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, 1996
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 0-9477
FIRST COMMERCIAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2693725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
865 Howe Avenue, Sacramento, California 95825
(address of principal executive offices) (Zip Code)
(916) 641-3288
(Registrant's telephone number, including area code)
(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.
Outstanding at
Class October 31, 1996
Common Stock, $.01 par value 105,765,932
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 -2-
Consolidated Statements of Income for the three and
nine month periods ended September 30, 1996 and 1995 -4-
Consolidated Statements of Cash Flows for the nine
month periods ended September 30, 1996 and 1995 -5-
Notes to Consolidated Financial Statements -6-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -10-
PART II OTHER INFORMATION
Item 6. Exhibits -18-
Signatures -19-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
FIRST COMMERICAL BANCORP, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
ASSETS
------
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks................................................ $ 8,069 9,768
Federal funds sold..................................................... 9,100 9,000
------- -------
Total cash and cash equivalents.................................. 17,169 18,768
------ ------
Investment securities:
Available for sale, at fair value....................................... 33,269 63,291
Held to maturity, at amortized cost (estimated fair
value of $3,012 and $11,005 at September 30, 1996
and December 31, 1995, respectively)................................... 3,004 10,958
------- ------
Total investment securities...................................... 36,273 74,249
------ ------
Loans:
Commercial.............................................................. 30,738 33,764
Real estate construction and development................................ 10,666 4,094
Real estate mortgage:
Residential........................................................... 19,720 17,824
Commercial............................................................ 23,015 15,021
Consumer and installment................................................ 10,465 3,508
------- -------
Total loans...................................................... 94,604 74,211
Unearned discount........................................................ (305) (196)
Allowance for possible loan losses....................................... (4,037) (5,388)
------- ------
Net loans........................................................ 90,262 68,627
------- ------
Lease receivable, net...................................................... - 991
Bank premises and equipment, net of accumulated depreciation............... 2,000 2,247
Accrued interest receivable................................................ 1,377 1,429
Other real estate owned.................................................... 524 1,380
Other assets............................................................... 1,375 1,844
------- -------
Total assets..................................................... $ 148,980 169,535
======= =======
</TABLE>
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
LIABILITIES
-----------
Deposits:
Demand:
<S> <C> <C>
Non-interest bearing................................................ $ 24,381 27,517
Interest bearing.................................................... 16,660 19,367
Savings............................................................... 32,821 36,986
Time:
Time deposits of $100 or more....................................... 10,837 18,764
Other time deposits................................................. 48,957 53,530
------- -------
Total deposits................................................... 133,656 156,164
Accrued interest payable................................................... 812 487
Accrued and other liabilities.............................................. 2,063 2,805
12% convertible debentures................................................. 6,500 6,500
------- -------
Total liabilities................................................ 143,031 165,956
------- -------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized;
no shares issued and outstanding Commonstock, $.01 par value,
250,000,000 shares authorized; 105,765,932 shares issued and
outstanding at September 30, 1996 and 69,675,110 shares issued
and outstanding at December 31, 1995................................. 1,058 697
Capital surplus............................................................ 36,107 33,251
Retained deficit........................................................... (31,185) (30,311)
Net fair value adjustment for securities available for sale................ (31) (58)
------- -------
Total stockholders' equity....................................... 5,949 3,579
------- -------
Total liabilities and stockholders' equity....................... $ 148,980 169,535
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
Consolidated Statements of Income (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
(Note 1) (Note 1)
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans................................. $ 2,214 2,228 6,147 7,792
Investment securities...................................... 580 464 2,248 1,180
Federal funds sold and other............................... 126 556 390 1,679
------ ------- ------- -------
Total interest income................................ 2,920 3,248 8,785 10,651
------ ------- ------- -------
Interest expense:
Deposits:
Interest-bearing demand................................. 57 95 211 297
Savings................................................. 355 255 1,086 892
Time deposits of $100 or more........................... 139 242 492 818
Other time deposits..................................... 552 908 1,743 2,546
Other borrowings............................................ 225 27 677 86
------- ----- ------ ------
Total interest expense............................... 1,328 1,527 4,209 4,639
------- ----- ------ ------
Net interest income.................................. 1,592 1,721 4,576 6,012
Provision for possible loan losses............................. 100 100 1,150 3,345
------- ----- ------ ------
Net interest income after provision
for possible loan losses........................... 1,492 1,621 3,426 2,667
------- ----- ------ ------
Noninterest income:
Service charges on deposit accounts
and customer service fees............................ 177 148 581 639
Other income............................................ 855 129 921 492
------- ------ ------ ------
Total noninterest income............................. 1,032 277 1,502 1,131
------- ------ ------ ------
Noninterest expense:
Salaries and employee benefits.......................... 471 984 1,705 3,196
Occupancy, net of rental income......................... 183 305 668 1,318
Furniture and equipment................................. 77 160 309 483
Federal Deposit Insurance
Corporation premiums................................. 60 144 281 498
Postage, printing and supplies.......................... 180 56 440 195
Data processing fees.................................... 97 17 304 61
Legal, examination and professional fees................ 376 361 1,153 793
Losses and expenses on foreclosed
real estate, net of gains............................ 729 400 952 2,410
Other expenses.......................................... 232 478 722 1,143
------- ------ ------- ------
Total noninterest expense............................ 2,405 2,919 6,534 10,097
------- ----- ------ ------
Income (loss) before benefit (provision) for
income taxes.................................... 119 (1,021) (1,606) (6,299)
Provision (benefit) for income taxes........................... (152) - (732) 2
------- ------ -------- -------
Net income (loss).................................... $ 271 (1,021) (874) (6,301)
======= ====== ======== ======
Income (loss) per common shares ........................... $ - (0.22) (0.01) (1.35)
======= ====== ======== ======
Weighted average shares of common
stock and common stock equivalents
outstanding (in thousands).................................... 105,766 4,675 87,788 4,675
======= ======= ====== =====
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
Consolidated Statements of Cash Flows (unaudited)
(dollars expressed in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------
1996 1995
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income (loss)................................................................. $ (874) (6,301)
Adjustments to reconcile net income (loss) to net cash:
Depreciation and amortization of bank premises and equipment.................... 241 348
Amortization, net of accretion.................................................. (97) 228
Provision for possible loan losses.............................................. 1,150 3,345
(Increase) decrease in accrued interest receivable.............................. 52 233
Interest accrued on liabilities................................................. 4,209 4,639
Payments of interest on liabilities............................................. (3,884) (4,656)
Benefit for income taxes........................................................ (732) -
Other........................................................................... (681) 2,346
-------- ------
Net cash provided by (used in) operating activities........................ (616) 182
-------- ------
Cash flows from investing activities:
Maturities of investment securities............................................... 66,825 2,300
Purchases of investment securities................................................ (28,805) (15,000)
Net (increase) decrease in loans.................................................. (23,873) 41,532
Recoveries of loans previously charged off........................................ 248 318
Proceeds from sale of other real estate owned..................................... 1,967 2,947
Other investing activities........................................................ 1,946 (82)
------- --------
Net cash provided by (used in) investing activities......................... 18,308 32,015
------ ------
Cash flows from financing activities:
Increase (decrease) in deposits................................................... (22,508) (66,297)
--------- -------
Proceeds from issuance of common stock............................................ 3,217
---------
4,646
Net cash provided by (used in) financing activities......................... (19,291) (61,651)
------- -------
Net increase (decrease) in cash and cash equivalents........................ (1,599) (29,454)
Cash and cash equivalents, beginning of period........................................ 18,768 86,259
------ ------
Cash and cash equivalents, end of period.............................................. $ 17,169 56,805
======= ======
Non cash investing and financing activities:
Loans transferred to foreclosed real estate....................................... $ 894 2,830
Loans to facilitate sale of foreclosed real estate................................ 54 1,977
======= ======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying consolidated financial statements of First Commercial
Bancorp, Inc. (FCB) are unaudited and should be read in conjunction with the
consolidated financial statements contained in the 1995 annual report on Form
10-K. In the opinion of management, all adjustments, consisting of normal
recurring accruals considered necessary for a fair presentation of the results
of operations for the interim periods presented herein, have been included.
Operating results for the three and nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996.
The consolidated financial statements include the accounts of FCB and
its sole subsidiary, First Commercial Bank (Bank). As more fully described in
Note 2, FCB executed an Amended and Restated Stock Purchase Agreement (Stock
Purchase Agreement) as of August 7, 1995, with First Banks, Inc., St. Louis,
Missouri (First Banks) and Mr. James F. Dierberg, Chairman, President and Chief
Executive Officer of First Banks, to provide for the recapitalization of FCB and
the Bank. The terms of the Stock Purchase Agreement provided for initial
purchases of Bank preferred and common stock by First Banks. These purchases,
which were completed on August 23, 1995, gave First Banks ownership of all of
the outstanding preferred stock and approximately 99% of the outstanding common
stock of the Bank as of September 30, 1995. The shares of common stock so issued
were subject to an irrevocable proxy granted by First Banks to the Board of
Directors of FCB to vote its shares of Bank stock. This proxy expired upon the
approval of the Stock Purchase Agreement and the transactions contemplated
thereby at the Special Shareholders Meeting on December 27, 1995. The shares of
preferred stock were non-voting. Following the Special Shareholders Meeting, all
of the Bank preferred and common stock held by First Banks was exchanged for
50,000,000 shares of FCB common stock.
First Banks had majority ownership, but not voting control, of the Bank
during the period from August 23, 1995 to December 27, 1995. However, that
ownership interest in the Bank was returned to FCB in the exchange of Bank stock
for FCB stock following the shareholders' approval on December 27, 1995. The
Form 10-Q filed with respect to the quarterly period ended September 30, 1995
reflected First Banks' ownership in the Bank as it actually existed at that
time. The financial statements for periods ended September 30, 1995 included
herein have been presented on a consolidated basis to reflect First Banks'
initial investment as if it had been made directly in shares of FCB common
stock, rather than Bank preferred and common stock, in order to make such
information comparable with that for periods ended September 30, 1996.
On February 16, 1996, FCB began an offering to its shareholders other
than First Banks, of an aggregate of 50 million shares of newly-offered common
stock, and an offering of 9.69 million shares of common stock in exchange for
certain outstanding dividend obligations and accrued interest thereon. The
offering price was $.10 per share. The offering was completed during the second
quarter of 1996 and resulted in the issuance of 36.09 million additional shares
of FCB common stock to shareholders other than First Banks. As a result, First
Banks owned 61.46% and 93.29% of the outstanding voting stock of FCB at
September 30, 1996 and December 31, 1995, respectively.
The net income (loss) per share has been computed using the weighted
average number of shares of common stock outstanding during the period. The
outstanding stock options and the conversion of the outstanding convertible
debentures have not been included in the computation as they do not have a
material effect on earnings per share.
<PAGE>
(2) Recapitalization
The Stock Purchase Agreement between James F. Dierberg, First Banks, a
Missouri bank holding company, FCB and the Bank provided for the
recapitalization of FCB and the Bank. The Stock Purchase Agreement amended a
previous agreement under which Mr. Dierberg had provided interim financing for
the Bank in the form of a purchase of $1.5 million of nonvoting preferred stock.
The Stock Purchase Agreement, and subsequent amendments entered into with First
Banks, resulted in a series of transactions as follows:
a. On August 22, 1995, First Banks acquired the Bank preferred stock from Mr.
Dierberg for $1.5 million.
b. On August 23, 1995, First Banks purchased 116,666,667 shares of Bank common
stock for an additional $3.5 million.
c. On October 31, 1995, First Banks purchased a convertible debenture of FCB for
$1.5 million.
d. Upon the completion of the Special Shareholders' Meeting on December 27,
1995, the shares of Bank preferred and common stock held by First Banks were
exchanged for 50,000,000 shares of FCB common stock. In addition, First Banks
purchased a convertible debenture of FCB for $5.0 million.
e. On December 28, 1995, First Banks purchased an additional 15,000,000 shares
of FCB common stock for $1.5 million.
