<PAGE> 1
As filed with the Securities and Exchange Commission on June 18, 1996
Registration No.333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
ARKANSAS 6022 71-0538646
(State or other jurisdiction of (Primary Standard Industrial) (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
</TABLE>
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
(501) 863-3181
(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------
JOHN E. BURNS
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
(501) 863-3181
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
---------------------
Copies to:
STAN D. SMITH
IVESTER, SKINNER & CAMP, P.A.
111 CENTER STREET, SUITE 1200
LITTLE ROCK, ARKANSAS 72201
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED PROPOSED AGGREGATE
OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(2) PRICE(3) REGISTRATION FEE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock....... 595,000 $27.38 $14,300,000 $4,935.00
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated based on the maximum number of shares to be registered.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The aggregate offering price is based on the contract purchase price. The
number of shares issued and price per share are inversely proportional to
each other.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST UNITED BANCSHARES, INC.
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEM 501(B) OF REGULATION S-K
A. INFORMATION ABOUT THE TRANSACTION
<TABLE>
<CAPTION>
LOCATION IN PROSPECTUS AND PROXY
REGISTRATION STATEMENT ITEM AND HEADING STATEMENT
- -------------------------------------------------------- ----------------------------------------
<C> <S> <C> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus.................... Facing Page of Registration Statement;
Cross Reference Sheet, Cover Page of
Proxy Statement
2. Inside Front and Outside Back Cover Pages of
Prospectus........................................ Available Information; Incorporation of
Certain Documents by Reference; Table
of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information............................. Summary; Financial Information
4. Terms of the Transaction.......................... The Merger
5. Pro Forma Financial Information................... Summary -- Selected Financial Data;
Financial Information
6. Material Contacts with the Company Being
Acquired.......................................... The Merger -- Background of the Merger;
Carlisle Bancshares, Inc. -- Resulting
Ownership in First United
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters..... Not Applicable
8. Interests of Named Experts and Counsel............ Legal Matters and Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants....... First United Bancshares, Inc.
11. Incorporation of Certain Information by Incorporation of Certain Documents by
Reference......................................... Reference
12. Information with Respect to S-2 or S-3 Not Applicable
Registrants.......................................
13. Incorporation of Certain Information by Not Applicable
Reference.........................................
14. Information with Respect to Registrants Other than
S-3 or S-2 Registrants............................ Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies......... Not Applicable
16. Information with Respect to S-2 or S-3 Not Applicable
Companies.........................................
17. Information with Respect to Companies Other than
S-3 or S-2 Companies
(1) Description of Business..................... Carlisle Bancshares, Inc. -- Description
of Business
(2) Market Price of and Dividends on the
Registrant's Common Equity.................. Summary -- Comparative Per Share Data;
Carlisle Bancshares, Inc. -- Principal
Stockholders of Carlisle and Related
Stockholder Matters
(3) Selected Financial Data..................... Summary -- Selected Financial Data
(4) Supplementary Financial Information......... Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
LOCATION IN PROSPECTUS AND PROXY
REGISTRATION STATEMENT ITEM AND HEADING STATEMENT
- -------------------------------------------------------- ----------------------------------------
<C> <S> <C> <C> <C>
(5) Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. Carlisle Bancshares, Inc. -- Management
Discussion and Analysis
(6) Changes In and Disagreements with
Accountants on Accounting and Financial
Disclosure.................................. Not Applicable
(7) Financial Statements........................ Financial Information
(8) Quarterly Financial Information............. Financial Information
(9) Financial Statement Schedules............... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations
Are to be Solicited
(1) Date, Time and Place of Information......... Cover Page of Proxy
(2) Revocability of Proxy....................... The Carlisle Special Meeting -- Voting;
Solicitation of Proxies; The First
United Special Meeting -- Voting;
Solicitation of Proxies
(3) Dissenters' Rights of Appraisal............. The Merger -- Right of Dissent under the
1965 Act; Right of Dissent under the
1987 Act
(4) Persons Making the Solicitation............. The Carlisle Special Meeting -- Voting;
Solicitation of Proxies; The First
United Special Meeting -- Voting;
Solicitation of Proxies
(5) Interest of Affiliates of the Registrant in
the Proposed Transaction; Voting Securities
and Principal Holders....................... Carlisle Bancshares, Inc. -- Principal
Stockholders of Carlisle; The
Merger -- Background of the Merger
(6) Vote Required for Approval.................. The Carlisle Special Meeting -- Vote
Required; The First United Special
Meeting -- Vote Required
(7) (i) Directors and Executive Officers.... Incorporation of Certain Documents by
Reference
(ii) Executive Compensation.............. Incorporation of Certain Documents by
Reference
(iii) Certain Relationships and Related
Transactions...................... Incorporation of Certain Documents by
Reference
19. Information if Proxies, Consents or Authorizations
Are Not to be Solicited or in an Exchange Offer... Not Applicable
</TABLE>
<PAGE> 4
FIRST UNITED BANCSHARES, INC.
To the Stockholders of
First United Bancshares, Inc.
Enclosed is a Notice of Special Meeting of Stockholders of First United
Bancshares, Inc. ("First United") which will be held at the main office of First
National Bank of El Dorado at Main and Washington Streets, El Dorado, Arkansas
on August 19, 1996 at 2:00 P.M.
At a Special Meeting, Stockholders of First United will consider and vote
upon the merger of First United and Carlisle Bancshares, Inc. ("Carlisle")
whereby Carlisle will be merged with and into First United. The Agreement
between First United and Carlisle provides that the stockholders of Carlisle
will receive total consideration of $13,025,000, plus after-tax earnings of
Carlisle between January 1, 1996 and the closing date, consisting of fully paid
and nonassessable shares of Common Stock, $1.00 par value, of First United. The
number of shares of First United Common Stock to be exchanged for all of the
issued and outstanding shares of Carlisle Common Stock will be determined by
dividing $13,025,000, plus after-tax earnings of Carlisle between January 1,
1996 and the closing date, by the average price per share of First United Common
Stock. The average price of First United Common Stock is defined as the average
sales price per share for all trades occurring during the period of ten (10)
trading days on which one or more trades actually takes place and which ends
immediately prior to the second trading day preceding the closing date. Each
stockholder of Carlisle common stock shall be entitled to receive a pro rata
portion of First United common stock based on each stockholder's pro rata
ownership of the issued and outstanding shares of Carlisle. In addition, the
President of Carlisle's subsidiary, FirstBank of Arkansas, will receive First
United Common Stock having a market value of approximately $40,000 in
satisfaction of his options to buy Carlisle Common Stock in the future.
If the average price of First United Common Stock exceeds $32.00 Carlisle
may terminate the Agreement without liability. If the average price of First
United Common Stock is less than $24.00 First United may terminate the Agreement
without liability.
Carlisle is a bank holding company which is primarily engaged in the
business of banking through its three wholly-owned bank subsidiaries, with bank
offices in Lonoke, Monroe and Prairie counties which provide a full range of
banking services to its customers.
The Stockholders of First United will also consider and vote upon
amendments to First United's Articles of Incorporation that would (1) allow the
First United Board of Directors to approve certain mergers or share exchanges
with other corporations without a Stockholders' vote and (2) allow the First
United Board of Directors to increase or decrease the number of directors fixed
by the Stockholders and to fill new positions created. These votes will be
independent of each other and independent of the Merger.
The Board of Directors believes that the proposed merger upon the terms and
conditions set forth in the accompanying Proxy Statement is in the best
interests of our Stockholders and therefore recommends that you vote in favor of
the merger. The Board of Directors also believes that both proposed amendments
to the First United Articles of Incorporation are in the best interests of our
Stockholders and therefore recommends that you vote in favor of both proposed
amendments. Additional information regarding the proposed merger, Carlisle, the
rights of dissenting Stockholders and the proposed amendments is set forth in
the enclosed Proxy Statement and I urge you to read this material carefully.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the Special Meeting, please sign, date and return as soon as
possible the enclosed proxy in the enclosed self-addressed and stamped envelope.
If you attend the meeting, you may vote in person if you wish, even though you
previously returned your proxy.
Very truly yours,
/s/ JAMES V. KELLEY
----------------------
James V. Kelley
Chairman of the Board
<PAGE> 5
FIRST UNITED BANCSHARES, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
August 19, 1996
NOTICE is hereby given that a Special Meeting of Stockholders of First
United Bancshares, Inc. has been called by the Board of Directors and will be
held at the main office in the First National Bank Building, Main and Washington
Streets, El Dorado, Arkansas on August 19, 1996 at 2:00 p.m. for the following
purposes:
1. To consider and vote upon an Agreement and Plan of Reorganization dated
as of April 1, 1996, as amended on April 10, 1996 and May 30, 1996,
which provides for the merger of Carlisle Bancshares, Inc. into First
United Bancshares, Inc. of El Dorado, Arkansas.
2. To consider and vote upon a proposed amendment to the First United
Articles of Incorporation to allow the Board of Directors to approve
certain mergers and share exchanges without a Stockholders vote.
3. To consider and vote upon a proposed amendment to the First United
Articles of Incorporation to allow the Board of Directors to increase or
decrease the number of directors last fixed by the Stockholders and to
fill new positions created.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All Stockholders of record at the close of business on June 28, 1996 are
entitled to vote at the meeting. The proposals 1, 2 and 3 above require the
affirmative vote of two-thirds of shares entitled to vote for approval.
Whether or not you plan to attend, please sign the enclosed Proxy and
return it at once in the stamped return envelope in order to insure that your
shares will be represented at the meeting. If you attend in person, the proxy
can be disregarded, if you wish, and you may vote your own shares.
By Order of the Board of Directors
/s/ ROBERT G. DUDLEY
---------------------------
Robert G. Dudley, Secretary
Dated: July 15, 1996
<PAGE> 6
CARLISLE BANCSHARES, INC.
To the Stockholders of
Carlisle Bancshares, Inc.
Enclosed is a Notice of Special Meeting of Stockholders of Carlisle
Bancshares, Inc. ("Carlisle") which will be held at 1590 Union National Plaza,
Little Rock, Arkansas on August 19, 1996 at 10:00 A.M.
At a Special Meeting, Stockholders of Carlisle will consider and vote upon
the merger of Carlisle with and into First United Bancshares, Inc. ("First
United"). The Agreement between First United and Carlisle provides that the
stockholders of Carlisle will receive total consideration of $13,025,000, plus
after-tax earnings of Carlisle between January 1, 1996 and the closing date,
consisting of fully paid and nonassessable shares of Common Stock, $1.00 par
value of First United. The number of shares of First United Common Stock to be
exchanged for all of the issued and outstanding shares of Carlisle Common Stock
will be determined by dividing $13,025,000, plus after-tax earnings of Carlisle
between January 1, 1996 and the closing date, by the average price per share of
First United Common Stock. The average price of First United Common Stock is
defined as the average sales price per share for all trades occurring during the
period of ten (10) trading days on which one or more trades actually takes place
and which ends immediately prior to the second trading day preceding the closing
date. Each stockholder of Carlisle common stock shall be entitled to receive a
pro rata portion of First United common stock based on each stockholder's pro
rata ownership of the issued and outstanding shares of Carlisle. In addition,
the President of Carlisle's subsidiary, FirstBank of Arkansas, will receive
First United Common Stock having a market value of approximately $40,000 in
satisfaction of his options to buy Carlisle Common Stock in the future.
If the average price of First United Common Stock exceeds $32.00 Carlisle
may terminate the Agreement without liability. If the average price of First
United Common Stock is less than $24.00 First United may terminate the Agreement
without liability.
First United is a bank holding company which is engaged in the business of
banking through its eight wholly-owned bank subsidiaries and its trust company
subsidiary, with bank offices in Union, Sebastian, Columbia, Ouachita, Izard,
Arkansas and Crawford Counties in Arkansas and in Bowie County, Texas, which
provide a full range of banking services to its customers.
Stockholders of Carlisle will also consider and vote upon the election by
Carlisle to be governed by the Arkansas Business Corporation Act of 1987. This
vote will be incidental to the vote on the merger in that the election will only
be made in order to facilitate compliance with statutory law in consummating the
merger and no election will be made unless the merger is approved.
The Board of Directors believes that the proposed merger upon the terms and
conditions set forth in the accompanying Proxy Statement is in the best
interests of our stockholders and therefore recommends that you vote in favor of
the merger and the election to be governed by the 1987 Act. Additional
information regarding the proposed merger, the above-referenced election, First
United and the rights of dissenting stockholders is set forth in the enclosed
Proxy Statement and I urge you to read this material carefully.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the Annual Meeting, please sign, date and return as soon as
possible the enclosed proxy in the enclosed self-addressed and stamped envelope.
If you attend the meeting, you may vote in person if you wish, even though you
previously returned your proxy.
Very truly yours,
/s/ WINTHROP P. ROCKEFELLER
-----------------------------
Winthrop P. Rockefeller
Chairman of the Board
<PAGE> 7
CARLISLE BANCSHARES, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
August 19, 1996
NOTICE is hereby given that a Special Meeting of Stockholders of Carlisle
Bancshares, Inc. has been called by the Board of Directors and will be held at
1590 Union National Plaza, Little Rock, Arkansas on August 19, 1996 at 10:00
a.m. for the following purposes:
1. To consider and vote upon an Agreement and Plan of Reorganization dated
as of April 1, 1996, as amended on April 10, 1996 and May 30, 1996
(collectively, the "Agreement"), which provides for the merger of
Carlisle Bancshares, Inc. into First United Bancshares, Inc. of El
Dorado, Arkansas.
2. To consider and vote upon an election to be governed by the Arkansas
Business Corporation Act of 1987. This vote will be incidental to the
vote upon the Agreement and will only be effective if the Agreement is
approved.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All stockholders of record at the close of business on June 28, 1996 are
entitled to vote at the meeting. Both proposals 1 and 2 above require the
affirmative vote of two-thirds of shares entitled to vote for approval.
Whether or not you plan to attend, please sign the enclosed Proxy and
return it at once in the stamped return envelope in order to insure that your
shares will be represented at the meeting. If you attend in person, the proxy
can be disregarded, if you wish, and you may vote your own shares.
By Order of the Board of Directors
/s/ WINTHROP P. ROCKEFELLER
-----------------------------
Winthrop P. Rockefeller
Chairman of the Board
Dated: July 15, 1996
<PAGE> 8
FIRST UNITED BANCSHARES, INC.
AND
CARLISLE BANCSHARES, INC.
JOINT PROXY STATEMENT
------------------------
FIRST UNITED BANCSHARES, INC.
PROSPECTUS
595,000 SHARES OF COMMON STOCK
PAR VALUE $1.00
This Proxy Statement and Prospectus ("Proxy Statement") is being furnished
to the stockholders of Carlisle Bancshares, Inc. ("Carlisle") and First United
Bancshares, Inc. ("First United or the Company") in connection with the
solicitation of proxies by the Board of Directors of Carlisle and First United,
respectively, for use at a special meeting of stockholders of Carlisle to be
held on August 19, 1996, including any adjournments or postponements of the
meeting, and for use at a special meeting of stockholders of First United to be
held on August 19, 1996, including any adjournments or postponements of the
meeting. At the meetings or any adjournments or postponements thereof, the
stockholders of Carlisle and First United will be asked to consider and vote on
a proposal to authorize and approve the transactions contemplated by the
Agreement and Plan of Reorganization between First United and Carlisle, dated
April 1, 1996 as amended on April 10, 1996 (the "Agreement"), and incidental
thereto the stockholders of Carlisle will be asked to consider and vote on a
proposal to elect to have Carlisle governed by the Arkansas Business Corporation
Act of 1987. Pursuant to the Agreement and the Plan of Merger ("Plan of Merger")
which is Exhibit A to the Agreement, First United would acquire all of the
issued and outstanding stock of Carlisle through a merger transaction (the
"Merger") in which Carlisle would merge with and into First United in exchange
for the issuance to the stockholders of Carlisle of up to 595,000 shares of
First United common stock, par value $1.00 ("Common Stock").
First United has agreed to register under the Securities Act of 1933, as
amended (the "Securities Act") the shares of First United Common Stock that may
be issued to stockholders of Carlisle in exchange for their stock in Carlisle.
Consequently, this Proxy Statement serves as a Prospectus of First United under
the Securities Act for the issuance of shares of First United Common Stock to
stockholders of Carlisle.
The Stockholders of First United will also consider and vote upon
amendments to First United's Articles of Incorporation that would (1) allow the
First United Board of Directors to approve certain mergers or share exchanges
with other corporations without a Stockholders vote and (2) allow the First
United Board of Directors to increase the number of directors fixed by the
Stockholders and to fill such positions. These votes will be independent of each
other and independent of the Merger.
This Proxy Statement and the accompanying forms of proxy are first being
mailed to stockholders of Carlisle and First United on or about July 15, 1996.
On June 3, 1996, the closing price on the National Association of Securities
Dealers Automatic Quotation System of a share of First United Common Stock was
$27.47, adjusted for the stock split declared on May 20, 1996.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY STATEMENT.
STOCKHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS
PROXY STATEMENT IN ITS ENTIRETY.
------------------------
THE SECURITIES TO BE ISSUED IN THE PROPOSED TRANSACTION 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 PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROXY STATEMENT IS JULY 15, 1996.
<PAGE> 9
NO PERSON IS AUTHORIZED BY FIRST UNITED OR CARLISLE TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROXY
STATEMENT, IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY THIS
PROXY STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES
NOT CONSTITUTE THE SOLICITATION OF A PROXY OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES IN ANY JURISDICTION IN
WHICH SUCH SOLICITATION OR OFFERING MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF FIRST UNITED OR CARLISLE SINCE
THE DATE HEREOF.
AVAILABLE INFORMATION
First United is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and, in accordance therewith,
files proxy statements, reports and other information with the Securities and
Exchange Commission ("Commission"). This filed material can 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 Commission's
Regional Offices in Chicago (500 West Madison, Northwestern Atrium Center, 14th
Floor, Chicago, Illinois 60661) and in New York (75 Park Place, New York, New
York 10007) and copies of such material can be obtained by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. First United's Common Stock is traded on the
National Association of Securities Dealers Automated Quotation National Market
System and the Company's Exchange Act reports and other information can be
inspected and copied at the National Association of Securities Dealers, 1735 "K"
Street, N.W., Washington, D.C. 20006.
First United has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act with respect to a maximum 595,000 shares of First United
Common Stock to be issued upon consummation of the transactions contemplated by
the Agreement. This Proxy Statement does not contain all the information set
forth in the Registration Statement and the exhibits thereto, certain portions
of which have been omitted as permitted by rules and regulations of the
Commission. Copies of the Registration Statement are available from the
Commission, upon payment of prescribed rates. For further information, reference
is made to the Registration Statement and the exhibits filed therewith.
Statements contained in this Proxy Statement or any document incorporated by
reference in this Proxy Statement relating to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM MR. JOHN E. BURNS, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
FIRST UNITED BANCSHARES, INC., MAIN AND WASHINGTON STREETS, EL DORADO, ARKANSAS
71730, (501) 863-3181. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST, ALTHOUGH NOT REQUIRED, SHOULD BE MADE, BY CERTIFIED MAIL, ON OR BEFORE
AUGUST 9, 1996.
2
<PAGE> 10
The following documents of First United, which have been filed with the
Commission under the Exchange Act, are incorporated by reference into this Proxy
Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, filed with the Commission on April 1, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996.
Each document filed subsequent to the date of this Proxy Statement pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the holding of
the Special Meetings of the Stockholders of Carlisle and First United,
respectively, shall be deemed to be incorporated by reference in this Proxy
Statement and shall be part hereof from the date of filing of such document. Any
statement contained in a document incorporated or deemed to be incorporated in
this Proxy Statement shall be deemed to be modified or superseded for purposes
of this Proxy Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference modifies or supersedes such document.
All information contained in this Proxy Statement relating to First United
has been supplied by First United and all information relating to Carlisle has
been supplied by Carlisle.
3
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY
The Company........................................................................ 6
Carlisle........................................................................... 6
The Merger......................................................................... 6
Combined Company................................................................... 7
No Fairness Opinion................................................................ 7
Election by Carlisle Stockholders Under the 1987 Act............................... 7
The First United Special Meeting................................................... 8
Proposed Amendments to First United's Articles of Incorporation.................... 8
The Carlisle Special Meeting....................................................... 8
Certain Federal Income Tax Consequences............................................ 8
Dissenters' Rights................................................................. 8
Regulatory Approvals............................................................... 8
Accounting Treatment............................................................... 9
Market Prices...................................................................... 9
Comparative Per Share Data......................................................... 9
Selected Financial Data............................................................ 10
THE CARLISLE SPECIAL MEETING
Date, Time and Place............................................................... 12
Purpose of Meeting................................................................. 12
Shares Outstanding and Entitled to Vote; Record Date............................... 12
Vote Required...................................................................... 12
Voting; Solicitation of Proxies.................................................... 12
THE FIRST UNITED SPECIAL MEETING
Date, Time and Place............................................................... 13
Purpose of Meeting................................................................. 13
Shares Outstanding and Entitled to Vote; Record Date............................... 13
Vote Required...................................................................... 13
Voting; Solicitation of Proxies.................................................... 13
THE MERGER
Background of the Merger........................................................... 13
Reason for the Merger.............................................................. 14
Fairness of the Transaction........................................................ 14
The Agreement...................................................................... 14
Regulatory Approvals............................................................... 15
Antitrust Matters.................................................................. 15
Certain Federal Income Tax Consequences............................................ 15
Accounting Treatment............................................................... 17
Right of Dissent Under the 1965 Act................................................ 17
Right of Dissent under the 1987 Act................................................ 18
Exchange Ratio for the Merger...................................................... 19
Expenses of the Merger............................................................. 19
FINANCIAL INFORMATION
Pro Forma Combining Balance Sheet.................................................. 21
Pro Forma Combining Statements of Income........................................... 22
Notes to Pro Forma Combining Financial Statements.................................. 27
</TABLE>
4
<PAGE> 12
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ELECTION BY CARLISLE STOCKHOLDERS UNDER THE 1987 ACT
Election Incidental to the Merger.................................................. 28
Reason for the Election............................................................ 28
Result of the Election............................................................. 28
FIRST UNITED BANCSHARES, INC.
General............................................................................ 30
Regulation......................................................................... 30
Offices............................................................................ 32
Employees.......................................................................... 32
Description of First United Common Stock........................................... 32
Resale of First United Common Stock................................................ 33
CARLISLE BANCSHARES, INC.
Description of Business............................................................ 33
Management Discussion and Analysis................................................. 33
Directors and Executive Officers................................................... 42
Transactions with Management....................................................... 43
Principal Stockholders of Carlisle................................................. 43
Resulting Ownership in First United................................................ 43
Competition........................................................................ 43
Litigation......................................................................... 43
Offices............................................................................ 43
Employees.......................................................................... 43
Description of Carlisle Stock...................................................... 44
Comparison of Rights of Holders of Carlisle Common Stock and First United Common
Stock........................................................................... 44
PROPOSED AMENDMENTS TO FIRST UNITED'S ARTICLES OF INCORPORATION...................... 45
LEGAL MATTERS AND EXPERTS
Legal Opinions..................................................................... 47
Experts............................................................................ 47
General............................................................................ 47
INDEX TO CARLISLE FINANCIAL STATEMENTS............................................... F-1
ANNEXES
I -- Restated Agreement and Plan of Reorganization
II -- Arkansas Business Corporation Act of 1965 sec. 4-26-1007
III -- Arkansas Business Corporation Act of 1987 sec. 4-27-1301 et. seq.
</TABLE>
5
<PAGE> 13
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information contained elsewhere in this Proxy
Statement, in the attached Annexes and in the documents incorporated by
reference. Stockholders are urged to read carefully this Proxy Statement and the
attached Annexes in their entirety.
THE COMPANY
The Company is a multi-bank holding company located in El Dorado, Arkansas
with eight wholly-owned subsidiary banks and a trust company operating in over
28 locations in seven communities throughout the States of Arkansas and Texas.
The Company's subsidiaries consist of First National Bank of El Dorado, El
Dorado, Arkansas; First National Bank of Magnolia, Magnolia, Arkansas; City
National Bank of Fort Smith, Fort Smith, Arkansas; Merchants and Planters Bank,
N.A., Camden, Arkansas; Commercial Bank at Alma, Alma, Arkansas, The Bank of
North Arkansas, Melbourne, Arkansas, First Stuttgart Bank & Trust Company,
Stuttgart, Arkansas, FirstBank, Texarkana, Texas and First United Trust Company,
N.A., El Dorado, Arkansas (collectively called the "Subsidiary Banks"). The
Company had consolidated assets of $1,370,822,000, and stockholders' equity of
$132,043,000 as of March 31, 1996.
On May 20, 1996, the Board of Directors of First United declared a 3-for-2
stock split effected in the form of a 50% stock dividend. The dividend will be
distributed on June 28, 1996 to holders of record as of June 7, 1996. Unless
otherwise indicated, all per share data, numbers of common shares and capital
accounts contained herein have been restated to reflect this stock split.
The Company's Common Stock is traded on the National Association of
Securities Dealers Automated Quotation National Market System Over-the-Counter
Market (NASDAQ-NMS) under the symbol "UNTD". The Company's principal executive
offices are located at Main and Washington Streets, El Dorado, Arkansas, 71730,
and its telephone number is (501) 863-3181.
CARLISLE
Carlisle is a privately-owned Arkansas bank holding company which owns 100%
of Citizens Bank & Trust Company, Carlisle, Arkansas ("CBT"), FirstBank of
Arkansas, Brinkley, Arkansas ("FirstBank"), and Hazen First State Bank, Hazen,
Arkansas ("Hazen"). Carlisle had consolidated assets of $100,998,000 and
stockholders' equity of $7,389,000 as of March 31, 1996.
There is no public market for shares of Carlisle's outstanding capital
stock. Carlisle's principal executive offices are located at 300 Spring
Building, Suite 1010, Little Rock, Arkansas, 72201; its telephone number is
(501) 376-2128.
THE MERGER
On April 1, 1996, the Company and Carlisle entered into a definitive
agreement pursuant to which the Company proposes to acquire all of the issued
and outstanding stock of Carlisle by merger of Carlisle with and into First
United. The acquisition of Carlisle will be consummated through the issuance to
Carlisle's stockholders of approximately 500,000 shares of First United Common
Stock. The reason for the Merger is to expand the markets of the Company and
thereby increase the earning potential of the Company. The Agreement requires
that the merger be accounted for as a pooling of interests. See "The
Merger -- The Agreement."
On March 29, 1996, the date immediately prior to the announcement of the
agreement in principle, shares of First United Common Stock traded on the
NASDAQ-NMS at a closing sales price of $28.14, adjusted for the stock split
declared on May 20, 1996. There is no established market value for the stock of
Carlisle.
6
<PAGE> 14
THE BOARD OF DIRECTORS OF FIRST UNITED AND CARLISLE RECOMMEND THAT FIRST
UNITED AND CARLISLE STOCKHOLDERS, RESPECTIVELY, VOTE IN FAVOR OF THE ADOPTION OF
THE AGREEMENT.
COMBINED COMPANY
The pro forma combined financial statements and its constituent parts of
First United and Carlisle as of and for the periods indicated reflect assets,
shareholders' equity, net interest income and income from continuing operations
as follows (in thousands):
<TABLE>
<CAPTION>
% %
FIRST PRO FORMA PRO FORMA PRO FORMA
UNITED COMBINED CARLISLE COMBINED COMBINED
---------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Assets
March 31, 1996............. $1,370,822 93.1 $100,998 6.9 $1,471,820
Shareholders' equity
March 31, 1996............. 132,043 94.7 7,389 5.3 139,432
Net interest income
Year ended December 31,
1995.................... 49,485 93.2 3,584 6.8 53,069
Three months ended March
31, 1996................ 12,622 93.0 948 7.0 13,570
Income from continuing
operations
Year ended December 31,
1995.................... 15,204 93.0 1,142 7.0 16,346
Three months ended March
31, 1996................ 4,349 92.7 342 7.3 4,691
</TABLE>
If a maximum of 595,000 shares of common stock of First United are issued
to Carlisle stockholders, First United will have a total of approximately
8,333,000 shares of common stock issued and outstanding. Present First United
stockholders will control 92.9% of such shares and Carlisle stockholders will
control 7.1% of such shares.
NO FAIRNESS OPINION
No fairness opinion will be rendered in connection with this transaction.
ELECTION BY CARLISLE STOCKHOLDERS UNDER THE 1987 ACT
The Election by the stockholders of Carlisle to be governed by the Arkansas
Business Corporation Act of 1987 codified at Ark. Code Ann. sec. 4-27-101 et.
seq. (the "1987 Act") is incidental to and a condition of the Merger proposal
and approval of such election will have no force or effect unless the Merger is
likewise approved.
Carlisle is a corporation organized under the Arkansas Business Corporation
Act of 1965, codified at Ark. Code Ann. sec. 4-26-101 et. seq. (the "1965 Act").
The 1987 Act is applicable to those corporations that were incorporated on or
after January 1, 1988 or those "1965 Act" corporations that elect to be governed
by the 1987 Act by amending their Articles of Incorporation to so state. The
stockholders of First United elected to be governed by the 1987 Act by amending
its Articles of Incorporation.
The 1965 Act and 1987 Act have statutory merger procedures that must be
complied with in order to legally consummate a merger. Although both Acts
contain similar provisions, Carlisle must elect to be governed by the 1987 Act
in order to facilitate compliance with the applicable statutory procedures.
7
<PAGE> 15
THE FIRST UNITED SPECIAL MEETING
Approval of the Merger by the stockholders of First United will be
considered at a Special Meeting to be held at the First National Bank Building,
El Dorado, Arkansas on August 19, 1996 at 2:00 p.m. Central Daylight Time.
The affirmative vote of the holders of two-thirds of the outstanding shares
of First United Common Stock is required for approval of the Merger. Directors,
executive officers and their affiliates hold a total of approximately 15% of the
outstanding Common Stock of First United. Stockholders of First United are
entitled to dissenters' rights. See "The Merger -- Right of Dissent under the
1987 Act."
PROPOSED AMENDMENTS TO FIRST UNITED'S ARTICLES OF INCORPORATION
The Stockholders of First United will also consider and vote upon
amendments to First United's Articles of Incorporation that would (1) allow the
First United Board of Directors to approve certain mergers or share exchanges
with other corporations without a Stockholders vote and (2) allow the First
United Board of Directors to increase the number of directors fixed by the
Stockholders and to fill such positions. These votes will be independent of each
other and independent of the Merger.
The affirmative vote of two-thirds of the outstanding shares of First
United Common Stock is required for approval of each proposed amendment.
THE CARLISLE SPECIAL MEETING
Approval of the Merger by the stockholders of Carlisle will be considered
at a Special Meeting to be held at 1590 Union National Plaza, Little Rock,
Arkansas on August 19, 1996, at 10:00 a.m. Central Daylight Time.
The affirmative vote of the holders of two-thirds of the outstanding shares
of Carlisle common stock is required for the approval of the Merger and the
Election to be governed by the 1987 Act. Directors, executive officers and their
affiliates hold a total of 99% of the outstanding stock of Carlisle.
Stockholders of Carlisle are entitled to dissenters' rights. See "The
Merger -- Right of Dissent under the 1965 Act; Right of Dissent under the 1987
Act."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that for federal income tax purposes the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and, accordingly, for federal
income tax purposes, no gain or loss will be recognized by either First United
or Carlisle as a result of the Merger and Carlisle's stockholders will not
recognize gain or loss upon the receipt of First United Common Stock in exchange
for Carlisle common stock. Carlisle expects to receive an opinion of counsel,
dated as of the effective date of the Merger, opining that no gain or loss will
be recognized by the Carlisle stockholders upon the receipt of First United
Common Stock in exchange for Carlisle common stock in connection with the
Merger. The parties to this transaction will not request a ruling from the
Internal Revenue Service concerning the taxability of this transaction. See "The
Merger -- Certain Federal Income Tax Consequences."
DISSENTERS' RIGHTS
Holders of both First United Common Stock and Carlisle common stock are
entitled to dissenter's rights with respect to the Merger. Holders of First
United Common Stock may exercise their right of dissent under the 1987 Act,
while Holders of Carlisle Common Stock may exercise their right of dissent under
either the 1965 Act or the 1987 Act. See "The Merger -- Right of Dissent under
the 1965 Act; Right of Dissent under the 1987 Act".
REGULATORY APPROVALS
At this time, First United expects to receive the approval of the Board of
Governors of the Federal Reserve to merge Carlisle into First United. First
United also expects to receive the approval of the Arkansas Bank Commissioner to
consummate the Merger. See "The Merger -- Regulatory Approvals."
8
<PAGE> 16
ACCOUNTING TREATMENT
First United intends to treat the Merger as a pooling of interests for
accounting purposes. Consummation of the Merger is conditioned upon the receipt
of the opinion of Arthur Andersen LLP that the Merger will qualify for the
pooling of interests accounting treatment. See "The Merger -- Accounting
Treatment."
MARKET PRICES
First United Common Stock is traded over-the-counter in the NASDAQ National
Market System. Carlisle common stock is not traded publicly and there is no
quoted market for the stock. The table below shows the high and low closing
sales prices for First United Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1993............................................... $19.67 $15.33
1994............................................... 22.00 17.67
1995............................................... 28.67 19.00
1996 (through June 3, 1996)........................ 28.81 26.80
</TABLE>
On March 29, 1996, immediately prior to the public announcement of the
agreement in principle between First United and Carlisle as to the proposed
merger transaction, the closing sales price for First United Common Stock was
$28.14. On June 3, 1996, the closing sales price for First United Common Stock
was $27.47.
COMPARATIVE PER SHARE DATA
The following table sets forth for the periods indicated selected
historical per share data of First United and Carlisle and the corresponding pro
forma and pro forma equivalent per share amounts giving effect to the proposed
Merger. The data presented are based upon the consolidated financial statements
and related notes of First United which are incorporated by reference in this
Proxy Statement, and the consolidated financial statements and related notes of
Carlisle and the pro forma combining balance sheet and income statements,
including the notes thereto, appearing elsewhere herein. This information should
be read in conjunction with such historical and pro forma financial statements
and related notes thereto. The assumptions used in the preparation of this table
appear elsewhere in this Proxy Statement. See "Financial Information." These
data are not necessarily indicative of the results of the future operations of
the combined organization or the actual results that would have occurred if the
Merger had been consummated prior to the periods indicated.
<TABLE>
<CAPTION>
FIRST UNITED/CARLISLE CARLISLE PRO FORMA
FIRST PRO FORMA COMBINED(2) EQUIVALENT(3)
UNITED CARLISLE -------------------------- --------------------------
HISTORICAL(1) HISTORICAL $24.00 $28.00 $32.00 $24.00 $28.00 $32.00
------------- ---------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Book value per common share:
December 31, 1995................... $ 16.85 $50.67 $16.60 $16.75 $16.87 $64.74 $55.94 $49.26
March 31, 1996...................... 17.06 53.28 16.84 17.00 17.12 65.68 56.78 49.99
Cash Dividends per common share:
Year ended December 31, 1993........ .44 1.65 .44 .44 .44 1.71 1.47 1.28
Year ended December 31, 1994........ .49 1.40 .49 .49 .49 1.91 1.64 1.43
Year ended December 31, 1995........ .57 1.00 .57 .57 .57 2.22 1.90 1.66
Three Months ended March 31, 1995... .13 1.00 .13 .13 .13 .51 .43 .38
Three Months ended March 31, 1996... .15 -- .15 .15 .15 .59 .50 .44
Income per share from continuing
operations:
Year ended December 31, 1993........ 1.71 6.05 1.70 1.71 1.72 6.63 5.71 5.02
Year ended December 31, 1994........ 1.81 6.43 1.80 1.82 1.83 7.02 6.08 5.34
Year ended December 31, 1995........ 1.96 8.25 1.97 1.99 2.01 7.68 6.65 5.87
Three Months ended March 31, 1995... .47 1.53 .47 .47 .48 1.83 1.57 1.40
Three Months ended March 31, 1996... .56 2.47 .57 .57 .58 2.22 1.91 1.69
</TABLE>
9
<PAGE> 17
- ---------------
(1) On May 20, 1996, the Board of Directors of First United declared a 3-for-2
stock split effected in the form of a 50% stock dividend. The dividend will
be distributed on June 28, 1996 to holders of record as of June 7, 1996.
All per share data have been restated to reflect this stock split.
(2) The First United/Carlisle Pro Forma Combined amounts do not consider the
number of shares of First United Common Stock that may be issued in such
amount as is equal to the after-tax earnings of Carlisle between January 1,
1996 and the closing date. The after-tax earnings of Carlisle for the three
months ended March 31, 1996 were $342,000. The First United/Carlisle Pro
Forma Combined amounts do not consider the number of shares of First United
Common Stock that may be issued in such amount as is equal to the intrinsic
value of any unexercised Carlisle stock options at the time of the Merger.
First United estimates the intrinsic value of such Carlisle stock options
to approximate $40,000. See "Financial Information."
