Filed pursuant to Rule
424(b)(2) in connection
with Registration Statement
No. 333-24981
[First Central Corporation Letterhead]
Dear Stockholder:
A Special Meeting of the Stockholders of First Central
Corporation ("First Central") will be held on June 10, 1997,
at 9:30 a.m., local time, at the the main office of First
National Bank, 200 West Race Street, Searcy, Arkansas.
The purpose of the meeting is to ask you to approve the merger
of First Central into First Commercial Corporation, Little
Rock, Arkansas ("First Commercial") (the "Merger"). The Merger
is subject, among other things, to the approval of the holders
of two-thirds (2/3) of the outstanding shares of common stock
of First Central ("First Central Stock"). If the Merger is
consummated, each holder of First Central Stock will receive
22.94024 shares of First Commercial common stock (with cash
payments in lieu of fractional shares) for each outstanding
share of First Central Stock held at the effective date of the
Merger.
FIRST CENTRAL'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,
Wayne Hartsfield
President and Chief Executive Officer
Searcy, Arkansas
May 8, 1997
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To The Stockholders of First Central Corporation:
Notice is hereby given that a Special Meeting of the
Stockholders of First Central Corporation ("First Central")
will be held on June 10, 1997, at 9:30 a.m., local time, at
the main office of First National Bank, 200 West Race Street,
Searcy, Arkansas, for the following purposes:
1. To consider and act upon a proposal to approve a
plan of merger providing for the merger of First
Central into First Commercial Corporation,
Little Rock, Arkansas ("First Commercial") (the
"Merger"), as a result of which each outstanding
share of common stock of First Central ("First
Central Stock") will be converted into 22.94024
shares of First Commercial common stock (with
cash payments in lieu of fractional shares).
Such approval, if voted, shall be deemed to
constitute the ratification, confirmation and
approval of the execution and delivery by First
Central of the Plan and Agreement of Merger
("Agreement") dated February 5, 1997, between
First Commercial and First Central.
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 two-thirds (2/3) of the outstanding shares of First
Central Stock. Only those holders of First Central Stock of
record at the close of business on May 1, 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 Section 4-26-1007 of the Arkansas Business
Corporation Act will be entitled to receive payment of the
cash value of their shares if the Merger is approved.
<PAGE>
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
Judy Kubisiak
-----------------------------------
Secretary
Searcy, Arkansas
May 8, 1997
<PAGE>
JOINT PROXY STATEMENT/PROSPECTUS
PROSPECTUS FOR
FIRST COMMERCIAL CORPORATION
1,650,000 Shares
Common Stock
($3.00 par value per share)
PROXY STATEMENT FOR
FIRST CENTRAL CORPORATION
First Commercial Corporation ("First Commercial") has filed a
registration statement pursuant to the Securities Act of 1933,
as amended, covering a maximum of 1,650,000 shares of First
Commercial Common Stock, $3.00 par value per share, to be
offered in connection with a proposed transaction in which
First Central Corporation ("First Central") will be merged into
First Commercial, with the result that First National Bank,
Searcy, Arkansas will be a wholly-owned subsidiary of First
Commercial. This document constitutes a proxy statement of
First Central 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.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT
ACCOUNTS AND ARE NOT INSURED BY THE SAVINGS ASSOCIATION
INSURANCE FUND OR THE FEDERAL DEPOSIT INSURANCE CORPORATION.
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.
The date of this Joint Proxy Statement/Prospectus is May 8, 1997.
<PAGE>
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 First Central since the date hereof.
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,
<PAGE>
OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE THEREIN. REQUESTS FOR
DOCUMENTS RELATING TO FIRST COMMERCIAL 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
JUNE 3, 1997.
<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE i
SUMMARY v
The Companies v
The Special Meeting v
Purpose of the Special Meeting v
Vote Required vi
Reasons for the Merger vi
Regulatory Approval vi
Dissenting Stockholders vi
Federal Income Tax Consequences vii
Selected Financial Data - First Commercial viii
Pro Forma Selected Financial Data - First Commercial ix
Comparative Per Share Data x
INTRODUCTORY STATEMENT 1
General 1
Purpose of the Special Meeting 1
Shares Entitled to Vote; Vote Required 2
Solicitation, Voting and Revocation of Proxies 2
THE MERGER 2
General 2
Reasons for the Merger 3
Federal Income Tax Consequences 4
Rights of Dissenting First Central Stockholders 6
Conditions of the Merger 7
Regulatory Approval 7
Termination of the Merger 8
Effective Date 8
Distribution of First Commercial Stock Certificates 8
Fractional Shares 9
Dilution 9
Accounting Treatment 9
Registration of First Commercial Stock
Under the Securities Act 10
INFORMATION CONCERNING FIRST CENTRAL 11
First Central Stock
11
Security Ownership of Certain Beneficial Owners
12
Security Ownership of Management
13
Selected Financial Data 14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS 15
1996 Compared to 1995 15
1995 Compared to 1994 15
1994 Compared to 1993 16
Allowance for Loan Losses 16
Non-Accrual and Past Due Loans 16
INFORMATION CONCERNING FIRST COMMERCIAL 17
Information Incorporated by Reference 17
Management and Additional Information 17
COMPARATIVE RIGHTS OF SHAREHOLDERS 17
General 17
Voting Rights 18
Voting Requirements for Extraordinary Corporate Matters 18
Voting for Election of Directors 18
Amendment of Articles of Incorporation 19
Amendment of Bylaws 20
Removal of Directors 20
Limitation of Director Liability 20
Filling Vacancies on the Board of Directors 21
Nomination of Director Candidates and Advance
Notice of Matters to be Brought Before an
Annual Meeting by Stockholders 21
Fair Price Provision 22
Shareholder Rights Plan 23
LEGAL OPINIONS 24
EXPERTS 25
First Central
25
First Commercial
25
CONSOLIDATED FINANCIAL STATEMENTS OF FIRST CENTRAL F-1
Attachment I - Section 4-26-1007 of the Arkansas A-1
Business Corporation Act
<PAGE>
SUMMARY
The following summary 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") is a multi-
bank holding company headquartered in Little Rock, Arkansas.
The Company offers a broad range of bank and bank-related
services through 15 commercial banking institutions in
Arkansas, seven in Texas, one in each of Louisiana and
Tennessee, and a 50% interest in each of two commercial banking
institutions in Oklahoma. In addition, subsidiaries of the
Company provide trust and fiduciary services, discount
brokerage 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."
First Central Corporation ("First Central"), is a bank holding
company headquartered in Searcy, Arkansas. First Central's
subsidiary is First National Bank, Searcy, Arkansas ("FNB").
First Central is incorporated under the laws of the State of
Arkansas. Executive offices of First Central are located at
200 West Race Street, Searcy, Arkansas 72143, telephone number:
(501)268-4211. See "Information Concerning First Central."
The Special Meeting
A special meeting of the stockholders of First Central (the
"Special Meeting") will be held on June 10, 1997, at the time
and place set forth in the accompanying Notice of Special
Meeting of Stockholders. Only record holders of the common
stock, $1.00 par value per share, of First Central (the "First
Central Stock"), on May 1, 1997 are entitled to notice
of and to vote at the Special Meeting. On that date there were
71,926 shares of First Central Stock outstanding, each of which
is entitled to one vote at the Special Meeting.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote upon
a proposal to approve the merger of First Central with and into
First Commercial (the "Merger") pursuant to the terms of a Plan
and Agreement of Merger between First Commercial and First
Central dated February 5, 1997 (the "Merger Agreement"). As a
result of the Merger, FNB will become a wholly-owned subsidiary
of First Commercial. Under the terms of the Merger Agreement,
each outstanding share of First Central Stock will be converted
into a right to receive 22.94024 shares of common stock, $3.00
par value per share, of First Commercial (the "First Commercial
<PAGE>
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 First Central stockholders are
hereinafter referred to as the "Merger Consideration." First
Central will have the right to terminate the Merger Agreement
in the event the price of a share of First Commercial Stock
drops below $30.50 for a period of time and if First Commercial
does not agree to amend the Merger Agreement so that the Merger
Consideration will include a number of shares of First
Commercial Stock having a value equal to $50,325,000. If the
price of a share of First Commercial Stock rises above $45.75
for a period of time, First Commercial may amend the Merger
Agreement so that the Merger Consideration will include a
number of shares of First Commercial Common Stock having a
value equal to $75,487,500. See "Introductory Statement -
Purpose of the Special Meeting."
Vote Required
The affirmative vote of the holders of two-thirds of the
outstanding shares of First Central Stock is required to
approve the Merger. Directors, executive officers and their
affiliates who own or control approximately 79.5% of the
outstanding shares of First Central Stock entitled to vote at
the Special Meeting have indicated that they will vote in favor
of the Merger. See "Introductory Statement - Shares Entitled
to Vote; Vote Required."
Stockholders of First Commercial are not required to vote on
the Merger.
Reasons for the Merger
The Boards of Directors of First Commercial and First Central
have unanimously determined that the Merger, pursuant to the
terms of the Merger Agreement, is desirable and in the best
interest of each organization and its respective stockholders.
The Board of Directors of First Central has recommended that
First Central stockholders vote for the approval, ratification
and confirmation of the Merger. See "The Merger - Background
of and Reasons for the Merger."
Regulatory Approval
Consummation of the Merger requires the prior approval of the
Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"). An application for such regulatory approval
was filed on March 19, 1997. The Department of Justice will
have the opportunity, within 30 days after approval of the
Merger by the Federal Reserve Board, to commence litigation
against First Commercial and First Central under the antitrust
laws of the United States to enjoin the Merger, in the event it
shall elect to do so. See "The Merger - Regulatory Approval."
<PAGE>
Dissenting Stockholders
Stockholders of First Central who comply with the specific
procedures required by Section 4-26-1007 of the Arkansas
Business Corporation Act, which are described elsewhere herein,
will have the right to dissent from the Merger, in which event,
if the Merger is consummated, they may be entitled to receive
in cash the fair value of their shares of First Central Stock.
See "The Merger - Rights of Dissenting First Central
Stockholders."
Federal Income Tax Consequences
The 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 Treasury regulations promulgated thereunder and pertinent
judicial decisions. The most important of these requirements
are that: (i) the transaction must qualify as a merger under
applicable state or federal law and (ii) the stockholders of
First Central must maintain a "continuity of interest" in First
Commercial after the Merger. The Internal Revenue Service
takes the position that this "continuity of interest" test will
be satisfied if the former First Central stockholders receive,
in the Merger, a number of shares of common stock of First
Commercial having a value, as of the effective date, equal to
at least fifty percent (50%) of the value of all the
outstanding stock of First Central as of such date. In general
this requires the stockholders of First Central to collectively
surrender at least 50% of their First Central Stock in exchange
for First Commercial Stock in the Merger. Based upon the
representation that these requirements will be satisfied in
connection with the Merger, 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 First
Central solely upon receipt of First Commercial Stock in
exchange for their shares of First Central Stock in connection
with the Merger. However, no ruling will be sought from the
Internal Revenue Service regarding the federal income tax
consequences of the Merger, and the tax opinion of counsel
referenced above is not binding on the Internal Revenue Service
or any court. See "The Merger - Certain Federal Income Tax
Consequences."
<PAGE>
Selected Financial Data - First Commercial
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)
Year Ended December 31,
----------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Period Ended:
Net Interest
Income $ 217,208 $ 184,550 $ 159,445 $ 144,574 $ 133,408
Provision for
Possible
Loan and Lease
Losses 7,452 3,059 (3,092) 4,416 8,941
Net Income 68,562 56,910 50,308 45,965 39,967
Per Common Share
Data(1):
Net Income 2.37 2.07 1.87 1.66 1.44
Cash Dividends .84 .74 .64 .51 .40
Book Value 16.49 15.06 12.85 12.06 10.65
Average Assets 5,283,525 4,652,368 4,235,586 3,812,409 3,313,162
Average Common
Equity 454,299 378,807 337,557 310,252 271,598
Average Total
Equity 454,299 378,807 339,244 320,872 282,218
Ratios(%)
Return on:
Average Assets 1.30 1.22 1.19 1.21 1.21
Average Common
Equity 15.09 15.02 14.87 14.43 14.27
Average Total Equity
to Average Assets 8.60 8.14 8.01 8.42 8.52
(1) All per share data has been restated to reflect the 3 for 2 stock
split 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.
<PAGE>
Pro Forma Selected Financial Data - First Commercial
The following table summarizes on a pro forma basis the effect of the
Merger, accounted for as a pooling of interests, as if it had been
consummated during the period ended December 31, 1996:
FIRST COMMERCIAL PRO FORMA SELECTED FINANCIAL DATA
(In thousands, except per share data)
Years Ended December 31,
-------------------------------
1996 1995 1994
---- ---- ----
Period Ended:
Net Interest Income $226,824 $192,957 $167,710
Provision for Possible
Loan and Lease Losses 7,687 3,204 (3,015)
Net Income 72,823 60,622 53,821
Per Common Share Data(1):
Net Income 2.38 2.08 1.89
Cash Dividends .79 .70 .60
Book Value 16.55 15.13 13.05
(1) All per share data has been restated to reflect the 7% stock
dividend declared November 1995 and the 5% stock dividend
declared October 1996.
