<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-8937
------
FIRST BANKS AMERICA, INC.
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-1604965
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
P.O. Box 630369, HOUSTON, TEXAS 77263-0369
-------------------------------------------
(address of principal executive offices) (Zip Code)
(713) 954-2400
--------------
(Registrant's telephone number, including area code)
BancTEXAS GROUP INC.
---------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class October 31, 1995
----- ----------------
<S> <C>
Common Stock, $.01 par value 1,343,468
Class B Common Stock, $.01 par value 2,500,000
</TABLE>
<PAGE> 2
<TABLE>
INDEX
<CAPTION>
Page
<C> <S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1995
and December 31, 1994 -2-
Consolidated Statements of Income for the three and nine months
ended September 30, 1995 and 1994 -4-
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994 -5-
Notes to Consolidated Financial Statements -6-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -7-
PART II OTHER INFORMATION
Item 2. Changes in Securities -13-
Item 4. Submission of Matters to a Vote of Security Holders -13-
Item 6. Exhibits -14-
Signatures -15-
</TABLE>
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
First Banks America, Inc
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
------ ------------- ------------
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks $ 8,282 14,029
Interest-bearing deposits with other financial institutions-
with maturities of three months or less 705 25,042
Federal funds sold 2,200 8,000
------------- ------------
Total cash and cash equivalents 11,187 47,071
------------- ------------
Investment securities - available-for-sale, at market value 72,931 61,400
------------- ------------
Loans:
Commercial, financial and agricultural 12,689 14,556
Real estate construction and development 24,219 13,793
Real estate mortgage 11,547 14,796
Consumer and installment 156,190 157,570
Loans held for sale - 7,253
------------- ------------
Total loans 204,645 207,968
Unearned discount (2,309) (4,654)
Allowance for possible loan losses (5,953) (2,756)
------------- ------------
Net loans 196,383 200,558
------------- ------------
Bank premises and equipment, net of accumulated depreciation 6,563 6,511
Accrued interest receivable 1,239 1,146
Foreclosed property, net 954 1,553
Deferred income taxes 16,131 12,517
Other assets 1,356 1,034
------------- ------------
Total assets $ 306,744 331,790
============= ============
</TABLE>
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<TABLE>
FIRST BANKS AMERICA, INC
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
<CAPTION>
September 30, December 31,
LIABILITIES 1995 1994
----------- ------------- ------------
<S> <C> <C>
Deposits:
Demand:
Non-interest bearing $ 42,662 45,418
Interest bearing 20,656 24,678
Savings 55,998 54,377
Time:
Time deposits of $100 or more 24,740 23,063
Other time deposits 98,019 94,034
------------- ------------
Total deposits 242,075 241,570
Federal Home Loan Bank advances 19,880 19,412
Federal funds purchased - 4,800
Securities sold under agreements to repurchase 692 19,433
Other borrowings 2,253 1,863
Accrued interest payable 810 716
Deferred income taxes 3,205 1,299
Accrued and other liabilities 2,753 2,983
------------- ------------
Total liabilities 271,668 292,076
------------- ------------
<CAPTION>
STOCKHOLDERS' EQUITY
--------------------
<S> <C> <C>
Common Stock:
Common stock, $.15 par value; 6,666,666 shares
authorized; 1,390,335 and 1,377,535 shares issued and
outstanding, respectively, at September 30, 1995 and
1,370,268 shares issued and outstanding
at December 31, 1994 209 206
Class B common stock, $.15 par value; 4,000,000 shares
authorized; 2,500,000 shares issued and outstanding 375 375
Capital surplus 39,229 39,133
Retained earnings since elimination of accumulated deficit
of $259,117 effective December 31, 1994 (2,279) -
Treasury stock, at cost; 12,800 shares at September 30, 1995 (144) -
Net fair value adjustment for securities available-for-sale (2,314) -
------------- ------------
Total stockholders' equity 35,076 39,714
------------- ------------
Total liabilities and stockholders' equity $ 306,744 331,790
============= ============
See accompanying notes to consolidated financial statements
</TABLE>
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<PAGE> 5
<TABLE>
FIRST BANKS AMERICA, INC
Consolidated Statments of Income (unaudited)
(dollars expressed in thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 4,472 3,838 13,204 11,016
Investment securities 1,050 2,048 3,708 5,910
Federal funds sold and other 69 17 392 120
-------- -------- -------- --------
Total interest income 5,591 5,903 17,304 17,046
-------- -------- -------- --------
Interest expense:
Deposits:
Interest-bearing demand 115 122 351 357
Savings 493 439 1,601 1,240
Time deposits of $100 or more 376 192 945 616
Other time deposits 1,347 1,013 3,745 2,973
Federal Home Loan Bank advances 386 425 1,126 911
Securities sold under agreements to repurchase 176 778 754 2,359
Other borrowings 40 80 119 143
-------- -------- -------- --------
Total interest expense 2,933 3,049 8,641 8,599
-------- -------- -------- --------
Net interest income 2,658 2,854 8,663 8,447
Provision for possible loan losses 4,425 455 5,525 605
-------- -------- -------- --------
Net interest income (loss) after provision for possible loan losses (1,767) 2,399 3,138 7,842
-------- -------- -------- --------
Noninterest income:
Service charges on deposit accounts and customer service fees 384 397 1,087 1,191
Loan servicing fees, net 30 101 138 371
Loss on sales of investment securities, net (99) (7,055) (99) (7,055)
Other income 271 66 1,232 418
-------- -------- -------- --------
Total noninterest income 586 (6,491) 2,358 (5,075)
-------- -------- -------- --------
Noninterest expenses:
Salaries and employee benefits 1,000 3,728 3,247 7,168
Occupancy, net of rental income 429 317 989 961
Furniture and equipment 155 194 501 634
Federal Deposit Insurance Corporation premiums (17) 168 289 516
Postage, printing and supplies 26 136 240 416
Data processing fees 81 235 575 706
Legal, examination, and professional fees 331 274 884 1,031
Communications 121 124 415 363
Losses and expenses on foreclosed real estate, net of gains 23 173 151 196
Other expenses 450 257 1,319 621
-------- -------- -------- --------
Total noninterest expenses 2,599 5,606 8,610 12,612
-------- -------- -------- --------
Income (loss) before provision for income taxes (3,780) (9,698) (3,114) (9,845)
Provision (credit) for income taxes (1,061) (9,209) (835) (9,209)
-------- -------- -------- --------
Net income (loss) $(2,719) (489) (2,279) (636)
======== ======== ======== ========
Earnings (loss) per common share $ (0.66) (0.20) (0.56) (0.34)
======== ======== ======== ========
Weighted average shares of common stock and common stock
equivalents outstanding (in thousands) 4,107 2,422 4,106 1,854
======== ======== ======== ========
See accompanying notes to consolidated financial statements
</TABLE>
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<PAGE> 6
<TABLE>
FIRST BANKS AMERICA, INC
Consolidated Statments of Cash Flows (unaudited)
(dollars expressed in thousands)
