As filed with the Securities and Exchange Commission on February __, 1997
Registration No. 333-12353
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FIRST COMMERCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Arkansas 6711 71-0540166
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classi- Identification
fication Code No.) No.)
400 West Capitol Avenue, Little Rock, Arkansas 72201
(501) 371-7000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Barnett Grace, Chairman of the Board
First Commercial Corporation
400 West Capitol Avenue
Little Rock, Arkansas 72201
(501) 371-7000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copy to:
John Clayton Randolph
Friday, Eldredge & Clark
400 West Capitol Avenue, Suite 2000
Little Rock, Arkansas 72201-3493
<PAGE>
Approximate date of commencement of proposed sale of the securities to the
public: Upon the effective date of the merger described in this
registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box.
[ ]
<PAGE>
[City National Bank Letterhead]
Dear Stockholder:
A Special Meeting of the Stockholders of City National Bank ("CNB") will be
held on March 18, 1997, at 4:00 p.m., local time, at the main office of
City National Bank, 1125 Highway 110 North, Whitehouse, Texas.
The purpose of the meeting is to ask you to approve the merger (the
"Merger") of CNB with and into Tyler Bank and Trust, N.A., Tyler, Texas, a
wholly-owned subsidiary of First Commercial Corporation, Little Rock,
Arkansas ("First Commercial"). The Merger is subject, among other things,
to the approval of the holders of at least two-thirds (2/3) of the shares
of common stock of CNB ("CNB Stock"). If the Merger is consummated, each
holder of CNB Stock will be entitled to receive .84352 shares of First
Commercial common stock (with cash payments in lieu of fractional shares)
for each outstanding share of CNB Stock held at the effective date of the
Merger. As discussed in detail in the Joint Proxy Statement/Prospectus
referred to below, of the .84352 shares of First Commercial common stock
CNB stockholders will be entitled to receive for each outstanding share of
CNB Stock, .05797 shares will be held in escrow pending the outcome of
certain litigation.
CITY NATIONAL BANK'S BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND APPROVAL
OF THE MERGER.
Enclosed with this letter are a Notice of Special Meeting, a Proxy Form and
return envelope and a Joint Proxy Statement/Prospectus, which contains a
detailed description of the entire transaction. Please read the enclosed
material carefully. Because your vote is important, we urge you to
complete, date, sign and return the Proxy Form in the enclosed envelope.
Sincerely,
/s/ Clyde A. Weaver
Whitehouse, Texas
February __, 1997
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To The Stockholders of City National Bank:
Notice is hereby given that a Special Meeting of the Stockholders of City
National Bank ("CNB") will be held on March 18, 1997, at 4:00 p.m., local
time, at the main office of City National Bank, 1125 Highway 110 North,
Whitehouse, Texas, for the following purposes:
1. To consider and act upon a proposal to approve a plan of
merger providing for the merger (the "Merger") of CNB with
and into Tyler Bank and Trust, N.A., Tyler, Texas ("TBT"), a
wholly-owned subsidiary of First Commercial Corporation,
Little Rock, Arkansas ("First Commercial"), as a result of
which each outstanding share of common stock of CNB ("CNB
Stock") will be converted into .84352 shares of First
Commercial common stock (with cash payments in lieu of
fractional shares), and of which shares, .05797 shares will
be held in escrow pending the outcome of certain litigation.
Such approval, if voted, shall be deemed to constitute the
ratification, confirmation and approval of the execution and
delivery by CNB of the Plan and Agreement of Merger Among
First Commercial, TBT and CNB dated May 9, 1996, as amended
on October 16, 1996 and December 26, 1996.
2. To transact such other business as may properly be brought
before the Special Meeting or at any adjournment thereof.
Information regarding the matters to be acted upon at the meeting is
contained in the accompanying Joint Proxy Statement/Prospectus.
Consummation of the Merger is conditioned upon approval by the holders of
at least two-thirds (2/3) of the outstanding shares of CNB Stock. Only
those holders of CNB Stock of record at the close of business on February
3, 1997, are entitled to notice of, and to vote at, the Special Meeting and
any adjournment thereof.
Dissenting shareholders who comply with the procedural requirements of 12
U.S.C. Section 215a(b), (c) and (d) will be entitled to receive payment of
the cash value of their shares if the Merger is approved.
Your vote is important regardless of the number of shares you own. Whether
or not you plan to attend the Special Meeting, please mark, date and sign
the enclosed Proxy and return it promptly.
By Order of the Board of Directors
/s/ Nancy Duress
Secretary
Whitehouse, Texas
February __, 1997
<PAGE>
JOINT PROXY STATEMENT/PROSPECTUS
PROSPECTUS FOR
FIRST COMMERCIAL CORPORATION
145,507 Shares
Common Stock
($3.00 par value per share)
PROXY STATEMENT FOR
CITY NATIONAL BANK, WHITEHOUSE, TEXAS
First Commercial Corporation ("First Commercial") has filed a registration
statement pursuant to the Securities Act of 1933, as amended, covering
145,507 shares of First Commercial Common Stock, $3.00 par value per share
(the "First Commercial Stock"), which are being offered in connection with
a proposed transaction in which City National Bank, Whitehouse, Texas
("CNB"), will be merged into Tyler Bank and Trust, N.A., Tyler, Texas
("TBT"), a wholly-owned subsidiary of First Commercial. This document
constitutes a proxy statement for CNB in connection with the proposed
transaction described herein and a prospectus of First Commercial with
respect to the offering of its shares of common stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person is authorized to give any information or to make any
representation not contained in this Prospectus and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered hereby, or the
solicitation of a proxy, in any jurisdiction in which, or to any person to
whom, it is unlawful to make such offer or solicitation of an offer or
proxy solicitation. Neither the delivery of this Prospectus nor any
distribution of the securities offered hereby shall, under any
circumstances, create an implication that there has been no change in the
affairs of First Commercial or CNB since the date hereof.
The date of this Joint Proxy Statement/Prospectus is February __, 1997.
<PAGE>
AVAILABLE INFORMATION
First Commercial is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information concerning First Commercial may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following regional offices of the Commission: Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and New York Regional Office, Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Additionally, such material may be accessed at the Commission's Web site
(http://www.sec.gov).
First Commercial has filed with the Commission a registration statement on
Form S-4 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended.
This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information, reference is hereby made to the Registration
Statement.
__________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
AS IS MORE FULLY SET FORTH UNDER "INFORMATION CONCERNING FIRST COMMERCIAL"
ELSEWHERE HEREIN, THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES
DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED
HEREWITH. FIRST COMMERCIAL HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO
EACH PERSON TO WHOM A COPY OF THIS JOINT PROXY STATEMENT/PROSPECTUS HAS
BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF
ANY OR ALL OF THE DOCUMENTS RELATING TO FIRST COMMERCIAL THAT HAVE BEEN
INCORPORATED BY REFERENCE HEREIN, OTHER THAN EXHIBITS TO SUCH DOCUMENTS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE THEREIN.
REQUESTS FOR DOCUMENTS SHOULD BE DIRECTED TO J. LYNN WRIGHT, CHIEF
FINANCIAL OFFICER, FIRST COMMERCIAL CORPORATION, POST OFFICE BOX 1471,
LITTLE ROCK, ARKANSAS 72203, TELEPHONE (501) 371-7000. IN ORDER TO INSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 13,
1997.
i
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE i
INTRODUCTION iv
SUMMARY iv
The Companies v
The CNB Transaction v
Regulatory Approval vi
Dissenting Stockholders vi
Federal Income Tax Consequences vi
Selected Financial Data - First Commercial vii
Comparative Per Share Data viii
THE CITY NATIONAL BANK TRANSACTION 1
General 1
The CNB Special Meeting 1
Escrow Shares 1
Shares Entitled to Vote; Vote Required 2
Solicitation, Voting and Revocation of Proxies 2
The CNB Merger 3
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION 12
INFORMATION CONCERNING CITY NATIONAL BANK 27
Business of CNB 27
CNB Stock 27
Selected Financial Data - City National Bank 30
Management's Discussion and Analysis or Plan
of Operation 31
INFORMATION CONCERNING FIRST COMMERCIAL 34
Information Incorporated by Reference 34
Recent Developments 35
COMPARATIVE RIGHTS OF SHAREHOLDERS 35
General 35
Authorized and Issued Shares 36
Dividends 36
Voting Rights 37
Preemptive Rights 39
Indemnification of Directors and Officers and
Limitation of Director Liability 40
Filling Vacancies on the Board of Directors 41
Nomination of Director Candidates and Advance
Notice of Matters to be Brought Before an
Annual Meeting by Stockholders 41
Fair Price Provision 43
LEGAL OPINIONS 44
ii
<PAGE>
EXPERTS 45
FINANCIAL STATEMENTS OF CITY NATIONAL BANK F-CNB-1
Appendix A - 12 USC Section 215a(b), (c) and (d)
iii
<PAGE>
INTRODUCTION
This Joint Proxy Statement/Prospectus describes and submits for the vote of
the stockholders of City National Bank, Whitehouse, Texas the proposed
merger of City National Bank into Tyler Bank & Trust, N.A., Tyler, Texas.
A summary of the City National Bank merger begins on page v, and a more
detailed description beings on page 1. Pro forma combined financial
statements depicting the effect of the merger are presented beginning on
page 12.
SUMMARY
The following summary of the proposed transactions is qualified in its
entirety by the more detailed information appearing elsewhere herein and in
the appendices hereto.
The Companies
First Commercial Corporation
First Commercial Corporation ("First Commercial") is the largest multi-bank
holding company headquartered in Arkansas, with its corporate offices
located in Little Rock. The Company offers a broad range of bank and bank-
related services through 15 commercial banking institutions in Arkansas,
seven institutions in the State of Texas, one institution in each of the
States of Louisiana and Tennessee, and a 50% interest in a commercial
banking institution in Oklahoma. In addition, subsidiaries of the Company
provide trust services and investment services, offer first mortgage loans
and perform mortgage loan servicing operations. First Commercial is
incorporated under the laws of the State of Arkansas. The executive
offices of the Company are located at 400 West Capitol Avenue, Little Rock,
Arkansas 72201, telephone number: (501) 371-7000. See "Information
Concerning First Commercial."
Tyler Bank and Trust, N.A., Tyler, Texas
Tyler Bank and Trust, N.A. ("TBT") is a wholly-owned national banking
subsidiary of First Commercial headquartered in Tyler, Texas. TBT is the
third largest bank in Tyler, Texas with one full service branch and three
ATM locations. TBT offers a large number of bank and bank-related services
and is the leading mortgage and residential construction lender in Smith
County. TBT has two wholly owned subsidiaries: Commercial Capital Funding,
Inc., located in Dallas, Texas, which provides operating capital to
moderate and small businesses by factoring accounts receivable, and
Aircraft Financing, Inc., located in Tyler, Texas, which provides financing
for the purchase of various types of aircraft at the consumer, commercial,
wholesale and retail levels. TBT's principal office is located at 100 East
Ferguson, Tyler, Texas 75702, telephone number: (903) 595-1941.
City National Bank, Whitehouse, Texas
City National Bank ("CNB") is a national banking association headquartered
in Whitehouse, Texas. CNB provides consumer and commercial lending for the
Whitehouse and southeast Tyler communities. CNB has branches located in
Gresham, the Lake Palestine area, the West Loop in Tyler and Gentry Parkway
iv
<PAGE>
in Tyler. CNB's principal office is located at 1125 Highway 110 North,
Whitehouse, Texas 75791, telephone number: (903)839-6000. As of September
30, 1996, CNB had total assets of $41.6 million, total deposits of $37.2
million and total stockholders' equity of $2.8 million. See "Information
Concerning City National Bank."
The CNB Transaction
The CNB Merger
Stockholders of CNB are being asked to consider and vote upon a proposal to
approve the merger of CNB with and into TBT (the "CNB Merger") pursuant to
the terms of a Plan and Agreement of Merger Among First Commercial, TBT and
CNB dated May 9, 1996, as amended on October 16, 1996 and December 26, 1996
(the "CNB Agreement"). Under the terms of the CNB Agreement, each
outstanding share of CNB Stock will be converted into a right to receive
.84352 shares of common stock, $3.00 par value per share, of First
Commercial (the "First Commercial Stock"). Cash will be paid by First
Commercial in lieu of issuing fractional shares. The First Commercial
Stock and cash to be delivered to the CNB Stockholders are hereinafter
referred to as the "CNB Merger Consideration." Of such CNB Merger
Consideration, .05797 shares of First Commercial Stock for each outstanding
share of CNB Stock will be held in escrow pending the outcome of certain
litigation. See "The City National Bank Transaction - Escrow Shares." CNB
will have the right to terminate the CNB Agreement in the event the price
of a share of First Commercial Common Stock drops below $32.00 per share
for a period of time. See "The City National Bank Transaction - The CNB
Special Meeting."
The CNB Special Meeting
A special meeting of the stockholders of CNB (the "CNB Special Meeting")
will be held on Tuesday, March 18, 1997, at the time and place set forth in
the accompanying Notice of Special Meeting of Stockholders. Only record
holders of the Common Stock, $5.00 par value per share, of CNB (the "CNB
Stock") on February 3, 1997 are entitled to notice of and to vote at the
Special Meeting. On that date, there were 172,500 shares of CNB Stock
outstanding, each of which is entitled to one vote at the CNB Special
Meeting.
Vote Required
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of CNB Stock is required to approve the CNB Agreement.
Reasons for the CNB Merger
The Boards of Directors of First Commercial, TBT and CNB have determined
that the CNB Merger, pursuant to the terms of the CNB Agreement, is
desirable and in the best interest of each organization and its respective
stockholders.
v
<PAGE>
The Board of Directors of CNB has recommended that CNB Stockholders vote
for the approval, ratification and confirmation of the CNB Merger. See
"The City National Bank Transaction - The CNB Merger."
First Commercial, as the sole stockholder of TBT, will vote to approve the
CNB Merger.
Regulatory Approval
Consummation of the CNB Merger requires the prior approval of the Board of
Governors of the Federal Reserve System ("Federal Reserve") and the Office
of the Comptroller of the Currency of the United States (the "OCC") and
the Texas Department of Banking. Applications for such regulatory approval
for the CNB Merger were filed on June 14, 1996, July 18, 1996 and June 14,
1996, respectively. The Federal Reserve, the OCC and the Texas Department
of Banking have approved the CNB Merger. See "The City National Bank
Transaction - The CNB Merger."
Dissenting Stockholders
Stockholders of CNB who comply with the specific procedures set forth in 12
U.S.C. Section 215a(b), (c) and (d), which are described elsewhere herein,
will have the right to dissent from the CNB Merger, in which event, if
such merger is consummated, they may be entitled to receive in cash the
fair value of their shares of CNB Stock. See "The City National
Bank Transaction - The CNB Merger.
Federal Income Tax Consequences
The CNB Merger will qualify as a tax-free corporate reorganization for
federal income tax purposes if it satisfies the specific requirements of
the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations promulgated thereunder and pertinent judicial decisions. The
most important of these requirements is that: (i) no stock of TBT may be
used in the transactions; (ii) substantially all of the properties of CNB
must be acquired by TBT in connection with the merger; and (iii) the
stockholders of CNB must maintain a "continuity of interest" in First
Commercial after the merger. Based upon the representation that these
requirements will be satisfied in connection with the transaction, and
subject to certain other assumptions and representations set forth in its
opinion, Friday, Eldredge & Clark, special tax counsel to First Commercial,
will render its opinion to the effect that, among other things, no taxable
gain or loss will be recognized for federal income tax purposes by the
stockholders of CNB solely upon receipt of the First Commercial Stock in
exchange for their shares of CNB Stock in connection with the merger. See
"The City National Bank Transaction - The CNB Merger."
vi
<PAGE>
<TABLE>
Selected Financial Data - First Commercial
<CAPTION>
The following selected financial data should be read in conjunction with
the more detailed information and financial statements, including the notes
thereto, set forth in this document and incorporated herein by reference.
See "Information Concerning First Commercial."