(3) The Carlisle pro forma equivalents represent the respective First
United/Carlisle pro forma combined earnings, dividends and book value per
common share multiplied by the applicable exchange ratio of 3.90 ($24.00
First United stock value), 3.34 ($28.00 First United stock value) or 2.92
($32.00 First United stock value) shares of First United Common Stock for
each share of Carlisle Common Stock so that the First United/Carlisle pro
forma equivalent amounts are equated to the respective values for one share
of Carlisle Common Stock. The exchange ratio is determined by dividing
First United common stock to be received by the Carlisle stockholders by
the 139,142 shares of Carlisle Common Stock currently outstanding.
SELECTED FINANCIAL DATA
The table on the following page presents selected historical financial data
of First United and Carlisle and selected unaudited pro forma financial data
after giving effect to the Merger as a pooling of interests for accounting
purposes, assuming the Merger had occurred at the beginning of the earliest
period presented, but without giving effect to costs associated with the
consummation of the Merger, which currently are estimated to total $200,000. The
First United historical data for each of the years in the five-year period ended
December 31, 1995 are based on the historical financial statements of First
United as audited by Arthur Andersen LLP, independent public accountants. The
Carlisle historical data for the year ended December 31, 1995 is derived from
the historical financial statements of Carlisle as audited by Kemp & Company,
independent auditors. The Carlisle data for each of the years in the three-year
period ended December 31, 1994 (1992 not presented separately herein) are
derived from the historical financial statements of Carlisle as audited by Ernst
& Young LLP, independent auditors. The selected financial data for First United
for the three month periods ended March 31, 1995 and 1996, and for Carlisle for
the three month periods ended March 31, 1995 and 1996 and for the year ended
December 31, 1991 have been obtained from unaudited financial statements and, in
the opinion of the respective management of First United and Carlisle, include
all adjustments necessary to present fairly the data for such periods. The pro
forma data is not necessarily indicative of the results of operations or the
financial condition that would have been reported had the Merger been in effect
during those periods, or as of those dates, or that may be reported in the
future. Pro forma combined per share data of First United and Carlisle give
effect to the exchange of each share of Carlisle common stock for 3.34 shares of
First United Common Stock.
10
<PAGE> 18
These data should be read in conjunction with the consolidated financial
statements of each of First United and Carlisle, and the related notes thereto,
incorporated by reference herein and in conjunction with the unaudited pro forma
financial information, including the notes thereto, appearing elsewhere in this
Proxy Statement. See "Incorporation of Certain Documents by Reference" and
"Financial Information."
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FIRST UNITED -- HISTORICAL
Operating Data
Total interest income.............. $ 84,935 $ 77,570 $ 71,968 $ 73,214 $ 92,735 $ 21,052 $ 24,195
Net interest income................ 36,710 42,511 43,063 42,961 49,485 11,555 12,622
Provision for possible loan
losses........................... 4,712 2,486 1,815 334 574 46 76
Income from continuing
operations....................... 8,454 12,676 13,215 14,008 15,204 3,669 4,349
Per Share Data
Income from continuing
operations....................... 1.09 1.64 1.71 1.81 1.96 0.47 0.56
Cash dividend paid................. 0.33 0.40 0.44 0.49 0.57 0.13 0.15
Selected Balance Sheet Items
Total assets....................... 1,038,320 1,086,467 1,123,598 1,106,610 1,336,020 1,269,636 1,370,822
Total securities................... 446,063 509,552 513,399 489,036 540,121 524,785 560,393
Net loans.......................... 448,972 442,661 489,333 502,826 631,537 595,963 635,654
Total deposits..................... 909,703 943,097 969,749 953,904 1,127,914 1,101,171 1,152,799
Long-term debt..................... 10,299 8,821 7,723 12,825 16,832 11,107 16,832
Capital accounts................... 85,571 95,438 108,122 109,509 130,405 116,386 132,043
CARLISLE -- HISTORICAL
Operating Data
Total interest income.............. 5,037 4,237 3,666 5,798 7,378 1,653 1,913
Net interest income................ 2,191 2,253 2,107 3,093 3,584 813 948
Provision for possible loan
losses........................... 151 180 180 65 60 11 17
Income from continuing
operations....................... 641 721 746 873 1,142 211 342
Per Share Data
Income from continuing
operations....................... 4.68 5.84 6.05 6.43 8.25 1.53 2.47
Cash dividend paid................. 1.07 -- 1.65 1.40 1.00 1.00 --
Selected Balance Sheet Items
Total assets....................... 54,064 54,745 54,908 98,066 100,794 97,935 100,998
Total securities................... 17,420 17,104 19,007 36,390 33,672 41,530 36,672
Net loans.......................... 31,460 32,570 30,852 52,518 56,953 48,833 54,924
Total deposits..................... 47,146 46,781 46,357 83,573 84,793 82,412 85,777
Long-term debt..................... 2,700 3,204 3,422 5,850 7,473 5,381 6,959
Capital accounts................... 3,578 4,306 4,847 5,930 7,027 5,899 7,389
PRO FORMA -- COMBINED
Operating Data
Total interest income.............. 89,972 81,807 75,634 79,012 100,113 22,705 26,108
Net interest income................ 38,901 44,764 45,169 46,054 53,069 12,368 13,570
Provision for possible loan
losses........................... 4,863 2,666 1,995 399 634 57 93
Income from continuing
operations....................... 9,095 13,398 13,961 14,881 16,346 3,880 4,691
Per Share Data
Income from continuing
operations....................... 1.11 1.65 1.71 1.82 1.99 0.47 0.57
Cash dividend paid................. 0.33 0.40 0.44 0.49 0.57 0.13 0.15
Selected Balance Sheet Items
Total assets....................... 1,092,384 1,141,212 1,178,506 1,204,676 1,436,814 1,367,571 1,471,820
Total securities................... 463,483 526,656 532,406 525,426 573,793 566,315 597,065
Net loans.......................... 480,432 475,231 520,185 555,344 688,490 644,796 690,578
Total deposits..................... 956,849 989,878 1,016,106 1,037,477 1,212,707 1,183,583 1,238,576
Long-term debt..................... 12,999 12,025 11,145 18,675 24,305 16,488 23,791
Capital accounts................... 89,149 99,744 112,969 115,439 137,432 122,285 139,432
</TABLE>
11
<PAGE> 19
THE CARLISLE SPECIAL MEETING
DATE, TIME AND PLACE
The Carlisle Special Meeting will be held on August 19, 1996, commencing at
10:00 a.m. Central Daylight Time, at the offices of Carlisle, 1590 Union
National Plaza, Little Rock, Arkansas.
PURPOSE OF MEETING
The purpose of the Carlisle Special Meeting is to consider and vote upon
the adoption of the Agreement between Carlisle and First United and to consider
and vote upon the election of Carlisle to be governed by the Arkansas Business
Corporation Act of 1987 (the "Election").
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The close of business on June 28, 1996 has been fixed by the Board of
Directors of Carlisle as the record date for the determination of holders of
Carlisle common stock entitled to notice of and to vote at the Carlisle Annual
Meeting. At the close of business on June 28, 1996, there were 139,142 shares of
Carlisle common stock outstanding held by 23 shareholders of record. Holders of
record of Carlisle common stock on the record date are entitled to one vote per
share and are entitled to dissenters' rights. See "The Merger -- Right of
Dissent under the 1965 Act; Right of Dissent under the 1987 Act."
VOTE REQUIRED
The affirmative vote of two-thirds of all the shares of Carlisle common
stock outstanding on the record date is required to adopt the Agreement and the
Election.
As of May 31, 1996, directors, executive officers and their affiliates own
99% of the outstanding stock of Carlisle.
VOTING; SOLICITATION OF PROXIES
Proxies for use at the Carlisle Special Meeting accompany copies of this
Proxy Statement delivered to record holders of Carlisle common stock and such
proxies are solicited on behalf of the Board of Directors of Carlisle. A holder
of Carlisle common stock may use his proxy if he is unable to attend the
Carlisle Annual Meeting in person or wishes to have his shares voted by proxy
even if he does attend the meeting. The proxy may be revoked in writing by the
person giving it at any time before it is exercised by notice of such revocation
to the secretary of Carlisle, or by submitting a proxy having a later date, or
by such person appearing at the Carlisle meeting and electing to vote in person.
All proxies validly submitted and not revoked will be voted in the manner
specified therein. If no specification is made, the proxies will be voted in
favor of the Merger and the Election.
Carlisle will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mails, proxies may be solicited by
personal interview. Officers and other employees of Carlisle acting on
Carlisle's behalf, may solicit proxies personally.
12
<PAGE> 20
THE FIRST UNITED SPECIAL MEETING
DATE, TIME AND PLACE
The First United Special Meeting will be held on August 19, 1996,
commencing at 2:00 p.m. Central Daylight Time at the First National Bank
Building, Main and Washington Streets, El Dorado, Arkansas.
PURPOSE OF MEETING
The purpose of the First United Special Meeting is to consider and vote
upon the adoption of the Agreement between Carlisle and First United, and to
consider and vote upon two proposed amendments to First United's Articles of
Incorporation.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The close of business on June 28, 1996 has been fixed by the Board of
Directors of First United as the record date for determination of holders of
First United Common Stock entitled to notice of and to vote at the First United
Special Meeting. At the close of business on May 31, 1996, there were
approximately 7,738,000 shares of First United Common Stock issued and
outstanding held by approximately 1,400 stockholders of record. Holders of
record of First United Common Stock on the record date are entitled to one vote
per share, and are entitled to Dissenter's Rights. See "The Merger -- Right of
Dissent under the 1987 Act."
VOTE REQUIRED
The affirmative vote of two-thirds of all the shares of First United Common
Stock outstanding on the record date is required to adopt the Agreement and each
of the proposed amendments to the Articles of Incorporation. As of May 31, 1996,
directors, executive officers and their affiliates own approximately 15% of the
outstanding Common Stock of First United.
VOTING; SOLICITATION OF PROXIES
Proxies for use at the First United Special Meeting accompany copies of
this Proxy Statement delivered to record holders of First United Common Stock. A
holder of First United Common Stock may use his proxy if he is unable to attend
the First United Special Meeting in person or wishes to have his shares voted by
proxy even if he does attend the meeting. The proxy may be revoked in writing by
the person giving it at any time before it is exercised by notice of such
revocation to the secretary of First United, or by submitting a proxy having a
later date, or by such person appearing at the First United Special Meeting and
electing to vote in person. All proxies validly submitted and not revoked will
be voted in the manner specified therein. If no specification is made, the
proxies will be voted in favor of the Merger.
First United will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mails, proxies may be solicited by
personal interview. Officers and other employees of First United, acting on
First United's behalf, may solicit proxies personally.
THE MERGER
BACKGROUND FOR THE MERGER
From time to time, the Board of Directors and management of Carlisle have
considered various strategies for Carlisle, including merging with a larger
company. The Board of Directors and management determined that it was
appropriate to consider a potential merger or sale of Carlisle. Several
companies were contacted to determine whether they had interest in acquiring
Carlisle by purchase or through a merger transaction. Discussions with First
United ensued. After numerous negotiating sessions, First United and Carlisle
negotiated the Agreement, which was approved by the Board of Directors and
certain shareholders of Carlisle on April 1, 1996.
13
<PAGE> 21
REASON FOR THE MERGER
The acquisition of Carlisle will expand First United's current markets. The
banking subsidiaries of Carlisle are located in Carlisle, Arkansas, Hazen,
Arkansas and Brinkley, Arkansas. Currently, there are no banking offices in the
First United system located in Carlisle, Hazen or Brinkley. Thus, the
acquisition of Carlisle expands First United's market into new areas.
Management of First United believes that by expanding its markets, it will
increase the range and competitiveness of its banking services to persons
residing in the Carlisle, Hazen and Brinkley areas while increasing the earning
power of First United. Moreover, it is the present intention of First United to
merge CBT, Hazen and FirstBank with First United's subsidiary First Bank & Trust
Company, Stuttgart, Arkansas ("Stuttgart") within twelve months after the
Merger. While the respective markets of the four banks do not overlap, Stuttgart
is located in Arkansas County which is contiguous to each of the counties of the
Carlisle Subsidiaries. The combined market area of the four banks will form one
contiguous area and First United believes the combination will result in
operating efficiencies.
FAIRNESS OF THE TRANSACTION
THE BOARDS OF DIRECTORS OF FIRST UNITED AND CARLISLE BELIEVE THAT THE
PROPOSED ACQUISITION TERMS ARE FAIR TO THE STOCKHOLDERS OF BOTH FIRST UNITED AND
CARLISLE AND RECOMMEND A VOTE IN FAVOR OF THE ADOPTION OF THE AGREEMENT.
THE AGREEMENT
The following description of certain features of the Agreement is qualified
in its entirety by the full text of the Agreement, which is incorporated herein
by reference and attached hereto by Annex.
Under the terms of the Agreement, Carlisle will be merged with and into
First United in exchange for the issuance by the Company of approximately
500,000 newly issued shares of First United Common Stock to the holders of the
common stock of Carlisle.
The Agreement provides that the stockholders of Carlisle will receive on a
pro rata basis total consideration of $13,025,000, plus after-tax earnings of
Carlisle between January 1, 1996 and the closing date, consisting of fully paid
and nonassessable shares of Common Stock, $1.00 par value of First United. The
number of shares of First United common stock to be exchanged for all of the
issued and outstanding shares of Carlisle Common Stock will be determined by
dividing $13,025,000, plus after-tax earnings of Carlisle between January 1,
1996 and the closing date, by the average price of First United Common Stock.
The average price of First United Common Stock is defined as the average sales
price per share for all trades occurring during the period of ten (10) trading
days on which one or more trades actually takes place and which ends immediately
prior to the second trading day preceding the closing date. Fractional shares of
First United Common Stock shall not be issued and any Carlisle stockholder
entitled to receive a fractional share shall receive a cash payment equal to the
value of the fractional share based on the average price of First United Common
Stock. In addition the president of Carlisle subsidiary FirstBank of Arkansas,
Brinkley, Arkansas, will receive First United Common Stock having a value of
approximately $40,000 in satisfaction of options to purchase Carlisle Common
Stock in the future.
The Agreement can be terminated by Carlisle if the First United Common
Stock average price is greater than $32.00. First United may terminate the
Agreement if the First United Common Stock average price is less than $24.00. In
addition, either party may terminate the Agreement, if the Merger is not closed
on or before December 31, 1996 provided that the failure to close is not caused
by a breach of the Agreement by the party seeking to terminate it.
Carlisle has agreed, for the period prior to the consummation of the
merger, to operate its businesses only in the usual, regular and ordinary
course. In addition, Carlisle will use reasonable efforts to maintain and keep
its properties in as good repair and condition as at present, except for
ordinary wear and tear and to perform all obligations required under all
material contracts, leases, and documents relating to or affecting their
respective
14
<PAGE> 22
assets prior to the consummation of the Merger. Carlisle has further agreed
that, prior to consummation of the Merger, it will not incur any material
liabilities or obligations, except in the ordinary course of business, or take
any action which would or is reasonably likely to adversely affect the ability
of either First United or Carlisle to obtain any necessary approvals, adversely
affect the ability of First United or Carlisle to perform their covenants and
agreements under the Agreement, or result in any of the conditions to the Merger
not being satisfied. Carlisle has further agreed that, unless otherwise required
by applicable law, it shall not initiate, solicit or encourage any inquiry or
proposal which constitutes a competing transaction.
The Agreement requires that certain conditions occur or be waived prior to
the closing date ("conditions precedent"), including (a) approval by Carlisle
stockholders by two-thirds of all outstanding shares; (b) approval by First
United stockholders by two-thirds of all outstanding shares; (c) approval by the
appropriate bank regulatory authorities; (d) receipt by First United of an
opinion from Arthur Andersen LLP that the Merger will qualify for pooling of
interests treatment under the applicable accounting principles; and (e)
satisfaction of other normal conditions to closing a merger transaction. It is
also a condition to the Merger that First United have an effective registration
statement on file with the Securities and Exchange Commission covering the
issuance of shares to be exchanged pursuant to the Merger. Prior to the
effective date of the Merger, any condition of the Agreement, except those
required by law, may be waived by the party benefited by the condition.
The effective date of the Merger will be the date the Articles of Merger
are filed with the Arkansas Secretary of State, or the date so stated in the
Articles of Merger. The Agreement provides that a closing date will be set by
mutual agreement to occur within a reasonable time following the date on which
the last of all regulatory and other approvals necessary to consummate the
Merger have been received and all necessary time periods imposed by regulatory
authorities have elapsed. The parties may, however, amend the Agreement to
provide a later closing date.
REGULATORY APPROVALS
The Merger is subject to prior approval by the appropriate banking
regulatory authorities. An application has been filed for approval of the Merger
with the Board of Governors of the Federal Reserve System ("Board") for First
United to acquire Carlisle. In conjunction with the Board application, the
Merger is also subject to review by the Department of Justice as to its
competitive effects. An application has also been filed with the Arkansas Bank
Department ("Department") for approval of the Merger. The application made to
the Board and Department has not been approved or denied. It cannot be predicted
with accuracy when approval or denial will be received, however, the Company
expects regulatory action to be taken on these applications within sixty (60)
days following the date of this Proxy Statement.
ANTITRUST MATTERS
The Department of Justice has fifteen (15) calendar days after approval by
the Board in which to challenge the proposed Merger on anti-trust
considerations. The approval letter or Order from the Board, therefore will
provide that the Merger may not be consummated until fifteen (15) calendar days
after the effective date of such letter or Order. The letter or Order will also
provide that the transaction must be consummated no later than ninety (90)
calendar days from that effective date unless the period is extended for good
cause by the Board upon request by First United.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. For federal income tax purposes the law provides that participants
(a "Party" or "Parties") in a transaction, including the transaction
contemplated by the Merger, which meets certain specific statutory and case law
requirements (a "reorganization") are entitled to special tax treatment which
effectively defers the instance of taxation on any gain inherent in a
reorganization. This result is achieved by treating the Parties as if they had
continued substantially unaffected by the reorganization. Under Section 361, no
gain or loss is recognized by a Party as a result of a reorganization (Section
references under this caption are to the Internal Revenue Code of 1986, as
amended (the "Code"). Section 362(b) provides that the tax basis of property
15
<PAGE> 23
received by a Party in a reorganization is the same as it would be in the hands
of the transferor, increased by any gain recognized by the transferor on such
transfer. The tax basis of the underlying assets of the Parties is not changed.
For the stockholders of corporations which are Parties to a reorganization,
Section 354 provides that no gain or loss shall be recognized to such
stockholders on the exchange of their stock of one Party for the stock of
another Party. Section 358 provides that the basis of the stock received by such
a stockholder shall be the same as the basis of the stock surrendered in the
exchange. Under Section 1223, the holding period of the stock received by a
stockholder of one of the Parties will include the period for which the stock
exchanged by such stockholder was held.
As a result of case law interpreting the special tax treatment available
for reorganizations, there is also (i) a continuity-of-interest concept which
requires that, in the aggregate, stockholders of each of the corporate parties
to a reorganization maintain a minimum level of equity ownership in the
surviving corporate party, (ii) a continuity of business enterprise requirement;
and (iii) a valid business purpose requirement.
Tax Consequences. It is expected that at or prior to the closing date of
the Merger, Carlisle will receive closing tax opinion of tax counsel to Carlisle
that for federal income tax purposes, under current law, assuming that the
Merger and related transactions will take place as described in the Merger
Agreement and that the case law requirements described above, relating to
continuity of stockholder interest, continuity of business enterprise and valid
business purpose, are satisfied, the Merger will constitute a reorganization
within the meaning of Section 368(a)(1)(A) of the Code, and First United and
Carlisle each will be a Party to the reorganization within the meaning of
Section 368(b) of the Code.
If the Merger constitutes such a reorganization, the following will be the
material federal income tax consequences of the Merger in the opinion of Shults,
Ray & Kurrus: (i) no gain or loss will be recognized by the Carlisle
stockholders upon the receipt of First United Common Stock in exchange for
Carlisle common stock in connection with the Merger; (ii) the tax basis of the
First United Common Stock to be received by the Carlisle stockholders in
connection with the Merger will be the same as the basis in the Carlisle Common
Stock surrendered in exchange therefor; (iii) the holding period of the First
United Common Stock to be received by the Carlisle stockholders in connection
with the Merger will include the holding period of the Carlisle common stock
surrendered in exchange therefor, provided that Carlisle common stock is held as
a capital asset at the effective time of the Merger; and (iv) the payment of
cash to stockholders of Carlisle in lieu of the issuing fractional shares of
First United Common Stock will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by First United for cash
and the payments received will be treated as distributions in redemption of the
fractional shares, subject to the provisions of Section 302 of the Code.
Cash Received by Holders of Carlisle or First United Common Stock Who
Dissent. A stockholder of Carlisle or First United who perfects his dissenter's
rights under the laws of Arkansas and who receives payment of the fair value of
his shares of Carlisle common stock will be treated as having received such
payment in redemption of such stock. Such redemption will be subject to the
conditions and limitations of Section 302 of the Code, including the attribution
rules of Section 318. In general, if the dissenting shares of common stock are
held by the holder as a capital asset at the effective time of the Merger, such
holder will recognize capital gain or loss measured by the difference between
the amount of cash received by such holder and the basis for such shares. Each
holder of common stock who contemplates exercising his dissenter's rights should
consult his own tax adviser as to the possibility that any payment to him will
be treated as dividend income.
THE DISCUSSION OF FEDERAL INCOME TAX MATTERS SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN
TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE
SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF
THIS DISCUSSION. EACH CARLISLE AND
16
<PAGE> 24
FIRST UNITED STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT
TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
ACCOUNTING TREATMENT
First United intends to treat the merger as a pooling of interests for
accounting purposes. Consequently, in accordance with generally accepted
accounting principles, First United anticipates that it will restate its 1996
consolidated financial statements to include the assets, liabilities,
stockholders' equity and results of operations of Carlisle as reflected in its
consolidated financial statements, subject to appropriate adjustments, if any,
to conform accounting principles of the two companies.
RIGHT OF DISSENT UNDER THE 1965 ACT
HOLDERS OF CARLISLE COMMON STOCK WILL BE ENTITLED TO EXERCISE DISSENTER'S
RIGHTS EITHER UNDER THE 1965 ACT OR THE 1987 ACT. IF APPROVED, THE ELECTION TO
BE GOVERNED BY THE 1987 ACT BY THE STOCKHOLDERS OF CARLISLE, AS DISCUSSED BELOW,
WILL BE MADE PRIOR TO CONSUMMATION OF THE MERGER BUT SUBSEQUENT TO A VOTE ON
SUCH MERGER. THEREFORE, FIRST UNITED WILL RECOGNIZE COMPLIANCE WITH EITHER THE
1965 ACT OR THE 1987 ACT AS A VALID EXERCISE OF DISSENTER'S RIGHTS WITH RESPECT
TO SUCH MERGER. FOR A DISCUSSION OF THE PROCEDURE TO BE FOLLOWED UNDER THE 1987
ACT, SEE "THE MERGER -- RIGHT OF DISSENT UNDER THE 1987 ACT."
Under Arkansas law, holders of Carlisle common stock are entitled to
dissenters' rights pursuant to Ark. Code Ann. sec. 4-26-1007 of the 1965 Act.
However, if a holder of shares of Carlisle common stock chooses to follow the
procedure under the 1965 Act, he shall only be entitled to such rights if he
complies with that statute. The following summary does not purport to be a
complete statement of the method of compliance with Section 4-26-1007 and is
qualified by reference to those statutory sections which are attached hereto by
Annex.
A holder of Carlisle stock who wishes to perfect his dissenter's rights in
the event that the Merger is adopted must:
(a) File with the corporation, prior to or at the meeting of
stockholders at which the vote on the Agreement is to be made, written
objection to the Agreement; and
(b) Not have voted in favor of the Agreement.
Any written notice of objection to the Agreement pursuant to clause (a) of
the immediately proceeding paragraph should be mailed or delivered to Carlisle
Bancshares, Inc., 300 Spring Building, Suite 1010, Little Rock, Arkansas 72201,
Attention: Daniel C. Horton, Secretary. Because the written objection must be
delivered prior to or at the stockholder vote on the Agreement, it is
recommended, although not required, that a stockholder using the mail should use
certified or registered mail, return receipt requested, to confirm that he has
made timely delivery.
Within ten (10) days after the consummation of the Merger, any stockholder
objecting to the Merger must make a written demand on First United for payment
of the fair value of his shares as of the day before the vote on the Agreement
was taken. This second notice should be mailed to First United Bancshares, Inc.,
Main and Washington Streets, El Dorado, Arkansas, 71730, Attention: John E.
Burns, Vice President and Chief Financial Officer. The demand must state the
number and class of shares owned. If a demand is not made within the 10-day
period, the stockholder is bound by the Agreement.
Within ten (10) days after the Merger is effected, First United shall give
notice to each dissenting stockholder who made demand as provided above for the
payment of the value of his shares. If the dissenting stockholder and First
United agree upon the value of the shares within thirty (30) days after the date
of the
17
<PAGE> 25
Merger, then payment shall be made within ninety (90) days of the Merger.
Simultaneously with the payment, the dissenting stockholder shall surrender the
certificates representing his shares.
If within the thirty-day period no agreement is reached as to the value of
the dissenting stockholder's shares, the dissenting stockholder must file a
petition in Pulaski County Circuit Court within 60 days after the expiration of
the 30-day period asking for a determination of the fair value of his shares.
The judgment will be final and is payable only upon and simultaneously with the
surrender of the certificates representing the shares to First United. If a
dissenting stockholder fails to file a petition within the 60-day period, he and
all persons claiming under him shall be bound by the terms of the Agreement.
RIGHT OF DISSENT UNDER THE 1987 ACT
HOLDERS OF FIRST UNITED COMMON STOCK OR CARLISLE COMMON STOCK SHALL BE
ENTITLED TO DISSENTER'S RIGHTS PURSUANT TO ARK. CODE ANN. SEC. 4-27-1301 ET.
SEQ. OF THE 1987 ACT WITH RESPECT TO THE MERGER. HOWEVER, A HOLDER OF FIRST
UNITED COMMON STOCK SHALL ONLY BE ENTITLED TO EXERCISE DISSENTER'S RIGHTS UNDER
THE 1987 ACT, WHEREAS A HOLDER OF CARLISLE COMMON STOCK MAY ALSO EXERCISE SUCH
RIGHTS UNDER THE 1965 ACT. SEE "THE MERGER -- RIGHT OF DISSENT UNDER THE 1965
ACT."
The following summary does not purport to be a complete statement of the
method of compliance with the 1987 Act and is qualified by reference to those
statutory sections which are attached hereto by Annex.
A holder of either Carlisle or First United Common Stock who wishes to
perfect his dissenter's rights in the event that the Merger is adopted must:
(a) File with the corporation, prior to or at the meeting of
stockholders at which the vote on the Agreement is to be made, written
objection to the Agreement; and
(b) Not have voted in favor of the Agreement.
Any written notice of objection to the Agreement pursuant to clause (a) of
the immediately preceding paragraph should be mailed or delivered by a Carlisle
stockholder to Carlisle Bancshares, Inc., 300 Spring Building, Suite 1010,
Little Rock, Arkansas 72201, Attention: Daniel C. Horton, Secretary or by a
stockholder of First United, to First United Bancshares, Inc., Main and
Washington Streets, El Dorado, Arkansas 71730, Attention: John E. Burns, Vice
President and Chief Financial Officer. Because the written objection must be
delivered prior to or at the time of the stockholder votes on the Merger, it is
recommended, although not required, that a stockholder using the mail should use
certified or registered mail, return receipt requested, to confirm that he has
made timely delivery.
If the Merger is adopted at the special stockholders meeting, the
corporation must send to the dissenting stockholder, no later than ten (10) days
after the corporate action was taken, a dissenter's notice which will inform the
stockholder where a demand for payment must be sent, where the stockholder's
share certificates must be deposited and provide a form for demanding payment.
The dissenter's notice will also notify the stockholder of a time period of not
fewer than thirty (30) nor more than sixty (60) days within which the
stockholder must deliver the payment demand form and stock certificates to the
corporation.
As soon as the Merger is consummated, or upon receipt of a payment demand
by the dissenting stockholder, First United must pay the dissenting stockholder
the amount First United estimates to be the fair value of the shares, plus
accrued interest and deliver to the dissenting stockholder the corporation's
balance sheet as of the most recent fiscal year, an income statement for that
year, a statement of changes in stockholder equity for that year, and the latest
available interim financial statement. At this time, First United shall also
deliver to the dissenting stockholder a statement of the corporation's estimate
of fair value of the shares, an explanation of how interest was calculated, a
statement of the dissenter's right to demand a higher value for his shares and a
copy of the appropriate statutory provisions governing the dissenters rights
procedure.
18
<PAGE> 26
Within thirty (30) days after the dissenting stockholder has received
payment in the amount the corporation estimates to be the fair value of the
shares, the dissenting stockholder must notify the corporation, in writing, of
his own estimate of fair value. If the dissenting stockholder does not notify
the corporation within this thirty (30) day period, he waives his right to
demand a higher payment.
If the demand for payment, as referenced in the immediately preceding
paragraph remains unsettled for sixty (60) days from the date the corporation
receives the dissenting stockholder's demand for payment, the corporation must
commence a proceeding and file a petition in Pulaski County Circuit Court to
determine the fair value of the shares and the amount of accrued interest to be
paid.
EXCHANGE RATIO FOR THE MERGER
The number of shares of First United Common Stock to be issued pursuant to
the Merger is calculated by dividing $13,025,000, plus after-tax earnings of
Carlisle between January 1, 1996 and the closing date, by the average sales
price of First United Common Stock for all trades occurring during the period of
ten (10) days on which one or more trades actually takes place and which ends
immediately prior to the second trading day preceding the closing date. The
exchange ratio for the Merger is calculated by taking the number of shares of
First United Common Stock to be issued and dividing this number by the total
number of outstanding shares of Carlisle common stock, which is 139,142. The
following table illustrates a range of average sales prices for First United
Common Stock and based upon these average sales prices, calculates the number of
shares of First United Common Stock to be issued and the resulting exchange
ratio. Furthermore, the table illustrates the total consideration to be
exchanged, which will vary depending upon the date of closing and the earnings
of Carlisle during 1996 and the average sales price of First United Common
Stock. This table is for illustration purposes only and should not be relied
upon as the actual amount of shares to be issued, the actual average sales
price, the actual exchange ratio, or the actual amount of consideration to be
exchanged.
CALCULATION OF EXCHANGE RATIO(1)
<TABLE>
<S> <C> <C> <C>
First United Average Sales Price........ $ 24.00 $ 28.00 $ 32.00
Total Purchase Price.................... 13,025,000 13,025,000 13,025,000
First United Common Stock Issued(2)..... 542,708 465,178 407,031
Exchange Ratio for the Merger........... 3.90 3.34 2.92
</TABLE>
- ---------------
(1) The Exchange Ratio represents the number of shares of First United Common
Stock that a stockholder of Carlisle would receive for one share of Carlisle
Common Stock. However, as discussed above, fractional shares will not be
issued.
(2) The First United Common Stock issued excludes the number of shares of First
United Common Stock that may be issued in such amount as is equal to the
after-tax earnings of Carlisle between January 1, 1996 and the closing date.
The after-tax earnings of Carlisle for the three months ended March 31, 1996
were $342,000. The First United Common Stock issued also excludes the number
of shares of First United Common Stock that may be issued in such amount as
is equal to the intrinsic value of any unexercised Carlisle stock options at
the time of the Merger. First United estimates the intrinsic value of such
Carlisle stock options to approximate $40,000.
EXPENSES OF THE MERGER
First United and Carlisle will bear their own expenses incident to
preparing for entering into and carrying out the Merger Agreement and the
consummation of the Merger, except that First United will pay all expenses
incident to the preparation of this Proxy Statement and its printing and
distribution and for the filing of necessary applications for approval of the
Merger with the Board and Department.
19
<PAGE> 27
FINANCIAL INFORMATION
The following unaudited Pro Forma Combining Balance Sheet as of March 31,
1996, and Unaudited Pro Forma Combining Income Statements for the three months
ended March 31, 1996 and 1995 and for the years ended December 31, 1995, 1994,
and 1993 illustrate the effect of the proposed Merger as if the Merger had
occurred at the beginning of the earliest period presented.
These Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of First United which are
incorporated by reference herein and Carlisle which are included herein.
The Pro Forma Combining Financial Statements are presented for comparative
purposes only and are not intended to be indicative of actual results had the
transactions occurred as of the dates indicated above nor do they purport to
indicate which may be attained in the future.