<CAPTION>
Nine months ended
September 30,
--------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,279) (636)
Adjustments to reconcile net income to net cash:
Depreciation and amortization of bank premises and equipment 276 545
Amortization, net of accretion (347) 505
Provision for possible loan losses 5,525 605
(Increase) decrease in accrued interest receivable (93) (389)
Increase (decrease) in loans originated for sale - 7,551
Interest accrued on liabilities 8,641 8,599
Payments of interest on liabilities (8,547) (8,606)
Provision for income taxes (835) (9,209)
Loss on sale of investment securities 99 7,055
Other (116) 1,909
---------- ----------
Net cash provided by (used in) operating activities 2,324 7,929
---------- ----------
Cash flow from investing activities:
Sales of investment securities 13,149 -
Maturities of investment securities 44,278 22,964
Purchases of investment securities (67,057) (30,703)
Net increase in loans (1,854) (33,456)
Recoveries of loans previously charged off 504 879
Purchases of bank premises and equipment (328) (225)
Other investing activities (4,676) 1,349
---------- ----------
Net cash provided by (used in) investing activities (15,984) (39,192)
---------- ----------
Cash flow from financing activities:
Increase (decrease) in deposits 505 391
Decrease in borrowed funds (22,683) (14,754)
Purchase of treasury stock (144) -
Other financing activities 98 125
---------- ----------
Net cash provided by (used in) financing activities (22,224) (14,238)
---------- ----------
Net increase (decrease) in cash and cash equivalents (35,884) (15,501)
Cash and cash equivalents, beginning of period 47,071 25,490
---------- ----------
Cash and cash equivalents, end of period $ 11,187 9,989
========== ==========
Noncash investing and financing activities:
Transfer of loans to loans held for sale $ 7,253 8,419
Loans to facilitate sale of foreclosed real estate - 90
========== ==========
See accompanying notes to consolidated financial statements
</TABLE>
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<PAGE> 7
FIRST BANKS AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying consolidated financial statements of First Banks
America, Inc. (FBA) (formerly BancTEXAS Group Inc.) are unaudited and should
be read in conjunction with the consolidated financial statements contained
in the 1994 annual report on Form 10K. In the opinion of management, all
adjustments, consisting of normal recurring accruals considered necessary for
a fair presentation, have been included. Operating results for the three and
nine months ended September 30, 1995 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1995.
The consolidated financial statements include the accounts of the parent
company and its subsidiaries, all of which are wholly owned. All significant
intercompany accounts and transactions have been eliminated.
On August 23, 1995, the Common and Class B Common stock shareholders of
FBA approved a reverse stock split. The reverse split converted 15 shares of
Common Stock or Class B Common stock into one share of Common Stock or Class
B Common Stock, respectively. Accordingly, all per share amounts, as well as
ending and average common shares data, have been restated to reflect the
one-for-15 reverse stock split.
Certain reclassifications of 1994 amounts have been made to conform with
the 1995 presentation.
(2) Transactions with Related Party
FBA purchases certain services and supplies from or through its
majority shareholder, First Banks, Inc. (First Banks). This includes the
purchase of insurance policies, office supplies and other commonly-used
banking products which could be acquired more economically than had
previously been possible for FBA separately. The amount of these purchases
was not material to the consolidated financial position or results of
operations of FBA for the three and nine month periods ended September 30,
1995.
In December 1994, the Board of Directors of BankTEXAS N.A. (the Bank),
a wholly owned subsidiary of FBA, approved a data processing agreement and a
management fee agreement with First Banks. Under the data processing
agreement, a subsidiary of First Banks began providing data processing and
various related services to the Bank beginning in February 1995. The fees
for such services are significantly less than the Bank was paying to its
non-affiliated vendors. The management fee agreement provides that the Bank
will compensate First Banks on an hourly basis for its use of personnel for
various functions including internal auditing, loan review, income tax
preparation and assistance, accounting, asset/liability and investment
services, loan servicing and other management and administrative services.
Hourly rates for such services compare favorably with those for similar
services from unrelated sources, as well as the internal costs of the Bank
personnel which were used previously, and it is estimated the aggregate cost
for the services will be significantly more economical than those previously
incurred by the Bank separately. Fees paid under these agreements were
$185,000 and $602,000 for the three and nine month periods ended September
30, 1995, respectively.
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<PAGE> 8
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
FBA is a registered bank holding company, incorporated in Delaware and
headquartered in Houston, Texas. At September 30, 1995, the Company had
approximately $307 million in total assets; $202 million in total loans, net
of unearned discount; $242 million in total deposits; and $35.1 million in
total stockholders' equity. The Company operates through its subsidiary
bank, BankTEXAS N.A. (the Bank).
Through the Bank, FBA offers a broad range of commercial and personal
banking services including certificate of deposit accounts, individual
retirement and other time deposit accounts, checking and other demand deposit
accounts, interest checking accounts, savings accounts and money market
accounts. Loans include commercial, financial, agricultural, real estate
construction and development, residential real estate and consumer and
installment loans. Other financial services include credit-related
insurance, automatic teller machines and safe deposit boxes.
Financial Condition
FBA's total assets were $307 million and $332 million at September 30,
1995 and December 31, 1994, respectively. The primary fluctuations from
December 31, 1994 were an increase in investment securities of $11.5 million
and a decrease in cash and cash equivalents of $35.9 million.
Results of Operations
Net Income
Net loss for the three months ended September 30, 1995 was $2.72 million
in comparison to a net loss of $489,000 For the same period in 1994. Net
loss for the nine months ended September 30, 1995 was $2.28 million compared
to a net loss Of $636,000 for the same period in 1994. For the three months
ended September 30, 1995, the net loss reflects a sharply higher provision
for loan losses in comparison to the same period in 1994. As more fully
described below, the substantial increase in the provision for loan losses
reflects higher than expected loan losses which have been experienced during
1995 and the relatively high level of loans which are over 30 days past due.
