<PAGE> 1
As filed with the Securities and Exchange Commission on October 7, 1994
Registration No. 33-55655
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
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<TABLE>
<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
--------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Copies to:
<TABLE>
<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III WILLIAM R. BOLES, JR.
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD BOLES, BOLES & RYAN
SOMERVILLE SUITE 350 1805 TOWER DRIVE
1700 FIRST ALABAMA BANK BUILDING 700 THIRTEENTH STREET, NW MONROE, LOUISIANA 71207
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20005 (318) 388-4050
(205) 250-5000 (202) 508-3303
</TABLE>
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Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
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. / /
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 Commission, acting pursuant to Section 8(a),
shall determine.
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<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
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<S> <C>
1. Forepart of registration
statement and outside front
cover page of prospectus . . . . . Outside Front Cover of Proxy Statement/Prospectus; Facing Page of Registration Statement;
Cross-Reference Sheet.
2. Inside front and outside
back cover of prospectus . . . . . Available Information; Documents Incorporated by Reference; Table of Contents.
3. Risk factors, ratio of
earnings to fixed charges and
other information . . . . . . . . . Summary; Market Prices and Dividends.
4. Terms of the transaction . . . . Summary; Description of the Transaction; Effect of the Merger on Rights of Stockholders;
Description of Regions Common Stock.
5. Pro forma financial information . . Summary; Pro Forma Financial Information.
6. Material contacts with the
company being acquired . . . . . . . Summary; Description of the Transaction.
7. Additional information required
for re-offering by persons and
parties deemed to be underwriters . . Not applicable.
8. Interest of named experts
and counsel . . . . . . . . . . . . . Opinions.
9. Disclosure of Commission
position on indemnification for
Securities Act liabilities . . . . . Not Applicable (See Part II, Item 20).
10. Information with respect to
S-3 registrants . . . . . . . . . . Documents Incorporated by Reference; Summary; Business of Regions.
11. Incorporation of certain
information by reference . . . . . . Documents Incorporated by Reference.
12. Information with respect to
S-2 or S-3 registrants . . . . . . . Not applicable.
13. Incorporation of certain
information by reference . . . . . . Not applicable.
14. Information with respect to
registrants other than S-2 or
S-3 registrants . . . . . . . . . . Not Applicable.
15. Information with respect to
S-3 companies . . . . . . . . . . Not Applicable.
16. Information with respect to S-2
or S-3 companies . . . . . . . . . . Not Applicable.
17. Information with respect to
companies other than S-2 or S-3
companies . . . . . . . . . . . . . Summary; ABI Mananagement's Discussion and Analysis of Financial Condition and
Results of Operations; Business of ABI; Voting Securities and Principal Stockholders of
ABI; Index to ABI Financial Statements.
18. Information if proxies,
consents, or authorizations are
to be solicited . . . . . . . . . . Documents Incorporated by Reference; Summary; The Special Meeting; Description of the
Transaction; Interest of Certain Persons in Matters to be Acted Upon; Description of
Regions Common Stock.
19. Information if proxies, consents,
or authorizations are not to be
solicited or in an exchange offer . Not Applicable.
</TABLE>
<PAGE> 3
Dear American Bancshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders
(the "Special Meeting") of American Bancshares, Inc. ("ABI") to be held at
ABI's main office, 1500 North 18th Street, Monroe, Louisiana 71201 on
November 8, 1994, at 10:00 a.m., local time, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Agreement"), entered
into with Regions Financial Corporation ("Regions") pursuant to which ABI will
merge (the "Merger") with and into Regions, and First American Bank & Trust
of Louisiana, a wholly-owned subsidiary of ABI (the "Bank"), will become a
wholly-owned subsidiary of Regions and will continue serving its current
markets as a state-chartered commercial bank, and the other subsidiaries of ABI
will become subsidiaries of Regions. Upon consummation of the Merger, each
share of ABI common stock issued and outstanding (except for certain shares
held by ABI or Regions and shares held by stockholders who perfect their
dissenters' rights of appraisal) will be converted into 2.4445 shares of
Regions common stock.