<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.
Years Ended December 31,
--------------------------
1996 1995 1994
---- ---- ----
Earnings Per Common Share:
Historical:
First Commercial(1) $ 2.37 $ 2.07 $ 1.87
First Central 59.18 51.56 48.79
Pro Forma - First Commercial 2.38 2.08 1.89
Pro Forma Equivalent Share Basis -
First Central(2) 54.60 47.72 43.36
Cash Dividends Per Common Share:
Historical:
First Commercial(1) .84 .74 .64
First Central 30.00 28.00 28.00
Pro Forma - First Commercial .79 .70 .60
Pro Forma Equivalent Share Basis -
First Central(2) 18.12 16.06 13.76
Book Value Per Common Share (period
end):
Historical:
First Commercial(1) 16.49 - -
First Central 402.37 - -
Pro Forma - First Commercial 16.55 - -
Pro Forma Equivalent Share Basis -
First Central(2) 379.66 - -
(1) All First Commercial Corporation historical and pro forma per share
data has been restated to reflect the 7% stock dividend declared
November 1995 and the 5% stock dividend declared October 1996.
(2) The pro forma equivalent share amounts are computed by multiplying
First Commercial's pro forma share information by 22.94024.
<PAGE>
INTRODUCTORY STATEMENT
General
This Joint Proxy Statement/Prospectus is furnished to the
stockholders of First Central Corporation ("First Central")
in connection with the solicitation of proxies on behalf of
its Board of Directors for use at a special meeting of
stockholders of First Central (the "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.
First Central and First Commercial Corporation ("First
Commercial") have each supplied all information included
herein with respect to itself. As used in this Joint Proxy
Statement/Prospectus, the term "First Central" means First
Central and its consolidated subsidiary and the term "First
Commercial" means First Commercial Corporation and its
consolidated subsidiaries.
This Joint Proxy Statement/Prospectus was first mailed to
shareholders of First Central on May 8, 1997.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote
upon a proposal to approve the merger of First Central with
and into First Commercial (the "Merger") pursuant to the
terms of a Plan and Agreement of Merger between First
Commercial and First Central dated February 5, 1997 (the
"Merger Agreement"). As a result of the Merger, First
National Bank, Searcy, Arkansas ("FNB") will become a
wholly-owned subsidiary of First Commercial. Under the
terms of the Merger Agreement, each outstanding share of
common stock of First Central, $1.00 par value per share
("First Central Stock"), will be canceled and converted
into the right to receive 22.94024 shares of First
Commercial common stock, $3.00 par value per share ("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 First Central
stockholders are hereinafter referred to as the "Merger
Consideration." See "The Merger - Distribution of First
Commercial Stock Certificates."
First Central may terminate the Merger Agreement if the
average of the individual averages of the bid and asked
prices for shares of First Commercial Stock as reported on
the Nasdaq National Market as of the close of business on
each of the twenty (20) trading days immediately preceding
the Closing Date (the "Pre-Closing Period Average Price")
shall be less than $30.50 per share and if First Commercial
does not agree to amend the Merger Agreement so that the
Merger Consideration will include a number of shares of
<PAGE>
First Commercial Stock having a value, based on the Pre-
Closing Period Average Price, equal to $50,325,000. If the
Pre-Closing Period Average Price shall be greater than
$45.75, First Commercial may amend the Merger Agreement so
that the Merger Consideration will include a number of
shares of First Commercial Stock having a value, based on
the Pre-Closing Period Average Price, equal to $75,487,500.
The average of the bid and asked price of a share of First
Commercial Stock on May 2, 1997, was $39.75.
Shares Entitled to Vote; Vote Required
Only holders of record of First Central Stock at the close
of business on May 1, 1997 (the "Record Date") are
entitled to notice of and to vote at the Special Meeting.
On that date, the number of outstanding shares of First
Central Stock was 71,926, each of which is entitled to one
vote on each matter to come before the Special Meeting.
Under First Central's Articles of Incorporation and the
Arkansas Business Corporation Act of 1965, approval of the
Merger requires the affirmative vote of the holders of two-
thirds (2/3) of the outstanding shares of First Central
Stock. Abstentions will not be counted as affirmative
votes. Directors, executive officers and their affiliates
who own or control approximately 79.5% of the outstanding
shares of First Central Stock entitled to vote have
indicated that they will vote in favor of the Merger.
Solicitation, Voting and Revocation of Proxies
In addition to soliciting proxies by mail, directors,
officers and employees of First Central, 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 First Central Stock, and First Central
will reimburse such parties for reasonable out-of-pocket
expenses incurred in connection therewith. The cost of
soliciting proxies is being paid by First Central.
The proxies that accompany this Joint Proxy
Statement/Prospectus permit each holder of First Central
Stock on the Record Date to vote on all matters that come
before the 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 Merger. A proxy may be revoked by (i)
giving written notice of revocation at any time before its
exercise to Judy Kubisiak, Secretary, First Central
Corporation, 200 West Race Street, Searcy, Arkansas 72143,
(ii) executing and delivering to Judy Kubisiak at any time
<PAGE>
before its exercise a proxy bearing a subsequent date or
(iii) attending the Special Meeting and voting in person.
The Board of Directors of First Central is not aware of any
business to be acted upon at the Special Meeting other than
consideration of the Merger. If, however, other proper
matters are brought before the 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 MERGER
General
On February 18, 1997, and February 5, 1997, the Boards of
Directors of First Commercial and First Central,
respectively, approved the Merger Agreement. The
description of the Merger Agreement herein does not purport
to be complete and is qualified in its entirety by
reference to the Merger 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 Merger Agreement, First Central will be merged
into First Commercial, and each share of First Central
Stock outstanding on the Effective Date, as defined in "The
Merger - Effective Date," will be converted into the right
to receive 22.94024 shares of First Commercial Stock. The
exchange ratio was based upon historical and projected
earnings of First Central, the amounts of First Central
assets and liabilities, and the market value of First
Commercial Stock. Projected earnings were based primarily
on historical trends.
First Commercial is an Arkansas corporation and a multi-
bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHCA"). First Central is
an Arkansas corporation and a bank holding company
registered under the BHCA.
Stockholders of First Central will exchange their stock
certificates for new certificates evidencing shares of
First Commercial Stock. After the Merger, and until so
exchanged, the shares of First Central Stock will represent
the right to receive the number of shares of First
Commercial Stock into which such shares of First Central
Stock will be converted. See "The Merger - Distribution of
First Commercial Stock Certificates."
Reasons for the Merger
Several factors were important in the First Central Board's
decision to pursue this opportunity for affiliation with
<PAGE>
First Commercial. 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 First
Central 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 financial soundness
of First Commercial. Based on the financial information
provided to First Central 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. Finally, the First Central
Board was impressed with First Commercial's commitment to
make each of its affiliates an independent community bank
responsive to the local community's needs. The combined
resources of the two companies will allow them to offer an
even greater array of products and services to meet those
needs.
The merger of First Central and First Commercial will
enhance First Commercial's ability to compete in the
Central Arkansas markets. The Merger also will provide
First Commercial with a larger business base over which to
spread the cost of developing new and innovative services.
In summary, the Board of Directors of First Central
believes that the proposed merger with First Commercial is
in the best interests of its shareholders.
Federal Income Tax Consequences
The following is a discussion of certain material federal
income tax considerations in connection with the Merger and
of the tax opinion of Friday, Eldredge & Clark, special tax
counsel to First Commercial. This discussion does not
address all aspects of federal income taxation that may be
relevant to particular shareholders of First Central and
may not be applicable to shareholders who are not citizens
or residents of the United States, or who may acquire First
Commercial common stock pursuant to the exercise or
termination of employee stock options or otherwise as
compensation, nor does the discussion address the effect of
any applicable foreign, state, local or other tax laws.
This discussion assumes that the First Central shareholders
<PAGE>
hold their First Central common stock as capital assets
within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"). EACH FIRST CENTRAL
SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO
THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE
MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS.
The Merger will qualify as a tax-free corporate
reorganization for federal income tax purposes under
Section 368(a)(1)(A) of 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 are (i) the
transaction must qualify as a merger under applicable state
or federal law and (ii) the stockholders of First Central
must maintain a "continuity of interest" in the surviving
corporation after the Merger. The Internal Revenue Service
takes the position that this "continuity of interest" test
will be satisfied if the former First Central stockholders
receive, in the Merger, a number of shares of common stock
of First Commercial 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 First
Central as of such date, and acquire such stock without a
present intent to sell, transfer or otherwise dispose of
such stock in a manner that would cause the fifty percent
(50%) continuity of interest threshold to be violated. In
general, this requires the stockholders of First Central to
collectively surrender at least 50% of their First Central
Stock in exchange for First Commercial Stock in the Merger,
without a present intent to sell, transfer or otherwise
dispose of such stock in violation of the fifty percent
(50%) continuity of interest requirement.
The Merger has been structured in a manner to qualify as a
statutory merger under the law of the State of Arkansas.
In addition, it is expected that the stockholders of First
Central will collectively exchange a sufficient number of
shares of First Central Stock for First Commercial Stock so
that the 50% "continuity of interest" test initially should
be satisfied in connection with the Merger.
Accordingly, assuming these tests 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 Section
368(a)(1)(A) of the Code.
If the Merger qualifies as a tax-free corporate
reorganization, the material federal income tax
consequences of the Merger will be as follows: (i) no
material gain or loss will be recognized by First Central
<PAGE>
or First Commercial as a result of the Merger; (ii) no gain
or loss will be recognized by the stockholders of First
Central upon the receipt of First Commercial Stock received
solely in exchange for their shares of First Central Stock
in connection with the Merger; (iii) the tax basis of the
shares of First Commercial stock received by the
stockholders of First Central in the Merger will, in each
instance, be the same as the basis of the shares of First
Central Stock surrendered in exchange therefor; (iv) the
holding period of the shares of First Commercial Stock
received by the stockholders of First Central in the Merger
will, in each instance, include the holding period of the
shares of First Central Stock exchanged therefor, provided
that the shares of First Central Stock were held as capital
assets on the date of the Merger; and (v) the payment of
cash to stockholders of First Central in lieu of fractional
shares of First Commercial Stock will be a taxable
transaction and 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 cash payments
will be treated as having been received by the stockholder
as a distribution in redemption of the fractional share
interest, subject to the provisions of Section 302 of the
Code.
Stockholders of First Central who exercise dissenters'
rights and receive cash for their shares of First Central
Stock will have engaged in a taxable transaction and will
be treated as having received such cash as a distribution
in redemption of such stockholders' First Central Stock,
subject to the conditions and limitations of Section 302 of
the Code.
If the Merger does not qualify as a tax-free corporate
reorganization for federal income tax purposes, it will
constitute a taxable transaction to the stockholders of
First Central. In such circumstances, gain or loss will be
recognized by the stockholders of First Central to the
extent of the difference between the fair market value, on
the Effective Date, of the shares of First Commercial Stock
received in connection with the Merger, and the adjusted
basis of the shares of First Central 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 is taxable, the holding period for the shares
of First Commercial Stock to be received by the
stockholders of First Central will commence on the day
following the date of the transaction.
Because the tax consequences to any particular stockholder
may be affected by matters not pertaining to the Merger, it
is recommended that each stockholder of First Central
consult his or her own personal tax advisor concerning the
<PAGE>
specific income tax consequences of the Merger, including
the applicability and effect of foreign, state, local and
other tax laws.
Rights of Dissenting First Central Stockholders
Pursuant to Section 4-26-1007 of the Arkansas Business
Corporation Act of 1965, any stockholder of First Central
may dissent from the Merger by filing with First Central,
prior to or at the meeting of stockholders at which the
proposed Merger is submitted to a vote, a written objection
to the proposed Merger. If the Merger is approved and the
dissenting stockholder shall not have voted in favor
thereof (a failure to vote against the proposed Merger will
not constitute a waiver of the stockholder's dissenter's
rights if all other statutory requisites are satisfied, and
a vote against the proposed Merger will not itself satisfy
the notice requirements of the dissenter's rights statute),
the stockholder shall, within ten days thereafter, make
written demand to First Central for payment of the fair
value of the stockholder's shares. The ten day period for
making such written demand begins on the day following the
date of the meeting at which the proposed Merger is
approved. Other than the "Notice of Special Meeting of
Stockholders" accompanying this Joint Proxy
Statement/Prospectus, which specifies the date on which
such vote will be taken, no further notice with regard to
the ten day period for making written demand upon First
Central will be provided to First Central stockholders. If
the proposed Merger is effected as provided, First Central
will pay the stockholder upon surrender of the certificate
or certificates representing his shares, the fair value of
his shares as of the day prior to the date on which the
vote was taken approving the Merger, excluding any
appreciation or depreciation in anticipation of the Merger.