20
<PAGE> 28
PRO FORMA COMBINING BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------------------------------------------
PRO FORMA PRO FORMA
FIRST UNITED CARLISLE ADJUSTMENTS(1) COMBINED
------------ -------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and due from banks.................. $ 42,898 $ 3,547 $ -- $ 46,445
Short-term investment.................... 73,974 1,445 -- 75,419
Securities available-for-sale............ 361,751 8,718 -- 370,469
Investment securities.................... 198,642 27,954 -- 226,596
Net loans................................ 635,654 54,924 -- 690,578
Premises and equipment................... 26,847 1,454 -- 28,301
Goodwill................................. 11,367 756 -- 12,123
Other real estate owned.................. 564 -- -- 564
Other assets............................. 19,125 2,200 -- 21,325
---------- -------- -------- ----------
Total Assets................... $ 1,370,822 $100,998 $ -- $1,471,820
========== ======== ======== ==========
LIABILITIES
Total deposits........................... $ 1,152,799 $ 85,777 $ -- $1,238,576
Federal funds purchased and securities
sold under agreements to repurchase.... 53,420 -- -- 53,420
Other liabilities........................ 15,728 873 -- 16,601
Notes payable............................ 16,832 6,959 -- 23,791
---------- -------- -------- ----------
Total Liabilities.............. 1,238,779 93,609 -- 1,332,388
---------- -------- -------- ----------
Capital Accounts
Preferred stock........................ -- -- -- --
Common stock........................... 7,739 155 (155)(2) 8,204
465(2)
Surplus................................ 10,972 1,863 (1,863)(2) 12,427
1,455(2)
Undivided profits...................... 113,584 5,880 -- 119,464
Less: Treasury stock................... -- (98) 98(2) --
Unrealized gains (losses) of securities
Available for sale.................. (252) (411) -- (663)
---------- -------- -------- ----------
Total Capital Accounts......... 132,043 7,389 -- 139,432
---------- -------- -------- ----------
Total Liabilities and Capital
Accounts..................... $ 1,370,822 $100,998 $ -- $1,471,820
========== ======== ======== ==========
</TABLE>
21
<PAGE> 29
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31, 1996
------------------------------------------
PRO FORMA
FIRST UNITED CARLISLE COMBINED
------------ -------- ----------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income....................................... $ 24,195 $ 1,913 $ 26,108
Interest expense...................................... 11,573 965 12,538
---------- -------- ----------
Net interest income................................... 12,622 948 13,570
Provision for loan losses............................. 76 17 93
---------- -------- ----------
Net interest income after provision for loan losses... 12,546 931 13,477
Other income
Service charges on deposit accounts................. 1,089 124 1,213
Trust department income............................. 438 5 443
Security gains...................................... 59 -- 59
Other operating income.............................. 834 54 888
---------- -------- ----------
Total other income.......................... 2,420 183 2,603
---------- -------- ----------
Other expense
Salaries............................................ 3,534 295 3,829
Pension and other employee benefits................. 1,180 61 1,241
Net occupancy expense............................... 784 41 825
Equipment expense................................... 560 67 627
Data processing expense............................. 431 -- 431
Other operating expenses............................ 2,264 185 2,449
---------- -------- ----------
Total other expense......................... 8,753 649 9,402
---------- -------- ----------
Income before income taxes............................ 6,213 465 6,678
Income tax expense.................................... 1,864 123 1,987
---------- -------- ----------
Income from continuing operations..................... $ 4,349 $ 342 $ 4,691
========== ======== ==========
Earnings per share(3)................................. $ 0.56 $ 2.47 $ 0.57
========== ======== ==========
Weighted average shares outstanding................... 7,738,158 138,686 8,203,337
========== ======== ==========
</TABLE>
22
<PAGE> 30
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31, 1995
------------------------------------------
PRO FORMA
FIRST UNITED CARLISLE COMBINED
------------ -------- ----------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income....................................... $ 21,052 $ 1,653 $ 22,705
Interest expense...................................... 9,497 840 10,337
---------- -------- ----------
Net interest income................................... 11,555 813 12,368
Provision for loan losses............................. 46 11 57
---------- -------- ----------
Net interest income after provision for loan losses... 11,509 802 12,311
Other income
Service charges on deposit accounts................. 948 121 1,069
Trust department income............................. 417 3 420
Security gains...................................... (145) -- (145)
Other operating income.............................. 685 40 725
---------- -------- ----------
Total other income.......................... 1,905 164 2,069
---------- -------- ----------
Other expense
Salaries............................................ 3,104 275 3,379
Pension and other employee benefits................. 892 66 958
Net occupancy expense............................... 678 40 718
Equipment expense................................... 411 51 462
Data processing expense............................. 397 -- 397
Other operating expenses............................ 2,706 246 2,952
---------- -------- ----------
Total other expense......................... 8,188 678 8,866
---------- -------- ----------
Income before income taxes............................ 5,226 288 5,514
Income tax expense.................................... 1,557 77 1,634
---------- -------- ----------
Income from continuing operations..................... $ 3,669 $ 211 $ 3,880
========== ======== ==========
Earnings per share(3)................................. $ 0.47 $ 1.53 $ 0.47
========== ======== ==========
Weighted average shares outstanding................... 7,738,158 138,135 8,199,529
========== ======== ==========
</TABLE>
23
<PAGE> 31
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
------------------------------------------
PRO FORMA
FIRST UNITED CARLISLE COMBINED
------------ -------- ----------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income....................................... $ 92,735 $ 7,378 $ 100,113
Interest expense...................................... 43,250 3,794 47,044
---------- -------- ----------
Net interest income................................... 49,485 3,584 53,069
Provision for loan losses............................. 574 60 634
---------- -------- ----------
Net interest income after provision for loan losses... 48,911 3,524 52,435
Other income
Service charges on deposit accounts................. 4,227 488 4,715
Trust department income............................. 1,799 68 1,867
Security gains...................................... (108) -- (108)
Other operating income.............................. 1,887 194 2,081
---------- -------- ----------
Total other income.......................... 7,805 750 8,555
---------- -------- ----------
Other expense
Salaries............................................ 13,288 1,112 14,400
Pension and other employee benefits................. 4,209 253 4,462
Net occupancy expense............................... 2,924 165 3,089
Equipment expense................................... 1,766 234 2,000
Data processing expense............................. 1,705 -- 1,705
Other operating expenses............................ 10,752 853 11,605
---------- -------- ----------
Total other expense......................... 34,644 2,617 37,261
---------- -------- ----------
Income before income taxes............................ 22,072 1,657 23,729
Income tax expense.................................... 6,868 515 7,383
---------- -------- ----------
Income from continuing operations..................... $ 15,204 $ 1,142 $ 16,346
========== ======== ==========
Earnings per share(3)................................. $ 1.96 $ 8.25 $ 1.99
========== ======== ==========
Weighted average shares outstanding................... 7,738,158 138,352 8,200,254
========== ======== ==========
</TABLE>
24
<PAGE> 32
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1994
------------------------------------------
PRO FORMA
FIRST UNITED CARLISLE COMBINED
------------ -------- ----------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income....................................... $ 73,214 $ 5,798 $ 79,012
Interest expense...................................... 30,253 2,705 32,958
---------- -------- ----------
Net interest income................................... 42,961 3,093 46,054
Provision for loan losses............................. 334 65 399
---------- -------- ----------
Net interest income after provision for loan losses... 42,627 3,028 45,655
Other income
Service charges on deposit accounts................. 3,229 426 3,655
Trust department income............................. 1,379 57 1,436
Security gains...................................... 9 -- 9
Other operating income.............................. 1,530 146 1,676
---------- -------- ----------
Total other income.......................... 6,147 629 6,776
---------- -------- ----------
Other expense
Salaries............................................ 11,071 970 12,041
Pension and other employee benefits................. 3,644 219 3,863
Net occupancy expense............................... 2,435 144 2,579
Equipment expense................................... 1,318 182 1,500
Data processing expense............................. 1,511 49 1,560
Other operating expenses............................ 8,818 879 9,697
---------- -------- ----------
Total other expense......................... 28,797 2,443 31,240
---------- -------- ----------
Income before income taxes............................ 19,977 1,214 21,191
Income tax expense.................................... 5,969 341 6,310
---------- -------- ----------
Income from continuing operations..................... $ 14,008 $ 873 $ 14,881
========== ======== ==========
Earnings per share(3)................................. $ 1.81 $ 6.43 $ 1.82
========== ======== ==========
Weighted average shares outstanding................... 7,738,158 135,679 8,191,326
========== ======== ==========
</TABLE>
25
<PAGE> 33
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1993
------------------------------------------
PRO FORMA
FIRST UNITED CARLISLE COMBINED
------------ -------- ----------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income....................................... $ 71,968 $ 3,666 $ 75,634
Interest expense...................................... 28,905 1,560 30,465
---------- -------- ----------
Net interest income................................... 43,063 2,106 45,169
Provision for loan losses............................. 1,815 180 1,995
---------- -------- ----------
Net interest income after provision for loan losses... 41,248 1,926 43,174
Other income
Service charges on deposit accounts................. 3,280 236 3,516
Trust department income............................. 1,515 54 1,569
Security gains...................................... 144 100 244
Other operating income.............................. 1,724 91 1,815
---------- -------- ----------
Total other income.......................... 6,663 481 7,144
---------- -------- ----------
Other expense
Salaries............................................ 10,356 515 10,871
Pension and other employee benefits................. 3,211 125 3,336
Net occupancy expense............................... 2,215 73 2,288
Equipment expense................................... 1,267 72 1,339
Data processing expense............................. 1,744 50 1,794
Other operating expenses............................ 10,284 464 10,748
---------- -------- ----------
Total other expense......................... 29,077 1,299 30,376
---------- -------- ----------
Income before income taxes............................ 18,834 1,108 19,942
Income tax expense.................................... 5,619 362 5,981
---------- -------- ----------
Income from continuing operations..................... $ 13,215 $ 746 $ 13,961
========== ======== ==========
Earnings per share(3)................................. $ 1.71 $ 6.05 $ 1.71
========== ======== ==========
Weighted average shares outstanding................... 7,738,158 123,422 8,150,387
========== ======== ==========
</TABLE>
26
<PAGE> 34
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(1) The adjustments to the Pro Forma Combining Financial Statements do not
include direct expenses related to the Merger, which will be recorded at the
time of the Merger. The pro forma data are not necessarily indicative of the
operating results or financial position that would have occurred had the
Merger been consummated at the dates indicated, nor necessarily indicative
of future operating results of financial position.
(2) These adjustments reflect the issuance of approximately 465,178 shares of
First United Common Stock in exchange for all common stock and the
retirement of Carlisle common stock held in treasury. The actual number of
shares of First United Common Stock to be issued pursuant to the Merger will
fluctuate based upon the average price of First United Common Stock assumed
to be at $28.00 for these Pro Forma Combining Financial Statements. The
First United Common Stock issued excludes the number of shares of First
United Common Stock that may be issued in such amount as is equal to the
after-tax earnings of Carlisle between January 1, 1996 and the closing date.
The after-tax earnings of Carlisle for the three months ended March 31, 1996
were $342,000. The First United Common Stock issued also excludes the number
of shares of First United Common Stock that may be issued in such amount as
is equal to the intrinsic value of any unexercised Carlisle stock options at
the time of the Merger. First United estimates the intrinsic value of such
Carlisle stock options to approximate $40,000.
(3) Pro forma per share data are based on the number of shares of First United
Common Stock that would have been outstanding had the Merger occurred at the
beginning of the earliest period presented. The following table illustrates
pro forma earnings per share based upon the allowable minimum and maximum
average price of First United Common Stock of $24.00 and $32.00,
respectively, pursuant to the Agreement.
<TABLE>
<CAPTION>
$24.00 $32.00
------ ------
<S> <C> <C>
Year ended December 31, 1993......................................... $ 1.70 $ 1.72
Year ended December 31, 1994......................................... 1.80 1.83
Year ended December 31, 1995......................................... 1.97 2.01
Three months ended March 31, 1995.................................... .47 .48
Three months ended March 31, 1996.................................... .57 .58
</TABLE>
27
<PAGE> 35
ELECTION BY CARLISLE STOCKHOLDERS UNDER THE 1987 ACT
ELECTION INCIDENTAL TO THE MERGER
THE ELECTION BY THE STOCKHOLDERS OF CARLISLE TO BE GOVERNED BY THE ARKANSAS
BUSINESS CORPORATION ACT OF 1987 IS INCIDENTAL TO THE MERGER PROPOSAL AND
APPROVAL OF SUCH ELECTION WILL HAVE NO FORCE OR EFFECT UNLESS THE MERGER IS
LIKEWISE APPROVED.
REASON FOR THE ELECTION
Carlisle is a corporation that was organized under the Arkansas Business
Corporation Act of 1965, codified at Ark. Code Ann. sec. 4-26-101 et. seq. The
1987 Act is applicable to those corporations that were incorporated on or after
January 1, 1988 or those "1965 Act" corporations that elect to be governed by
the 1987 Act by amending their Articles of Incorporation to so state. The
stockholders of First United elected to be governed by the 1987 Act by amending
its Articles of Incorporation.
The 1965 Act and 1987 Act have statutory merger procedures that must be
complied with in order to legally consummate a merger. Although both acts
contain similar provisions, it is advisable for Carlisle to elect to be governed
by the 1987 Act in order to facilitate compliance with the applicable statutory
requirements.
RESULT OF THE ELECTION
The affirmative vote of two-thirds of all outstanding shares of Carlisle
common stock will authorize Carlisle to amend its Articles of Incorporation and
thereby elect to be governed by the 1987 Act. First United is governed by the
1987 Act and shares of First United Common Stock received by Carlisle
stockholders upon consummation of the Merger will entitle such stockholders
rights under the 1987 Act. The following discussion is an analysis of the
material differences between the 1965 and 1987 Act with respect to Stockholders'
rights.
Powers of Directors in Setting Preferences, Rights and Limitation of
Classes and Series of Stocks. The 1965 Act states that the preferences, rights
and limitations of classes of stock must be specified in the Articles, and that
the power to establish certain limited rights and preferences for series may be
delegated to the Board. The 1987 Act, however, allows inclusion of a provision
in the Articles which gives the Board the power to set the preferences, rights
and limitations of any class or series of stock before any shares of the class
or series are issued. This power is exercised by filing with the Secretary of
State Articles of Amendment, adopted without stockholder action.
Preemptive Rights. The 1987 Act denies stockholders preemptive rights
(i.e., the right of existing stockholders to acquire newly-issued shares of
stock on a pro rata basis of current ownership interest) unless the Articles
specifically authorize preemptive rights. In contrast, the 1965 Act grants
certain preemptive rights unless denied by the Articles.
Restrictions On Distributions. The 1987 Act allows a corporation to elect
in its Articles to restrict its ability to make distributions. The 1965 Act has
no such provision.
Quorum. The 1987 Act, like the 1965 Act, provides that a quorum, for
purposes of a stockholders meeting, will be a majority of the shares entitled to
vote unless the Articles provide otherwise. The 1987 Act does not provide a
minimum size for the quorum. The 1965 Act provides that a quorum may not be less
than one-third of the shares entitled to vote.
Cumulative Voting. Cumulative voting is a method of voting for directors
where each share entitled to vote is given as many votes as there are board
positions being voted on; the votes may be "cumulated," or cast for a single
position, rather than spread among the available positions. The 1987 Act does
not allow stockholders to cumulate their votes for election of directors unless
the Articles of Incorporation so provide. This is contrary to the 1965 Act,
which grants stockholders absolute cumulative voting rights.
28
<PAGE> 36
Removal of Directors. The 1987 Act allows the Articles to provide that
directors may be removed only for cause. The 1965 Act does not allow such a
limitation and provides that directors may be removed with or without cause by a
majority of the shares entitled to vote.
Vacancy on Board of Directors. The 1987 Act provides that unless the
Articles provide otherwise, any vacancy on the board may be filled by either the
stockholders or the remaining directors. This is a change from the 1965 Act,
under which the remaining directors fill vacancies unless the Articles provide
otherwise.
Amendment of By-Laws. The 1987 Act provides that the Articles may reserve
to the stockholders the power to amend a corporation's by-laws. If the power is
not so reserved, the board may amend the by-laws, but stockholders may not be
excluded from the power to amend the by-laws. The 1965 Act provides that the
board of directors alone have the power to amend the by-laws, unless the
Articles reserve that power solely to the stockholders.
By-Law Increasing Quorum or Voting Requirements for Stockholders. The 1987
Act allows the stockholders to adopt a by-law that fixes a greater stockholder
quorum or voting requirement than the statutory requirement if such by-law is
authorized by the Articles of Incorporation. The 1965 Act has no such provision.
Voting to Adopt Merger. The 1987 Act allows the Articles to set a voting
requirement for mergers which is greater than the statutory requirement of a
majority of votes to be cast. The 1965 Act includes a statutory requirement of
two-thirds of the votes entitled to be cast to approve a merger.
Sales of Assets in Regular Course of Business and Mortgage of Assets.
Unless otherwise provided in the Articles, the 1987 Act allows the board to act
without stockholder approval in the sale or other disposition of all, or
substantially all, of the property of the corporation in the usual course of
business and to mortgage all or any of the corporation's property, whether or
not in the usual course of business. However, the 1965 Act contains the same
provision.
Notice of Stockholder Meetings. The 1987 Act requires notice of the date,
time, and place of each annual or special meeting of the stockholders. If the
meeting is to consider a proposal to increase the authorized capital stock or
bonded indebtedness of the corporation, the notice must be given no fewer than
75 days before the meeting period. The 1965 Act has the same provision. Under
the 1987 Act, in all other cases the notice must be given no fewer than 10 and
no more than 60 days before the meeting date. Under the 1965 Act notice cannot
be given fewer than 10 and more than 50 days prior to the meeting.
Proxies. Like the 1965 Act, the 1987 Act allows a stockholder to vote by
proxy. The procedural provisions for the exercise of proxies under the 1987 Act
are the same as under the 1965 Act.
Voting. The 1987 Act, unlike the 1965 Act, does not count abstaining votes
in determining whether there are sufficient affirmative votes to approve a
measure. The 1965 Act states that (unless a greater number is required by
statute or by the Articles) approval by stockholders takes the affirmative vote
of a majority of the shares represented at the meeting and entitled to vote on
the subject matter. The 1987 Act, however, provides that the action is approved
if the votes cast within the voting group favoring the action exceed the votes
cast opposing the action.
Dissenting Stockholders. Those transactions giving rise to dissenters'
rights under the 1965 Act are as follows:
1. Consummation of a sale of all or substantially all of the assets of
a corporation otherwise than in the usual or ordinary course of its
business.
2. Consummation of a merger or consolidation to which the corporation
is a party unless on the date the Articles of Merger are filed the
surviving corporation wholly owns the other corporations that are parties
to the Merger.
29
<PAGE> 37
Under the 1987 Act, a stockholder is entitled to dissent from the following
corporate actions:
1. Consummation of a plan of merger to which the corporation is a
party if stockholder approval is required or if the corporation is a
subsidiary that is merged with its parent;
2. Consummation of a plan of share exchange to which the corporation
is a party and which requires stockholder approval;
3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business if stockholder approval is required;
4. An amendment of the Articles of Incorporation that materially and
adversely affects the rights of dissenters' shares; or
5. Any other corporate action taken pursuant to a stockholder vote to
the extent the Articles of Incorporation, the By-Laws, or a resolution of
the board of directors provides that stockholders are entitled to dissent.
For a summary of the procedure that would be followed in order to exercise
dissenters' rights under the 1965 Act, See "The Merger -- Right of Dissent under
the 1965 Act." For a summary of the procedure that would be followed in order to
exercise dissenters' rights under the 1987 Act, See "The Merger -- Right of
Dissent under the 1987 Act."
FIRST UNITED BANCSHARES, INC.
GENERAL
First United is a multi-bank holding company incorporated in 1980 for the
purpose of holding all of the outstanding stock of The First National Bank of El
Dorado, El Dorado, Arkansas. Between 1981 and 1995, First United acquired six
other banks in different cities within Arkansas and Texas. The banks acquired
were the First National Bank of Magnolia, Magnolia, Arkansas; Merchants and
Planters Bank, N.A. of Camden, Camden, Arkansas; City National Bank of Fort
Smith, Fort Smith, Arkansas; Commercial Bank at Alma, Alma, Arkansas; The Bank
of North Arkansas, Melbourne, Arkansas; First Stuttgart Bank & Trust Company,
Stuttgart, Arkansas; and FirstBank, Texarkana, Texas. Each of the banks are
wholly-owned by First United, and, furthermore, are banks organized under the
laws of the United States, Arkansas or Texas and are regulated by the Office of
the Comptroller of the Currency, the Federal Reserve System, the Arkansas Bank
Department or the Texas Department of Banking. As of March 31, 1996, these banks
had a total of $646,323,000 of loans outstanding, an allowance for loan losses
of $10,669,000, total deposits of $1,152,799,000 and total stockholders' equity
of $126,319,000. In 1996 First United Trust Company was chartered as a
wholly-owned subsidiary of First United to handle and expand trust business
formerly done by First United's subsidiary banks.
The banks offer customary services of banks of similar size and similar
markets, including interest-bearing and non-interest-bearing deposit accounts,
commercial, real estate and personal loans, trust services, correspondent
banking services and safe deposit box activities.
The banking business is highly competitive. The Subsidiary Banks of First
United compete actively with national and state banks, savings and loan
associations, securities dealers, mortgage bankers, finance companies and
insurance companies.
REGULATION
First United is a registered bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended (the "Act"), and as such, is subject to
regulation and examination by the Federal Reserve Board and is required to file
with the Federal Reserve Board annual reports and other information regarding
the business operations of itself and its subsidiaries. The Act provides that a
bank holding company may be required to obtain Federal Reserve Board approval
for the acquisition of more than 5% of the voting securities
30
<PAGE> 38
of substantially all of the assets of any bank or bank holding company, unless
it already owns a majority of the voting securities of such bank or bank holding
company. The Act prohibits First United from engaging in any business other than
banking or bank-related activities specifically allowed by the Federal Reserve
Board. The Act also prohibits First United and its subsidiaries from engaging in
certain tie-in arrangements in connection with the extension of credit, the
lease of sale of property or the provision of any services.
As a registered bank holding company, First United is subject to the
Federal Reserve Board's position that a bank holding company should serve as a
"source of strength" for its bank subsidiaries. In an early appreciation of the
doctrine the Federal Reserve Board announced that failure to assist a troubled
bank subsidiary when its holding company was in a position to do so was an
unsafe and unsound practice and the Federal Reserve Board claimed the authority
to order a bank holding company to capitalize its subsidiary banks.
In 1991, Congress modified the source of strength doctrine by creating a
system of prompt corrective actions under which the federal banking agencies are
required to take certain actions to resolve the problems of depository
institutions based on their level of capitalization. In a bank holding company
organization, an undercapitalized insured depository institution must submit a
capital restoration plan to the appropriate agency which may not accept the plan
unless the company controlling the institution has guaranteed that the
institution will comply with the plan until the institution has been adequately
capitalized on average during each of four consecutive calendar quarters. The
aggregate liability to the guaranteeing companies is the lesser of an amount
equal to 5 percent of the institution's total assets at the time the institution
became undercapitalized, or the amount which is necessary to bring the
institution into compliance with applicable capital standards.
For a significantly undercapitalized institution, the appropriate agency
must prohibit a bank holding company from making any capital distribution
without prior Federal Reserve Board approval. The agency also may require a bank
holding company to divest or liquidate the institution.
First United and its subsidiaries are subject to various federal banking
laws including the Financial Institutions, Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") which, among other things, made substantive changes to the
deposit insurance system. As a part of the reorganization of the deposit
insurance funds, the deposit premiums for insurance of Bank Insurance Fund
members were significantly increased. FIRREA also authorized bank holding
companies to acquire savings and thrift institutions without tandem operation
restrictions. Furthermore, FIRREA expanded the authority of regulatory agencies
to assess severe penalties ranging from $5,000 per day to $1,000,000 per day, on
persons or institutions that the agency finds in violation of a broad range of
activities.
First United and its subsidiaries are also subject to the provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991, which provided
for industry-wide standards in such areas as real estate lending, further
restrictions on brokered deposits and insider lending, establishment of a
risk-based deposit insurance system, enhanced examinations and audits of banking
institutions, the adoption of a Truth-in-Savings Act, various
merger-and-acquisitions related provisions, and the implementation of
legislation on foreign bank operations in the United States.
The provisions of the Community Reinvestment Act of 1977, as amended, are
applicable to the subsidiary of First United. Federal Regulators are required to
consider performance under the Community Reinvestment Act before approving an
application to establish a branch or acquire another financial institution. The
Federal Reserve Board has promulgated regulations governing compliance with the
Community Reinvestment Act in Regulation BB. Recent regulatory and statutory
developments show that compliance with the Community Reinvestment Act is subject
to strict scrutiny and is often grounds for denial of an application to federal
regulators. First United's subsidiary banks are all rated "satisfactory" for CRA
purposes.
On January 19, 1989, the Federal Reserve Board issued final guidelines to
implement risk-based capital requirements for bank holding companies. The
guidelines establish a systematic analytical framework that makes regulatory
capital requirements more sensitive to differences in risk profiles among
banking organizations, takes off-balance sheet exposures into account in
assessing capital adequacy, and minimizes disincen-
31
<PAGE> 39
tives to holding liquid, low-risk assets. The guidelines provided for phasing in
risk-based capital standards through the end of 1992, at which time the
standards became fully effective. The Company's year end 1995 Tier 1 ratio of
15.67% and Total capital ratio of 10.35% exceeds the current minimum regulatory
requirements of 4.00% and 6.00% respectively.
The table below illustrates all of the capital requirements applicable to
First United and its subsidiaries.
REGULATORY COMPARISON OF CAPITAL RATIOS(1)
<TABLE>
<CAPTION>
REGULATORY
MARCH 31, 1996 FIRST UNITED REQUIREMENTS
------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Total Capital/Total Assets.................................. 10.35% 6.00%
Primary Capital/Total Assets................................ 10.35% 5.50%
Total Risk-Based Capital.................................... 16.92% 8.00%
Tier 1 Capital.............................................. 15.67% 4.00%
Leverage Ratio.............................................. 8.90% 3.00%
</TABLE>
- ---------------
(1) Excludes unrealized gains and losses on securities available-for-sale.
First United's Subsidiary Banks are subject to a variety of regulations
concerning the maintenance of reserves against deposits, limitations on the
rates that can be charged on loans or paid on deposits, branching, restrictions
on the nature and amounts of loans and investments that can be made and limits
on daylight overdrafts
The Subsidiary Banks are limited in the amount of dividends they may
declare. Prior approval must be obtained from the appropriate regulatory
authorities before dividends can be paid by the Subsidiary Banks to First United
if the amount of adjusted capital, surplus and retained earnings is below
defined regulatory limits. As of December 31, 1995 First United's Subsidiary
Banks had available for payment of dividends without regulatory approval,
approximately $3,735,000 of undistributed earnings plus the net income earned in
1996. The Subsidiary Banks are also restricted from extending credit or making
loans to or investments in First United and certain other affiliates as defined
in the Act. Furthermore, loans and extensions of credit are subject to certain
other collateral requirements.
OFFICES
First United's executive offices are located in the offices of First
National Bank of El Dorado at Main and Washington Streets, El Dorado, Arkansas
71730.
EMPLOYEES
As of December 31, 1995, First United and its Subsidiary Banks had
approximately 578 full-time equivalent employees.
DESCRIPTION OF FIRST UNITED COMMON STOCK
The following summary of the terms of First United Common Stock does not
purport to be complete and is qualified in its entirety by reference to the 1987
Act and First United's Amended and Restated Articles of Incorporation. First
United's Amended and Restated Articles of Incorporation authorizes the issuance
of 24,000,000 shares of Common Stock, $1.00 par value. As of May 15, 1996 there
were 5,158,772 fully paid and non-assessable shares of First United Common Stock
issued and outstanding.
Each share of First United Common Stock is entitled to one vote on all
matters to be voted on by stockholders, including the right to cumulate votes
for the election of the Board of Directors, and to dividends when and if
declared from time to time by the Board of Directors. There is no right of
preemption associated with the First United Common Stock. Upon liquidation, each
share would be entitled to share pro rata in all of the assets of First United
available for distribution to the holders of Common Stock. The transfer agent
for
32
<PAGE> 40
First United Common Stock is First National Bank of El Dorado, El Dorado,
Arkansas. First United Common Stock is traded on NASDAQ-National Market System
over-the-counter under the symbol of "UNTD."
RESALE OF FIRST UNITED COMMON STOCK
The First United Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act of 1933 (the "Securities Act"), except for
shares issued to any Carlisle stockholder who may be deemed to be an "affiliate"
of Carlisle for purposes of Rule 145 under the Securities Act. Each such
stockholder has entered into an agreement with First United providing that such
affiliate will not transfer any First United Common Stock received in the merger
except in compliance with the Securities Act and will not sell or otherwise
transfer such Common Stock (or any interest therein) until financial results of
First United and its subsidiaries (including Carlisle) for at least 30 days of
combined operations are published. This restriction is expected to expire by
October 21, 1996. See also "Carlisle Bancshares, Inc. -- Resulting Ownership in
First United".
CARLISLE BANCSHARES, INC.
DESCRIPTION OF BUSINESS
Carlisle is a multi-bank holding company which owns 100% of the common
stock of Citizens Bank & Trust Company, Carlisle, Arkansas ("CBT"), Hazen First
State Bank, Hazen, Arkansas ("Hazen") and FirstBank of Arkansas, Brinkley,
Arkansas ("FirstBank") respectively. Carlisle may engage, directly or through
subsidiaries, in those activities closely related to banking which are
specifically permitted under the Bank Holding Company Act of 1956, as amended.
The subsidiaries grant commercial, installment and real estate loans to
customers principally in Lonoke County, Prairie County and Monroe County,
Arkansas. As of March 31, 1996, these subsidiaries had a total of $56,146,000 of
loans outstanding, an allowance for loan losses of $1,222,000, total deposits of
$85,777,000 and total stockholders' equity of $7,389,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis highlights the significant factors
affecting Carlisle's consolidated financial statements. For a more complete
understanding of the following discussion, reference should be made to
Carlisle's consolidated financial statements and related notes thereto presented
elsewhere in this Proxy Statement.
BALANCE SHEET ANALYSIS
Financial Condition. The total assets of Carlisle increased by $2,728,000
or 2.8% between December 31, 1995 and 1994. The increase was due primarily to
growth in the loan portfolio. At March 31, 1996 assets were $100,998,000
compared to the December 31, 1995 level of $100,794,000. Carlisle receives a
major portion of its income from earning assets which consist of interest
bearing deposits with other banks, federal funds sold, investment securities and
loans. See Tables 1 and 2 for an analysis of the average balances of
interest-earning assets and interest-bearing liabilities for the years ended
December 31, 1995 and 1994.
Carlisle's loan portfolio represents the largest component of the earning
asset base and has the largest impact on income from earning assets. The markets
in which Carlisle operates are dependent upon the agribusiness economic sector.
Due to the seasonal nature of agricultural production, the volume of loans and
investment securities fluctuate relative to the agribusiness cycle. This
accounts for the decrease in loans and increase in investment securities at
March 31, 1996 compared to the December 31, 1995 levels.
Inherent in Carlisle's loan portfolio is credit risk. Carlisle maintains an
allowance for loan losses which is evaluated for adequacy by management.
Management's methodology to determine the adequacy of the allowance considers
reviews of individual loans, recent loan loss experience, current economic
conditions and
33
<PAGE> 41
the risk characteristics of the various categories of loans. See Tables 5
through 9 for detailed information concerning the loan portfolio and the
allowance for loan losses.
Investment securities are the second largest component of the earning asset
base. The average volume of investment securities has remained relatively stable
during the three months ended March 31, 1996 and the years ended December 31,
1995 and 1994. See Tables 3 and 4 for details concerning the composition and
maturity ranges of the investment portfolio.
Deposits, the primary source of funding earning assets, increased by
$1,220,000 or 1.5% between December 31, 1994 and December 31, 1995 and by
$984,000 or 1.2% between December 31, 1995 and March 31, 1996. The majority of
the increase in deposits for the indicated periods has occurred in the
certificate of deposits category reflecting the increase in market interest
rates for such deposits. See Table 10 for a maturity analysis of certificates of
deposits in excess of $100,000 as of December 31, 1995.
During 1995, Carlisle increased the level of borrowings from the Federal
Home Loan Bank in order to provide funds for the increase in loan growth.
Liquidity and Interest Rate Sensitivity Management. Liquidity is the
ability of an institution to fund the needs of its borrowers, depositors and
creditors. Based on the maturity structure and anticipated loan and deposit
funding requirements, Carlisle anticipates that its liquidity requirements will
be met in the foreseeable future. Carlisle's management is of the opinion that
the traditional funding sources of maturing loans and investment securities,
federal funds, the base of core deposits, the seasonal borrowing line of credit
with the Federal Reserve Bank ($3 million at December 31, 1995 and 1994) will be
adequate to provide liquidity needs. See Tables 4, 6 and 10 for additional
information on certain investment, loan and time deposit maturities.
Capital. The Federal Reserve Board requires banks to maintain capital based
on "risk-adjusted" assets so that categories of assets with potentially higher
risk will require more capital backing than assets with lower risk. In addition,
banks are required to maintain capital to support, on a risk-adjusted basis,
certain off-balance sheet activities such as loan commitments.
At March 31, 1996, Carlisle's Tier 1 capital and total capital as a
percentage of total risk-adjusted assets exceeded the required minimum levels.
See Table 11 for additional information concerning Carlisle's capital ratios.
EARNINGS ANALYSIS
Net income for the first three months of 1996 was approximately $342,000,
an increase of $131,000 or 62.1% over the same period in 1995. The increase was
due primarily to a $135,000 or 16.6% increase in net interest income and a
$44,000 reduction in FDIC and State Bank Department insurance assessments. For
the years ended December 31, 1995, 1994, and 1993, net income was approximately
$1,142,000, $873,000, and $746,000, respectively. The annualized return on
average assets and return on average equity for the first three months of 1996
was 1.3% and 19.0%, respectively, compared to 0.9% and 14.3% for the first three
months of 1995. For the years ended December 31, 1995, 1994 and 1993, the return
on average assets was 1.1%, 0.9%, and 1.4%, respectively, while the return on
average equity was 17.8%, 16.2%, and 16.3% respectively. As more fully discussed
in Note 2 of Notes to Consolidated Financial Statements included elsewhere
herein, Carlisle acquired Hazen and FirstBank during 1994. The effect of these
acquisitions must be considered when making comparisons of 1994 operating
results and ratios with other periods.
The primary components of total income and expense which affect net income
are net interest income, provision for loan losses, non-interest income,
non-interest expense and the provision for income taxes. Significant factors
affecting these categories are presented below.
Net Interest Income. Net interest income for the first three months of 1996
was $948,000, a 16.6% increase over the same period in 1995. The primary reason
for the increase was an increase of approximately .5% in the yield on average
loans during the period. Interest on loans for the three months ended March 31,
34
<PAGE> 42
1996 increased by $238,000 or 22.1% compared to the corresponding period of
1995. As a percentage of total assets at March 31, 1996, loans totaled 54.4%
while investment securities were 36.3%.
For the years ended December 31, 1995, 1994, and 1993, net interest income
was $3,584,000, $3,093,000 and $2,107,000, respectively. The increase during
1995 compared to 1994 was due primarily to the increase in the net yield on
interest earning assets. The 1994 increase compared to 1993 was due primarily to
the increase in the volume of interest-earning assets resulting from the Hazen
and FirstBank acquisitions. See Tables 1 and 2 for more detailed information
regarding rate and volume factors which affected net interest income during the
three-year period ended December 31, 1995.
Provision for Loan Losses. For the first three months of 1996 Carlisle
provided $17,000 for loan losses compared to $11,000 for the comparable period
in 1995. The provision for loan losses was $60,000, $65,000 and $180,000 for the
years ended December 31, 1995, 1994 and 1993.
Net charge-offs on loans were $90,000 in 1995, $55,000 in 1994 and $1,000
in 1993. For the three months ended March 31, 1996, net charge-offs totaled
$10,000. The allowance for loan losses was $1,222,000 or 2.2% of loans at March
31, 1996, compared to $1,215,000 or 2.1% at December 31, 1995, and $1,245,000 or
2.3% at December 31, 1994. See Tables 7, 8 and 9 for more information regarding
loan quality and the allowance for loan losses.
Non-Interest Income. Total non-interest income for the three months ended
March 31, 1996 and 1995, was $183,000 and $164,000, respectively. Total
non-interest income for the year ended December 31, 1995 was $750,000, as
compared to $629,000 for 1994 and $481,000 in 1993. The increase in 1995 versus
1994 and in 1994 versus 1993 was primarily due to the effects of the 1994
acquisitions of Hazen and FirstBank.
Non-Interest Expense. Total non-interest expense for the three months ended
March 31, 1996 and 1995 was $649,000 and $678,000, respectively. The decrease
was due primarily to a decrease in 1996 of $44,000 in FDIC and State Bank
Department insurance assessments.
Total non-interest expense for the year ended December 31, 1995 was
$2,617,000 as compared to $2,443,000 for 1994 and $1,299,000 in 1993. The
increases for each of the years 1995 and 1994 were primarily due to the effects
of the acquisitions of Hazen and FirstBank during 1994.
Provision for Income Taxes. Income tax expense for the three months ended
March 31, 1996 and 1995 was $123,000 and $77,000, respectively, or effective tax
rates of 26.5% and 26.6%, respectively. Income tax expense for the years ended
December 31, 1995, 1994 and 1993 was $515,000, $341,000 and $362,000,
respectively. Effective tax rates were 31.1%, 28.1%, and 32.7% for 1995, 1994,
1993, respectively. Note 12 of Notes to the Consolidated Financial Statements
provides further details of the applicable income tax expense for 1995, 1994 and
1993.
REGULATORY ISSUES
Pursuant to the Interest Rate Control Amendment to the Constitution of the
State of Arkansas, "consumer loans and credit sales" have a maximum limitation
of 17% per annum and all "general loans" have a maximum limitation of 5% over
the Federal Reserve Discount Rate in effect at the time the loans are made. The
Arkansas Supreme Court has determined that "consumer loans and credit sales" are
"general loans" and are subject to the limitation of 5% over the Federal Reserve
Discount Rate as well as a maximum limitation of 17% per annum. As a general
rule, Carlisle is required to comply with the Arkansas usury laws on loans made
within the State of Arkansas.
ACCOUNTING STANDARDS
During 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". The adoption of Statement No. 121 (required in 1996),
which establishes accounting standards for the impairment of long-lived assets
35
<PAGE> 43
and goodwill related to assets to be held and used, and long-lived assets to be
disposed of, is not expected to have a significant impact on Carlisle's
consolidated financial statements.
STATISTICAL DISCLOSURES
CARLISLE BANCSHARES, INC.
STATISTICAL DISCLOSURES
TABLE 1 -- COMPARATIVE AVERAGE BALANCES -- YIELDS AND RATES ($ in thousands)
The table below shows the average balances of the assets and liabilities of
Carlisle, the interest income or expense associated with those assets and
liabilities, and the computed yield or rate (annualized in 1994 for the
acquisition of FirstBank) based upon the interest income or expense for each of
the last two years.
<TABLE>
<CAPTION>
1995 1994
---------------------------- ---------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans...................................... $ 56,238 $ 5,178 9.21% $54,108 $ 4,039 8.19%
Investment securities:
Taxable................................. 34,657 2,010 5.80% 34,820 1,568 4.82%
Tax-Exempt.............................. 1,775 119 6.70% 2,066 121 5.86%
Federal funds sold......................... 1,089 60 5.51% 2,259 58 2.97%
Other...................................... 295 11 3.73% 362 12 3.59%
------- ------ ------- ------
Total interest-earning assets................ 94,054 7,378 7.84% 93,615 5,798 6.74%
Non-interest-earning assets:
Cash and due from banks.................... 3,290 3,925
Other assets............................... 4,562 2,029
Allowance for loan losses.................. (1,226) (1,242)
------- -------
Total.............................. $100,680 $98,327
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits............................ $ 26,159 $ 676 2.58% $27,753 $ 633 2.50%
Savings deposits........................... 3,810 96 2.52% 4,459 100 2.44%
Time deposits.............................. 43,409 2,311 5.32% 41,746 1,539 4.01%
Federal funds purchased(1)................. 2,511 150 5.97% 1,483 59 4.11%
Note payable............................... 3,870 342 8.84% 3,195 262 8.20%
FHLB advances.............................. 2,315 155 6.70% 1,704 103 6.75%
Other...................................... 1,003 64 6.38% 238 9 4.20%
------- ------ ------- ------
Total interest-bearing liabilities........... 83,077 3,794 4.57% 80,578 2,705 3.63%
Non-interest-bearing liabilities:
Demand deposits............................ 10,269 10,764
Other...................................... 916 1,597
------- -------
11,185 12,361
Shareholders' equity......................... 6,418 5,388
------- -------
Total.............................. $100,680 $98,327
======= =======
Net interest earnings........................ $ 3,584 $ 3,093
====== ======
Net yield on interest-earning assets......... 3.81% 3.62%
</TABLE>
36
<PAGE> 44
- ---------------
(1) The amount of federal funds purchased at December 31, 1995 was $585,000 and
the weighted average interest rate thereon was 5.36%. The maximum amount of
such borrowings outstanding at any month-end during 1995 was $5,345,000.
Non-accruing loans have been included in the average loan balances and
interest collected prior to these loans having been placed on non-accrual has
been included in interest income.