Net Interest Income
Net interest income was $2.66 million, or 3.60% of average interest
earning assets, for the three months ended September 30, 1995, compared to
$2.85 million, or 3.32% for the same period in 1994. Net interest income was
$8.66 million, or 3.96% of average interest earning assets, for the nine
months ended September 30, 1995 in comparison to $8.45 million or 3.24% for
the same period in 1994. The increase in net interest income for the nine
months ended September 30, 1995, is primarily attributable to the additional
capital of $30 million from the sale of Class B common stock to First Banks
on August 31, 1994. The interest income earned from the use of the additional
capital was substantially offset by a reduction of net interest income
resulting from a decrease in the average earning assets of approximately
$49.8 million and $55.4 million for the three and nine month periods ended
September 30, 1995, respectively, in comparison to the same periods in 1994.
The decrease in average earning assets for 1995 in comparison to 1994 was
primarily attributable to sales of investment securities which occurred in
the fourth quarter of 1994.
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<PAGE> 9
Provision for Possible Loan Losses
The provision for possible loan losses was $4.4 million and $5.5 million
for the three and nine month periods ended September 30, 1995, respectively,
in comparison to $455,000 and $605,000 for the same periods in 1994. Net
loan charge-offs were $743,000 and $2.3 million for the three and nine month
periods ended September 30, 1995, respectively, in comparison to $296,000 and
$613,000 for the same periods in 1994. As a result of the increased
provision for loan losses , the allowance for loan losses was $6.0 million,
or 2.94% of total loans, as of September 30, 1995, compared to $2.8 million,
or 1.36% of total loans, as of December 31, 1994. Loans which were either 90
days or more past and still accruing or on non-accrual status totaled
$967,000 at September 30, 1995, representing a relatively modest .48% of
total loans at that date. However, loans which were between 30 and 89 days
past due were $6.1 million at September 30, 1995, in comparison to $1.0
million and $1.3 million at December 31, 1994 and September 30, 1994,
respectively.
The increase in the provision for possible loan losses is attributable
to the increased level of loan charge-offs and loans past due over 30 days
within the automobile loan portfolio and management's evaluation of the
quality of the loans in the portfolio. Because of the increased loan
charge-offs and loans past due over 30 days, FBA conducted an extensive
internal review of the reasons for the losses and increasing level of loans
past due over 30 days. In addition, the level of loan charge-offs is partly
due to a change in the practice and timing of recording such charge-offs.
Previously, FBA charged-off the remaining balance of a loan after reducing
that amount by the estimated value which the collateral would have been when
it is in the possession of the Company. Currently, FBA charges-off the
remaining balance of a loan after the loan has become 120 days or more past
due, even if the collateral is not yet in the possession of FBA. When the
collateral is subsequently received by FBA, the charged-off amount is
adjusted for the value of the collateral. Also, in an effort to further
reduce the overall level of loan charge-offs within this portfolio, FBA has
increased its collection efforts and has implemented more stringent lending
practices, including regular reviews of new loans originated and strict
adherence to approved policies and practices.
Noninterest Income
Noninterest income improved from a loss of $6.49 million to income of
$586,000 for the three months ended September 30, 1994 and 1995,
respectively. Noninterest income for the nine months ended September 30,
1995 was $2.36 million in comparison to a loss of $5.08 million for the same
period in 1994. The reported losses for the periods in 1994 related to a loss
of $7.1 million on sale of $115 million of securities which was realized in
the third quarter of 1994.
Loan servicing fees decreased to $30,000 and $138,000 for the three and
nine months ended September 30, 1995, in comparison to $101,000 and $371,000
for the same periods in 1994. The decrease is due to a reduction in the
amount of loans serviced for others to $10.9 million at September 30, 1995
from $28.8 million at September 30, 1994. Loans serviced for others consist
of automobile loans which were sold with servicing retained by FBA. The
decrease in the loan servicing portfolio is attributable to FBA's decision to
retain new loan originations in its loan portfolio.
Noninterest income also includes net investment security losses of
$99,000 and $7.06 million for the three months ended September 30, 1995 and
1994, respectively. The securities sold during 1995 were classified as
available-for-sale within the investment security portfolio. For the three
months ended September 30, 1995, the gross gains from the sales of securities
were $1.2 million. The gross gains on sales of investment securities were
offset by the recognition of $1.3 million of hedging losses. The sales of
investment securities during 1994 were executed in connection with the
restructuring of the investment portfolio and to provide
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<PAGE> 10
funds to reduce borrowings.
Other income for the three months ended September 30, 1995 includes
$179,000 from the termination of the Directors' Retirement Plan. FBA had
previously adopted a noncontributory defined benefit pension plan covering
non-employee directors of FBA and the Bank. The Directors' Retirement Plan
was terminated by the Board of Directors on September 11, 1995. The income
represents the nonvested portion previously expensed by FBA under the
Directors' Retirement Plan.
Other income for the nine months ended September 30, 1995 includes
$802,000 which was maintained in a trust. The trust which was established
during 1990 and subsequently funded by FBA to provide limited protection
against personal claims being taken or threatened against FBA's officers and
directors and potential costs of litigation. Prior to FBA's affiliation with
First Banks, officer and director liability insurance was not economically
feasible. Considering the cost of such insurance, certain legal claims
pending against FBA at that time and the potential for additional claims, FBA
elected to establish and fund this trust. Since officer and director
coverage is now available at a reasonable price, the trust fund is no longer
necessary and, accordingly, was terminated, at which time the funds were
returned to FBA.
Other income for the nine months ended September 30, 1994 includes a
$255,000 legal settlement. The legal settlement related to a lawsuit filed
against the Federal Deposit Insurance Corporation regarding the closure of
the FBA's former subsidiary, BankTEXAS Dallas.
Noninterest Expenses
Noninterest expenses decreased by $3.01 million to $2.60 million from
$5.61 million for the three months ended September 30, 1995 and 1994,
respectively. For the nine months ended September 30, 1995 and 1994,
noninterest expenses decreased by $4.00 million to $8.61 million from $12.61
million, respectively. While virtually each functional area of FBA has
experienced reductions in noninterest expenses, the decrease is primarily
attributable to salaries and employee benefits.
The decrease in salaries and employee benefits of $2.73 million to $1.00
million from $3.73 million for the three months ended September 30, 1995 and
1994, respectively, and of $3.92 million to $3.25 million from $7.17 million
for the nine months ended September 30, 1995 and 1994, respectively, relates
primarily to reductions in staff. FBA's staff was reduced to 95 employees
(85 full-time; 10 part-time) at September 30, 1995, from the 167 full-time
employees at September 30, 1994, or by 43%.