FIRST COMMERCIAL CONSOLIDATED SELECTED FINANCIAL DATA
(In thousands, except per share data)
(Unaudited)
Nine Months Ended Year Ended December 31,
September 30 <F1>
-------------- --------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended:
Net Interest Income $ 160,337 $ 134,158 $ 184,550 $ 159,445 $ 144,574 $ 133,408 $ 119,056
Provision for
Possible Loan and
Lease Losses 4,871 1,740 3,059 (3,092) 4,416 8,941 9,992
Net Income 49,795 41,244 56,910 50,308 45,965 39,967 33,961
Per Common Share
Data: <F2>
Net Income 1.74 1.50 2.07 1.87 1.66 1.45 1.29
Cash Dividends .60 .59 .74 .64 .51 .40 .34
Book Value 16.00 13.99 15.06 12.85 12.06 10.65 9.74
Average Assets 5,212,460 4,522,357 4,652,368 4,235,586 3,812,409 3,313,162 2,997,988
Average Common Equity 449,331 371,771 378,807 337,557 310,252 271,598 229,975
Average Total Equity 449,331 371,771 378,807 339,244 320,872 282,218 239,460
Ratios(%)
Return on:
Average Assets 1.31 1.29 1.22 1.19 1.21 1.21 1.13
Average Common Equity 14.97 15.49 15.02 14.87 14.43 14.27 14.30
Average Total Equity
to Average Assets 8.62 8.22 8.14 8.01 8.42 8.52 7.99
<PAGE>
<FN>
<F1>
The unaudited operating results for First Commercial for the nine months ended September 30, 1996 and 1995, in
the opinion of First Commercial management, included all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation. Interim results for the nine months ended September 30, 1996, are
not necessarily indicative of results for the full year 1996.
<F2>
All per share data has been restated to reflect the 10% stock dividend declared July 1992, the 3 for 2 stock split in the
form of a stock dividend declared November 1993, the 5% stock dividend declared November 1994, the 7% stock dividend
declared November 1995 and the 5% stock dividend declared October 1996.
</FN>
</TABLE>
vii
<PAGE>
Comparative Per Share Data
Information presented below may not be indicative of the results that
actually would have occurred if the combination had been in effect on the
dates indicated or indicative of future results.
Nine Months Ended Years Ended
Sept. 30, (1) December 31,
-------------- ------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Earnings Per Common Share
(before the cumulative
effect of a change in
accounting principle common
share):
Historical:
First Commercial (2) 1.74 1.50 2.07 1.87 1.66
CNB 1.94 1.30 1.54 2.05 2.38
Pro Forma - First Commercial 1.74 1.50 2.07 1.87 1.66
Pro Forma Equivalent Share
Basis -
CNB (3) 1.47 1.27 1.75 1.58 1.40
Cash Dividents Per Common
Share:
Historical:
First Commercial (2) .60 .54 .74 .64 .51
CNB (3) 0 0 0 .25 0
Pro Forma - First Commercial .60 .54 .74 .63 .51
Pro Forma Equivalent Share
Basis -
CNB (3) .51 .46 .62 .53 .43
Book Value Per Common Share
(period end):
Historical:
First Commercial (2) 16.00 --- 15.06 --- ---
CNB 16.28 --- 14.39 --- ---
Pro Forma - First Commercial 16.02 --- 15.07 --- ---
Pro Forma Equivalent Share
Basis -
CNB (3) 13.51 --- 12.71 --- ---
(1) The unaudited operating results for First Commercial and CNB for the
nine months ended September 30, 1996 and 1995, in the opinion of First
Commercial and CNB management, included all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation. Interim results for the nine months ended September 30,
1996, are not necessarily indicative of results for the full year 1996.
viii
<PAGE>
(2) All First Commercial Corporation historical and pro forma per share
data has been restated to reflect the 5% stock dividend declared
November 1994, the 7% stock dividend declared November 1995, and the
5% stock dividend declared October 1996.
(3) The pro forma equivalent share amounts are computed by multiplying First
Commercial's pro forma share information by .84352.
<PAGE>
THE CITY NATIONAL BANK TRANSACTION
Information in this section relates to the proposed merger of City
National Bank, Whitehouse, Texas ("CNB") into Tyler Bank and Trust,
N.A., Tyler, Texas ("TBT"), a wholly-owned national banking association
of First Commercial Corporation ("First Commercial") (the "CNB
Merger").
General
This Joint Proxy Statement/Prospectus is furnished to the stockholders
of CNB in connection with the solicitation of proxies on behalf of its
Board of Directors for use at a special meeting of stockholders of CNB
(the "CNB Special Meeting") to be held on the date and at the time and
place specified in the accompanying Notice of Special Meeting of
Stockholders or any adjournment thereof.
CNB and First Commercial each have supplied all information included
herein with respect to itself.
This Joint Proxy Statement/Prospectus was first mailed to shareholders
of CNB on February __, 1997.
The CNB Special Meeting
The purpose of the CNB Special Meeting is to consider and vote upon a
proposal to approve the CNB Merger pursuant to the terms of a Plan and
Agreement of Merger among First Commercial, TBT and CNB dated May 9,
1996, as amended on October 16, 1996 and December 26, 1996 (the "CNB
Agreement"). Under the terms of the CNB Agreement, each outstanding
share of common stock of CNB, $5.00 par value per share (the "CNB
Stock"), will be canceled and converted into the right to receive
.84352 shares of First Commercial common stock, $3.00 par value per
share (the "First Commercial Stock"), with cash payment due in lieu of
any fractional shares. The First Commercial Stock and cash in lieu of
fractional shares to be delivered to CNB stockholders are hereinafter
referred to as the "CNB Merger Consideration." See "The City National
Bank Transaction - The CNB Merger." The CNB Merger Consideration is
subject to adjustment. See "The City National Bank Transaction -
Escrow Shares."
CNB may terminate the Agreement if the average of the individual
averages of the bid and asked prices of a share of First Commercial
Stock as reported on the Nasdaq National Market for the twenty business
days preceding the Closing Date shall be less than $32.00 per share.
The average of the bid and asked price of a share of the First
Commercial Stock on February __, 1997, was $_________.
Escrow Shares
Under the terms of the CNB Agreement, an aggregate of 145,507 shares of
First Commercial Stock are to be issued to the CNB Stockholders. The
CNB Agreement provides, however, that on the Closing Date, 10,000
shares of the CNB Merger Consideration will be placed in escrow (the
"Escrow Shares") in connection with certain litigation brought by Betty
-1-
<PAGE>
Sizemore against CNB and TBT (the "Sizemore Dispute"). In the event
First Commercial incurs any liabilities on behalf of CNB (or TBT as
successor to CNB) in connection with the Sizemore Dispute, Escrow
Shares will be used to pay First Commercial, as an adjustment to the
CNB Merger Consideration, for any such liabilities. The value of any
Escrow Shares paid to First Commercial shall be based on the value of
such shares at the Closing Date. All Escrow Shares remaining in escrow
after satisfaction of the liabilities, if any, incurred by First
Commercial, shall be released to the CNB stockholders. The reduction
of the Merger Consideration by the number of Escrow Shares will result
in stockholders of CNB receiving, pending resolution of the Sizemore
Dispute, .05797 fewer shares of First Commercial Stock for each share
of CNB Stock held as of the Closing Date.
Shares Entitled to Vote; Vote Required
Only holders of record of the CNB Stock at the close of business on
February 3, 1997 (the "CNB Record Date") will be entitled to notice of
and to vote at the CNB Special Meeting. On that date, the number of
outstanding shares of the CNB Stock was 172,500, each share of which is
entitled to one vote on each matter to come before the CNB Special
Meeting. Under national banking laws approval of the CNB Merger
requires the affirmative vote of the holders of at least two-thirds
(2/3) of the outstanding shares of CNB Stock. Abstentions will not be
counted as affirmative votes. Directors, executive officers and their
affiliates who own or control approximately 90.7% of the outstanding
shares of CNB Stock entitled to vote have indicated that they will vote
in favor of the CNB Merger.
Solicitation, Voting and Revocation of Proxies
In addition to soliciting proxies by mail, directors, officers and
employees of CNB, without receiving additional compensation therefor,
may solicit proxies by telephone and in person. Arrangements will also
be made with brokerage firms and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners
of CNB Stock, and CNB will reimburse such parties for reasonable out-
of-pocket expenses incurred in connection therewith. The cost of
soliciting proxies is being paid by CNB.
The proxies that accompany this Joint Proxy Statement/Prospectus permit
each holder of CNB Stock on the CNB Record Date to vote on all matters
that come before the CNB Special Meeting. When a stockholder specifies
his choice on the proxy with respect to a matter being voted upon, the
shares represented by the proxy will be voted in accordance with such
specification. If no such specification is made, the shares will be
voted in favor of approval of the CNB Merger. A proxy may be revoked
by (i) giving written notice of revocation at any time before its
exercise to Nancy Duress, Secretary, P.O. Box 710, Whitehouse, Texas
75791, (ii) executing and delivering to Nancy Duress at any time before
its exercise a proxy bearing a subsequent date or (iii) attending the
CNB Special Meeting and voting in person.
The Board of Directors of CNB is not aware of any business to be acted
upon at the CNB Special Meeting other than consideration of the CNB
-2-
<PAGE>
Merger. If, however, other proper matters are brought before the CNB
Special Meeting, or any adjournments thereof, the persons appointed as
proxies will have discretion to vote or abstain from voting thereon
according to their best judgment.
The CNB Merger
General
On June 18, 1996, and July 24, 1996, the Boards of Directors of First
Commercial and CNB, respectively, each approved the CNB Agreement. The
description of the CNB Agreement herein does not purport to be complete
and is qualified in its entirety by reference to the CNB Agreement,
which is made an exhibit to the Registration Statement of which this
Joint Proxy Statement/Prospectus is a part and is incorporated herein
by reference.
Under the CNB Agreement, CNB will be merged into TBT, and each share of
CNB Stock outstanding on the Effective Date, as defined herein, will be
converted into the right to receive .84352 shares of First Commercial
Stock. The exchange ratio was based upon historical and projected
earnings of CNB, the amounts of CNB assets and liabilities, and the
market value of First Commercial Stock. Projected earnings were based
primarily on historical trends. The Merger Consideration is subject to
reduction by the number of Escrow Shares. See "The City National Bank
Transaction -Escrow Shares."
The CNB Agreement was the result of arm's-length negotiations between
representatives of First Commercial and CNB. CNB's Board of Directors
believes the terms of the CNB Merger are fair.
First Commercial is an Arkansas corporation and a multi-bank holding
company registered under the Bank Holding Company Act of 1956, as
amended ("BHCA"). CNB and TBT are each national banking associations
operating under the laws of the United States of America.
Stockholders of CNB will exchange their stock certificates for new
certificates evidencing shares of First Commercial Stock. After the
CNB Merger, and until so exchanged, the shares of CNB Stock will
represent the right to receive the number of shares of First Commercial
Stock into which such shares of CNB Stock will be converted. See
"Distribution of First Commercial Stock Certificates" below.
Reasons for the CNB Merger
Several factors were important in the CNB Board's decision to pursue
this opportunity for a merger with First Commercial's subsidiary, TBT.
First, based on the market price of First Commercial's Stock at the
time the negotiations began, it was apparent that the value of the
proposed transaction was in the best interest of shareholders. A
second important consideration of the Board of Directors was that First
Commercial's Stock prices are quoted on the Nasdaq National Market and
there is apparently sufficient market volume in the stock to afford
shareholders of CNB an opportunity for liquidity. A third important
consideration was First Commercial's sound record of dividend payout.
A fourth and extremely important consideration in the decision was the
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financial soundness of First Commercial. Based on the financial
information provided CNB directors concerning the financial performance
of First Commercial over the preceding two years, it was apparent that
First Commercial met or exceeded all soundness criteria comparable with
its peer group. Additionally, its profitability performance had been
at or above levels of peer financial institutions. A fifth important
consideration was the general environment of the commercial banking
industry in this country and the substantially enhanced activity of
merger and acquisition opportunities in the industry.
In summary, the Board of Directors of CNB believes that the proposed
CNB Merger is in the best interests of its shareholders.
Federal Income Tax Consequences
The following is a discussion of certain of the material federal income
tax considerations in connection with the CNB Merger and the tax
opinion of Friday, Eldredge & Clark, special tax counsel to First
Commercial.
The CNB Merger will qualify as a tax-free corporate reorganization for
federal income tax purposes under Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code, as amended (the "Code"), if
it satisfies the specific requirements of the Code, the regulations
promulgated thereunder, and pertinent judicial decisions. The most
important of these requirements is that (i) no stock of TBT may be used
in the transaction, (ii) substantially all of the properties of CNB
must be acquired by TBT in connection with the CNB Merger (the
"Substantially All Test"), and (iii) the stockholders of CNB must,
collectively as a group, maintain a "continuity of interest" in First
Commercial after the CNB Merger (the "Continuity of Interest Test").
The merger transaction does not contemplate the use of any stock of TBT
in the transaction, and, accordingly, this requirement should be
satisfied. For private letter ruling purposes, the Internal Revenue
Service ("IRS") generally regards the Substantially All Test to be
satisfied if at least 90% of the fair market value of CNB's net assets
and at least 70% of the fair market value of CNB's gross assets held by
CNB immediately prior to the transaction are acquired in connection
with the CNB Merger. Management of CNB and TBT believe that this test
will be satisfied in connection with the transaction contemplated by
the CNB Merger. The IRS takes the position that the Continuity of
Interest Test will be satisfied if the former CNB stockholders receive,
in the CNB Merger, a number of shares of First Commercial Stock having
a value, as of the Effective Date (as defined herein), equal to at
least fifty percent (50%) of the value of all the outstanding stock of
CNB as of such date. In general, this requires the stockholders of CNB
to collectively surrender at least 50% of their CNB Stock in exchange
for First Commercial Stock in the CNB Merger. In addition, in order
for the Continuity of Interest Test to be satisfied, this 50%
continuity of stock ownership generally must be maintained for a
meaningful period of time following the CNB Merger. Moreover, at the
time of the CNB Merger, there can be no plan or intention on the part
of the shareholders of CNB to collectively dispose of an amount of the
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First Commercial Stock that would cause the 50% continuity of stock
ownership requirement to not be satisfied.
Accordingly, assuming the Substantially All Test and Continuity of
Interest Test are satisfied, and provided other specific requirements
contained in the Code, the regulations promulgated thereunder, and
pertinent judicial decisions are met, the transaction should qualify as
a tax-free corporate reorganization for federal income tax purposes
pursuant to the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code.
If the CNB Merger qualifies as a tax-free corporate reorganization, the
material federal income tax consequences of the CNB Merger will be as
follows: (i) no material gain or loss will be recognized by CNB,
First Commercial or TBT as a result of the CNB Merger; (ii) no gain or
loss will be recognized by the shareholders of CNB upon the receipt of
First Commercial Stock solely in exchange for their shares of CNB Stock
in connection with the CNB Merger; (iii) the tax basis of the shares of
First Commercial stock received by the shareholders of CNB in the CNB
Merger will, in each instance, be the same as the basis of the shares
of CNB Stock surrendered in exchange therefor; (iv) the holding period
of the shares of First Commercial Stock received by the shareholders of
CNB in the CNB Merger will, in each instance, include the holding
period of the shares of CNB Stock exchanged therefor, provided that the
shares of CNB Stock were held as capital assets on the date of the CNB
Merger; and (v) the payment of cash to shareholders of CNB in lieu of
issuing fractional shares of First Commercial Stock will be treated as
if the fractional shares were distributed as part of the exchange and
then redeemed by First Commercial for cash, and any such payments will
be treated as having been received by the shareholder as a distribution
in redemption of the fractional share interest, subject to provisions
of Section 302 of the Code.
Shareholders of CNB who exercise dissenters rights and receive cash for
their shares of CNB Stock will be treated as having received such cash
as a distribution in redemption of such shareholder's CNB Stock,
subject to the conditions and limitations of Section 302 of the Code.
If the CNB Merger does not qualify as a tax-free corporate
reorganization, the transaction will be treated for federal income tax
purposes as a taxable purchase by First Commercial of the CNB Stock.
In such event, the CNB Merger will constitute a taxable transaction to
the shareholders of CNB and possibly also a taxable transaction to TBT.
In such event, gain or loss will be recognized by the shareholders of
CNB to the extent of the difference between (i) the fair market value,
on the Effective Date, of the shares of First Commercial Stock received
in connection with the CNB Merger, and (ii) the adjusted basis of the
shares of CNB Stock surrendered in the transaction. The fair market
value of the First Commercial Stock on the Effective Date may be
determined on the basis of the average high and low selling prices of
such stock on the day of the transaction. If the transaction does not
qualify for tax-free reorganization treatment, (i) the holding period
for the shares of First Commercial Stock to be received by the
shareholders of CNB will commence on the day following the date of the
transaction; (ii) gain or loss would likely be recognized by CNB on the
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transfer of its assets to TBT to the extent of the difference between
the fair market value of the assets and the adjusted basis of the
assets in the hands of CNB on the Effective Date and (iii) the holding
period for the assets of CNB to be received by TBT would likely
commence on the date following the transaction.