On February 16, 1996, after its Amended Registration Statement was
declared effective by the Securities and Exchange Commission, FCB commenced an
offering of an aggregate of 59.69 million shares of newly-issued common stock.
The offering was composed of: (a) an offering to its existing shareholders,
other than First Banks, of 50 million shares at $.10 per share; (b) an offering
to individuals who are not shareholders of FCB of a maximum of 10 million of the
shares available in the Rights Offering which are not otherwise subscribed; and
(c) an offering of 9.69 million shares in exchange for certain outstanding
dividend obligations and accrued interest thereon of FCB (collectively the
Offering). The Offering was completed during the second quarter of 1996 and
approximately 36.09 million shares were issued in exchange for $2.97 million in
cash and $643,000 of outstanding dividend obligations. The offering provided
$3.24 million of capital to FCB, net of underwriting expenditures of $373,000.
As a result of the offering, First Banks' ownership was reduced to 61.46% prior
to the conversion of the debentures, or 76.98% if the debentures had been
converted as of September 30, 1996.
The proceeds from these transactions, net of amounts retained by the
parent company for corporate expenses and certain offering expenses incurred in
the above transactions, were used to increase the capital of the Bank. As a
result of these transactions, the capital ratios of FCB and the Bank as of
September 30, 1996 and December 31, 1995 were as follows:
<TABLE>
<CAPTION>
FCB Bank
--------------------------- -----------------------------
September 30, December 31, September 30, December 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total risk-based capital ratio 6.61% 4.99% 12.65% 12.66%
Tier I risk-based capital ratio 5.33 3.68 11.37 11.35
Leverage ratio 3.95 2.14 8.41 6.58
</TABLE>
(3) Regulatory Agreements
For each of the four years ended December 31, 1995 and the first
quarter of 1996, FCB and the Bank incurred substantial losses from operations.
These losses were associated primarily with the emphasis which the Bank had
placed on real estate based lending and the deterioration of the California
economy during that period, particularly as it related to the real estate
sector. Because of the magnitude of problem assets which arose and the reduction
of the Bank's capital due to the losses, FCB has been operating under the terms
of a Memorandum of Understanding with The Federal Reserve Bank of San Francisco
(MOU), and the Bank has been operating under the terms of a Cease and Desist
<PAGE>
Order issued by the Federal Deposit Insurance Corporation, a Final Order issued
by the State Banking Department of California and several Capital Impairment
Orders (collectively the "Orders"). The MOU and the Orders have placed
significant restrictions on FCB and the Bank including restrictions on the
payment of dividends, requirements of specified capital levels and reductions of
classified assets. As a result of the recapitalization described in Note 2 and
numerous actions taken by FCB, management believes that FCB is in substantial
compliance with the MOU and the Orders, except for the Capital Impairment
Orders.
As a result of the completion of the transactions pursuant to the Stock
Purchase Agreement with First Banks and Mr. James F. Dierberg, and the Offering,
FCB and the Bank were substantially recapitalized. However, FCB incurred a net
loss from operations for the nine months ended September 30, 1996.
(4) Income Taxes
FCB and the Bank filed a consolidated federal income tax return for the
periods prior to their respective acquisitions by First Banks. Due to the
structure of the transaction described in Note 2, current income tax regulations
prohibit the Bank from filing a consolidated income tax return with FCB for the
period after August 22, 1995, because the acquisition of the Bank stock by First
Banks caused its disaffiliation with FCB for tax purposes. The Bank will join in
filing a consolidated federal income tax return with First Banks for the periods
from August 23, 1995 until the issuance of stock upon the completion of the
rights offering on May 17, 1996, when First Banks no longer owned 80% of the
Bank either directly or indirectly. FCB will join in filing a consolidated
federal income tax return with First Banks for the period from December 28, 1995
through May 17, 1996.
Neither FCB nor the Bank are permitted to be included in the
consolidated return of First Banks for five years following their tax
disaffiliation on May 18, 1996. In addition, the Bank, which was disaffiliated
from FCB on August 22, 1995, is not permitted to file a consolidated return with
FCB for five years. However, regulations allow FCB to request permission from
the Internal Revenue Service to join in filing a consolidated return with the
Bank. FCB has not determined whether it will request permission to file a
consolidated return with the bank for periods after May 18, 1996. Furthermore,
there can be no assurance that a waiver to allow such a reaffiliation, if
requested, would be granted.
(5) Transactions with Related Parties
The Bank has $17.8 million in whole loans and loan participations
outstanding at September 30, 1996, that were purchased from banks that are
affiliated with First Banks. There were no whole loans or loan participations
from affiliates outstanding at December 31, 1995. These loans and loan
participations were acquired at interest rates and terms prevailing at the dates
of their purchase and under credit standards and policies followed by the Bank.
The Bank has entered into a management services agreement with First
Banks and a cost sharing agreement with First Bank & Trust, Irvine, California,
a wholly owned subsidiary of First Banks. The management services 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 return preparation and assistance, accounting and other
management and administrative services. Hourly rates for such services compare
favorably with those of similar services from unrelated sources, as well as the
internal costs of the Bank personnel which were used previously. It is estimated
that the aggregate cost for such services will be more economical than those
previously incurred separately by the Bank.
Because of its affiliation through First Banks and the geographic
proximity of certain of their banking offices, the Bank and First Bank & Trust
share the cost of certain personnel and services which are used by both banks.
This includes the salaries and benefits of certain loan and administrative
personnel. The banks have entered into a cost sharing agreement for the purpose
<PAGE>
of allocating these expenses between them. Expenses associated with loan
origination personnel are allocated based on the relative loan volume between
the banks.
Costs of other personnel are allocated on an hourly basis.
The Bank also entered into a data processing agreement with FirstServ,
Inc., a wholly owned data processing subsidiary of First Banks, beginning in
December 1995. The fees for such services are substantially less than the Bank
had incurred in connection with its previous in-house data processing operation
or than it would incur with non-affiliated vendors.
The aggregate fees paid by the Bank in connection with the management
services agreement, the cost sharing agreement and the data processing agreement
were $398,000 and $1.07 million for the three and nine month periods ended
September 30, 1996. No such fees were incurred during the nine months ended
September 30, 1995.
As discussed in Note 2, in 1995, First Banks purchased convertible
debentures from FCB totaling $6.5 million which bear interest at 12% annually.
Interest is payable when, at the discretion of the Board of Directors, it is
prudent to do so, and it is permitted by regulatory authorities. Interest
accrued which remains unpaid will be converted into common stock at maturity.
The interest expense on these debentures was $217,000 and $649,000 for the three
and nine month periods ended September 30, 1996. These debentures were not
oustanding during the comparable periods of 1995.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
FCB is a registered Sacramento, California-based bank holding company
which reincorporated in Delaware in 1990 and conducts business through the Bank,
a California state-chartered bank. The Bank commenced operations in 1979, and
operates a commercial banking business through its headquarters office and five
branch offices located in Sacramento, Roseville (two branches), San Francisco,
Concord and Campbell, California. At September 30, 1996, FCB had approximately
$149.0 million in total assets, $94.3 million in total loans, net of unearned
discount, $133.7 million in total deposits, and $5.9 million in total
stockholders' equity.
Through the Bank, FCB 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.
General
FCB has reported losses from operations for each of the four years
ended December 31, 1995, as well as the nine months ended September 30, 1996. As
a result of these losses, FCB and the Bank have been operating under the terms
of a Memorandum of Understanding (MOU) and under certain regulatory orders
(Orders) which have placed significant restrictions on their operations,
including restrictions on the payment of dividends, requirements for the
attainment of specified capital levels and reductions of classified assets.
Through the recapitalization of FCB as described in Note 2 to the accompanying
consolidated financial statements, combined with numerous other actions which
have been taken, FCB and the Bank believe they are in substantial compliance
with most of the requirements of the MOU and the Orders. Based on its past
performance, the Bank was and remains designated a problem bank and considered
"troubled" for all regulatory purposes.
In 1995, FCB and the Bank pursued a strategy of reducing the Bank's
size in order to decrease expenses and optimize its capital position, while
endeavoring to attract a substantial infusion of new capital. In August 1995,
FCB and the Bank entered into a Stock Purchase Agreement with First Banks and
Mr. James F. Dierberg, which ultimately resulted in the purchase of $6.5 million
of newly-issued common stock of FCB and $6.5 million of convertible debentures
by First Banks. These transactions, which were completed in December 1995,
recapitalized FCB, providing it with the opportunity to discontinue its strategy
of asset diminution. Consequently, in 1996, FCB has focused on the continued
reduction of its portfolio of classified assets and the rebuilding of its
banking franchise.
To facilitate accomplishing these objectives, the Bank strengthened its
allowance for possible loan losses by providing $100,000 and $1.15 million for
possible loan losses for the three and nine months ended September 30, of 1996,
respectively, thereby increasing the ratio of allowance for possible loan losses
to nonperforming loans to 225.53% at September 30, 1996 from 119.05% at December
31, 1995. At the same time, the Bank pursued its problem borrowers to reduce its
exposure to further losses. This resulted in a decrease of its classified assets
from $20.59 million at December 31, 1995 to $4.80 million at September 30, 1996.
Financial Condition
FCB's total assets were $149.0 million and $169.5 million at September
30, 1996 and December 31, 1995, respectively, in comparison to $239.3 million at
December 31, 1994. As the Bank has endeavored to reduce its problem assets, it
has maintained a generally conservative environment in considering new credits.
<PAGE>
This, combined with reduction of marginal credits from the Bank, has contributed
to the reduction of the Bank's loan portfolio. Since loans typically carry
interest rates which are higher than alternative uses of the Bank's funds, such
as investment securities and federal funds sold, this has tended to reduce the
Bank's net interest income. To replenish its portfolio with high quality loans,
more effectively use a portion of the liquidity which had been increasing in the
Bank, and contribute toward improving the Bank's net interest income, in March
1996, the Bank began purchasing whole loans and loan participations from banks
affiliated with First Banks. This has contributed to improved operating results
for the three and nine month periods ended September 30, 1996, and it is the
primary reason that total loans, net of unearned discount, increased from $74.0
million at December 31, 1995 to $94.3 million at September 30, 1996.
Because of the attrition occurring in the Bank's loan portfolio and the
substantial liquidity which was being generated, the Bank has elected to
conservatively price its deposit products. Consequently, total deposits
decreased from $156.2 million at December 31, 1995 to $133.7 million at
September 30, 1996, a decrease of $22.5 million. The most significant part of
this was a decrease in the amount of time deposits of $100,000 or more which
decreased $7.9 million to $10.8 million at September 30, 1996 from $18.8 million
at December 31, 1995. Since the interest rate differentials between these time
deposits and investment securities were not adequate to provide for costs of
operations and a reasonable profit, the Bank has not aggressively pursued these
deposits as a principal funding source.
The principal source of funds for the loan purchases and the deposit
attrition was provided by the investment securities portfolio which decreased
from $74.2 million at December 31, 1995 to $36.3 million at September 30, 1996.
Results of Operations
Net Income
The net income for the three months ended September 30, 1996 was
$271,000, in comparison to a net loss of $1.02 million for the same period in
1995. For the nine months ended September 30, 1996 and 1995, the net loss was
$874,000 and $6.30 million, respectively. The improved operating results for
1996 are a result of several factors including the recapitalization of FCB and
the Bank and reductions in the required levels of provisions for possible loan
losses along with continued decreases in noninterest expense. During 1995 and
1996, the Bank reduced its reliance on title and escrow deposits, shrank its
loan portfolio and decreased its staff and other operating costs. Consequently,
while total assets were $239.3 million at December 31, 1994, they have been
reduced to $149.0 million at September 30, 1996. This reduction in the size of
the Bank achieved the initial objective which was to reduce assets in order to
optimize the Bank's capital base and decrease expenses. However, it also reduced
the assets on which the Bank earned interest. Consequently, the Bank's primary
source of profitability, its net interest income, was reduced to $1.59 million
and $4.58 million for the three and nine month periods ended September 30, 1996
from $1.72 million and $6.01 million for the same periods in 1995.