Any stockholder failing to make demand within the ten day
period from the date of stockholder vote will be bound by
the terms of the Merger.
Within ten days after the Merger is effected as provided,
First Commercial will give written notice thereof to each
dissenting stockholder who has made the required demand and
will make a written offer to each such stockholder to pay
for his shares at a specified price deemed by First
Commercial to be their fair value. If the fair value is
agreed upon between a dissenting stockholder and First
Commercial within thirty days after the date on which the
Merger is effected, payment therefor will be made within
ninety days after the date upon which the Merger is
effected upon surrender of the certificate or certificates
representing such shares. Upon payment of the agreed
value, the dissenting stockholder will cease to have any
interest in his or her shares in First Central.
<PAGE>
If an agreement is not reached as to the fair value of the
shares within said thirty day period, the dissenting
stockholder, within sixty days after the expiration of the
thirty day period, may file a petition in the Circuit Court
of White County, Arkansas, requesting that the fair value
of the shares be found and determined.
The foregoing summary of the rights of dissenting
stockholders is qualified in its entirety by reference to
Attachment I which sets forth in full the provisions of
Section 4-26-1007 of the Arkansas Business Corporation Act
of 1965.
Conditions of the Merger
Consummation of the 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 Merger by the stockholders of First
Central; (ii) confirmation by First Commercial and First
Central of the truth of their respective representations
and warranties and compliance with their respective
covenants as set forth in the Merger 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 Merger
Agreement which, in the opinion of either First Commercial
or First Central, would make the consummation of the Merger
inadvisable; (iv) the absence of any suit, action or
proceedings pending or threatened against First Commercial
or First Central or any of each other's officers or
directors which, if successful, would, in the reasonable
judgment of First Central or First Commercial, have a
material adverse effect on the financial condition of First
Commercial or First Central, respectively; (v) receipt by
First Commercial and First Central 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 LLP that the pooling of interests method of
accounting applies to the Merger; (vi) receipt by First
Commercial and First Central of certain opinions from First
Central's and First Commercial's counsel, respectively;
(vii) receipt by First Commercial from affiliates of First
Central of an agreement restricting disposition of First
Commercial Stock for a certain period of time; (viii)
receipt by First Commercial and First Central of an opinion
from tax counsel addressing the tax consequences of the
contemplated Merger; and (ix) the absence of any material
adverse change in the financial condition, business or
operations of either First Commercial or First Central.
All of these conditions are expected to be met.
<PAGE>
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 First Central will waive any condition if
such waiver, in the judgment of its Board of Directors,
would result in materially adverse consequences to it or
its stockholders.
Regulatory Approval
Consummation of the Merger requires the prior written
approval of the Federal Reserve Board. An application for
such approval was filed on March 19, 1997. Under the BHCA,
subsequent to approval of the Merger by the Federal Reserve
Board, the United States Department of Justice will have
the opportunity, within 30 days after such approval, to
commence litigation against First Commercial and First
Central under the antitrust laws of the United States to
enjoin the Merger, in the event it shall elect to do so.
Although no assurance can be provided, First Commercial and
First Central currently expect the Merger to be consummated
on or before June 30, 1997. See "The Merger - Termination
of the Merger."
Termination of the Merger
The Merger Agreement provides that it may be terminated by
mutual consent of the Boards of Directors of First
Commercial and First Central at any time before the Closing
(as defined in the Merger Agreement). Either First
Commercial or First Central, at its option, may terminate
the Merger Agreement (unless such terminating party has
breached a covenant under the Merger Agreement) if the
Closing Date shall not have occurred on or before September
30, 1997, or such later date agreed to in writing by the
parties. Either First Commercial or First Central may
terminate the Merger Agreement if any of the conditions
precedent to their obligation to consummate the Merger have
not been met at or prior to the Closing. See "The Merger -
Conditions of the Merger." Under certain circumstances,
First Central may terminate the Merger Agreement following
a drop in the price of a share of First Commercial Stock.
See "Introductory Statement - Purpose of the Special
Meeting." First Central may terminate the Merger Agreement
in the event that prior to the Effective Date First
Commercial enters into an agreement in which it either will
be acquired or will be merged out of existence or another
person publicly announces the intent to acquire 25% or more
of the outstanding equity securities of First Commercial.
<PAGE>
Effective Date
The Merger Agreement provides that the Merger shall become
effective at 5:00 p.m. on the date of filing appropriate
Articles of Merger with the Secretary of State of the State
of Arkansas (the "Effective Date"). Although no assurance
can be given, the Effective Date is expected to be on or
before June 30, 1997.
Distribution of First Commercial Stock Certificates
After the Effective Date, each holder of certificates
previously evidencing shares of First Central 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 Stock which the holder of such shares of First
Central Stock will have the right to receive (except for
any fractional share interests as described in "The Merger
- Fractional Shares"), together with any dividends which
have been declared on such shares of First Commercial Stock
and to which such holder is entitled.
Holders of First Central Stock on the Effective Date shall
be entitled to receive dividends declared by First
Commercial subsequent to the Effective Date, but payment of
such dividends will not be required of First Commercial
until such persons have delivered their certificates
representing shares of First Central Stock in exchange for
certificates representing shares of First Commercial Stock.
As soon as practicable after consummation of the Merger,
transmittal forms will be sent to stockholders of First
Central for use in forwarding to First Commercial's
transfer agent certificates previously evidencing First
Central Stock for surrender and exchange for certificates
evidencing First Commercial Stock. Until so surrendered,
certificates formerly evidencing First Central Stock will
be deemed for all corporate purposes (except for payment of
dividends to First Central 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 right to receive cash in lieu of
fractional shares which the holder thereof would be
entitled to receive upon surrender. Stockholders of First
Central are requested not to submit stock certificates for
exchange until they have received written instructions to
do so.
If outstanding certificates for shares of First Central
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
<PAGE>
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 Merger shall be liable
to any holder of First Central 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 First Central 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 based on the average of the bid and asked prices for
a share of First Commercial Stock on the Closing Date. See
"The Merger - Federal Income Tax Consequences."
Dilution
Each common stockholder of First Central who exchanges his
stock will receive a voting interest exactly in proportion
to his relative voting common stock interest in relation to
other First Central stockholders before the combination is
effected. Each share of First Central Stock presently held
by First Central stockholders will represent less of a
percentage voting interest in the total number of
outstanding shares of First Commercial (subsequent to the
Merger) than it now represents as a percentage of the total
outstanding shares of First Central.
Accounting Treatment
The Merger will be accounted for as a pooling of interests
under generally accepted accounting principles. The assets
and liabilities of First Central will be reflected in the
consolidated financial statements of First Commercial at
their book value as reflected in First Central's financial
statements. Expenses incurred in connection with the
Merger will be considered as an expense of First
Commercial.
A condition of consummating the Merger is that First
Commercial receive an opinion from Ernst & Young LLP that
the pooling of interests method of accounting applies to
the Merger. Management of First Commercial expects this
condition to be met.
<PAGE>
Registration of First Commercial Stock Under the Securities
Act
The shares of First Commercial Stock to be issued to First
Central stockholders in the 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 were not
affiliates of First Central, as that term is defined in the
Securities Act.
Directors and certain officers and stockholders of First
Central may be deemed to be "affiliates" of First Central
within the meaning of the Securities Act. Accordingly,
resales by such persons of any shares of First Commercial
Stock received by them in the 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 First Central
will be subject to certain restrictions. For one year
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. Such
shares of First Commercial Stock held for more than one
year but less than two years after the Effective Date may
be sold freely if First Commercial is in compliance with
the above discussed Exchange Act reporting requirements.
Once the shares of such First Commercial Stock have been
held for two years after the Effective Date, they may be
sold free from the restrictions of Rules 144 and 145.
It is a condition to First Commercial's obligation to
consummate the Merger that First Commercial shall have
received an agreement in form and substance satisfactory to
it, executed and delivered by each holder of First Central
<PAGE>
Stock who is determined to be an affiliate of First
Central, providing, among other things, that such holder
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. In addition to the above, each First Central
stockholder who owns more than five percent (5%) of the
First Central Stock shall deliver an agreement to First
Commercial representing that he has no present intent to
sell any of the First Commercial Stock to be received by
him, nor will he sell more than fifty percent (50%) of such
stock for a period of at least one (1) year following the
Closing.
INFORMATION CONCERNING FIRST CENTRAL
First Central Corporation, an Arkansas corporation, is a
one-bank holding company having 100% ownership in First
National Bank, Searcy, Arkansas ("FNB"). FNB was
originally chartered in 1904 as an Arkansas state bank
under the name Searcy Bank. Its name was changed in 1906
to Bank of Searcy and again in 1943 to The Searcy Bank. In
1967 it was converted to a national bank and given its
current name. Its main office is in Searcy (White County)
with branches in Bald Knob, Beebe and Rose Bud. The
principal office is located at 200 West Race Street,
Searcy, Arkansas, with five branch locations in the city
limits of Searcy.
First Central Stock
As of March 31, 1997, there were 80,000 authorized shares
of First Central Stock with 71,926 shares issued and
outstanding. The approximate number of holders of First
Central Stock on that date was 43. There is no established
public trading market for shares of First Central Stock.
On February 4, 1997, the date preceding the announcement of
the First Central Merger, there was no independent basis
for establishing a per share cash market price for First
Central Stock. Book value of First Central Stock equaled
$406.98 per share on January 31, 1997, the month end
preceding that date.
First Central's dividends for the three years ended
December 31, 1996, 1995, and 1994 are as follows:
<PAGE>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Dividend
Dividend Dividend Dividend Dividend Declared
-------- -------- -------- -------- --------
1996:
Per Share $ 5 $ 5 $ 5 $ 15 $ 30
Total Declared 359,630 359,630 359,630 1,078,890 2,157,780
1995:
Per Share $ 5 $ 5 $ 5 $ 13 $ 28
Total Declared 359,630 359,630 359,630 935,038 2,013,928
1994:
Per Share $ 5 $ 5 $ 5 $ 13 $ 28
Total Declared 359,630 359,630 359,630 935,038 2,013,928
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 31, 1997, the identity and
total number of shares of First Central Common Stock owned by persons
known by management of First Central to own more than five percent (5%)
of the total outstanding shares.
First Commercial
First Central Common Stock to be
Common Stock Owned Upon
Name and Address of Beneficially Owned on Consummation of
Beneficial Owner March 31, 1997 Merger(1)
___________________ __________________ ____________________
Shares % of Class Shares % of Class
Sarah Pyeatt Black 3,928 5.47 90,109 *
2060 Shadowwood Cove
Memphis, TN 38119
Phillip H. Pyeatt(2) 18,654 25.93 427,927 1.34
P. O. Box 1425
Searcy, AR 72145
Robert E. Pyeatt 4,384 6.10 100,570 *
6554 Pidgeon Hull
Memphis, TN 38119
<PAGE>
Wayne W. Pyeatt(3) 16,182 22.50 371,218 1.17
349 Inkberry Lane
Memphis, TN 38117
*Denotes less than 1%
__________
(1) Assumes an exchange ratio of 22.94024 First Commercial
shares for each outstanding First Central share.
(2) Represents shares owned individually, as general partner
of The Pyeatt Family Limited Partnership, and Phillip H.
Pyeatt Trust, of which he is trustee.
(3) Represents shares owned individually and as trustee of
the Wayne W. Pyeatt Trust.
<PAGE>
Security Ownership of Management
The following table sets forth the beneficial ownership of
shares of First Central Common Stock by each director of
First Central and by all directors and executive officers
of First Central as a group as of March 31, 1997. 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.
First Central First Commercial
Common Stock Common Stock to be
Beneficially Owned on Owned Upon
March 31, 1997 Consummation of the
Name of Director Merger(1)
_________________ ___________________ _____________________
Shares % of Shares % of
Class Class
Shell Blakely 1,200 1.67 27,528 *
Logan Cothern 80 .11 1,835 *
Wayne Hartsfield 1,200 1.67 27,528 *
Edwin Hubach 1,000 1.39 22,940 *
Jerry Moore 452 .63 10,368 *
Jack Powell 560 .78 12,846 *
Phillip H.
Pyeatt(2) 18,654 25.93 427,927 1.34
Robert E. Pyeatt 4,384 6.10 100,570 *
Phyllis Pyeatt
Webb 2,000 2.78 45,880 *
Wayne W.
Pyeatt(3) 16,182 22.50 371,218 1.17
All Directors and 45,920 63.84 1,053,415 3.31
Executive
Officers as a
Group (a total of
12 individuals)
*Denotes less than 1%
__________
(1) Assumes an exchange ratio of 22.94024 First Commercial
shares for each outstanding First Central share.
(2) Includes shares owned by Phillip H. Pyeatt,
individually, The Pyeatt Family Limited Partnership
and Phillip H. Pyeatt Trust.
(3) Includes shares owned by Wayne W. Pyeatt,
individually, and Wayne W. Pyeatt Trust.