The foregoing discussion is limited to matters pertaining to federal
income tax law. Moreover, because of the complexity of federal, state
and local tax laws, the tax consequences to any particular shareholder
may be affected by matters not pertaining to the CNB Merger.
Accordingly, it is recommended that each shareholder of CNB consult his
own personal tax advisor concerning the specific federal, state and
local income tax consequences of the CNB Merger.
Rights of Dissenting CNB Stockholders
Pursuant to 12 U.S.C. Section 215a, any holder of record of CNB Stock
who objects to the proposed CNB Merger and who fully complies with
all of the provisions of Section 215 (but not otherwise) shall be
entitled to demand and receive payment for all (but not less than
all) of his shares of CNB Stock if the CNB Merger is consummated.
Any shareholder of CNB who objects to the CNB Merger and desires to
receive payment for his CNB Stock:
1. Must file a written objection to the CNB Merger with CNB
either prior to the CNB Special Meeting or at the CNB Special Meeting,
but before the vote is taken, or he must vote against approval of the
CNB Merger at the CNB Special Meeting; AND
2. Must file with TBT a written notice of his election to
dissent within thirty (30) days after the date of consummation of the
CNB Merger, and the notice of dissent must contain the shareholder's
full name and address, the number of shares of CNB Stock held by him,
and a demand for payment of the value of his shares; AND
3. Must concurrently with the giving of the notice referred to
in subparagraph 2 above submit his certificates for CNB Stock to Dana
Gregory, Secretary of TBT, for notation thereon of the shareholder's
election to dissent.
Any notices required to be given to CNB should be forwarded to City
National Bank, 1125 Highway 110 North, Whitehouse, Texas 75791, to the
attention of Nancy Duress, Secretary.
Any notices required to be given to TBT should be forwarded to Tyler
Bank and Trust, 100 East Ferguson, Tyler, Texas 75702, to the attention
of Dana Gregory, Secretary.
If the CNB Merger is approved, TBT will promptly mail by certified mail
to each shareholder who has complied with the conditions above written
notice of such approval, addressed to the shareholder at such address
as he has furnished CNB in writing, or if none, at the shareholder's
address as it appears on the records of CNB. Within thirty (30) days
after the date of consummation of the CNB Merger, the shareholder must
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make the written election to dissent and demand for payment described
in subparagraph 2 above.
The value of the shares of CNB Stock held by dissenting shareholders
shall be ascertained, as of the Effective Date of the CNB Merger, by an
appraisal made by a committee of three persons, composed of (a) one
selected by the vote of the holders of the majority of the CNB Stock,
the owners of which are entitled to payment in cash, (b) one selected
by the directors of TBT, and (c) one selected by the two so selected.
The valuation agreed upon by any two of the three appraisers shall
govern. If the value so fixed shall not be satisfactory to any
dissenting shareholder who has requested payment, such shareholder may,
within five (5) days after being notified of the appraised value of the
shares, appeal to the Comptroller of the Currency of the United States
of America (the "OCC"), which shall cause a reappraisal to be made,
which shall be final and binding as to the value of the shares.
If within ninety (90) days from the date of consummation of the CNB
Merger for any reason one or more of the appraisers is not selected or
the appraisers fail to determine the value of the shares of CNB Stock,
the OCC shall upon written request of any interested party cause an
appraisal to be made, which shall be final and binding on all parties.
The expenses of the OCC in making the reappraisal or the appraisal, as
the case may be, shall be paid by TBT. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by
TBT. The shares of First Commercial Stock that would have been
delivered to such dissenting shareholders had they not requested
payment shall be sold by First Commercial at an advertised public
auction, and First Commercial shall have the right to purchase any of
such shares at such public auction, if it is the highest bidder
therefor, for the purpose of reselling such shares within thirty (30)
days thereafter to such person or persons and at such price, not less
than par, as First Commercial's Board of Directors by resolution may
determine. If the shares are sold at public auction at a price greater
than the amount paid to the dissenting shareholders, the excess in such
sale price shall be paid to such shareholders.
If holders of more than 17,250 shares of CNB Stock perfect their
dissenters' rights, CNB, First Commercial and TBT may elect not to
consummate the CNB Merger, in which event the dissenters' rights
described in this section would terminate. However, it is the intent
of management of First Commercial to accommodate those CNB shareholders
electing to dissent to the extent that funds may be obtained or
financing may be arranged to purchase their shares and to the extent
that such accommodation does not create tax, accounting or regulatory
obstacles.
The foregoing does not purport to be a complete statement of the
provisions of Section 215a of Title 12 of the United States Code, and
it is qualified in its entirety by reference to such provisions, which
are reproduced in full as Appendix A to this Joint Proxy
Statement/Prospectus.
Upon compliance with the statutory procedures, dissenting shareholders
will not have any rights as shareholders of CNB or of First Commercial,
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including, among other things, the right to receive dividends or the
right to vote on matters submitted for shareholder consideration.
Conditions of the CNB Merger
Consummation of the CNB Merger is conditioned upon the occurrence of
certain events on or prior to the Effective Date including, among other
things, the following: (i) approval of the CNB Merger by the
stockholders of CNB; (ii) confirmation by First Commercial and CNB of
the truth of their respective representations and warranties and
compliance with their respective covenants as set forth in the CNB
Agreement; (iii) the absence of any court or governmental proceeding
undertaken or threatened to restrain, enjoin, prohibit, or obtain
damages for the transaction contemplated by the CNB Agreement which, in
the opinion of either First Commercial or CNB, would make the
consummation of the CNB Merger inadvisable; (iv) the absence of any
suit, action or proceedings pending or threatened against First
Commercial or CNB or any of each other's officers or directors which,
if successful, would, in the reasonable judgment of CNB or First
Commercial, respectively, have a material adverse effect on the
financial condition of First Commercial or CNB, respectively; (v)
receipt by First Commercial and CNB of letters, as considered
necessary, from each other's independent certified public accountants
relating to certain financial statements and information of the other
and an opinion from Ernst & Young that the pooling of interests method
of accounting applies to the CNB Merger; (vi) receipt by First
Commercial and CNB of certain opinions from CNB's and First
Commercial's counsel, respectively; (vii) receipt by First Commercial
from affiliates of CNB of an agreement restricting disposition of First
Commercial Stock for a certain period of time; (viii) receipt by First
Commercial and CNB of an opinion from tax counsel addressing the tax
consequences of the contemplated CNB Merger; and (ix) the absence of
any material adverse change in the financial condition, business or
operations of either First Commercial or CNB.
All of these conditions are expected to be met.
Any of the conditions set forth above may be waived at the discretion
of the respective institutions except as otherwise provided by law.
However, neither First Commercial nor CNB will waive any condition if
such waiver, in the judgment of its respective Board of Directors,
would result in materially adverse consequences to it or its
stockholders.
Regulatory Approval
Consummation of the CNB Merger requires the prior written approval of
the Federal Reserve, the OCC and the Texas Department of Banking.
Applications for such approval were filed on June 14, 1996, July 18,
1996 and June 14, 1996, respectively. The Federal Reserve, the OCC and
the Texas Department of Banking have approved the CNB Merger.
Although no assurance can be provided, First Commercial and CNB
currently expect the CNB Merger to be consummated on or before April
30, 1997. See "Termination of the CNB Merger" below.
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Termination of the CNB Merger
The CNB Agreement provides that it may be terminated, whether before or
after shareholder approval, by mutual consent of the Boards of
Directors of First Commercial and CNB at any time before the Closing
(as defined in the CNB Agreement). Either First Commercial or CNB, at
its option, may terminate the CNB Agreement (unless such terminating
party has breached a covenant under the CNB Agreement) if the Closing
Date shall not have occurred on or before April 30, 1997.
Either First Commercial or CNB may terminate the Agreement if any of
the conditions precedent to its obligation to consummate the CNB Merger
have not been met at or prior to the Closing, or if it shall have
discovered a material breach by the other party of any representation,
warranty or agreement contained in the CNB Agreement that has not been
cured within twenty (20) days of the time that written notice of such
breach is received by such other party. See "Conditions of the CNB
Merger" above.
Effective Date
The CNB Agreement provides that the CNB Merger shall become effective
at the time and on the date specified in the approval of merger issued
by the OCC (the "CNB Effective Date"). Although no assurance can be
given, the CNB Effective Date is expected to be on or before April 30,
1997.
Distribution of First Commercial Stock Certificates
After the CNB Effective Date, each holder of certificates previously
evidencing shares of CNB Stock will be required to surrender such
certificates for transfer and cancellation. Upon surrender each holder
will receive certificate(s) representing the number of shares of First
Commercial Common Stock which the holders of such shares of CNB Stock
will have the right to receive (except for any fractional share
interests as described below in "Fractional Shares"), together with any
dividends which have been declared on such shares of First Commercial
Common Stock and to which such holders are entitled.
Holders of CNB Stock on the CNB Effective Date shall be entitled to
receive dividends declared by First Commercial subsequent to the CNB
Effective Date, but payment of such dividends will not be required of
First Commercial until such persons have delivered their certificates
representing shares of CNB Stock in exchange for certificates
representing shares of First Commercial Stock.
As soon as practicable after consummation of the CNB Merger,
transmittal forms will be sent to stockholders of CNB for use in
forwarding to First Commercial's transfer agent certificates previously
evidencing CNB Stock for surrender and exchange for certificates
evidencing First Commercial Stock. Until so surrendered, certificates
formerly evidencing CNB Stock will be deemed for all corporate purposes
(except for payment of dividends to CNB stockholders which may be
withheld pending exchange of certificates) to evidence the right to
receive the number of whole shares of First Commercial Stock and the
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right to receive cash in lieu of fractional shares which the holder
thereof would be entitled to receive upon surrender. Stockholders of
CNB are requested not to submit stock certificates for exchange until
they have received written instructions to do so.
If outstanding certificates for shares of CNB Stock are not
surrendered, or if payment for them is not claimed prior to such date
on which such payment would otherwise escheat to or become the property
of any governmental unit or agency, the unclaimed item shall, to the
extent permitted by the abandoned property and/or any other applicable
law, become the property of First Commercial (and to the extent not in
its possession shall be paid over to it), free and clear of all claims
or interests of any person previously entitled to such items.
Notwithstanding the foregoing, neither First Commercial's transfer
agent nor any party to the CNB Merger shall be liable to any holder of
CNB Stock for any amount paid to any governmental unit or agency having
jurisdiction of such unclaimed items pursuant to the abandoned property
or other applicable law of such jurisdiction.
Fractional Shares
No fractional shares of First Commercial Stock will be issued for
shares of CNB Stock. In lieu of fractional interests, First Commercial
shall pay to such persons who would otherwise receive fractional shares
cash in an amount equal to the market value of such fractional shares
determined on the basis that one share of First Commercial Common Stock
shall have a value equal to the average of the bid and asked prices of
First Commercial Common Stock on the Closing Date. See "Federal Income
Tax Consequences" above.
Dilution
Each common stockholder of CNB who exchanges his stock will receive a
voting interest exactly in proportion to his relative voting common
stock interest in relation to other CNB stockholders before the
combination is effected. Each share of CNB Stock presently held by CNB
stockholders will represent less of a percentage voting interest in the
total number of outstanding shares of First Commercial (subsequent to
the CNB Merger) than it now represents as a percentage of the total
outstanding shares of CNB.
Accounting Treatment
The CNB Merger will be accounted for as a pooling of interests under
generally accepted accounting principles. The assets and liabilities
of CNB will be reflected in the consolidated financial statements of
First Commercial at their book value as reflected in CNB's financial
statements. Expenses incurred in connection with the CNB Merger will
be considered as an expense of First Commercial.
A condition of consummating the CNB Merger is that First Commercial
receive an opinion from Ernst & Young LLP that the pooling of interests
method of accounting applies to the CNB Merger. Management of First
Commercial expects this condition to be met.
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Registration of First Commercial Common Stock Under the Securities Act
The shares of First Commercial Stock to be issued to CNB stockholders
in the CNB Merger have been registered under the Securities Act of
1933, as amended (the "Securities Act"), thereby allowing such shares
to be freely traded without restriction by persons who will not be
"affiliates" of First Commercial and who were not affiliates of CNB, as
that term is defined in the Securities Act.
Directors and certain officers and stockholders of CNB may be deemed to
be "affiliates" of CNB within the meaning of the Securities Act.
Accordingly, resales by such persons of any shares of First Commercial
Stock received by them in the CNB Merger are restricted and may be made
only if such stock is registered under the Securities Act or an
exemption from the registration requirements of the Securities Act is
available. All such persons should carefully consider the limitations
imposed by Rules 144 and 145 promulgated under the Securities Act
("Rule 144" and "Rule 145") prior to effecting any resales of such
First Commercial Stock.
Pursuant to Rule 145, the sale of First Commercial Stock held by those
persons who are affiliates of CNB will be subject to certain
restrictions. For two years following the Effective Date, such persons
may sell the First Commercial Stock only if (i) First Commercial has
filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
during the preceding twelve months, (ii) such First Commercial Stock is
sold in "brokers' transactions" as that term is defined in Section 4(4)
of the Securities Act, (iii) the person selling such First Commercial
Stock does not solicit or arrange for the solicitation of orders to buy
such First Commercial Stock in anticipation of or in connection with
such transaction nor make any payment in connection with the offer or
sale of such First Commercial Stock to any person other than the broker
who executes the order to sell, and (iv) sales made by such person
within the preceding three months do not exceed 1% of the outstanding
shares of that class. Shares of the First Commercial Stock held for
more than two years but less than three years after the CNB Effective
Date may be sold freely if First Commercial is in compliance with the
above discussed Exchange Act reporting requirements. Once the shares
of First Commercial Stock have been held for three years from the CNB
Effective Date, they may be sold free from the restrictions of Rules
144 and 145.
It is a condition of First Commercial's obligation to consummate the
CNB Merger that First Commercial shall have received an agreement in
form and substance satisfactory to it, executed and delivered by each
holder of CNB Stock who is determined to be an affiliate of CNB,
providing, among other things, that such holder (i) will not sell,
transfer or in any way reduce his risk with respect to his shares of
First Commercial Stock until such time as First Commercial shall have
published financial results covering at least 30 days of post-Merger
combined operations, (ii) has no present intent to sell, transfer or
otherwise dispose of any of his shares of First Commercial Stock and
(iii) will not sell, transfer or otherwise dispose of more than fifty
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percent (50%) of his shares of First Commercial Stock for a period of
at least one (1) year following the Closing.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined balance sheets as of
December 31, 1995 and September 30, 1996 and unaudited pro forma
combined statements of income for the three years ended December 31,
1995 and for the nine month periods ended September 30, 1996 and 1995
give effect to the following transaction:
As described herein, on May 9, 1996, First Commercial entered into a
definitive agreement with TBT and CNB, whereby CNB will be merged with
and into TBT, a subsidiary of First Commercial. This transaction will
be effected through an exchange of 145,507 shares of First Commercial
common stock for all of the outstanding shares of CNB. The merger will
be accounted for as a pooling of interests.
The following unaudited pro forma financial information is not
necessarily indicative of the results of operation of First Commercial
as if the acquisition had occurred on January 1, 1993.
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PRO FORMA COMBINED BALANCE SHEET
September 30, 1996
(Unaudited)
Pending
---------
(In thousands)
First
Commercial CNB Pro forma
Corporation Pooling Adjustment Pro forma
(A) (B) (C)
--------- ----- -------- -------
ASSETS
Cash and due from banks $330,079 $3,622 $333,701
Investment securities held-
to-maturity 334,790 486 335,276
Investment securities
available-for-sale 1,006,278 2,058 1,008,336
Trading account securities 307 307
Short-term investments 85,327 85,327
Loans, net 3,211,123 32,282 3,243,405
Premises and equipment, net 103,259 2,362 105,621
Other assets 233,391 812 234,203
---------- ------- ----------
$5,304,554 $41,622 $5,346,176
========== ======= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $926,978 $8,116 $935,094
Interest bearing 3,666,147 29,096 3,695,243
--------- ------ ---------
Total deposits 4,593,125 37,212 4,630,337
Short-term borrowings 185,558 1,165 186,723
Other liabilities 63,029 436 63,465
Long-term debt 6,097 6,097
--------- ------ ---------
Total liabilities 4,847,809 38,813 4,886,622
--------- ------ ---------
Stockholders' equity:
Common stock 82,168 863 (426)(D) (82,605)
Surplus 195,337 862 426 (D) (196,625)
Retained earnings 186,941 1,109 188,050
Unrealized net gains (losses)
on available-for-sale
securities, net of income (1,582) (25) (1,607)
Treasury stock (6,119) (6,119)
---------- ------- ----------
Total stockholders' equity 456,745 2,809 459,554
---------- ------- ----------
$5,304,554 $41,622 $5,346,176
========== ======= ==========
See accompanying notes to pro forma combined balance sheet.