Recognizing the prospect of a significantly smaller income base, the
Bank focused on expense reduction during 1995 and 1996. This included not only
the expenses associated with the closure of three branch offices in 1995 and
1996, but significant staff reductions in continuing branches and the home
office. Headquarters office space was subleased, data processing services were
transferred to First Banks' system, and a conscientious cost reduction process
was enforced. This resulted in a reduction of noninterest expense to $2.41
million and $6.53 million for the three and nine month periods ended September
30, 1996 from $2.92 million, and $10.10 million for the same periods in 1995.
Finally, FCB has benefited from its inclusion in the consolidated
income tax return of First Banks. For the three and nine month periods ended
September 30, 1995, no tax benefit from losses was available, since any
recognition of benefits was dependent upon the ability of FCB and the Bank to
generate sufficient future taxable income. As more fully described in Note 4,
FCB and the Bank were included in the consolidated return of First Banks from
January 1, 1996 through May 17, 1996, allowing them to receive the benefit of
losses incurred which were offset against the taxable income of First Banks.
This resulted in the recognition of a net tax benefit of $152,000 and $732,000
for the three and nine month periods ended September 30, 1996.
<PAGE>
Net Interest Income
Net interest income was $1.59 million and $4.58 million, or 4.46% and
4.15% of average interest-earning assets, for the three month and nine month
periods ended September 30, 1996, respectively, in comparison to $1.72 million
and $6.01 million, or 4.34% and 4.51% of average interest-earning assets,
respectively, for the same periods in 1995. Interest and fees earned on the loan
portfolio is the primary source of income of FCB. The reduction in net interest
income for the nine month period ended September 30, 1996, in comparison to the
same period in 1995, is indicative of the overall reduction in the loan
portfolio throughout 1995. The improved net interest income for the three month
period ended September 30, 1996, in comparison to the same period in 1995,
reflects the rebuilding of the loan portfolio. Total loans, net of unearned
discount, were $94.3 million and $74.0 million at September 30, 1996 and
December 31, 1995, respectively, in comparison to $130.2 million at December 31,
1994.
Loan income is critical to the profitability of the Bank. While loans
carry with them inherent credit risks, this can be controlled by effective loan
underwriting and loan approval procedures, a strong credit administration and
risk management system, and periodic independent loan reviews. At the same time,
loans typically have interest rates and fees which are substantially higher than
alternative earning assets, such as investment securities and Federal funds
sold. For the three and nine month periods ended September 30, 1996, the yield
on the Bank's loan portfolio was 9.45% and 9.59%, compared to 5.83% and 5.77% on
its investment portfolio, respectively.
While the reduction in the loan portfolio contributed to a substantial
decline in total interest income, the decrease in the cost of the Bank's funding
sources was less significant. Total interest expense was $1.33 million and $4.21
million for the three and nine month periods ended September 30, 1996, or 4.47%
and 4.51% of average interest-bearing liabilities, compared with $1.53 million
and $4.64 million, or 4.41% and 4.09% for the same periods in 1995. The decrease
in interest expense associated with the decline in deposit balances was offset
by increases in interest rates during 1995 that continued into 1996 and the
interest cost of the 12% convertible debentures issued in connection with the
recapitalization of FCB. Interest expense on the debentures totaled $217,000 and
$649,000 for the three and nine month periods ended September 30, 1996. FCB's
recapitalization is more fully described in Note 2 to the accompanying
consolidated financial statements.
<PAGE>
The following table sets forth certain information relating to FCB's
average balance sheet, and reflects the average yield earned on interest-earning
assets, the average cost of interest-bearing liabilities and the resulting net
interest income for the three and nine month periods ended September 30:
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1996 1995 1996 1995
------------------------ ----------------------- ----------------------- -----------------------
Interest Interest Interest Interest
Average income/ Yield/ Average income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
balance expense rate balance expense rate balance expense rate balance expense rate
------- ------- ---- ------- ------- ----- ------- ------- ----- ------- ------- ------
(dollars expressed in thousands)
Assets
------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $93,670 2,214 9.45% $88,712 2,228 9.96% $ 85,461 6,147 9.59% $ 112,634 7,792 9.25%
Investment securities 39,791 580 5.83 30,763 464 5.98 51,933 2,248 5.77 26,300 1,180 6.00
Federal funds sold and other 9,349 126 5.39 37,715 556 5.85 9,740 390 5.34 39,156 1,679 5.73
-------- ------ -------- ----- ------- ----- ------- -----
Total interest-earning assets 142,810 2,920 8.18 157,190 3,248 8.20 147,134 8,785 7.96 178,090 10,651 8.00
----- ----- ----- ------
Nonearning assets 7,596 15,894 8,350 15,463
------- -------- ------- --------
Total assets $ 150,406 $173,084 $155,484 $ 193,553
======== ======= ======= =======
Liabilities and Stockholders' Equity
-------------------------------------
Interest-bearing liabilities:
Interest-bearing demand deposits$ 16,900 57 1.35% $ 21,270 95 1.77% $ 18,151 211 1.55% $ 23,010 297 1.73%
Savings deposits 34,048 355 4.17 40,491 255 2.50 35,256 1,086 4.11 48,446 892 2.46
Time deposits of $100 or more 10,842 139 5.13 17,953 242 5.35 12,251 492 5.35 21,475 818 5.09
Other time deposits 50,553 552 4.37 57,052 908 6.31 52,239 1,743 4.45 57,939 2,546 5.88
-------- ------ -------- ----- -------- ------ ------- -----
Total interest-bearing deposits
112,343 1,103 3.93 136,766 1,500 4.35 117,897 3,532 3.99 150,870 4,553 4.05
Other borrowings 6,500 225 13.85 747 27 14.33 6,500 677 13.89 748 86 15.38
-------- ------ -------- ------- ------- ----- -------- -----
Total interest-bearing
liabilities 118,843 1,328 4.47 137,513 1,527 4.41 124,397 4,209 4.51 151,618 4,639 4.09
------ ----- ----- -----
Noninterest-bearing liabilities:
Demand deposits 23,273 32,030 24,130 37,486
Other liabilities 2,579 1,010 2,806 552
------- -------- ------- ---------
Total liabilities 144,695 170,553 151,333 189,656
Stockholders' equity 5,711 2,531 4,151 3,897
-------- -------- -------- --------
Total liabilities and
Stockholders' equity $ 150,406 $ 173,084 $ 155,484 $193,553
======== ======= ======= =======
Net interest income 1,592 1,721 4,576 6,012
===== ===== ===== =====
Net interest margin 4.46% 4.34% 4.15% 4.51%
===== ===== ===== =====
</TABLE>
Provision for Possible Loan Losses
The provision for possible loan losses was $100,000 and $1.15 million
for the three and nine month periods ended September 30, 1996, compared to
$100,000 and $3.35 million for the same periods in 1995, respectively. The
provision reflects the residual inventory of unresolved problem loans which have
the potential of generating additional losses. Consequently, the Bank has
undertaken to continually strengthen the allowance for possible loan losses
relative to these problem loans until such time as they can be significantly
reduced.
Net loan charge-offs were $1.37 million and $2.50 million for the
three and nine month periods ended September 30, 1996, in comparison to $79,000
and $5.92 million for the same periods in 1995. The allowance for possible loan
losses was $4.04 million, or 4.28% of total loans, as of September 30, 1996,
compared to $5.39 million, or 7.28% of total loans, as of December 31, 1995.
Tables summarizing nonperforming assets, past due loans and loan loss experience
are presented in the "Lending and Credit Management" section of this Form 10-Q.
<PAGE>
Noninterest Income
Noninterest income increased to $1.03 million and $1.50 million for
the three and nine month periods ended September 30, 1996, respectively, from
$277,000 and $1.13 million for the same periods in 1995. Noninterest income
consists primarily of service charges on deposit accounts and other related
fees, other non-yield related fees and charges, and other income. Service
charges on deposit accounts were $177,000 and $581,000 for the three and nine
month periods ended September 30, 1996 as compared to $148,000 and $639,000 for
the same periods in 1995.
Other income increased to $855,000 and $921,000 for the three and nine
month periods ended September 30, 1996, respectively, compared to $129,000 and
$492,000 for the same periods in 1995. The Bank held certain leveraged leases on
railroad cars which were assigned to an unrelated party during the third quarter
of 1996. Simultaneously, with the assignment of these leases, the Bank sold its
interest in the railroad cars, realizing a net gain on the transaction of
$795,000. This gain is included in other income for the three and nine month
periods ended September 30, 1996.
Noninterest Expense
Noninterest expense was $2.41 million and $6.53 million for the three
and nine month periods ended September 30, 1996, respectively, in comparison to
$2.92 million and $10.10 million for the same periods in 1995, representing a
decrease of $510,000 and $3.57 million or 17.5% and 35.3%, respectively. The
decrease is primarily related to salaries and employee benefits, and occupancy
expenses, net of rental income.
Salaries and employee benefits decreased to $471,000 and $1.71 million
for the three and nine month periods ended September 30, 1996, respectively, in
comparison to $984,000 and $3.20 million for the same periods in 1995. The
decrease reflects the downsizing of the organization through the closure of
branch offices in January 1995, April 1995 and August 1996, and the conversion
and centralization of FCB's data processing and various operating functions into
First Banks' systems in December 1995.
Expenses of holding and disposing of foreclosed real estate, net of
gains, totaled $729,000 and $952,000 for the three and nine month periods ended
September 30, 1996, respectively, compared to $400,000 and $2.41 million for the
same periods in 1995. During the three months ended September 30, 1996, the Bank
determined that its potential loss in connection with real estate held as
foreclosed property had become more probable. As a result the Bank provided
$747,000 to reflect this exposure.
The Federal Deposit Insurance Corporation (FDIC) voted to reduce the
deposit insurance premiums paid by most members of the Bank Insurance Fund
(BIF). The Bank is a BIF depository institution and was assessed 27 cents per
$100.00 of assessable deposits for the three and nine month periods ended
September 30, 1996.
Lending and Credit Management
Interest earned on the loan portfolio is the primary source of income
of FCB. Total loans, net of unearned discount, represented 63.3%, 43.7% and
54.4% of total assets as of September 30, 1996, December 31, 1995 and December
31, 1994, respectively. FCB experienced a decrease in its loan portfolio during
1995, due to the Company's Capital Restoration Plan which included the reduction
of assets. The loan portfolio increased during the nine month period ended
September 30, 1996 due to increased lending activity, primarily through the
purchase of whole loans and loan participations from affiliated banks. Total
loans, net of unearned discount, were $94.3 million, $74.0 million and $130.2
million at September 30, 1996, December 31, 1995 and December 31, 1994,
respectively.
FCB's nonperforming loans consist of loans on a nonaccrual status and
loans on which the original terms have been restructured. Impaired loans,
consisting of nonaccrual and restructured loans, were $1.79 million and $4.53
million at September 30, 1996 and December 31, 1995, respectively.
<PAGE>
The following is a summary of nonperforming assets and past due loans
at the dates indicated:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
(dollars expressed in thousands)
Nonperforming assets:
<S> <C> <C>
Nonperforming loans $ 1,790 4,526
Other real estate 524 1,380
------- -----
Total nonperforming assets $ 2,314 5,906
====== =====
Loans past due:
Over 30 days to 90 days $ 1,318 3,015
Over 90 days and still accruing 66 2,249
-------- ---------
Total past due loans $ 1,384 5,264
====== =========
Loans, net of unearned discount $ 94,299 74,015
====== ========
Allowance for possible loan losses to loans 4.28% 7.28%
Nonperforming loans to loans 1.90 6.11
Allowance for possible loan losses to
nonperforming loans 225.53 119.05
Nonperforming assets to loans and foreclosed assets 2.44 7.83
==== ====
</TABLE>
The allowance for possible loan losses is based on past loan loss
experience, on 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 reviewed relative to FCB's internal watch
list and other data utilized 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.
