHIBIT C
SECTION 131 OF THE LOUISIANA BUSINESS
CORPORATION LAW
<PAGE> 117
EXHIBIT C
La. R.S. 12:131 (1993)
Section 131. Rights of a shareholder dissenting from certain corporate
actions
A. Except as provided in subsection B of this section, if a
corporation has, by vote of its shareholders, authorized a sale, lease or
exchange of all of its assets, or has, by vote of its shareholders, become a
party to a merger or consolidation, then, unless such authorization or action
shall have been given or approved by at least eighty percent of the total
voting power, a shareholder who voted against such corporate action shall have
the right to dissent. If a corporation has become a party to a merger pursuant
to R.S. 12:112(H), the shareholders of any subsidiaries party to the merger
shall have the right to dissent without regard to the proportion of the voting
power which approved the merger and despite the fact that the merger was not
approved by vote of the shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist
in the case of:
(1) A sale pursuant to an order of a court having jurisdiction in
the premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance with
their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at
the record date fixed to determine shareholders entitled to receive notice of
and to vote at the meeting of shareholders at which a merger or consolidation
was acted on, were listed on a national securities exchange, or were designated
as a national market system security on an inter-dealer quotation system by the
National Association of Securities Dealers, unless the articles of the
corporation issuing such stock provide otherwise or the shares of such
shareholders were not converted by the merger or consolidation solely into
shares of the surviving or new corporation.
C. Except as provided in the last sentence of this subsection,
any shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than
eighty percent of the total voting power, and the merger, consolidation or
sale, lease or exchange of assets authorized thereby be effected, the
corporation shall promptly thereafter give written notice thereof, by
registered mail, to each shareholder who filed such written objection to, and
voted his shares against, such action, at such shareholder's last address on
the corporation's records. Each such shareholder may, within twenty days after
the mailing of such notice to him, but not thereafter, file with the
corporation a demand in writing for the fair cash value of his shares as of the
day before such vote was taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of the corporation may
be sent, and at the same time deposit in escrow in a chartered bank or trust
company located in the parish of the registered office of the corporation, the
certificates representing his shares, duly endorsed and transferred to the
corporation upon the sole condition that said certificates shall be delivered
to the corporation upon payment of the value of the shares determined in
accordance with the provisions of this section. With his demand the
shareholder shall deliver to the corporation, the written acknowledgment of
such bank or trust company that it so holds his certificates of stock. Unless
the objection, demand and acknowledgment aforesaid be made and delivered by the
shareholder within the period above limited, he shall conclusively be presumed
to have acquiesced in the corporate action proposed or taken. In the case of a
merger pursuant to R.S. 12:112(H), the dissenting shareholder need not file an
objection with the corporation nor vote against the merger, but need only file
with the corporation, within
<PAGE> 118
twenty days after a copy of the merger certificate was mailed to him, a demand
in writing for the cash value of his shares as of the day before the
certificate was filed with the secretary of state, state in such demand the
value demanded and a post office address to which the corporation's reply may
be sent, deposit the certificates representing his shares in escrow as
hereinabove provided, and deliver to the corporation with his demand the
acknowledgment of the escrow bank or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so stated and
demanded, or does not agree that a payment is due, it shall, within twenty days
after receipt of such demand and acknowledgment, notify in writing the
shareholder, at the designated post office address, of its disagreement, and
shall state in such notice the value it will agree to pay if any payment should
be held to be due; otherwise it shall be liable for, and shall pay to the
dissatisfied shareholder, the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to
whether any payment is due, after compliance by the parties with the provisions
of subsections C and D of this section, the dissatisfied shareholder, within
sixty days after receipt of notice in writing of the corporation's
disagreement, but not thereafter, may file suit against the corporation, or the
merged or consolidated corporation, as the case may be, in the district court
of the parish in which the corporation or the merged or consolidated
corporation, as the case may be, has its registered office, praying the court
to fix and decree the fair cash value of the dissatisfied shareholder's shares
as of the day before such corporate action complained of was taken, and the
court shall, on such evidence as may be adduced in relation thereto, determine
summarily whether any payment is due, and, if so, such cash value, and render
judgment accordingly. Any shareholder entitled to file such suit may, within
such sixty-day period but not thereafter, intervene as a plaintiff in such suit
filed by another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or decree shall be
made by the court staying the proposed corporate action, and any such corporate
action may be carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit, within sixty
days after receipt of notice of disagreement by the corporation shall
conclusively bind the shareholder (1) by the corporation's statement that no
payment is due, or (2) if the corporation does not contend that no payment is
due, to accept the value of his shares as fixed by the corporation in its
notice of disagreement.