<PAGE>
Selected Financial Data - First Central Corporation
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 First
Central."
FIRST CENTRAL SELECTED FINANCIAL DATA
(In thousands, except per share data)
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Summary of Operating
Results:
Net Interest Income $ 9,616 $ 8,407 $ 8,265 $ 8,407 $ 8,121
Provision for Possible
Loan and Lease Losses 235 145 77 60 60
Net Income 4,260 3,712 3,512 3,839 3,675
Period End Balance Sheet
Data:
Total Assets 260,636 243,019 224,433 213,325 206,194
Total Deposits 228,953 213,602 197,318 187,137 182,951
Long Term Debt -0- -0- -0- -0- -0-
Shareholder's Equity 28,940 26,942 24,094 23,442 23,412
Per Common Share Data:
Net Income 59.18 51.56 48.79 53.33 51.01
Cash Dividend 30.00 28.00 28.00 26.00 19.00
Book Value 402.37 374.58 335.00 325.92 297.70
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides certain information
concerning First Central Corporation 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 First Central
Corporation and Subsidiary and related notes thereto
presented elsewhere in this Joint Proxy
Statement/Prospectus.
1996 Compared to 1995
1996 was a period of excellent growth for First Central
Corporation. Loans increased by $12,367,870 or 9.74%,
deposits increased by $15,351,587 or 7.19%, and total
assets increased by $17,616,607 or 7.25%. The increase in
loans and deposits was prompted by continued growth in the
local economy.
Dividends of $2,157,780 were paid in 1996 and stockholders
equity increased $1,998,784 or 7.42%. In addition to the
increase in loans the deposit growth was used to increase
investments by $4,494,529. First Central Corporation
concluded the year with a return on assets of 1.63% and a
return on equity of 14.72%.
Net income for 1996 was $4,260,774 compared to $3,712,166
in 1995. The $1,888,200 increase in interest income was
offset by a $679,298 increase in interest expense creating
an increase of .22% in net interest margin. The
$15,617,823 increase in deposit accounts yielded a $57,738
increase in deposit fee income. The increase in other
income resulted mainly from increases in income from
fiduciary activities.
1995 Compared to 1994
1995 was also a period of growth for First Central
Corporation. Loans increased by $13,806,514 or 12.21%,
deposits increased by $16,283,764 or 8.25% and total assets
increased by $18,586,701 or 8.28%. The increase in loans
and deposits was prompted by substantial growth in the
local economy.
Dividends of $2,013,928 were paid in 1995 and stockholders
equity increased $2,847,158 or 11.82%. In addition to the
increase in loans, the deposit growth was used to increase
investments $4,135,950. First Central Corporation
concluded the year with a return on assets of 1.53% and a
return on equity of 13.78%.
Net income for 1995 was $3,712,166 compared to $3,512,672
in 1994. The $2,570,685 increase in interest income was
<PAGE>
offset by a $2,428,432 increase in interest expense
creating a slight decrease in the net interest margin of
.26%. The increase in deposit accounts of $16,283,764
yielded a $92,331 increase in deposit fee income.
Decreases in other service charges and securities losses
reduced the net increase in other income to $62,650.
1994 Compared to 1993
1994 was also a period of growth for First Central
Corporation even though net income for the year was down
$326,772. Loans increased $20,479,470 or 22.11%, deposits
increased $10,180,682 or 5.44%, and total assets increased
$11,108,112 or 5.21%.
Dividends of $2,013,928 were paid in 1994 and stockholders
equity increased $652,802 or 2.78%. Stockholders equity
was reduced by net unrealized depreciation on securities
available for sale totaling $1,027,857.
With the increase in deposits being relatively low, the
additional loans were funded by investments. Investments
decreased by $10,648,023 or 9.72%. First Central
Corporation used a portion of its resources by adding
approximately $700,000 to building and equipment. Return
on assets and return on equity were 1.57% and 14.58%,
respectively.
Net income fell by $326,772 or 8.51% from 1993 to
$3,512,672. The $437,999 increase in interest income was
offset by a $580,447 increase in interest expense creating
a decrease in net interest margin of .18%. The $10,180,682
increase in deposit accounts resulted in a $93,380 or
12.57% increase in deposit fee income. The increase in
other income totaled $97,650 or 9.20%.
Allowance for Loan Losses
A summary of the changes in the allowance for loan losses
for each of the past two years is presented below.
<PAGE>
1996 1995
---- ----
Balance at beginning of period $712,551 $608,997
Amounts charged-off (100,721) (56,611)
Recoveries of amounts previously
charged-off 22,043 15,165
------- -------
Net charge offs (78,678) (41,446)
Provision for loan losses 235,000 145,000
------- -------
Balance at end of period $868,873 $712,551
======= =======
The provision for loan losses is charged to expenses as a
cost of doing business. Bank management constantly
monitors this provision and a least quarterly recommends to
the board a provision for loan losses. Historic data, past
dues, problem loans, and other factors that might affect
the area s economic condition are taken into consideration
in making the final decision by the Board of Directors.
Non-Accrual and Past Due Loans
It is the policy of First National Bank to review the loans
on a loan by loan basis to determine if they should be
placed on non-accrual status. It is based on the ability
to pay and the amount of collateral and is at the
discretion of the loan committee. The total amount in non-
accrual loans at December 31, 1996 and 1995 was $18,579 and
$4,681, respectively.
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 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, 1996;
2. The description of First Commercial'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
3. 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 Special Meeting
are incorporated herein by reference from date of filing.
<PAGE>
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.
<PAGE>
Management and Additional Information
Certain information relating to the executive compensation,
various benefit plans, voting securities and the principal
holders thereof, certain relationships and related
transactions and other related matters as to First
Commercial is incorporated by reference or set forth in the
First Commercial Annual Report on Form 10-K for the year
ended December 31, 1996, incorporated herein by reference.
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.
COMPARATIVE RIGHTS OF SHAREHOLDERS
General
If the stockholders of First Central approve the Merger,
and if the Merger is subsequently consummated, all
stockholders of First Central, other than those exercising
dissenters' rights, will become stockholders of First
Commercial. The rights of stockholders of First Commercial
are governed by and 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"), and Bylaws rather than the
Arkansas Business Corporation Act of 1965 and the Articles
of Incorporation and Bylaws of First Central, which govern
the rights of stockholders of First Central. The following
is a brief summary asserting some of the principal
differences between the rights of First Commercial
stockholders and the rights of First Central stockholders
not described elsewhere herein.
Voting Rights
Holders of First Commercial Stock are entitled to one vote
for each share held on all matters brought to a vote before
the stockholders of First Commercial. Stockholders of
First Central Stock also are entitled to one vote for each
share held on all matters brought to a vote before the
stockholders of First Central.
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.
<PAGE>
Voting Requirements for Extraordinary Corporate Matters
The corporate law governing First Central requires with
respect to mergers, consolidations, sales of all or
substantially all of a corporation's assets outside the
normal course of business, or voluntary dissolution of a
corporation ("extraordinary corporate matters"), that such
extraordinary corporate matters be approved by the
affirmative vote of the holders of at least two-thirds
(2/3) of the outstanding shares entitled to vote.
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 extraordinary
corporate matters. First Commercial's Articles provide,
however, that if a transaction is contemplated with an
Interested Stockholder (as defined herein) of First
Commercial, then pursuant to the Fair Price Provision,
which is defined and described in greater detail below, the
transaction must be approved by the holders of at least 80%
of the votes entitled to be cast by the holders of First
Commercial Stock. 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 meet certain standards of fairness set forth in
the Fair Price Provision, the 80% vote requirement does not
apply.
Voting for Election of Directors
Corporate law governing First Central provides that 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. The right of First
Central's stockholders to cumulate their votes cannot be
revoked or restricted by the Articles of Incorporation or
Bylaws of First Central. Such cumulative voting rights
afford minority stockholders some assurance of
representation on a corporation's board of directors.
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.
<PAGE>
The directors of First Central 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 Incorporation of First
Central ("First Central's Articles") must be approved by
two-thirds (2/3) 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 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.
<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 First Central have the power to amend the
Bylaws of First Central. 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 by stockholders
before an annual meeting, 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 repealed
only with the consent of the holders of at least 80% of the
First Commercial Stock entitled to vote.
Removal of Directors
Stockholders of First Central 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 only
for cause.
Limitation of Director Liability
Under the corporate law governing First Central, First
Central's Articles are not permitted to include provisions
limiting the liability of directors to First Central or its
stockholders. First Commercial's Articles provide that to
the 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
<PAGE>
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.
Filling Vacancies on the Board of Directors
Under the corporate law governing First Central, vacancies
on its Board of Directors created by the removal of a
director by stockholders can only be filled by the vote of
its stockholders. Under 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
<PAGE>
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.
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, to 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.
<PAGE>
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.
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, 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
<PAGE>
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 of First Commercial Stock to 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.
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
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 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 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.
<PAGE>
Shareholder Rights Plan
Preferred share purchase rights ("Rights") are attached to
shares of First Commercial Stock, including the shares
offered hereby, pursuant to a Shareholder Rights Plan of
First Commercial (the "Rights Plan"). The following
description of the Rights is qualified in is entirety by
reference to the Rights Plan, which is incorporated herein
by reference. See "Information Concerning First Commercial
- Information Incorporated by Reference."
The Rights trade automatically with shares of First
Commercial Stock, and become exercisable and will trade
separately from the First Commercial Stock on the tenth day
after public announcement that a person or group has
acquired, or has the right to acquire, beneficial ownership
of 20% or more of the outstanding shares of First
Commercial Stock, or on the tenth day following
commencement or announcement of intent to make a tender
offer for 20% or more of the outstanding shares of First
Commercial Stock, in either case without prior written
consent of the First Commercial Board. When exercisable,
one Right entitles the holder to buy 1/100 of a share of
Junior Participating Preferred Stock of First Commercial at
an exercise price of $75 per Right. The exercise price
payable, and the number of shares of Junior Participating
Preferred Stock issuable, upon exercise of the Rights are
subject to adjustment from time to time upon the occurrence
of certain events in order to prevent dilution. In
addition, the number of outstanding Rights are also subject
to adjustment in the event of a stock dividend on First
Commercial Stock payable in shares of First Commercial
Stock, subdivisions of the First Commercial Stock, or
combinations of shares of First Commercial Stock into a
smaller number of shares.
In the event a person acquires a beneficial ownership of
20% or more of First Commercial Stock, holders of Rights
(other than the acquiring person or group) may purchase
First Commercial Stock having a market value of twice the
then current exercise price of each Right or, under certain
circumstances, holders of Rights may purchase stock of the
acquiring company having a market value of twice the
current exercise price of each Right.
The Rights are designed to protect the interests of First
Commercial and its shareholders against coercive takeover
tactics. The purpose of the Rights is to encourage
potential acquirors to negotiate with First Commercial's
Board of Directors prior to attempting a takeover and to
give the Board leverage in negotiating on behalf of all
shareholders the terms of any proposed takeover. The
<PAGE>
Rights may deter certain takeover proposals. The Rights,
which can be redeemed by First Commercial's Board of
Directors in certain circumstances, expire by their terms
on September 28, 2000.
LEGAL OPINIONS
The validity of the shares of First Commercial 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. Paul B. Benham III, a partner of Friday,
Eldredge & Clark, beneficially owns, individually and
through various retirement plans, 1,945 shares of First
Commercial Stock. Certain legal matters will be passed
upon for First Central by Lightle, Beebe, Raney and Bell,
Searcy, Arkansas.
EXPERTS
First Central
The consolidated financial statements of First Central and
subsidiaries as of December 31, 1996 and 1995, and for each
of the years in the three-year period ended December 31,
1996, are included and incorporated herein by reference in
reliance upon the report of Angel, Humphrey, Hamilton &
Company, Ltd., independent auditors, which is included and
incorporated herein by reference, and upon the authority of
said firm as experts in accounting and auditing.
First Commercial
The consolidated financial statements of First Commercial
incorporated by reference in First Commercial's Annual
Report (Form 10-K) for the year ended December 31, 1996,
have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated
by reference therein and incorporated herein by reference.
Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and
auditing.
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF FIRST CENTRAL
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF FIRST CENTRAL
Page
----
Financial Statements
Independent Auditor's Report - 1/17/97
Consolidated Balance Sheets - 12/31/1996 and 1995
Consolidated Statements of Income - 12/31/1996 and 1995
Consolidated Statements of Changes in Stockholders'
Equity - 12/31/1996 and 1995
Consolidated Statements of Cash Flows - 12/31/1996 and 1995
Notes to Consolidated Financial Statements
Independent Auditor's Report - 2/26/1996
Consolidated Balance Sheets - 12/31/1995 and 1994
Consolidated Statements of Income - 12/31/1995 and 1994
Consolidated Statements of Changes in Stockholders'
Equity - 12/31/1995 and 1994
Consolidated Statements of Cash Flows - 12/31/1995 and 1994
Notes to Consolidated Financial Statements
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
<PAGE>
Angel, Humphrey, Hamilton & Co., Ltd.