<PAGE>
NOTES TO PRO FORMA COMBINED BALANCE SHEET
September 30, 1996
(Unaudited)
(A) Represents historical balance sheet of First Commercial Corporation.
(B) Represents historical balance sheet of City National Bank.
(C) Represents pro forma combined balances, as if this pooling transaction
had occurred on or prior to September 30, 1996.
(D) Adjusts the increase in common stock to the total par value of the stock
to be issued in this transaction.
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
December 31, 1995
(Unaudited)
Pending
---------
(In thousands)
First
Commercial CNB Pro forma
Corporation (Pooling) Adjustment Pro forma
(A) (B) (C)
-------- ------ -------- -------
ASSETS
Cash and due from banks $432,117 $2,233 $434,350
Investment securities held-
to-maturity 351,415 351,415
Investment securities
available-for-sale 973,129 2,357 975,486
Trading account securities 449 449
Short-term investments 108,181 2,491 110,672
Loans, net 3,164,221 29,376 3,193,597
Premises and equipment, net 106,665 2,293 108,958
Other assets 224,763 785 225,548
---------- ------- ----------
$5,360,940 $39,535 $5,400,475
========== ======= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $1,018,181 $ 6,709 $1,024,890
Interest bearing 3,612,360 30,072 3,642,432
--------- ------- ----------
Total deposits 4,630,541 36,781 4,667,322
Short-term borrowings 235,378 235,378
Other liabilities 55,592 272 55,864
Long-term debt 7,170 7,170
--------- ------ ---------
Total liabilities 4,928,681 37,053 4,965,734
========= ====== =========
Stockholders' equity:
Common stock 82,030 863 (426)(D) (82,467)
Surplus 195,019 862 426 (D) (196,307
Retained earnings 154,356 774 155,130
Unrealized net gains (losses)
on available-for-sale
securities, net of income 854 (17) 837
---------- ------- ----------
Total stockholders' equity 432,259 2,482 434,741
---------- ------- ----------
$5,360,940 $39,535 $5,400,475
========== ======= ==========
See accompanying notes to pro forma combined balance sheet.
<PAGE>
NOTES TO PRO FORMA COMBINED BALANCE SHEET
December 31, 1995
(Unaudited)
(A) Represents historical balance sheet of First Commercial Corporation.
(B) Represents historical balance sheet of City National Bank.
(C) Represents pro forma combined balances, as if this pooling transaction
had occurred on or prior to December 31, 1995.
(D) Adjusts the increase in common stock to the total par value of the stock
to be issued in this transaction.
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1996
(Unaudited)
(In thousands except for per share data)
Pending
-------
First
Commercial CNB
Corporation (Pooling) Pro forma
(A) (B) (C)
-------- ------ -------
Interest income $278,112 $2,471 $280,583
Interest expense 117,775 968 118,743
-------- ------- ---------
Net interest income 160,337 1,503 161,840
Provision for possible loan
and lease losses 4,871 147 5,018
Net interest income after
provision for possible
loan and lease losses 155,466 1,356 156,822
Other operating income 76,652 543 77,195
Other operating expenses 155,326 1,425 156,751
--------- ------- ----------
Income before income taxes 76,792 474 77,266
Income tax expense (benefit) 26,997 139 27,136
--------- ------- ----------
Net income $49,795 $335 $50,130
========= ======= ==========
Average common shares
outstanding during
period (D) 28,665,683 172,500 28,811,190
Net income per common share $1.74 $1.94 $1.74
See accompanying notes to pro forma combined statement of income.
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1996
(Unaudited)
(A) Represents historical income statement of First Commercial Corporation.
(B) Represents historical income statement of City National Bank.
(C) Represents pro forma results as if this pooling transaction had occurred
on or prior to September 30, 1996.
(D) Average shares outstanding for First Commercial Corporation and pro
forma combined have been restated to reflect the 5% stock dividend
declared October 1996.
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1995
(Unaudited)
(In thousands except for per share data)
Pending
-------
First
Commercial CNB
Corporation (Pooling) Pro forma
(A) (B) (C)
--------- ----- --------
Interest income $234,024 $2,119 $236,143
Interest expense 99,866 920 100,786
-------- ------ --------
Net interest income 134,158 1,199 135,357
Provision for possible loan
and lease losses 1,740 70 1,810
Net interest income after
provision for possible loan
and lease losses 132,418 1,129 133,547
Other operating income 49,389 491 49,880
Other operating expenses 119,602 1,317 120,919
------- ----- -------
Income before income taxes 62,205 303 62,508
Income tax expense (benefit) 20,961 78 21,039
------- ----- -------
Net income $41,244 $225 $41,469
======== ======= ==========
Average common shares
outstanding during period (D) 27,427,659 172,500 27,573,166
Net income per common share $1.50 $1.30 $1.50
See accompanying notes to pro forma combined statement of income.
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1995
(Unaudited)
(A) Represents historical income statement of First Commercial Corporation.
(B) Represents historical income statement of City National Bank.
(C) Represents pro forma results as if this pooling transaction had
occurred on or prior to September 30, 1995.
(D) Average shares outstanding for First Commercial Corporation and pro
forma combined have been restated to reflect the 7% stock dividend
declared November 1995 and the 5% stock dividend declared October 1996.
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1995
(Unaudited)
(In thousands except for per share data)
Pending
-------
First
Commercial CNB
Corporation (Pooling) Pro forma
(A) (B) (C)
--------- ------ -------
Interest income $322,182 $2,924 $325,106
Interest expense 137,632 1,270 138,902
-------- ------ --------
Net interest income 184,550 1,654 186,204
Provision for possible
loan and lease losses 3,059 100 3,159
Net interest income after
provision for possible loan
and lease losses 181,491 1,554 183,045
Other operating income 73,988 656 74,644
Other operating expenses 170,306 1,822 172,128
------- ----- -------
Income before income taxes 85,173 388 85,561
Income tax expense (benefit) 28,263 123 28,386
------- ----- -------
Net income $56,910 $265 $57,175
Average common shares
outstanding during
period (D) 27,530,791 172,500 27,676,298
Net income per common share $2.07 $1.54 $2.07
See accompanying notes to pro forma combined statement of income.
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1995
(Unaudited)
(A) Represents historical income statement of First Commercial Corporation.
(B) Represents historical income statement of City National Bank.
(C) Represents pro forma results as if this pooling transaction had occurred
on or prior to December 31, 1995.
(D) Average shares outstanding for First Commercial Corporation and pro
forma combined have been restated to reflect the 5% stock dividend
declared October 1996.
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1994
(Unaudited)
(In thousands except for per share data)
Pending
-------
First
Commercial CNB
Corporation (Pooling) Pro forma
(A) (B) (C)
--------- ------ -------
Interest income $257,751 $2,380 $260,131
Interest expense 98,306 724 99,030
-------- ------ --------
Net interest income 159,445 1,656 161,101
Provision for possible
loan and lease losses (3,092) 120 (2,972)
Net interest income after
provision for possible
loan and lease losses 162,537 1,536 164,073
Other operating income 68,652 477 69,129
Other operating expenses 156,875 1,492 158,367
------- ------ -------
Income before income taxes 74,314 521 74,835
Income tax expense (benefit) 24,006 167 24,173
------- ------ -------
Net income $50,308 $354 $50,662
======= ====== =======
Preferred stock dividend 129 129
------- ------ -------
Income applicable to common shares $50,179 $354 $50,533
======= ====== =======
Average common shares
outstanding during period (D) 26,886,990 172,500 27,032,497
Net income per common share $1.87 $2.05 $1.87
See accompanying notes to pro forma combined statement of income.
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1994
(Unaudited)
(A) Represents historical income statement of First Commercial Corporation.
(B) Represents historical income statement of City National Bank.
(C) Represents pro forma results as if this pooling transaction had
occurred on or prior to December 31, 1994.
(D) Average shares outstanding for First Commercial Corporation and pro
forma combined have been restated to reflect the 7% stock dividend
declared November 1995 and the 5% stock dividend declared October 1996.
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1993
(Unaudited)
(In thousands except for per share data)
Pending
-------
First
Commercial CNB
Corporation (Pooling) Pro forma
(A) (B) (C)
-------- ------ -------
Interest income $234,995 $2,148 $237,143
Interest expense 90,421 646 91,067
-------- ------ --------
Net interest income 144,574 1,502 146,076
Provision for possible
loan and lease losses 4,416 54 4,470
Net interest income after
provision for possible
loan and lease losses 140,158 1,448 141,606
Other operating income 58,957 448 59,405
Other operating expenses 135,191 1,438 136,629
------- ----- -------
Income before income taxes 63,924 458 64,382
Income tax expense (benefit) 17,959 48 18,007
------- ----- -------
Net income $45,965 $410 $46,375
======= ===== =======
Preferred stock dividend 1,210 1,210
------- ------
Income applicable to common
shares $44,755 $410 $45,165
======= ===== =======
Average common shares
outstanding during period (D) 27,000,072 172,500 27,145,579
Net income per common share $1.66 $2.38 $1.66
See accompanying notes to pro forma combined statement of income.
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1993
(Unaudited)
(A) Represents historical income statement of First Commercial Corporation.
(B) Represents historical income statement of City National Bank.
(C) Represents pro forma results as if this pooling transaction had
occurred on or prior to December 31, 1993.
(D) Average shares outstanding for First Commercial Corporation and pro
forma combined have been restated to reflect the 5% stock dividend
declared November 1994, the 7% stock dividend declared November 1995,
and the 5% stock dividend declared October 1996.
<PAGE>
INFORMATION CONCERNING CITY NATIONAL BANK
Business of CNB
CNB was organized as a national banking association on June 24,
1985, and provides consumer and commercial lending for the
Whitehouse and southeast Tyler communities. The Bank has
branches located in Gresham, the Lake Palestine area, the West
Loop in Tyler and Gentry Parkway in Tyler. CNB's principal
office is located at 1125 Highway 110 North, Whitehouse, Texas
75791, telephone number: (903)839-6000.
CNB Stock
General
As of December 31, 1996, there were 172,500 outstanding shares of
CNB Stock. The approximate number of holders of CNB Stock on
that date was 75. There is no established public trading market
for shares of CNB Stock.
On May 8, 1996, the date preceding the announcement of the CNB
Merger, there was no independent basis for establishing a per
share cash market price for CNB Stock. Book value of CNB Stock
equaled $15.33 per share on that date.
CNB's dividends for the nine month period ended September 30,
1996 and the last two fiscal years are as follows:
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Dividend
Dividend Dividend Dividend Dividend Declared
1996:
Per share $ 0 $ 0 $ 0 $ - $ -
Total Declared 0 0 0 - -
1995:
Per share $ 0 $ 0 $ 0 $ 0 $ 0
Total Declared 0 0 0 0 0
1994
Per share $ .25 $ 0 $ 0 $ 0 $ .25
Total Declared 43,125 0 0 0 43,125
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of December 31, 1996, the
identity and total number of shares of CNB Common Stock owned by
persons known by management of CNB to own more than five percent
(5%) of the total outstanding shares.
-27-
<PAGE>
First Commercial
Common Stock to
CNB Common Stock be Owned Upon
Name and Address of Beneficially Owned Consummation of
Beneficial Owner on Dec. 31, 1996 the Merger(1)
% of % of
Shares Class Shares Class
Nancy Duress 12,522(2) 7.26 10,562 *
P.O. Box 1046
Whitehouse, TX 75791
D.W. Hamilton 16,173 9.38 13,642 *
P.O. Box 516
Whitehouse, TX 75791
Ray Howard 30,874(3) 17.90 26,042 *
P.O. Box 176
Whitehouse, TX 75791
John B. McDonald 33,633 19.50 28,370 *
P.O. Box 39
Troup, TX 75789
Jess Odom 25,466(4) 14.76 21,481 *
16027 County Line Road
Troup, TX 75789
Clyde Weaver 19,220 11.14 16,212 *
208 Ackertap
Whitehouse, TX 75791
*Denotes less than 1%
(1) Assumes an exchange ratio of .84352 First Commercial shares
for each outstanding CNB share.
(2) 200 shares are held by Mrs. Duress's husband.
(3) 4,000 shares are owned jointly by Mr. Howard and his wife,
and 26,874 are owned by the Ray Howard Company, of which Mr.
Howard serves as President.
(4) These shares are held jointly with his wife.
Security Ownership of Management
The following table sets forth the beneficial ownership of shares
of CNB Common Stock by each director of CNB and by all directors
and executive officers of CNB as a group as of December 31, 1996.
The number of shares shown as being beneficially owned by each
director are those over which he or she has either sole or shared
voting and/or investment powers.
-28-
<PAGE>
First Commercial
Common Stock to
CNB Common Stock be Owned Upon
Beneficially Owned Consummation of
Name of Directors on Dec. 31, 1996 the Merger(1)
% of % of
Shares Class Shares Class
Nancy Duress 12,522(2) 7.26 10,562 *
D.W. Hamilton 16,173 9.38 13,642 *
Ray Howard 30,874(3) 17.90 26,042 *
John B. McDonald 33,633 19.50 28,370 *
Jess Odom 25,466(4) 14.76 21,481 *
Tom Tatum 8,401(5) 4.87 7,086 *
Ray Terry 8,026(6) 4.65 6,770 *
Clyde Weaver 19,220 11.14 16,212 *
All Directors and Exe-
cutive Officers as a
Group (a total of 14
individuals) 156,474 90.71 131,988 *
*Denotes less than 1%
(1) Assumes an exchange ratio of .84352 First Commercial shares
for each outstanding CNB share.
(2) 200 shares are held by Mrs. Duress's husband.
(3) 4,000 shares are owned jointly by Mr. Howard and his wife,
and 26,874 shares are owned by the Ray Howard Company, of
which Mr. Howard serves as President.
(4) These shares are held jointly with his wife.
(5) 459 shares are held by Mr. Tatum's wife.
(6) 275 shares are held by Terry's Plant Farm, a company of
which Mr. Terry serves as President.
-29-
<PAGE>
<TABLE>
Selected Financial Data - City National Bank
The following selected financial data should be read in conjunction with
the financial statements, including the notes thereto, set forth in this
document. See "Consolidated Financial Statements of CNB."
CITY NATIONAL BANK
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Nine Months Ended Year Ended December 31,
September 30, <F1>
---------------- ----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operating Results:
Net Interest Income $ 1,503 $ 1,199 $ 1,654 $ 1,656 $ 1,502 $1,216 $871
Provision for Possible
Loan and Lease Losses 147 70 100 120 54 20 0
Net Income 335 225 265 354 410 476 303
Period End Balance Sheet Data:
Total Assets 41,622 38,522 39,535 32,879 30,047 24,042 21,750
Total Deposits 37,212 35,732 36,781 28,548 27,983 22,408 20,583
Shareholders' Equity 2,809 2,459 2,482 2,234 1,923 1,513 1,037
Per Common Share Data:
Net Income 1.94 1.30 1.54 2.05 2.38 2.76 1.76
Cash Dividends 0 0 0 .25 0 0 0
Book Value 16.28 14.26 14.39 12.95 11.15 8.77 6.01
<FN>
<F1>
The unaudited operating results for CNB for the nine months ended September 30, 1996 and 1995, in the
opinion of CNB management, included all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation. Interim results for the nine months ended September 30, 1996,
are not necessarily indicative of results for the full year 1996.
</FN>
</TABLE>
-30-
<PAGE>
Management's Discussion and Analysis or Plan of Operation
The following discussion provides certain information concerning
CNB's financial condition and results of operations. For a more
complete understanding of the following discussion, reference
should be made to the financial statements of CNB presented
elsewhere in this Joint Proxy Statement/Prospectus.
Financial Condition - September 30, 1996 Compared with September
30, 1995
During this period of time net loans increased by $3,172,294 or
10.90%, which was funded by a $1,479,584 increase in deposits
(4.14%) and a $1,572,251 reduction in short term investments. In
order to maintain liquidity, the Bank increased short term
borrowings by $1,165,000. Assets increased by $3,099,366 or
8.05% and equity increased by $349,733 or 14.22% (no dividends
were paid). Risk weighted assets totaled $33,018,000 at
September 30, 1996 with a capital to risk weighted asset ratio of
9.57%. The first nine months of 1996 yielded a return on assets
of 1.11% and a return on equity of 16.89%.