The following is a summary of the loan loss experience for the three and
nine month periods ended September 30:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Allowance for possible loan losses, beginning of period $ 5,303 4,817 5,388 7,437
------ ----- ----- -------
Loans charged-off (1,513) (163) (2,749) (6,235)
Recoveries of loans previously charged-off 147 84 248 318
------- -------- ------- -------
Net loan (charge-offs) recoveries (1,366) (79) (2,501) (5,917)
------ ------- ------ ------
Reduction in allowance for loans transferred
with branch sale - - - (27)
Provision for possible loan losses 100 100 1,150 3,345
------ ------ ----- ------
Allowance for possible loan losses, end of period $ 4,037 4,838 4,037 4,838
===== ===== ===== ======
</TABLE>
Interest Rate Risk Management
Managing interest rate risk is fundamental to banking. Banking
institutions manage the inherently different maturity and repricing
characteristics of their 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
<PAGE>
lending and deposit-taking activities tend to create a naturally
liability-sensitive interest rate risk profile.
FCB's objective regarding interest rate risk management is to position
FCB such that changes in interest rates do not have a material adverse impact
upon the net market value and net interest income of FCB. To measure the impact
from interest rate changes, FCB calculates on a pro forma basis the net market
value of its assets and liabilities, and net interest income 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 FCB'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.
Liquidity
The liquidity of FCB 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, FCB 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 and securities sold
under agreements to repurchase. The aggregate funds, which consisted solely of
certificates of deposit in denominations of $100,000 or more, were $10.8 million
at September 30, 1996 and $18.8 million at December 31, 1995.
At September 30, 1996, FCB's more volatile sources of funds mature as
follows:
(dollars expressed in thousands)
Three months or less $ 5,357
Over three months through six months 3,298
Over six months through twelve months 1,732
Over twelve months 450
-------
Total $ 10,837
======
Capital
FCB and the Bank are subject to the capital guidelines of the Federal
Reserve Board and the FDIC, respectively, which establish the parameters for
capital adequacy for bank holding companies and banks. These guidelines set
total capital requirements and define capital in terms of "core capital
elements", or Tier 1 capital, and "supplemental capital elements", or Tier 2
capital. Both bank holding companies and banks are required to maintain a
minimum ratio of qualifying total capital to risk-weighted assets of 8%, at
least one-half of which must be Tier 1 capital. Risk-weighted assets are
determined by applying risk weights assigned by the regulatory agencies to
various categories of assets and off-balance sheet exposures.
In addition to the minimum regulatory capital requirements set forth
above, the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") required supervisory or other corrective action when a bank's capital
declines below certain minimum levels. In order to be well capitalized, an
institution must have a total risk-based capital ratio of at least 10%, a Tier 1
risk-based capital ratio of at least 6%, a leverage ratio of at least 5%, and
not be subject to any written agreement or order issued by the FDIC. An
adequately capitalized institution must have a total risk-based capital ratio of
at least 8%, a Tier 1 risk-based capital ratio of at least 4% and a leverage
ratio of at least 4%. An undercapitalized institution has a total risk-based
capital ratio which is less than 8%, a Tier 1 risk-based capital ratio which is
less than 4% or a leverage ratio of less than 4%. A significantly
undercapitalized institution has a total risk-based capital ratio of less than
6%,a Tier 1 risk-based capital ratio of less than 3% or a leverage ratio of less
than 3%. Finally, a critically undercapitalized institution has a ratio of
tangible equity to total assets that is 2% or less.
<PAGE>
At September 30, 1996 and December 31, 1995, FCB's and the Bank's
capital ratios were as follows:
Risk-Based Capital Ratios
Total Tier 1 Leverage Ratio
----- ------ --------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
FCB 6.61% 4.99% 5.33% 3.68% 3.95% 2.14%
Bank 12.65 12.66 11.37 11.35 8.41 6.58
As a result of the above capital ratios, FCB is considered
"undercapitalized" and the Bank is considered "adequately capitalized" as of
September 30, 1996.
As more fully described in Note 2, FCB completed an offering to its
existing shareholders other than First Banks. Pursuant to the offering, FCB
issued 36.09 million shares of newly issued common stock in exchange for $2.97
million in cash and $643,000 of outstanding dividend obligations. The offering
provided $3.24 million of capital to FCB net of underwriting expenditures of
$373,000.
Regulatory Agreements
Due to its operating losses and excessive levels of classified
assets, in 1993, the Bank consented to enter into an amended Cease and Desist
Order with the FDIC (Orders) and a Final Order with the State Banking Department
of the State of California (SBD). The Orders establish certain restrictions and
requirements relative to the operation of the Bank, including: (a) maintaining
management acceptable to the supervisory agencies; (b) receiving prior
notification before adding an individual to the Board of Directors; (c) reducing
assets classified in the examination; (d) developing and implementing a profit
plan and budget; (e) implementing a strategic plan to return the Bank to
profitability; (f) increasing tangible shareholders' equity to specified levels
as of certain dates; and (g) refraining from the payment of distributions to any
shareholder without the prior written consent of the FDIC and the SBD. The
Orders remain in effect. Management believes the Bank is in substantial
compliance with the Orders.
The Bank continues to be designated as a problem bank and is
considered "troubled" for all regulatory purposes. Accordingly, the Bank is
required to provide prior notice to the FDIC of the employment of any senior
officer or appointment of a director. Failure to comply with the terms of the
Orders could result in various regulatory actions against the Bank, including
recapitalization, merger and/or acquisition of the Bank.
The California Financial Code deems the capital of a bank "impaired"
whenever it has a retained deficit in an amount exceeding 40% of its
"contributed capital". Contributed capital is defined as all capital other than
retained earnings or deficit. The Bank has received notices from the SBD that
its capital is impaired, most recently on August 22, 1996. The Bank has not
complied with the Capital Impairment Orders. As long as the Bank's contributed
capital remains impaired, the SBD is authorized to take possession of the
property and business of the Bank, to close the Bank or to order the Bank to
correct the capital impairment through a levy to FCB, the sole shareholder of
the Bank.
The Superintendent of the SBD has the authority to take certain
appropriate regulatory action with respect to a bank having impaired contributed
capital. Subject to the approval of its shareholders and the Superintendent, the
bank may readjust its accounts in a quasi-reorganization, which includes
eliminating its retained deficit. It is the policy of the Superintendent not to
authorize a quasi-reorganization unless a bank can establish that: (a) it has
adequate capital; (b) the problems that created past losses and the impairment
of capital have been corrected; and (c) it is currently operating on a
profitable basis and will continue to do so in the future. Because a
quasi-reorganization requires that a Bank adjust its assets and liabilities to
fair value at the time of the reorganization, the Bank's capital could be
reduced from its present level as a result of such an adjustment. Management
anticipates that it will apply to the Superintendent for permission to adjust
its accounts through a quasi-reorganization during the fourth quarter of 1996.
<PAGE>
In addition to the Orders, FCB has entered into a Memorandum of
Understanding with the Federal Reserve Bank of San Francisco (MOU). Among other
requirements under the terms of the MOU: (a) FCB may not declare or pay any
dividends without the prior written approval of, and may not take dividends from
the Bank without providing prior written notice to, the Federal Reserve Bank;
(b) FCB must submit a written plan to improve and maintain adequate capital at
FCB and the Bank; and (c) certain transactions between FCB and the Bank are
restricted.
Effects of New Accounting Standards
In June 1995, the FASB issued SFAS 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities (SFAS 125). SFAS
125 established accounting and reporting standards for transfers and servicing
of financial assets and extinguishment of liabilities.
The standards established by SFAS 125 are based on consistent
applications of a financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. This statement provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.
SFAS 125 is effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996, and is to
be applied prospectively. Earlier or retroactive application is not permitted.
FCB does not believe the implementation of SFAS 125 will have a
material effect on its consolidated financial position or results of operation.
PART II - OTHER INFORMATION
Item 6 - Exhibit
The exhibit is numbered in accordance with the Exhibit Table of Item 601 of
Regulation S-K.
Exhibit
Number Description
3(ii) Amended and Restated By-Laws
27 Article 9 - Financial Data Schedule
(EDGAR only)
<PAGE>
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 COMMERCIAL BANCORP, INC.
Registrant
Date: November 12, 1996 By: /s/Donald W. Williams
---------------------
Donald W. Williams
Chairman, President
and Chief Executive
Officer
Date: November 12, 1996 By: /s/Allen H. Blake
-----------------
Allen H. Blake
Chief Financial Officer
and Secretary
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
FIRST COMMERCIAL BANCORP, INC.
(A Delaware Corporation)
ARTICLE I Offices and Records
ARTICLE II Corporate Seal
ARTICLE III Shareholders
ARTICLE IV Directors
ARTICLE V Officers
ARTICLE VI Shares of Stock
ARTICLE VII Indemnification
ARTICLE VIII General Provisions
<PAGE>
ARTICLE I
Offices and Records
-------------------
Section 1. Registered Office and Registered Agent. The location of the
registered office and the name of the registered agent of the corporation in the
State of Delaware shall be determined from time to time by the Board of
Directors and shall be on file in the appropriate office of the State of
Delaware pursuant to applicable provisions of law.
Section 2. Corporate Offices. The corporation may have such corporate
offices, anywhere within and without the State of Delaware as the Board of
Directors from time to time may appoint, or the business of the corporation may
require. The "principal place of business" or "principal business" or "executive
office or offices" of the corporation may be fixed and so designated from time
to time by the Board of Directors, but the location or residence of the
corporation in Delaware shall be deemed for all purposes to be in the county in
which its registered office in Delaware is maintained.
Section 3. Records. The corporation shall keep at its registered office
in Delaware, at its principal place of business, or at the office of its
transfer agent, original or duplicate books in which shall be recorded the
number of its shares subscribed, the names of the owners of its shares, the
numbers of shares owned of record by them respectively, the amount of shares
paid, and by whom, the transfer of said shares with the date of transfer, the
amount of its assets and liabilities, and the names and places of residence of
its officers, and from time to time such other or additional records,
statements, lists, and information as may be required by law, including the
shareholder lists mentioned in these By-laws.
Section 4. Inspection of Records. A shareholder, if he is entitled and
demands to inspect the records of the corporation pursuant to any statutory or
other legal right, shall be privileged to inspect such records only during the
usual and customary hours of business and in such manner as will not unduly
interfere with the regular conduct of the business of the corporation. In order
to exercise this right of examination, a shareholder must make written demand
upon the corporation, stating with particularity the records sought to be
examined and the purpose therefor. A shareholder may delegate his right of
inspection to his representative on the condition that, if the representative is
not an attorney, the shareholder and representative agree with the corporation
to furnish to the corporation, promptly as completed or made, a true and correct
copy of each report with respect to such inspection made by such representative.
No shareholder shall use or permit to be used or acquiesce in the use by others
of any information so obtained, to the detriment competitively of the
corporation, nor shall he furnish or permit to be furnished any information so
obtained to any competitor or prospective competitor of the corporation.