F. When the fair value of the shares has been agreed upon between
the shareholder and the corporation, or when the corporation has become liable
for the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation,
as the case may be, shall, in its notice of disagreement, have offered to pay
to the dissatisfied shareholder on demand an amount in cash deemed by it to be
the fair cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as
the case may be; otherwise the costs of the proceeding shall be taxed against
such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a shareholder except the
rights accorded by this section. Such a demand may be withdrawn by the
shareholder at any time before the corporation gives notice of disagreement, as
provided in subsection D of this section. After such notice of disagreement is
given, withdrawal of a notice of election shall require the written consent of
the corporation. If a notice of election is withdrawn, or the proposed
corporate action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or
<PAGE> 119
the shareholder shall otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him
in exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand
for value, including any intervening preemptive rights, and the right to
payment of any intervening dividend or other distribution, or, if any such
rights have expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
<PAGE> 120
EXHIBIT D
ESCROW AGREEMENT
<PAGE> 121
ESCROW AGREEMENT
This Escrow Agreement is made effective as of ________, 1997 by and
among First Capital Bancorp, Inc. ("FCB"), and its wholly-owned subsidiary
Capital Bank ("Capital Bank"), and Deposit Guaranty Corp. ("DGC"), its
wholly-owned subsidiary Deposit Guaranty Louisiana Corp. ("DG Louisiana"), and
DG Louisiana's wholly-owned subsidiary Deposit Guaranty National Bank of
Louisiana ("DGNB Louisiana"), and ________ (the "Escrow Agent"). This Escrow
Agreement is entered into in accordance with Section 1.07(f) of the Agreement
and Plan of Merger dated ____, among FCB, Capital Bank, DGC, DG Louisiana, and
DGNB Louisiana (the "Merger Agreement"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meaning set forth in the Merger
Agreement.
In consideration of the mutual covenants and agreements contained
herein, the parties hereto agree as follows:
1. Deposit of Escrow Shares. On the Effective Date, the Exchange
Agent shall issue to the Escrow Agent, in its capacity as such, or to such
nominees as the Escrow Agent shall designate, a certificate representing the
number of whole shares of DGC Common Stock to be issued to holders of FCB
Common Stock based on the Escrow Shares Exchange Ratio, which shares shall be
held by Escrow Agent for the benefit of such holders of FCB Common Stock (the
"Beneficial Owners") subject to the terms of this Escrow Agreement. The Escrow
Agent agrees to accept and hold the Escrow Shares on deposit with it in
accordance with the terms of this Escrow Agreement, and to release the Escrow
Shares to the Beneficial Owners or DGC, or both, as the case may be, only in
accordance with the terms hereof. The Exchange Agent shall provide the Escrow
Agent a list setting forth the names and addresses of the Beneficial Owners and
the number of shares assigned to each Beneficial Owner, and the percentage that
such number of shares bears to the total number of Escrow Shares (such
percentage is referred to herein as a Beneficial Owner's "Proportionate
Interest").
2. Dividends and Other Distributions; Voting. (a) The Escrow
Agent shall promptly upon on its receipt of the same, pay over or transfer to
each Beneficial Owner the same proportion of cash dividends paid on the Escrow
Shares as the number of shares assigned to the Beneficial Owner bears to the
total number of Escrow Shares. All other distributions made with respect to
the Escrow Shares (including, without limitation, all dividends and
distributions made in connection with any reclassification or recapitalization,
split-up, consolidation or exchange of shares) shall be held by the Escrow
Agent pursuant to the terms of this Escrow Agreement.
(b) The Escrow Agent shall, in connection with all meetings of
shareholders of DGC, designate a suitable proxy or proxies (who may be the
proxies designated by the management of DGC in connection with a general
solicitation of proxies from shareholders) to vote the shares held by the
Escrow Agent hereunder and entitled to vote that portion of the shares held
hereunder for the account of each Beneficial Owner in such manner as such
Beneficial Owner shall, in written instructions delivered to the Escrow Agent,
direct. The Escrow Agent shall, promptly after its receipt of the same, mail
to each Beneficial Owner a copy of each annual report, notice of meeting of
shareholders, proxy statement or other solicitation material distributed
generally to shareholders of DGC in connection with each meeting of the
shareholders of DGC, or otherwise.