Statement of Income - Nine Months Ended September 30, 1996
Compared with September 30, 1995
Net income for the first nine months of 1996 was $334,657
compared to $224,665 for the same period in 1995. The increase
in loan volume fueled a 65 basis point increase in loan yield and
a 94 basis point increase in net interest yield. Net interest
margin increased $303,946 or 25.36%.
The Bank increased its loan loss provision from $70,000 for the
first nine months of 1995 to $147,000 for the same period in
1996. Non interest income increased by $51,613 or 10.50%
inclusive of a $15,000 loss on sale of assets. As a result of the
expansion of the Bank's facilities in 1995 and 1996, occupancy
expense increased by $84,014 or 30.24%. Salaries and benefits
increased modestly at $36,091 or 6.62% with a $12,538 or 2.53%
reduction in all other expenses.
1995 Compared to 1994
1995 was a period of excellent growth for CNB. Loans increased
by $4,383,638 or 17.34%, deposits increased by $8,233,224 or
28.84% and total assets increased by $6,656,345 or 20.37%. The
increase in loans and deposits was prompted by CNB expanding its
facilities - building, furniture and fixtures increased by
$675,570 net of depreciation expense or 41.78%. Dividends were
not paid in 1995, which contributed to the $247,517 or 11.08%
increase in stockholders' equity. In addition to the increase in
loans, the deposit growth was used to eliminate $1,855,000 in
borrowings and increase short term investments by $1,716,749.
CNB concluded the year with a return on assets of .72% and a return
on equity of 11.17%, both of which decreased from 1994.
-31-
<PAGE>
Net income for 1995 was $264,517 compared to $354,363 in 1994.
The $543,356 increase in interest income was offset by a $545,803
increase in interest expense creating a flat net interest margin.
The $1,421,912 increase in non-interest bearing demand deposits
yielded a $126,852 increase in deposit fee income. The increase
in other income resulted mainly from losses on sale of assets
sustained in 1994.
The primary negative impact on earnings was the $186,953 (73.64%)
increase in occupancy and equipment costs, resulting from CNB's
expansion.
1994 compared to 1993
1994 was a period of above average growth for CNB. Assets
increased by $2,831,343 or 9.42%. Deposits remained relatively
flat with a $565,112 or 2.02% increase; however, loan growth had
a substantial $4,739,403 or 23.07% increase. Minimal deposit
growth required the use of short-term investments and borrowings
to fund loans. Short term investments decreased by $2,953,000 or
79.23% and borrowings increased by $1,855,000. CNB used a
portion of its resources for expansion by adding approximately
$400,000 to building and equipment. Return on assets and return
on equity were of 1.14% and 16.99%, respectively.
Net income fell by $55,776 or 13.60% from 1993 to $354,363. The
increase in loan volume strengthened the net interest margin by
$153,370 or 10.21%. Although total deposit growth was minimal,
non-interest bearing demand deposits increased by $1,031,633 or
24.24% resulting in a $51,808 or 14.22% increase in deposit fee
income. Other income fell sharply by $22,799 or 27.22% due to
the loss on sale of assets of $27,398.
Non interest expense increased by $53,155 or 8.02% which was
evenly distributed among the major expense categories. Salaries
increased by $45,694 or 8.08%, occupancy expense increased by
$35,066 or 16.03% and all other expenses decreased by $27,605 or
4.22%. The provision for federal income taxes increased by
$118,500 or 244.33%.
Allowance for Loan Losses
A summary of the changes in the allowance for loan losses for
each of the past two years, including loan loss experience by
major category, is presented below.
-32-
<PAGE>
Nine Months Ended
September 30
1996 1995
Balance at beginning of period $292,000 $278,000
Amounts charged-off:
Commercial 23,000 47,000
Real estate mortgage 0 0
Consumer 105,000 29,000
-------- --------
Total loans charged-off $128,000 $ 76,000
Recoveries on amounts previously
charged-off:
Commercial 6,000 5,000
Real estate mortgage 0 0
Consumer 10,000 13,000
------ ------
Total recoveries 16,000 18,000
Net charge-offs 112,000 58,000
Provision for loan losses 147,000 70,000
------- -------
Balance at end of period 327,000 290,000
======== ========
Ratio of net charge-offs
during the period to average
loans outstanding during the
period 0.36% 0.21%
The allowance for loan losses is established through a provision
for loan losses charged to expenses. The allowance represents an
amount which, in management s judgment, will be adequate to
absorb probable losses on existing loans that may become
uncollectible. The adequacy of the allowance for loan losses is
determined on an ongoing basis by means of an analysis of the
overall quality of the loan portfolio, the historical loan loss
experience of the bank, loan delinquency trends and the economic
conditions within the trade area. Also, additional allocations
are made to the allowance based on specially identified potential
loss situations. These potential loss situations are identified
by an internal loan review function reporting directly to CNB s
Board of Directors, as well as by the account officers
evaluation of their portfolios.
The tables below set forth an allocation of the allowance for
loan losses according to the categories of loans indicated and a
percentage distribution of the allowance allocation. In making
the allocation, consideration was given to such factors as
management s evaluation of risk in each category, current
economic conditions and charge-off experience. The following
allocation does not indicate the unavailability of any portion of
the allowance for loan losses to absorb losses in any loan
category.
-33-
<PAGE>
Allocation of Allowance for loan losses
September 30
1996 1995
Commercial $124,043 $ 81,437
Real Estate 130,547 65,602
Consumer 72,629 142,514
-------- --------
Total 327,219 289,553
======== ========
Percentage Distribution of Allowance for Loan Losses and
Categories of Loans as Percent of Gross Loans at September 30
1996 1995
Allowance Loans Allowance Loans
--------- ----- -------- -----
Commercial 37.90% 22.76% 28.13% 27.00%
Real Estate 39.90% 44.15% 22.65% 43.90%
Consumer 22.20% 33.09% 49.22% 29.10%
------ ------ ------ ------
100.00% 100.00% 100.00% 100.00%
======= ======= ======= =======
Nonaccrual and Past Due Loans
It is the policy of CNB to place loans greater than ninety days
past due on nonaccrual status, unless the lending officer can
provide sufficient evidence supporting probable collection within
the near future. All loans greater than one hundred and twenty
days past due are placed on nonaccrual. At the discretion of the
lending officer, some loans past due less than ninety days may be
placed on nonaccrual.
As of September 30, 1996 and 1995, there were approximately $229
thousand and $99 thousand, respectively, in nonaccrual loans and
$1.88 million and $29 thousand, respectively, in accruing loans
contractually past due 90 days or more as to principal or
interest payments.
INFORMATION CONCERNING FIRST COMMERCIAL
Information Incorporated by Reference
The following documents, or the indicated portions thereof, have
been filed by First Commercial with the Commission under the
-34-
<PAGE>
Exchange Act and are incorporated by reference in this Joint
Proxy Statement/Prospectus:
1. Annual Report on Form 10-K for the year ended December
31, 1995, as amended by Form 10-K/A filed June 28,
1996;
2. Proxy Statement for annual meeting of stockholders held
April 16, 1996;
3. Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1996, June 30, 1996 and
September 30, 1996;
4. Current Reports on Form 8-K dated March 13, 1996 and
June 21, 1996;
5. Form 10-C filed January 9, 1996;
6. The description of the Company's common Stock contained
in the Registration Statement on Form 10 filed April
30, 1981 and any amendment or report filed for the
purpose of updating such description; and
7. Registration Statement on Form 8-A for the preferred
share purchase rights as filed on January 9, 1991.
In addition, all other reports filed by First Commercial under
the Exchange Act between the date of this Joint Proxy
Statement/Prospectus and the date of the CNB Special Meeting are
incorporated herein by reference from date of filing. Any
statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Joint Proxy
Statement/Prospectus. See "Incorporation of Certain Documents by
Reference" for information with respect to securing copies of
documents incorporated by reference in this Joint Proxy
Statement/Prospectus.
Recent Developments
On October 4, 1996, First Commercial announced that it had
entered into a definitive agreement to acquire W.B.T. Holding
Company ("WBT") and its wholly-owned subsidiary, United American
Bank, in Memphis, Tennessee. United American Bank has assets of
$274 million, loans of $174 million and deposits of $250 million.
First Commercial will issue approximately 1.3 million shares of
its common stock in exchange for all of the outstanding shares of
WBT common stock, subject to adjustments for non-bank assets and
-35-
<PAGE>
liabilities of WBT. First Commercial expects to close the
transaction, which is subject to regulatory approval, in the
first quarter of 1997.
On November 23, 1996, First Commercial completed its acquisition
of Security National Bank, Nacogdoches, Texas. Pursuant to the
terms of the transaction, Security National Bank was merged into
Stone Fort National Bank, Nacogdoches, Texas, a wholly-owned
subsidiary of First Commercial. First Commercial issued 253,154
shares of its common stock in connection with the acquisition.
As of September 30, 1996, Security National Bank had assets of
$37 million, loans of $16 million and deposits of $33 million.
On December 20, 1996, First Commercial announced that it had
entered into a definitive agreement to acquire Southwest
Bancshares, Inc. ("Southwest Bancshares") and its wholly-owned
subsidiaries, First Bank of Arkansas, Jonesboro; First Bank of
Arkansas, Russellville; First Bank of Arkansas, Searcy; and First
Bank of Arkansas, Wynne. Southwest Bancshares has assets of $777
million, loans of $589 million and deposits of $674 million.
First Commercial will issue approximately 3.4 million shares of
its common stock in exchange for all of the outstanding shares of
Southwest Bancshares common stock. First Commercial expects to
close the transaction, which is subject to Southwest Bancshares
stockholder and regulatory approval, in the second quarter of
1997.
On February 5, 1997, First Commercial announced that it had
entered into a definitive agreement to acquire First Central
Corporation ("First Central") and its wholly-owned subsidiary,
First National Bank, Searcy, Arkansas. First Central has assets
of $260,000,000, loans of $140,000,000, and deposits of
$230,000,000. First Commercial will issue approximately 1.6
million shares of its common stock in exchange for all of the
outstanding shares of First Central common stock. First
Commercial expects to close the transaction, which is subject to
First Central stockholder and regulatory approval, in the second
quarter of 1997.
COMPARATIVE RIGHTS OF SHAREHOLDERS
General
If the stockholders of CNB approve the CNB Merger, and if the CNB
Merger is subsequently consummated, stockholders of CNB, other
than those exercising dissenters' rights, will become
stockholders of First Commercial. The rights of stockholders of
First Commercial will be governed by and be subject to the
Arkansas Business Corporation Act of 1987 and First Commercial's
Second Amended and Restated Articles of Incorporation, as amended
("First Commercial's Articles"). The following is a brief
summary of certain of the principal differences between the
rights of the stockholders of First Commercial and the rights of
the stockholders of CNB.
<PAGE>
Authorized and Issued Shares
First Commercial's Articles authorize the Corporation to issue a
maximum of 50,000,000 shares of common stock, $3.00 par value per
share, of which 28,810,466 shares are outstanding, and 400,000
shares of preferred stock, $1.00 par value per share, of which no
shares are outstanding.
CNB's Articles of Association authorize it to issue a maximum of
187,500 shares of common stock, $5.00 par value per share, of
which 172,500 shares are issued and outstanding.
-36-
<PAGE>
Federal banking laws provide, with certain exceptions, that the
capital stock of CNB may be sold only for cash consideration and
that any issuance of capital stock must be approved by the OCC
and by the vote of the holders of two-thirds of the outstanding
bank stock. On the other hand, the issuance of stock by First
Commercial will not be subject to regulatory or shareholder
approval, and such stock may be issued for cash, property or
services rendered.
First Commercial has the ability to issue and sell its common
stock through public offerings or private placements. Private
placements may be used to dilute the stock ownership of persons
seeking to acquire control of First Commercial. Dilution would
occur because the person's percentage ownership of First
Commercial would be reduced. It should be recognized that
private placements would dilute the stock ownership of all
shareholders, not just those seeking to acquire control. At this
time, however, First Commercial has no plans to issue additional
shares or privately place any such shares, except for shares of
common stock to be issued in connection with certain acquisitions
discussed herein. See "Information Concerning First Commercial -
Recent Developments."
Dividends
The payment of dividends by CNB is subject to various conditions
and restrictions which are set forth in applicable federal
banking laws. Among other things, the approval of the OCC is
required if the total of all dividends declared by a bank in any
calendar year will exceed the total of its net profits of that
year combined with its retained net profits of the preceding two
years. In addition, a bank may increase its capital stock
through the payment of a stock dividend only after obtaining the
approval of the OCC and the holders of at least two-thirds of the
outstanding bank stock.
If the CNB Merger is approved, the foregoing restrictions will
continue to apply to dividends paid by the bank to First
Commercial. However, the payment of dividends by First
Commercial to its shareholders (including the former shareholders
of CNB) will be subject to the Arkansas Business Corporation Act
of 1987. The Arkansas Business Corporation Act of 1987 provides,
among other things, that dividends may be paid in cash, property
or shares of company stock, unless the dividend payment would
render the company insolvent.
Voting Rights
General
Holders of First Commercial Common Stock are entitled to one vote
for each share held on all matters on which holders of Common
Stock are entitled to vote. Stockholders of CNB Stock and SNB
Stock also are entitled to one vote for each share held on all
matters brought to a vote.
-37-
<PAGE>
Generally, under federal banking laws, action on a matter
presented to the shareholders of a bank is approved if a majority
of the shares represented at a meeting are voted in favor of the
action, provided that a quorum of shares is represented at the
meeting. The Arkansas Business Corporation Act of 1987 provides
that if a quorum exists, action on a matter presented to
shareholders will be approved if the votes cast favoring the
action exceed the votes cast opposing the action. Accordingly,
under the Arkansas Business Corporation Act of 1987, matters can
be approved by shareholders of First Commercial by less than a
majority of the shares represented at a meeting, if any shares
represented at the meeting are not voted.
Under First Commercial's Articles, the Board of Directors of
First Commercial is authorized to issue preferred stock. In the
event a series of preferred stock is issued, the holders of such
preferred stock shall be entitled to vote on the election of two
directors in the event of a default in preference dividends on
the preferred stock and shall have such other voting rights as
may be prescribed by First Commercial's Board of Directors in the
articles of amendment creating such series of preferred stock,
which articles of amendment may be adopted by the Board of
Directors without further stockholder action.
Voting Requirements for Extraordinary Corporate Matters
For CNB, the affirmative vote of two-thirds of the outstanding
shares of bank stock is required by the federal Bank Merger Act
to approve a merger or consolidation.
The corporate law governing First Commercial generally requires
the affirmative vote of the holders of a majority of the votes
entitled to be cast to approve mergers, consolidations, sales of
all or substantially all of the corporation's assets, or
voluntary dissolution. First Commercial's Articles provide that
if a transaction is contemplated with an "Interested Stockholder"
of First Commercial, as defined in the fair price provision
discussed below, the transaction must be approved by the holders
of at least 80% of the votes entitled to be cast. If, on the
other hand, the transaction is approved by a majority of
disinterested directors or if the price paid to all stockholders
in connection with the transaction meets certain standards of
fairness set forth in the fair price provision, the 80% vote
requirement does not apply.
Voting for Election of Directors
Stockholders of CNB are entitled to cumulate votes when electing
directors for their respective banks. A stockholder entitled to
vote for the election of directors may vote the number of shares
owned for as many candidates as a stockholder is entitled to
elect, or the stockholder may cumulate his votes and distribute
them among any candidate or candidates as he sees fit. Such
cumulative voting rights afford minority stockholders some
assurance of representation on a bank's board of directors.
-38-
<PAGE>
Under the law governing First Commercial, however, cumulative
voting is authorized only if affirmatively stated in a
corporation's articles of incorporation. First Commercial's
Articles do not grant cumulative voting rights. Accordingly, any
stockholder who obtains a majority of the outstanding shares of
First Commercial Common Stock will have the power to elect all
directors.
The directors of CNB are elected for a term of one year.
Pursuant to First Commercial's Articles, its board of directors
is divided into three classes of approximately equal size. Such
a board is referred to as a classified or staggered board of
directors. Each director of First Commercial is elected for a
term of three years, and the terms are staggered in such a way
that approximately one-third of the terms expire at each annual
meeting. The staggering of terms of directors has the potential
effect of increasing the difficulty of changing the composition
of First Commercial's Board of Directors to the extent that at
least two annual meetings, rather than one, will be required in
order for First Commercial stockholders to effect a change in the
majority control of its Board of Directors.
Amendment of Articles of Incorporation
Amendments to the Articles of Association of CNB must be approved
by a majority of the outstanding shares entitled to vote thereon.