<PAGE>
The corporation may, as a condition precedent to any shareholder's
inspection of the records of the corporation, require the shareholder to
indemnify the corporation against any loss or damage which may be suffered by it
arising out of or resulting from any unauthorized disclosure made or permitted
to be made by such shareholder or any representative or financial advisor of the
shareholder of information obtained in the course of such inspection. The
corporation may, as a further condition precedent to any shareholder's
inspection of the records of the corporation, also require the shareholder to
execute and deliver to the corporation a confidentiality agreement in which the
shareholder: (i) acknowledges that the corporation is engaged in a highly
competitive economic environment, that the nonpublic records of the corporation
are secret and confidential, and that the corporation would suffer material
adverse financial consequences if competitors or other entities with which the
corporation does business should gain access to nonpublic information contained
in the records of the corporation; (ii) agrees that he will not, directly or
indirectly, without the corporation's prior written consent, disclose any
nonpublic information obtained from the records of the corporation to any party
other than the shareholder's representative or personal financial advisor; and
(iii) agrees to instruct his representative and any personal financial advisor
not to disclose, directly or indirectly, without the corporation's prior written
consent, any such nonpublic information received and that no applicable
professional-client privileges shall be waived. The corporation may also require
any representative or personal financial advisor of a shareholder to sign a
confidentiality agreement containing substantially the provisions described
above as a condition precedent to inspection of the records of the corporation.
As used herein, "nonpublic" information is all information other than: (a) what
the corporation has filed with a governmental agency and which (i) was not
designated as confidential, secret, proprietary, or the like and (ii) is
generally open to public inspection in accordance with applicable laws, rules,
and regulations; and (b) what the corporation has released to the press or other
media for general publication.
ARTICLE II
Corporate Seal
--------------
Section 1. Corporate Seal. The corporate seal, if any, shall have
inscribed thereon the name of the corporation. Said seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
ARTICLE III
Shareholders
------------
Section 1. Place of Meetings. All meetings of the shareholders shall be
held at the principal business office of the corporation, except such meetings
as the Board of Directors to the extent permissible by law expressly determines
<PAGE>
shall be held elsewhere, in which case such meetings may be held, upon notice
thereof as herein provided, at such other place or places, within or without the
State of Delaware, as said Board of Directors shall determine and as shall be
stated in such notice; and, unless specifically prohibited by law, any meeting
may be held at any place and time, and for any purpose if consented to in
writing by all of the shareholders entitled to vote thereat.
Section 2. Annual Meeting. An annual meeting of the shareholders shall
be held on such day in the month of December each year, and at such time on that
day, as shall be determined by the Board of Directors, at which time the
shareholders shall elect directors to succeed those whose terms expire and
transact such other business as may properly come before the meeting.
Section 3. Special Meetings. Special meetings of the shareholders may
be called by the Chairman of the Board (if any), the President, by the Board of
Directors, or by the holders of such percentage and class(es) of outstanding
shares as the Certificate of Incorporation may specifically permit, and shall be
held on such date and at such time as the Chairman of the Board (if any), the
President, or the Board of Directors shall fix.
Section 4. No Shareholder Action Without a Meeting. Actions by the
shareholders shall be taken only at annual or special meetings, and shareholders
may not act by written consent. This Section may not be altered, amended, or
repealed except by the vote of at least two-thirds of the full Board of
Directors or by the holders of such percentage and class(es) of the issued and
outstanding shares entitled to vote thereon as may be specifically provided for
in the Certificate of Incorporation; and if not so specifically provided, then
by a majority of the class(es) of shares entitled to vote for the election of
directors.
Section 5. Notice of Meetings. Written or printed notice stating the
place, day, and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not less
than ten nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the Board of Directors, the
Chairman of the Board (if any), the President, or the Secretary, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail in a
sealed envelope addressed to the shareholder at his address as it appears on the
records of the corporation, with postage thereon prepaid.
Section 6. Presiding Officials. Every meeting of the shareholders for
whatever object, shall be convened (in the order shown, unless otherwise
determined by resolution of the Board of Directors) by the Chairman of the Board
(if any), or by the President, or by the officer who called the meeting by
notice as above provided; but it shall be presided over by the officers
specified elsewhere in these By-laws.
<PAGE>
Section 7. Waiver of Notice. Whenever any notice is required to be
given under the provisions of these By-laws, the Certificate of Incorporation of
the corporation, or any law, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before, at, or after the time stated
therein, shall be deemed the equivalent of the giving of such notice. To the
extent provided by law, attendance at any meeting shall constitute a waiver of
notice of such meeting.
Section 8. Business Transacted at Annual Meetings. At each annual
meeting of the shareholders, the shareholders shall elect a Board of Directors
to hold office until the next succeeding annual meeting, or, in the case of a
classified Board of Directors, the shareholders shall elect Directors to fill
those director positions the terms of which are set to expire at that annual
meeting of shareholders; and they may transact such other business as may be
desired, whether or not the same was specified in the notice of the meeting,
unless the consideration of such other business without its having been
specified in the notice of the meeting as one of the purposes thereof is
prohibited by law, the corporation's Certificate of Incorporation, or any other
provision of these By-laws.
Section 9. Business Transacted at Special Meetings. Business transacted
at all special meetings of the shareholders shall be confined to the purposes
stated in the notice of such meetings, unless the transaction of other business
is consented to by the holders of all of the outstanding shares of stock of the
corporation entitled to vote thereat.
Section 10. Quorum. Except as may be otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the voting shares
issued and outstanding and entitled to vote for the election of directors,
whether present in person or by proxy, shall constitute a quorum for the
transaction of business at all meetings of the shareholders. Every decision of a
majority in amount of shares of such quorum shall be valid as a corporate act,
except in those specific instances in which a larger vote is required by law, by
these By-laws, or by the Certificate of Incorporation. If, however, such quorum
should not be present at any meeting, the shareholders present and entitled to
vote shall have the power successively to adjourn the meeting, without notice
other than announcement at the meeting, to a specified date not longer than
ninety days after such adjournment. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting of which the shareholders were originally notified.
However, if the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given in the manner otherwise provided herein to each
shareholder of record entitled to vote at such adjourned meeting. Withdrawal of
shareholders from any meeting shall not cause the failure of a duly constituted
quorum at such meeting.
<PAGE>
Section 11. Proxies. At any meeting of the shareholders every
shareholder having the right to vote shall be entitled to vote in person, or by
vesting another person with authority to exercise the voting power of any or all
of his stock by executing in writing any voting trust agreement, proxy, or any
other type of appointment form or agreement, except as may be expressly limited
by law or by the Certificate of Incorporation. Any copy, facsimile
telecommunication, or other reliable reproduction of any writing referred to in
this Section may be used in lieu of the original writing for any and all
purposes for which the original writing could be used, provided that such copy,
facsimile telecommunication, or other reproduction shall be a complete
reproduction of the entire original writing. No proxy shall be valid after three
years from the date of its execution, unless otherwise provided in the proxy.
Section 12. Voting. Each shareholder shall have one vote (or such other
number of votes as may be specifically provided) for each share of stock
entitled to vote under the provisions of the Certificate of Incorporation which
is registered in his name on the books of the corporation; in all elections of
directors of the corporation, each share of stock entitled to vote shall be
entitled to one vote as to each director to be elected by the holders thereof
and no shareholder shall have the right to cast votes in the aggregate or to
cumulate his votes for the election of any director, and cumulative voting of
shares in elections of directors is hereby specifically negated. All elections
for directors shall be determined by a plurality of the votes cast. All other
matters, except as required by law or the Certificate of Incorporation, shall be
determined by a majority of the votes cast. Any shareholder who is in attendance
at a meeting of the shareholders either in person or by proxy, but who abstains
from voting on any matter, shall not be deemed present or represented at such
meeting for purposes of the preceding sentence with respect to such vote, but
shall be deemed present or represented for all other purposes.
The rights and powers of the holders of any class or series of
preferred stock with respect to the election of directors shall be only as may
be duly designated with respect to such class or series and as is consistent
with the provisions of the Certificate of Incorporation.
All elections of directors shall be by written ballot, unless otherwise
provided in the Certificate of Incorporation.
No person shall be permitted to vote any shares belonging to the
corporation.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine.
<PAGE>
Shares standing in the name of a deceased person may be voted by his
personal representative either in person or by proxy. Shares standing in the
name of a conservator or trustee may be voted by such fiduciary, either in
person or by proxy, but no conservator or trustee shall be entitled as such
fiduciary to vote shares held by him without transfer of such shares into his
name.
Shares standing in the name of a receiver, and shares held by or under
the control of a receiver may be voted by such receiver without the transfer
thereof into his name if authority to do so is contained in an appropriate order
of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares transferred;
provided, however, that if the pledgor in the transfer on the books of the
corporation has expressly empowered the pledgee to vote the shares, only the
pledgee, or his proxy, may represent any such shares.
Shares standing in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, shall be represented or voted in accordance with
Section 217 of the Delaware General Corporation Law, as amended from time to
time.
Section 13. Registered Shareholders. The corporation shall be entitled
to treat the holder of any share or shares of stock of the corporation, as
recorded on the stock record or transfer books of the corporation, as the holder
of record and as the holder and owner in fact thereof and, accordingly, shall
not be required to recognize any equitable or other claim to or interest in such
share(s) on the part of any other person, firm, partnership, corporation or
association, whether or not the corporation shall have express or other notice
thereof, save as is otherwise expressly required by law. The term shareholder as
used in these By-laws means one who is a holder of record of shares of the
corporation.
Section 14. Shareholder Lists. A complete list of the shareholders
entitled to vote at each meeting of the shareholders, arranged in alphabetical
order, with the address of, and the number of voting shares held by each, shall
be prepared by the officer of the corporation having charge of the stock
transfer books of the corporation, and shall for a period of ten days prior to
the meeting be kept on file either at the place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held,
and shall at any time during ordinary business hours be subject to inspection by
any shareholder. A similar or duplicate list shall also be produced and kept
open for the inspection of any shareholder during the whole time of the meeting.
<PAGE>
The original share ledger or transfer book, or a duplicate thereof kept in the
State of Delaware, shall be prima facie evidence as to who are shareholders
entitled to examine such list, ledger, or transfer book or to vote at any
meeting of shareholders. Failure to comply with the foregoing shall not affect
the validity of any action taken at any such meeting.
Section 15. Removal of Directors. Except as otherwise provided in the
Certificate of Incorporation or by law, the shareholders shall have the power by
an affirmative vote of a majority of the outstanding shares then entitled to
vote for the election of directors at any regular meeting or special meeting
expressly called for that purpose, to remove any director from office with or
without cause. Such meeting shall be held at any place prescribed by law or at
any other place which may, under law, permissibly be, and which is, designated
in the notice of the special meeting. If cumulative voting applies to the
election of directors and if less than the entire Board is to be removed, no 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 entire
Board of Directors.
Section 16. Nomination of Directors. Nominations of persons for
election to the Board of Directors of the corporation at a meeting of the
shareholders may be made by or at the direction of the Board of Directors or may
be made at a meeting of shareholders by any shareholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the procedures set forth in this Section. Such nominations, other than those
made by or at the direction of the Board, shall be made by delivering timely
notice in writing to the Secretary of the corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal office of the corporation not less than one hundred twenty days nor
more than one hundred eighty days prior to the anniversary of the previous
year's Annual Meeting of Shareholders. To be valid, such shareholder's notice to
the Secretary shall set forth: (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address, and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the number of shares of stock of
the corporation that are beneficially owned by the person, and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (whether or not the
provisions of such Regulation are then applicable to the corporation), provided,
however, that nothing in this Section is intended to create or imply any
obligation on the part of the corporation to include within the corporation's
proxy solicitation materials, if any, any materials or information regarding
persons nominated for election to the Board of Directors by shareholders of the
corporation; and (b) as to the shareholder giving notice (i) the name and record
address of the shareholder and (ii) the number of shares of stock of the
corporation that are beneficially owned by the shareholder. The corporation may
<PAGE>
require any proposed nominee to furnish such other information as may be
reasonably required by the Board of Directors to determine the eligibility of
such proposed nominee to serve as director of the corporation. No person shall
be eligible for election as a director of the corporation at a meeting of the
shareholders unless nominated in accordance with the procedures set forth
herein. The chairman of the meeting shall, if the facts warrant, determine and
declare that a nomination was not made in accordance with the foregoing
procedure, in which case the defective nomination shall be disregarded.