3. Demands for Release of Escrow Shares. (a) If any member of
the DGC Consolidated Group pays a fine or civil money penalty or an amount in
settlement of a claim by the United States for any such fine or civil money
penalty as a result of matters described in Schedule 3.14. to the Merger
Agreement or as a result of any other violation by Capital Bank of the Bank
Secrecy Act or the Treasury Department regulations promulgated thereunder prior
to the Effective Date (collectively, a "Covered Payment"), DGC may deliver to
the Escrow Agent a certificate (the "Certificate") demanding that the Escrow
Agent transfer to DGC a number of whole shares equal as nearly as possible to
the amount of the Covered Payment, less the amount of any tax benefit to the
DGC Consolidated Group as a consequence of such Covered Payment, divided by the
Average Market Price of DGC Common Stock (as
2
<PAGE> 122
defined in the Merger Agreement). The Certificate shall specify the amount and
nature of the Covered Payment, the tax treatment of such Covered Payment, the
number of Escrow Shares for which release is demanded, and the basis for the
demand. A copy of the Certificate shall be mailed by the Escrow Agent to each
Beneficial Owner within five business days after receipt thereof by the Escrow
Agent, along with a letter of instructions regarding the procedure for
objecting to the release of the Escrow Shares demanded in the Certificate.
(b) Unless the Escrow Agent receives a written objection (an
"Objection") to the Certificate from Beneficial Owners having an aggregate
Proportionate Interest greater than 10% within 45 days after the date of the
Escrow Agent's mailing of a copy of the Certificate to the Beneficial Owners,
the Escrow Agent shall release to DGC the number of Escrow Shares demanded in
the Certificate. If the Escrow Agent receives a timely Objection to a
Certificate, it shall forward a copy thereof to DGC within five business days
of receipt of such Objection.
(c) If Beneficial Owners having an aggregate Proportionate Interest
greater than 10% deliver timely Objections to a Certificate to the Escrow
Agent, the Escrow Agent shall not release any of the Escrow shares to DGC
pursuant to the Certificate unless and until the Escrow Agent receives (i) a
certified copy of an arbitration award from an arbitration conducted pursuant
to Article 9 hereof, specifying the number of Escrow Shares, if any, to be
released, or (ii) joint instructions from DGC and Beneficial Owners holding a
majority of the Proportionate Interest owned by those Beneficial Owners
submitting Objections, instructing the number of Escrow Shares to be released.
4. Escrow Period. (a) Unless sooner terminated, the escrow
created by this Escrow Agreement shall terminate thirty (30) days prior to the
fifth anniversary of the Effective Date. If (i) the Treasury Department
conducts an investigation of possible violations of the Bank Secrecy Act and
the Treasury Department regulations promulgated thereunder by Capital Bank
covering a period from the earliest date, as of the time of the investigation,
as to which a penalty may be assessed for violations of the Bank Secrecy Act
and the Treasury Department regulations by Capital Bank through December 1,
1995, (ii) the Treasury Department investigation has been completed, and (iii)
Escrow Shares have been delivered to DGC pursuant to Section 3 of this Escrow
Agreement, then DGC shall so notify the Escrow Agent and the Beneficial Owners,
and the escrow created by this Escrow Agreement shall terminate.
(b) Notwithstanding anything to the contrary in this Escrow Agreement,
upon termination of the escrow period pursuant to Section 4(a) above, the
Escrow Agent shall promptly exchange the DGC stock certificates in its name
representing the remaining Escrow Shares for certificates in the names of each
of the Beneficial Owners, in an amount as to a Beneficial Owner equal to the
number of Escrow Shares then remaining in escrow, multiplied by such Beneficial
Owner's Proportionate Interest. The Escrow Agent shall instruct DGC to
distribute such new certificates to the Beneficial Owners, and DGC shall do so
as promptly as practicable after receipt of such instruction. This Escrow
Agreement shall terminate upon disbursement of all of the Escrow Shares. No
certificates or scrip representing fractional interests in any Escrow Shares
shall be released by the Escrow Agent. All fractional interests in Escrow
Shares that a person at any time would otherwise be entitled to receive under
this Escrow Agreement shall be disregarded and such person shall only be
entitled to receive the resulting whole number of Escrow Shares.