Certified Public Accountants
Bob Humphrey, CPA Ph: (501) 268-5353
Mitchell Hamilton, CPA Fax: (501) 268-5351
--------------- --------------
Jay W. Cherry, CPA 405 North Spring
David L. Spradlin, CPA P.O. Box 310
Debra T. Scaife, CPA Searcy, AR 72145
James D. Bellcock, CPA
Independent Auditors' Report
To the Board of Directors and Stockholders
First Central Corporation
Searcy, Arkansas
We have audited the accompanying consolidated balance sheets
of First Central Corporation and its wholly owned subsidiary First
National Bank of Searcy as of December 31, 1996 and 1995, and the
related consolidated statements of income, changes in
stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly in all material respects the
financial position of First Central Corporation and its wholly
owned subsidiary First National Bank of Searcy at December 31,
1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally
accepted accounting principles.
Searcy, Arkansas
January 17, 1997
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
------ ------
Cash and due from banks $7,880,387 $7,390,315
Interest-bearing deposits in banks 299,000 99,000
Federal funds sold 4,750,000 7,400,000
Securities available for sale 42,984,820 43,684,645
Securities to be held to maturity 59,386,676 51,742,322
Loans, net of allowance for credit losses 139,290,352 126,922,482
Properties and equipment 3,072,656 3,268,168
Accrued income and other assets 2,972,525 2,512,877
----------- -----------
Total Assets $ 260,636,416 $ 243,019,809
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $47,879,924 $46,150,724
Savings and NOW deposits 47,189,924 44,163,778
Other time deposits 133,883,930 123,287,689
----------- -----------
Total Deposits 228,953,778 213,602,191
Federal funds purchased and securities
sold under agreements to repurchase 166,000 0
Accrued expenses and other liabilities 2,575,845 2,475,609
----------- -----------
Total Liabilities 231,695,623 216,077,800
----------- -----------
Stockholders' equity
Common stock, par value $1;
Authorized -80,000 shares
Outstanding -72,000 shares 72,000 72,000
Capital surplus 7,365,942 7,365,942
Retained earnings 21,499,873 19,396,879
Net unrealized appreciation on securities
available for sale, net of deferred
tax effects 16,853 121,063
---------- ----------
28,954,668 26,955,884
Treasury stock at cost -74 shares 13,875 13,875
---------- ----------
<PAGE>
Total Stockholders' Equity 28,940,793 26,942,009
----------- -----------
Total Liabilities and Stockholders'
Equity $ 260,636,416 $ 243,019,809
============ ============
See accompanying notes and accountants' report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
December 31, 1996 and 1995
1996 1995
------ ------
Interest income
Interest and fees on loans $12,569,000 $10,966,666
Interest on securities 5,875,678 5,617,958
Interest on federal funds sold 245,915 224,597
Interest on deposits with banks 8,554 1,726
---------- ----------
Total Interest Income $18,699,147 $16,810,947
----------- -----------
Interest expense
Interest on deposits 9,072,829 8,336,523
Interest on federal funds purchased
and securities sold under agreements
to repurchase 9,982 66,990
---------- ----------
Total Interest Expense 9,082,811 8,403,513
---------- ----------
Net interest income 9,616,336 8,407,434
Provision for credit losses 235,000 145,000
--------- ---------
Net Interest Income After Credit Losses 9,381,336 8,262,434
---------- ----------
Other income
Income from fiduciary activities 80,895 36,652
Service charges on deposit accounts 986,293 928,555
Other service charges & fees 149,903 158,976
Securities gains and losses 31,449 17,911
Other income 87,325 79,447
--------- ---------
Total Other Income 1,335,865 1,221,541
---------- ----------
Other expense
Salaries and employee benefits 2,506,856 2,293,627
Occupancy expense 301,211 245,737
Equipment expense 167,444 129,044
Other expense 1,708,032 1,720,244
---------- ----------
Total Other Expense 4,683,543 4,388,652
---------- ----------
<PAGE>
Income before income taxes 6,033,658 5,095,323
Income tax provision 1,772,884 1,383,157
---------- ----------
Net Income $ 4,269,774 $ 3,712,166
========== ==========
Net Income Per Share of Common Stock $ 59.18 $ 51.56
========= =========
See accompanying notes and accountants' report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1996 and 1995
Net
Unrealized
(Depreciation)
Appreciation
Common Capital Retained Available-for-
Stock Surplus Earnings Sale Securities Total
------ ------- -------- --------------- -----
Balance, 1/1/95 $72,000 $7,365,942 $17,698,641 $(1,027,857) $24,108,726
Net Income, 1995 3,712,166 3,712,166
Cash dividend
declared, $28.00
per share (2,013,928) (2,013,928)
Net change in
unrealized
depreciation on
securities
available for
sale, net of
deferred taxes 1,148,920 1,148,920
-------- --------- ---------- --------- ----------
Balance, 1/1/96 72,000 7,365,942 19,396,879 121,063 26,955,884
Net Income, 1996 4,260,774 4,260,774
Cash dividends
declared, $30.00
per share (2,157,780) (2,157,780)
Net change in
unrealized
appreciation on
securities
available for
sale, net of
deferred taxes (104,210) (104,210)
------- --------- ----------- --------- -----------
Balance, 12/31/96 $72,000 $7,365,942 $21,499,873 $16,853 $28,954,668
======= ========= ========== ====== ==========
See accompanying notes and accountants' report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1996 and 1995
1996 1995
------ -------
Cash Flows From Operating Activities
Net Income $ 4,260,774 $ 3,712,166
--------- ---------
Adjustments to reconcile net income
to net cash provided by operating
activities 296,320 240,834
Provision for credit losses 235,000 145,000
Deferred income tax (benefit) (54,000) 6,089
Net realized gain on securities
available for sale (31,449) (17,911)
Accrued income and other assets (459,648) (284,984)
Accrued expense and other liabilities 154,236 413,718
------- -------
Total adjustments 140,459 502,746
------- --------
Net Cash Provided by Operating
Activities 4,401,233 4,214,912
--------- ---------
Cash Flows From Investing Activities
Net (increase) decrease in interest
bearing deposits with banks (200,000) 397,884
Net (increase) decrease in federal
funds sold 2,650,000 (6,550,000)
Purchases of securities (68,603,882) (40,603,670)
Proceeds from sale of securities 61,585,965 44,378,535
Net increase in loans (12,602,870) (13,951,514)
Purchases of property and equipment (100,181) (349,303)
---------- ----------
Net Cash Used By Investing
Activities (17,270,968) (16,678,068)
---------- ----------
Cash Flows From Financing Activities
Net increase in demand savings and
NOW accounts 4,755,346 1,128,011
Net increase in time deposits 10,596,241 15,155,753
Net increase (decrease) in
securities sold under agreements
to repurchase 166,000 (1,026,466)
Dividends paid (2,157,780) (2,013,928)
Net Cash Provided By Financing
Activities 13,359,807 13,243,370
---------- ----------
Net Increase In Cash And Due From Banks 490,072 780,214
<PAGE>
Cash And Due From Banks At January 1 7,390,315 6,610,101
---------- ----------
Cash And Due From Banks At December 31 $ 7,880,387 $ 7,390,315
=========== ===========
Interest Paid $ 9,061,737 $ 8,117,755
=========== ===========
Income Taxes Paid $ 1,826,851 $ 1,472,841
=========== ===========
See accompanying notes and accountants report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
Note A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements of First Central
Corporation (the Holding Company) include the accounts
of the Holding Company and its wholly owned subsidiary
First National Bank. Significant intercompany
transactions and amounts have been eliminated.
Investments in Securities
The Bank's investments in securities are classified
in three categories and accounted for as follows:
Trading Securities
Government bonds held principally for resale in the
near term and mortgage-backed securities held for
sale in conjunction with the Bank's mortgage banking
activities are classified as trading securities and
recorded at their fair values. Unrealized gains
and losses on trading securities when applicable are
included in other income. No securities were held in
this category during 1996 or 1995.
Securities to be Held to Maturity. Bonds, notes and
debentures for which the Bank has the positive intent
and ability to hold to maturity are reported at cost,
adjusted for amortization of premiums and accretion of
discounts which are recognized in interest income using
the interest method over the period to maturity.
Securities Available for Sale. Securities available for
sale consist of bonds, notes, debentures, and certain
equity securities not classified as trading securities
nor as securities to be held to maturity.
When applicable, declines in the fair value of individual
held-to-maturity and available-for-sale securities below
their cost that are other than temporary have resulted in
write-downs of the individual securities to their fair
value. The related writedowns have been included in
earnings as realized losses.
Unrealized holding gains and losses, net of tax, on
securities available for sale are reported as a net amount
in a separate component of shareholders' equity until
realized.
<PAGE>
Gains and losses on the sale of securities available for
sale are determined using the specific-identification
method.
<PAGE>
Allowance for Credit Losses
The allowance is maintained at a level adequate
to absorb probable losses. Management determines
the adequacy of the allowance based upon reviews
of individual credits, recent loss experience, current
economic conditions, the risk characteristics of the
various categories of loans and other pertinent
factors. Credits deemed uncollectible are charged
to the allowance. Provisions for credit losses and
recoveries on loans previously charged off are added to
the allowance.
Properties and Equipment
Properties and equipment are stated at cost, less
accumulated depreciation. The provision for depreciation
is computed principally by the straight-line method.
Interest Income on Loans
Interest on loans is accrued and credited to income based
on the principal amount outstanding. The accrual of
interest on loans is discontinued when, in the opinion
of management, there is an indication that the borrower may
be unable to meet payments as they become due. Upon such
discontinuance, all unpaid accrued interest is reversed.
Pension Costs
Pension costs are charged to salaries and employee
benefits expense and are funded as accrued.
Income Taxes
Provisions for income taxes are based on taxes payable or
refundable for the current year (after exclusion of
non-taxable income such as interest on state and
municipal securities) and deferred taxes on temporary
differences between the amount of taxable income and
pretax financial income and between the tax bases of
assets and liabilities and their reported amounts
in the financial statements. Deferred tax assets
and liabilities are included in the financial
statements at currently enacted income tax rates
applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or
settled as prescribed in FASB Statement No. 109,
Accounting for Income Taxes. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes.
<PAGE>
Net Income Per Share of Common Stock
Net income per share of common stock is computed by
dividing net income by the weighted average number of
shares of common stock outstanding during the period,
after giving retroactive effect to stock dividends if
any occurred.
Trust Fees
Trust fees are recorded on the accrual basis except for
estates.
Off-Balance-Sheet Instruments
In the ordinary course of business the Bank has entered
into off balance sheet financial instruments consisting
of commitments to extend credit, commercial letters of
credit and standby letters of credit. Such financial
instruments are recorded in the financial statements
when they are funded or related fees are incurred or
received.
Fair Values of Financial Instruments
The following methods and assumptions were used by
the Bank in estimating fair values of financial
instruments as disclosed herein:
Cash and cash equivalents - The carrying amounts of
cash and short-term instruments approximate their
fair value.
Trading securities - The Bank does not maintain a
trading account for securities.
Securities to be held to maturity and securities
available for sale - Fair values for investment
securities are based on quoted market prices.
Loans receivable - Fair values for certain mortgage
loans (e.g., one-to-four family residential), and
other consumer loans are based on quoted market
prices of similar loans sold in conjunction with
securitization transactions. Fair values for
commercial real estate and commercial loans are
estimated using discounted cash flow analyses,
using interest rates currently being offered for
loans with similar terms to borrowers of similar
credit quality. Fair values for impaired loans are
estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
<PAGE>
Deposit liabilities - The fair values disclosed for
demand deposits are, by definition, equal to the
amount payable on demand at the reporting date
(that is, their carrying amounts). The carrying
amounts of variable-rate, fixed-term money market
accounts and certificates of deposit approximate
their fair values at the reporting date. Fair
values for fixed-rate certificates of deposit are
estimated using a discounted cash flow calculation
that applies interest rates currently being offered
on certificates to a schedule of aggregated
expected monthly maturities on time deposits.
Accrued interest - The carrying amounts of accrued
interest approximate their fair values.
Off-balance-sheet instruments - Fair values for
off-balance-sheet lending commitments are based on
fees currently charged to enter into similar
agreements, taking into account the remaining terms
of the agreements and the counterparties' credit
standing.
Cash and Cash Equivalents
For the purpose of presentation in the Statements of
Cash Flows, cash and cash equivalents are defined as those
amount included in the balance sheet caption "Cash and Due
from Banks".