Offsetting the decrease in salaries and employee benefits were increases
in other expenses of $193,000 to $450,000 from $257,000 for the three months
ended September 30, 1995 and 1994, respectively, and of $698,000 to $1.32
million from $621,000 for the nine months ended September 30, 1995 and 1994,
respectively, which were primarily attributable to the conversion and
centralization of data processing and certain operating functions to First
Banks' systems and procedures.
On August 8, 1995, the Federal Deposit Insurance Corporation (FDIC)
voted to reduce the deposit insurance premiums paid by most members of the
Bank Insurance Fund (BIF) and to keep existing assessment rates intact for
members of the Savings Association Insurance Fund (SAIF). Under the reduced
assessment rate schedule for the BIF, the best-rated institutions will pay an
annual rate of four cents per $100.00 of assessable deposits, down from the
current rate of 23 cents per $100.00. The weakest BIF and SAIF institutions
will continue to pay 31 cents per $100.00 of assessable deposits. The
reduction in the BIF rates are effective retroactively back to June 1, 1995.
FBA is a BIF depository institution and was assessed four
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<PAGE> 11
cents per $100.00. The reduced BIF rates resulted in a refund of previously
paid deposit insurance premiums from the FDIC of $147,000. The refund is
reflected as a reduction to FDIC premium expense for the three months ended
September 30, 1995.
Lending and Credit Management
Interest earned on the loan portfolio is the primary source of income
of FBA. Total loans, net of unearned discount, represented 66.0% and 61.3%
of total assets as of September 30, 1995 and December 31, 1994,
respectively. FBA has experienced modest improvements in commercial and
consumer loan demand during the three and nine month period ended September
30, 1995 which was offset by the effects of more stringent lending practices
with respect to its automobile loan portfolio. Total loans, net of unearned
discount, were $202 million and $203 million at September 30, 1995 and
December 31, 1994, respectively.
FBA's nonperforming loans consist of loans on a nonaccrual status and
loans on which the original terms have been restructured. Nonperforming
loans were $545,000 and $293,000 at September 30, 1995 and December 31, 1994,
respectively. Impaired loans, consisting of nonaccrual loans and consumer
installment loans 60 days or more past due, were $2.2 million at September
30, 1995 and averaged $1.7 million for the nine months ended September 30,
1995. Loans past due 30 to 89 days or over 90 days and still accruing
totaled $6.5 million and $1.6 million at September 30, 1995 and December 31,
1994, respectively.
The allowance for possible loan losses is based on past loan loss
experience, on FBA management's evaluation of the quality of the loans in the
portfolio and on the anticipated effect of national and local economic
conditions relative to the ability of loan customers to repay. Each quarter,
the allowance for possible loan losses is revised relative to FBA's internal
watch list and other data to determine its adequacy. The provision for
possible loan losses is management's estimate of the amount necessary to
maintain the allowance at a level consistent with this evaluation. As
adjustments to the allowance for possible loan losses are considered
necessary, they are reflected in the results of operations.
Interest Rate Risk Management
Managing interest rate risk is fundamental to banking. Banking
institutions manage the inherently different maturity and repricing
characteristics of the lending and deposit-taking activities to achieve a
desired interest rate sensitivity position and to limit their exposure to
interest rate risk. The maturity and repricing characteristics inherent to
the lending and deposit-taking activities tends to create a naturally
liability-sensitive interest rate risk profile. By using a combination of
on- and off-balance sheet financial instruments, FBA manages its interest
rate sensitivity to within policy guidelines.
FBA's objective regarding interest rate risk management is to position
FBA such that changes in interest rates do not have a material adverse impact
upon the net market value and net interest income of FBA. To measure the
impact from interest rate changes, FBA recalculates its net market value and
net interest income on a proforma basis over a one year horizon assuming
instantaneous, permanent parallel shifts in the yield curve, of varying
amounts of increases and decreases in rates. Larger increases or decreases
in FBA's net market value and net interest income as a result of these
assumed interest rate changes indicate greater levels of interest rate
sensitivity than do smaller increases or decreases. As more fully described
in the 1994 Annual Report on Form 10K, FBA uses a combination of derivative
financial instruments including interest rate cap agreements, interest rate
futures contracts and options on interest rate futures contracts to assist in
achieving that objective.
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<PAGE> 12
<TABLE>
Derivative financial instruments held by FBA for purposes of managing
interest rate risk are summarized as follows:
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
Notional Credit Notional Credit
amount exposure amount exposure
-------- -------- -------- --------
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Interest rate futures contracts $868,000 - 768,000 -
Interest rate cap agreements 10,000 353 10,000 577
Options on interest rate futures contracts 405,000 44 - -
</TABLE>
The notional amounts of derivative financial instruments do not
represent amounts exchanged by the parties and, therefore, are not a measure
of FBA's credit exposure through its use of derivative financial instruments.
The amounts exchanged are determined by reference to the notional amounts
and the other terms of the derivatives.
FBA sells interest rate futures contracts to hedge the interest rate
risk of its available-for-sale securities portfolio. In addition, during the
third quarter of 1995, FBA purchased options on interest rate futures
contracts. Interest rate futures contracts are commitments to either
purchase or sell designated financial instruments at a future date for a
specified price and may be settled in cash or through delivery of such
financial instruments. Options on interest rate futures contracts confer the
right to purchase or sell financial futures contracts at a specified price
and are settled in cash. Changes in contract values are settled daily.
Options and futures contracts have little credit risk because future
exchanges are the counterparties. The contracts outstanding at September 30,
1995, which have expiration dates from December 1995 to September 1998 were
selected to approximate the effective maturity of the available-for-sale
securities portfolio.
At September 30, 1995, the unamortized balance of net deferred losses
on interest rate futures contracts was $3.14 million, which was applied to
the carrying value of the available-for-sale securities portfolio as part of
the mark-to-market valuation. At December 31, 1994, the unamortized balance
of net deferred gains on interest rate futures contracts of $886,000 was
applied to the carrying value of the available-for-sale securities portfolio
in connection with the quasi-reorganization, as more fully described in Note
2 to the consolidated financial statements contained in the 1994 Annual
Report on Form 10K. At September 30, 1995, the unamortized premium paid on
the options to purchase interest rate futures contracts was $64,000 and was
also applied to the carrying value of the available-for-sale securities
portfolio as part of the mark-to-market valuation.