5. Transfer Restrictions. Neither the right to receive the
Escrow Shares nor any interest therein shall be transferable or assignable by
the Beneficial Owners other than by will or by the laws of descent and
distribution.
6. Fees and Expenses. DGC shall pay all fees and expenses of the
Escrow Agent in accordance with the attached fee schedule.
7. Limitation on Escrow Agent's Liability. The Escrow Agent
shall incur no liability in respect of any action taken or suffered by it in
reliance upon any notice, direction, instruction, consent, statement or other
paper or document believed by it to be genuine and duly authorized nor for
anything except its own wilful
3
<PAGE> 123
misconduct, bad faith, or negligence. In all questions arising under this
Escrow Agreement the Escrow Agent may rely on the advice of counsel, and for
anything done, omitted or suffered in good faith by the Escrow Agent based on
such advice the Escrow Agent shall not be liable to anyone. The Escrow Agent
shall not be required to take any action hereunder involving any expense unless
the payment of such expense shall be made or provide for in a manner
satisfactory to it.
8. 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:
i. If to DGC, DG Louisiana or DGNB Louisiana, to:
Deposit Guaranty Corp.
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
ii. If to the Beneficial Owners:
The addresses shown on the books and records of the Escrow
Agent.
iii. If to the Escrow Agent:
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. Disputes. In the event of any disagreement among any of the
parties hereto and the Beneficial Owners having an aggregate Proportionate
Interest greater than 10% regarding any person's rights or obligations
hereunder, any party, or Beneficial Owners having an aggregate Proportionate
Interest greater than 10%, may submit the question to an arbitrator to be
appointed by the American Arbitration Association for arbitration in accordance
with its rules, whose determination shall be conclusive and binding on all
parties to the Escrow Agreement and the Beneficial Owners. DGC shall pay the
fees and expenses of the Arbitrator.
10. No Admission. Nothing in this Escrow Agreement or the Merger
Agreement is intended to or shall be interpreted as an admission or
acknowledgment of liability or the extent thereof by any party with respect to
the matters described in Schedule 3.14 to the Merger Agreement or any other
matter.
4
<PAGE> 124
11. DGC Consolidated Group Obligation of Good Faith. DGC agrees
that each member of the DGC Consolidated Group will use its best efforts to
minimize the amount of any Covered Payment, and will act in good faith, based
upon advice of counsel, in settling or defending any claims relating to such
matters, provided that no member of the DGC Consolidated Group shall be
required to agree to any extension of the statutory period during which claims
may be brought for violations of the Bank Secrecy Act and the Treasury
Department regulations promulgated thereunder .
12. Third Party Beneficiaries. This Agreement is intended to be
only for the benefit of and is enforceable only by the Beneficial Owners and
the parties hereto. This Escrow Agreement is binding on the parties hereto and
the Beneficial Owners, and their respective successors, assigns, heirs,
administrators, and representatives.
13. Valuation. For all purposes of this Escrow Agreement, each
share of DGC Common Stock included in the Escrow Shares shall be valued at a
price equal to the Average Market Price (as defined in the Agreement).
14. Amendments. This Escrow Agreement may be amended only in
writing and with the approval of DGC, the Escrow Agent, and Beneficial Owners
having an aggregate Proportionate Interest greater than 50%.
15. Counterparts. This Escrow 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.
16. Governing Law. This Escrow Agreement shall be governed by the
laws of the State of Louisiana, without giving effect to the principles of
conflicts of laws thereof.
17. Headings. The Section headings contained in this Escrow
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Escrow Agreement.
[SIGNATURES]
5
<PAGE> 125
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Deposit Guaranty is incorporated under the laws of Mississippi.
Subarticle E of Article 8 of the Mississippi Business Corporation Act
prescribes the conditions under which indemnification may be obtained by a
present or former director or officer of Deposit Guaranty who incurs expenses
or liability as a consequence of matters arising out of his activities as a
director or officer.