<PAGE>
Note B INVESTMENT SECURITIES
The carrying amounts of investment securities as shown
in the consolidated balance sheets of the Bank and their
approximate fair values at December 31, 1996 were as
follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------ ------- ------ -----
Securities Available
For Sale -
U.S. Agency securities $22,773,579 $ 32,760 $156,315 $22,650,023
U.S. Government
securities 19,133,171 58,197 4,380 19,186,988
State & municipal
securities 0 0 0 0
Other 1,052,534 95,425 151 1,147,809
---------- ------ ------- ---------
$42,959,284 $186,382 $160,846 $42,984,820
=========== ======== ======== ===========
<PAGE>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------- ------- ------ ----
Securities to be held
to maturity -
U.S. Agency securities $33,735,960 $ 44,270 $285,155 $33,495,075
U.S. Government
securities 0 0 0 0
State & municipal
securities 23,155,503 498,847 230,146 23,424,204
Other
securities 2,495,213 4,608 10,645 2,489,176
---------- ------ ------- ----------
$59,386,676 $547,725 $525,946 $59,408,455
========== ======= ======= ==========
Assets, principally securities, carried at approximately $23,570,000 at
December 31, 1996 and $21,025,000 at December 31, 1995 were pledged to
secure public deposits and for other purposes required or permitted by law.
Gross realized gains and gross realized losses on sales of securities
available for sale were:
1996
------
Gross realized gains:
U.S. Government and agency securities $24,462
State and municipal securities 7,550
------
$32,012
=======
Gross realized losses:
U.S. Government and agency securities $ 0
State and municipal securities 563
-------
$ 563
=======
<PAGE>
Note C LOANS
The components of loans in the consolidated balance sheets
were as follows:
1996 1995
---- ----
Commercial $10,314,076 $18,092,006
Construction 21,247,115 7,493,603
Mortgage 83,775,845 78,946,757
Other 24,822,189 23,102,667
----------- -----------
$140,159,225 $127,635,033
============ ============
Note D ALLOWANCE FOR CREDIT LOSSES
An analysis of the change in the allowance for credit
losses follows:
1996 1995
---- ----
Balance at January 1 $ 712,551 $ 608,998
-------- --------
Credits charged off (100,721) (56,611)
Recoveries 22,043 15,164
-------- --------
Net credits charged off ( 78,678) ( 41,447)
--------- ---------
Provision for credit losses 235,000 145,000
--------- ---------
Balance at December 31 $ 868,873 $ 712,551
========= =========
<PAGE>
Note E PROPERTIES AND EQUIPMENT
Components of properties and equipment included in the
consolidated balance sheets at December 31, 1996 and
1995 were as follows:
1996 1995
---- ----
Land $ 289,547 $ 289,547
Bank premises 3,488,420 3,488,420
Furniture & equipment 2,336,866 2,249,865
Leasehold improvements 304,702 291,523
--------- ---------
Total cost 6,419,535 6,319,355
Less accumulated depreciation (3,346,879) (3,051,187)
---------- ----------
Net book value $ 3,072,656 $ 3,268,168
=========== ===========
Certain bank facilities and equipment are leased under
various operating leases. Rental expense was $71,681 in
1996 and $51,970 in 1995. Future minimum rental
commitments under noncancelable leases are:
1997 $ 73,951
1998 73,951
1999 73,951
2000 39,301
2001 39,301
--------
$ 300,455
=========
<PAGE>
Note F EMPLOYEE BENEFITS
The bank has a non-contributory single employer defined
benefit pension plan covering substantially all of its
employees. The frozen initial liability method was used
to determine funding requirements of $130,902 for 1996
and $111,253 for 1995. Under this method, the first
year's normal cost for each participant is the level
contribution which would have been required from the
participant's age at original entry into the employer's
service in order to fund the participant's benefit at
retirement age. The frozen unfunded actuarial liability
represents the reserve which would have been on hand if
the normal cost had been paid in all prior years, less
plan assets. Each year the frozen unfunded actuarial
liability is increased by interest plus the normal cost
with interest, and decreased by the company contribution
with interest. The normal cost for any year after the
first year is equal to the present value of benefit less
the actuarial value of plan assets less the current
value of the frozen unfunded actuarial liability,
divided by an average temporary annuity factor. The
average temporary annuity factor is calculated based on
the present value of each participant's future
compensation. Any actuarial gains or losses which arise
from plan experience which differ from the actuarial
assumptions are spread over future years' normal costs.
However, any gains or losses resulting from plan
amendment or assumption changes are considered new
pieces of unfunded liability and must be funded over no
more than thirty years. A summary of the plan's funding
standard account for plan years 1996 and 1995 is as
follows:
1996 1995
---- ----
Reconciliation of Funded Status
Actuarial present value of
accumulated benefit obligations:
a. Vested portion ($1,070,035) ($1,033,544)
b. Non-vested portion ( 47,029) ( 58,531)
---------- ----------
Accumulated Benefit Obligation ( 1,117,064) ( 1,092,075)
Effect of estimated future
pay growth ( 168,342) ( 109,053)
---------- ----------
Projected Benefit Obligation ( 1,285,406) ( 1,201,128)
<PAGE>
Plan assets at fair value 1,561,964 1,464,995
---------- ---------
Funded Status 276,558 263,867
Unrecognized net (gain) or loss ( 91,502) ( 70,643)
Unrecognized prior service cost ( 143,307) ( 149,278)
Unrecognized net obligation or (net
asset) ( 41,749) ( 43,946)
---------- ----------
(Accrued) Prepaid Cost $ 0 $ 0
========== ==========
Determination of Pension Cost
Service Cost $ 76,765 $ 73,528
Interest Cost 89,146 92,020
Expected return on assets ( 102,243) ( 86,769)
Expected return on assets
Amortization of:
Unrecognized net (gain) or loss 0 3,013
Unrecognized prior service cost ( 5,971) ( 5,971)
Unrecognized net obligation or
(net asset) ( 2,197) ( 2,197)
--------- ---------
Net Periodic Pension Cost $ 55,500 $ 73,624
========= =========
The funding calculation was based on a weighted average
assumed discount of 6% and an annual rate of increase
in compensation of 4.5%.
The bank also has a non-contributory defined
contribution profit sharing plan covering substantially
all of its employees. The contributions for 1996 and
1995 were provided based on 10% of eligible employee's
covered compensation. These contributions were
$164,329 and $153,521 for 1996 and 1995 respectively.
<PAGE>
Note G INCOME TAXES
The consolidated provision for income taxes consisted of the
following:
1996 1995
----- -----
Currently payable
Federal $1,698,884 $1,299,287
State 128,000 77,781
--------- ---------
$1,826,884 $1,377,068
Deferred tax expense (benefit) ( 54,000) 6,089
--------- ---------
$1,772,884 $1,383,157
========= =========
The provision for federal income taxes is less than
that computed by applying the federal statutory rate of
34% in 1996 and 1995, as indicated in the following
analysis:
1996 1995
---- ----
Statutory rate 34.0% 34.0%
Decrease resulting from:
Effect of tax-exempt income ( 7.9%) ( 9.6%)
Interest and other nondeductible
expenses 2.0% 1.6%
----- ------
28.1% 26.0%
===== =====
The cumulative totals of each type of significant item
that gave rise to deferred taxes are:
1996 1995
---- ----
Net unrealized appreciation
on securities available
for sale ($ 25,535) ( $183,429)
Depreciation ( 375,329) ( 376,260)
---------- ---------
Total ($ 400,864) ($ 559,689)
========== ==========
<PAGE>
Note H RELATED PARTIES
The Bank has entered into transactions with its directors,
significant shareholders and their affiliates (related
parties). Such transactions were made in the ordinary
course of business on substantially the same terms and
conditions, including interest rates and collateral, as
those prevailing at the same time for comparable
transactions with other customers, and did not, in the
opinion of management, involve more than normal credit
risk or present other unfavorable features. The aggregate
amount of loans to such related parties at December 31,
1996 was $1,805,203. During 1996, new loans to such
related parties amounted to $987,701 and repayments
amounted to $1,116,888.
Note I CONTINGENT LIABILITIES AND COMMITMENTS
The Bank's consolidated financial statements do not
reflect various commitments and contingent liabilities
which arise in the normal course of business and which
involve elements of credit risk, interest rate risk and
liquidity risk. These commitments and contingent
liabilities are described in Note K Financial Instruments.
Note J CONCENTRATIONS OF CREDIT
All of the Bank's loans, commitments, and commercial and
standby letters of credit have been granted to customers
in the Bank's market area. All such customers are
depositors of the Bank. Investments in state and
municipal securities also involve governmental entities
within the Bank's market area. The distribution of
commitments to extend credit approximates the distribution
of loans outstanding. Commercial and standby letters of
credit were granted primarily to commercial borrowers.
Note K FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-
balance-sheet risk in the normal course of business to
meet the financing needs of its customers and to reduce
its own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve,
to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the statement
of financial position.
<PAGE>
The contract or notional amounts of those instruments
reflect the extent of the Bank's involvement in particular
classes of financial instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial
instrument for commitments to extend credit and standby
letters of credit, is represented by the contractual
notional amount of those instruments. The Bank uses the
same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments.
Commitments to Extend Credit and Financial Guarantees. At
December 31, 1996, the Bank was exposed to credit risk on
commitments to extend credit having contract amounts of
$6,318,933 and standby letters of credit of $282,100.
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have
fixed expiration dates or other termination clauses and
may require payment of a fee. Since many of the
commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates
each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if it is deemed
necessary by the Bank upon extension of credit, is based
on management's credit evaluation of the counter party.
Collateral held varies but may include accounts
receivable, inventory, property, plant, and equipment; and
income-producing commercial properties.
<PAGE>
The estimated fair values of the Bank's financial
instruments were as follows:
December 31, 1996 December 31, 1995
------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- ------ -----
Financial Assets:
Cash and short-term
investments 8,179,387 8,179,387 7,489,315 7,489,315
Investment securities 102,371,496 102,393,275 95,426,967 95,744,811
Loans, net of allowance 139,290,352 133,105,285 126,922,482 119,866,946
----------- ----------- ----------- -----------
249,841,235 243,677,947 229,838,764 223,101,072
=========== =========== =========== ===========
Financial Liabilities:
Demand deposits 95,069,848 95,069,848 90,314,502 90,314,502
Certificates of deposit 133,883,930 134,110,583 123,287,689 123,716,227
Unrecognized financial
instruments: N/A N/A N/A N/A
Note L SALE OF BANK
On February 5, 1997, First Central Corporation, the
holding company of First National Bank, agreed to sell
in a stock for stock swap to First Commercial
Corporation. Pending regulatory approval, First Central
Corporation will swap 71,926 shares for 1,650,000 shares
of First Commercial Corporation. The approximate value
of the First Commercial Corporation shares at February
5, 1997 totaled $61,500,000. The deal will be
consummated as is, if the value of First Commercial
Corporation shares at the point they receive regulatory
approval, is between $30.50 - $45.75 per share. If the
per share value is above or below this range, the
agreement will be renegotiated.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
<PAGE>
Angel, Humphrey, Hamilton & Co., Ltd.