Amendments to First Commercial's Articles are deemed approved if
the number of votes cast in favor of the amendment exceed the
votes cast against the amendment, provided that a quorum of those
entitled to vote is represented at the meeting; provided,
however, if the amendment creates dissenters' rights for a voting
group, the amendment must be approved by a majority of the votes
entitled to be cast by such voting group. The reduced voting
requirement for stockholder approval may make stockholder
approval for amendments to First Commercial's Articles easier to
obtain and thus more difficult for minority stockholders to
defeat. However, First Commercial's Articles do require the
approval of at least 80% of the shares entitled to vote with
regard to the amendment, modification or repeal of provisions
dealing with a classified Board of Directors, advance notice from
stockholders of nominations for election of First Commercial
Directors, the filling of vacancies on the First Commercial Board
of Directors, removal of First Commercial Directors, action of
stockholders without a meeting, and an amendment of parallel
provisions in First Commercial's Bylaws.
First Commercial's Board of Directors has the power to amend
First Commercial's Articles with respect to matters of a routine
nature without shareholder approval. Such types of amendment
include those: (i) to change each issued and unissued authorized
share of an outstanding class into a greater number of whole
shares if only shares of that class are outstanding; (ii) to
change the corporate name in limited fashion; or (iii) to adopt
any other amendment allowed to be adopted without shareholder
approval under the corporate law governing First Commercial.
-39-
<PAGE>
First Commercial stockholders, to the extent they comply with the
appropriate dissenting stockholder provisions, obtain certain
rights when amendments are approved that (i) alter or abolish a
preferential right of the shares; (ii) create, alter or abolish a
right in respect of redemption; (iii) alter or abolish preemptive
rights; (iv) exclude or limit the rights of shares to vote on any
matter or cumulative voting rights; or (v) reduce the number of
shares of any holder to a fractional share if such fractional
share is to be acquired for cash.
Amendment of Bylaws
Stockholders of CNB have the power to amend the Bylaws of their
bank. Stockholders of First Commercial have the power to amend
the Bylaws of First Commercial with the exception that Bylaw
provisions relating to the nomination of directors by
stockholders, notice from stockholders of matters to be brought
before an annual meeting by stockholders, special meetings, the
taking of action by stockholders without a meeting, the number,
election and terms of directors, the removal of directors, and
the filling of vacancies may be amended or appealed only with the
consent of the holders of at least 80% of the First Commercial
Common Stock entitled to vote.
Removal of Directors
Stockholders of CNB may remove a director, either with or without
cause, by a vote of the majority of the shares entitled to vote
at an election of directors. The stockholders of First
Commercial may remove a director for cause only.
Preemptive Rights
Shareholders of CNB have preemptive rights, meaning that upon a
proposed sale by CNB of additional shares of bank stock,
shareholders of that bank have the right to acquire such shares
in proportion to their present holdings of bank stock upon terms
no less favorable than those of the proposed sale. Stockholders
of First Commercial Common Stock do not have preemptive rights.
Indemnification of Directors and Officers and Limitation of
Director Liability
The Arkansas Business Corporation Act of 1987 contains detailed
provisions for indemnification of directors and officers of
Arkansas corporations against expenses, judgments, fines and
settlements incurred by them in connection with litigation.
Article Twelfth of First Commercial's Articles provides for
mandatory indemnification of the directors and executive officers
of First Commercial to the fullest extent legally permissible
under the provisions of the Arkansas Business Corporation Act of
1987. The Articles of Association of CNB merely provide that the
bank may indemnify a director, officer, or employee in such
situations.
-40-
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling First Commercial pursuant to the foregoing
provisions, First Commercial has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
Article Eleventh of First Commercial's Articles provides that to
the fullest extent permitted by the Arkansas Business Corporation
Act of 1987 no director of First Commercial shall be personally
liable to First Commercial or its stockholders for monetary
damages for or with respect to any acts or omissions in the
performance of his duties. These provisions do not extend
protection to directors for claims by third parties, but only
eliminate personal liability of a director to First Commercial or
its stockholders for monetary damages for a breach of his
fiduciary duty as a director. A director is personally liable
for monetary damages to First Commercial or its stockholders (i)
for breach of a duty of loyalty to First Commercial or its
stockholders, (ii) for an act of omission not in good faith or
involving intentional misconduct or a knowing violation of law,
(iii) for the payment of unlawful dividends or unlawful stock
repurchases or redemptions in violation of Arkansas law, or (iv)
for a transaction in which the director received an improper
personal benefit. The provisions do not eliminate or limit the
liability of a director arising in connection with causes of
action brought under federal or state securities laws or under
federal or state banking laws. Furthermore, since these director
liability provisions only eliminate money damage awards, they do
not affect the availability of equitable relief, such as an
injunction or rescission (although in a given situation such
relief may not be available or as effective as personal liability
for monetary damages). The provisions do not eliminate or limit
liability for acts or omissions by an officer or employee of
First Commercial, even though such person may also be a director,
if the act or omission in question was performed by such person
while acting in a capacity other than that of a director.
Under certain circumstances, the director liability provisions of
First Commercial's Articles could have an anti-takeover effect
with respect to First Commercial. Because of the decreased
likelihood of being held accountable for monetary damages for a
breach of fiduciary duty as directors, the directors of First
Commercial may have a greater tendency to reject takeover
proposals benefiting stockholders of First Commercial which the
directors might have accepted absent such statutory protection
provided by First Commercial's Articles.
Article TWELFTH of CNB's Articles provides that to the fullest
extent not prohibited by law, no director of CNB shall be
personally liable to the bank or any of its shareholders for
monetary damages for an act or omission in the director's
capacity as a director. Such provision does not eliminate or
limit the liability of a director for:
-41-
<PAGE>
1. A breach of his duty of loyalty to the bank or its
shareholders;
2. An act or omission not in good faith or that involved
intentional misconduct or a knowing violation of the law;
3. A transaction from which he received an improper
benefit;
4. An act or omission for which the liability of a
director is expressly provided for by statute; or
5. An act related to an unlawful stock repurchase or
payment of a dividend.
Filling Vacancies on the Board of Directors
Under the Articles of Association of CNB, vacancies on the bank's
Board of Directors may be filled by the remaining members of the
Board. Under the corporate law governing First Commercial, and
as provided in First Commercial's Articles, vacancies on its
board of directors shall be filled solely by the affirmative vote
of a majority of the remaining directors then in office. This
provision precludes the holder of a majority of First Commercial
Stock from removing incumbent directors and simultaneously
gaining control of the Board of Directors by filling the
vacancies created by removal with his own nominees.
Nomination of Director Candidates and Advance
Notice of Matters to be Brought Before an Annual
Meeting by Stockholders
First Commercial's Articles provide that nominations for the
election of directors and placement of matters before the
stockholders at an annual meeting must be made as provided by the
First Commercial Bylaws. The pertinent bylaw provisions provide
that stockholders intending to nominate director candidates for
election must deliver written notice thereof to the Secretary of
First Commercial not later than (i) with respect to an election
to be held at an annual meeting of stockholders, ninety (90) days
prior to the anniversary date of the immediately preceding annual
meeting of stockholders, and (ii) with respect to an election to
be held at a special meeting of stockholders, the close of
business on the tenth day following the date on which notice of
such meeting is first given to stockholders. The Bylaws further
provide that the notice shall set forth certain information
concerning such stockholder and his nominee(s), including their
names and addresses, a representation that the stockholder is
entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons
specified in the notice, a description of all arrangements or
understandings between the stockholder and each nominee, such
other information as would be required to be included in a proxy
statement soliciting proxies for the election of the nominees of
such stockholder and the consent of each nominee to serve as a
director of First Commercial if so elected.
-42-
<PAGE>
The First Commercial Bylaws further provide that for business
properly to be brought before an annual meeting by a stockholder,
the stockholder must deliver written notice of such matter to the
Secretary of First Commercial not less than ninety (90) days
prior to the anniversary date of the immediately preceding annual
meeting of stockholders and the notice must set forth as to each
matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business, (ii) the name
and address of the stockholder proposing such business, (iii) the
class and number of shares of First Commercial beneficially owned
by the stockholder, and (iv) any material interest of the
stockholder in such business.
The advance notice requirements, by regulating stockholder
nominations and matters to be brought before an annual meeting by
stockholders, afford the board of directors of First Commercial
the opportunity to consider the qualifications of proposed
nominees and the importance of matters proposed to be brought
before an annual meeting and to the extent deemed necessary or
desirable by the Board, inform stockholders about the
qualifications of nominees and issues important to the
consideration of matters brought before an annual meeting. There
is the chance that these provisions may discourage or deter a
third party from conducting a solicitation of proxies to elect
its own slate of directors or to adopt a matter which serves its
own interest, without regard to whether such might be harmful or
beneficial to First Commercial and its stockholders.
The Articles of Association of CNB provide that in order for
shareholders to nominate individuals for election to the Board of
Directors such nomination must be in writing and must be
delivered or mailed to the President of the bank and to the OCC
not less than fourteen (14) nor more than fifty (50) days prior
to any meeting of stockholders called for the election of
directors; provided, however, that if less than twenty-one (21)
days notice of the meeting is given to stockholders, such
nomination shall be mailed or delivered not later than the close
of business on the seventh (7th) day following the day on which
notice of the meeting was mailed. Such notice must contain the
following information: (i) the name and address of the proposed
nominee; (ii) the principal occupation of the nominee; (iii) the
total number of shares of capital stock of the bank that will be
voted for the nominee; (iv) the name and residence address of the
notifying shareholder; and (v) the number of shares of capital
stock of the bank owned by the notifying shareholder.
Fair Price Provision
The following summary of the fair price provision in First
Commercial's Articles (the "Fair Price Provision") is qualified
in its entirety by reference to the Fair Price Provision found in
Article Eighth of First Commercial's Articles, which appear as an
exhibit to the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part.
-43-
<PAGE>
First Commercial's Articles require approval by holders of eighty
percent (80%) of the votes entitled to be cast as a condition for
mergers and certain other business combinations (as hereinafter
more fully defined, "Business Combination") involving First
Commercial and any person or group holding five percent (5%) or
more of the First Commercial Stock (an "Interested Shareholder"),
unless the transaction is approved by a majority of the members
of the First Commercial Board who are unaffiliated with the
Interested Shareholder and who were directors before the
Interested Shareholder became an Interested Shareholder
("Disinterested Directors"), or certain minimum price and
procedural requirements are met.
A Business Combination includes (a) a merger or consolidation of
First Commercial with an Interested Shareholder, (b) the sale or
other disposition by First Commercial or a subsidiary of assets
of $10,000,000 or more if an Interested Shareholder is a party to
the transaction, (c) the issuance of stock or other securities of
First Commercial or of a subsidiary to a person that, immediately
prior to such issuance, is an Interested Shareholder in exchange
for cash or property of $10,000,000 or more, (d) the adoption of
any plan or proposal for the liquidation or dissolution of First
Commercial proposed by or on behalf of an Interested Shareholder,
or (e) any reclassification of securities, recapitalization,
merger with a subsidiary or other transaction which has the
effect, directly or indirectly, of increasing the proportionate
shares of the outstanding stock of any class of First Commercial
or a subsidiary owned by an Interested Shareholder.
The 80% affirmative stockholder vote contemplated by the Fair
Price Provision is not required if (1) the transaction is
approved by a majority of the Disinterested Directors or (2) all
of the various minimum price criteria and procedural requirements
are satisfied.
The minimum price criteria referred to above require that when
cash or other consideration is being paid to First Commercial
stockholders in connection with a Business Combination, the
consideration to be paid would be required to be either cash or
the same type of consideration used by the Interested Shareholder
in acquiring the largest portion of its common stock prior to the
first public announcement of the terms of the proposed Business
Combination. In the case of payments to First Commercial
stockholders, the per share fair market value of such payments
would have to be at least equal in value to the higher of (i) the
highest per share price paid by an Interested Shareholder in
acquiring any shares during the two years prior to announcement
of the Business Combination or in the transaction in which it
became an Interested Shareholder (whichever is higher) or (ii)
the fair market value per share of common stock on the date of
the announcement of the Business Combination or on the date on
which the Interested Shareholder became an Interested Shareholder
(whichever is higher), in either case appropriately adjusted for
any stock dividend, stock split or combination of shares.
-44-
<PAGE>
The Fair Price Provision provides that a vote of the holders of
eighty percent (80%) or more of the votes entitled to be cast by
the holders of First Commercial Common Stock is required in order
to amend, alter or repeal, or adopt any provisions inconsistent
with, the Fair Price Provision.
Because of the higher percentage requirement for stockholder
approval of any Business Combination not meeting the price and
procedural requirements described above, and the possibility of
having to pay a higher price than would otherwise be the case to
other stockholders in such a Business Combination, it may become
more costly for a purchaser to acquire control of First
Commercial. The Fair Price Provision may therefore decrease the
likelihood that a tender offer will be made for less than 80% of
the voting power of First Commercial Common Stock and, as a
result, may adversely affect those stockholders who would desire
to participate in such a tender offer. The Fair Price Provision
also has the effect of giving veto power to the holders of a
minority of the voting power of First Commercial Common Stock
with respect to a Business Combination that is opposed by the
Board of Directors but which a majority of the stockholders may
believe to be desirable and beneficial. In addition, since only
the disinterested directors will have the authority to eliminate
the 80% stockholder vote required for a Business Combination, the
Fair Price Provision may have the effect of insulating current
management against the possibility of removal in the event of a
takeover bid.
LEGAL OPINIONS
The validity of the shares of First Commercial Common Stock
offered hereby will be passed upon for First Commercial by
Friday, Eldredge & Clark, Little Rock, Arkansas. Legal opinions
relating to tax matters will be furnished by Friday, Eldredge &
Clark, special tax counsel to First Commercial. Certain legal
matters will be passed upon for CNB by Thomas T. Tatum.
EXPERTS
The consolidated financial statements of First Commercial at
December 31, 1995 and 1994, and for each of the three years in
the period ended December 31, 1995 incorporated by reference in
First Commercial's Annual Report (Form 10-K) for the year ended
December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon and
incorporated by reference herein which, as to the year 1993, are
based in part on the report of KPMG Peat Marwick LLP, independent
auditors. The financial statements referred to above are
included in reliance upon such reports given upon the authority
of such firms as experts in accounting and auditing.