The net change in the unamortized balance of net deferred losses is
attributable to the significant decline in interest rates which occurred
during the period from December 31, 1994 through September 30, 1995. The
losses incurred on the interest rate futures contracts were partially offset
by gains in the available-for-sale securities portfolio. The net loss in
value to FBA, which totaled $2.3 million for the nine month period ended
September 30, 1995, resulted from an increase in the projected prepayments of
principal underlying the available-for-sale securities portfolio. These
increased prepayment projections disproportionately shortened the expected
lives of the available-for-sale securities portfolio in comparison to the
effective maturity created with the hedge position. As a result, FBA
adjusted its hedge position to coincide with the current expected life of the
available-for-sale securities portfolio by reducing the number of outstanding
interest rate futures contracts and purchasing options on interest rate
futures contracts. The options will gain significant value in a falling
interest rate environment.
FBA also has an interest rate cap agreement to limit the interest
expense associated with certain of its interest-bearing liabilities. In
exchange for an initial fee, the interest rate cap
-11-
<PAGE> 13
agreement entitles FBA to receive interest payments when a specified index
rate exceeds a predetermined rate. The agreement outstanding at September
30, 1995 effectively limits the interest rate to 5.0% on $10 million of
interest-bearing liabilities from October 15, 1997 to May 15, 2000. At
September 30, 1995 and December 31, 1994, the unamortized costs were $493,000
and $577,000, respectively, and were included in other assets. There are no
amounts receivable under the agreement.
Liquidity
The liquidity of FBA and the Bank is the ability to maintain a cash
flow which is adequate to fund operations, service its debt obligations and
meet other commitments on a timely basis. The primary sources of funds for
liquidity are derived from customer deposits, loan payments, maturities,
sales of investments and operations. In addition, FBA and the Bank
may avail themselves of more volatile sources of funds through issuance of
certificates of deposit in denominations of $100,000 or more, federal funds
borrowed, securities sold under agreements to repurchase and borrowings from
the Federal Home Loan Bank. The aggregate funds acquired from those sources
were $45.3 million at September 30, 1995 and $66.7 million at December 31,
1994.
<TABLE>
At September 30, 1995, FBA's more volatile sources of funds mature as
follows:
<CAPTION>
(dollars expressed in thousands)
--------------------------------
<S> <C>
Three months or less $23,723
Over three months through six months 4,244
Over six months through twelve months 8,273
Over twelve months 9,072
-------
Total $45,312
=======
</TABLE>
Management believes the available liquidity and future earnings of the
Bank will be sufficient to provide funds for growth and to meet FBA's
operating and debt service requirements both on a short-term and long-term
basis.
Capital
Risk-based capital guidelines for financial institutions are designed
to relate regulatory capital requirements to the risk profiles of the
specific institutions and to provide more uniform requirements among the
various regulators. FBA and the Bank are required to maintain a minimum
risk-based capital to risk-weighted assets ratio of 8.00%, with at least
4.00% being "Tier 1" capital. Tier 1 capital is composed of total
stockholders' equity excluding the net fair value adjustment for securities
available-for-sale, less the excess of net deferred tax assets, which is more
fully described below, and the net loss on financial futures contracts
deferred for financial reporting purposes. In addition, a minimum leverage
ratio (Tier 1 capital to total assets) of 3.00% plus an additional cushion of
100 to 200 basis points is expected.
<TABLE>
At September 30, 1995 and December 31, 1994, FBA's and the Bank's
capital ratios were as follows:
<CAPTION>
Risk-based capital ratios
-------------------------
Total Tier 1 Leverage Ratio
----- ------ --------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Company 12.05% 17.50% 10.78% 16.28% 8.64% 11.97%
Bank 8.38 9.25 7.12 8.04 5.87 5.82
</TABLE>
The decrease in the risk-based capital and leverage ratios for FBA is
primarily due to a change in regulation affecting the treatment of net
deferred tax assets and the regulatory
-12-
<PAGE> 14
treatment of net deferred losses on financial futures contracts. The change
in regulation, which was effective for FBA on April 1, 1995, limits the
amount of net deferred tax assets, as adjusted for any amounts applicable to
the SFAS 115 "Accounting for Certain Investments in Debt and Equity
Securities", that are included in Tier 1 capital. The amount of net deferred
tax assets that may be included in Tier 1 capital is limited to the lesser of
the amount of net deferred tax assets that FBA expects to realize over the
next twelve month period or 10% of Tier 1 capital. The amount expected to be
realized by FBA over the next twelve month period has been estimated at $1.6
million and is included in Tier 1 capital as it is less than 10% of Tier 1
capital. The remaining amount of the net deferred tax assets, as adjusted,
of $10.4 million for FBA has been subtracted from stockholders' equity in
arriving at Tier 1 capital at September 30, 1995. For purposes of
determining regulatory capital ratios, net deferred hedging losses are
deducted from the amount of stockholders' equity.
The decrease in the risk-based capital and leverage ratios for the Bank
is primarily due to an increase in the net deferred losses on financial
futures contracts.
PART II - OTHER INFORMATION
Item 2 - Changes in Securities
A one-for fifteen reverse stock split was implemented with respect to
both Common Stock and Class B Common Stock following the annual meeting of
the stockholders on August 23, 1995. These changes were effected by
amendments to FBA's Certificate of Incorporation which became effective on
September 1, 1995 and are reflected in the Restated Certificate of
Incorporation which is attached to this Report as Exhibit 3(a).
The reverse stock split reduced the overall number of shares of
authorized and outstanding Common Stock and Class B Common Stock by a factor
of fifteen, with each resulting share representing a proportionately larger
interest in FBA. No fractional shares were issued and holders of fewer than
fifteen shares of Common Stock, prior to the reverse stock split, received
cash in lieu of new shares. First Banks, as the owner of all of the 37.5
million shares of Class B Common Stock outstanding prior to the reverse stock
split, received 2.5 million new shares of Class B Common Stock as a result of
this change, which did not affect the relationship between the Common Stock
and the Class B Common Stock.
Item 4 - Submission of Matters to a Vote of Security Holders
On August 23, 1995, FBA held its annual meeting of shareholders (Annual
Meeting) at which time the stockholders elected six directors and also acted
on two other proposals.