Certified Public Accountants
Bob Humphrey, CPA Ph: (501) 268-5353
Mitchell Hamilton, CPA Fax: (501) 268-5351
R. Mark Story, CPA 405 North Spring
Jay W. Cherry, CPA P.O. Box 310
David L. Spradlin, CPA Searcy, AR 72145
Independent Auditors' Report
To the Board of Directors and Stockholders
First Central Corporation
Searcy, Arkansas
We have audited the accompanying consolidated balance
sheets of First Central Corporation and its wholly owned
subsidiary First National Bank of Searcy as of December 31,
1995 and 1994, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for
the years then ended. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly in all material respects the
financial position of First Central Corporation and its
wholly owned subsidiary First National Bank of Searcy at
December 31, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
Searcy, Arkansas
February 26, 1996
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
---- ----
Cash and due from banks $7,390,315 $6,610,101
Interest-bearing deposits in banks 99,000 496,884
Federal funds sold 7,400,000 850,000
Securities available for sale 43,684,645 39,444,219
Securities to be held to maturity 51,742,322 57,998,914
Loans, net of allowance for credit
losses 126,922,482 113,115,968
Properties and equipment 3,268,168 3,159,699
Accrued income and other assets 2,512,877 2,757,395
----------- -----------
Total Assets $243,019,809 $244,433,108
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $46,150,724 $46,241,632
Savings and NOW deposits 44,163,778 42,944,859
Other time deposits 123,287,689 108,131,936
----------- -----------
Total Deposits 213,602,191 197,318,427
Federal funds purchased and
securities sold under agreements
to repurchase 0 1,026,466
Accrued expenses and other
liabilities 2,475,609 1,993,436
---------- ---------
Total Liabilities 216,077,800 200,338,329
----------- -----------
Stockholders' equity
Common stock, par value $1;
Authorized -80,000 shares
Outstanding -72,000 shares 72,000 72,000
Capital surplus 7,365,942 7,365,942
Retained earnings 19,396,879 17,698,641
Net unrealized appreciation
(depreciation) on securities
available for sale, net of
deferred tax effects 121,063 (1,027,857)
---------- ---------
26,955,884 24,108,726
<PAGE>
Treasury stock at cost -74 shares 13,875 13,875
---------- ----------
Total Stockholders' Equity 26,942,009 24,094,851
---------- ----------
Total Liabilities and
Stockholders' Equity $243,019,809 $224,433,180
============ ============
See accompanying notes and accountants' report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
December 31, 1995 and 1994
1995 1994
---- ----
Interest income
Interest and fees on loans $10,966,666 $8,581,973
Interest on securities 5,617,958 5,541,362
Interest on federal funds sold 224,597 96,395
Interest on deposits with banks 1,726 20,532
---------- ----------
Total Interest Income $16,810,947 $14,240,262
---------- ----------
Interest expense
Interest on deposits 8,336,523 5,933,569
Interest on federal funds
purchased and securities sold
under agreements to repurchase 66,990 41,512
--------- ---------
Total Interest Expense 8,403,513 5,975,081
--------- ---------
Net interest income 8,407,434 8,265,181
Provision for credit losses 145,000 77,000
--------- ---------
Net Interest Income After Credit
Losses 8,262,434 8,188,181
--------- ---------
Other income
Income from fiduciary activities 36,652 38,663
Service charges on deposit accounts 928,555 836,224
Other service charges & fees 158,976 167,439
Securities gains and losses 17,911 38,368
Other income 79,447 78,197
--------- ---------
1,221,541 1,158,891
--------- ---------
Other expense
Salaries and employee benefits 2,293,627 2,175,278
Occupancy expense 245,737 253,459
Equipment expense 129,044 160,642
Other expense 1,720,244 1,834,562
--------- ---------
4,388,652 4,423,941
--------- ---------
<PAGE>
Income before income taxes 5,095,323 4,923,131
Income tax provision 1,383,157 1,410,459
--------- ---------
Net Income $3,712,166 $3,512,672
========= =========
Net Income Per Share of Common Stock $ 51.56 $ 48.79
========= =========
See accompanying notes and accountants' report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1995 and 1994
Net
Unrealized
(Depreciation)
Appreciation
Common Capital Retained Available-for-
Stock Surplus Earnings Sale Securities Total
----- ------- -------- ------------- -----
Balance, 1/1/94 $72,000 $7,365,942 $16,017,982 N/A $ 23,455,924
Net Income, 1994 3,512,672 3,512,672
Correction of
prior year
depreciation
provisions 181,915 181,915
Cash dividends
declared,
$28.00 per share (2,013,928) (2,013,928)
Net change in
unrealized
depreciation on
securities
available for
sale, net of
deferred taxes (1,027,857) (1,027,857)
------ --------- --------- --------- ---------
Balance, 1/1/95 72,000 7,365,942 17,698,641 (1,027,857) 24,108,726
Net Income, 1995 3,712,166 3,712,166
Cash dividends
declared, $28.00
per share (2,013,928) (2,013,928)
Net change in
unrealized
appreciation
on securities
available for
sale, net of
deferred taxes 1,148,920 1,148,920
------ --------- ---------- --------- ----------
Balance, 12/31/95 $72,000 $7,365,942 $19,396,879 $ 121,063 $26,955,884
====== ========= ========== ========= ==========
See accompanying notes and accountants' report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1995 and 1994
1995 1994
---- ----
Cash Flows From Operating Activities
Net Income $3,712,166 $3,512,672
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 240,834 227,364
Provision for credit losses 145,000 77,000
Deferred income taxes 6,385 8,261
Net realized gain on securites
available for sale ( 17,911) ( 38,368)
Accrued income and other assets ( 284,984) ( 97,894)
Accrued expense and other liabilites 413,422 137,404
--------- ---------
Total adjustments 502,746 313,767
--------- ---------
Net Cash Provided by Operating
Activities 4,214,912 3,826,439
--------- ---------
Cash Flows From Investing Activities
Net (increase) decrease in interest
bearing deposits with banks 397,884 ( 5,133)
Net (increase) decrease in federal
funds sold ( 6,550,000) 2,550,000
Purchases of securites ( 40,603,670) ( 47,393,838)
Proceeds from sale of secruites 44,378,535 53,978,004
Net increase in loans ( 13,951,514) ( 20,556,470)
Purchases or property and equipment ( 349,303) ( 648,001)
----------- -----------
Net Cash Used By Investing Activites ( 16,678,068) ( 12,075,438)
----------- -----------
Cash Flows From Financing Activities
Net increase in demand savings and
NOW accounts 1,128,011 6,292,225
Net increase in time deposits 15,155,753 3,888,457
Net increase (decrease) in
securities sold under agreements
to repurchase ( 1,026,466) 35,247
Dividends paid ( 2,013,928) ( 2,013,928)
----------- -----------
Net Cash Provided By Financing
Activites 13,243,370 8,202,001
---------- ---------
<PAGE>
Net Increase (Decrease) In Cash And
Due from Banks 780,214 ( 46,998)
Cash And Due From Banks At January 1 6,610,101 6,657,099
---------- ----------
Cash And Due From Banks At December 31 $ 7,390,315 $ 6,610,101
=========== ===========
Interest Paid $ 8,117,755 $ 5,789,965
=========== ===========
Income Taxes Paid $ 1,253,396 $ 1,472,841
=========== ===========
See accompanying notes and accountants report.
<PAGE>
FIRST CENTRAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
Note A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements of First
Central Corporation (the Holding Company) include
the accounts of the Holding Company and its wholly
owned subsidiary First National Bank. Significant
intercompany transactions and amounts have been
eliminated.
Investments in Securities
The Bank's investments in securities are classified
in three categories and accounted for as follows:
Trading Securities - Government bonds held
principally for resale in the near term and
mortgage-backed securities held for sale in
conjunction with the Bank's mortgage banking
activities are classified as trading securities
and recorded at their fair values. Unrealized
gains and losses on trading securities when
applicable are included in other income. No
securities were held in this category during
1995 or 1994.
Securities to be Held to Maturity - Bonds,
notes and debentures for which the Bank has the
positive intent and ability to hold to maturity
are reported at cost, adjusted for amortization
of premiums and accretion of discounts which
are recognized in interest income using the
interest method over the period to maturity.
Securities Available for Sale - Securities
available for sale consist of bonds, notes,
debentures, and certain equity securities not
classified as trading securities nor as
securities to be held to maturity.
<PAGE>
When applicable, declines in the fair value of
individual held-to-maturity and available-for-sale
securities below their cost that are other than
temporary have resulted in write-downs of the
individual securities to their fair value. The
related writedowns have been included in earnings as
realized losses.
Unrealized holding gains and losses, net of tax, on
securities available for sale are reported as a net
amount in a separate component of shareholders'
equity until realized.
Gains and losses on the sale of securities available
for sale are determined using the specific-
identification method.
Allowance for Credit Losses
The allowance is maintained at a level adequate
to absorb probable losses. Management determines
the adequacy of the allowance based upon reviews
of individual credits, recent loss experience, current
economic conditions, the risk characteristics of the
various categories of loans and other pertinent factors.
Credits deemed uncollectible are charged to the
allowance. Provisions for credit losses and recoveries
on loans previously charged off are added to the allowance.
Properties and Equipment
Properties and equipment are stated at cost, less
accumulated depreciation. The provision for
depreciation is computed principally by the straight-
line method.
Interest Income on Loans
Interest on loans is accrued and credited to income
based on the principal amount outstanding. The accrual
of interest on loans is discontinued when, in the opinion
of management, there is an indication that the
borrower may be unable to meet payments as they become
due. Upon such discontinuance, all unpaid accrued interest
is reversed.
<PAGE>
Pension Costs
Pension costs are charged to salaries and employee benefits
expense and are funded as accrued.
Income Taxes
Provisions for income taxes are based on taxes payable
or refundable for the current year (after exclusion of
non-taxable income such as interest on state and
municipal securities) and deferred taxes on temporary
differences between the amount of taxable income and
pretax financial income and between the tax bases of
assets and liabilities and their reported amounts
in the financial statements. Deferred tax assets and
liabilities are included in the financial statements
at currently enacted income tax rates applicable to the
period in which the deferred tax assets and liabilities
are expected to be realized or settled as prescribed in
FASB Statement No. 109, Accounting for Income Taxes. As
changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision
for income taxes.
Net Income Per Share of Common Stock
Net income per share of common stock is computed by
dividing net income by the weighted average number of
shares of common stock outstanding during the period,
after giving retroactive effect to stock dividends if
any occurred.
Trust Fees
Trust fees are recorded on the accrual basis.
Off-Balance-Sheet Instruments
In the ordinary course of business the Bank has
entered into off balance sheet financial instruments
consisting of commitments to extend credit, commercial
letters of credit and standby letters of credit. Such
financial instruments are recorded in the financial
statements when they are funded or related fees are incurred
or received.
<PAGE>
Fair Values of Financial Instruments
The following methods and assumptions were used by the
Bank in estimating fair values of financial instruments
as disclosed herein:
Cash and cash equivalents - The carrying
amounts of cash and short-term instruments
approximate their fair value.
Trading securities - The Bank does not maintain
a trading account for securities.
Securities to be held to maturity and
securities available for sale - Fair values for
investment securities are based on quoted
market prices.
Loans receivable - Fair values for certain
mortgage loans (e.g., one-to-four family
residential), and other consumer loans are
based on quoted market prices of similar loans
sold in conjunction with securitization
transactions. Fair values for commercial real
estate and commercial loans are estimated using
discounted cash flow analyses, using interest
rates currently being offered for loans with
similar terms to borrowers of similar credit
quality. Fair values for impaired loans are
estimated using discounted cash flow analyses
or underlying collateral values, where
applicable.
Deposit liabilities - The fair values disclosed
for demand deposits are, by definition, equal
to the amount payable on demand at the
reporting date (that is, their carrying
amounts). The carrying amounts of variable-
rate, fixed-term money market accounts and
certificates of deposit approximate their fair
values at the reporting date. Fair values for
fixed-rate certificates of deposit are
estimated using a discounted cash flow
calculation that applies interest rates
currently being offered on certificates to a
schedule of aggregated expected monthly
maturities on time deposits.
Accrued interest - The carrying amounts of
accrued interest approximate their fair values.
<PAGE>
Off-balance-sheet instruments - Fair values for
off-balance-sheet lending commitments are based
on fees currently charged to enter into similar
agreements, taking into account the remaining
terms of the agreements and the counterparties'
credit standing.
Cash and Cash Equivalents
For the purpose of presentation in the Statements
of Cash Flows, cash and cash equivalents are defined
as those amount included in the balance sheet caption
"Cash and Due from Banks".
<PAGE>
Note B INVESTMENT SECURITIES
The carrying amounts of investment securities as
shown in the consolidated balance sheets of the Bank
and their approximate fair values at December 31,
1995 were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------- -------- -------- -------
Securities available for
sale -
U.S. Agency securities $20,470,527 $ 54,093 $145,461 $20,379,159
U.S. Government
securities 21,147,279 140,384 23,810 21,263,853
State & municipal
securites 0 0 0 0
Other securities 1,883,409 159,284 1,060 2,041,633
---------- ------- ------- ---------
$43,501,215 $353,761 $170,331 $43,684,645
========== ======= ======= ==========
Securities to be held
to maturity -
U.S. Agency securities $24,073,836 $ 80,662 $236,355 $23,918,143
U.S. Government
securities 2,000,000 0 0 2,000,000
State & municipal
securities 24,068,995 692,063 221,560 24,539,498
Other securities 1,599,491 14,412 11,378 1,602,525
---------- ------- ------- ----------
$51,742,322 $787,137 $469,293 $52,060,166
========== ======= ======= ==========
<PAGE>
Assets, principally securities, carried at approximately
$21,025,000 at December 31, 1995 and $16,470,000 at
December 31, 1994 were pledged to secure public deposits
and for other purposes required or permitted by law.