TABLE 2 -- VOLUME AND YIELD/RATE VARIANCE ANALYSIS
The following table shows the change from year to year for each component
of the net interest margin separated into the amount generated by volume changes
and the amount generated by changes in the yield or rate ($ in thousands):
<TABLE>
<CAPTION>
1995 COMPARED TO 1994 1994 COMPARED TO 1993
CHANGE DUE TO: CHANGE DUE TO:
-------------------------- --------------------------
YIELD/ YIELD/
VOLUME RATE NET VOLUME RATE NET
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNED ON:
Loans...................................... $163 $ 976 $1,139 $1,787 $ (410) $1,377
Investment securities:
Taxable.................................. (7) 449 442 887 (140) 747
Tax-exempt............................... (18) 16 (2) (47) 24 (23)
Federal funds sold....................... (41) 43 2 30 (6) 24
Other.................................... (2) 1 (1) 8 (1) 7
------ ------ ------ ------ ------ ------
Total interest-earning assets.... $ 95 $1,485 $1,580 $2,665 $ (533) $2,132
====== ====== ====== ====== ===== ======
INTEREST PAID ON:
Interest-bearing demand deposits........... $(32) $ 75 $ 43 $ 290 $ (37) $ 253
Savings deposits........................... (16) 12 (4) 49 (2) 47
Time deposits.............................. 64 708 772 665 (41) 624
Federal funds purchased.................... 53 38 91 58 0 58
Note payable............................... 58 22 80 62 62 124
FHLB advances.............................. 40 12 52 47 (4) 43
Other...................................... 45 10 55 (2) (1) (3)
------ ------ ------ ------ ------ ------
Total interest-bearing
liabilities.................... $212 $ 877 $1,089 $1,169 $ (23) $1,146
====== ====== ====== ====== ===== ======
</TABLE>
The change in interest due to both volume and yield/rate has been allocated
to change due to volume and change due to yield/rate in proportion to the
absolute value of the change of each. The balances of nonaccrual loans and
related income recognized have been included for purposes of these computations.
37
<PAGE> 45
TABLE 3 -- INVESTMENT PORTFOLIO
The table below indicates carrying values of investment securities by type
at year-end for each of the last two years ($ in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
HELD-TO-MATURITY
U.S. Treasury and U.S. Government agencies............................... $20,949 $25,159
Obligations of states and political subdivisions......................... 1,740 1,986
Other securities......................................................... 638 791
------- -------
Total Debt Securities.......................................... 23,327 27,936
Equity Securities........................................................ 0 0
------- -------
Total Held-to-Maturity Investment Securities................... $23,327 $27,936
======= =======
AVAILABLE-FOR-SALE
U.S. Treasury and U.S. Government agencies............................... $ 9,480 $ 8,237
Obligations of states and political subdivisions......................... 133 204
Other securities......................................................... 0 0
------- -------
Total Debt Securities.......................................... 9,613 8,441
Equity Securities........................................................ 732 13
------- -------
Total Available-for-Sale Investment Securities................. $10,345 $ 8,454
======= =======
</TABLE>
TABLE 4 -- MATURITY DISTRIBUTION AND YIELDS OF INVESTMENT PORTFOLIO
The following table details the maturities of investment securities at
December 31, 1995 and the weighted average yield for each range of maturities ($
in thousands):
<TABLE>
<CAPTION>
MATURING
-----------------------------------------------------------------------------------------
AFTER ONE AFTER FIVE AFTER
WITHIN BUT WITHIN BUT WITHIN TEN
ONE YEAR YIELD FIVE YEARS YIELD TEN YEARS YIELD YEARS YIELD TOTAL
-------- ----- ---------- ----- ---------- ----- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY
U.S. Treasury and U.S. Government
Agencies......................... $12,615 5.84 % $6,102 6.18 % $1,216 7.32 % $1,016 7.71 % $20,949
Obligations of states and political
securities....................... 195 5.98 % 1,150 6.04 % 295 5.61 % 100 6.42 % 1,740
Other securities................... 102 5.45 % 451 7.59 % 0 0 % 85 9.93 % 638
------- ------ ------ ------ -------
Total Debt Securities...... $12,912 5.84 % $7,703 6.24 % $1,511 6.99 % $1,201 7.76 % 23,327
======= ====== ====== ======
Equity securities.................. 0
-------
Total Held-to-Maturity
Investment Securities.... $23,327
=======
AVAILABLE-FOR-SALE
U.S. Treasury and U.S. Government
Agencies......................... $ 2,380 5.01 % $7,087 4.86 % $ 13 9.26 % $ 0 0 % $ 9,480
Obligations of states and political
subdivisions..................... 6 0 % 0 0 % 0 0 % 127 7.73 % 133
Other securities................... 0 0 % 0 0 % 0 0 % 0 0 % 0
------- ------ ------ ------ -------
Total Debt Securities...... $ 2,386 $7,087 $ 13 $ 127 9,613
======= ====== ====== ======
Equity securities.................. 732
-------
Total Available-for-Sale
Investment Securities.... $10,345
=======
</TABLE>
38
<PAGE> 46
At December 31, 1995 there were no securities in the portfolio of any one
issuer with a carrying value exceeding ten percent of total stockholders'
equity. At December 31, 1995, Carlisle held $18,888 of municipal bonds which are
in default. The accrual of interest income on the bonds has been discontinued.
TABLE 5 -- COMPOSITION OF THE LOAN PORTFOLIO ($ in thousands)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Commercial, Financial and Agricultural................................... $24,263 $27,063
Real Estate -- Construction.............................................. 2,370 1,473
Real Estate -- Mortgage.................................................. 25,362 21,463
Consumer Loans........................................................... 6,173 3,765
------- -------
Total Loans.................................................... $58,168 $53,764
======= =======
</TABLE>
TABLE 6 -- LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
($ in thousands):
<TABLE>
<CAPTION>
MATURING
----------------------------------------
ONE YEAR
WITHIN ONE THROUGH AFTER
YEAR OR LESS FIVE YEARS FIVE YEARS TOTAL
------------ ---------- ---------- -------
<S> <C> <C> <C> <C>
Total Loans(1)..................................... $ 32,449 $ 21,107 $4,612 $58,168
======= ======= ====== =======
<CAPTION>
MATURING
-----------------------
ONE YEAR
THROUGH AFTER
FIVE YEARS FIVE YEARS
------------------------
<S> <C> <C> <C> <C>
Above loans due after one year which have:
Predetermined interest rates..................... $ 20,228 $4,612
Floating interest rates.......................... 879 0
------- ------
$ 21,107 $4,612
======= ======
</TABLE>
- ---------------
(1) The maturity information by loan type was not available.
TABLE 7 -- NON-PERFORMING LOANS AND PAST DUE LOANS
The table below shows Carlisle's non-performing loans and past due loans at
the end of each of the last two years ($ in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1995 1994
---- ----
<S> <C> <C>
Loans accounted for on a nonaccrual basis............................. $543 $645
Restructured loans.................................................... 0 0
---- ----
Non-performing loans................................................ $543 $645
==== ====
Accruing loans past due 90 days or more............................... $193 $ 0
==== ====
</TABLE>
If interest on nonaccrual loans had been accrued for 1995, such income
would not have been material. The interest which was included in earnings for
1995 for nonaccrual loans is immaterial.
At December 31, 1995, Carlisle had no loan concentrations greater than ten
percent (10%) of total loans except as shown in Table 5.
Carlisle does not accrue interest on any loan for which payment of interest
or principal is not expected, on any loan which is seriously delinquent unless
the obligation is both well secured and in the process of collection, or on any
loan that is maintained on a cash basis due to deterioration in the financial
condition of
39
<PAGE> 47
the borrower. Management considers a debt to be "well secured" if it is secured
by collateral in the form of liens on or pledges of real or personal property
that have a realizable value sufficient to discharge the debt in full or by the
guaranty of a financially responsible party. A debt is considered to be "in
process of collection" if, based on a probable specific event, it is expected
that the loan will be repaid or brought current. At December 31, 1995, Carlisle
has no loans which are not included in the non-performing or past due categories
above about which management has serious doubts as to their collectibility.
TABLE 8 -- ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The table below summarizes Carlisle's loan loss experience for each of the
last two years ($ in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1995 1994
------ ------
<S> <C> <C>
Amount of loan loss reserve at beginning of period................. $1,245 $ 824
Loans charged off:
Real Estate -- Mortgage.......................................... (88) (66)
Commercial, Financial and Agricultural........................... (33) (9)
Consumer......................................................... (11) (17)
------ ------
Total charge-offs........................................ (132) (92)
Recoveries on loans previously charged off:
Real Estate -- Mortgage.......................................... 5 6
Commercial, Financial and Agricultural........................... 27 16
Consumer......................................................... 10 14
------ ------
Total recoveries......................................... 42 36
------ ------
Net charge-offs.................................................... (90) (56)
Additions to allowance charged to operating expense(1)............. 60 65
------ ------
Allowances of acquired subsidiaries................................ 0 412
------ ------
Amount of loan loss reserve at end of period....................... $1,215 $1,245
====== ======
Percentage of net charge-offs during period to average loans
outstanding during the period.................................... 0.16% 0.10%
====== ======
</TABLE>
- ---------------
(1) The amount charged to operations and the related balance in the allowance
for loan losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including, but not
limited to, general economic conditions, loan portfolio composition, prior
loan loss experience, and management's reviews of individual loans.
TABLE 9 -- ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table is a summary by allocation category of Carlisle's
allowance for loan losses ($ in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
% LOANS % LOANS
IN EACH IN EACH
1995 CATEGORY 1994 CATEGORY
------ -------- ------ --------
<S> <C> <C> <C> <C>
Commercial, Financial and Agricultural............ $ 680 42% $ 697 50%
Real Estate -- Construction....................... 12 4% 8 3%
Real Estate -- Mortgage........................... 243 44% 251 40%
Consumer.......................................... 50 10% 49 7%
Unallocated....................................... 230 240
------ ------
$1,215 $1,245
====== ======
</TABLE>
40
<PAGE> 48
TABLE 10 -- TIME DEPOSITS OF $100,000 OR MORE
The table below shows maturities on outstanding time deposits of $100,000
or more at December 31, 1995 ($ in thousands):
<TABLE>
<CAPTION>
CERTIFICATES
OF DEPOSIT
------------
<S> <C>
3 months or less........................................................ $ 4,444
Over 3 months through 6 months.......................................... 4,326
Over 6 months through 12 months......................................... 2,286
Over 12 months.......................................................... 400
-------
$ 11,456
=======
</TABLE>
TABLE 11 -- RETURN ON EQUITY AND ASSETS
The following table shows consolidated operating and equity ratios of
Carlisle for each of the last two years:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1995 1994
----- -----
<S> <C> <C>
Return on assets..................................................... 1.13% .89%
Return on equity..................................................... 17.79% 16.20%
Dividend payout ratio................................................ 12.12% 21.77%
Equity to assets ratio............................................... 6.37% 5.48%
</TABLE>
41
<PAGE> 49
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of Carlisle will be dissolved and positions held by
executive officers of Carlisle will no longer exist upon the consummation of the
Merger. The present directors and executive officers of the Carlisle
subsidiaries are expected to remain in their respective positions with CBT,
Hazen and FirstBank, except for Daniel C. Horton, Barry L. McKuin and M. S.
Woodruff who are expected to resign their director and officer positions
indicated below. Upon consummation of the Merger Robert M. Koch, President and
Chief Executive Officer of First United's subsidiary First Stuttgart Bank &
Trust Company, will be elected to the boards of directors of the Carlisle
subsidiaries and will be elected President and Chief Executive Officer of CBT
and Hazen to replace Mr. Horton who previously held these positions. At this
time none of the directors or executive officers of Carlisle are expected to be
on the Board of Directors or an executive officer of First United after
consummation of the Merger. The directors of Carlisle and its subsidiaries are
set forth below:
DIRECTORS AND EXECUTIVE OFFICERS OF CARLISLE AND ITS SUBSIDIARIES
<TABLE>
<CAPTION>
SHARES OF
CARLISLE COMMON
STOCK OWNED
BENEFICIALLY AS
OF MAY 15, 1996
PRINCIPAL OCCUPATION, AND PERCENT OF
DIRECTOR(1) EXECUTIVE OFFICER POSITION CLASS IF MORE
NAME AGE SINCE AND DIRECTORSHIP THAN 1%
- --------------------------- --- ----------- ------------------------------ -----------------
<S> <C> <C> <C> <C> <C>
Harold Hardwick 48 1994 Banker; Director of Carlisle; 3,486 (2.5%)
President and Director of
FirstBank
Tommy Hillman 60 1994 President, Winrock Farms, 15,072 (10.8%)
Inc.; Director of Carlisle and
the Carlisle Subsidiaries
Daniel C. Horton 55 1985 Bank Consultant and Banker; 11,950 (8.6%)
Director of Carlisle and the
Carlisle Subsidiaries;
President and CEO of CBT and
Hazen; Chairman of FirstBank
Barry L. McKuin 51 1985 Financial Manager; Director 10,450 (7.5%)
and President of Carlisle;
Director of the Carlisle
Subsidiaries
Ben Myers 51 1994 Pharmacist; Director of 619
FirstBank
Robert Petter 60 1983 Farmer; Director of Hazen 248
Winthrop P. Rockefeller 47 1985 Chairman, Winrock Farms, Inc.; 84,853 (61%)
Director and Chairman of
Carlisle
Bill J. Shoup 59 1980 Executive Vice President CBT; 50
Director of CBT
Randall Snider 40 1986 Farmer; Director of CBT 50
Dewey Snowden 66 1972 Retired School Superintendent; 1
Director of FirstBank
Ralph Wilson 63 1994 Dr. of Optometry; Director of 619
FirstBank
M. Gaines Young, Jr. 61 1994 Senior Vice President CBT; 50
Director of CBT
M.S. Woodruff 68 1985 Retired Banker; Director of 10,450 (7.5%)
Carlisle and CBT; Chairman of
CBT
</TABLE>
- ---------------
(1) This column represents the year in which the directorship commenced. If a
person serves as director for both Carlisle and one more of its
subsidiaries, the year disclosed reflects the date the directorship in
Carlisle commenced.
42
<PAGE> 50
During 1995, the Board of Directors of Carlisle held one meeting and all
the incumbent directors then in office were in attendance. The Board of
Directors does not have a nominating, compensation or audit committee.
TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of Carlisle and its subsidiaries, their
associates and members of their immediate families were customers of and had
transactions including loans and commitments to lend with subsidiaries of
Carlisle in the ordinary course of business during 1995. All such loans and
commitments were made by the subsidiaries on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features. Similar
transactions may be expected to take place in the ordinary course of business in
the future. On March 31, 1996, the aggregate of these related party loans was
approximately $717,000 or approximately 1.5% of total loans outstanding of the
subsidiaries.
PRINCIPAL STOCKHOLDERS OF CARLISLE
All persons who as of May 15, 1996, owned of record or beneficially more
than five (5%) of the Carlisle Common Stock and the number of shares owned
beneficially by each of them are reflected in the foregoing table.
All directors and executive officers of Carlisle and its subsidiaries as a
group (13 persons) and members of their immediate families and associates as of
May 15, 1996 owned 137,898 shares or 99.1% of the outstanding shares of Carlisle
Common Stock. No director or executive officer of Carlisle owns any shares of
First United Common Stock, except that Tommy Hillman owns 7,032 shares or less
than one percent (1%) of the First United Common Stock. Neither First United nor
any of its subsidiaries nor any director or executive officer of First United
owns any shares of Carlisle Common Stock.
RESULTING OWNERSHIP IN FIRST UNITED
No stockholder of Carlisle will own five percent (5%) or more of First
United's outstanding common stock subsequent to the Merger.
COMPETITION
The banking subsidiaries of Carlisle compete actively with national and
state banks, savings and loan associations, securities dealers, mortgage
bankers, finance companies and insurance companies.
LITIGATION
There is no material pending litigation in which Carlisle or its
subsidiaries is a party.
OFFICES
Carlisle's executive offices are located at 300 Spring Building, Suite
1010, Little Rock, Arkansas 72201.
EMPLOYEES
As of December 31, 1995, Carlisle and its subsidiaries had 53 employees, 26
of whom are located in Carlisle, 12 of whom are located in Hazen, and 15 of whom
are located in Brinkley.
43
<PAGE> 51
DESCRIPTION OF CARLISLE STOCK
Carlisle has one class of common stock issued and outstanding. As of May
15, 1996, Carlisle had 200,000 shares of authorized common stock, $1.00 par
value, and 139,142 shares outstanding and 16,900 shares are held in treasury.
Currently, approximately 23 stockholders own shares of the common stock of
Carlisle.
<TABLE>
<CAPTION>
DIVIDENDS PAID PER SHARE
-------------------------
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Common Stock........................................ $1.65 $1.40 $1.00
</TABLE>
COMPARISON OF RIGHTS OF HOLDERS OF CARLISLE COMMON STOCK AND FIRST UNITED COMMON
STOCK
Carlisle is a corporation organized and existing under the laws of the
State of Arkansas, including the Arkansas Business Corporation Act of 1965.
First United is a corporation organized and existing under the laws of the State
of Arkansas, including the Arkansas Business Corporation Act of 1987. Holders of
Carlisle common stock have the rights, privileges and duties provided by the
1965 Act, while the holders of First United Common Stock have the rights,
privileges and duties provided by the 1987 Act. For a detailed discussion of all
material differences between the rights of security holders of Carlisle, and the
rights of security holders of First United, see "Election by Carlisle
Stockholders under the 1987 Act -- Result of Election."
Two-thirds of the outstanding shares of Carlisle common stock may authorize
the Merger pursuant to the 1965 Act. A simple majority of the outstanding shares
of common stockholders is required to authorize the proposed merger pursuant to
the 1987 Act. However, the Articles of Incorporation of First United provide
that two-thirds of the outstanding shares of First United Common Stock must
authorize the Merger.
The holders of Carlisle common stock and First United Common Stock are both
entitled to cumulative voting for directors. Pursuant to First United's By-Laws,
the number of directors of the corporation may not be less than three nor more
than twenty-five. The Carlisle By-Laws require that the number of directors may
not be less than three nor more than ten. Furthermore, holders of Carlisle
Common Stock and First United Common Stock do not have preemptive rights with
respect to issuance of additional securities.
Both Carlisle and First United have corporate power to indemnify their
officers and directors with respect to certain liabilities. Under the 1987 Act,
the ability to indemnify officers an directors with respect to liabilities
incurred by them in their conduct of the business of the corporation is broader
than under the 1965 Act. Such power is limited, however, by applicable federal
laws and regulations including federal banking laws and regulations and the
applicable state law. See "Proposed Amendments To First United's Articles of
Incorporation."
First United's Articles of Incorporation contain a paragraph that may have
the effect of operating as an antitakeover provision. Paragraph SEVENTH contains
a super-majority voting requirement of two-thirds ( 2/3) of all shares issued
and outstanding that are entitled to vote for approval of (1) a merger or share
exchange with another corporation unless such merger or share exchange can be
effected under the authority of state law without shareholder approval, (2) a
transaction to sell, exchange, lease or otherwise dispose of all, or
substantially all, of the corporation's assets and property except where
accomplished in the usual and regular course of business, (3) a transaction
effecting a dissolution or liquidation of the corporation, or (4) any amendment
of the Articles of Incorporation. The Carlisle Articles of Incorporation do not
contain a like provision. However, under the 1965 Act, Carlisle must have a
two-thirds ( 2/3) majority vote of all votes entitled to be cast to adopt a
merger. See "Proposed Amendments To First United's Articles of Incorporation."
44
<PAGE> 52
PROPOSED AMENDMENTS TO FIRST UNITED'S ARTICLES OF INCORPORATION
PROPOSALS INDEPENDENT OF THE MERGER AND EACH OTHER
The adoption or rejection of one or both proposed amendments is not related
to the Merger and will not have any effect on the Merger and approval or
disapproval of the Merger will not have any effect on the proposed amendments.
VOTE REQUIRED
Each proposed amendment must be approved by the affirmative vote of
two-thirds of the outstanding shares of First United Common Stock to become
effective.
PROPOSED AMENDMENT TO ARTICLE SEVENTH
Arkansas law would permit the Board of Directors to approve certain mergers
and share exchanges without first obtaining stockholder approval if the number
of shares of First United common stock to be issued in the transaction does not
exceed twenty percent (20%) of the number of shares of common stock issued and
outstanding immediately prior to consummation of the transaction. Article
Seventh of the First United Articles of Incorporation requires that for any such
merger or share exchange to be effected the stockholders must approve the
transaction by a two-thirds ( 2/3) vote of all shares issued and outstanding and
entitled to vote.
The proposed amendment to Article Seventh would allow the Board of
Directors to approve mergers or share exchanges without a stockholders vote if
(i) the number of shares to be issued in the transaction does not exceed twenty
percent (20%) of the number of shares issued and outstanding immediately prior
to consummation of the transaction and (ii) the total number of shares issued
during any consecutive twelve month period in connection with such transactions
does not exceed twenty percent (20%) of the number of shares of common stock
outstanding immediately prior to consummation of the transaction.
The proposed amendment would retain the present requirement of stockholder
approval by two-thirds of all shares issued and outstanding and entitled to vote
for (i) any transaction pursuant to which a purchaser would acquire control of
First United, (ii) any merger or share exchange transaction in which the number
of shares of First United Common Stock to be issued exceeds the levels described
above, (iii) any sale, exchange, lease or other disposition of all or
substantially all of First United's assets and property except when accompanied
in the usual and regular course of business, (iv) any dissolution or liquidation
of First United or (v) any amendment to the Articles of Incorporation.
REASON FOR THE PROPOSED AMENDMENT TO ARTICLE SEVENTH
The Board of Directors anticipates that First United will in the future
acquire additional banking subsidiaries in exchange for First United Common
Stock. The proposed amendment would provide for a more efficient assimilation of
banks into the First United system through mergers and share exchanges. At the
present time it cannot acquire additional banking subsidiaries without holding a
special stockholders meeting. It is estimated that the cost of such a special
stockholders meeting is $10,000. The Board of Directors believes that the
interest of the stockholders would be better served by allowing such
transactions when the number of shares being issued does not exceed the
percentages described above. Such transactions would be permitted under Arkansas
law but for the present provision of Article Seventh.
If the proposed amendment were in effect at the present time then a First
United Stockholders vote on the Carlisle merger would not be required. The
number of shares of First United Common Stock to be issued if that transaction
is approved will be approximately 500,000, which is approximately six and
one-half percent (6.5%) of the number of First United shares outstanding.
ARTICLE SEVENTH PRESENTLY IN EFFECT
SEVENTH. Except upon the approval of two-thirds ( 2/3) of all shares issued
and outstanding that are entitled to vote on all the following transactions, the
corporation shall not (i) effect a merger or share
45
<PAGE> 53
exchange with another corporation provided, however, that mergers authorized by
the Ark. Code Ann 4-27-1104 (as the same may be amended from time to time) may
be effected without shareholder approval, (ii) sell, exchange, lease, or
otherwise dispose of all, or substantially all, of the corporation's assets and
property except when accomplished in the usual and regular course of business of
the corporation, (iii) effect a dissolution or liquidation of the corporation,
or (iv) amend these Articles of Incorporation.
PROPOSED ARTICLE SEVENTH
SEVENTH: Except upon the approval of two-thirds ( 2/3) of all shares issued
and outstanding that are entitled to vote at a duly called shareholders
meeting, the corporation shall not:
(i) effect any transaction pursuant to which a purchaser would acquire
control of the corporation, whether by merger, consolidation, purchase of
stock or otherwise,
(ii) effect a merger or share exchange with another entity pursuant to
which the corporation would issue shares of common stock in an amount
greater than twenty percent (20%) of the number of shares of common stock
issued and outstanding immediately prior to consummation of the
transaction,
(iii) effect a merger or share exchange with another entity pursuant
to which the corporation would issue shares of common stock in an amount
that would cause the total number of shares issued during any consecutive
twelve month period in connection with such transactions to exceed twenty
percent (20%) of the number of shares of common stock issued and
outstanding immediately prior to consummation of the transaction,
(iv) sell, exchange, lease or otherwise dispose of all or
substantially all of the corporation's assets and property other than in
the usual and regular course of business of the corporation,
(v) effect a dissolution or liquidation of the corporation, or
(vi) amend these Articles of Incorporation.
PROPOSED AMENDMENT TO ARTICLE TENTH
Arkansas law would permit the Board of Directors to increase the number of
director positions by up to thirty percent (30%) of the number elected by the
stockholders within the range allowed by and unless restricted by the Articles
of Incorporation. First United's Articles of Incorporation provide that the
number of directors shall not exceed twenty-five (25) and shall be determined
only by the stockholders. First United's Bylaws provide that the number of
directors shall not be less than three (3).
The proposed amendment to Article Tenth would allow the Board of Directors
to increase or decrease the number of directors by no more than thirty percent
(30%) of the number last determined by the stockholders and to fill new
positions created. The proposed amendment would retain the maximum number of
twenty-five (25) directors and fix the minimum number at three (3). The
stockholders will continue to elect directors annually.
REASON FOR THE PROPOSED AMENDMENT
The Board of Directors believes that it is desirable that the Board have
the flexibility to add directors within the proposed limits as permitted by
Arkansas law.
ARTICLE TENTH PRESENTLY IN EFFECT
TENTH. The number of directors that constitute the Board of Directors of
the corporation shall not exceed twenty-five (25). The number of directors shall
be determined by the stockholders at each annual meeting or may be determined at
any special meeting, and the number of directors so determined shall be
applicable until the next meeting of stockholders at which directors are elected
and a new number of directors determined.
46
<PAGE> 54
PROPOSED ARTICLE TENTH
TENTH. The number of directors that constitutes the Board of Directors of
the corporation shall not exceed twenty-five (25). The number of directors
shall be determined by the stockholders at each annual meeting or may be
determined at any special meeting. The Board of Directors may increase or
decrease by thirty percent (30%) or less the number of directors last fixed
by the stockholders, provided that the number of directors shall not be
less than three (3) nor more than twenty-five (25). The Board of Directors
may fill a vacancy created by the Board of Directors under this Article
Tenth.
LEGAL MATTERS AND EXPERTS
LEGAL OPINIONS
The legality of the First United Common Stock to be issued after the Merger
has been consummated by and between First United and Carlisle will be passed
upon for First United by Ivester, Skinner & Camp, P.A., 111 Center Street, Suite
1200, Little Rock, Arkansas 72201. Certain tax matters relating to the Merger
will be passed upon by Shults, Ray & Kurrus, 200 West Capitol Avenue, Suite
1600, Little Rock, Arkansas 72201.
EXPERTS
The consolidated financial statements of First United Bancshares, Inc. as
of December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995 incorporated by reference in this Proxy Statement have
been audited by Arthur Andersen LLP, independent public accountants as set forth
in their report. In that report, that firm states that with respect to the
financial statements for the years-ended December 31, 1993 of InvestArk
Bankshares, Inc., a company acquired during 1994 in a transaction accounted for
as a pooling-of-interests, its opinion is based on the report of other
independent public accountants, namely Martin & Company. The financial
statements referred to above have been incorporated by reference herein in
reliance upon the authority of said firms as experts in accounting and auditing.
The consolidated financial statements of Carlisle Bancshares, Inc. at
December 31, 1995 and for the year then ended, appearing in this Proxy Statement
and Registration Statement, have been audited by Kemp & Company, independent
auditors, and at December 31, 1994, and for each of the two years in the period
ended December 31, 1994, by Ernst & Young LLP, independent auditors, as set
forth in their respective reports thereon appearing elsewhere herein, and are
included in reliance upon such reports given upon the authority of such firms as
experts in accounting and auditing.
GENERAL
As of the date of this Proxy Statement, the board of directors of First
United or Carlisle does not intend to present, and has not been informed that
another person intends to present, any matter for action at either special
meeting of stockholders other than as discussed in this Proxy Statement. If any
other matters properly come before the meeting, it is intended that the holders
of the proxies will act in accordance with their best judgment.
47
<PAGE> 55
INDEX TO CARLISLE FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Financial Statements
Reports of Independent Auditors..................................................... F-2
Consolidated Balance Sheets -- December 31, 1995 and 1994........................... F-4
Consolidated Statements of Income -- Years ended December 31, 1995, 1994 and 1993... F-5
Consolidated Statements of Shareholders' Equity -- Years ended December 31, 1995,
1994 and 1993.................................................................... F-6
Consolidated Statements of Cash Flows -- Years ended December 31, 1995, 1994 and
1993............................................................................. F-7
Notes to Financial Statements -- December 31, 1995.................................. F-8
Financial Statements
Consolidated Balance Sheets -- March 31, 1996 (Unaudited) and December 31, 1995..... F-21
Consolidated Statements of Income (Unaudited) -- Three Months ended March 31, 1996
and 1995......................................................................... F-22
Consolidated Statements of Shareholders' Equity (Unaudited) -- Three Months Ended
March 31, 1996................................................................... F-23
Consolidated Statements of Cash Flows (Unaudited) -- Three Months ended March 31,
1996 and 1995.................................................................... F-24
Notes to Financial Statements (Unaudited) -- March 31, 1996......................... F-25
</TABLE>
F-1
<PAGE> 56
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Carlisle Bancshares, Inc.
We have audited the accompanying consolidated balance sheet of Carlisle
Bancshares, Inc. and subsidiaries as of December 31, 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year 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 accompanying 1995 financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Carlisle Bancshares, Inc. and subsidiaries, as of December 31, 1995,
and the consolidated results of their operations and their cash flows for the
year then ended in conformity with generally accepted accounting principles.
KEMP & COMPANY
/s/ KEMP & COMPANY
-------------------------
Little Rock, Arkansas
January 26, 1996
F-2
<PAGE> 57
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Carlisle Bancshares, Inc.
We have audited the accompanying consolidated balance sheet of Carlisle
Bancshares, Inc. and subsidiaries as of December 31, 1994, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the two years in the period ended December 31, 1994. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Carlisle
Bancshares, Inc. and subsidiaries at December 31, 1994, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
/s/ ERNST & YOUNG LLP
-------------------------
Little Rock, Arkansas
February 14, 1995
F-3
<PAGE> 58
CARLISLE BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash and due from banks (Note 3)................................. $ 4,214,843 $ 3,819,849
Federal funds sold............................................... 1,285,000
------------ -----------
Cash and cash equivalents...................................... 5,499,843 3,819,849
Interest bearing deposits in banks............................... 195,000
Investment securities (Note 4):
Held-to-maturity securities (approximate fair values of
$23,530,174 in 1995 and $27,326,834 in 1994)................ 23,327,187 27,936,266
Available-for-sale securities.................................. 10,345,256 8,454,171
------------ -----------
33,672,443 36,390,437
Loans -- net (Notes 5, 9, 10, 13 and 14)......................... 56,952,622 52,518,396
Premises and equipment, net (Note 6)............................. 1,476,219 1,637,125
Accrued interest receivable...................................... 1,718,725 1,290,675
Cost in excess of net assets of banks acquired, less accumulated
amortization of $786,644 in 1995 and $706,331 in 1994.......... 775,668 855,981
Other assets..................................................... 698,782 1,359,017
------------ -----------
$100,794,302 $98,066,480
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits (Note 7):
Noninterest bearing............................................ $ 10,587,497 $10,071,220
Interest bearing............................................... 74,205,235 73,501,882
------------ -----------
84,792,732 83,573,102
Federal funds purchased.......................................... 585,000 2,090,000
Note payable (Note 8)............................................ 3,760,531 4,200,775
Federal Home Loan Bank advances (Note 9)......................... 3,712,759 1,648,862
Accrued interest payable......................................... 654,162 452,061
Other liabilities................................................ 262,179 171,506
------------ -----------
Total liabilities...................................... 93,767,363 92,136,306
Commitments (Note 13)
Shareholders' equity (Notes 8 and 15):
Common stock, $1 par value:
Authorized 200,000 shares; issued: 155,586 shares in 1995
and 155,035 shares in 1994................................ 155,586 155,035
Capital surplus................................................ 1,862,938 1,838,529
Retained earnings.............................................. 5,537,847 4,534,371
Net unrealized losses on available-for-sale securities less
deferred income tax benefit of $73,185 in 1995 and $115,582
in 1994..................................................... (117,948) (186,277)
Less: Treasury stock, at cost; 16,900 shares................... (411,484) (411,484)
------------ -----------
Total shareholders' equity............................. 7,026,939 5,930,174
------------ -----------
$100,794,302 $98,066,480
============ ===========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 59
CARLISLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Interest income:
Loans, including fees.................................. $5,178,646 $4,056,865 $2,661,752
Investment securities:
Taxable............................................. 2,009,777 1,391,845 723,867
Tax-exempt.......................................... 118,756 198,551 143,929
Other.................................................. 71,063 151,004 136,768
---------- ---------- ----------
7,378,242 5,798,265 3,666,316
Interest expense:
Deposits............................................... 3,082,257 2,251,476 1,348,866
Short-term borrowings.................................. 208,036 84,909 13,197
Long-term borrowings................................... 503,591 368,582 197,499
---------- ---------- ----------
3,793,884 2,704,967 1,559,562
---------- ---------- ----------
Net interest income...................................... 3,584,358 3,093,298 2,106,754
Provision for loan losses (Note 5)....................... 60,000 65,000 180,000
---------- ---------- ----------
Net interest income after provision for loan losses...... 3,524,358 3,028,298 1,926,754
Other income:
Service charges on deposit accounts.................... 488,019 425,739 235,686
Trust fees............................................. 67,506 57,216 54,103
Investment securities gains (Note 4)................... 100,000
Other (Note 19)........................................ 194,050 146,092 90,969
---------- ---------- ----------
749,575 629,047 480,758
Other expenses:
Salaries and employee benefits (Note 11)............... 1,364,691 1,189,429 639,916
Net occupancy expense and furniture and equipment
expense............................................. 399,338 325,687 144,950
Amortization........................................... 80,313 78,435 71,813
Other (Note 19)........................................ 772,497 849,747 442,250
---------- ---------- ----------
2,616,839 2,443,298 1,298,929
---------- ---------- ----------
Income before income taxes............................... 1,657,094 1,214,047 1,108,583
Provision for income taxes (Note 12)..................... 515,482 341,262 362,242
---------- ---------- ----------
Net income............................................... $1,141,612 $ 872,785 $ 746,341
========== ========== ==========
Net income per share..................................... $ 8.25 $ 6.43 $ 6.05
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 60
CARLISLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
UNREALIZED
LOSSES ON
AVAILABLE-
COMMON CAPITAL RETAINED FOR-SALE TREASURY
STOCK SURPLUS EARNINGS SECURITIES STOCK TOTAL
-------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993................... $140,300 $1,268,400 $3,306,775 $ $(409,704) $4,305,771
Net income................................... 746,341 746,341
Cash dividends ($1.65 per share)............. (203,692) (203,692)
Purchase of treasury stock (50 shares)....... (1,780) (1,780)
-------- ---------- ---------- --------- --------- ----------
Balance at December 31, 1993................. 140,300 1,268,400 3,849,424 (411,484) 4,846,640
Net income................................... 872,785 872,785
Net unrealized losses on available-for-sale
securities, net of deferred income tax
benefit of $98,877......................... (186,277 ) (186,277)
Cash dividends ($1.40 per share)............. (187,838) (187,838)
Issuance of 3,966 shares for cash............ 3,966 156,061 160,027
Issuance of 10,769 shares of stock in
connection with acquisition of Hazen First
State Bank (Note 2)........................ 10,769 414,068 424,837
-------- ---------- ---------- --------- --------- ----------
Balance at December 31, 1994................. 155,035 1,838,529 4,534,371 (186,277 ) (411,484) 5,930,174
Net income................................... 1,141,612 1,141,612
Cash dividends ($1.00 per share)............. (138,136) (138,136)
Issuance of 551 shares of stock for cash..... 551 24,409 24,960
Net change in unrealized losses on
available-for-sale securities, net of
deferred income taxes of $42,397........... 68,329 68,329
-------- ---------- ---------- --------- --------- ----------
Balance at December 31, 1995................. $155,586 $1,862,938 $5,537,847 $(117,948 ) $(411,484) $7,026,939
======== ========== ========== ========= ========= ==========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 61
CARLISLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
Operating activities:
Net income......................................... $ 1,141,612 $ 872,785 $ 746,341
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses..................... 60,000 65,000 180,000
Depreciation and amortization................. 245,135 217,644 101,813
Deferred income taxes......................... 48,050 4,334 14,422
Investment securities gains (Note 4).......... (100,000)
Net accretion of investment security
discounts.................................. (89,100) (142,017) (23,280)
Decrease (increase) in accrued interest
receivable other assets.................... 141,738 (208,778) (40,740)
Increase (decrease) in accrued interest
payable and other liabilities.............. 292,774 201,268 (512,627)
----------- ------------ -----------
Net cash provided by operating
activities............................... 1,840,209 1,010,236 365,929
Investing activities:
Net assets of acquired subsidiaries, net of cash
acquired........................................ 685,500
Proceeds from maturities of held-to-maturity
securities...................................... 10,895,289 9,596,301 8,095,107
Purchases of held-to-maturity securities........... (6,544,746) (16,827,814) (9,874,265)
Proceeds from maturities of available-for-sale
securities...................................... 250,000 5,619,272
Purchases of available-for-sale securities......... (1,682,723) (493,814)
Net decrease in interest bearing deposits with
other banks..................................... 195,000 396,000 392,453
Net (increase) decrease in loans................... (4,494,226) (2,310,268) 1,857,234
Proceeds from sales of other real estate........... 52,532
Purchases of premises and equipment................ (3,916) (213,350) (61,839)
----------- ------------ -----------
Net cash used by investing activities...... (1,385,322) (3,548,173) 461,222
Financing activities:
Net increase (decrease) in deposits................ 1,219,630 (323,279) (423,779)
Net increase (decrease) in federal funds
purchased....................................... (1,505,000) 1,590,000
Proceeds from borrowings on note payable........... 2,303,321
Repayments on note payable......................... (440,244) (290,871) (266,855)
Borrowings from FHLB............................... 2,189,000 500,000 500,000
Repayments on FHLB borrowings...................... (125,103) (85,073) (14,505)
Proceeds from issuance of common stock............. 24,960 160,027
Purchase of treasury stock......................... (1,780)
Cash dividends..................................... (138,136) (187,838) (203,692)
----------- ------------ -----------
Net cash provided by financing
activities............................... 1,225,107 3,666,287 (410,611)
----------- ------------ -----------
Cash and cash equivalents:
Net increase....................................... 1,679,994 1,128,350 416,540
Balance at January 1............................... 3,819,849 2,691,499 2,274,959
----------- ------------ -----------
Balance at December 31............................. $ 5,499,843 $ 3,819,849 $ 2,691,499
=========== ============ ===========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE> 62
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Carlisle
Bancshares, Inc. (the "Company") and its wholly owned subsidiaries, Citizens
Bank & Trust, FirstBank of Arkansas, Brinkley (from purchase date of May 6,
1994), and its majority-owned bank subsidiary, Hazen First State Bank (from
purchase date of January 18, 1994). All significant intercompany accounts and
transactions have been eliminated in consolidation.