-45-
<PAGE>
FINANCIAL STATEMENTS OF CITY NATIONAL BANK
INDEX TO FINANCIAL STATEMENTS OF CNB
Page
Balance Sheets for September 30, 1996 and 1995 (unaudited) F-CNB-2
Statements of Income for the Nine Months Ended September 30, 1996
and 1995 (unaudited) F-CNB-3
Balance Sheets for December 31, 1995 and 1994 (unaudited) F-CNB-4
Statements of Income for the Years Ended December 31, 1995,
1994 and 1993 (unaudited) F-CNB-5
Statements of Cash Flows for the Nine Months Ended September 30,
1996 and 1995 and for the Years Ended December 31, 1995,
1994 and 1993 (unaudited) F-CNB-8
F-CNB-1
<PAGE>
City National Bank
Balance Sheets
Unaudited
September 30,
--------------------
1996 1995
Assets
--------
Cash and Due from Banks 3,621,796 2,335,357
Short Term Investments 0 1,572,251
Investment Securities 2,544,301 2,468,448
Real Estate Loans 14,398,032 12,906,057
Commercial Loans 7,421,661 7,937,099
Consumer Loans and Other 11,433,989 9,233,278
Unearned Discount (644,816) (677,528)
---------- ----------
Total Loans 32,608,866 29,398,906
Reserve for Loan Losses (327,219) (289,553)
Building 1,910,820 1,877,455
Furniture and Fixtures 450,928 463,190
Bank Auto 0 0
Total Fixed Assets 2,361,748 2,340,645
Other Assets 812,342 696,414
---------- ----------
Total Assets 41,621,834 38,522,468
Liabilities
-------------
Non Interest Bearing Demand 8,116,384 6,206,567
Interest Bearing Demand 10,656,105 12,149,448
Savings 2,939,741 3,324,731
Certificates of Deposit 15,499,648 14,051,548
---------- ----------
Total Deposits 37,211,878 35,732,294
Borrowed Funds 1,165,000 0
Other Liabilities 436,278 331,229
Total Liabilities 38,813,156 36,063,523
---------- ----------
<PAGE>
Common Stock 862,500 862,500
Surplus 862,500 862,500
Undivided Profits 1,108,454 733,945
Unrealized gains (losses) (24,776) 0
--------- ---------
Total Equity 2,808,678 2,458,945
---------- ----------
Total Liabilities and Equity 41,621,834 38,522,468
========== ==========
F-CNB-2
<PAGE>
City National Bank
Statements of Income
Unaudited
Nine Months Ended September 30,
------------------------------
1996 1995
---- ----
Interest Income on Securities 161,513 190,966
Interest Income on Loans 2,246,946 1,871,450
Loan Fee Income 62,406 56,645
--------- ---------
2,470,865 2,119,061
Total Interest Income
Interest Expense 968,207 920,349
--------- ---------
Net Interest Income 1,502,658 1,198,712
Provision for Loan Losses 147,000 70,000
--------- ---------
Net Int Income after Provision 1,355,658 1,128,712
Deposit Fee Income 446,425 372,925
Other Income 96,618 118,505
-------- --------
Total Noninterest Income 543,043 491,430
Salaries and Benefits 581,152 545,061
Occupancy Expense 361,833 277,819
All Other Expenses 482,059 494,597
--------- ---------
Total Noninterest Expenses 1,425,044 1,317,477
--------- ---------
Net Income Before FIT 473,657 302,665
Federal Income Tax Provision 139,000 78,000
--------- ---------
Net Income After Taxes 334,657 224,665
========= =========
F-CNB-3
<PAGE>
City National Bank
Balance Sheets
Unaudited
December 31,
---------------
1995 1994
------ ------
Assets
----------
Cash and Due from Banks 2,232,512 2,263,118
Short Term Investments 2,491,000 774,251
Investment Securities 2,357,173 2,655,303
Real Estate Loans 12,935,132 9,928,944
Commercial Loans 8,080,734 7,596,676
Consumer Loans and Other 9,291,714 8,386,478
Unearned Discount (639,642) (627,798)
---------- ----------
Total Loans 29,667,938 25,284,300
Reserve for Loan Losses (291,748) (278,214)
Building 1,877,794 1,378,444
Furniture and Fixtures 414,744 238,524
Bank Auto 0 15,847
--------- ---------
Total Fixed Assets 2,292,538 1,632,815
Other Assets 785,445 546,940
---------- ----------
Total Assets 39,534,858 32,878,513
========== ==========
Liabilities
-------------
Non Interest Bearing Demand 6,709,097 5,287,185
Interest Bearing Demand 12,340,583 11,224,325
Savings 3,205,331 2,956,734
Certificates of Deposit 14,526,108 9,079,651
---------- ----------
Total Deposits 36,781,119 28,547,895
Borrowed Funds 0 1,855,000
Other Liabilities 271,942 241,338
---------- ----------
Total Liabilities 37,053,061 30,644,233
---------- ----------
F-CNB-4
<PAGE>
Common Stock 862,500 862,500
Surplus 862,500 862,500
Undivided Profits 773,797 509,280
Unrealized gains (losses) (17,000) 0
---------- ----------
Total Equity 2,481,797 2,234,280
---------- ----------
Total Liabilities and Equity 39,534,858 32,878,513
========== ==========
<PAGE>
City National Bank
Statements of Income
Unaudited
Year Ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
Interest Income on Securities 259,054 209,572 237,589
Interest Income on Loans 2,566,025 2,071,099 1,826,646
Loan Fee Income 98,470 99,522 83,865
--------- --------- ---------
2,923,549 2,380,193 2,148,100
Total Interest Income
Interest Expense 1,270,238 724,435 645,712
--------- --------- ---------
Net Interest Income 1,653,311 1,655,758 1,502,388
Provision for Loan Losses 100,000 120,000 53,500
--------- --------- ---------
Net Int Income after Provision 1,553,311 1,535,758 1,448,888
Deposit Fee Income 543,092 416,240 364,432
Other Income 112,737 60,960 83,759
-------- -------- ---------
Total Noninterest Income 655,829 477,200 448,191
Salaries and Benefits 737,607 611,095 565,401
Occupancy Expense 440,819 253,866 218,800
All Other Expenses 643,497 626,634 654,239
--------- --------- ---------
Total Noninterest Expenses 1,821,923 1,491,595 1,438,440
--------- --------- ---------
Net Income Before FIT 387,217 521,363 458,639
Federal Income Tax Provision 122,700 167,000 48,500
-------- -------- --------
Net Income After Taxes 264,517 354,363 410,139
======== ======== ========
F-CNB-5
<PAGE>
<TABLE>
City National Bank
Statements of Cash Flows
(000's)
<CAPTION>
Unaudited
-----------
Nine Months Ended
September 30, Year Ended December 31,
1996 1995 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Operating Activities
Net Income 335 225 265 354 410
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 104 54 132 70 64
Increase (decrease) in loan loss reserve 35 11 14 (13) 18
Increase (decrease) in taxes payable 14 72 133 49 58
Decrease (increase) in interest receivable (144) (45) (57) (41) 10
Increase (decrease) in interest payable (3) 28 33 20 (9)
Decrease (increase) in prepaid and other assets 27 (144) (170) 5 (1)
Increase (decrease) in accrued expenses 148 (9) (111) 31 (8)
----- ----- ----- ----- -----
Net cash provided by operating activities 516 192 239 475 542
Investing Activities
Proceeds from maturing investment securities 200 0 400 165 400
Paydowns on investment securitites 45 187 260 4 44
Purchases of investment securities (436) 0 (400) (654) (660)
Decrease (increase) in Fed Funds sold 2,491 (798) (1,717) 2,953 (1,163)
Decrease (increase) in loans (2,941) (4,115) (4,384) (4,739) (4,202)
Fixed asset purchases (173) (762) (792) (460) (150)
Proceeds from sale of fixed assets 0 0 0 0 0
Purchase of other real estate owned 0 0 (14) 237 0
Proceeds from sale of other real estate owned 91 39 0 0 246
----- ----- ----- ----- -----
Net cash used in investing activities (723) (5,449) (6,647) (2,494) (5,485)
Financing Activities
Dividends paid 0 0 0 (43) 0
Increase (decrease) in deposits 431 7,184 8,233 565 5,574
Increase (decrease) in short-term borrowings 1,165 (1,855) (1,855) 1,855 0
----- ----- ----- ----- -----
Net cash provided by financing activities 1,596 5,329 6,378 2,377 5,574
Net increase (decrease) in cash and cash equivalents 1,389 72 (30) 358 631
Cash and cash equivalents at beginning of period 2,233 2,263 2,263 1,905 1,274
----- ----- ----- ----- -----
Cash and cash equivalents at end of period 3,622 2,335 2,233 2,263 1,905
===== ===== ===== ===== =====
</TABLE>
F-CNB-8
<PAGE>
APPENDIX A
Ch. 2 Consolidation and Merger 12 Section 215a
Section 215a MERGER OF NATIONAL BANKS OR STATE BANKS INTO NATIONAL
BANKS
(b) Dissenting shareholders
If a merger shall be voted for at the called meetings by the
necessary majorities of the shareholders of each association or
State bank participating in the plan of merger, and thereafter
the merger shall be approved by the Comptroller, any shareholder
of any association or State bank to be merged into the receiving
association who has voted against such merger at the meeting of
the association or bank of which he is a stockholder, or has
given notice in writing at or prior to such meeting to the
presiding officer that he dissents from the plan of merger, shall
be entitled to receive the value of the shares so held by him
when such merger shall be approved by the Comptroller upon
written request made to the receiving association at any time
before thirty days after the date of consummation of the merger,
accompanied by the surrender of his stock certificates.
(c) Valuation of shares
The value of the shares of any dissenting shareholder shall
be ascertained, as of the effective date of the merger, by an
appraisal made by a committee of three persons, composed of (1)
one selected by the vote of the holders of the majority of the
stock, the owners of which are entitled to payment in cash; (2)
one selected by the directors of the receiving association; and
(3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the
value so fixed shall not be satisfactory to any dissenting
shareholder who has requested payment, that shareholder may,
within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the
value of the shares of the appellant.
(d) Application to shareholders of merging associations:
appraisal by Comptroller; expenses of receiving association;
sale and resale of shares; State appraisal and merger law
If, within ninety days from the date of consummation of the
merger, for any reason one or more of the appraisers is not
selected as herein provided, or the appraisers fail to determine
the value of such shares, the Comptroller shall upon written
request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of
the Comptroller in making the reappraisal or the appraisal, as
the case may be, shall be paid by the receiving association. The
value of the shares ascertained shall be promptly paid to the
dissenting shareholders by the receiving association. The shares
<PAGE>
of stock of the receiving association which would have been
delivered to such dissenting shareholders had they not requested
payment shall be sold by the receiving association at an
advertised public auction, and the receiving association shall
have the right to purchase any of such shares at such public
auction, if it is the highest bidder therefor, for the purpose of
reselling such shares within thirty days thereafter to such
person or persons and at such price not less than par as its
board of directors by resolution may determine. If the shares
are sold at public auction at a price greater than the amount
paid to the dissenting shareholders, the excess in such sale
price shall be paid to such dissenting shareholders. The
appraisal of such shares of stock in any State bank shall be
determined in the manner prescribed by the law of the State in
such cases, rather than as provided in this section, if such
provision is made in the State law; and no such merger shall be
in contravention of the law of the State under which such bank is
incorporated. The provisions of this subsection shall apply only
to shareholders of (and stock owned by them in) a bank or
association being merged into the receiving association.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 21. Exhibits and Financial Statement Schedules.
Number Description
* 2.1(a) Plan and Agreement of Merger among First
Commercial Corporation, Tyler Bank and Trust,
N.A., Tyler, Texas and City National Bank,
Whitehouse, Texas.
2.1(b) Amendment No. 1 to Plan and Agreement of
Merger among First Commercial Corporation,
Tyler Bank and Trust, N.A., Tyler, Texas and
City National Bank, Whitehouse, Texas.
2.1(c) Amendment No. 2 to Plan and Agreement of
Merger among First Commercial Corporation,
Tyler Bank and Trust, N.A., Tyler, Texas and
City National Bank, Whitehouse, Texas.
* 2.2 Plan and Agreement of Merger among First
Commercial Corporation, Stone Fort National
Bank, Nacogdoches, Texas and Security
National Bank, Nacogdoches, Texas.
** 4.1 First Commercial's Second Amended and
Restated Articles of Incorporation, as
amended (incorporated by reference to Exhibit
3(i) to Form 10-Q for the quarterly period
ended June 30, 1996.
** 4.2 First Commercial's By-Laws as currently in
effect (incorporated by reference to Exhibit
3(d) to Form 10-K for the fiscal year ended
December 31, 1991, as amended, in 0-9676).
** 4.3 Rights Agreement (incorporated by reference
to Exhibit 4 to Form 8-K dated September 18,
1990, in 0-9676).
* 5 Opinion and Consent of Friday, Eldredge &
Clark.
* 8 Opinions and Consents of Friday, Eldredge &
Clark regarding certain tax matters.
* 23.1 Consent of Friday, Eldredge & Clark (included
in Exhibits 5 and 8 to this Registration
Statement).
II-1
<PAGE>
23.2 Consent of Ernst & Young LLP.
23.3 Consent of KPMG Peat Marwick LLP.
* 23.4 Consent of Ken Rogers & Associates, LTD.
* 24 Powers of Attorney.
* 99 Forms of Proxy.
*Previously filed.
**Incorporated herein by reference as indicated.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Little
Rock, State of Arkansas, on the 6th day of February, 1997.
FIRST COMMERCIAL CORPORATION
/s/ J. Lynn Wright
J. Lynn Wright
Chief Financial Officer
Pursuant to the requirements of the Securities Act, this
Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities indicated on the 6th day
of February, 1997.
* Chairman of the Board, Chief
Barnett Grace Executive Officer, President and
Director
(Principal Executive Officer)
/s/ J. Lynn Wright Chief Financial Officer
J. Lynn Wright (Principal Financial and
Accounting Officer)
* Director
John W. Allison
* Director
Truman Arnold
* Director
William H. Bowen
Director
Peggy Clark
* Director
Robert G. Cress
Director
Cecil W. Cupp, Jr.
II-3
<PAGE>
* Director
Frank D. Hickingbotham
* Director
Walter E. Hussman, Jr.
* Director
Frederick E. Joyce, M.D.
* Director
Jack G. Justus
* Director
William M. Lemley
* Director
Michael W. Murphy
* Director
Sam C. Sowell
* Director
Paul D. Tilley
*By: /s/ Edwin P. Henry
Edwin P. Henry
Attorney-in-Fact
Edwin P. Henry, by signing his name hereto, does sign this
document on behalf of each of the persons indicated above
pursuant to powers of attorney duly executed by such persons,
filed or to be filed with the Securities and Exchange Commission
as supplemental information.
II-4
<PAGE>
INDEX TO EXHIBITS
Index
Number Description
* 2.1(a) Plan and Agreement of Merger among First
Commercial Corporation, Tyler Bank and Trust,
N.A., Tyler, Texas and City National Bank,
Whitehouse, Texas.
2.1(b) Amendment No. 1 to Plan and Agreement of
Merger among First Commercial Corporation,
Tyler Bank and Trust, N.A., Tyler, Texas and
City National Bank, Whitehouse, Texas.
2.1(c) Amendment No. 2 to Plan and Agreement of
Merger among First Commercial Corporation,
Tyler Bank and Trust, N.A., Tyler, Texas and
City National Bank, Whitehouse, Texas.
* 2.2 Plan and Agreement of Merger among First
Commercial Corporation, Stone Fort National
Bank, Nacogdoches, Texas and Security
National Bank, Nacogdoches, Texas.
** 4.1 First Commercial's Second Amended and
Restated Articles of Incorporation, as
amended (incorporated by reference to Exhibit
3(i) to Form 10-Q for the quarterly period
ended June 30, 1996.
** 4.2 First Commercial's By-Laws as currently in
effect (incorporated by reference to Exhibit
3(d) to Form 10-K for the fiscal year ended
December 31, 1991, as amended, in 0-9676).
** 4.3 Rights Agreement (incorporated by reference
to Exhibit 4 to Form 8-K dated September 18,
1990, in 0-9676).
* 5 Opinion and Consent of Friday, Eldredge &
Clark.
* 8 Opinions and Consents of Friday, Eldredge &
Clark regarding certain tax matters.
* 23.1 Consent of Friday, Eldredge & Clark (included
in Exhibits 5 and 8 to this Registration
Statement).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of KPMG Peat Marwick LLP.
* 23.4 Consent of Ken Rogers & Associates, LTD.
<PAGE>
* 24 Powers of Attorney.
* 99 Forms of Proxy.
*Previously filed.
**Incorporated herein by reference as indicated.
<PAGE>
EXHIBIT 2.1(b)
AMENDMENT NO. 1 TO
PLAN AND AGREEMENT OF MERGER
AMONG
FIRST COMMERCIAL CORPORATION,
TYLER BANK AND TRUST, N.A.
AND CITY NATIONAL BANK, WHITEHOUSE, TEXAS
This Amendment No. 1 (the "First Amendment Agreement") is
made effective October 16, 1996 among FIRST COMMERCIAL
CORPORATION ("First Commercial"), TYLER BANK AND TRUST, N.A.
("TBT") and CITY NATIONAL BANK, WHITEHOUSE, TEXAS ("CNB").
WHEREAS, on May 9, 1996 the parties entered into a Plan and
Agreement of Merger (the "Merger Agreement") contemplating, among
other things, the merger of CNB with and into TBT with the
stockholders of CNB receiving shares of common stock of First
Commercial;
NOW, THEREFORE, in consideration of these premises and the
mutual promises, representations, covenants and actions
hereinafter set forth, the parties hereto, each intending to be
legally bound hereby, AGREE as follows:
1. All capitalized terms not specifically defined in this
First Amendment Agreement shall have the meanings provided in the
Merger Agreement.
2. The third sentence of Section 1.04 of the Merger
Agreement is hereby amended to read in its entirety as follows:
"The parties hereto will use their best efforts to
accomplish the Closing before March 31, 1997."
3. Subsection (c) of Section 6.01 of the Merger Agreement
is hereby amended in its entirety to read as follows:
"By either CNB or First Commercial if the Closing Date
shall not have occurred, for reasons other than a
breach of this Agreement by the party seeking
termination, on or before March 31, 1997, or such later
date agreed to in writing by the parties; or"
4. This First Amendment Agreement may be executed in one
or more counterparts, all of which shall be considered one and
the same agreement, and shall be deemed effective when one or
more of such counterparts have been signed by each of the parties
and delivered to the others.
5. This First Amendment Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas.
<PAGE>
Except as specifically amended by this First Amendment
Agreement, the Merger Agreement shall continue to have full force
and effect between the parties hereto.