<TABLE>
The six directors were elected with the following vote totals:
<CAPTION>
For Withheld Broker Non-Votes
--- -------- ----------------
<S> <C> <C> <C>
Allen H. Blake 53,722,367 1,504,235 3,037,423
Charles A. Crocco, Jr. 53,851,055 1,375,547 3,037,423
James F. Dierberg 53,822,995 1,403,607 3,037,423
Edward T. Story, Jr. 53,882,356 1,344,246 3,037,423
Mark T. Turkcan 53,714,246 1,512,356 3,037,423
Donald W. Williams 53,773,821 1,452,781 3,037,423
</TABLE>
-13-
<PAGE> 15
<TABLE>
The following matters were also voted on at the Annual Meeting, with the
voting results indicated:
<CAPTION>
Withheld
--------
Proposal For Against Abstentions Broker Non-Votes
- -------- --- ------- ----------- ----------------
<S> <C> <C> <C> <C>
Approval to change
the name of the
corporation from
"BancTEXAS Group
Inc." to "First Banks
America, Inc." 53,996,997 1,069,977 159,628 3,037,423
</TABLE>
<TABLE>
<CAPTION>
Withheld
--------
Proposal For Against Abstentions Broker Non-Votes
- -------- --- ------- ----------- ----------------
<S> <C> <C> <C> <C>
Approval of reverse
stock split whereby
each 15 shares of
Common Stock or
Class B Common
Stock will be converted
into one share of Common
or Class B Common,
respectively. 52,181,962 2,360,341 684,299 3,037,423
</TABLE>
Item 6 - Exhibits
These exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
3(a) Restated Certificate of Incorporation
27 Article 9 - Financial Data Schedule
(EDGAR only)
</TABLE>
-14-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BANKS AMERICA, INC.
Registrant
Date: November 14, 1995 By: /s/ James F. Dierberg
----------------------------------
James F. Dierberg
Chairman, President
and Chief Executive
Officer
Date: November 14, 1995 By: /s/ Allen H. Blake
----------------------------------
Allen H. Blake
Vice President,
Chief Financial Officer
and Secretary
(Principal Financial Officer)
-15-
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF FIRST BANKS AMERICA, INC.
Pursuant to the provisions of Section 245 of the General Corporation
Law of the State of Delaware, the undersigned, First Banks America, Inc., a
Delaware corporation (the "Corporation"), incorporated on January 25, 1978,
hereby amends and restates its Restated Certificate of Incorporation as
follows:
1. The present name of the corporation is First Banks America, Inc.
The name under which the corporation was originally organized was Commerce
Southwest Inc.
2. This Restated Certificate of Incorporation has been duly adopted
in accordance with the provisions of Section 245 of the General Corporation
Law of the State of Delaware. Amendments to the Restated Certificate of
Incorporation of the Corporation were adopted by the Corporation's
stockholders on August 23, 1995. The Board of Directors, by resolution,
authorized the preparation of this Restated Certificate of Incorporation,
which restates and integrates the aforesaid amendments but does not further
amend the Corporation's Restated Certificate of Incorporation as duly filed
with the Secretary of State, there being no discrepancy between the provision
of such Restated Certificate of Incorporation, as amended, and the provisions
of this Restated Certificate of Incorporation.
3. The Certificate of Incorporation of the Corporation is hereby
restated in its entirety to read as follows:
FIRST: The name of the Corporation is First Banks
-----
America, Inc.
SECOND: The address of its registered office in the
------
State of Delaware is 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in
-----
any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: (A) The total number of shares of all classes
------
of capital stock which the Corporation shall have authority to
issue is thirteen million six hundred sixty-six thousand six
hundred sixty-six (13,666,666) shares consisting of (a) three
million (3,000,000) shares of a class designated as Preferred
Stock, par value $1.00 per share ("Preferred Stock"), (b) six
million six hundred sixty-six thousand six hundred sixty-six
(6,666,666) shares of a class designated Common Stock, par value
$0.15 per share ("Common Stock"), and (c) four million (4,000,000)
shares
<PAGE> 2
of a class designated Class B Common Stock, par value $0.15
per share ("Class B Common Stock").
(B) The designations and the powers, preferences,
rights, qualifications, limitations, and restrictions of the
Preferred Stock, the Common Stock, and the Class B Common Stock
are as follows:
1. Provisions Relating to the Preferred Stock. Shares
of Preferred Stock may be issued in one or more series as
determined from time to time by the Board of Directors. All shares
of any one series of Preferred Stock will be identical, except as
to the dates of issue and the dates from which dividends on shares
of the series issued on different dates will cumulate, if
dividends on the shares of such series are cumulative. Authority
is hereby expressly granted to the Board of Directors to authorize
the issuance of one or more series of Preferred Stock, and to fix
by one or more resolutions providing for the issuance of each such
series the voting powers, designations, preferences and relative,
participating, optional, redemption, conversion, exchange or other
special rights, qualifications, limitations or restrictions of
such series, and the number of shares in such series, to the full
extent now or hereafter permitted by law.
2. Provisions Relating to the Common Stock and the
Class B Common Stock.
(a) General. Except as otherwise provided herein, or as
otherwise provided by applicable law, all shares of Common Stock
and Class B Common Stock shall have identical rights and
privileges in every respect.
(b) Voting. The Common Stock and the Class B Common
Stock shall each be fully voting stock entitled to one vote per
share with respect to the election of directors and for all other
purposes. The holders of Common Stock and Class B Common Stock
shall, unless otherwise required by law or by another provision of
this Certificate of Incorporation, vote as a single class on all
matters. In all elections for directors of the Corporation, each
stockholder shall have the right to cast as many votes in the
aggregate as shall equal the number of voting shares held by such
stockholder in the Corporation, multiplied by the number of
directors to be elected by the class to which such stockholder
belongs at such election, and each stockholder may cast the whole
number of votes, either in person or by proxy, for one candidate
or distribute them among two or more candidates.
(c) Dividends. Subject to the limitations prescribed
herein, holders of Common Stock and Class B Common Stock shall
participate equally in any dividends (whether payable in cash,
stock or property) when and as declared by the
-2-
<PAGE> 3
Board of Directors of the Corporation out of the assets of the
Corporation legally available therefor and the Corporation shall
treat the Common Stock and Class B Common Stock identically in
respect of any subdivisions or combinations (for example, if the
Corporation effects a two-for-one stock split with respect to the
Common Stock, it shall at the same time effect a two-for-one stock
split with respect to the Class B Common Stock); provided, however,
that (i) with respect to dividends payable in cash by the
Corporation, the holders of Class B Common Stock shall participate
equally per share only if and to the extent such cash dividends
exceed $0.45 per share on the Common Stock per calendar year (for
example, if the Board of Directors declares and the Corporation
pays a dividend of $0.75 per share of Common Stock for a given
calendar year, holders of Class B Common Stock shall be entitled to
a dividend of $0.30 per share); and (ii) dividends payable in
shares of Common Stock (or rights to subscribe for or purchase
shares of Common Stock or securities or indebtedness convertible
into shares of Common Stock) shall be paid only on shares of Common
Stock and dividends payable in shares of Class B Common Stock (or
rights to subscribe for or purchase shares of Class B Common Stock
or securities or indebtedness convertible into shares of Class B
Common Stock) shall be paid only on shares of Class B Common Stock
(for example, if the Board of Directors declares and the
Corporation pays a five percent (5%) stock dividend on the Common
Stock, payable in shares of Common Stock, at the same time the
Board of Directors shall declare and the Corporation shall pay a
five percent (5%) stock dividend on the Class B Common Stock
payable in shares of Class B Common Stock).