Section 17. Proposals for Annual Meeting. Shareholder proposals
intended for presentation at the annual meeting of shareholders must comply as
respects time of submission, contents, and otherwise with Rule 14a-8 promulgated
by the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended from time to time (whether or not the provisions of Rule
14a-8 are then applicable to the corporation). Any shareholder proposal that is
advisory or precatory in nature and which requests the Board of Directors to
take any action shall require the affirmative vote of a majority of the shares
entitled to vote for the election of directors in order for any resolution,
shareholder referendum, or the like embodying such proposal to be adopted.
ARTICLE IV
Directors
---------
Section 1. Qualifications and Number. Each director shall be a natural
person who is at least eighteen years of age. A director need not be a
shareholder, a citizen of the United States, or a resident of the State of
Missouri unless required by law or the Articles of Incorporation.
Unless and until changed, the number of directors to constitute the
full Board of Directors shall be five (5). The Board of Directors, if, to the
extent, and in such manner as may be permitted by the Certificate of
Incorporation and by law, shall have the power to change the number of
directors, in which case any notice required by law of any such change shall be
duly given. If the power to change these by-law provisions concerning the number
of directors is not granted to the Board of Directors, such power shall be
exercised by such vote of the shareholders entitled to vote as may be required
in the Certificate of Incorporation; and if no specific vote of the shareholders
is required, then by a majority of the shareholders then entitled to vote.
Section 2. Classification of the Board. Upon the initial election of
directors of the corporation, if the Certificate of Incorporation then divides
the Board of Directors into classes, or following the effective date of any
amendment to the Certificate of Incorporation of the corporation dividing the
Board of Directors into classes, the Board of Directors shall, at its next
regular meeting or at a special meeting at which a quorum is present and voting,
designate three (3) classes of directors. Each class shall be as nearly equal in
<PAGE>
number as may be, and shall be designated respectively Class A, Class B, and
Class C.
By resolution adopted by majority vote, each director shall be
designated as a member of any one of Class A, Class B, or Class C, thereby
effecting the initial designation of directors. The directors initially
designated as Class A directors shall serve an initial term of one year,
measured from the time of their most recent election by the shareholders, and
thereafter Class A directors shall hold office for a term of three years. The
directors initially designated as Class B directors shall serve an initial term
of two years, measured from the time of their most recent election by the
shareholders, and thereafter Class B directors shall hold office for a term of
three years. The directors initially designated as Class C directors shall serve
an initial term of three years, measured from the time of their most recent
election by the shareholders, and thereafter Class C directors shall hold office
for a term of three years.
At the first annual meeting of shareholders held after the time when
the Board of Directors has acted to initially designate the members of the Board
of Directors as Class A, Class B, and Class C, and every third year thereafter,
the shareholders of the corporation shall elect Class A directors, and the term
of office of each shall be for three years. At the second annual meeting of
shareholders held after the time when the Board of Directors has acted to so
designate the members of the Board of Directors into classes, and every third
year thereafter, the shareholders of the corporation shall elect Class B
directors, and the term of office of each shall be three years. At the third
annual meeting of shareholders held after the time when the Board of Directors
has acted to so designate the members of the Board of Directors into classes,
and every third year thereafter, the shareholders of the corporation shall elect
Class C directors, and the term of office of each shall be for three years.
Section 3. Powers of the Board. The property and business of the
Corporation shall be managed by the directors, acting as a Board. The Board
shall have and is vested with all and unlimited powers and authorities, except
as may be expressly limited by law, the Certificate of Incorporation, or these
By-laws, to do or cause to be done any and all lawful things for and on behalf
of the corporation (including, without limitation, the declaration of dividends
on the outstanding shares of the corporation and the payment thereof in cash,
property or shares), and to exercise or cause to be exercised any or all of its
powers, privileges and franchises, and to seek the effectuation of its objects
and purposes.
Section 4. Annual Meeting of the Board, Notice. Any continuing members
and newly elected members of the Board shall meet: (i) immediately following the
conclusion of the annual meeting of the shareholders for the purpose of electing
officers and for such other purposes as may come before the meeting, and the
<PAGE>
time and place of such meeting shall be announced at the annual meeting of the
shareholders by the chairman of such meeting, and no other notice to any
continuing or newly elected directors shall be necessary in order to legally
constitute the meeting, provided a quorum of the directors shall be present; or
(ii) if no meeting immediately following the annual meeting of shareholders is
announced, at such time and place, either within or without the State of
Delaware, as may be suggested or provided for by resolution of the shareholders
at their annual meeting and no other notice of such meeting shall be necessary
to newly elected directors in order to legally constitute the meeting, provided
a quorum of the directors shall be present; or (iii) if not so suggested or
provided for by resolution of the shareholders or if a quorum of the directors
shall not be present, at such time and place as may be consented to in writing
by a majority of any continuing and newly elected directors, provided that
written or printed notice of such meeting shall be given to each of any
continuing and newly elected directors in the same manner as provided in these
By-laws with respect to the notice for special meetings of the Board, except
that it shall not be necessary to state the purpose of the meeting in such
notice; or (iv) regardless of whether or not the time and place of such meeting
shall be suggested or provided for by resolution of the shareholders at the
annual meeting, at such time and place as may be consented to in writing by all
of any continuing and newly elected directors. Each director, upon his election,
shall qualify by accepting the office of director, and his attendance at, or his
written approval of the minutes of, any meeting of the Board that included newly
elected directors shall constitute his acceptance of such office; or he may
execute such acceptance by a separate writing, which shall be placed in the
minute book.
Section 5. Regular Meetings, Notice. Regular meetings of the Board may
be held at such times and places either within or without the State of Delaware
as shall from time to time be fixed by resolution adopted by a majority of the
full Board of Directors. No notice of any regular meeting need be given other
than by announcement at the immediately preceding regular meeting and
communicated in writing to all absent directors; provided, however, that written
notice of any regular meeting of the Board of Directors stating the place, day,
and hour of such meeting shall be given if required by resolution adopted by the
Board of Directors. Any business may be transacted at a regular meeting. Neither
the business to be transacted at nor the purpose need be specified in any notice
or waiver of notice of any regular meeting of the Board of Directors.
Section 6. Special Meetings, Notice. Special meetings of the Board may
be called at any time by the Chairman of the Board (if any), the President, or
by one-third of the directors (rounded up to the nearest whole number). The
place may be within or without the State of Delaware as designated in the
notice.
Written notice of each special meeting of the Board, stating the place,
day, and hour of the meeting shall be given to each director at least two days
<PAGE>
before the date on which the meeting is to be held. The notice shall be given
(i) in the manner provided for in these By-laws or (ii) may be given
telephonically, if confirmed promptly in writing, in which case the notice shall
be deemed to have been given at the time of telephonic communication. The notice
may be given by any officer directed to do so by any officer having authority to
call the meeting or by the director(s) who have called the meeting.
Neither the business to be transacted at nor the purpose need be
specified in the notice or any waiver of notice of any special meeting of the
Board of Directors.
Section 7. Action in Lieu of Meetings. Unless otherwise restricted by
the Certificate of Incorporation or these By-laws or by law, any action required
to be taken at a meeting of the Board of Directors or any other action which may
be taken at a meeting of the Board of Directors may be taken without a meeting
if a consent in writing setting forth the action so taken shall be signed by all
the directors entitled to vote with respect to the subject matter thereof. Any
such consent signed by all the directors shall have the same effect as a
unanimous vote and may be stated as such in any document describing the action
taken by the Board of Directors.
Section 8. Meetings by Conference Telephone or Similar Communications
Equipment. Unless otherwise restricted by the Certificate of Incorporation or
these By-laws or by law, members of the Board of Directors of the corporation,
or any committee designated by such Board, may participate in a meeting of such
Board or committee by means of conference telephone or similar communications
equipment whereby all persons participating in the meeting can hear each other,
and participation in a meeting in such manner shall constitute presence in
person at such meeting.
Section 9. Quorum. At all meetings of the Board a majority of the full
Board of Directors shall, unless a greater number as to any particular matter is
required by the Certificate of Incorporation or these By-laws, constitute a
quorum for the transaction of business. The act of a majority of the directors
present at any meeting at which there is a quorum, except as may be otherwise
specifically provided by law, by the Certificate of Incorporation, or by these
By-laws, shall be the act of the Board of Directors. A director who is in
attendance at a meeting of the Board of Directors but who abstains from voting
on a matter shall not be deemed present at such meeting for purposes of the
preceding sentence with respect to such vote, but shall be deemed present at
such meeting for all other purposes. Withdrawal by a director from any meeting
at which a duly constituted quorum is present shall not cause the failure of the
quorum.
Less than a quorum may adjourn a meeting successively until a quorum is
present, and no notice of adjournment shall be required.
<PAGE>
Section 10. Waiver of Notice; Attendance at Meeting. Any notice
provided or required to be given to the directors may be waived in writing by
any of them, whether before, at, or after the time stated therein.
Attendance of a director at any meeting shall constitute a waiver of
notice of such meeting except where the director attends for the express
purpose, and so states at the opening of the meeting, of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 11. Vacancies. If the office of any director is or becomes
vacant by reason of death, resignation, or due to an increase in the number of
directors, a majority of the survivors or remaining directors, though less than
a quorum, may appoint a director to fill the vacancy until a successor shall
have been duly elected at a shareholders' meeting.
Section 12. Executive Committee. The Board of Directors may, by
resolution passed by a majority of the full Board, designate an executive
committee, such committee to consist of two or more directors of the
corporation. Such committee, except to the extent limited in said resolution,
shall have and may exercise all of the powers of the Board of Directors in the
management of the corporation. The members constituting the executive committee
shall be determined from time to time by resolution adopted by a majority of the
full Board; and any director may vote for himself as a member of the executive
committee. In no event, however, shall the executive committee have any
authority to amend the Certificate of Incorporation, to adopt any plan of merger
or consolidation with another corporation or corporations, to recommend to the
shareholders the sale, lease, exchange, mortgage, pledge, or other disposition
of all or substantially all of the property and assets of the corporation if not
made in the usual and regular course of its business, to recommend to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
to amend, alter, or repeal the By-laws of the corporation, to elect or remove
officers of the corporation or members of the executive committee, to fix the
compensation of any member of the executive committee, to declare any dividend,
or to amend, alter, or repeal any resolution of the Board of Directors which by
its terms provides that it shall not be amended, altered, or repealed by the
executive committee.
The executive committee shall keep regular minutes of its proceedings
and the same shall be recorded in the minute book of the corporation. The
Secretary or an Assistant Secretary of the corporation may act as secretary for
the executive committee if the executive committee so requests.
Section 13. Other Committees. The Board of Directors may, by resolution
passed by a majority of the full Board, designate one or more standing or ad hoc
<PAGE>
committees, each committee to consist of two or more of the directors of the
corporation and such other person(s) as may be appointed as advisory members
under authority provided in the resolution. Each such committee, to the extent
provided in the resolution and permitted by law, shall have and may exercise the
power of the Board of Directors. The members constituting each such committee
shall be determined from time to time by resolution adopted by a majority of the
full Board; and any director may vote for himself as a member of any such
committee.
Each such committee shall, to the extent required by resolution of the
Board of Directors (or, in the absence of any such resolution, to the extent a
majority of its members determines is appropriate) keep minutes of its
proceedings and the same shall be recorded in the minute book of the
corporation. The Secretary or Assistant Secretary of the corporation may act as
secretary for any such committee if the committee so requests.
Section 14. Compensation of Directors and Committee Members. Directors
and members of all committees shall receive such compensation for their services
as may be determined from time to time by resolution adopted from time to time
by the Board, as well as such expenses, if any, as may be allowed pursuant to
resolution adopted from time to time by the Board. No such resolution shall be
deemed voidable or invalid by reason of the personal or pecuniary interest of
the directors or any director in adopting it. Nothing herein contained shall be
construed to preclude any director or committee member from serving the
corporation in any other capacity and receiving compensation therefor.