Article Nine of Deposit Guaranty's Articles of Incorporation also
provides for indemnification of officers and directors under certain
circumstances. Deposit Guaranty has purchased a liability policy which, subject
to any limitations set forth in the policy, indemnifies Deposit Guaranty's
directors and officers for damages that they become legally obligated to pay as
a result of any negligent act, error or omission committed by such person in
his capacity as an officer or director.
ITEM 21. EXHIBITS
The following exhibits are furnished (or incorporated by reference) as
a part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2 Agreement and Plan of Merger dated as of
December 26, 1996, as amended, included as
Exhibit A to the Proxy Statement/Prospectus
contained herein
5 Opinion of Watkins Ludlam & Stennis, P.A.
regarding legality of common stock registered
hereby
8 Opinion of Watkins Ludlam & Stennis, P.A.
regarding tax matters
23(a) Consent of KPMG Peat Marwick LLP, independent
accountants, with respect to consolidated
financial statements of Deposit Guaranty
Corp.
23(b) Consent of KPMG Peat Marwick LLP, independent
accountants, with respect to consolidated
financial statements of First Capital
Bancorp, Inc.
23(c) Consent of Watkins Ludlam & Stennis, P.A. is
contained in their opinion filed as Exhibit 5
to this Registration Statement
23(d) Consent of Mercer Capital Management, Inc.
24 Power of attorney included as part of
signature page
99 Form of Proxy
</TABLE>
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
<PAGE> 126
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
(2) The Registrant hereby undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and issued in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) The Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(4) The Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE> 127
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 21st
day of January, 1997.
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 First Capital 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 January 21, 1997
- ----------------------------------- and Director (Principal
E. B. Robinson, Jr. Executive Officer)
/s/ HOWARD L. McMILLAN, JR. President and Director January 21, 1997
- ----------------------------------
Howard L. McMillan, Jr.
/s/ ARLEN L. McDONALD Executive Vice President January 21, 1997
- ---------------------------------- (Principal Financial
Arlen L. McDonald Officer)
</TABLE>
<PAGE> 128
<TABLE>
<S> <C> <C>
/s/ STEPHEN E. BARKER Controller (Principal January 21, 1997
- ------------------------------- Accounting Officer)
Stephen E. Barker
/s/ MICHAEL B. BEMIS Director January 21, 1997
- -------------------------------
Michael B. Bemis
Director January __, 1997
- -----------------------------
Richard H. Bremer
/s/ WARREN A. HOOD, JR. Director January 21, 1997
- ----------------------------
Warren A. Hood, Jr.
/s/ CHARLES L. IRBY Director January 21, 1997
- ----------------------------
Charles L. Irby
/s/ RICHARD D. McRAE, JR. Director January 21, 1997
- ----------------------------
Richard D. McRae, Jr.
/s/ W. R. NEWMAN, III Director January 21, 1997
- ----------------------------
W. R. Newman, III
/s/ JOHN N. PALMER Director January 21, 1997
- ----------------------------
John N. Palmer
/s/ STEVEN C. WALKER Director January 21, 1997
- ----------------------------
Steven C. Walker
/s/ J. KELLEY WILLIAMS Director January 21, 1997
- ----------------------------
J. Kelley Williams
</TABLE>
<PAGE> 129
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description Page Number
-------------- ----------- -----------
<S> <C> <C>
2 Agreement and Plan of Merger dated as of December 26,
1996, as amended, included as Exhibit A to the Proxy
Statement/Prospectus contained herein
5 Opinion of Watkins Ludlam & Stennis, P.A. regarding
legality of common stock registered hereby
8 Opinion of Watkins Ludlam & Stennis, P.A. regarding tax
matters
23(a) Consent of KPMG Peat Marwick LLP, independent
accountants, with respect to consolidated financial
statements of Deposit Guaranty Corp.
23(b) Consent of KPMG Peat Marwick LLP, independent
accountants, with respect to consolidated financial
statements of First Capital Bancorp, Inc.
23(c) Consent of Watkins Ludlam & Stennis, P.A. is contained in
their opinion filed as Exhibit 5 to this Registration
Statement
23(d) Consent of Mercer Capital Management, Inc.