On December 29, 1994, Grand Prairie Bancshares, Inc. was merged into
Citizens Bank & Trust. This transaction did not effect the consolidated results
of operations or financial condition of Carlisle Bancshares, Inc.
Nature of operations
The Company is a bank holding company with three bank subsidiaries. The
banks operate under state bank charters and provide banking services principally
to customers located in Arkansas. The Company and its subsidiaries are subject
to regulation by the Federal Reserve, the Arkansas Bank Department and the
Federal Deposit Insurance Corporation.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Investment securities
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The Company adopted the provisions of the statement
on January 1, 1994 with an insignificant effect on shareholders' equity.
The Company's investment securities are classified as held-to-maturity
securities and available-for-sale securities. Debt securities for which the
Company has the positive intent and ability to hold until maturity are
classified as held-to-maturity securities that are reported at cost, adjusted
for amortization of premiums and accretion of discounts. Available-for-sale
securities consist of securities not classified as held-to-maturity and are
reported at fair value.
Unrealized holding gains and losses, net of tax, on available-for-sale
securities are reported as a net amount in a separate component of shareholders'
equity until realized. Gains or losses on the sale of securities are computed
using the carrying amount of the specific securities sold.
Revenue recognition
Interest on loans is credited to operations currently based upon the
principal amount and period outstanding. Interest on loans is not accrued when
amounts are considered doubtful of collection. When interest accruals are
discontinued, unpaid interest credited to income in the current year is reversed
and interest accrued in the prior year is charged to the allowance for loan
losses. If the ultimate collectibility of principal is in doubt, any payment
received on a loan on which the accrual of interest had been suspended is
applied to reduce principal to the extent necessary to eliminate such doubt.
F-8
<PAGE> 63
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Allowance for loan losses
The allowance for loan losses is maintained at a level management believes
to be adequate to absorb probable losses in the loan portfolio. Management's
determination of the adequacy of the allowance is based on reviews of individual
loans, recent loan loss experience, current economic conditions and the risk
characteristics of the various categories of loans. Loans deemed uncollectible
are charged to the allowance. Provisions for loan losses and recoveries on loans
previously charged off are added to the allowance.
Premises and equipment, net
Premises and equipment are stated at cost, less accumulated depreciation.
Depreciation expense is computed generally by the declining balance method based
on the estimated useful lives of the assets.
Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired is amortized by the straight-line
method over periods ranging from 15 to 20 years (see Note 2).
Other real estate
Other real estate, which is included in Other assets in the Consolidated
Balance Sheets ($19,823 at December 31, 1995 and $166,451 at December 31, 1994),
consists of properties acquired through foreclosure proceedings, acceptance of a
deed in lieu of foreclosure, or through in-substance foreclosure. These
properties are carried at the lower of cost or fair market value based on
appraised value at the date acquired. Fair value is the estimated sales price
based on appraisal values less estimated costs of disposal. Loan losses arising
from the acquisition of such properties are charged against the allowance for
loan losses. Subsequent valuation adjustments, if any, are charged to operating
expenses. Loans aggregating approximately $148,000 were transferred to other
real estate during 1994. No loans were transferred to other real estate in 1995
or 1993.
Income taxes
The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
The Company and its subsidiaries file consolidated income tax returns. It
is the Company's practice to have its subsidiaries pay to or receive from the
Company amounts based on the taxable income or loss of the subsidiaries.
Net income per share
Net income per share is based on average shares outstanding during the
year. Average shares outstanding amounted to 138,352 shares, 135,679 shares and
123,422 shares for the years ended December 31, 1995, 1994 and 1993,
respectively.
Cash equivalents
Cash equivalents include due from banks and federal funds sold and other
highly liquid investment securities with initial maturities of three months or
less when purchased. Generally, federal funds are purchased and sold for one-day
periods.
F-9
<PAGE> 64
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reclassifications
Certain amounts in the 1994 and 1993 consolidated financial statements have
been reclassified to conform to the reporting format used for the 1995
consolidated financial statements.
Future Application of Accounting Standards
During 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". The adoption of Statement No. 121 (required in 1996),
which establishes accounting standards for the impairment of long-lived assets
and goodwill related to assets to be held and used, and long-lived assets to be
disposed of, is not expected to have a significant impact on the Company's
consolidated financial statements.
NOTE 2: SUBSIDIARY BANKS
On May 5, 1994, the Company acquired 100% of the outstanding stock of
FirstBank of Arkansas, Brinkley for approximately $1,642,000 in cash, in a
transaction accounted for by the purchase method. The purchase price was based
on the book value as of the end of the month immediately preceding the closing
date (April 30, 1994). The Company acquired assets of approximately $24 million,
loans of $13 million, and deposits of $21 million. The bank's assets and
liabilities were recorded at book value, which approximated estimated fair value
on the date of acquisition. The results of operations of FirstBank of Arkansas,
Brinkley are included in the consolidated results of operations from the
acquisition date.
On January 18, 1994, the Company acquired 71.68% of the outstanding common
stock and 55.66% of the outstanding preferred stock of Hazen First State Bank.
On June 30, 1994, 44.34% of the remaining preferred stock and 27.82% of the
remaining common stock were purchased resulting in 100% ownership of the
preferred stock and 99.5% ownership of the common stock. The total purchase
price consisted of approximately $1,156,000 in cash and the issuance of 10,769
(valued at $39.45 per share) of the Company's common stock. The acquisition was
accounted for as a purchase and the assets and liabilities of Hazen First State
Bank were recorded at book value at the date of acquisition which approximated
estimated fair value. The bank had assets of approximately $17 million, loans of
$6 million, and deposits of $16 million on the acquisition date. Cost in excess
of net assets acquired of $123,257 was recorded in connection with this
transaction and is being amortized by the straight-line method over 15 years.
The results of operations of Hazen First State Bank from the date of majority
ownership (January 18, 1994) are included in the consolidated results of
operations.
NOTE 3: RESTRICTIONS ON CASH AND DUE FROM BANKS
The bank subsidiaries are required to maintain certain minimum cash
reserves based upon liabilities to depositors. The minimum consolidated cash
reserve requirement at December 31, 1995 was approximately $130,000. The average
reserve requirement for the year ended December 31, 1995 amounted to
approximately $311,000.
F-10
<PAGE> 65
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4: INVESTMENT SECURITIES
The amortized cost and approximate fair values of investment securities are
as follows as of December 31:
<TABLE>
<CAPTION>
1995
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Held-to-maturity
U.S. Treasury securities and
obligations of U.S. government
agencies......................... $18,030,536 $ 107,189 $ 44,006 $18,093,719
Obligations of states and political
subdivisions..................... 1,739,943 49,900 5 1,789,838
Corporate securities................ 638,043 26,291 781 663,553
Mortgage-backed securities.......... 2,918,665 79,563 15,164 2,983,064
----------- -------- -------- -----------
Total debt securities....... $23,327,187 $ 262,943 $ 59,956 $23,530,174
=========== ======== ======== ===========
Available-for-sale
U.S. Treasury securities and
obligations of U.S. government
agencies......................... $ 9,638,711 $ 1,826 $ 180,841 $ 9,459,696
Obligations of states and political
subdivisions..................... 137,242 8,931 13,377 132,796
Mortgage-backed securities.......... 19,787 577 20,364
----------- -------- -------- -----------
Total debt securities....... 9,795,740 11,334 194,218 9,612,856
Equity securities................... 732,400 732,400
----------- -------- -------- -----------
$10,528,140 $ 11,334 $ 194,218 $10,345,256
=========== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
1994
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Held-to-maturity
U. S. Treasury securities and
obligations of U.S. government
agencies......................... $21,319,777 $ 2,240 $ 558,558 $20,763,459
Obligations of states and political
subdivisions..................... 1,986,262 47,077 10,711 2,022,628
Corporate securities................ 790,653 14,668 17,143 788,178
Mortgage-backed securities.......... 3,839,574 24,565 111,570 3,752,569
----------- -------- -------- -----------
Total debt securities....... $27,936,266 $ 88,550 $ 697,982 $27,326,834
=========== ======== ======== ===========
Available-for-sale
U.S. Treasury securities and
obligations of U.S. government
agencies......................... $ 8,454,208 $ $ 246,642 $ 8,207,566
Obligations of states and political
subdivisions..................... 242,495 2,863 41,236 204,122
Mortgage-backed securities.......... 29,773 139 29,634
----------- -------- -------- -----------
Total debt securities....... 8,726,476 2,863 288,017 8,441,322
Equity securities................... 12,849 12,849
----------- -------- -------- -----------
$ 8,739,325 $ 2,863 $ 288,017 $ 8,454,171
=========== ======== ======== ===========
</TABLE>
F-11
<PAGE> 66
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The scheduled maturities of held-to-maturity and available-for-sale debt
securities at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
-------------------------- ------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Due in one year or less............ $12,912,080 $12,941,733 $4,096,917 $4,047,617
Due after one year through five
years............................ 6,266,845 6,323,208 5,547,532 5,404,184
Due after five years through ten
years............................ 787,697 820,566 13,150 13,406
Due after ten years................ 441,900 461,603 118,354 127,285
----------- ----------- ---------- ----------
20,408,522 20,547,110 9,775,953 9,592,492
Mortgage-backed securities......... 2,918,665 2,983,064 19,787 20,364
----------- ----------- ---------- ----------
$23,327,187 $23,530,174 $9,795,740 $9,612,856
=========== =========== ========== ==========
</TABLE>
During 1993, a $100,000 gain was recorded by the Company for a change in
value of a debt security. There were no realized gains or losses on sales of
investment securities during the three-year period ended December 31, 1995.
Securities with a carrying amount of approximately $18,550,000 at December
31, 1995 and $15,967,000 at December 31, 1994 were pledged to secure public
deposits and for other purposes (see Note 17).
NOTE 5: LOANS, ALLOWANCE FOR LOANS LOSSES AND IMPAIRED LOANS
Loans consisted of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Real estate -- construction............................... $ 2,370,028 $ 1,472,728
Real estate -- mortgage................................... 25,362,296 21,464,672
Agricultural.............................................. 14,443,169 14,620,388
Commercial................................................ 9,819,115 12,441,334
Consumer and other........................................ 6,173,071 3,764,702
----------- -----------
Total loans..................................... 58,167,679 53,763,824
Less:
Allowance for loan losses............................... (1,215,057) (1,245,428)
----------- -----------
Loans, net...................................... $56,952,622 $52,518,396
=========== ===========
</TABLE>
Transactions in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- --------
<S> <C> <C> <C>
Balance -- January 1.............................. $1,245,428 $ 824,093 $644,900
Provision for loan losses....................... 60,000 65,000 180,000
Allowances of acquired subsidiaries............. 411,655
Net charge-offs:
Charge-offs (deduction)...................... (132,315) (91,489) (20,189)
Recoveries................................... 41,944 36,169 19,382
---------- ---------- --------
(90,371) (55,320) (807)
---------- ---------- --------
Balance -- December 31............................ $1,215,057 $1,245,428 $824,093
========== ========== ========
</TABLE>
F-12
<PAGE> 67
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan",
as amended by SFAS No. 118. The Statement requires that impaired loans, which
management considers to be nonaccrual loans, be measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate, or as a practical expedient, at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent. The effect of
the adoption of this Statement on the Company's 1995 financial statements was
not significant.
Nonaccrual loans amounted to $543,134 at December 31, 1995 and $645,015 at
December 31, 1994. Allowance for loan losses allocations for nonaccrual loans
amounted to approximately $63,000 at December 31, 1995. Average nonaccrual loans
for the year ended December 31, 1995 amounted to approximately $594,000. There
were no significant commitments to lend additional funds to borrowers included
in the nonaccrual loans category.
NOTE 6: BANK PREMISES AND EQUIPMENT
Bank premises and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Land....................................................... $ 193,813 $ 193,813
Buildings and improvements................................. 1,340,466 1,326,482
Furniture and equipment.................................... 1,297,061 1,396,638
----------- -----------
2,831,340 2,916,933
Less accumulated depreciation and amortization............. (1,355,121) (1,279,808)
----------- -----------
$ 1,476,219 $ 1,637,125
=========== ===========
</TABLE>
Depreciation expense amounted to $164,822, $139,209 and $30,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.
NOTE 7: DEPOSITS
The following summarizes information on deposits as of December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Noninterest bearing....................................... $10,587,497 $10,071,220
NOW and money market accounts............................. 25,200,135 27,900,884
Savings accounts.......................................... 3,571,095 4,028,080
Certificates of deposit, $100,000 and over................ 11,456,282 9,021,040
Other certificates of deposit............................. 33,977,723 32,551,878
----------- -----------
$84,792,732 $83,573,102
=========== ===========
</TABLE>
NOTE 8: NOTE PAYABLE
The Company's note payable to an unrelated bank is payable in annual
installments through 2006 with interest at the prime rate of the issuing bank
(8.5% at December 31, 1995 and 1994). The note is collateralized by the capital
stock of the bank subsidiaries owned by the Company. The loan agreement places
restrictions on the declaration of dividends by the banks. The banks can declare
dividends amounting to the debt service requirements without obtaining the
approval of the lender. The agreement also places restrictions on additional
borrowings and requires that certain financial ratios be maintained.
F-13
<PAGE> 68
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Scheduled principal payments on the note for the next five years are as
follows: 1996 -- $478,322; 1997 -- $519,770; 1998 -- $564,690; 1999 -- $613,584;
and 2000 -- $178,909.
NOTE 9: FEDERAL HOME LOAN BANK ADVANCES
The Federal Home Loan Bank advances are payable in monthly installments
with interest rates ranging from 5.72% to 7.19% and have final maturities
ranging from 2000 through 2009. The banks are required to maintain specified
levels of qualifying real estate mortgage loan collateral to secure the
borrowings.
Schedule principal payments on Federal Home Loan Bank borrowings are as
follows: 1996 -- $145,572; 1997 -- $145,354; 1998 -- $146,175; 1999 -- $254,396;
and 2000 -- $1,018,557.
NOTE 10: LOANS TO RELATED PARTIES
The bank subsidiaries have had, and expect to have in the future, banking
transactions in the ordinary course of business with their officers and
directors. Such transactions have been on similar terms, including interest
rates and collateral on loans, as those prevailing at the time for comparable
transactions with others, and have involved no more than normal risk or other
potential unfavorable aspects. Loans made to such borrowers (including companies
in which they are principal owners) amounted to approximately $1,516,000 and
$933,000 at December 31, 1995 and 1994, respectively. During 1995, approximately
$1,235,000 of new loans were made and repayments aggregated approximately
$652,000.
NOTE 11: EMPLOYEE BENEFIT PLAN
The Company has a defined contribution retirement plan for the benefit of
all eligible employees. The plan qualifies under Section 401(k) of the Internal
Revenue Code thereby allowing eligible employees to make tax deductible
contributions to the plan. The plan provides for employer contributions up to 4%
of a participant's compensation. All employer contributions are at the
discretion of the Board of Directors. The Company made contributions of $34,983,
$25,312 and $16,944 in 1995, 1994 and 1993, respectively.
NOTE 12: INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes". The adoption of the Statement
had no significant effect on the Company's results of operations or financial
condition.
At December 31, 1995, the Company has net operating loss carryforwards of
approximately $608,000 for income tax purposes that expire beginning in 2003
through 2006. Those carryforwards resulted from the Company's 1994 acquisitions
of Hazen First State Bank and FirstBank of Arkansas, Brinkley. A valuation
allowance is provided when it is more likely than not that some portion of the
deferred tax asset related to the loss carryforwards will not be realized. The
Company established a valuation allowance of $71,809 for 1995 and $160,662 for
1994, which approximated the amount of acquired net operating loss carryforwards
in excess of the subsidiaries' future taxable items in the carryforward periods.
F-14
<PAGE> 69
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes for the years ended December 31, 1995, 1994
and 1993 consisted of the following:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.......................................... $460,371 $322,703 $323,270
State............................................ 7,061 14,225 24,550
-------- -------- --------
467,432 336,928 347,820
-------- -------- --------
Deferred:
Federal.......................................... 42,672 1,939 11,974
State............................................ 5,378 2,395 2,448
-------- -------- --------
48,050 4,334 14,422
-------- -------- --------
Applicable income taxes.......................... $515,482 $341,262 $362,242
======== ======== ========
</TABLE>
The reasons for the differences between income tax expense and the amount
computed by applying the statutory federal income tax rate to income before
taxes are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Federal income taxes at statutory rate............... $563,412 $417,455 $376,918
Add (deduct):
State income taxes, net of federal tax benefit..... 8,210 10,969 17,819
Tax-exempt interest income......................... (40,377) (67,507) (48,936)
Other, net......................................... (15,763) (19,655) 16,441
-------- -------- --------
Applicable income taxes.................... $515,482 $341,262 $362,242
======== ======== ========
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
as of December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Cash method of accounting.................................... $ 59,300 $ 88,950
Tax over book depreciation................................... 89,097 81,056
Prepaid assets............................................... 18,023 25,731
Investment securities........................................ 66,343 48,389
-------- --------
Total deferred tax liabilities................................. 232,763 244,126
Deferred tax assets:
Net operating loss carryforwards............................. 232,737 299,785
Unrealized losses on available-for-sale securities........... 66,166 98,877
Allowance for loan losses.................................... 241,497 255,361
Other real estate writedown.................................. 17,132 44,351
Other........................................................ 11,803 5,754
-------- --------
Total deferred tax assets...................................... 569,335 704,128
Valuation allowance for deferred tax assets.................... (71,809) (160,662)
-------- --------
497,526 543,466
-------- --------
Net deferred tax assets........................................ $264,763 $299,340
======== ========
</TABLE>
F-15
<PAGE> 70
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 13: COMMITMENTS
In the normal course of business there are various commitments outstanding
and contingent liabilities, such as commitments to extend credit, including
standby letters of credit to assure performance or to support debt obligations,
which are not reflected in the accompanying consolidated financial statements.
These arrangements have credit risk essentially the same as that involved in
extending loans to customers.
Commitments to extend credit which amounted to $5,026,000 and $4,454,000 at
December 31, 1995 and 1994, respectively, 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 Company evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary, upon extension of credit is based on management's credit evaluation
of the counterparty. Collateral held varies but may include real estate,
accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.
Standby letters of credit which amounted to $107,000 and $86,000 at
December 31, 1995 and 1994, respectively, are conditional commitments issued by
the Company to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowings
arrangements and similar transactions.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instruments for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balancesheet instruments.
NOTE 14: CONCENTRATIONS OF CREDIT RISK
Most of the Company's business activity is with customers located within
Lonoke, Prairie and Monroe Counties of Arkansas. The concentrations of credit by
major category of loan type are set forth in Note 5.
NOTE 15: REGULATORY MATTERS
Bank regulatory agencies restrict the amount available for the payment of
dividends by the bank subsidiaries to fifty percent of net income without
obtaining prior approval of those agencies. Such approval was obtained for the
1995, 1994 and 1993 dividend payments.
The Company and the bank subsidiaries are required to maintain sufficient
capital to meet minimum capital ratios, as defined by the regulatory agencies.
At December 31, 1995, the capital ratios of the Company and the bank
subsidiaries exceeded the minimum required amounts.
NOTE 16: SUPPLEMENTAL CASH FLOWS INFORMATION
The Company paid $3,591,783, $2,466,000 and $1,405,000 in interest on
deposits and other borrowings during 1995, 1994 and 1993, respectively. Cash
payments for income taxes amounted to $497,765, $362,235 and $410,562 during
1995, 1994 and 1993, respectively.
NOTE 17: FEDERAL RESERVE SEASONAL BORROWING LINE OF CREDIT
Citizens Bank and Trust maintains a seasonal borrowing line of credit with
the Federal Reserve Bank ($3,000,000 at December 31, 1995 and 1994), to provide
funds for lending activities. There were no outstanding borrowings on this line
at either December 31, 1995 or December 31, 1994. Investment securities
F-16
<PAGE> 71
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with a carrying amount of approximately $3,947,000 and $4,990,000 at December
31, 1995 and 1994, respectively, have been pledged to collateralize this line of
credit.
NOTE 18: FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments for the year
ended December 31, 1995:
Cash, due from banks, and federal funds sold: The carrying amounts for
these assets reported in the balance sheet approximate their fair values.
Investment securities: Fair values for investment securities are based
on quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
values. The fair values for fixed-rate 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.
Deposits: The fair values of noninterest bearing deposits, interest
bearing transaction accounts and savings accounts are, by definition, equal
to the amount payable on demand at the reporting date (i.e., their carrying
amounts). The carrying amounts for variable-rate, fixed-term money market
accounts and certificates of deposits 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 of such deposits.
Short-term borrowings: The carrying amounts of federal funds purchased
approximate their fair values.
Note payable: Fair value on the note payable is the amount payable at
the reporting date since the interest rate is equal to the prime rate on
corporate loans.
Federal Home Loan Bank advances: Fair values are estimated using rates
currently offered for borrowings of similar maturities.
Accrued interest: The carrying amounts of accrued interest approximate
their fair values.
Commitments to extend credit and standby letters of credit: The fair
values of commitments are estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of
the agreements and the present credit worthiness of the counterparties. The
fair values of standby letters of credit are based on fees currently
charged for similar agreements or on the estimated cost to terminate them
or otherwise settle the obligations with the counterparties at the
reporting date. Due to the insignificance of the fees that would be
currently charged for such agreements and the short-term nature of the
current agreements, no fair value estimates have been made for commitments
to extend credit and standby letters of credit.
F-17
<PAGE> 72
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The estimated fair values of the Company's financial instruments were as
follows at December 31, 1995:
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
----------- -----------
<S> <C> <C>
Financial assets
Cash and due from banks and federal funds sold.......... $ 5,499,843 $ 5,499,843
Held-to-maturity securities............................. 23,327,187 23,530,174
Available-for-sale securities........................... 10,345,256 10,345,256
Loans -- total.......................................... 58,167,679 57,580,000
Accrued interest receivable............................. 1,718,725 1,718,725
Financial liabilities
Deposits................................................ $84,792,732 $84,897,000
Short-term borrowings................................... 585,000 585,000
Notes payable........................................... 3,760,531 3,760,531
Federal Home Loan Bank advances......................... 3,712,759 3,936,000
Accrued interest payable................................ 654,162 654,162
</TABLE>
NOTE 19: SUPPLEMENTAL INCOME STATEMENT INFORMATION
The following categories of other income and expenses exceeded one percent
of the aggregate of total interest income and other income for the years ended
December 31, 1995, 1994 and 1993 : Other income: none in any year; Other
expenses: (1) FDIC and State Bank Department insurance assessments: 1995 --
$136,122, 1994 -- $216,931 and 1993 -- $137,025; (2) Printing and supplies:
1995 -- $90,313, 1994 -- $83,135 and 1993 -- $45,720; and (3) Data processing
services: 1993 -- $49,600.
NOTE 20: CARLISLE BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
----------- -----------
<S> <C> <C>
BALANCE SHEETS
Assets:
Cash in bank subsidiaries....................................... $ 129,656 $ 11,061
Income tax receivable from bank subsidiaries.................... 129,943 92,021
Investment in bank subsidiaries................................. 10,117,988 9,459,693
Cost in excess of net assets of bank acquired, less accumulated
amortization................................................. 660,911 732,724
----------- -----------
Total assets............................................ $11,038,498 $10,295,499
=========== ===========
Liabilities:
Note payable.................................................... $ 3,760,531 $ 4,200,775
Accrued interest payable........................................ 251,028 164,550
----------- -----------
Total liabilities....................................... 4,011,559 4,365,325
Shareholders' equity.............................................. 7,026,939 5,930,174
----------- -----------
Total liabilities and shareholders' equity................... $11,038,498 $10,295,499
=========== ===========
</TABLE>
F-18
<PAGE> 73
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- --------
<S> <C> <C> <C>
STATEMENTS OF INCOME
Income:
Dividends from bank subsidiaries........................ $ 850,000 $1,550,649 $325,000
Other................................................... 14,208
---------- ---------- --------
850,000 1,564,857 325,000
Expenses:
Interest on note payable................................ 342,409 261,546 137,550
Amortization............................................ 71,813 72,317 71,813
Other................................................... 9,226 9,308 2,725
---------- ---------- --------
423,448 343,171 212,088
---------- ---------- --------
Income before income taxes and equity in undistributed net
income of bank subsidiaries............................. 426,552 1,221,686 112,912
Income taxes (credit)..................................... (131,093) (89,738) (53,418)
---------- ---------- --------
557,645 1,311,424 166,330
Equity in undistributed net income (distributions in
excess of net income) of bank subsidiaries.............. 583,967 (438,639) 580,011
---------- ---------- --------
Net income...................................... $1,141,612 $ 872,785 $746,341
========== ========== ========
</TABLE>
F-19
<PAGE> 74
CARLISLE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
---------- ----------- ---------
<S> <C> <C> <C>
STATEMENTS OF CASH FLOWS
Operating activities:
Net income............................................ $1,141,612 $ 872,785 $ 746,341
Adjustments to reconcile net cash provided by
operating activities:
Distributions in excess of net income (equity in
undistributed net income) of bank subsidiaries... (583,967) 438,639 (580,011)
Amortization....................................... 71,813 72,317 71,813
Other -- net....................................... 42,557 21,235 40,532
---------- ----------- ---------
Net cash provided by operating activities..... 672,015 1,404,976 278,675
Investing activities:
Investment in bank subsidiaries -- net cash used by
investing activities............................... (2,909,089)
Financing activities:
Payments on note payable.............................. (440,244) (290,871) (266,855)
Proceeds from borrowings on note payable.............. 2,303,321
Increase (decrease) in advances from Grand Prairie
Bancshares, Inc.................................... (540,000) 215,000
Proceeds from sales of common stock................... 24,960 160,027
Purchase of treasury stock............................ (1,780)
Cash dividends........................................ (138,136) (187,838) (203,692)
---------- ----------- ---------
Net cash provided (used) by financing
activities.................................. (553,420) 1,444,639 (257,327)
---------- ----------- ---------
Increase in cash.............................. 118,595 (59,474) 21,348
Cash at beginning of year............................... 11,061 70,535 49,187
---------- ----------- ---------
Cash at end of year..................................... $ 129,656 $ 11,061 $ 70,535
========== =========== =========
</TABLE>
Supplementary Cash Flows Information -- The parent company paid $255,931,
$195,471 and $152,630 in interest during 1995, 1994 and 1993, respectively.
F-20
<PAGE> 75
CARLISLE BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks......................................... $ 3,547,409 $ 4,214,843
Federal funds sold.............................................. 1,445,000 1,285,000
------------ ------------
Cash and cash equivalents..................................... 4,992,409 5,499,843
Investment securities:
Held-to-maturity securities (approximate fair values of
$28,036,000 in 1996 and $23,530,000 in 1995)............... 27,954,090 23,327,187
Available-for-sale securities................................. 8,718,227 10,345,256
------------ ------------
36,672,317 33,672,443
Loans -- net.................................................... 54,924,482 56,952,622
Premises and equipment, net..................................... 1,454,016 1,476,219
Accrued interest receivable..................................... 1,435,491 1,718,725
Cost in excess of net assets of banks acquired, less accumulated
amortization of $806,722 in 1996 and $786,644 in 1995......... 755,590 775,668
Other assets.................................................... 764,109 698,782
------------ ------------
$100,998,414 $100,794,302
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing........................................... $ 9,878,727 $ 10,587,497
Interest bearing.............................................. 75,898,444 74,205,235
------------ ------------
85,777,171 84,792,732
Federal funds purchased......................................... 585,000
Note payable.................................................... 3,282,209 3,760,531
Federal Home Loan Bank advances................................. 3,676,315 3,712,759
Accrued interest payable........................................ 366,610 654,162
Other liabilities............................................... 506,850 262,179
------------ ------------
Total liabilities..................................... 93,609,155 93,767,363
Commitments (Note 3)
Shareholders' equity:
Common stock, $1 par value:
Authorized 200,000 shares; issued: 155,586 shares.......... 155,586 155,586
Capital surplus............................................... 1,862,938 1,862,938
Retained earnings............................................. 5,879,896 5,537,847
Net unrealized losses on available-for-sale securities less
deferred income tax benefit of $60,607 in 1996 and $73,185
in 1995.................................................... (97,677) (117,948)
Less: Treasury stock, at cost; 16,900 shares.................. (411,484) (411,484)
------------ ------------
Total shareholders' equity............................ 7,389,259 7,026,939
------------ ------------
$100,998,414 $100,794,302
============ ============
</TABLE>
See notes to unaudited consolidated financial statements.
F-21
<PAGE> 76
CARLISLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
--------------------------
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Interest income:
Loans, including fees.............................................. $ 1,313,728 $ 1,075,746
Investment securities:
Taxable......................................................... 527,848 528,630
Tax-exempt...................................................... 24,755 30,511
Other.............................................................. 46,913 17,937
---------- ----------
1,913,244 1,652,824
Interest expense:
Deposits........................................................... 822,393 704,128
Short-term borrowings.............................................. 4,621 17,004
Long-term borrowings............................................... 137,960 119,005
---------- ----------
964,974 840,137
---------- ----------
Net interest income.................................................. 948,270 812,687
Provision for loan losses............................................ 17,000 11,000
---------- ----------
Net interest income after provision for loan losses.................. 931,270 801,687
Other income:
Service charges on deposit accounts................................ 123,837 121,439
Other.............................................................. 59,659 42,658
---------- ----------
183,496 164,097
Other expenses:
Salaries and employee benefits..................................... 356,359 340,858
Net occupancy expense and furniture and equipment expense.......... 108,393 91,349
Amortization....................................................... 20,078 20,078
Other.............................................................. 164,563 225,893
---------- ----------
649,393 678,178
---------- ----------
Income before income taxes........................................... 465,373 287,606
Provision for income taxes........................................... 123,324 76,527
---------- ----------
Net income........................................................... $ 342,049 $ 211,079
========== ==========
Net income per share (Note 2)........................................ $ 2.47 $ 1.53
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
F-22
<PAGE> 77
CARLISLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED
LOSSES ON
AVAILABLE-
COMMON CAPITAL RETAINED FOR-SALE TREASURY
STOCK SURPLUS EARNINGS SECURITIES STOCK TOTAL
-------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1996................. $155,586 $1,862,938 $5,537,847 $ (117,948) $(411,484) $7,026,939
Net income............. 342,049 342,049
Net unrealized losses
on available-for-sale
securities, net of
deferred income tax
benefit of $12,578... 20,271 20,271
-------- ---------- ---------- --------- --------- ----------
Balance at March 31,
1996................. $155,586.. $1,862,938 $5,879,896 $ (97,677) $(411,484) $7,389,259
======== ========== ========== ========= ========= ==========
</TABLE>
See notes to unaudited consolidated financial statements.
F-23
<PAGE> 78
CARLISLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
---------------------------
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Operating activities:
Net income...................................................... $ 342,049 $ 211,079
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses.................................... 17,000 11,000
Depreciation and amortization................................ 63,386 60,839
Net accretion of investment security discounts............... (9,858) (24,550)
Decrease in accrued interest receivable and other assets..... 205,329 671,337
Decrease in accrued interest payable and other liabilities... (42,881) (44,912)
----------- -----------
Net cash provided by operating activities............... 575,025 884,793
Investing activities:
Proceeds from maturities of held-to-maturity securities......... 5,212,587 447,603
Purchases of held-to-maturity securities........................ (9,831,761) (5,470,000)
Proceeds from maturities of available-for-sale securities....... 1,690,807 14,905
Purchases of available-for-sale securities...................... (28,800) (277,034)
Net decrease in loans........................................... 2,011,140 3,674,184
Purchases of premises and equipment............................. (21,105) -0-
----------- -----------
Net cash used by investing activities................... (967,132) (1,610,342)
Financing activities:
Net increase (decrease) in deposits............................. 984,439 (1,161,094)
Net increase (decrease) in federal funds purchased.............. (585,000) 1,575,000
Repayments on note payable...................................... (478,322) (440,244)
Repayments on FHLB borrowings................................... (36,444) (28,081)
Cash dividends.................................................. (138,136)
----------- -----------
Net cash used by financing activities................... (115,327) (192,555)
----------- -----------
Cash and cash equivalents:
Net decrease.................................................... (507,434) (918,104)
Balance at January 1............................................ 5,499,843 3,819,849
----------- -----------
Balance at March 31............................................. $ 4,992,409 $ 2,901,745
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
F-24
<PAGE> 79
CARLISLE BANCSHARES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1: FINANCIAL STATEMENT PRESENTATION
The consolidated balance sheet as of March 31, 1996, the consolidated
statements of income and cash flows for the three months ended March 31, 1996
and 1995 and the statement of shareholders' equity for the three months ended
March 31, 1996, have been prepared by the Company, without audit. In the opinion
of management, all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position, results of operations and
cash flows at March 31, 1996 and for all periods presented have been made.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1996.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted in accordance with Article 10 of Regulation S-X. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended December
31, 1995 included elsewhere herein.
NOTE 2: NET INCOME PER SHARE
Net income per share is based on average shares outstanding during the
period (138,686 shares and 138,135 shares for the three-month periods ended
March 31, 1996 and 1995, respectively).
NOTE 3: SUBSEQUENT EVENT
On April 1, 1996, the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") with First United Bancshares, Inc. ("First
United"). The Agreement, as amended, provides for a purchase price of
$13,025,000 plus earnings from January 1, 1996 as defined in the Agreement. The
exchange of common stock between the Company and First United will be based on
the average price per share of First United common stock for the ten trading
days preceding the closing date. The Agreement may be terminated by First United
if the price per share of First United stock is less than $24 and by the Company
if the price per share of First United Stock is greater than $32. Completion of
the transaction is subject to regulatory and shareholder approvals.
F-25
<PAGE> 80
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Arkansas Business Corporation Act of 1987 (the "Act") codified at Ark.
Code Ann. sec.4-27-101 et. seq. and more specifically at Ark. Code Ann.
sec.4-27-850 permits an Arkansas Corporation to indemnify directors, officers,
employees and agents under some circumstances, and mandates indemnification
under certain limited circumstances. The Act permits a corporation to indemnify
a director, officer, employee, or agent for expenses (including attorneys'
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification against expenses incurred by a director, officer, employee or
agent in connection with his defense of a proceeding against such person for
actions in such capacity is mandatory to the extent that such person has been
successful on the merits. If a director, officer, employee, or agent is
determined to be liable to the corporation, indemnification for expenses is not
allowable, subject to limited exceptions where a court deems the award of
expenses appropriate. The Act grants express power to an Arkansas corporation to
purchase liability insurance for its directors, officers, employees and agents,
regardless of whether any such person is otherwise eligible for indemnification
by the corporation. Advancement of expenses is permitted, but a person receiving
such advances must repay those expenses if it is ultimately determined that he
is not entitled to indemnifications.
The Amended and Restated Articles of Incorporation and the Bylaws of First
United provides that the directors, officers, employees and agents of First
United shall be indemnified as set forth below.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
TWELFTH. The corporation may indemnify any person who was, or is, a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding to the fullest extent permitted by the Arkansas
Business Corporation Act as it now exists or may hereafter be amended.