Section 15. Protection of Director for Reliance on Corporate Records.
No director shall be liable for dividends legally declared, distributions
legally made to shareholders, or any other action taken in reliance in good
faith upon financial statements of the corporation represented to him to be
correct by the Chairman of the Board (if any), the President, or the officer of
the corporation having charge of the books of account, or certified by an
accountant to fairly represent the financial condition of the corporation; nor
shall any such director be liable for determining in good faith the amount
available for dividends or distributions by considering the assets to be of
their book values.
<PAGE>
ARTICLE V
Officers
--------
Section 1. Officers--Who Shall Constitute. The officers of the
corporation shall be a President, one or more Vice Presidents, a Secretary, a
Treasurer, one or more Assistant Secretaries, and one or more Assistant
Treasurers. The Board shall elect or appoint a President and Secretary at its
first meeting and at each annual meeting of the Board of Directors which shall
follow the annual meeting of the shareholders. The Board then, or from time to
time, may also elect or appoint one or more of the other prescribed officers as
it shall deem advisable, but need not elect or appoint any officers other than a
President and a Secretary. The Board may, if it desires, further identify or
describe any one or more of such officers.
An officer need not be a shareholder unless required by law or the
Certificate of Incorporation. Any two or more of such offices may be held by the
same person.
An officer shall be deemed qualified when he enters upon the duties of
the office to which he has been elected or appointed and furnishes any bond
required by the Board; but the Board may also require of such person his written
acceptance and promise faithfully to discharge the duties of such office.
Section 2. Term of Office. Each officer of the corporation shall hold
his office for the term for which he was elected, or until he resigns or is
removed by the Board, whichever first occurs.
Section 3. Appointment of Officers and Agents--Terms of Office. The
Board from time to time may also appoint such other officers and agents for the
corporation as it shall deem necessary or advisable. All appointed officers and
agents shall hold their respective positions at the pleasure of the Board or for
such terms as the Board may specify, and they shall exercise such powers and
perform such duties as shall be determined from time to time by the Board, or by
an elected officer empowered by the Board to make such determination.
Section 4. Removal. Any officer or agent elected or appointed by the
Board of Directors, and any employee, may be removed or discharged by the Board
whenever in its judgment the best interests of the corporation would be served
thereby, but such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights.
Section 5. Salaries and Compensation. Salaries and compensation of all
elected officers of the corporation shall be fixed, increased or decreased by
<PAGE>
the Board of Directors, but this power may, unless prohibited by law, be
delegated by the Board to the Chairman of the Board (if any) or to the President
(except as to their own compensation), or to a committee. Salaries and
compensation of all other appointed officers and agents, and employees of the
corporation, may be fixed, increased or decreased by the Board of Directors or a
committee thereof, but until action is taken with respect thereto by the Board
of Directors or a committee thereof, the same may be fixed, increased or
decreased by the Chairman of the Board (if any), the President, or by such other
officer or officers as may be empowered by the Board of Directors or a committee
thereof to do so.
Section 6. Delegation of Authority to Hire, Discharge, Etc. The Board,
from time to time, may delegate to the Chairman of the Board (if any), the
President, or any other officer or executive employee of the corporation,
authority to hire, discharge, and fix and modify the duties, salary, or other
compensation of employees of the corporation under their jurisdiction; and the
Board may delegate to such officer or executive employee similar authority with
respect to obtaining and retaining for the corporation the services of
attorneys, accountants, and other experts.
Section 7. The President. The President shall be the chief executive
officer of the corporation. Except as otherwise provided for in these By-laws,
the President shall preside at all meetings of the Shareholders and Directors.
The President shall have general and active management of the business of the
corporation and shall carry into effect all directions and resolutions of the
Board.
The President may execute all bonds, notes, debentures, mortgages and
other contracts requiring a seal to be affixed thereto, and all other
instruments for and in the name of the corporation.
The President, when authorized to do so by the Board, may execute
powers of attorney from, for, and in the name of the corporation, to such proper
person or persons as he may deem fit, in order that thereby the business of the
corporation may be furthered or action taken as may be deemed by him necessary
or advisable in furtherance of the interests of the corporation.
The President, except as may be otherwise directed by the Board, shall
be authorized to attend meetings of shareholders of other corporations to
represent this corporation thereat and to vote or take action with respect to
the shares of any such corporation owned by this corporation in such manner as
he shall deem to be for the interest of the corporation or as may be directed by
the Board.
The President shall, unless the Board otherwise provides, be ex officio
a member of all standing committees. The President shall have such general (and
<PAGE>
concurrent) executive powers and duties of supervision and management as are
usually vested in the office of the chief executive of a corporation.
The President shall have such other or further duties and authority as
may be prescribed elsewhere in these By-laws or from time to time by the Board
of Directors, and the Board may from time to time divide the responsibilities,
duties, and authority between them to such extent as it may deem advisable.
Section 8. Vice Presidents. The Vice Presidents, in the order of their
seniority as determined by the Board, shall, in the absence, disability or
inability to act of the President, perform the duties and exercise the powers of
the President, and shall perform such other duties as the Board of Directors
shall from time to time prescribe.
Section 9. The Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board and except as otherwise provided for in these
By-laws, all meetings of the shareholders, and shall record or cause to be
recorded all votes taken and the minutes of all proceedings in a minute book of
the corporation to be kept for that purpose. The Secretary shall perform like
duties for the executive and other standing committees when requested by the
Board or such committee to do so.
The Secretary shall have the principal responsibility to give, or cause
to be given, notice of all meetings of the shareholders and of the Board of
Directors, but this shall not lessen the authority of others to give such notice
as is authorized elsewhere in these By-laws.
The Secretary shall see that all books, records, lists and information,
or duplicates, required to be maintained at the registered office or at some
office of the corporation in Delaware, or elsewhere, are so maintained.
The Secretary shall keep in safe custody the seal of the corporation,
and when duly authorized to do so, shall affix the same to any instrument
requiring it, and when so affixed, shall attest the same by his signature.
The Secretary shall perform such other duties and have such other
authority as may be prescribed elsewhere in these By-laws or from time to time
by the Board of Directors or the President, under whose direct supervision the
Secretary shall be.
The Secretary shall have the general duties, powers and
responsibilities of a Secretary of a corporation.
The Assistant Secretaries, in the order of their seniority, in the
absence, disability, or inability to act of the Secretary, shall perform the
<PAGE>
duties and exercise the powers of the Secretary, and shall perform such other
duties as the Board may from time to time prescribe.
Section 10. The Treasurer and Assistant Treasurers. The Treasurer shall
have responsibility for the safekeeping of the funds and securities of the
corporation, and shall keep or cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the corporation. The Treasurer
shall keep, or cause to be kept, all other books of account and accounting
records of the corporation, and shall deposit or cause to be deposited all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse, or permit to be disbursed, the funds of
the corporation as may be ordered, or authorized generally, by the Board and
shall render to the chief executive officer of the corporation and the
directors, whenever they may require it, an account of all his transactions as
Treasurer and of those under his jurisdiction, and of the financial condition of
the corporation.
The Treasurer shall perform such other duties and shall have such other
responsibility and authority as may be prescribed elsewhere in these By-laws or
from time to time by the Board of Directors.
The Treasurer shall have the general duties, powers and responsibility
of a Treasurer of a corporation, and shall be the chief financial and accounting
officer of the corporation.
If required by the Board, the Treasurer shall give the corporation a
bond in a sum and with one or more sureties satisfactory to the Board for the
faithful performance of the duties of his office, and for the restoration to the
corporation, in the case of his death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control which belong to the corporation.
The Assistant Treasurers in the order of their seniority shall, in the
absence, disability or inability to act of the Treasurer, perform the duties and
exercise the powers of the Treasurer, and shall perform such other duties as the
Board of Directors shall from time to time prescribe.
Section 11. Bond. At the option of the Board of Directors, any officer
may be required to give bond for the faithful performance of his duties.
Section 12. Checks and Other Instruments. All checks, drafts, notes,
acceptances, bills of exchange and other negotiable and non-negotiable
<PAGE>
instruments and obligations for the payment of money, and all contracts, deeds,
mortgages, and all other papers and documents whatsoever, unless otherwise
provided for by these By-laws, shall be signed by such officer or officers or
such other person or persons and in such manner as the Board of Directors from
time to time shall designate. If no such designation is made, and unless and
until the Board otherwise provides, the Chairman of the Board (if any) or the
President and the Secretary, or the Chairman of the Board (if any) or the
President and the Treasurer, shall have power to sign all such instruments for,
and on behalf of and in the name of the corporation, which are executed or made
in the ordinary course of the corporation's business.
Section 13. Duties of Officers May be Delegated. If any officer of the
corporation shall be absent or unable to act, or for any other reason the Board
may deem sufficient, the Board may delegate, for the time being, some or all of
the functions, duties, powers and responsibilities of any officer to any other
officer, or to any other agent or employee of the corporation or other
responsible person, provided a majority of the then sitting Board concurs
therein.
ARTICLE VI
Shares of Stock
---------------
Section 1. Payment for Shares of Stock. The corporation shall not issue
shares of stock except for (i) cash received, (ii) labor done or services
actually received, (iii) real property or personal property actually received,
(iv) leases of real property, or (v) a combination thereof; provided, however,
that shares may also be issued (vi) in consideration of the cancellation of
valid bona fide antecedent debts, (vii) as stock dividends, (viii) pursuant to
stock splits, reverse stock splits, stock combinations, reclassifications of
outstanding shares into shares of another class or classes, exchanges of
outstanding shares for shares of another class or classes, or (ix) other bona
fide changes respecting outstanding shares. Notwithstanding the foregoing, so
long as the corporation receives aggregate consideration in the forms specified
in subclauses (i) through (v) above in an amount equal to the par value or
stated value allocated to capital of the shares issued, it may accept a binding
obligation from a subscriber or purchaser for the balance of the consideration
due for such shares. The corporation may also issue partly paid shares pursuant
to the provisions of Section 156 of the Delaware General Corporation Law, as
amended from time to time.
Section 2. Certificates for Shares of Stock. The certificates for
shares of stock of the corporation shall be numbered, shall be in such form as
may be prescribed by the Board of Directors in conformity with law, and shall be
entered in the stock books of the corporation as they are issued, and such
entries shall show the name and address of the person, firm, partnership,
corporation, or association to whom each certificate is issued. Each certificate
<PAGE>
shall have printed, typed, or written thereon the name of the person, firm,
partnership, corporation, or association to whom it is issued, and number of
shares represented thereby and shall be signed by the Chairman of the Board (if
any) or the President or a Vice President, and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the corporation and
sealed with the seal of the corporation, which seal may be facsimile, engraved
or printed. If the corporation has a registrar, a transfer agent, or a transfer
clerk who actually signs such certificates, the signature of any of the other
officers above mentioned may be facsimile, engraved, or printed. In case any
such officer who has signed or whose facsimile signature has been placed upon
any such certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nevertheless be issued by the
corporation with the same effect as if such officer were an officer at the date
of its issue.
Section 3. Lost or Destroyed Certificates. In case of the loss or
destruction of any certificate for shares of stock of the corporation, upon due
proof of the registered owner thereof or his representative, by affidavit of
such loss or otherwise, the Chairman of the Board (if any) or the President and
Secretary may issue a duplicate certificate or replacement certificate in its
place, upon the corporation being fully indemnified therefor. Any such officer
may request the posting of an indemnity bond in favor of the corporation
whenever and to the extent that they deem appropriate as a precondition to the
issuance of any duplicate or replacement certificate.