24 Power of attorney included as part of signature page
99 Form of Proxy
</TABLE>
<PAGE> 1
EXHIBIT 5
January 21, 1997
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
1,702,126 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 December 26, 1996, by and among
Deposit Guaranty Corp., Deposit Guaranty Louisiana Corp., Deposit Guaranty
National Bank of Louisiana, First Capital Bancorp, Inc. and Capital 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 1,702,126 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
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 First Capital 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 First Capital Bancorp in exchange for shares of Deposit
Guaranty Common Stock and the assumption of liabilities of First Capital 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 First Capital Bancorp held
immediately prior to the Merger. Deposit Guaranty, Deposit Guaranty Louisiana,
and First Capital 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 First Capital Bancorp upon the
transfer of substantially all of its assets to Deposit Guaranty Louisiana in
exchange solely for Deposit Guaranty Common Stock and the assumption by Deposit
Guaranty Louisiana of the liabilities of First Capital Bancorp (Code sections
361(a) and 357(a)). Such non-recognition is not affected by the fact that
First Capital Bancorp will be deemed to receive cash in lieu of fractional
share interests of First Capital Bancorp shareholders, since all of the cash
will be deemed distributed to First Capital Bancorp shareholders pursuant to
the Merger Agreement.
3. No gain or loss will be recognized by First Capital Bancorp upon the
transfer of substantially all of its assets to Deposit Guaranty in exchange
solely for Deposit Guaranty Common Stock and the assumption by DGC of the
liabilities of First Capital Bancorp. (Rev. Rul. 57-278, 1957-1 C.B. 124).
4. No gain or loss will be recognized by Deposit Guaranty upon the
receipt by Deposit Guaranty Louisiana of substantially all of the assets of
First Capital Bancorp solely in exchange for Deposit Guaranty Common Stock
issued to First Capital Bancorp and the assumption by Deposit Guaranty Louisiana
of the liabilities of First Capital Bancorp and the liabilities to which the
transferred assets are subject (Rev. Rul 57-278, 1957-1 C.B. 124).
5. The basis of the assets of First Capital Bancorp in the hands of
Deposit Guaranty will be, in each instance, the same as the basis of those
assets in the hands of First Capital Bancorp immediately prior to the Holding
Company Merger (Code section 362(b)).
7. The holding period of First Capital Bancorp's assets in the hands of
DGC will include the period during which the assets were held by First Capital
Bancorp (Code section 1223(2)).
8. No gain or loss will be recognized by the shareholders of First
Capital Bancorp upon their receipt of Deposit Guaranty Common Stock (including
fractional share interests to which they may be entitled) solely in exchange
for their First Capital Bancorp Common Stock (Code section 354(a)(1)).
9. The basis of the Deposit Guaranty Common Stock to be received by the
First Capital 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 First Capital Bancorp Common Stock surrendered in exchange therefor (Code
section 358)).
10. The holding period of the Deposit Guaranty Common Stock to be
received by the First Capital Bancorp shareholders (including any fractional
share interests to which they may be entitled) will include, in each case, the
period during which the First Capital Bancorp Common Stock surrendered in
exchange therefor was held, provided that the First Capital Bancorp Common Stock
is held as a capital asset in the hands of the First Capital Bancorp shareholder
on the date of the exchange (Code section 1223(1)).
<PAGE> 2
11. The payment of cash to First Capital 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.
12. Where a dissenting First Capital Bancorp shareholder receives
solely cash in exchange for his or her First Capital Bancorp Common Stock, such
cash will be treated as having been received by the shareholder as a
distribution in redemption of his or her stock subject to the provisions and
limitations of section 302.
B. With respect to the Bank Merger:
1. Provided that the merger of Capital 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. Capital Bank and DGNB Louisiana will each be "a
party to a reorganization" within the meaning of section 368(b)(2).
2. No gain or loss will be recognized by Capital Bank on 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 Capital 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 Capital Bank in constructive exchange
for DGNB Louisiana Common Stock issued to Deposit Guaranty Louisiana and the
assumption by DGNB Louisiana of the liabilities of Capital Bank and the
liabilities to which the transferred assets are subject (Rev. Rul 57-278,
1957-1 C.B. 124).
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
Capital Bank Common Stock in constructive exchange for the DGNB Louisiana Common
Stock.
5. The basis of the assets of Capital Bank in the hands of DGNB
Louisiana will, in each case, be the same as the basis of those assets in the
hands of Capital Bank immediately prior to the Bank Merger (Code section
362(b)).