BY-LAWS
Article VII, Section 6. INDEMNIFICATION. Every person who was or is a party
or is threatened to be made a party to or is involved in any action, suit,
proceeding, whether civil, criminal, administrative, or investigative, by reason
of the fact that he is or was a director or officer of the Corporation or is or
was serving at the request of the Corporation as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust, or other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under and pursuant to any procedure specified
in the Arkansas Business Corporation Act of the State of Arkansas, as amended
and as the same may be amended hereafter, against all expenses, liabilities, and
losses (including attorney's fees, judgments, fines and amounts paid or to be
paid in settlement) reasonably incurred or suffered by him in connection
therewith. Such right of indemnification shall be a contract right that may be
enforced in any lawful manner by such person. Such right of indemnification
shall not be exclusive of any other right which such director or officer may
have or hereafter acquire and, without limiting the generality of such
statement, he shall be entitled to his rights of indemnification under any
agreement, vote of stockholders, provisions of law, or otherwise, as well as his
rights under this paragraph.
The board of directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was a Director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the Corporation would have power to indemnify such
person.
II-1
<PAGE> 81
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------------- ----------------------------------------------------------------------
<S> <C>
2 -- Restated Agreement and Plan of Reorganization Between First United
Bancshares, Inc. and Carlisle Bancshares, Inc. and Plan of Merger
attached as Exhibit A thereto.
3(i) -- Articles of Incorporation of Carlisle Bancshares, Inc.
3(ii) -- Bylaws of Carlisle Bancshares, Inc.
5 -- Opinion of Ivester, Skinner & Camp, P.A.
8 -- Tax Opinion of Shults, Ray & Kurrus regarding Carlisle Bancshares,
Inc. Acquisition
21 -- Subsidiaries of First United Bancshares, Inc.
23(a) -- Consent of Arthur Andersen LLP
23(b) -- Consent of Martin and Company
23(c) -- Consent of Kemp & Company
23(d) -- Consent of Ernst & Young LLP
24 -- Power of Attorney -- Signature Page of the Registration Statement
99(a) -- First United Bancshares, Inc. Form of Proxy
99(b) -- Carlisle Bancshares, Inc. Form of Proxy
</TABLE>
ITEM 22. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(3) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(4) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE> 82
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(6) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(7) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(8) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement.
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 (sec.239.13 of this
chapter) or Form S-8 (sec.239.16b of this chapter), and the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE> 83
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Eldorado, State of
Arkansas, on June 17, 1996.
FIRST UNITED BANCSHARES, INC.
/s/ JAMES V. KELLEY
-----------------------------
James V. Kelley
Chairman, President and Chief
Executive Officer
/s/ JOHN E. BURNS
-----------------------------
John E. Burns
Vice President, Chief Financial
Officer
and Principal Accounting Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, a Director or
Officer, or both, of First United Bancshares, Inc. (the "Corporation"), acting
pursuant to authorization of the Board of Directors of the Corporation hereby
appoints James V. Kelley and John E. Burns, attorney-in-fact and agents for me
and in my name and on behalf, individually and as a Director or Officer, or
both, of the Corporation to sign a Registration Statement on Form S-4 and any
amendments (including post effective amendments) and supplements thereto, of the
Corporation to be filed with the Securities and Exchange Commission pursuant to
any applicable Rule under the Securities Act of 1933, as amended (the "Act")
with respect to the issue and sale of not more than 595,000 shares of common
stock, par value $1.00 of the Corporation, said shares to be exchanged to the
shareholder of Carlisle Bancshares, Inc. with respect to the merger by and
between Carlisle Bancshares, Inc. will be merged with and into the Corporation,
and generally to do and perform all things necessary to be done in connection
with the foregoing as fully in all respects as I could do personally.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June,
1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------- ------------------------------- -------------
<C> <S> <C>
/s/ JAMES V. KELLEY Chairman, President, Chief June 17, 1996
- --------------------------- Executive Officer and Director
James V. Kelley
/s/ JOHN E. BURNS Vice President, Chief Financial June 17, 1996
- --------------------------- Officer and Principal Accounting
John E. Burns Officer
/s/ E. LARRY BURROW Director June 17, 1996
- ---------------------------
E. Larry Burrow
Director June 17, 1996
- ---------------------------
Claiborne P. Deming
/s/ WILLIAM A. ECKERT, JR. Director June 17, 1996
- ---------------------------
William A. Eckert, Jr.
</TABLE>
II-4
<PAGE> 84
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- -------- -------------
<S> <C> <C>
/s/ ROY E. LEDBETTER Director June 17, 1996
--------------------------------
Roy E. Ledbetter
/s/ MICHAEL F. MAHONY Director June 17, 1996
--------------------------------
Michael F. Mahony
/s/ RICHARD H. MASON Director June 17, 1996
--------------------------------
Richard H. Mason
/s/ JACK W. McNUTT Director June 17, 1996
--------------------------------
Jack W. McNutt
/s/ WILLIAM E. MORGAN, JR. Director June 17, 1996
--------------------------------
William E. Morgan, Jr.
/s/ R. MADISON MURPHY Director June 17, 1996
--------------------------------
R. Madison Murphy
/s/ ROBERT C. NOLAN Director June 17, 1996
--------------------------------
Robert C. Nolan
/s/ PAULA M. O'CONNOR Director June 17, 1996
--------------------------------
Paula M. O'Connor
/s/ KATHERINE PATTON OZMENT Director June 17, 1996
--------------------------------
Katherine Patton Ozment
/s/ CAL PARTEE, JR. Director June 17, 1996
--------------------------------
Cal Partee, Jr.
/s/ CHELSEY PRUET Director June 17, 1996
--------------------------------
Chelsey Pruet
/s/ JOHN D. TRIMBLE, JR. Director June 17, 1996
--------------------------------
John D. Trimble, Jr.
/s/ RALPH C. WEISER Director June 17, 1996
--------------------------------
Ralph C. Weiser
/s/ DAVID M. YOCUM, JR. Director June 17, 1996
--------------------------------
David M. Yocum, Jr.
</TABLE>
II-5
<PAGE> 85
FIRST UNITED BANCSHARES, INC.
FORM S-4 REGISTRATION STATEMENT
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------
<S> <C> <C>
2 -- Restated Agreement and Plan of Reorganization Between First United
Bancshares, Inc. and Carlisle Bancshares, Inc. and Plan of Merger
attached as Exhibit A thereto.
3(i) -- Articles of Incorporation of Carlisle Bancshares, Inc.
3(ii) -- Bylaws of Carlisle Bancshares, Inc.
5 -- Opinion of Ivester, Skinner & Camp, P.A.
8 -- Tax Opinion of Shults, Ray & Kurrus regarding Carlisle Bancshares,
Inc. Acquisition
21 -- Subsidiaries of First United Bancshares, Inc.
23(a) -- Consent of Arthur Andersen LLP
23(b) -- Consent of Martin and Company
23(c) -- Consent of Kemp & Company
23(d) -- Consent of Ernst & Young LLP
24 -- Power of Attorney -- Signature Page of the Registration Statement
99(a) -- First United Bancshares, Inc. Form of Proxy
99(b) -- Carlisle Bancshares, Inc. Form of Proxy
</TABLE>
<PAGE> 1
EXHIBIT 2
RESTATED AGREEMENT AND PLAN OF REORGANIZATION
<PAGE> 2
RESTATED AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of April
1, 1996 by and between First United Bancshares, Inc. ("Bancshares"), Carlisle
Bancshares, Inc. ("Carlisle") and certain Shareholders of Carlisle listed in
Exhibit 1 attached hereto, said Shareholders being referred to collectively as
Sellers and individually as Seller.
WHEREAS, Carlisle owns one hundred percent (100%) of the issued and
outstanding shares of capital stock of Citizens Bank & Trust Company, Carlisle,
Arkansas ("CBT"), Hazen First State Bank, Hazen, Arkansas ("Hazen") and
FirstBank of Arkansas, Brinkley, Arkansas ("FirstBank"); and
WHEREAS, Bancshares desires to acquire one hundred percent (100%) of the
capital stock of Carlisle (the "Carlisle Common Stock") upon the terms and
conditions hereinafter set forth through the merger of Carlisle with and into
Bancshares, (the "Merger") pursuant to a Plan of Merger in substantially the
form attached hereto as Exhibit A (the "Plan of Merger"); and
WHEREAS, Sellers own ninety-three percent (93%) of the Carlisle Common
Stock; and
WHEREAS, the respective Boards of Directors of Bancshares and Carlisle
believe that such proposed Merger and the exchange of shares of Bancshares Stock
(as defined in Section 2.01(a) hereof) for the Carlisle Common Stock, pursuant
and subject to the terms of this Agreement and the Plan of Merger (the "Merger
Agreements"), is desirable and in the best short-term and long-term interests of
their respective corporations and shareholders; and
WHEREAS, Bancshares, Carlisle and Sellers desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the promises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of this Agreement,
Bancshares, Carlisle and Sellers agree to effect the Merger of Carlisle with and
into Bancshares in accordance with the Arkansas Business Corporation Act (the
"ABCA").
1.02. Effective Time of the Merger. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") shall be duly prepared
and executed by Bancshares and Carlisle and thereafter delivered to the
Secretary of State of Arkansas for filing, as provided in the ABCA, as soon as
practicable on or after the Closing Date (as defined in Section 1.03). The
Merger shall become effective upon the filing of the Articles of Merger with the
Secretary of State of Arkansas or at such time within two business days
thereafter as is provided in the Articles of Merger (the "Effective Time").
1.03. Closing. The closing of the Merger (the "Closing") will take place at
the offices of Bancshares at a time and on a date (the "Closing Date") to be
specified in writing by the parties as soon as reasonably practicable after the
later to occur of all regulatory and other approvals and the expiration of all
waiting periods.
<PAGE> 3
ARTICLE II
EFFECT OF THE MERGER
2.01. Effect on Common Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
Carlisle Common Stock, but subject to the rights of dissenting shareholders of
Carlisle:
(a) Conversion of Carlisle Common Stock. The purchase price paid by
Bancshares to Sellers shall be equal to $13,000,000.00, plus (i) additional
capital of Carlisle paid in subsequent to January 1, 1996, (ii) the
earnings after allowance for federal and state income taxes, of Carlisle
between January 1, 1996 and the last day of the month which ends on a date
15 or more, but not to exceed 45, days prior to the Closing Date (the
"Carlisle Earnings"), and (iii) an amount equal to the number of days from
the date on which the Carlisle Earnings are determined (the "Carlisle
Earnings Date") to the Closing Date multiplied by the average daily
earnings of Carlisle, after allowance for federal and state income taxes,
for the period beginning January 1, 1996 and ending on the Carlisle
Earnings Date (the "Purchase Price"). For purposes of determining the
Carlisle Earnings, the Carlisle Earnings shall not include non-recurring
income such as, but not limited to, gains on securities held for sale. One
hundred percent of the issued and outstanding shares of Carlisle Common
Stock shall be converted into the right to receive an aggregate amount of
fully paid and nonassessable shares of voting common stock, $1.00 par
value, of Bancshares determined by dividing the Purchase Price by the
Bancshares Average Price as defined below. The number of shares of common
stock of Bancshares so determined shall be referred to as the Bancshares
Stock. In the event the Bancshares Average Price exceeds $32.00 then
Carlisle may in its sole discretion terminate this Agreement without
liability. In the event the Bancshares Average Price is less than $24.00
then Bancshares may in its sole discretion terminate this Agreement without
liability. The Bancshares Average Price shall be the average sales price
per share of Bancshares common stock for all trades occurring during the
period of 10 trading days on which one or more trades actually takes place
and which ends immediately prior to the second trading day preceding the
Closing Date. Each Seller shall be entitled to receive a pro rata portion
of the Bancshares Stock based upon each Seller's pro rata ownership of the
total of issued and outstanding shares of Carlisle Common Stock at the
Effective Time. Fractional shares of Bancshares Stock shall not be issued.
Any Seller entitled to receive a fractional share shall receive a cash
payment in lieu thereof equal to the value of the fractional share based on
the Bancshares Average Price.
(b) Cancellation of Shares. All shares of Carlisle Common Stock issued
and outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the
right to receive a pro rata number of shares of Bancshares Stock to be
issued in consideration therefor upon the surrender of such certificate in
accordance with the Plan of Merger.
(c) Anti-Dilution. If prior to the Effective Time Bancshares shall
declare a stock dividend or subdivide, split up, reclassify or combine its
shares of Bancshares common stock or make a distribution on Bancshares
common stock of any security, appropriate adjustment or adjustments will be
made in the conversion rate set forth in subsection (a).
(d) Registration. The Bancshares Stock shall when issued be subject to
and covered by an effective registration statement as filed under the
Securities Act of 1933 (the "Securities Act") and such issuance shall
comply with any applicable state "Blue Sky" laws.
(e) Termination of 401(k) Plan. As soon as practical after execution
of this Agreement, Carlisle shall cause Carlisle, CBT, Hazen and FirstBank
to make all filings, take all action and receive all approvals necessary
and appropriate to allow termination of the Carlisle 401(k) plan
immediately following the Closing Date. Bancshares shall assist Carlisle in
accomplishing the above procedures.
2
<PAGE> 4
2.02. Approval By Shareholders. Consummation of the Merger shall be
contingent upon its approval by the legally required votes of the shares of
Carlisle Common Stock and Bancshares Common Stock at shareholders meetings duly
called for the purpose of voting on the Merger. In the event the number of
shares owned by Carlisle shareholders exercising dissenters' rights would or
could, in the written opinion of Bancshares' outside accountants, reasonably be
expected to cause the cash consideration paid by Bancshares to dissenters to
jeopardize Bancshares' ability to account for the Merger as a pooling of
interests then Bancshares shall have the right to terminate this Agreement. The
Board of Directors of Carlisle and Bancshares shall recommend approval of the
Merger to their respective shareholders.
2.03 Stock Option. Harold W. Hardwick, Carlisle and Bancshares agree that
if on the Closing Date Hardwick remains an employee of FirstBank, then on the
Closing Date, in full satisfaction of Carlisle's obligation under the stock
options granted to Hardwick by Carlisle on April 20, 1994, Bancshares will pay
to Hardwick an amount determined as follows. The book value per share of the
Carlisle Common Stock shall be determined as of the Carlisle Earnings Date and
said book value shall be divided into the dollar amount representing the
aggregate exercise price of all unexercised stock options to determine the
number of Carlisle shares Hardwick would be entitled to receive if all
unexercised stock options were subject to exercise on the Carlisle Earnings Date
(the "Hardwick Shares"). The Purchase Price shall be divided by the number of
shares of Carlisle Common Stock issued and outstanding immediately prior to the
Effective Time; the book value per share of the Carlisle Common Stock as of the
Carlisle Earnings Date shall be subtracted from such amount; the difference
shall be multiplied by the number of the Hardwick Shares and Bancshares shall
pay the resulting amount to Hardwick on the Closing Date. Such payment shall be
paid in Bancshares common stock. Bancshares shall issue to Hardwick on the
Closing Date Bancshares common stock determined by dividing the payment amount
by the Bancshares Average Price. The Deferred Compensation Agreement between
FirstBank and Hardwick dated November 1, 1992 shall remain in full force and
effect after Closing and Hardwick shall be deemed fully vested in accordance
with the terms of said Agreement. Hardwick hereby waives his rights as an
employee of FirstBank to participate in Bancshares' 401(k) plan, employee stock
ownership plan and defined benefit pension plan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CARLISLE AND SELLERS
Carlisle and Sellers hereby represent and warrant to Bancshares, to the
best of their knowledge and belief, the following:
3.01. Organization, Standing and Power of Carlisle. Carlisle is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Arkansas and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, except where the failure to have such power or authority would not
have a material adverse effect on the business, operations or financial
condition of Carlisle or any Carlisle Subsidiary (as hereinafter defined).
Carlisle is not qualified to do business in any other state or foreign
jurisdiction, and its ownership or leasing of property or the conduct of its
business does not require it to be so qualified, except where such failure to be
so qualified would not have a material adverse effect on the business,
operations or financial condition of Carlisle or any Carlisle Subsidiary.
Carlisle is registered as a bank holding company with the Federal Reserve Board
under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). Carlisle
has delivered to Bancshares true, accurate and complete copies of its currently
effective Articles of Incorporation and Bylaws, including all amendments
thereto.
3.02. Ownership, Organization, Standing and Power of Carlisle Subsidiaries.
Carlisle directly and beneficially owns all of the shares of the outstanding
capital stock of CBT, Hazen and FirstBank. CBT, Hazen and FirstBank are
hereinafter called collectively the "Carlisle Subsidiaries" or individually a
"Carlisle Subsidiary". CBT, Hazen and FirstBank are Carlisle's only
subsidiaries. No equity securities of CBT, Hazen or FirstBank are or may become
required to be issued by reason of any option, warrant, call, right or agreement
of any character whatsoever; there are outstanding no securities or rights
convertible into or exchangeable for shares of any capital stock of CBT, Hazen
or FirstBank; and there are no other contracts,
3
<PAGE> 5
commitments, understandings or arrangements by which either CBT, Hazen or
FirstBank is bound to issue additional shares of its capital stock or options,
warrants, calls, rights or agreements to purchase or acquire any additional
shares of its capital stock. All of the shares of capital stock of CBT, Hazen
and FirstBank owned by Carlisle are fully paid and nonassessable and are owned
free and clear of any claim, lien, encumbrance or agreement with respect thereto
except for a lien in favor of Union Planters National Bank, Memphis, Tennessee.
Consent of Union Planters National Bank must be obtained prior to consummation
of the merger. The loan to Union Planters National Bank is also secured by
personal guaranties of certain of the Sellers, and as a condition precedent to
the merger all personal guaranties of the Union Planters National Bank loan must
be released and cancelled. CBT, Hazen and FirstBank are banking associations
duly organized, validly existing and in good standing under the laws of
Arkansas, and have the corporate power and authority to own or lease their
properties and assets and to carry on their businesses as they are now being
conducted, except where the failure to have such power or authority would not
have a material adverse effect on the business, operations or financial
condition of CBT, Hazen, or FirstBank. The deposits of CBT, Hazen and FirstBank
are insured by the Federal Deposit Insurance Corporation ("FDIC") to the extent
provided by law. Carlisle has delivered to Bancshares true, accurate and
complete copies of the currently effective Articles of Incorporation and Bylaws
of CBT, Hazen and FirstBank, including all amendments thereto. Except for
securities held in their capacities as fiduciaries, CBT, Hazen and FirstBank do
not own beneficially, directly or indirectly, any class of equity securities,
partnership interests or similar interests of any corporation, bank,
partnership, limited partnership, business trust, association or similar
organization. The authorized capital stock of CBT consists of 39,000 shares of
common stock, $25.00 par value, of which 39,000 shares are outstanding and are
owned by Carlisle. The authorized capital stock of Hazen consists of 31,000
shares of common stock, $50.00 par value, and 8,000 shares of non-voting
preferred stock, of which 19,935 shares of common stock are outstanding and are
owned by Carlisle. The authorized capital stock of FirstBank consists of 100,000
shares of common stock, $8.00 par value, and 50,000 shares of preferred stock,
$8.00 par value, of which 91,500 shares of common stock are outstanding and are
owned by Carlisle. CBT, Hazen and FirstBank or their predecessor banks have been
chartered as banking institutions for more than 5 years.
3.03. Capital Structure of Carlisle. The authorized capital stock of
Carlisle consists of 200,000 shares of common stock, $1.00 par value, of which
138,686 shares are issued and outstanding and 16,900 shares are held by Carlisle
in its treasury. The number of shares issued and outstanding and held in
treasury shall be adjusted as necessary in the event Harold W. Hardwick
exercises his option to acquire shares of Carlisle Common Stock having a book
value of $25,000.00, which option is exercisable as of April 20, 1996. Neither
Carlisle, CBT, Hazen nor FirstBank has issued and has outstanding bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into securities having the right to vote) on any matters on which shareholders
may vote ("Voting Debt"). All outstanding shares of Carlisle Common Stock are
validly issued, fully paid, nonassessable, and not subject to preemptive rights.
Except for the options of Harold W. Hardwick to acquire certain shares of
Carlisle Common Stock, there are no options, warrants, calls, rights, or
agreements of any character whatsoever to which Carlisle, CBT, Hazen or
FirstBank is a party or by which Carlisle, CBT, Hazen or FirstBank is obligated
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any voting debt securities or by which Carlisle, CBT,
Hazen or FirstBank is obligated to grant, extend or enter into any such option,
warrant, call, right or agreement, except as described in subparagraph (b)
below. Immediately before and after the Effective Time there will be no option,
warrant, call, right or agreement obligating Carlisle, CBT, Hazen or FirstBank
to issue, deliver or sell, or cause to be issued, delivered or sold, any shares
of capital stock or obligating Carlisle, CBT, Hazen or FirstBank to grant,
extend or enter into any such option, warrant, call, right or agreement, except
as described in subparagraph (b) below.
3.04. Authority. Carlisle has all requisite corporate power and authority
to enter into this Agreement and the Plan of Merger and, subject only to
approval of this Agreement and the Plan of Merger by the shareholders of
Carlisle and of applicable regulatory authorities, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Carlisle's board of directors. This Agreement
and the Plan of Merger have been duly executed and delivered by Carlisle, and,
subject to such shareholder approval, each constitutes
4
<PAGE> 6
a valid and binding obligation of Carlisle enforceable in accordance with its
terms, except as the enforceability of the Agreement may be subject to or
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting the rights of creditors and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution and delivery of
this Agreement and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination, cancellation or
acceleration loss or creation, a "Violation"), pursuant to any provision of (a)
the Articles of Incorporation or Bylaws of Carlisle, CBT, Hazen or FirstBank or
(b) any loan or credit agreement, note, mortgage, indenture, lease, or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Carlisle, CBT, Hazen or FirstBank or their respective properties or assets,
except where such violation would not have a material adverse effect on the
business, operations or financial condition of Carlisle or any Carlisle
Subsidiary. Other than in connection or in compliance with the provisions of the
ABCA, the Securities Act and the regulations thereunder, the Securities and
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), the securities or blue sky laws of the various states, and
consents, authorizations, approvals, notices or exemptions required under the
BHC Act, the National Bank Act, Arkansas banking laws, and from other regulatory
agencies, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Carlisle, CBT, Hazen
or FirstBank in connection with the execution and delivery of this Agreement and
the Plan of Merger by Carlisle or the consummation by Carlisle of the
transactions contemplated hereby and thereby.
3.05. Carlisle Financial Statements.
(a) The (i) consolidated balance sheet of Carlisle as of December 31, 1995
and the related consolidated statements of income, consolidated statements of
cash flows and consolidated statements of shareholders equity for the year then
ended certified by Kemp and Company, (ii) consolidated balance sheet of Carlisle
as of December 31, 1994 and the related consolidated statements of income,
consolidated statements of cash flows and consolidated statements of
shareholders equity for the year then ended certified by Ernst & Young, and
(iii) the internally prepared and unaudited financial statements for CBT, Hazen
and FirstBank dated February 29, 1996, (items (i)-(iii) being called
collectively the "Carlisle Financial Statements"), copies of which have been
furnished by Carlisle to Bancshares, have been prepared in accordance with (A)
generally accepted accounting principles and practices with respect to items (i)
and (ii) and (B) accounting principles and practices with respect to item (iii),
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein and except for year-end adjustments of the unaudited
financial statements of a non-material nature) present fairly the consolidated
financial condition of Carlisle and the financial condition of CBT, Hazen and
FirstBank, at the dates, and the results of operations and cash flows for the
periods, stated therein. Neither Carlisle, CBT, Hazen nor FirstBank has any
liability of any nature, whether direct, indirect, accrued, absolute, contingent
or otherwise, which is material to Carlisle except as provided for or disclosed
in the Carlisle Financial Statements and except for such of the following
liabilities as are incurred in the ordinary course of business:
(i) deposit liabilities and interest payable thereon,
(ii) federal funds purchased and securities sold under repurchase
agreements and interest payable thereon,
(iii) other short term borrowings,
(iv) contingent liability upon negotiable instruments endorsed for the
purpose of collection,
(v) taxes,
(vi) accounts payable of the operating business,
5
<PAGE> 7
(vii) salaries and benefits payable,
(viii) unearned income and premiums,
(ix) abandoned and garnished accounts, and
(x) letters of credit and similar commitments.
(b) Without limitation of the foregoing, Carlisle has no reserve allowance
for self-insured health and dental benefit claims and knows of no facts which
should cause it to create such a reserve.
3.06. Carlisle Reports. Carlisle, CBT, Hazen and FirstBank have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that were and are required to be filed with (i)
the Federal Reserve Board ("FRB"), (ii) the FDIC, (iii) the Arkansas State Bank
Department (the "ASBD") and (iv) any other applicable securities, banking or
regulatory authorities (all such reports and statements are collectively
referred to herein as the "Carlisle Reports"), except where such failure to file
would not have a material adverse effect on the business operations or financial
condition of Carlisle or any Carlisle Subsidiary. The Carlisle Reports complied
in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.07. Information Supplied. None of the information supplied or to be
supplied by Carlisle for inclusion or incorporation by reference in any document
to be filed with the Securities and Exchange Commission, the Federal Reserve
Board, or any regulatory agency in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Carlisle has made available to Bancshares all financial and
other information reasonably requested by Bancshares.
3.08. Authorizations; Compliance with Applicable Laws. Carlisle, CBT, Hazen
and FirstBank hold all authorizations, permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities which are material to the
operations of the businesses of Carlisle, CBT, Hazen or FirstBank (the "Carlisle
Permits"), including appropriate authorizations from the ASBD. Carlisle, CBT,
Hazen and FirstBank are in compliance with the terms of the Carlisle Permits,
except where the failure so to comply would not have a material adverse effect
on Carlisle, CBT, Hazen or FirstBank. The businesses of Carlisle, Hazen and
FirstBank are not being conducted in violation of any federal, state or local
law, statute, ordinance or regulation of any Governmental Entity (collectively
"Laws"), including, without limitation, Regulation O of the FRB, except for
possible violations which individually or in the aggregate do not and, insofar
as reasonably can be foreseen, in the future will not, have a material adverse
effect on Carlisle, CBT, Hazen or FirstBank. No investigation or review by any
Governmental Entity with respect to Carlisle, CBT, Hazen or FirstBank is pending
or, to the best of their knowledge, threatened, nor has any Governmental Entity
indicated an intention to conduct the same. Without limiting the foregoing,
there have been no acts or omissions occurring on or with respect to real estate
currently or previously owned, leased or otherwise used in the ordinary course
of business by Carlisle, CBT, Hazen or FirstBank or, to the best of their
knowledge, in which Carlisle, CBT, Hazen or FirstBank has or had an investment
or security interest (by mortgage, deed of trust, or otherwise), including,
without limitation, properties under foreclosure, properties held by Carlisle,
CBT, Hazen or FirstBank in its capacity as a trustee, or properties in which any
venture capital or similar unit of Carlisle, Hazen or FirstBank has or had an
interest (the "Carlisle Property"), which constitute or result, or may have
constituted or resulted, in the creation of any federal, state or common law
nuisance (whether or not the nuisance condition is, or was, foreseen or
unforeseen) or which do not comply or have not complied with federal, state or
local environmental laws including, without limitation, the Clean Water Act, the
Clean Air Act, the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental, Response, Compensation and
Liability Act, as amended, and their state and local law counterparts, all rules
and regulations promulgated thereunder and all other legal requirements
associated with the ownership and
6
<PAGE> 8
use of the Carlisle Property (collectively, "Environmental Laws"), and as a
result of which acts or omissions Carlisle, CBT, Hazen or FirstBank is subject
to or reasonably likely to incur a material liability or suffer a diminution in
value of any interest exceeding $100,000.00. Neither Carlisle, CBT, Hazen nor
FirstBank is subject to or reasonably likely to incur a material liability or
suffer a diminution in value of any interest exceeding $100,000.00 as a result
of its ownership, lease, operation, or use of any Carlisle Property or as a
result of its investment or security interest (as described above) in any
Carlisle Property (a) that is contaminated by or contains any hazardous waste,
toxic substances or related materials, including without limitation asbestos,
PCBs, pesticides, herbicides, petroleum products, substances defined as
"hazardous substances" or "toxic substances" in the Environmental Laws, and any
other substances or waste that is hazardous to human health or the environment
(collectively, "Toxic Substances"), or (b) on which any Toxic Substance has been
stored, disposed of, placed, or used in the construction thereof. No claim,
action, suit or proceeding is pending against Carlisle, CBT, Hazen or FirstBank
relating to the Carlisle Property before any court or other governmental
authority or arbitration tribunal relating to Toxic Substances, pollution or the
environment, and there is no outstanding judgment, order, writ, injunction,
decree, or award against or affecting Carlisle, CBT, Hazen or FirstBank with
respect thereto.
3.09. Litigation and Claims. (a) Neither Carlisle, CBT, Hazen nor FirstBank
is subject to any continuing order of, or written agreement or memorandum of
understanding with, or continuing material investigation by, any federal or
state banking or insurance authority or other Governmental Entity, or any
judgment, order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease-and-desist or other orders of
any bank regulatory authority, (b) there is no claim of any kind, action, suit,
litigation, proceeding, arbitration, investigation, or controversy affecting
Carlisle, CBT, Hazen or FirstBank pending or, to the best of their knowledge,
threatened, which will have or can reasonably be expected to have a material
adverse effect on Carlisle, and (c) there are no uncured material violations, or
violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to Carlisle, CBT, Hazen or FirstBank as
a result of the examination by any bank regulatory authority.
3.10. Taxes. Carlisle, CBT, Hazen and FirstBank have filed all tax returns
required to be filed by them and have paid or have set up an adequate reserve
for the payment of, all taxes required to be paid as shown on such returns, and
the most recent Carlisle Financial Statements reflect an adequate reserve for
all taxes payable by Carlisle, CBT, Hazen and FirstBank accrued through the date
of such financial statements. There has been no examination by the United States
Internal Revenue Service ("IRS") of Carlisle, CBT, Hazen or FirstBank for over
seven years. There is no examination pending by the IRS with respect to
Carlisle, CBT, Hazen or FirstBank. Neither Carlisle, CBT, Hazen nor FirstBank
has executed or filed with the IRS any agreement which is still in effect
extending the period for assessment and collection of any federal tax, and there
are no existing material disputes as to federal, state, or local taxes due from
Carlisle, CBT, Hazen or FirstBank. There are no material liens for taxes upon
the assets of Carlisle, CBT, Hazen or FirstBank, except for statutory liens for
taxes not yet delinquent. Neither Carlisle, CBT, Hazen nor FirstBank is a party
to any action or proceeding by any governmental authority for assessment and
collection of taxes, and no claim for assessment and collection of taxes has
been asserted against any of them. For the purpose of this Agreement, the term
"tax" (including, with correlative meaning, the terms "taxes" and "taxable")
shall include all federal, state, and local income, profits, franchise, gross
receipts, payroll, sales, employment, use, personal and real property,
withholding, excise and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts. Carlisle, CBT, Hazen and FirstBank have withheld from
their employees and timely paid to the appropriate governmental agency proper
and accurate amounts for all periods through the date hereof in material
compliance with all tax withholding provisions of applicable federal, state, and
local laws (including without limitation income, social security and employment
tax withholding for all types of compensation).
3.11. Certain Agreements. Neither Carlisle, CBT, Hazen nor FirstBank is a
party to any (i) consulting, professional services , employment or other
agreement not terminable at will providing any term of employment, compensation,
guarantee, or severance or supplemental retirement benefit, (ii) union, guild or
collective bargaining agreement, (iii) agreement or plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated
7
<PAGE> 9
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of the transactions contemplated by this Agreement, (iv)
any stock option plan, stock appreciation rights plan, restricted stock plan,
stock purchase plan or similar plan granting rights to acquire stock in
Carlisle, CBT, Hazen or FirstBank, except as referred to in Section 2.03, or (v)
contract containing covenants which limit the ability of Carlisle, CBT, Hazen or
FirstBank to compete in any line of business or with any person or which involve
any restriction of the geographical area in which, or method by which, Carlisle,
CBT, Hazen or FirstBank may carry on its business (other than as may be required
by law or applicable regulatory authorities). Carlisle, CBT, Hazen and FirstBank
shall terminate all existing consulting, professional services and employment
contracts, other than at will employment contracts by no later than the Closing
Date.
3.12. Benefit Plans.
(a) Exhibit 3.12 hereto lists (i) each employee bonus, incentive, deferred
compensation, stock purchase, stock appreciation right, stock option and
severance pay plan, (ii) each pension, profit sharing, stock bonus, thrift,
savings and employee stock ownership plan, and (iii) every other employee
benefit plan (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (collectively "Benefit
Plans"), which Carlisle, CBT, Hazen or FirstBank maintains or to which Carlisle,
CBT, Hazen or FirstBank contributes on behalf of current or former employees.
All of the plans and programs listed in Exhibit 3.12 (collectively, "Carlisle
Benefit Plans") comply in all material respects with all applicable requirements
of ERISA and all other applicable federal and state laws, including without
limitation the reporting and disclosure requirements of Part 1 of Title I of
ERISA. With respect to the Carlisle Benefit Plans, individually and in the
aggregate, no event has occurred, and there exists no condition or set of
circumstances, in connection with which Carlisle, CBT, Hazen or FirstBank could
be subject to any liability (except liability for benefits claims and funding
obligations payable in the ordinary course) under ERISA, the Code or any other
applicable law. Each of the Carlisle Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), has been determined by the IRS to qualify
under Section 401(a) of the Code, and there exist no circumstances that would
materially adversely affect the qualified status of any such Carlisle Benefit
Plan under that section. Each Carlisle Benefit Plan that is a defined benefit
pension plan has assets with an aggregate value that exceeds the actuarially
present value of its liability for accrued benefits as determined on the basis
of the actuarial assumptions used for the most recent actuarial valuation of
such Plan, no such Plan has incurred an accumulated funding deficiency within
the meaning of Section 412(a) of the Code, and no such Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA. There is no pending or, to
the best of Carlisle's knowledge, threatened litigation, governmental proceeding
or investigation against or relating to any Carlisle Benefit Plan, and there is
no reasonable basis for any material proceedings, claims, actions or proceedings
against any Plan. No "reportable event" (as defined in Section 4043(b) of ERISA)
(other than a "reportable event" for which the 30-day notice requirement has
been waived by the Pension Benefit Guaranty Corporation) has occurred with
respect to any Carlisle Benefit Plan, and no Carlisle Benefit Plan has engaged
in a "prohibited transaction" (as defined in Section 406 of ERISA and Section
4975(c) of the Code) since the date on which said sections became applicable to
such Plan which could reasonably result in a liability material to the affected
benefit plan.
(b) Carlisle has delivered to Bancshares copies of (i) each Carlisle
Benefit Plan, (ii) the most recent summary plan descriptions of each Carlisle
Benefit Plan, (iii) each trust agreement, insurance policy or other instrument
relating to the funding of any Carlisle Benefit Plan, (iv) the most recent
Annual Reports (Form 5500 series) and accompanying schedules filed with the IRS
or Bancshares States Department of Labor with respect to each Carlisle Benefit
Plan, (v) the most recent determination letter issued by the IRS with respect to
each Carlisle Benefit Plan that is intended to qualify under Section 401 of the
Code, (vi) the most recent available financial statements for each Carlisle
Benefit Plan that has assets, (vii) the most recent actuarial report for any
Carlisle Benefit Plan that is a defined benefit pension plan, and if any such
benefit plan was amended subsequent to the date of such report, information
about the financial effects of such amendment and (viii) the most recent audited
financial statements for each Carlisle Benefit Plan for which audited financial
statements are required by ERISA.
8
<PAGE> 10
3.13. Insurance. Carlisle has delivered to Bancshares correct and complete
copies of all material policies of insurance of Carlisle, CBT, Hazen and
FirstBank currently in effect, including, but not limited to, directors and
officers liability policies and blanket bond policies. Neither Carlisle, CBT,
Hazen nor FirstBank has any liability for unpaid premiums or premium adjustments
not properly reflected on the Carlisle Financial Statements.