(d) Liquidation. In the event the Corporation is
liquidated, dissolved or wound up, whether voluntarily or
involuntarily, the holders of the Common Stock and the Class B
Common Stock shall participate equally in any distribution.
(e) Voluntary Conversion of Class B Common Stock. (i)
Conversion Rights. Each share of Class B Common Stock may be
converted into one (1) share of Common Stock at the option of any
holder thereof at any time after the fifth (5th) anniversary of
the date of its issuance by the Corporation. For the foregoing
purpose, a share of Class B Common Stock issued as a stock
dividend or pursuant to a stock split, reclassification or other
combination, shall be deemed to have been issued on the date of
the share of Class B Common Stock with respect to which it is so
issued.
(ii) Conversion Procedures. Any holder of Class B
Common Stock desiring to exercise such holder's option to convert
such Class B Common Stock in accordance with the foregoing shall
surrender the certificate or certificates representing the Class B
Common Stock to be converted, duly endorsed to the Corporation or
in blank, at the principal executive office of the Corporation,
and shall give written notice to the Corporation at such office
that such holder elects to convert the number of shares
represented by such certificate or certificates, or a
-3-
<PAGE> 4
specified number thereof. As promptly as practicable after the
surrender for conversion of any Class B Common Stock, the
Corporation shall execute and deliver or cause to be executed and
delivered to the holder of such Class B Common Stock certificates
representing the shares of Common Stock issuable upon such
conversion. In case any certificate or certificates representing
shares of Class B Common Stock shall be surrendered for conversion
for only a part of the shares represented thereby, the Corporation
shall execute and deliver to the holders of the certificate or
certificates for shares of Class B Common Stock so surrendered a
new certificate or certificates representing the shares of Class B
Common Stock not converted, dated the same date as the certificate
or certificates representing the Common Stock. Shares of the Class
B Common Stock converted as aforesaid shall be deemed to have been
converted immediately prior to the close of business on the date
such shares are duly surrendered for conversion, and the person or
persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such
date.
(iii) Recapitalization, Consolidation, or Merger of the
Corporation. In the event that the Corporation shall be
recapitalized, consolidated with, or merged with or into any other
corporation (a "Reorganization") and the terms thereof shall
provide (i) that the Class B Common Stock shall remain outstanding
after such Reorganization and (ii) for any change in or conversion
of the Common Stock, then the terms of such Reorganization shall
include a provision to the effect that each share of Class B
Common Stock after such Reorganization shall thereafter be
entitled to receive upon conversion the same kind and amount of
securities or assets as shall be distributable upon such
Reorganization with respect to one share of Common Stock.
(iv) Reservation of Shares. The Corporation shall at
all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of Class B Common Stock as herein
provided, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding
shares of Class B Common Stock and shall take all such corporate
action as may be necessary to assure that such shares of Common
Stock may be validly and legally issued upon conversion of all of
the outstanding shares of Class B Common Stock; and if, at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the Class B
Common Stock, the Corporation shall take such corporate action as
may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purpose.
-4-
<PAGE> 5
(v) Retirement of Shares. Shares of Class B Common
Stock which have been issued and have been converted into Common
Stock, repurchased, or reacquired in any other manner by the
Corporation shall not be reissued.
(f) Mandatory Conversion of Class B Common Stock. If,
at any time while there are shares of Class B Common Stock issued
and outstanding, it shall be determined by the Board of Directors,
in its sole discretion, that legislation or regulations are
enacted or any judicial or administrative determination is made
which would prohibit the listing, quotation or trading of the
Common Stock on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotation System, or
would otherwise have a material adverse effect on the Corporation,
in any such case due to the Corporation having more than one class
of common shares outstanding, then the Board of Directors may by
resolution convert all outstanding shares of Class B Common Stock
into shares of Common Stock on a share-for-share basis. To the
extent practicable, notice of such conversion of Class B Common
Stock specifying the date fixed for said conversion shall be
mailed, postage pre-paid, at least ten (10) days but not more than
thirty (30) days prior to said conversion date to the holders of
record of Common Stock and Class B Common Stock at their
respective addresses as the same shall appear on the books of the
Corporation; provided, however, that no failure or inability to
provide such notice shall limit the authority or ability of the
Board of Directors to convert all outstanding shares of Class B
Common Stock into shares of Common Stock. Immediately prior to the
close of business on said conversion date (or, if said conversion
date is not a business day, on the next succeeding business day)
each outstanding share of Class B Common Stock shall thereupon
automatically be converted into a share of Common Stock and each
certificate theretofore representing shares of Class B Common
Stock shall thereupon and thereafter represent a like number of
shares of Common Stock.
(g) Class Voting Under Certain Circumstances. None of
the provisions hereof affecting the powers, preferences, rights,
qualifications, limitations or restrictions of the Class B Common
Stock may be amended or repealed unless, in addition to any other
vote required by law or this Certificate of Incorporation, such
amendment shall be approved by the affirmative vote of the holders
of a majority of the shares of the Common Stock then outstanding,
voting as a separate class.
3. General. Subject to the foregoing provisions of this
Certificate of Incorporation, the Corporation may issue shares of
its Preferred Stock, Common Stock, and Class B Common Stock from
time to time for such consideration (not less than the par value
thereof) as may be fixed by the Board of Directors of the
Corporation, which is expressly authorized to fix the same in its
absolute and uncontrolled discretion, subject to the foregoing
conditions. Shares so issued for which the consideration shall
have been paid or delivered to the Corporation shall be deemed
fully paid stock and shall not be liable to any further call or
assessment thereon, and the holders of such shares shall not be
liable for any further payments in respect of such shares.
-5-
<PAGE> 6
FIFTH: The Corporation shall have perpetual existence.
-----
SIXTH: The number of directors of the Corporation shall
-----
be fixed in the By-Laws.
SEVENTH: The Board of Directors of the Corporation
-------
shall have power to make, alter or repeal the By-Laws of the
Corporation only with the prior approval of the holders of a
majority of the shares of Class B Common Stock, subject to such
restrictions upon the exercise of such power as may be imposed by
the stockholders in any By-Laws adopted by them from time to time.