6. The holding period of the assets of Capital Bank in the hands of DGNB
Louisiana will, in each instance, include the period for which such assets were
held by Capital Bank. (Code section 1223(2)).
<PAGE> 1
EXHIBIT 23(a)
Independent Auditors' 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 headings "Experts" and "Accounting Treatment"
in the prospectus. Our report on the 1994 financial statements refers to a
change in the method of accounting for debt securities.
KPMG PEAT MARWICK LLP
Jackson, Mississippi
January 21, 1997
<PAGE> 1
EXHIBIT 23(b)
Independent Auditors' Consent
The Board of Directors
First Capital Bancorp, Inc.:
We consent to the use of our audit report dated January 19, 1996 on the
consolidated financial statements of First Capital Bancorp, Inc. and subsidiary
as of December 31, 1995 and 1994, and for each of the years in the three-year
period ended December 31, 1995 included herein and to the reference to our firm
under the heading "Experts" in the prospectus. Our report refers to changes in
1993 in the method of accounting for securities and the method of accounting
for income taxes.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
January 20, 1997
<PAGE> 1
EXHIBIT 23(d)
[MERCER CAPITAL LETTERHEAD]
January 20, 1997
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use of our Fairness Opinion as Exhibit B relating to
the proposed merger between Deposit Guaranty Corp. and First Capital Bancorp,
Inc. included in the Registration Statement on Form S-4 and to the reference to
our Firm under the caption "Opinion of Financial Advisor" in the Prospectus.
MERCER CAPITAL MANAGEMENT, INC.
By: /s/ JEFF K. DAVIS
-----------------------------------
Jeff K. Davis, ASA, CFA
Vice President
<PAGE> 1
EXHIBIT 99 - FORM OF PROXY
FIRST CAPITAL BANCORP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF FIRST CAPITAL BANCORP, INC.
The undersigned shareholder of First Capital Bancorp, Inc. ("First Capital
Bancorp"), a Louisiana corporation, hereby constitutes and appoints____ and
____, or either of them, proxies of the undersigned, with power of
substitution, to represent the undersigned, and to vote all of the shares of
First Capital Bancorp Common Stock that the undersigned is entitled to vote at
the Special Meeting of Shareholders of First Capital Bancorp to be held on
______, 1997 and at any adjournment or postponement thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN
BY THE SHAREHOLDER. IF NO DIRECTION IS SPECIFIED WHEN THE DULY EXECUTED PROXY
IS RETURNED, SUCH SHARES WILL BE VOTED "FOR" PROPOSAL 1 SET FORTH HEREIN .
The Board of Directors of First Capital Bancorp recommends that you
vote "FOR" approval of the Agreement and Plan of Merger.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<PAGE> 2
PLEASE MARK YOUR CHOICE LIKE
THIS [x] IN BLUE OR BLACK INK
Item 1. A proposal to approve an Agreement and Plan of Merger, dated
as of December 26, 1996 (the "Merger Agreement"), by and among
Deposit Guaranty Corp. ("Deposit Guaranty"), a Mississippi
corporation, Deposit Guaranty Louisiana Corp. ("DG
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 DG Louisiana, on the one hand, and
First Capital Bancorp, and its wholly-owned subsidiary,
Capital Bank ("Capital Bank"), a Louisiana state bank, on the
other hand, pursuant to which (a) First Capital Bancorp will
merge into DG Louisiana and Capital Bank will merge into DGNB
Louisiana, and (b) each outstanding share of First Capital
Bancorp common stock will be converted into a number of shares
of Deposit Guaranty common stock, as determined pursuant to
the Merger Agreement.
For Against Abstain
[ ] [ ] [ ]
Item 2. In their discretion, to vote upon such other business as may
properly come before the meeting or any adjournment or
postponement thereof.
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Special Meeting of Shareholders and Proxy
Statement/Prospectus and hereby revokes any proxy or proxies heretofore given.
Date
-----------------------------
Signature
------------------------
Signature
------------------------
Please mark, date and sign as your name appears and return in the enclosed
envelope. If acting as executor, administrator, trustee, guardian or in a
similar capacity, you should so indicate when signing. If the person signing
is a corporation, partnership or other entity, please sign the full name of the
corporation, partnership or other entity by a duly authorized officer, partner
or other person. If the shares are held jointly, each shareholder named should
sign.