3.14. Conduct of Carlisle to Date. Except as contemplated by this Agreement
and the Plan of Merger, from and after December 31, 1995 through the date of
this Agreement: (a) Carlisle, CBT, Hazen and FirstBank have carried on their
respective businesses in the ordinary and usual course consistent with past
practices, (b) Carlisle, CBT, Hazen and FirstBank have not issued or sold any
capital stock or issued or sold any corporate debt securities which would be
classified as long term debt on the balance sheet of Carlisle, CBT, Hazen or
FirstBank, (c) Carlisle, CBT, Hazen and FirstBank have not granted any option
for the purchase of capital stock (except as referred to in Section 2.03),
effected any stock split, or otherwise changed their capitalization, (d)
Carlisle has not declared, set aside, or paid any cash or stock dividend or
other distribution in respect to its capital stock, (e) neither Carlisle, CBT,
Hazen nor FirstBank has incurred any material obligation or liability (absolute
or contingent), except normal trade or business obligations or liabilities
incurred in the ordinary course of business or mortgaged, pledged, or subjected
to lien, claim, security interest, charge, encumbrance or restriction any of its
assets or properties, (f) neither Carlisle, CBT, Hazen nor FirstBank has
discharged or satisfied any material lien, mortgage, pledge, claim, security
interest, charges, encumbrance, or restriction or paid any material obligation
or liability (absolute or contingent), other than in the ordinary course of
business, (g) neither Carlisle, CBT, Hazen nor FirstBank has since December 31,
1995, sold, assigned, transferred, leased, exchanged, or otherwise disposed of
any of its properties or assets other than for a fair consideration in the
ordinary course of business, (h) except as set forth in Exhibit 3.14, neither
Carlisle, CBT, Hazen nor FirstBank has increased the rate of compensation of, or
paid any bonus to, any of its directors, officers, or other employees, except
merit or promotion increases in accordance with existing policy; entered into
any new, or amended or supplemented any existing, employment, management,
consulting, deferred compensation, severance, or other similar contract;
adopted, entered into, terminated, amended or modified any Carlisle Benefit Plan
in respect of any of present or former directors, officers or other employees;
or agreed to do any of the foregoing, (i) neither Carlisle, CBT, Hazen nor
FirstBank has suffered any material damage, destruction, or loss, whether as the
result of flood, fire, explosion, earthquake, accident, casualty, labor trouble,
requisition or taking of property by any government or any agency of any
government, windstorm, embargo, riot, act of God, or other similar or dissimilar
casualty or event or otherwise, whether or not covered by insurance, (j) neither
Carlisle, CBT, Hazen nor FirstBank has cancelled or compromised any debt to an
extent exceeding $50,000.00 owed to Carlisle, CBT, Hazen or FirstBank or claim
to an extent exceeding $50,000.00 asserted by Carlisle, CBT, Hazen or FirstBank,
(k) neither Carlisle, CBT, Hazen nor FirstBank has entered into any transaction,
contract, or commitment outside the ordinary course of its business, (1) neither
Carlisle, CBT, Hazen nor FirstBank has entered, or agreed to enter, into any
agreement or arrangement granting any preferential right to purchase any of its
material assets, properties or rights or requiring the consent of any party to
the transfer and assignment of any such material assets, properties or rights,
(m) there has not been any change in the method of accounting or accounting
practices of Carlisle, CBT, Hazen and FirstBank, and (n) Carlisle, CBT, Hazen
and FirstBank have kept all records substantially in accordance with all
regulatory and statutory requirements and substantially in accordance with
industry standards specified by the American Bankers Association, and have
retained such records for the periods required by statute, regulation or
American Bankers Association industry standards.
3.15. Material Adverse Change. Since December 31, 1995, there has been no
material adverse change in the financial condition, results of operations or
business of Carlisle.
3.16. Properties, Leases and Other Agreements. Except (i) with respect to
debts reflected in the Carlisle Financial Statements, (ii) for any lien for
current taxes not yet delinquent, (iii) for pledges to secure deposits and (iv)
for such other liens, security interests, claims, charges, options or other
encumbrances and imperfections of title which do not materially affect the value
or interfere with or impair the present and continued use of personal or real
property reflected in the Carlisle Financial Statements or acquired since the
9
<PAGE> 11
date of such Statements, Carlisle, CBT, Hazen and FirstBank have good title,
free and clear of any liens, security interests, claims, charges, options or
other encumbrances to all of the personal and real property reflected in the
Carlisle Financial Statements, and all personal and real property acquired since
the date of such Carlisle Financial Statements, except such personal and real
property as has been disposed of in the ordinary course of business.
Substantially all of the buildings and equipment in regular use by Carlisle,
CBT, Hazen and FirstBank have been reasonably maintained and are in good and
serviceable condition, reasonable wear and tear excepted. All leases material to
Carlisle, CBT, Hazen and FirstBank pursuant to which Carlisle, CBT, Hazen or
FirstBank, as lessee, leases real or personal property are valid and effective
in accordance with their respective terms and there is not, under any of such
leases, any material existing default by Carlisle, CBT, Hazen or FirstBank, or
any other party thereto, or any event which with notice or lapse of time or both
would constitute such a material default. No options to renew said leases have
lapsed and the terms of the leases govern the rights of the respective landlords
of Carlisle, CBT, Hazen and FirstBank.
3.17. Accounting. Neither Carlisle nor any of its affiliates will knowingly
take any action that would, in the reasonable opinion of Bancshares, prevent the
Merger from qualifying for pooling of interests accounting treatment.
3.18. No Untrue Statements. No representation or warranty hereunder or
information contained in any financial statement or any other document delivered
to Bancshares pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
3.19. Proper Documentation. With respect to all loans to borrowers which
are payable to Carlisle, CBT, Hazen or FirstBank either directly or as a
participant and except for such imperfections in documentation which when
considered as a whole would not have a net adverse effect on the business,
operations or financial condition of either Carlisle, CBT, Hazen or FirstBank in
excess of $100,000.00:
(a) All loans were made for good, valuable and adequate consideration
in the normal and ordinary course of business, and the notes and other
evidences of indebtedness and any loan agreements or security documents
executed in connection therewith are true and genuine and constitute the
valid and legally binding obligations of the borrowers to whom the loans
were made and are legally enforceable against such borrowers in accordance
with their terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar debtor relief laws from time to
time in effect, as well as general principles of equity applied by a court
of proper jurisdiction (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(b) The amounts represented to Bancshares as the balances owing on the
loans are the correct amounts actually and unconditionally owing, are
undisputed, and are not subject to any offsets, credits, deductions or
counterclaims;
(c) The collateral securing each loan as referenced in a loan officer
worksheet, loan summary report or similar interoffice loan documentation is
in fact the collateral held by Carlisle, CBT, Hazen or FirstBank to secure
each loan;
(d) Carlisle, CBT, Hazen or FirstBank has possession of all loan
document files and credit files for all loans held by them containing
promissory notes and other relevant evidences of indebtedness with original
signatures of their borrowers and guarantors;
(e) Carlisle, CBT, Hazen and FirstBank hold validly perfected liens or
security interests in the collateral granted to them to secure all loans as
referenced in the loan officer worksheets, loan summary reports or similar
interoffice loan documentation and the loan or credit files contain the
original security agreements, mortgages, or other lien creation and
perfection documents unless originals of such documents are filed of public
record;
(f) Each lien or security interest of Carlisle, CBT, Hazen or
FirstBank in the collateral held for each loan is properly perfected in the
priority described as being held by Carlisle, CBT, Hazen or
10
<PAGE> 12
FirstBank in the loan officer worksheets, loan summary reports or similar
interoffice loan documentation contained in the loan document or credit
files;
(g) Carlisle, CBT, Hazen and FirstBank are in possession of all
collateral that the loan document files or credit files indicate they have
in their possession;
(h) All guaranties granted to Carlisle, CBT, Hazen and FirstBank to
insure payment of loans constitute the valid and legally binding
obligations of the guarantors and are enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and similar debtor relief laws from time to time in effect, as
well as general principles of equity applied by a court of proper
jurisdiction (regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(i) With respect to any loans in which Carlisle, CBT, Hazen and
FirstBank have sold participation interests to another bank or other
financial institution, none of the buyers of such participation interests
are in default under any participation agreements.
3.20. Not in Default. Neither Carlisle, CBT, Hazen nor FirstBank is in
default under any material agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment to which it is a party, by which it is bound, or to
which its properties or assets are subject.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCSHARES
Bancshares hereby represents and warrants to Carlisle and Sellers as
follows:
4.01. Organization, Standing and Power. Bancshares is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to have such power or authority would not have a
material adverse effect on the business, operations or financial condition of
Bancshares and its subsidiaries. Bancshares is registered as a bank holding
company with the FRB under the BHC Act.
4.02. Authority. Subject to the approval of this Agreement and the Plan of
Merger by the shareholders of Bancshares and by applicable regulatory
authorities, Bancshares has all requisite corporate power and authority to enter
into this Agreement and the Plan of Merger and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Plan of Merger and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Bancshares' board of directors. This Agreement and the Plan of
Merger have been duly executed and delivered by Bancshares and, subject to
regulatory approval, each constitutes a valid and binding obligation of
Bancshares enforceable in accordance with its terms, except as the
enforceability of the Agreement may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors. The execution and delivery of
this Agreement and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, result in any Violation
pursuant to any provision of the Articles of Incorporation or Bylaws of
Bancshares or any of their subsidiaries or result in any Violation of any loan
or credit agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Bancshares or
any of its subsidiaries or their respective properties or assets. Other than as
described below in connection or in compliance with the provisions of the ABCA,
the Securities Act, the Exchange Act, the securities or blue sky laws of the
various states, and consents, authorizations, approvals, notices or exemptions
required under the BHC Act, the National Bank Act, Arkansas banking laws, and
from other regulatory authorities, no consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Bancshares in connection with the execution and
delivery of this Agreement and the Plan of Merger by Bancshares or the
consummation by Bancshares of the
11
<PAGE> 13
transactions contemplated hereby and thereby, the failure to obtain which would
have a material adverse effect on Bancshares or any Bancshares subsidiary.
Pursuant to a contract Bancshares must obtain the consent of First Tennessee
Bank, N.A. prior to consummation of the merger.
4.03. Capital Structure of Bancshares. The authorized capital stock of
Bancshares consists of 24,000,000 shares of common stock, $1.00 par value, and
500,000 shares of preferred stock, $1.00 par value, of which 5,158,772 shares of
common stock are issued and outstanding. Bancshares has no issued and
outstanding bonds, debentures, notes or other indebtedness having the right to
vote (or convertible into securities having the right to vote) on any matters on
which shareholders may vote. All outstanding shares of Bancshares common stock
are validly issued, fully paid, nonassessable, and not subject to preemptive
rights. There are no options, warrants, calls, rights, or agreements of any
character whatsoever to which Bancshares is a party or by which Bancshares is
obligated to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or any voting debt securities, or by which
Bancshares is obligated to grant, extend or enter into any such option, warrant,
call, right or agreement, except for options of James V. Kelley to purchase
15,384 shares of common stock as publicly disclosed by Bancshares. Immediately
before and after the Effective Time there will be no option, warrant, call,
right or agreement obligating Bancshares to issue, deliver or sell, or cause to
be issued, delivered or sold, any shares of capital stock, or obligating
Bancshares to grant, extend or enter into any such option, warrant, call, right
or agreement, except as disclosed in Exhibit 4.03. The above numbers of shares
of common stock outstanding and subject to stock options are subject to a fifty
percent (50%) stock dividend payable on June 28, 1996.
4.04. Bancshares Financial Statements. (a) The (i) consolidated balance
sheets of Bancshares as of December 31, 1995 and 1994 and the related
consolidated statements of income, consolidated statements of cash flows and
consolidated statements of shareholders equity for the years then ended
certified by Arthur Andersen LLP ("Bancshares Financial Statements") copies of
which have been furnished by Bancshares to Carlisle, have been prepared in
accordance with generally accepted accounting principles and practices applied
on a consistent basis throughout the periods involved (except as otherwise noted
therein and except for year end adjustments of a non-material nature), and
present fairly the consolidated financial condition of Bancshares, at the dates,
and the consolidated results of operations and cash flows for the periods,
stated therein. Neither Bancshares nor any Bancshares subsidiary has any
liability of any nature, whether direct, indirect, accrued, absolute, contingent
or otherwise, which is material to Bancshares, except as provided for or
disclosed in the Bancshares Financial Statements and except for such of the
following liabilities as are incurred in the ordinary course of business:
(i) deposit liabilities and interest payable thereon,
(ii) federal funds purchased and securities sold under repurchase
agreements and interest payable thereon,
(iii) other short term borrowings,
(iv) contingent liability upon negotiable instruments endorsed for the
purpose of collection,
(v) taxes,
(vi) accounts payable of the operating business,
(vii) salaries and benefits payable,
(viii) unearned income and premiums,
(ix) abandoned and garnished accounts, and
(x) letters of credit and similar commitments.
4.05. Bancshares Reports. Bancshares and its subsidiaries have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that were and are required to be filed with (i)
the FRB, (ii) the Office of the Comptroller of the Currency, (iii) the FDIC,
(iv) the Arkansas State Bank Department (the "ASBD") and (v) any other
applicable securities, banking or
12
<PAGE> 14
regulatory authorities (all such reports and statements are collectively
referred to herein as the "Bancshares Reports") except where such failure to
file would not have a material adverse effect on the business operations or
financial condition of Bancshares. The Bancshares Reports complied in all
material respects with all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.06. Authorizations; Compliance with Applicable Laws. Bancshares and its
subsidiaries hold all authorizations, permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities which are material to the
operations of the businesses of Bancshares and its subsidiaries (the "Bancshares
Permits"). Bancshares and its subsidiaries are in compliance with the terms of
the Bancshares Permits, except where the failure to comply would not have a
material adverse effect on Bancshares. The businesses of Bancshares and its
subsidiaries are not being conducted in violation of any Laws, including,
without limitation, Regulation O of the FRB, except for possible violations
which individually or in the aggregate do not and, insofar as reasonably can be
foreseen, in the future will not, have a material adverse effect on Bancshares.
No investigation or review by any Governmental Entity with respect to Bancshares
or its subsidiaries is pending or threatened, nor has any Governmental Entity
indicated an intention to conduct the same. Without limiting the foregoing,
there have been no acts or omissions occurring on or with respect to real estate
currently or previously owned, leased or otherwise used by Bancshares or any
Bancshares subsidiary or in which Bancshares or any Bancshares subsidiary has or
had an investment or security interest (by mortgage, deed of trust, or
otherwise), including, without limitation, properties under foreclosure,
properties held by Bancshares or a Bancshares subsidiary in its capacity as a
trustee, or properties in which any venture capital or similar unit of
Bancshares or a Bancshares subsidiary has or had an interest (the "Bancshares
Property"), which constitute or result, or may have constituted or resulted, in
the creation of any federal, state or common law nuisance (whether or not the
nuisance condition is, or was, foreseen or unforeseen) or which do not comply or
have not complied with federal, state or local Environmental Laws, and as a
result of which acts or omissions Bancshares or a Bancshares subsidiary is
subject to or reasonably likely to incur a material liability. Neither
Bancshares nor any Bancshares subsidiary is subject to or reasonably likely to
incur a material liability as a result of its ownership, lease, operation, or
use of any Bancshares Property or as a result of its investment or security
interest (as described above) in any Bancshares Property (a) that is
contaminated by or contains any hazardous waste, toxic substances or related
materials, including without limitation asbestos, PCBs, pesticides, herbicides,
petroleum products, substances defined as "hazardous substances" or "toxic
substances" in the Environmental Laws, and any other Toxic Substances, or (b) on
which any Toxic Substance has been stored, disposed of, placed, or used in the
construction thereof. No claim, action, suit or proceeding is pending against
Bancshares or any Bancshares subsidiary relating to the Bancshares Property
before any court or other governmental authority or arbitration tribunal
relating to Toxic Substances, pollution or the environment, and there is no
outstanding judgment, order, writ, injunction, decree, or award against or
affecting Bancshares or any Bancshares subsidiary with respect thereto.
4.07. Litigation and Claims. Except as disclosed in this Agreement (a)
neither Bancshares nor any Bancshares subsidiary is subject to any continuing
order of, or written agreement or memorandum of understanding with, or
continuing material investigation by, any federal or state banking or insurance
authority or other Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator, including,
without limitation, cease-and-desist or other orders of any bank regulatory
authority, (b) there is no claim of any kind, action, suit, litigation,
proceeding, arbitration, investigation, or controversy affecting Bancshares or
any Bancshares subsidiary pending or threatened, which will have or can
reasonably be expected to have a material adverse effect on Bancshares and (c)
there are no uncured material violations, or violations with respect to which
material refunds or restitutions may be required, cited in any compliance report
to Bancshares or any Bancshares subsidiary as a result of the examination by any
bank regulatory authority.
4.08. Material Adverse Change. Since December 31, 1995, there has been no
material adverse change in the financial condition, results of operations or
business of Bancshares.
13
<PAGE> 15
4.09. Not in Default. Neither Bancshares nor any Bancshares subsidiary is
in default under any material agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment to which it is a party, by which it is bound,
or to which its properties or assets are subject.
ARTICLE V
COVENANTS OF CARLISLE
5.01. Affirmative Covenants. Carlisle hereby covenants and agrees with
Bancshares that prior to the Effective Time, unless the prior written consent of
Bancshares shall have been obtained, which consent shall not be unreasonably
withheld, and except as otherwise contemplated herein, Carlisle will and
Carlisle will cause CBT, Hazen and FirstBank to:
(a) operate their businesses only in the usual, regular and ordinary
course consistent with past practices;
(b) use reasonable efforts to preserve intact their business
organization and assets, maintain their rights and franchises, retain the
services of their officers and key employees (except that they shall have
the right to lawfully terminate the employment of any officer or key
employee if such termination is in accordance with Carlisle's existing
employment procedures) and maintain their relationships with customers;
(c) use reasonable efforts to maintain and keep their properties in as
good repair and condition as at present, except for depreciation due to
ordinary wear and tear;
(d) use reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that now
maintained;
(e) perform in all material respects all obligations required to be
performed by them under all material contracts, leases, and documents
relating to or affecting their assets, properties, and business;
(f) comply with and perform in all material respects all obligations
and duties imposed upon them by all Laws; and
(g) give Bancshares notice of all boards of directors meetings, allow
Bancshares to have a non-voting representative at each such meeting except
to the extent that Carlisle's legal counsel advises the directors that
permitting Bancshares's presence would constitute a breach of their
fiduciary duties, and provide Bancshares with all written materials and
communications provided to the directors in connection with such meetings.
5.02. Negative Covenants. Except as specifically contemplated by this
Agreement, from the date hereof until the earlier of the termination of the
Agreement or the Effective Time, Carlisle shall not do, and Carlisle will cause
CBT, Hazen and FirstBank not to do, without the prior written consent of
Bancshares, which consent shall not be unreasonably withheld, any of the
following:
(a) incur any material liabilities or material obligations, whether
directly or by way of guaranty, including any obligation for borrowed money
whether or not evidenced by a note, bond, debenture or similar instrument,
except in the ordinary course of business consistent with past practice;
(b) (i) except as disclosed in Exhibit 3.14, grant any bonuses or
increase in compensation to their employees, officers or directors, (ii)
effect any change in retirement or any other benefits to any class of
employees or officers (unless any such change shall be required by this
Agreement or applicable law) which would increase their retirement benefit
liabilities, (iii) adopt, enter into, amend or modify any Carlisle Benefit
Plan except as provided herein, or (iv) hire any executive officer or elect
any new director;
(c) declare or pay any dividend on, or make any other distribution in
respect of, their outstanding shares of capital stock except dividends by
CBT, Hazen or FirstBank;
14
<PAGE> 16
(d) (i) redeem, purchase or otherwise acquire any shares of their
capital stock or any securities or obligations convertible into or
exchangeable for any shares of their capital stock, or any options,
warrants, conversion or other rights to acquire any shares of their capital
stock or any such securities or obligations; (ii) merge with or into or
consolidate with any other corporation or bank, or effect any
reorganization or recapitalization; (iii) purchase or otherwise acquire any
substantial portion of the assets or any class of stock, of any
corporation, bank or other business; (iv) liquidate, sell, dispose of, or
encumber any assets or acquire any assets, other than in the ordinary
course of business consistent with past practice; or (v) split, combine or
reclassify any of their capital or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of their capital stock;
(e) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of their capital
stock of any class (including shares held in treasury), any Voting Debt or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, Voting Debt or convertible securities;
(f) except as required by applicable law, initiate, solicit or
encourage (including by way of furnishing information or assistance), or
take any other action to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as such term is defined below), or negotiate with
any person in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize
any of their officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by
Carlisle, CBT, Hazen or FirstBank to take any such action and, upon
learning of such action by any representative, shall take appropriate steps
to terminate such action, Carlisle shall promptly notify Bancshares orally
of all of the relevant details relating to all inquiries and proposals
which it may receive relating to any of such matters; for purposes of this
Agreement, "Competing Transaction" shall mean any of the following
involving Carlisle, CBT, Hazen or FirstBank; any merger, consolidation,
share exchange or other business combination; a sale, lease, exchange,
mortgage, pledge, transfer or other disposition of a substantial portion of
assets; a sale of shares of capital stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing, the right to acquire capital stock);
(g) propose or adopt any amendments to their corporate charters or
bylaws except as provided in this Agreement;
(h) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle
with respect to any acquisition of a material amount of assets or
securities or any release or relinquishment of any material contract rights
not in the ordinary course of business;
(i) except in their fiduciary capacities, purchase any shares of
Bancshares common stock;
(j) change any method of accounting in effect at December 31, 1995, or
change any method of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending December 31, 1995, except as may be
required by law or generally accepted accounting principles;
(k) take action which would or is reasonably likely to (i) adversely
affect the ability of either of Bancshares or Carlisle to obtain any
necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect Carlisle's ability
to perform its covenants and agreements under this Agreement; or (iii)
result in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(l) change the lending, investment, asset/liability management and
other material policies concerning the business of Carlisle, CBT, Hazen or
FirstBank, unless required by Law or order or unless such change does not
cause a material adverse effect on Carlisle, CBT, Hazen or FirstBank;
(m) agree in writing or otherwise to do any of the foregoing;
15
<PAGE> 17
(n) make any single new loan or series of loans not in accordance with
existing loan policies to one borrower or related series of borrowers in an
aggregate amount greater than $250,000.00;
(o) sell or otherwise dispose of securities owned as investments
except at maturity dates or in accordance with past practices for
securities held for sale or trading or in accordance with Generally
Accepted Accounting Principles for securities classified as "held to
maturity"; or
(p) sell or dispose of any real estate or other assets having a value
in excess of $100,000.00.
5.03. Access and Information. Upon reasonable notice, Carlisle shall (and
shall cause CBT, Hazen and FirstBank to) afford to Bancshares's officers,
employees, accountants, counsel and other representatives, access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records. During such period,
Carlisle shall (and shall cause CBT, Hazen and FirstBank to) furnish promptly to
Bancshares (i) a copy of each Carlisle Report filed or received by it during
such period pursuant to the requirements of the BHC Act 21 and any other federal
or state banking laws promptly after such documents are available, (ii) the
monthly financial statements of CBT, Hazen and FirstBank promptly after such
financial statements are available, (iii) a summary of any action taken by the
Boards of Directors, or any committee thereof, of Carlisle, CBT, Hazen and
FirstBank, and (iv) all other information concerning its business, properties
and personnel as Bancshares may reasonably request. Unless otherwise required by
law, each party will hold any information obtained from the other in connection
with the transaction which is nonpublic in confidence until such time as such
information otherwise becomes publicly available through no wrongful act of the
party holding nonpublic information of the other party, and in the event of
termination of this Agreement for any reason each party shall promptly return
all nonpublic documents obtained from the other party, and any copies made of
such documents, to such other party or destroy such documents and copies.
5.04. Update Disclosure; Breaches. From and after the date hereof until the
earlier of the termination of this Agreement or the Effective Time, Carlisle and
Bancshares shall provide to the other party prompt notice of any matters which
have become known or which have occurred from and after the date hereof which
are material to the financial condition or operations of the disclosing party or
which have a material bearing on any matter dealt with herein.
5.05. Amendment of Carlisle Articles. Carlisle and Sellers shall prior to
the Closing Date effect an amendment to Carlisle's Articles of Incorporation to
elect for Carlisle to be governed by the Arkansas Business Corporation Act of
1987.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Shareholders Meeting. Carlisle and Bancshares shall call meetings of
their shareholders to be held as promptly as practicable for the purpose of
voting upon the Merger Agreements.
6.02. Legal Conditions to Merger. Each of Carlisle and Bancshares will take
all reasonable actions necessary to comply promptly with all legal requirements
it may have with respect to the Merger (including furnishing all information
required by the FRB or in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon either of them
or any of their subsidiaries in connection with the Merger. Each of Carlisle and
Bancshares will, respectively, cause their subsidiaries to take in a prompt
manner all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any agreement, consent, authorization, order or approval of,
or any exemption by, any Governmental Entity or other public or private third
party, required to be obtained or made by Bancshares, Carlisle or any of their
subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement and the Plan of Merger.
16
<PAGE> 18
6.03. Reports.
(a) Prior to the Effective Time, Carlisle and Bancshares shall
respectively, prepare and file as and when required all Carlisle Reports and
Bancshares Reports.
(b) Carlisle and Bancshares shall prepare such Carlisle Reports and
Bancshares Reports such that (i) they comply in all material respects with all
of the statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they are filed and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (ii) with respect to any
Carlisle Report or Bancshares Report containing financial information of the
type included in the Carlisle Financial Statements or the Bancshares Financial
Statements, the financial information (A) is prepared in accordance with
accounting principles and practices as utilized in the Carlisle Financial
Statements or the Bancshares Financial Statements, applied on a consistent basis
(except as stated therein or in the notes thereto) (B) presents fairly the
consolidated financial condition of Carlisle or Bancshares, at the dates, and
the consolidated results of operations and cash flows for the periods, stated
therein and (C) in the case of interim fiscal periods, reflects all adjustments,
consisting only of normal recurring items necessary for a fair presentation,
subject to year-end audit adjustments.
6.04. Brokers or Finders. Bancshares, Carlisle and Sellers represent, as to
itself or themselves, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.
6.05. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other parties. In case at any time after
the Effective Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement or to vest Bancshares with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of Carlisle, CBT, Hazen or FirstBank, the proper officers and directors
of each party to this Agreement shall take all such necessary action.
6.06. Governmental and Other Third Party Approvals. Carlisle and Bancshares
shall each use their reasonable best efforts to obtain all governmental and
other third party approvals, authorizations and consents that may be necessary
or reasonably required of them in order to effect the transactions contemplated
by this Agreement. Carlisle and Bancshares agree to make all filings and
applications for such approvals and reviews as soon as practicable, to prosecute
the same with reasonable diligence and to notify each other when such approvals,
authorizations and consents have been received. Carlisle and Bancshares will
provide each other with copies of all regulatory notices and filings made in
connection with the transactions contemplated by this Agreement prior to filing.
Bancshares and Carlisle will each provide to the other copies of any
correspondence received from any regulatory agency relating to such filings, and
shall use its best efforts to keep the other party advised of the progress of
obtaining all regulatory and third party approvals required for the consummation
of all transactions contemplated by this Agreement.
17
<PAGE> 19
ARTICLE VII
CONDITIONS PRECEDENT
7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approval. The Merger Agreements shall have been
approved and adopted by the legally required vote of the holders of the
outstanding shares of Carlisle Common Stock and the Bancshares common stock
at shareholders meetings duly called for the purpose of voting on the
Merger.
(b) Federal Reserve Board. The Merger Agreements and the transactions
contemplated hereby shall have been approved by the FRB and other necessary
banking authorities without any condition not acceptable to Bancshares, all
conditions required to be satisfied prior to the Effective Time imposed by
the terms of such approvals shall have been satisfied and all waiting
periods relating to such approvals shall have expired.
(c) Arkansas State Bank Commissioner. The Arkansas State Bank
Commissioner shall have approved the transfer of ownership of CBT, Hazen
and FirstBank to Bancshares without any condition not acceptable to
Bancshares.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect.
(e) No Proceeding or Litigation. No material action, suit or
proceeding before any court or any governmental or regulatory authority
shall have been commenced against Bancshares, Carlisle or any affiliate,
subsidiary, associate, officer or director of either of them, seeking to
restrain, enjoin, prevent, change or rescind the transactions contemplated
hereby or questioning the validity or legality of any such transactions.
(f) Closing Date. The Closing Date shall occur as soon as practicable
but in no event later than December 31, 1996 unless extended by Carlisle
and Bancshares.
(g) Consents Under Agreements. Bancshares, Carlisle and their
subsidiaries shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement or instrument.
(h) Securities Laws. A registration statement for the Bancshares Stock
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order. Bancshares
shall have obtained all securities or "blue sky" permits and other
authorizations necessary under state securities laws for Bancshares to
issue the Bancshares Stock and consummate the Merger.
7.02. Conditions to Obligations of Bancshares. The obligation of Bancshares
to effect the Merger is subject to the satisfaction of the following conditions
unless waived in writing by Bancshares:
(a) Representations and Warranties. Each of the representations and
warranties of Carlisle and Sellers set forth in this Agreement shall be
true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects) as
of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except for
changes expressly contemplated by this Agreement.
(b) Performance of Obligations of Carlisle. Carlisle shall have
performed in all material respects each of the obligations required to be
performed by it under this Agreement and the Plan of Merger at or
18
<PAGE> 20
prior to the Closing Date, and Bancshares shall have received a certificate
signed on behalf of Carlisle by the chief executive officer and by the
chief financial officer of Carlisle to such effect.
(c) Opinion of Counsel. Carlisle shall have delivered to Bancshares an
opinion of its counsel, Shults, Ray & Kurrus, dated as of the Closing Date
and in form and substance satisfactory to counsel for Bancshares, to the
aggregate effect that: (i) Carlisle has been duly incorporated and
organized and is a corporation validly existing in good standing under the
laws of Arkansas with full corporate power and authority to enter into this
Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings and other actions on
the part of Carlisle necessary to be taken in connection with the Merger
and (except for the filing of the Articles of Merger) necessary to make
same effective have been duly and validly taken; (iii) this Agreement and
the Plan of Merger have been duly and validly authorized, executed and
delivered on behalf of Carlisle and constitute (subject to standard
exceptions to enforceability arising from the bankruptcy laws and rules of
equity) valid and binding agreements of Carlisle; (iv) the execution of the
Articles of Merger by Carlisle has been duly and validly authorized; and
(v) Carlisle is governed by the Arkansas Business Corporation Act of 1987.
(d) No Material Adverse Change. There shall have been no material
adverse change since December 31, 1995 in the financial condition, results
of operations or business of Carlisle.
(e) Environmental Audits. Phase I environmental audits of the Carlisle
Property shall have been conducted at Bancshares's expense and shall, to
Bancshares's satisfaction, reflect no material problems under Environmental
Laws.
(f) Pooling Opinion. Bancshares shall have received an opinion from
Arthur Andersen LLP to the effect that the Merger qualifies for
pooling-of-interests accounting treatment under applicable accounting
principles and that it will be so treated by the SEC if consummated in
accordance with the Merger Agreements.
(g) Amendment of Articles of Incorporation. Carlisle shall have
perfected an amendment to its articles of incorporation to provide that it
shall be governed by the Arkansas Business Corporation Act of 1987.
(h) Affiliates. Each person who receives a portion of the Bancshares
Stock and who might reasonably be considered to be an affiliate of
Carlisle, as defined in paragraph (a) of Rule 144 of the Rules of the
Securities and Exchange Commission under the Securities Act, shall have
executed and delivered at Closing a letter substantially in the form set
forth in Exhibit 7.02(h).
(i) Consents Under Agreements. Bancshares and its subsidiaries shall
have obtained the consent or approval of each person whose consent or
approval of any transaction contemplated herein is required under any loan
or credit agreement, note, mortgage, indenture, lease or other agreement or
instrument.
(j) CBT and the owners of the office building known as the data
processing annex located on Main Street, Carlisle, Arkansas presently
leased to CBT shall have entered into a written agreement that provides CBT
will continue to occupy and lease said building for twelve months after the
Closing Date, at which time the lease shall terminate.
7.03. Conditions to Obligations of Carlisle and Sellers. The obligations of
Carlisle to effect the Merger are subject to the satisfaction of the following
conditions unless waived by Carlisle and Sellers:
(a) Representations and Warranties. Each of the representations and
warranties of Bancshares set forth in this Agreement shall be true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects) as of the date of
this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except for changes expressly
contemplated by this Agreement, and Carlisle shall have received a
certificate signed on behalf of Bancshares by the chief executive officer
and by the chief financial officer of Bancshares to such effect.
19
<PAGE> 21
(b) Performance of Obligations of Bancshares. Bancshares shall have
performed in all material respects each of the obligations required to be
performed by it under this Agreement and the Plan of Merger at or prior to
the Closing Date, and Carlisle shall have received a certificate signed on
behalf of Bancshares by the chief executive officer and by the chief
financial officer of Bancshares to such effect.
(c) Opinion of Counsel. Bancshares shall have delivered to Carlisle an
opinion of its counsel, Ivester, Skinner & Camp, P.A., dated as of the
Closing Date and in form and substance satisfactory to counsel for
Carlisle, to the aggregate effect that: (i) Bancshares is a corporation
validly existing under the laws Arkansas with full corporate power and
authority to enter into this Agreement and the Plan of Merger and to
consummate the transactions contemplated thereby; (ii) all corporate
proceedings and other actions on the part of Bancshares necessary to be
taken in connection with the Merger and (except for the filing of the
Articles of Merger) necessary to make same effective have been duly and
validly taken; (iii) this Agreement has been duly and validly authorized,
executed and delivered on behalf of Bancshares and constitutes (subject to
standard exceptions to enforceability arising from the bankruptcy laws and
rules of equity) a valid and binding agreement of Bancshares; and (iv) the
execution of the Articles of Merger by Bancshares has been duly and validly
authorized.
(d) No Material Adverse Change. There shall have been no material
adverse change since December 31, 1995 in the financial condition, results
of operations or business of Bancshares.
(e) Release of Guaranties. Union Planters National Bank, Memphis,
Tennessee or Bancshares shall have provided to Sellers satisfactory
assurance that, upon the Closing of the Merger, all of Sellers who have
guaranteed payment of any Carlisle debt to Union Planters National Bank
shall be released and discharged from such guaranties.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01. Termination. This Agreement and the Plan of Merger may be terminated
at any time prior to the Effective Time:
(a) by mutual consent of the Board of Directors of Bancshares and the
Board of Directors of Carlisle;
(b) by either Bancshares or Carlisle (A) if there has been a breach in
any material respect (except that where any statement in a representation
or warranty expressly includes a standard of materiality, such statement
shall have been breached in any respect) of any representation, warranty,
covenant or agreement on the part of Carlisle, on the one hand, or
Bancshares on the other hand, respectively, set forth in this Agreement, or
(B) if any representation or warranty of Carlisle on the one hand, or
Bancshares on the other hand, respectively, shall be discovered to have
become untrue in any material respect (except that where any statement in a
representation or warranty expressly includes a standard of materiality,
such statement shall have become untrue in any respect), in either case
which breach or other condition has not been cured within 10 business days
following receipt by the nonterminating party of notice of such breach or
other condition from the terminating party;
(c) by either Bancshares or Carlisle if any permanent Injunction
preventing the consummation of the Merger shall have become final and
nonappealable;
(d) by either Bancshares or Carlisle if the Merger shall not have been
consummated on or before December 31, 1996, for a reason other than the
failure of the terminating party to comply with its obligations under this
Agreement;
(e) by either Bancshares or Carlisle if the FRB has denied approval of
the Merger and such denial has become final and nonappealable;
20
<PAGE> 22
(f) by Bancshares or Carlisle if any condition precedent to the
terminating party's obligation to effect the Merger has not been satisfied
and such condition cannot reasonably be expected to be satisfied prior to
the date specified in Subsection 8.01(d);
(g) by Carlisle if the Bancshares Average Price is greater than
$32.00; or
(h) by Bancshares if the Bancshares Average Price is less than $24.00.
8.02. Effect of Termination. In the event of termination of this Agreement
by either Carlisle or Bancshares as provided in Section 8.01, this Agreement and
the Plan of Merger shall forthwith become void and there shall be no liability
or obligation on the part of Carlisle, Sellers, Bancshares or their respective
officers or directors, except to the extent that such termination results from
the willful breach by a party hereto of any of its or their representations,
warranties, covenants or agreements set forth in this Agreement.
8.03. Amendment. Subject to the next following sentence, this Agreement and
the Plan of Merger may be amended by the parties hereto by action taken or
authorized by the respective Boards of Directors of Bancshares and Carlisle at
any time prior to the Closing Date. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
8.04. Extension; Waiver. At any time prior to the Effective Time,
Bancshares, on the one hand, and Carlisle, on the other hand, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto, and (iii) waive compliance by the other
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
9.01. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Bancshares, to
First United Bancshares, Inc.
Attention: John E. Burns
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201
(b) if to Carlisle or Sellers, to:
Mr. Daniel C. Horton
Horton & Associates
300 Spring Building, Suite 1010
Little Rock, Arkansas 72201
21
<PAGE> 23
with a copy to:
Robert L. Shults, Esq.
Shults, Ray & Kurrus
200 West Capitol, Suite 1600
Little Rock, Arkansas 72201-3637
9.02. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.03. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.04. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein, including the Plan of Merger) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
9.05. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Arkansas.
9.06. Publicity. The parties hereto agree that they will consult with each
other concerning any proposed press release or public announcement pertaining to
the Merger and will use their best efforts to agree upon the text of such press
release or public announcement prior to the publication of such press release or
the making of such public announcement. However, the determination by Bancshares
as to when and whether it will make a public statement and the contents of any
such public statement shall be final and binding.
9.07. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
heirs, successors and assigns.