IN WITNESS WHEREOF, First Commercial, TBT and CNB have
caused this First Amendment Agreement to be executed in
counterparts as of the date first above written.
FIRST COMMERCIAL CORPORATION
ATTEST:
By: /s/ J. Lynn Wright
/s/ Donna B. Rogers
Secretary Title: Chief Financial Officer
TYLER BANK & TRUST, N.A.
ATTEST:
By: /s/ Neil S. West
/s/ Dana Gregory
Secretary Title: Chairman and Chief
Executive Officer
CITY NATIONAL BANK, WHITEHOUSE,
TEXAS
ATTEST:
By: /s/ Tom Tatum
/s/ Nancy Duress
Secretary Title: Interim President
<PAGE>
EXHIBIT 2.1(c)
AMENDMENT NO. 2 TO
PLAN AND AGREEMENT OF MERGER
AMONG
FIRST COMMERCIAL CORPORATION,
TYLER BANK AND TRUST, N.A., TYLER, TEXAS
AND CITY NATIONAL BANK, WHITEHOUSE, TEXAS
This Amendment No. 2 (the "Second Amendment Agreement") is
made effective December 26, 1996 among FIRST COMMERCIAL
CORPORATION ("First Commercial"), TYLER BANK AND TRUST, N.A.,
TYLER, TEXAS ("TBT"), and CITY NATIONAL BANK, WHITEHOUSE, TEXAS
("CNB").
WHEREAS, on May 9, 1996 the parties entered into a Plan and
Agreement of Merger, which was amended by Amendment No. 1 dated
October 16, 1996 (such Agreement, as amended, being hereinafter
referred to as the "Merger Agreement"), contemplating, among
other things, the merger of CNB with and into TBT with the
stockholders of CNB receiving shares of common stock of First
Commercial;
NOW, THEREFORE, in consideration of these premises and the
mutual promises, representations, covenants and actions
hereinafter set forth, the parties hereto, each intending to be
legally bound hereby, AGREE as follows:
1. All capitalized terms not specifically defined in this
Second Amendment Agreement shall have the meanings provided in
the Merger Agreement.
2. The third sentence of Section 1.04 of the Merger
Agreement is hereby amended to read in its entirety as follows:
"The parties hereto will use their best efforts to accomplish the
Closing before April 30, 1997."
3. The eighth line of subsection (a) of Section 1.06 of
the Merger Agreement is hereby amended so that the number
"174,492" appearing therein shall now read "145,507."
4. Subsection (a) of Section 1.06 of the Merger Agreement
is hereby amended by inserting the following language at the end
of such subsection after the word "appropriate":
"; provided, further, that the number of shares of
First Commercial Stock to be issued as the Merger
Consideration shall be reduced by 10,000 shares,
subject to such adjustment as provided above, which
shares shall be placed in escrow pursuant to the terms
of an Escrow Agreement as described in Section
5.01(q)."
5. Section 5.01 of the Merger Agreement is hereby amended
by adding a new subsection (q) which shall read as follows:
<PAGE>
"(q) Delivery of Escrow Agreement. CNB shall have
entered into an Escrow Agreement with First Commercial
in substantially the form attached hereto as Exhibit
C."
6. Subsection (j) of Section 5.02 of the Merger Agreement
is hereby amended in its entirety to read as follows:
"(j) No Adverse Change in Market Price for First
Commercial Stock. The average of the individual
averages of the bid and asked prices of First
Commercial Stock on the Nasdaq National Market for the
twenty (20) business days preceding the Closing Date
shall not be less than $32.00, subject to such
adjustment as provided in Section 1.06 hereof."
7. Subsection (c) of Section 6.01 of the Merger Agreement
is hereby amended in its entirety to read as follows:
"(c) By either CNB or First Commercial if the
Closing Date shall not have occurred, for reasons other
than a breach of this Agreement by the party seeking
termination, on or before April 30, 1997, or such later
date agreed to in writing by the parties; or"
8. This Second Amendment Agreement may be executed in one
or more counterparts, all of which shall be considered one and
the same agreement, and shall be deemed effective when one or
more of such counterparts have been signed by each of the parties
and delivered to the others.
9. This Second Amendment Agreement shall be governed by
and construed in accordance with the laws of the State of
Arkansas.
Except as specifically amended by this Second Amendment
Agreement, the Merger Agreement shall continue to have full force
and effect between the parties hereto.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, First Commercial, TBT and CNB have
caused this First Amendment Agreement to be executed in
counterparts as of the date first above written.
FIRST COMMERCIAL CORPORATION
ATTEST:
By: /s/ J. Lynn Wright
/s/ J. French Hill
Executive Officer Title: Chief Financial Officer
TYLER BANK & TRUST, N.A.,
TYLER, TEXAS
ATTEST:
By: /s/ Neil S. West
/s/ Dana Gregory
Secretary Title: Chairman of the Board
CITY NATIONAL BANK, WHITEHOUSE,
TEXAS
ATTEST:
By: /s/ Clyde A. Weaver
/s/ Nancy Duress
Secretary Title: Chairman of the Board
<PAGE>
EXHIBIT C
ESCROW AGREEMENT
This Escrow Agreement is executed effective as of ________,
1997 by and among FIRST COMMERCIAL CORPORATION ("First
Commercial"), CITY NATIONAL BANK, Whitehouse, Texas ("CNB"), and
FIRST COMMERCIAL TRUST COMPANY, N.A. (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, First Commercial, Tyler Bank and Trust, N.A.,
Tyler, Texas ("TBT"), and CNB have entered into a Plan and
Agreement of Merger dated May 9, 1996, as amended October 16,
1996 and December 26, 1996 (the "Merger Agreement"),pursuant to
which CNB will be merged with and into TBT with the CNB
stockholders receiving shares of common stock of First Commercial
(such stockholders being hereinafter referred to as the "CNB
Stockholders"); and
WHEREAS, CNB and TBT currently are involved in certain
litigation with Betty Sizemore (the "Sizemore Dispute"); and
WHEREAS, First Commercial desires to place in an escrow
account 10,000 of the shares of First Commercial Common Stock to
be paid as Merger Consideration, such shares to be used to pay,
as an adjustment to the Merger Consideration, any liabilities of
CNB (or TBT as successor to CNB) that might arise in connection
with the Sizemore Dispute; and
WHEREAS, the parties have agreed to execute and deliver this
Escrow Agreement for the purpose of setting forth the terms
governing the above-referenced escrow account and for the other
purposes contained herein;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
AGREE as follows:
1. Appointment of Escrow Agent. First Commercial and CNB
hereby designate and appoint Escrow Agent as their agent to
perform the duties and services specified herein, and Escrow
Agent hereby accepts such engagement, upon the terms and
conditions hereinafter set forth.
2. Appointment of CNB Stockholders Representative. CNB
hereby designates ___________ (the "CNB Stockholders
Representative") to act on behalf of the CNB Stockholders in
connection with all matters pertaining to this Agreement.
3. Capitalized Terms. The capitalized terms not otherwise
defined herein shall have the meanings as set forth in the Merger
Agreement, unless the context otherwise specifically requires.
<PAGE>
4. Deposit of Escrow Shares. First Commercial hereby
tenders to Escrow Agent, and Escrow Agent hereby acknowledges and
accepts delivery of, 10,000 shares of First Commercial Common
Stock, $3.00 par value per share (the "Escrow Shares"), for the
purpose of protecting First Commercial to the extent set forth
herein from actual losses incurred in connection with the
Sizemore Dispute. The Escrow Agent shall maintain the Escrow
Shares in a fiduciary capacity in a separate trust account as
agent of First Commercial and the CNB Stockholders and shall hold
and disburse the Escrow Shares pursuant to the terms and
conditions of this Escrow Agreement.
5. Escrow Fee. The Escrow Agent shall be paid a fee for
its services hereunder as provided in the schedule of fees
attached hereto and incorporated herein as Exhibit A. The escrow
fee shall be paid by First Commercial.
6. Disposition of Escrow Shares.
(a) Distribution to First Commercial. Any liabilities
incurred by TBT or First Commercial in connection with the
Sizemore Dispute (including, in the event the Sizemore Dispute is
not resolved in favor of CNB and TBT, the cost of defending such
Sizemore Dispute) shall result in the Escrow Agent paying over
and delivering to First Commercial, as an adjustment to the
Merger Consideration, a number of Escrow Shares having a value,
based on the value of such shares at the Closing Date, equal to
any such liability. Such shares shall be delivered to First
Commercial upon receipt of (i) a copy of the final judgment in
the Sizemore Dispute and a certificate of counsel for CNB that
the time for appeal has expired or (ii) a CNB officer's
certificate setting forth the terms of a binding settlement
agreement between the parties with respect to the Sizemore
Dispute. Any such settlement shall preclude Ms. Sizemore from
bringing any further action against CNB or TBT for any matter
arising out of or in connection with the Sizemore Dispute.
(b) Distribution to the Former CNB Stockholders.
Following any distributions made pursuant to Section 6(a) above,
the Escrow Agent shall release to the CNB Stockholders the
balance of the Escrow Shares then held by the Escrow Agent upon
receipt of certification from counsel for CNB that the Sizemore
Dispute has been dismissed, settled, or has been finally
determined with no liability to CNB (or with liability to CNB in
an amount less than the value, determined as of the Closing Date,
of the Escrow Shares) and the time for appeal has expired. To
the extent any Escrow Shares are released to the CNB
Stockholders, each shareholder shall receive a number of shares
that is in the same proportion to the aggregate number of such
released shares as the number of shares received by him at
Closing was to the aggregate number of shares issued at Closing.
(c) Dividends. Any dividends paid on the Escrow
Shares shall be immediately paid over and delivered to the CNB
Stockholders, except that no such dividends shall be payable on
<PAGE>
any Escrow Shares distributed to First Commercial pursuant to
Section 6(a).
(d) Voting. The CNB Stockholders shall have voting
rights with respect to any Escrow Shares held by the Escrow
Agent. The CNB Stockholders shall not have voting rights with
respect to any such shares distributed to First Commercial
pursuant to Section 6(a).
(e) Transferability. The Escrow Shares and the CNB
Stockholders' rights hereunder shall not be transferable by the
CNB Stockholders during the term of this Agreement, and the CNB
Stockholders shall not have the right to substitute any other
property for the Escrow Shares.
7. Defense of the Litigation. First Commercial shall,
following the Effective Date of the Merger, vigorously defend the
Sizemore Dispute using counsel acceptable to, and approved by
(which approval shall not be unreasonably withheld or delayed),
the CNB Stockholders Representative. Additionally, First
Commercial will not, and will not allow CNB to, pay any amount in
settlement of the Sizemore Dispute without the CNB Stockholders
Representative's written consent to the terms and provisions of
any such settlement, which consent shall not be unreasonably
withheld or delayed.
8. Controversy Between the Parties. Any dispute with
regard to this Escrow Agreement, including interpleader by the
Escrow Agent, shall be in the jurisdiction of the United States
District Court for the Eastern District of Arkansas.
9. Administration. The Escrow Agent undertakes to perform
only the duties expressly set forth herein. The Escrow Agent may
rely, and shall be authorized to act or refrain from acting upon,
any written notice, demand, instruction or request furnished to
it as provided herein which Escrow Agent believes in good faith
to be genuine and to have been signed and presented by the proper
party. The Escrow Agent may from time to time engage independent
legal counsel for advice concerning the subject matter and proper
administration of this Escrow Agreement and shall be held
harmless by the parties hereto for any actions taken or omitted
in good faith in accordance with the opinion of such counsel.
10. Limitation on Liability of Escrow Agent. First
Commercial and CNB agree to hold Escrow Agent harmless from any
acts or omissions of Escrow Agent taken or omitted in good faith
in connection with the performance of services pursuant to this
Escrow Agreement, except acts or omissions which constitute a
breach of fiduciary duty or gross, willful, or wanton negligence
or misconduct.
<PAGE>
11. Removal and Resignation.
(a) Removal. The Escrow Agent may be removed at any
time, with or without cause, upon written agreement of First
Commercial and the CNB Stockholders Representative. In such
event a new escrow agent shall be appointed by First Commercial
and the CNB Stockholders Representative and the Escrow Shares
shall be promptly transferred to said successor.
(b) Resignation. The Escrow Agent may resign from its
appointment hereunder only upon thirty (30) days prior written
notice to First Commercial and the CNB Stockholders
Representative. In such event First Commercial and the CNB
Stockholders Representative shall appoint a new escrow agent.
However, in the event First Commercial and the CNB Stockholders
Representative are unable to agree on a successor within said
thirty (30) day period, the Escrow Agent shall appoint a similar
institution as successor escrow agent to serve pursuant to the
terms and conditions of this agreement.
12. Fees of Legal Counsel. In the event Escrow Agent
employs counsel for purposes of an interpleader or other similar
action, First Commercial shall reimburse Escrow Agent for all
reasonable attorneys' fees and expenses incurred in good faith in
connection with such action.
13. Miscellaneous.
(a) Modification. No provision contained herein may
be modified, amended, or waived except by written agreement
signed by the party to be bound thereby.
(b) Binding Effect and Benefit. This agreement shall
inure to the benefit of, and shall be binding upon, the parties
hereto, and their respective heirs, executors, administrators,
personal representatives, successors, and permitted assigns.
(c) Headings and Captions. Subject headings and
captions are included for convenience purposes only and shall not
affect the interpretation of this agreement.
(d) Notice. All notices, requests, demands, and other
communications permitted or required hereunder shall be deemed to
have been duly given if delivered or sent by first class
registered or certified mail, postage prepaid, with return
receipt requested, or by recognized overnight courier as follows:
If to CNB, to:
City National Bank
1125 Highway 110 North
Whitehouse, Texas 75791
Attention: Mr. Tom Tatum
<PAGE>
If to First Commercial, to:
First Commercial Corporation
400 West Capitol Avenue
Little Rock, Arkansas 72201
Attention: Mr. J. Lynn Wright
with copy to:
Mr. John Clayton Randolph
Friday, Eldredge & Clark
400 West Capitol Avenue, Suite 2000
Little Rock, Arkansas 72201-3493
If to Escrow Agent, to:
First Commercial Trust Company, N.A.
400 West Capitol Avenue
Little Rock, Arkansas 72201
Attention: Debi DeHan
or to such other address as such party may designate by notice in
accordance with this Section 11(d).
(e) Entire Agreement. This document constitutes the
entire agreement of the parties and supersedes any and all other
prior agreements, oral or written, with respect to the subject
matter contained herein, and the parties acknowledge and agree
that Escrow Agent is not a party to the Merger Agreement.
(f) Governing Law. This agreement shall be subject to
and governed by the laws of the State of Arkansas.
(g) Incorporation by Reference. The terms and
conditions of the Merger Agreement are hereby incorporated herein
by reference as between First Commercial, TBT and CNB.
(h) Waiver. No waiver of a breach or violation of
this Agreement shall operate or be construed as a waiver of any
subsequent breach or limit or restrict any right or remedy
otherwise available. Any waiver must be in writing.
(i) Rights and Remedies Cumulative. The rights and
remedies expressed herein are cumulative and not exclusive of any
rights and remedies otherwise available.
(j) Gender and Pronouns. Throughout this agreement,
the masculine shall include the feminine and neuter and the
singular shall include the plural and vice versa as the context
requires.
(k) Counterparts. This agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
agreement effective as of the day and year aforesaid.
FIRST COMMERCIAL CORPORATION
By:________________________________
Title:_____________________________
ATTEST:
___________________________
Secretary
CITY NATIONAL BANK
By: ______________________________
Title: ___________________________
ATTEST:
___________________________
Secretary
ESCROW AGENT:
FIRST COMMERCIAL TRUST COMPANY,
N.A.
By:
Title:
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in Amendment No. 1 to Registration Statement (Form S-4
333-12353) and related Prospectus of First Commercial Corporation
for the registration of 145,507 shares of its common stock and to
the incorporation by reference therein of our report dated
January 30, 1996, with respect to the consolidated financial
statements of First Commercial Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Little Rock, Arkansas
February 5, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
First Commercial Corporation:
We consent to the incorporation by reference in the Registration
Statement (333-12353) on Form S-4 of First Commercial Corporation
of our report dated January 28, 1994, relating to the
consolidated statements of income, stockholders' equity and cash
flows of State First Financial Corporation and subsidiaries for
the year ended December 31, 1993 which report appears as Exhibit
99(a) in the December 31, 1995 Annual Report on Form 10-K of
First Commercial Corporation.
We also consent to the reference to our firm under the heading
"Experts" in the Joint Proxy Statement/Prospectus.
KPMG Peat Marwick LLP
Little Rock, Arkansas
February 5, 1997