EIGHTH: The Corporation reserves the right to amend,
------
alter, change or repeal any provision contained in the Certificate
of Incorporation or any amendment thereof in the manner now or
hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
NINTH: (A) Whereby under the laws of the State of
-----
Delaware a vote of stockholders is required to approve or
authorize any of the transactions set forth below, then the
affirmative vote or consent of 75% of the capital stock of this
Corporation entitled to vote in elections of directors, voting as
a single class, shall be required to authorize or approve such
transactions:
(1) a merger or consolidation with or into any other
corporation, or
(2) any sale, lease or exchange of all or substantially
all of the property and assets of this Corporation to any other
corporation, person or other entity, or
(3) any purchase or lease of all or substantially all of
the assets of any corporation, person or other entity by this
Corporation, or
(4) any combination of the outstanding shares of Common
Stock of this Corporation into a smaller number of shares, or
if as of the record date for the determination of
stockholders entitled to notice thereof and to vote thereon or
consent thereto (i) such other corporation, person or entity which
is a party to a transaction described in clauses (1), (2) or (3)
above is the beneficial owner, directly or indirectly, of at least
5% of the total outstanding shares of stock of this Corporation
entitled to vote in elections of directors, considered for this
purpose as one class, or (ii) any combination of the outstanding
shares of Common Stock into a smaller number of shares as
described in clause (4) above is proposed, directly or indirectly,
by a person, corporation or entity which is the beneficial owner,
directly or indirectly, of at least 5% of the total outstanding
shares of stock of this Corporation entitled to vote in elections
of directors, considered for this purpose as one class. Such
affirmative vote or consent shall be in addition to the vote or
consent of the holders of the stock of this Corporation
-6-
<PAGE> 7
otherwise required by law or any agreement between this Corporation
and any national securities exchange.
(B) For purposes of this Article Ninth any corporation,
person or other entity shall be deemed to be the beneficial owner
of any shares of stock of this Corporation,
(1) which it owns directly, whether or not of record, or
(2) which it has the right to acquire pursuant to any
agreement or understanding or upon exercise of conversion rights,
warrants, options or otherwise, or
(3) which are beneficially owned, directly or indirectly
(including shares deemed to be owned through application of clause
(2) above), by any affiliate (a person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by or is under common control with any such
corporation, person or other entity) or associate (any corporation
or organization of which such person is an officer or partner or
is, directly or indirectly, the beneficial owner of 10% or more of
any class of equity security; any trust or other estate in which
such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity;
and any relative or spouse of such person or any relative of such
spouse, who has the same home as such person or who is a director
or officer of the corporation or any of its parents or
subsidiaries), or
(4) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (2)
above), by any other corporation, person or entity with which it
or its affiliate or associates (as such terms are defined in
clause (3) above) has any agreement or arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of stock of this Corporation.
For the purposes of this Article Ninth, the total
outstanding shares of any class of stock of this Corporation shall
be deemed to include shares owned through the application of
clauses (B)(2), (3) and (4) above for the purposes of calculating
the percentage of ownership of such corporation, person, or other
entity, but shall not be deemed to include any other shares which
may be issuable pursuant to any agreement or upon exercise of
conversion rights, warrants, options or otherwise.
(C) The Board of Directors shall have the power and
duty to determine for the purpose of this Article Ninth on the
basis of information known to this Corporation, whether
(1) such other corporation, person or other entity
beneficially owns more than 5% of the total outstanding shares of
stock of this Corporation entitled to vote in elections of
directors,
-7-
<PAGE> 8
(2) a corporation, person, or entity is an "affiliate" or
"associate" (as defined in paragraph (B) above) of another, and
(3) the memorandum of understanding referred to in
paragraph (D)(1) below is substantially consistent with the
transaction covered thereby.
Any such determination shall be conclusive and binding
for all purposes of this Article Ninth.
(D) The provisions of this Article Ninth shall not
apply to
(1) any merger or similar transaction with any
corporation, if the Board of Directors of this Corporation has
approved a memorandum of understanding with such other corporation
with respect to such transaction prior to the time that such other
corporation shall have become a beneficial owner of 5% or more of
the total outstanding shares of stock of this Corporation entitled
to vote in elections of directors; or
(2) any merger or consolidation of this Corporation with,
or any sale or lease to this Corporation or any subsidiary thereof
of any assets of, or any sale or lease by this Corporation or any
subsidiary thereof of any assets to, any corporation of which a
majority of the outstanding shares of all classes of stock
entitled to vote in elections of directors of such corporation is
owned of record or beneficially by this Corporation and its
subsidiaries.
(E) Except as may be otherwise provided by this Article
Ninth, or required by statute, an agreement of merger or
consolidation may be approved by a majority vote of the shares
issued and outstanding, taken at a meeting called for the purpose
of such approval.
(F) Notwithstanding any other provision of this
Certificate of Incorporation or by the By-Laws of this Corporation
(and in addition to any other vote that may be required by law,
this Certificate of Incorporation or the By-Laws of this
Corporation) the affirmative vote of 75% of the capital stock of
this Corporation entitled to vote in elections of directors,
voting as a single class, shall be required to amend, alter,
change, or repeal this Article Ninth.
TENTH: No director shall be personally liable to the
-----
Corporation or any stockholder for monetary damages for breach of
fiduciary duty as a director, except for any matter in respect of
which such director shall be liable under Section 174 of the
Delaware General Corporation Law or any amendment thereto or
successor provision thereto or shall be liable by reason that, in
addition to any and all other requirements for such liability, he
(i) shall have breached his duty of loyalty to the Corporation or
its stockholders, (ii) shall not have acted in good faith, (iii)
shall have acted in a manner involving intentional
-8-
<PAGE> 9
misconduct or a knowing violation of law or, in failing to act,
shall have acted in a manner involving intentional misconduct or a
knowing violation of law or (iv) shall have derived an improper
personal benefit. Neither the amendment nor repeal of Article
Tenth, nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this Article Tenth, shall eliminate
or reduce the effect of this Article Tenth in respect of any matter
occurring, or any cause of action, suit or claim that, but for
this Article Tenth, would accrue or arise prior to such amendment,
repeal or adoption of an inconsistent provision.
4. This Restated Certificate of Incorporation shall be effective on
August 31, 1995.
IN WITNESS WHEREOF, First Banks America, Inc. has caused this
Certificate to be duly executed this 23th day of August, 1995.
First Banks America, Inc.
By: /s/James F. Dierberg
---------------------
James F. Dierberg
Chairman of the Board of Directors,
Chief Executive Officer and President
ATTEST:
By: /s/Allen H. Blake
------------------
Allen H. Blake
Secretary
-9-
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