9.08. Knowledge of the Parties. Wherever in this Agreement any
representation or warranty is made upon the knowledge of a party hereto that is
not an individual, such knowledge shall include the actual knowledge, after due
inquiry, of any executive officer of such party or an executive officer of any
subsidiary thereof.
9.09. Expenses. Except as otherwise provided herein, all Expenses incurred
by Bancshares and Carlisle in connection with or related to the authorization,
preparation and execution of this Agreement, the Plan of Merger, and all other
matters related to the closing of the transactions contemplated hereby,
including, without limitation of the generality of the foregoing, all fees and
expenses of agents, representatives, counsel and accountants employed by either
such party or its affiliates, shall be borne solely and entirely by the party
which has incurred the same.
9.10. Non-Survival of Representations and Warranties. Except as hereinafter
provided, the representations and warranties contained in this Agreement and all
other terms, covenants and conditions hereof shall merge in the closing
documents and shall not survive Closing or, after Closing be the basis for any
action by any party, except as to any matter which is based upon willful fraud
by a party with respect to which the representations, warranties, terms,
covenants and conditions set forth in this Agreement shall expire only upon
expiration of the applicable statute of limitations.
22
<PAGE> 24
IN WITNESS WHEREOF, Carlisle, Sellers, and Bancshares have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
First United Bancshares, Inc.
By: /s/ JAMES V. KELLEY
-------------------------------
James V. Kelley
Chairman, President and Chief
Executive Officer
ATTEST:
/s/ ROBERT G. DUDLEY
- --------------------------------
Robert G. Dudley, Secretary
Carlisle Bancshares, Inc.
By: /s/ WINTHROP P. ROCKEFELLER
-------------------------------
Winthrop P. Rockefeller
Chairman of the Board
ATTEST:
/s/ DANIEL C. HORTON
- --------------------------------
Daniel C. Horton, Secretary
SELLERS:
<TABLE>
<S> <C>
/s/ WINTHROP P. ROCKFELLER /s/ HAROLD HARDWICK
- -------------------------------- ------------------------------
Winthrop P. Rockefeller Harold Hardwick
/s/ BARRY L. McKUIN /s/ TOMMY HILLMAN
- -------------------------------- ------------------------------
Barry L. McKuin Tommy Hillman
/s/ DANIEL C. HORTON /s/ M. S. WOODRUFF
- -------------------------------- ------------------------------
Daniel C. Horton M. S. Woodruff
</TABLE>
23
<PAGE> 25
EXHIBIT A
PLAN OF MERGER
This Plan of Merger, dated as of April 1, 1996 ("Plan of Merger"), by and
between First United Bancshares, Inc., an Arkansas corporation ("Bancshares"),
and Carlisle Bancshares, Inc., an Arkansas corporation ("Carlisle").
WHEREAS, Carlisle is a corporation with authorized capital stock consisting
of 200,000 shares of common stock, $1.00 par value of which 139,142 shares of
common stock ("Carlisle Common Stock") are validly issued and outstanding on the
date hereof;
WHEREAS, Bancshares is a corporation with authorized capital stock of
24,000,000 shares of common stock, $1.00 par value, and 500,000 shares of
preferred stock, $1.00 par value, of which 5,158,772 shares of common stock are
validly issued and outstanding on the date hereof, subject to a fifty percent
(50%) stock dividend payable on June 26, 1996;
WHEREAS, Bancshares is a corporation duly organized and existing under the
laws of Arkansas;
WHEREAS, concurrently with the execution and delivery of this Plan of
Merger, Bancshares and Carlisle have entered into an Agreement and Plan of
Reorganization (the "Agreement" and, together with this Plan of Merger, the
"Merger Agreements") that contemplates the merger of Carlisle with and into
Bancshares (the "Merger") upon the terms and conditions provided in this Plan of
Merger and the Agreement and pursuant to the Arkansas Business corporation Act
(the "ABCA");
WHEREAS, the Boards of Directors of Bancshares and Carlisle deem it fair
and equitable to, and in the best short-term and long-term interests of, their
respective corporations and shareholders that Carlisle be merged with and into
Bancshares with Bancshares being the surviving corporation, and each such Board
of Directors has approved this Plan of Merger, has authorized its execution and
delivery, and has directed that this Plan of Merger and the Merger be submitted
to Carlisle and Bancshares shareholders for approval, and has recommended that
the shareholders approve the Merger.
NOW, THEREFORE, in consideration of the promises and the agreements herein
contained, the parties hereto adopt and agree to the following agreements, terms
and conditions relating to the Merger and the mode of carrying the same into
effect:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of the Merger
Agreements, Carlisle will be merged with and into Bancshares, which will
continue as the surviving corporation, in accordance with and with the effect
provided in the ABCA.
1.02. Effective Time of the Merger. Subject to the provisions of the Merger
Agreements, articles of merger (the "Articles of Merger") shall be duly prepared
and executed by Bancshares and Carlisle and thereafter delivered to the
Secretary of State of the State of Arkansas for filing, as provided in the ABCA,
as soon as practicable on or after the Closing Date (as defined in the
Agreement). The Merger shall become effective upon the filing of the Articles of
Merger with the Secretary of the State of Arkansas or at such time within two
business days thereafter as is provided in the Articles of Merger (the
"Effective Time").
1.03. Effects of the Merger. (a) At the Effective Time, (i) the separate
existence of Carlisle shall cease and Carlisle shall be merged with and into
Bancshares (Bancshares and Carlisle are sometimes referred to herein as the
"Constituent Corporations" and Bancshares is sometimes referred to herein as the
"Surviving Corporation"), (ii) the Articles of Incorporation of Bancshares in
effect as of the Effective Time (the "Articles") shall be the Articles of
Incorporation of the Surviving Corporation, and (iii) the Bylaws of Bancshares
in effect as of the Effective Time (the "Bylaws") shall be the Bylaws of the
Surviving Corporation.
<PAGE> 26
(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock subscriptions
and all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the Constituent Corporations, and the title to any real estate
vested by deed or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts and liabilities had been
incurred by it. Any action or proceeding, whether civil, criminal or
administrative, pending by or against either Constituent Corporation shall be
prosecuted as if the Merger had not taken place, and the Surviving Corporation
may be substituted as a party in such action or proceeding in place of any
Constituent Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE COMMON STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.01. Conversion of Carlisle Common Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Carlisle Common Stock, but subject to the rights of dissenting
shareholders of Carlisle:
(a) Conversion of Carlisle Common Stock. The issued and outstanding
shares of Carlisle Common Stock shall be converted in accordance with the
Agreement into the right to receive the consideration provided in Section
2.01 of the Agreement.
(b) Cancellation of Shares. All shares of Carlisle Common Stock issued
and outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the
right to receive a pro rata amount of the consideration provided therefor
upon the surrender of such certificate in accordance with the Plan of
Merger.
2.02. Exchange of Certificates. (a) Exchange Agent. As of the Effective
Time, Bancshares shall deposit with the Trust Department of First National Bank
of El Dorado, El Dorado, Arkansas or such other bank or trust company designated
by Bancshares (the "Exchange Agent") for the benefit of the holders of shares of
Carlisle Common Stock, for exchange in accordance with this Article II through
the Exchange Agent, the number of shares of Bancshares common stock and cash
(the "Exchange Fund") to be paid pursuant to Section 2.01 in exchange for shares
of Carlisle Common Stock outstanding immediately prior to the Effective Time.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Carlisle Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of Bancshares
common stock and cash pursuant to Section 2.01, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Bancshares may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Bancshares common stock
and cash payment due. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
Bancshares, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of whole
A-2
<PAGE> 27
shares of Bancshares common stock and cash which such holder has the right to
receive pursuant to Section 2.01 of the Agreement, and the Certificate so
surrendered shall forthwith be cancelled. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
consideration specified in Section 2.01 of the Agreement.
(c) Distributions with Respect to Unexchanged Shares. No delivery of
Bancshares common stock or cash payment of any kind shall be made to the holder
of any unsurrendered Certificate until the holder of record of such Certificate
shall surrender such Certificate.
(d) No Further Ownership Rights in Carlisle Common Stock. The consideration
paid upon the surrender of shares of Carlisle Common Stock in accordance with
the terms hereof including any cash shall be deemed to have been paid in full
satisfaction of all rights pertaining to such shares of Carlisle Common Stock,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Carlisle Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and payment shall be made as provided in this
Plan of Merger.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the shareholders of Carlisle for six months after the
Effective Time shall be delivered to Bancshares, upon demand, and any
shareholders of Carlisle who have not theretofore complied with this Section
2.02 shall thereafter look only to Bancshares for payment of the Bancshares
common stock and cash due for their Carlisle stock.
(f) No Liability. Neither Bancshares nor Carlisle shall be liable to any
holder of shares of Carlisle Common Stock for shares of Bancshares common stock
or cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE III
CONDITIONS; TERMINATION; AMENDMENT
3.01. Conditions to the Merger. Consummation of the Merger is conditional
upon the fulfillment or waiver of the conditions precedent set forth in Article
VII of the Agreement.
3.02. Termination. This Plan of Merger may be terminated and the Merger
abandoned by mutual consent of the respective Boards of Directors of Carlisle
and Bancshares at any time prior to the Effective Time. If the Agreement is
terminated in accordance with Article IX thereof, then this Plan of Merger will
terminate simultaneously and the Merger will be abandoned without further action
by Carlisle or United.
3.03. Amendment. Subject to the next following sentence, this Plan of
Merger may be amended by the parties hereto by action taken or authorized by
their respective Boards of Directors at any time before the Closing Date. This
Plan of Merger may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
3.04. Extension; Waiver. At any time prior to the Closing Date, Bancshares
and Carlisle, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto
and (ii) waive compliance by the other with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument on
behalf of such party.
A-3
<PAGE> 28
ARTICLE IV
GENERAL PROVISIONS
4.01. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Bancshares, to
First United Bancshares, Inc.
Attention: John E. Burns
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201
(b) if to Carlisle, to
Mr. Daniel C. Horton
Horton & Associates
300 Spring Building, Suite 1010
Little Rock, Arkansas 72201
with a copy to:
Robert L. Shults, Esq.
Shults, Ray & Kurrus
200 West Capitol, Suite 1600
Little Rock, Arkansas 72201-3637
4.02. Interpretation. When a reference is made in this Plan of Merger to
Sections, such reference shall be to a Section of this Plan of Merger unless
otherwise indicated. The headings contained in this Plan of Merger are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan of Merger.
4.03. Counterparts. This Plan of Merger may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
4.04. Governing Law. This Plan of Merger shall be governed and construed in
accordance with the laws of the State of Arkansas.
A-4
<PAGE> 29
IN WITNESS WHEREOF, Carlisle and Bancshares have caused this Plan of Merger
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
FIRST UNITED BANCSHARES, INC.
By: /s/ JAMES V. KELLEY
-------------------------------
James V. Kelley
Chairman, President
and Chief Executive Officer
ATTEST:
/s/ ROBERT G. DUDLEY
- --------------------------------
Robert G. Dudley, Secretary
CARLISLE BANCSHARES, INC.
By: /s/ WINTHROP P. ROCKEFELLER
-------------------------------
Chairman of the Board
/s/ DANIEL C. HORTON
- --------------------------------
Daniel C. Horton, Secretary
A-5
<PAGE> 30
EXHIBIT 1
SHAREHOLDERS OF CARLISLE BANCSHARES, INC.
(SELLERS)
<TABLE>
<CAPTION>
OWNED
NAME RESIDENCE SHARES
- ------------------------------------------------------------------ ---------------- -------
<S> <C> <C>
Harold Hardwick................................................... Brinkley, AR 2,479
Tommy Hillman..................................................... Carlisle, AR 11,994
Daniel C. Horton.................................................. Little Rock, AR 11,950
Barry L. McKuin................................................... Morrilton, AR 10,450
Winthrop P. Rockefeller........................................... Little Rock, AR 83,631
M. S. Woodruff.................................................... Hot Springs, AR 8,725
TOTALS............................................................ 129,229
</TABLE>
<PAGE> 31
EXHIBIT 7.02(H)
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Gentlemen:
I may presently be considered to be an "affiliate", as defined in paragraph
(a) of Rule 144 of the Rules and Regulations of the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended (the "Act"), of
Carlisle Bancshares, Inc. an Arkansas Corporation ("Carlisle"). Pursuant to the
merger (the "Merger") of Carlisle with and into First United Bancshares, Inc.
("First United"), I will acquire shares of the common stock, par value
$1 per share ("Common Stock"), of First United. I represent and warrant that I
(i) am acquiring said shares (as the same may be increased, decreased or are
changed in accordance with the Agreement and Plan of Merger dated April 1, 1996,
as amended, relating to the Merger, the ("Shares")) for my own account (or in
the capacity indicated hereon) and with no present intention of dividing my
participation with others or otherwise making a distribution of the Shares and
(ii) shall not make any sale, transfer or other disposition of the Shares in
violation of the Act or the General Rules and Regulations promulgated thereunder
by the SEC.
I have been advised that the issuance of the Shares to me pursuant to the
Merger has been registered under the Act in the Registration Statement on SEC
Form S-4, as amended, Registration No. ("Registration Statement") as
filed with the SEC, receipt of a copy of which Registration Statement is hereby
acknowledged. However, I have also been advised that any public offering or sale
by me of any of the Shares will, under current law, require either (i) the
further registration (by amendment of such Form S-4 or otherwise) under the Act
of the Shares to be sold or (ii) compliance with Rule 145 promulgated under the
Act or (iii) the availability of another exemption from such registration.
I agree not to sell, transfer or dispose of the Shares unless (i) there is
in effect a registration statement under the Act covering such sale, transfer,
or other disposition, or (ii), such sale, transfer or disposition complies with
Rule 145 or is otherwise exempt from registration. Further, I will furnish to
First United such documentation incident to such sale, transfer or other
disposition as First United shall reasonably request evidencing compliance with
Rule 145 or the availability of any exemption from registration being claimed.
Such documentation shall be provided to First United prior to any such sale,
transfer or other disposition in order that First United, and its counsel may
have a reasonable opportunity to review the documentation and form an opinion as
to the validity of any such exemption.
I agree that notwithstanding any provision herein or contained in the
Agreement and Plan of Reorganization that I will not sell, transfer, or
otherwise dispose of any of the Shares unless First United has made public
disclosure of financial results reflecting 30 days' of post-Merger combined
operations of Carlisle and First United within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies. First United has agreed
to make the required public disclosure of financial results as set out above as
soon as feasible after the Merger is consummated. In addition, I hereby
represent and warrant to First United that I have not made any sales of Carlisle
or First United common stock during the 30-day period immediately preceding the
date hereof and I further agree not to engage in any such sales prior to the
Merger, nor have I pledged or will I pledge any First United or Carlisle common
stock to secure any obligation during such period.
I represent and warrant to First United that:
1. I have carefully read this letter and discussed its requirements and
other applicable limitations upon the sale, transfer or other disposition of the
Shares, to the extent I felt necessary, with my counsel or counsel for Carlisle.
2. I have been informed by First United that any distribution by me of the
Shares has not been registered under the Act and that the Shares must be held by
me indefinitely until (i) such distribution of the Shares has been registered
under the Act, (ii) a sale of the Shares is made in conformity with the volume
and other
<PAGE> 32
limitations of Rule 145 promulgated by the SEC under the Act, or (iii) some
other exemption from registration is available with respect to any such proposed
sale, transfer or other disposition of the Shares.
3. I have been informed by First United that it is required to file
periodic reports with the SEC and the NASDAQ and that certain sales of the
Shares by me may not be required to be registered under the Act by virtue of
Rule 145 promulgated by the SEC under the Act, provided that such sales are made
in accordance with all of the terms and conditions of such Rule, including among
other things the following:
(a) The amount of First United Common Stock sold by me pursuant to
Rule 145 during any period of three months cannot exceed the quantity limit
of (i) one percent of the total outstanding First United Common Stock or
(ii) the average reported weekly trading volume on NASDAQ during the four
week period immediately preceding receipt of the order by the broker to
execute the transaction, whichever of (i) or (ii) is greater. In computing
the quantity limit it is necessary to count sales not only by me but also
by certain immediate family members and other related persons and others
with whom I may act in concert.
(b) Sales must be made in brokers' transactions as defined by the SEC
Rule 144 (certain provisions of which are incorporated by reference into
Rule 145).
(c) No sales may be made under the Rule unless First United has filed
all SEC reports required to be filed by First United.
(d) The broker must be given information showing compliance with Rule
145.
4. I understand that First United is under no obligation to register the
sale, transfer or other disposition of the Shares by me or on my behalf or to
take any other action necessary in order to make compliance with an exemption
from registration available.
5. I have been informed by First United that if I propose to sell any of
these Shares pursuant to Rule 145, and if such sale would be permitted under the
terms of this letter, First United will, upon my written request, supply me with
the following:
(a) A statement as to whether First United has complied with the
provisions of Rule 145 regarding filing of SEC reports as a condition to
sales made pursuant to that Rule;
(b) A confirmation as to the number of shares of First United Common
Stock outstanding as shown by the most recent report or statement published
by it; and
(c) First United taxpayer identification number and SEC file number.
The information and documents described or referred to above were furnished
to me before my right to acquire the Shares became fixed.
Very truly yours,
2
<PAGE> 1
EXHIBIT 3(I)
Articles of Incorporation of Carlisle Bancshares, Inc.
<PAGE> 2
EXHIBIT 3(I)
RESTATED
ARTICLES OF INCORPORATION
OF
CARLISLE BANCSHARES, INC.
DATED OCTOBER 29, 1984
AS AMENDED
MARCH 4, 1992
The undersigned natural person of the age of twenty-one (21) years or
more, in order to form a corporation for the purposes hereinafter stated, under
and pursuant to the Arkansas Business Corporation Act, hereby certifies as
follows:
1. The name of this corporation is Carlisle Bancshares, Inc.
2. The nature of the business of the corporation and the object
or purposes proposed to be transacted, promoted or carried on by it, are as
follows:
(a) To engage in the business of a bank holding company.
(b) To conduct any other business enterprise not contrary
to law.
(c) To buy, sell, lease, use, develop, mortgage, improve
and otherwise deal in and dispose of all types of real or personal property in
connection with the conduct of business enterprise carried on by the
corporation.
(d) To exercise all of the powers enumerated in Section 4
of the Arkansas Business Corporation Act.
3. The period of existence of this corporation shall be
perpetual.
4. The registered office of this corporation shall be located at
2200 Worthen Bank Building,, Little Rock, Arkansas 72201 and the name of the
registered agent of this corporation at that address is C. Douglas Buford, Jr.
5. The total amount of the authorized capital stock of this
corporation is 200,000 shares of common stock with $1.00 par value each.
6. This corporation shall not commence business until at least
$300.00 has been received as consideration for the issuance of shares.
7. The name and post office address of each incorporator is as
follows:
<TABLE>
<CAPTION>
NAME POST OFFICE ADDRESS
---- -------------------
<S> <C>
C. Douglas Buford, Jr. 2200 Worthen Bank Building
Little Rock, Arkansas 72201
</TABLE>
<PAGE> 3
8. The number of Directors constituting the initial Board of
Directors shall be one. At the meeting of the shareholders next following the
time when the number of shareholders of record shall be more than one,
additional Directors shall be elected so that the total number of Directors
shall be equal to the number of shareholders of record (but not to exceed eight
unless the corporate bylaws specifically so provide).
9. The President and Secretary of the Corporation shall have the
authority on behalf of the corporation to enter into any contract between the
corporation and all of its shareholders (a) imposing restrictions on the future
transfer (whether inter vivos, by inheritance or testamentary gift),
hypothecation or other disposition of its shares; (b) granting purchase options
to the corporation or its shareholders; or (c) requiring the corporation or its
shareholders to or (c) requiring the corporation or its shareholders to
purchase such shares upon stated contingencies. In addition, any and all of
such restrictions, options or requirements may be imposed on all shares of the
corporation, issued and unissued, upon the unanimous resolution of the Board of
Directors and the consent of all stockholders as of the date of the Board's
resolution.
10. No contract entered into by this corporation shall be invalid
or unenforceable because of the interest of any Director in the contract,
either directly or indirectly.
EXECUTED this 29th day of October, 1984.
/s/ C. Douglas Buford, Jr.
--------------------------
2
<PAGE> 1
EXHIBIT 3(II)
Bylaws of Carlisle Bancshares, Inc.
<PAGE> 2
EXHIBIT 3(II)
BYLAWS
OF
CARLISLE BANCSHARES, INC.
ARTICLE I
STOCK
1. Certificates. Certificates of stock shall be issued to each
holder of fully paid stock in numerical order. Each certificate shall be
signed by the President and attested by the Secretary. A record of each
certificate shall be kept in the corporation's records.
2. Form. The form of the certificate to represent stock
ownership in the corporation shall be fixed by the original incorporators, and
may be changed from time to time by the Board of Directors.
3. Transfer. Shares of the corporation shall be transferred on
its books only upon the surrender to the corporation of the share certificates
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer. In that event, the surrendered certificates shall be
cancelled, new certificates issued to the person entitled to them, and the
transaction recorded on the books of the corporation.
4. Lost Certificates. The Board of Directors shall direct a new
certificate to be issued in place of a certificate alleged to have been
destroyed or lost if the owner makes an affidavit that it is destroyed or lost,
but the board in its discretion may, as a condition precedent to issuing the
new certificate, require the owner to give the corporation a bond or security
acceptable to the Board as indemnity against any claim that may be made against
the corporation on the certificate allegedly destroyed or lost.
5. Restrictions on Transfer. The President and Secretary of the
corporation shall have the authority on behalf of the corporation to enter into
any contract between the corporation and all of its shareholders (a) imposing
restrictions on the future transfer (whether inter vivos, by inheritance or
testamentary gift), hypothecation or other disposition of its shares; (b)
granting purchase options to the corporation or its shareholders; or (c)
requiring the corporation or its shareholders to purchase such shares upon
stated contingencies. In addition, any or all of such restrictions, options or
requirements may be imposed on all shares of the corporation, issued and
unissued, upon the unanimous resolution of the Board of Directors and the
consent of all stockholders as of the date of the Board's resolution.
<PAGE> 3
ARTICLE II
STOCKHOLDERS
1. Annual Meeting. The annual meeting of the stockholders of
this corporation shall be held at such place within the continental limits of
the United States as the Directors shall designate, the date of the meeting to
be fixed by the Directors for a date in the month of January of each year.
2. Special Meetings. Special meetings of the stockholders may be
called at any time by the President, by resolution of the Board of Directors,
or by any member of the Board of Directors.
3. Notice. Written notice of stockholders' meetings shall be
given either personally or by mail, to each stockholder of record at his
address, as the same appears on the stock book of the corporation, not less
than ten (10) nor more than fifty (50) days before the meeting is to be held.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid.
If a proposal to increase the authorized capital stock or bonded indebtedness
is to be submitted, notice must be given not less than sixty (60) nor more than
seventy-five (75) days before the meeting. In case of special meetings, the
notice shall also include a statement of the purpose or purposes for which the
meeting is called. If at any annual meeting there shall be presented a
proposal to increase the authorized capital stock or bonded indebtedness, to
dissolve, merge or consolidate, or to sell, lease, exchange, or otherwise
dispose of all or substantially all of the corporation's assets, to amend the
Articles of Incorporation or to effect any other fundamental corporate change,
then that annual meeting shall be deemed, for the purpose of notice, a special
meeting. Notice of any meeting or service of such notice may be waived in
writing before or after the meting by a stockholder or by the attendance in
person or by proxy of any stockholder at such meeting. No irregularity of
notice of any regular or special meeting of the stockholders shall invalidate
such meeting or any proceeding held at such meeting.
4. Quorum. A quorum at any meeting of the stockholders shall
consist of a majority in interest in the stock issued an outstanding then
entitled to vote, represented in person or by proxy. A majority of such quorum
shall decide any question that may come before the meeting.
5. Proxies. A stockholder may vote at any meeting of the
stockholders by being present in person or by giving to some other person
present at the meeting a written proxy. Such proxy shall be filed with the
Secretary of the corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution unless
otherwise provided in the proxy.
2
<PAGE> 4
6. Voting Shares. Subject to the provisions for cumulative
voting hereinafter set forth in Number 7 of this Article II, each outstanding
share entitled to vote shall be entitled to one vote upon each matter submitted
to a vote at a meeting of the shareholders.
7. Cumulative Voting. At each election for directors every
shareholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are directors to be elected and for whose election he has a right to
vote, or to cumulate his votes by giving one candidate as many votes as the
number of such directors multiplied by the number of his shares equal, or by
distributing such votes on the same principle among any number of candidates.
8. Informal Action by Stockholders. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
DIRECTORS
1. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
2. Number, Tenure and Qualifications. The number of Directors of
the corporation shall be the same as the number stated in the Articles of
Incorporation. Each Director shall hold office for the term for which he is
elected or until his successor shall have been elected and qualified.
directors need not be residents of Arkansas nor shareholders of the
corporation.
3. Vacancies. If a vacancy occurs in the Board of Directors by
reason of death or resignation, or if the stockholders fail to fill all the
vacancies in the Board of Directors at the annual meeting of stockholders or
any meeting for the purpose of electing Directors, the vacancies shall be
filled by the affirmative vote of a majority of the remaining members of the
Board of Directors.
4. Resignations. A Director may resign at any time by filing his
written resignation with the Secretary.
5. Removal. A Director may be removed at any time, with or
without cause, by a special stockholders' meeting called expressly for that
purpose.
6. Meetings. Meetings of the Board of Directors shall be held on
call of any member after giving notice in writing or otherwise to all members
at least twenty-four hours prior thereto. Notice of any meeting or service of
such
3
<PAGE> 5
notice may be waived in writing before or after the meeting by a Director or by
attendance at such meeting. No irregularity of notice of such meeting shall
invalidate such meeting or any proceeding thereat.
7. Quorum. A quorum of any meeting of the Board of Directors
shall consist of a majority of the entire membership of the Board. A majority
of such quorum shall decide any question that may come before the meeting.
8. Informal Action. Action taken by a majority of the Directors
without a meeting in respect to any corporate matter shall be valid if, before
or after such action, all Board members sign and file with the Secretary for
inclusion in the corporate minute book a memorandum showing (a) the nature of
the action taken, (b) the consent of each Board member, and (c) the names of
Directors approving and Directors opposing such action.
9. Proxies. Directors may not vote by proxy.
10. Election of Officers. Officers of the corporation shall be
elected by the Board of Directors and shall serve at the pleasure of the board
of Directors subject to any contracts of employment entered into by the
corporation. The Board of Directors shall fix the compensation of all officers
of the corporation.
11. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance by each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
OFFICERS
1. Number. The officers of the corporation shall be a President,
one or more Vice-Presidents (the number thereof to be determined by the Board
of Directors), a Treasurer, a Secretary and such other officers as may be
elected in accordance with these bylaws. Any two or more offices may be held
by the same person, except that if there is more than one shareholder the
offices of President and Secretary may not be held by the same person.
2. Vacancies. When a vacancy occurs in one of the executive
offices by death, resignation or otherwise, it shall be filled by the Board of
Directors. The officer so selected shall hold office until his successor is
chosen and qualified.
3. Execution of Written Instruments. Leases, deeds, mortgages,
and contracts not in the ordinary course of business shall be executed by the
President or the Vice-President and attested by the Secretary unless he Board
of Directors shall in a particular situation designate another procedure for
their execution. The Board of Directors may
4
<PAGE> 6
authorize any one or more officers and/or employees to execute contracts in the
ordinary course of business on behalf of the corporation and such authority may
be general or confined to specific instances.
4. Checks and Notes. Checks, notes, drafts and demands for money
shall be signed by any one or more officers of the corporation.
ARTICLE V
GENERAL FISCAL PROVISIONS
1. Fiscal Year. The corporation shall keep its books on a
calendar year basis.
2. Dividends. The Board of Directors may from time to time
declare, and the corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law and its Articles
of Incorporation.
ARTICLE VI
WAIVER OF NOTICE
1. Whenever any notice is required to be given to any shareholder
or director of the corporation under these Bylaws or under the provisions of
the Articles of Incorporation or under the Arkansas Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE VII
AMENDMENTS
Bylaws may be adopted, amended or repealed at any meeting of the Board
of Directors by the vote of a majority thereof, unless the Articles of
Incorporation provide for the adoption, amendment or repeal by the
shareholders, in which event action thereof may be taken at any meeting of the
shareholders by vote of a majority of the voting shares outstanding and a
majority of the outstanding shares of any other class which may be
substantially adversely affected by such action.
CARLISLE BANCSHARES, INC.
By /s/ Daniel C. Horton
---------------------------------
Daniel C. Horton
Secretary
Dated March 29, 1985
-----------------------------
5
<PAGE> 1
EXHIBIT 5
Opinion of Ivester, Skinner & Camp, P.A.
<PAGE> 2
Exhibit 5
June 17, 1996
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Gentlemen:
In our opinion, the shares of First United Bancshares, Inc. common
stock $1.00 par value per share, being registered under this Registration
Statement when issued in exchange for the outstanding common stock of Carlisle
Bancshares, Inc., will constitute legally issued, fully paid, nonassessable
shares of First United Bancshares, Inc.
We consent to the inclusion of this opinion in the Registration
Statement and reference to us under the caption "Legal Opinions" in the Proxy
Statement included in the Registration Statement.
IVESTER, SKINNER & CAMP, P.A.
/s/ Ivester, Skinner & Camp, P.A.
<PAGE> 1
EXHIBIT 8
Tax Opinion of Shults, Ray & Kurrus
Regarding Carlisle Bancshares, Inc. Acquisition
<PAGE> 2
EXHIBIT 8
June 17, 1996
Carlisle Bancshares, Inc.
300 Spring Building, Suite 1010
Little Rock, Arkansas
Dear Sirs:
We are special tax counsel to Carlisle Bancshares, Inc. ("Carlisle") in
connection with certain transactions contemplated by the Agreement and Plan of
Reorganization, as amended, dated as of April 1, 1996, pursuant to which First
United Bancshares, Inc. ("First United") would issue to the stockholders of
Carlisle shares of First United Stock in exchange for all the issued and
outstanding stock of Carlisle through a merger transaction (the "Merger") in
which Carlisle would be merged with and into First United. In that connection,
our opinion is as set forth in the section entitled, "THE MERGER - Certain
Federal Income Tax Consequences" in this Registation Statement.
We hereby consent to the filing of this letter as Exhibit 8 to the
Registration Statement on Form S-4 which the Proxy Statement is a part and to
the reference to us in the section entitled "THE MERGER - Certain Federal
Income Tax Consequences" in the Proxy Statement.
Very truly yours,
/s/ SHULTS, RAY & KURRUS
Shults, Ray & Kurrus
<PAGE> 1
EXHIBIT 21
Subsidiaries of First United Bancshares, Inc.
<PAGE> 2
EXHIBIT 21
FIRST UNITED BANCSHARES, INC.
Subsidiaries
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
The First National Bank of El Dorado, El Dorado, Arkansas United States
City National Bank of Fort Smith, Fort Smith, Arkansas United States
First National Bank of Magnolia, Magnolia, Arkansas United States
Merchants and Planters Bank N.A., Camden, Arkansas United States
First United Trust Company, N..A., El Dorado, Arkansas United States
Commercial Bank at Alma, Alma, Arkansas` Arkansas
First Stuttgart Bank & Trust Company, Stuttgart, Arkansas Arkansas
Bank of North Arkansas, Melbourne, Arkansas Arkansas
FirstBank, Texarkana, Texas Texas
</TABLE>
<PAGE> 1
EXHIBIT 23(A)
Consent of Arthur Andersen LLP
<PAGE> 2
EXHIBIT 23(A)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated January 19, 1996 included in First United Bancshares, Inc.'s Form
10-K for the year ended December 31, 1995 and to all references to our Firm
included in this Registration Statement.
ARTHUR ANDERSEN LLP
Jackson, Mississippi
June 17, 1996
<PAGE> 1
EXHIBIT 23(B)
Consent of Martin & Company
<PAGE> 2
EXHIBIT 23(B)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated January 28, 1994 included in First United Bancshares, Inc.'s Form
10-K for the year ended December 31, 1995 and to all references to our Firm
included in this Registration Statement.
MARTIN & COMPANY
Little Rock, Arkansas
June 17, 1996
<PAGE> 1
EXHIBIT 23(C)
Consent of Kemp & Company
<PAGE> 2
EXHIBIT 23(C)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the use of our report dated January 26, 1996
on the consolidated financial statements of Carlisle Bancshares, Inc. as of
December 31, 1995 and for the year then ended included in this Registration
Statement on Form S-4 and related Prospectus of First United Bancshares, Inc.
for the registration of 595,000 shares of its common stock.
/s/ Kemp & Company
- ------------------
Little Rock, Arkansas
June 14, 1996
<PAGE> 1
EXHIBIT 23(D)
Consent of Ernst & Young LLP
<PAGE> 2
EXHIBIT 23(D)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the use of our report dated February 14, 1995
with respect to the consolidated financial statements of Carlisle Bancshares,
Inc. as of December 31, 1994 and for each of the two years then ended included
in this Registration Statement on Form S-4 and related Prospectus of First
United Bancshares, Inc. for the registration of 595,000 shares of its common
stock.
/s/ Ernst & Young LLP
- ---------------------
Little Rock, Arkansas
June 14, 1996
<PAGE> 1
EXHIBIT 99(A)
First United Bancshares, Inc. Form of Proxy
<PAGE> 2
Exhibit 99(a)
FIRST UNITED BANCSHARES, INC.
PROXY
The undersigned hereby appoints James V. Kelley and John E. Burns, or
either of them acting in the absence of the other, as attorneys and proxies of
the undersigned, to represent the undersigned at the Special Meeting of
Stockholders of First United Bancshares, Inc. ("First United") to be held on
August 19, 1996 at 2:00 p.m. local time at the First National Bank Building,
Main and Washington Streets, El Dorado, Arkansas and at any adjournment or
adjournments thereof and to vote all shares of stock of First United held of
record by the undersigned:
1. Approval of the Agreement and Plan of Reorganization which
provides for the merger of Carlisle Bancshares, Inc. into
First United.
FOR AGAINST ABSTAIN
---- ---- ----
2. Approval of the amendment to Article Seventh of the First
United Articles of Incorporation to allow the First United
Board of Directors to approve certain mergers or share
exchanges without Stockholder approval.
FOR AGAINST ABSTAIN
---- ---- ----
3. Approval of the amendment to Article Tenth of the First United
Articles of Incorporation to allow the First United Board of
Directors to increase or decrease the number of directors last
fixed by the Stockholders and to fill new positions created.
FOR AGAINST ABSTAIN
---- ---- ----
4. In their discretion on such other matters as may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on other side)
THIS PROXY WILL BE VOTED AS DIRECTED BUT, WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION, FOR THE
PROPOSED AMENDMENT TO ARTICLE SEVENTH OF FIRST UNITED'S ARTICLES OF
INCORPORATION AND FOR THE PROPOSED AMENDMENT TO ARTICLE TENTH OF FIRST UNITED'S
ARTICLES OF INCORPORATION. A COPY OF THE PROXY STATEMENT HAS BEEN RECEIVED BY
THE UNDERSIGNED.
DATED:
----------------------------- -------------------------------------
Signature
-------------------------------------
Signature
Please sign exactly as name(s) appear(s) hereon and return promptly in the
enclosed envelope. When signing as attorney, executor, administrator, trustee,
guardian or corporate official, please give your title as such.
PLEASE CHECK IF YOU PLAN TO ATTEND THIS MEETING.
- ---
<PAGE> 1
EXHIBIT 99(B)
Carlisle Bancshares, Inc. Form of Proxy
<PAGE> 2
Exhibit 99(b)
CARLISLE BANCSHARES, INC.
PROXY
The undersigned hereby appoints Daniel C. Horton and Robert L. Shults,
or either of them acting in the absence of the other, as attorneys and proxies
of the undersigned, to represent the undersigned at the Special Meeting of
Stockholders of Carlisle Bancshares, Inc. ("Carlisle") to be held on August 19,
1996 at 10:00 a.m. local time at 1590 Union National Plaza, Little Rock,
Arkansas 72201 and at any adjournment or adjournments thereof and to vote all
shares of stock of Carlisle held of record by the undersigned on the following
matters:
1. Approval of the Agreement and Plan of Reorganization which
provides for the merger of Carlisle Bancshares, Inc. into
First United Bancshares, Inc.
FOR AGAINST ABSTAIN
---- ---- ----
2. Approval of the election by Carlisle to be governed by the
Arkansas Business Corporation Act of 1987.
FOR AGAINST ABSTAIN
---- ---- ----
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on other side)
THIS PROXY WILL BE VOTED AS DIRECTED BUT, WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND ELECTION. A COPY OF THE PROXY
STATEMENT HAS BEEN RECEIVED BY THE UNDERSIGNED.
DATED:
----------------------------- -------------------------------------
Signature
-------------------------------------
Signature
Please sign exactly as name(s) appear(s) hereon and return promptly in the
enclosed envelope. When signing as attorney, executor, administrator, trustee,
guardian or corporate official, please give your title as such.
PLEASE CHECK IF YOU PLAN TO ATTEND THIS MEETING.
- ---