Gross realized gains and gross realized losses on
sales of securities available for sale were:
1995
----
Gross realized gains:
U.S. Government and agency securities $ 34,662
State and municipal securities 11,730
-------
$ 46,392
=======
Gross realized losses:
U.S. Government and agency securities $ 28,481
State and municipal securities 0
-------
$ 28,481
=======
<PAGE>
Note C LOANS
The components of loans in the consolidated balance
sheets were as follows:
1995 1994
---- ----
Commercial $ 18,092,006 $ 17,491,411
Construction 7,493,603 6,583,557
Mortgage 78,946,757 69,879,440
Other 23,102,667 19,770,558
----------- -----------
$127,635,033 $113,724,966
=========== ===========
Note D ALLOWANCE FOR CREDIT LOSSES
An analysis of the change in the allowance for credit
losses follows:
1995 1994
---- ----
Balance at January 1 $ 608,998 $ 561,424
-------- --------
Credits charged off ( 56,611) ( 40,549)
Recoveries 15,164 11,123
-------- --------
Net credits charged off ( 41,447) ( 29,426)
-------- --------
Provision for credit losses 145,000 77,000
-------- --------
Balance at December 31 $ 712,551 $ 608,998
======== ========
<PAGE>
Note E PROPERTIES AND EQUIPMENT
Components of properties and equipment included in
the consolidated balance sheets at December 31, 1995
and 1994 were as follows:
1995 1994
---- ----
Land $ 289,547 $ 289,547
Bank premises 3,488,420 3,474,359
Furniture & equipment 2,249,865 2,088,169
Leasehold improvements 291,523 127,642
--------- ---------
Total cost 6,319,355 5,979,717
Less accumulated
depreciation (3,051,187) (2,820,948)
3,268,168 3,158,769
Construction in progress 0 930
--------- ---------
Net book value $3,268,168 $3,159,699
========= =========
Certain bank facilities and equipment are leased
under various operating leases. Rental expense was
$51,970 in 1995 and $49,895 in 1994. Future minimum
rental commitments under noncancelable leases are:
1996 $ 73,951
1997 73,951
1998 73,951
1999 73,951
2000 39,301
-------
$ 335,105
=======
<PAGE>
Note F EMPLOYEE BENEFITS
The bank has a non-contributory single employer
defined benefit pension plan covering substantially
all of its employees. The frozen initial liability
method was used to determine funding requirements of
$111,253 for 1995 and $120,092 for 1994. Under this
method, the first year's normal cost for each
participant is the level contribution which would
have been required from the participant's age at
original entry into the employer's service in order
to fund the participant's benefit at retirement age.
The frozen unfunded actuarial liability represents
the reserve which would have been on hand if the
normal cost had been paid in all prior years, less
plan assets. Each year the frozen unfunded actuarial
liability is increased by interest plus the normal
cost with interest, and decreased by the company
contribution with interest. The normal cost for any
year after the first year is equal to the present
value of benefit less the actuarial value of plan
assets less the current value of the frozen unfunded
actuarial liability, divided by an average temporary
annuity factor. The average temporary annuity factor
is calculated based on the present value of each
participant's future compensation. Any actuarial
gains or losses which arise from plan experience
which differ from the actuarial assumptions are
spread over future years' normal costs. However, any
gains or losses resulting from plan amendment or
assumption changes are considered new pieces of
unfunded liability and must be funded over no more
than thirty years. A summary of the plan's funding
standard account for plan years 1995 and 1994 is as
follows:
<PAGE>
1995 1994
---- ----
Reconciliation of Funded Status
Actuarial present value of
accumulated benefit obligations:
a. Vested portion ($1,033,544) ( 879,903)
b. Non-vested protion ( 58,531) ( 26,042)
--------- --------
Accumulated Benefit Obligation (1,092,075) ( 905,945)
Effect of estimated future pay growth ( 109,053) ( 339,478)
--------- ---------
Projected Benefit Obligation (1,201,128) (1,245,423)
Plan assets at fair value 1,464,995 1,243,937
--------- ---------
Funded status 263,867 ( 1,486)
Unrecognized net (gain) or loss ( 70,643) 202,878
Unrecognized prior service cost ( 149,278) ( 155,249)
Unrecognized net obligation or (net
asset) ( 43,946) ( 46,143)
(Accrued) Prepaid Cost $ 0 $ 0
========= ========
1995 1994
---- ----
Determination of Pension Cost
Service cost $ 73,528 $ 60,364
Interest cost 92,020 89,791
Expected return on assets ( 86,769) ( 76,158)
Amortization of:
Unrecognized net (gain)
or loss 3,013 2,310
Unrecognized prior service
cost ( 5,971) 0
Unrecognized net obligation
or (net asset) ( 2,197) ( 2,197)
--------- ---------
Net Periodic Pension Cost $ 73,634 $ 74,110
========= =========
The funding calculation was based on a weighted average
assumed discount of 6% and an annual rate of increase
in compensation of 4.5%.
The bank also has a non-contributory defined
contribution profit sharing plan covering substantially
all of its employees. The contributions for 1995 and
1994 were provided based on 10% of eligible employee's
covered compensation. These contributions were
$153,521 and $151,617 for 1995 and 1994 respectively.
<PAGE>
Note G INCOME TAXES
The consolidated provision for income taxes consisted
of the following:
1995 1994
---- ----
Currently payable
Federal $1,299,287 $1,188,615
State 77,781 212,761
--------- ---------
$1,377,068 $1,401,376
========= =========
Deferred tax 6,089 9,083
--------- ---------
$1,383,157 $1,410,459
========= =========
The provision for federal income taxes is less than
that computed by applying the federal statutory rate of
34% in 1995 and 1994, as indicated in the following
analysis:
1995 1994
---- ----
Statutory rate 34.0% 34.0%
Increase (decrease) resulting from:
Effect of tax-exempt income ( 9.6%) ( 10.2%)
Interest and other nondeductible
expenses 1.6% 1.1%
Other 0.0% .5%
---- ----
26.0% 25.4%
===== =====
The cumulative totals of each type of significant item
that gave rise to deferred taxes are:
1995 1994
---- ----
Net unrealized (appreciation) depreciation
on securities available for sale ($ 591,868) $ 529,502
Depreciation ( 6,089) ( 145,799)
--------- ---------
Net deferred tax effect ($ 597,957) ($ 383,703)
======== ========
<PAGE>
Note H RELATED PARTIES
The Bank has entered into transactions with its
directors, significant shareholders and their
affiliates (related parties). Such transactions
were made in the ordinary course of business on
substantially the same terms and conditions,
including interest rates and collateral, as those
prevailing at the same time for comparable
transactions with other customers, and did not, in
the opinion of management, involve more than normal
credit risk or present other unfavorable features.
The aggregate amount of loans to such related
parties at December 31, 1995 was $1,934,390. During
1995, new loans to such related parties amounted to
$2,525,659 and repayments amounted to $1,947,752.
Note I CONTINGENT LIABILITIES AND COMMITMENTS
The Bank's consolidated financial statements do not
reflect various commitments and contingent
liabilities which arise in the normal course of
business and which involve elements of credit risk,
interest rate risk and liquidity risk. These
commitments and contingent liabilities are described
in Note K Financial Instruments.
Note J CONCENTRATIONS OF CREDIT
All of the Bank's loans, commitments, and commercial
and standby letters of credit have been granted to
customers in the Bank's market area. All such
customers are depositors of the Bank. Investments
in state and municipal securities also involve
governmental entities within the Bank's market area.
The distribution of commitments to extend credit
approximates the distribution of loans outstanding.
Commercial and standby letters of credit were
granted primarily to commercial borrowers.
Note K FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of
business to meet the financing needs of its
customers and to reduce its own exposure to
fluctuations in interest rates. These financial
instruments include commitments to extend credit and
standby letters of credit. Those instruments
involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount
recognized in the statement of financial position.
<PAGE>
The contract or notional amounts of those
instruments reflect the extent of the Bank's
involvement in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial
instrument for commitments to extend credit and
standby letters of credit, is represented by the
contractual notional amount of those instruments.
The Bank uses the same credit policies in making
commitments and conditional obligations as it does
for on-balance-sheet instruments.
Commitments to Extend Credit and Financial
Guarantees. At December 31, 1995, the Bank was
exposed to credit risk on commitments to extend
credit having contract amounts of $4,285,138 and
standby letters of credit of $251,584.
Commitments to extend credit are agreements to lend
to a customer as long as there is no violation of
any condition established in the contract.
Commitments generally have fixed expiration dates or
other termination clauses and may require payment of
a fee. Since many of the commitments are expected
to expire without being drawn upon, the total
commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each
customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained, if it is
deemed necessary by the Bank upon extension of
credit, is based on management's credit evaluation
of the counter party. Collateral held varies but
may include accounts receivable, inventory,
property, plant, and equipment; and income-producing
commercial properties.
The estimated fair values of the Bank's financial
instruments were as follows:
<PAGE>
December 31, 1995 December 31, 1994
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
Financial Assets:
Cash and short-term
investments 7,489,315 7,489,315 7,106,985 7,106,985
Investment securities 95,426,967 95,744,811 97,443,132 96,343,246
Loans, net of
allowance 126,922,482 119,866,946 113,115,968 106,284,754
----------- ----------- ----------- -----------
229,838,764 223,101,072 217,666,085 209,734,985
=========== =========== =========== ===========
Financial Liabilities:
Demand deposits 90,314,502 90,314,502 89,186,491 89,186,491
Certificates of deposit 123,287,689 123,716,237 108,131,936 107,563,939
Unrecognized financial
instruments: N/A N/A N/A N/A
Note L CHANGE IN DEPRECIATION METHOD
Depreciation was computed by the straight-line
method in 1994. Depreciation in prior years was
computed using accelerated depreciation as specified
by the Internal Revenue Code. The new method was
adopted in accordance with generally accepted
accounting principles. The effect of the
retroactive changes on the bank's Balance Sheet for
1994 was as follows:
Increase in book value of Fixed Assets $ 275,630
Less: Deferred income tax 93,714
-------
Increase in equity $ 181,916
=======
<PAGE>
ATTACHMENT I
Arkansas Business Corporation Act of 1965
4-26-1007. Rights of dissenting shareholders.
(a) If a shareholder of a corporation which is a
party to a merger or consolidation files with the
corporation, prior to or at the meeting of shareholders at
which the plan of merger or consolidation is submitted to a
vote, a written objection to the plan of merger or
consolidation and does not vote in favor thereof, and the
shareholder within ten (10) days after the date on which
the vote was taken makes written demand on the surviving or
new domestic or foreign corporation for payment of the fair
value of his shares as of the day prior to the date on
which the vote was taken approving the merger or
consolidation, then, if the merger or consolidation is
effected, the surviving or new corporation shall pay to the
shareholder, upon surrender of his certificate or
certificates representing the shares, the fair value
thereof.
(b) The demand shall state the number and class of
the shares owned by the dissenting shareholder.
(c) Any shareholder failing to make demand within the
ten-day period shall be bound by the terms of the merger or
consolidation.
(d) Within ten (10) days after the merger or
consolidation is effected, the surviving or new
corporation, as the case may be, shall give notice to each
dissenting shareholder who has made demand as herein
provided for the payment of the fair value of his shares.
(e)(1) If within thirty (30) days after the date on
which the merger or consolidation was effected the value of
such shares is agreed upon between the dissenting
shareholder and the surviving or new corporation, payment
shall be made within ninety (90) days after the date on
which such merger or consolidation was effected, upon the
surrender of his certificate or certificates representing
those shares.
(2) Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in those
shares or in the corporation.
(f)(1) If within the period of thirty (30) days the
shareholder and the surviving or new corporation do not so
agree, then the dissenting shareholder, within sixty (60)
days after the expiration of the thirty-day period, may
file a petition in the circuit court of the county in which
<PAGE>
the registered office of the surviving corporation is
located, if the surviving corporation is a domestic
corporation or in the Pulaski County Circuit Court if the
surviving corporation is a foreign corporation, asking for
a finding and determination of the fair value of the shares
and shall be entitled to judgment against the surviving or
new corporation for the amount of the fair value as of the
day prior to the date on which the vote was taken approving
such merger or consolidation, together with interest
thereon to the date of the judgment.
(2) The judgment shall be payable only upon and
simultaneously with the surrender to the surviving or new
corporation of the certificate or certificates representing
the shares.
(3) Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in the shares
or in the surviving or new corporation.
(4) Unless the dissenting shareholder files the
petition within the time herein limited, the shareholder
and all persons claiming under him shall be bound by the
terms of the merger or consolidation.
(g) Shares acquired by the surviving or new
corporation pursuant to the payment of the agreed value
thereof or to payment of the judgment entered, as in this
section provided, may be held and disposed of by the
corporation as in the case of other treasury shares.
(h) The provisions of this section shall not apply to
a merger if, on the date of the filing of the articles of
merger, the surviving corporation is the owner of all the
outstanding shares of the other domestic or foreign
corporations that are parties to the merger.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
First Central Corporation
200 West Race Street
Searcy, Arkansas 72143
Telephone No. (501)
PROXY
The undersigned hereby constitutes and appoints Phyllis
Pyeatt Webb and Jerry Moore, or either of them, proxies for
the undersigned, with power of substitution, to represent the
undersigned and to vote all of the shares of Common Stock of
First Central Corporation (the "Company) which the undersigned
is entitled to vote at the special meeting of shareholders of
the Company to be held on June 10, 1997, and at any and all
adjournments thereof.
1. Proposal to approve the Plan and Agreement of Merger
between First Commercial Corporation and First Central
Corporation dated February 5, 1997.
----- FOR ----- AGAINST ------ ABSTAIN
2. In their discretion to transact such other business as
may properly come before the meeting and all adjournments
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC
DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1
SET FORTH HEREIN.
---------------------------- ------------------------------
Signature NAME: PLEASE PRINT
-------------------------- -----------------------------
Signature (if held jointly) NAME (if joint tenant):
PLEASE PRINT
Date: -----------------
Please sign exactly as name appears on the certificates
representing shares to be voted by this proxy. When signing
as executor, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership,
please sign in partnership name by authorized persons.