Section 4. Transfers of Shares, Transfer Agent, Registrar. Transfers of
shares of stock shall be made on the stock record or transfer books of the
corporation only by the person named in the stock certificate, or by his
attorney lawfully constituted in writing, and upon surrender of the certificate
therefor. The stock record book and other transfer records shall be in the
possession of the Secretary (or other person appointed and empowered by the
Board to do so) or of a transfer agent or clerk for the corporation. The
corporation, by resolution of the Board, may from time to time appoint a
transfer agent, and, if desired, a registrar, under such arrangements and upon
such terms and conditions as the Board deems advisable; but until and unless the
Board appoints some other person, firm, or corporation as its transfer agent
(and upon the revocation of any such appointment, thereafter until a new
appointment is similarly made) the Secretary of the corporation (or other person
appointed and empowered by the Board) shall be the transfer agent or clerk of
the corporation, without the necessity of any formal action of the Board, and
the Secretary or other person shall perform all of the duties thereof.
Section 5. Record Date. The Board of Directors shall have the power to
fix in advance a date not exceeding sixty days preceding nor less than ten days
preceding the date of any meeting of shareholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of shares shall go into effect, as a record
date for the determination of the shareholders entitled to notice of, and to
<PAGE>
vote at, the meeting or any adjournment thereof, or entitled to receive payment
of the dividends, or entitled to the allotment of rights, or entitled to
exercise the rights in respect of the change, conversion, or exchange of shares.
In such case, only the shareholders who are shareholders of record on the record
date so fixed shall be entitled to such notice of, and to vote at, the meeting,
and any adjournment thereof (unless the Board of Directors fixes a new record
date with respect to the adjournment), or to receive payment of the dividend, or
to receive the allotment of rights, or to exercise the rights, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after the date of closing of the transfer books or the record date fixed as
aforesaid. If the Board of Directors does not set a record date for the
determination of the shareholders entitled to notice of, and to vote at, the
meeting and any adjournment of the meeting, the record date shall be the close
of business on the day next preceding the day on which notice is given; except
that, if prior to the meeting written waivers of notice of the meeting are
signed and delivered to the corporation by all of the shareholders of record at
the time the meeting is convened, only the shareholders who are shareholders of
record at the close of business on the day next preceding the day on which the
meeting is held shall be entitled to vote at the meeting and at any adjournment
of the meeting. If the Board of Directors does not set a record date with
respect to any dividend, allotment of rights, or exercise of rights in respect
of the change, conversion, or exchange of shares, the record date for such
purpose shall be the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
The record date for actions taken by consent of the shareholders shall
be determined in accordance with Section 213(b) of the Delaware General
Corporation Law, as amended from time to time.
Section 6. Fractional Share Interests or Scrip. The corporation may
issue fractions of a share and it may issue a certificate for a fractional
share, or by action of the Board of Directors, the corporation may issue in lieu
thereof it may issue scrip or other evidence of ownership which shall entitle
the holder to receive a certificate for a full share upon the surrender of such
scrip or other evidence of ownership aggregating a full share. A certificate for
a fractional share shall (but scrip or other evidence of ownership shall not,
unless otherwise provided by resolution of the Board of Directors) entitle the
holder to all of the rights of a shareholder, including without limitation the
right to exercise any voting right, or to receive dividends thereon or to
participate in any of the assets of the corporation in the event of liquidation.
The Board of Directors may cause such scrip or evidence of ownership (other than
a certificate for a fractional share) to be issued subject to the condition that
it shall become void if not exchanged for share certificates before a specified
date, or subject to the condition that the shares for which such scrip or
evidence of ownership is exchangeable may be sold by the corporation and the
proceeds thereof distributed to the holders of such scrip or evidence of
ownership, or subject to any other condition which the Board of Directors may
deem advisable.
<PAGE>
ARTICLE VII
Indemnification
---------------
Section 1. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses, including attorney fees,
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Actions By or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses, including attorney fees and amounts paid in settlement, actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was brought determines
upon application that, despite the adjudication of liability and in view of all
the circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
Section 3. Indemnity if Successful. To the extent that a director,
officer, employee, or agent of the corporation has been successful on the merits
or otherwise in defense of any action, suit, or proceeding referred to in
Sections 1 and 2 of this Article, or in defense of any claim, issue or matter
<PAGE>
therein, he shall be indemnified against expenses (including attorney fees)
actually and reasonably incurred by him in connection with the action, suit, or
proceeding.
Section 4. Standard of Conduct. Any indemnification under Sections 1
and 2 of this Article (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in this Article.
The determination shall be made (i) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit,
or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the shareholders by majority vote of
the shares eligible to vote for directors and actually voted, where shares held
by the individual about whom such indemnification is at issue shall not be
eligible to vote.
Section 5. Expenses. Expenses incurred in defending a civil or criminal
action, suit, or proceeding may be paid by the corporation in advance of the
final disposition of the action, suit, or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this Article.
Section 6. Nonexclusivity. The indemnification provided by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under the Certificate of Incorporation, these
By-laws, or any agreement, vote of the shareholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, personal representatives, and administrators of such a person.
Section 7. Further Indemnity Permissible. The corporation shall have
the power to give further indemnity, in addition to the indemnity authorized or
contemplated under the various sections of this Article, including Section 6
hereof, to any person who is or was a director, officer, employee, or agent, or
to any person who is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, provided such further indemnity is either
(i) authorized, directed, or provided for in the Certificate of Incorporation of
the corporation or a duly adopted amendment thereof or (ii) authorized,
directed, or provided for in these By-laws or in any agreement of the
corporation which has been adopted by the shareholders of the corporation, and
provided further that no such indemnity shall indemnify any person from or on
account of such person's conduct which has been finally adjudged to have been
<PAGE>
knowingly fraudulent, deliberately dishonest, or willful misconduct. Nothing in
this Section 7 shall be deemed to limit the power of the corporation under
Section 6 of this Article to enact By-laws or to enter into agreements without
shareholder adoption of the same.
Section 8. Insurance. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
Section 9. Corporation. For the purpose of this Article, references to
"the corporation" include all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation so
that any person who is or was a director or officer of such a constituent
corporation or is or was serving at the request of such constituent corporation
as a director or officer of another corporation, partnership, joint venture,
trust, or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
Section 10. Other Definitions. For purposes of this Article, the term
"other enterprise" shall include without limitation employee benefit plans; the
term "fines" shall include without limitation any excise taxes assessed on a
person with respect to an employee benefit plan; and the term "serving at the
request of the corporation" shall include without limitation any service as a
director, officer, employee, or agent of the corporation which imposes duties
on, or involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this Article.
Section 11. Indemnity for Agents and Employees. The corporation may, by
resolution duly adopted by a majority of the disinterested members of the Board
of Directors, grant such indemnity rights and reimbursement for such expenses as
it determines to be appropriate to any person who was or is a party to any
threatened, pending, or completed action or suit, whether civil, criminal,
administrative, or investigative, including any action by or in the right of the
corporation, by reason of the fact that such person is or was an agent or
employee of the corporation, or is or was serving as an agent or employee, at
<PAGE>
the request of the corporation, of another corporation, partnership, joint
venture, trust, or other enterprise. Any such grant of indemnification shall be
only to the extent so provided in the resolution granting indemnification, but
shall, in no event, be greater than the rights of indemnification and
reimbursement of expenses granted to directors and officers of this corporation.
ARTICLE VIII
General Provisions
------------------
Section 1. Fixing of Capital, Transfers of Surplus. Except as may be
specifically otherwise provided in the Certificate of Incorporation, the Board
of Directors is expressly empowered to exercise all authority conferred upon it
or the corporation by any law or statute, and in conformity therewith, relative
to:
The determination of what part of the consideration received for shares
of the corporation shall be capital;
Increasing capital;
Transferring surplus to capital;
The consideration to be received by the corporation for its shares; and
All similar or related matters;
provided that any concurrent action or consent by or of the corporation and its
shareholders required to be taken or given pursuant to law shall be duly taken
or given in connection therewith.
Section 2. Dividends. Ordinary dividends upon the shares of the
corporation, subject to the provisions of the Certificate of Incorporation and
applicable law, may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property, or in shares of its
stock.
Liquidating dividends or dividends representing a distribution of
paid-in surplus or a return of capital shall be made only when and in the manner
permitted by law.
Section 3. Creation of Reserves. Before the payment of any dividend,
there may be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in their
reasonable discretion, think proper as a reserve fund or funds, to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purposes as the Board of
<PAGE>
Directors shall determine in the best interests of the corporation, and the
Board may abolish any such reserve in the manner in which it was created.
Section 4. Fiscal Year. The Board of Directors shall have the paramount
power to fix, and from time to time, to change, the fiscal year of the
corporation. In the absence of action by the Board of Directors, however, the
fiscal year of the corporation shall be determined and signified by the filing
of the Corporation's first federal income tax return, and shall so continue
until such time, if any, as the fiscal year shall be changed by the Board of
Directors.
Section 5. Notices. Except as otherwise specifically provided herein
with respect to notice to shareholders or otherwise, or as otherwise required by
law, all notices required to be given by any provision of these By-laws shall be
in writing and shall be deemed to have been given: (i) when received if
delivered in person; (ii) on the date of acknowledgment or confirmation of
receipt if sent by telex, facsimile, or other electronic transmission; (iii) one
day after delivery, properly addressed and fees prepaid, to a reputable courier
for same day or overnight delivery; or (iv) two days after being deposited,
properly addressed and postage prepaid, in the United States mail.
Section 6. Amendments to By-laws. The By-laws of the corporation may
from time to time be repealed, amended or altered, or new and/or restated
By-laws may be adopted, in either of the following ways:
By such vote of the shareholders entitled to vote at any annual or
special meeting thereof as may be required by the Certificate of
Incorporation, and if there is no such specific requirement, then by the
vote of a majority of said shareholders; or
By resolution adopted by the Board of Directors if such power shall
have been vested in the Board of Directors by the Certificate of
Incorporation; provided, however, that such power shall be exercisable
only by such number or percentage of the Directors as is required by the
Certificate of Incorporation, and if there is no such specific
requirement, then by a majority of the Board of Directors. Notwithstanding
the foregoing, the Board of Directors shall not have the power to suspend,
repeal, amend or otherwise alter the By-laws or portion thereof enacted by
the shareholders if at the time of such enactment or thereafter the
shareholders shall so expressly provide.
-----------------------------
<PAGE>
CERTIFICATE
We, the undersigned, hereby certify that we acted as Chairman and
Secretary, respectively, of a meeting of the Board of Directors of First
Commercial Bancorp, Inc. held on the 24th day of September, 1996 at which
the foregoing Amended and Restated By-laws were duly adopted as and for
the By-laws of said corporation, and hereby further certify that the
foregoing constitute the By-laws of said corporation.
Dated this 24th day of September, 1996.
/s/Donald W. Williams
-----------------------
Donald W. Williams
Chairman of the Meeting
/s/James E. Culleton
-----------------------
James E. Culleton
Secretary of the Meeting
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0
0
<COMMON> 1,058
<OTHER-SE> 4,572
<TOTAL-LIABILITIES-AND-EQUITY> 151,814
<INTEREST-LOAN> 3,933
<INTEREST-INVEST> 1,668
<INTEREST-OTHER> 264
<INTEREST-TOTAL> 7,403
<INTEREST-DEPOSIT> 2,429
<INTEREST-EXPENSE> 2,881
<INTEREST-INCOME-NET> 2,984
<LOAN-LOSSES> 1,050
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,148
<INCOME-PRETAX> (1,725)
<INCOME-PRE-EXTRAORDINARY> (1,725)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,145)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
<YIELD-ACTUAL> 7.90
<LOANS-NON> 2,293
<LOANS-PAST> 862
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 12,922
<ALLOWANCE-OPEN> 5,388
<CHARGE-OFFS> (1,236)
<RECOVERIES> 101
<ALLOWANCE-CLOSE> 5,303
<ALLOWANCE-DOMESTIC> 5,303
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