The accompanying Proxy Statement/Prospectus includes a description of the
proposed Merger and provides other specific information concerning the Special
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.
The Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of ABI has agreed to vote those ABI shares over which he has voting
authority (other than in a fiduciary capacity) in favor of the Merger.
Consummation of the Merger is subject to certain conditions, including approval
of the Agreement by ABI stockholders and approval of the Merger by various
regulatory agencies.
Stockholders of ABI who perfect their dissenters' rights of appraisal prior
to consummation of the proposed Merger and comply with applicable law will be
entitled to receive the fair value of their ABI shares in cash, as provided by
applicable law.
It is important to understand that approval of the Agreement requires the
affirmative vote of at least two-thirds of the common stock of ABI represented
in person or by proxy at the Special Meeting, not just two-thirds of the votes
cast. Consequently, an abstention will have the same effect as a vote against
the Agreement, but a nonvote, unlike an abstention, would reduce the number of
affirmative votes required for approval.
Accordingly, whether or not you plan to attend the Special Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for ABI, and your vote on this matter is of great importance.
On behalf of the Board of Directors, I urge you to vote for approval of the
Merger by marking the enclosed proxy card "FOR" Item One.
Sincerely,
George M. Campbell
President and Chief Executive Officer
<PAGE> 4
AMERICAN BANCSHARES, INC.
1500 NORTH 18TH STREET, MONROE, LOUISIANA 71201
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 8, 1994
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of American Bancshares, Inc. ("ABI") will be held at ABI's main
office, 1500 North 18th Street, Monroe, Louisiana 71201 on November 8, 1994, at
10:00 a.m., local time, for the following purposes:
1. Merger. To consider and vote on the Agreement and Plan of Merger, dated
as of June 1, 1994 (the "Agreement"), by and between ABI and Regions Financial
Corporation ("Regions") pursuant to which (i) Regions will acquire all of the
issued and outstanding common stock of ABI through the merger of ABI with and
into Regions (the "Merger"), (ii) each share of ABI common stock (except for
certain shares held by ABI or Regions and shares held by stockholders who
perfect their dissenters' rights of appraisal) will be converted into 2.4445
shares of Regions common stock, and (iii) each ABI stockholder will receive
cash in lieu of any remaining fractional share interest, all as described more
fully in the accompanying Proxy Statement/Prospectus.
2. Other Business. To transact such other business as may properly come
before the Special Meeting, including adjourning the Special Meeting to permit,
if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on September 30, 1994,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of ABI have a right to dissent from the Merger and obtain
payment of the fair value of their shares in cash by complying with the
applicable provisions of Louisiana law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix B. DISSENTING SHAREHOLDERS WHO COMPLY
WITH THE PROCEDURAL REQUIREMENTS OF THE BUSINESS CORPORATION LAW OF LOUISIANA
WILL BE ENTITLED TO RECEIVE PAYMENT OF THE FAIR CASH VALUE OF THEIR SHARES IF
THE TRANSACTION IS EFFECTED UPON APPROVAL BY LESS THAN 80% OF THE CORPORATION'S
TOTAL VOTING POWER.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
ABI an instrument of revocation or a duly executed proxy bearing a later date
or by electing to vote in person at the Special Meeting.
By Order of the Board of Directors
William R. Boles, Jr.
Corporate Secretary
Monroe, Louisiana
October 10, 1994
<PAGE> 5
AMERICAN BANCSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD NOVEMBER 8, 1994 (PAR VALUE $.625)
This Prospectus of Regions Financial Corporation, a regional bank holding
company organized under the laws of the state of Delaware ("Regions"), relates
to the shares of its common stock, par value $.625 per share ("Regions Common
Stock"), which are issuable to the stockholders of American Bancshares, Inc.
("ABI") upon consummation of the proposed merger (the "Merger") described
herein by which ABI will merge with and into Regions pursuant to the terms of
an Agreement and Plan of Merger, dated as of June 1, 1994, by and between
Regions and ABI (the "Agreement").
At the effective date of the Merger (the "Effective Date"), except as
described herein, (i) ABI will merge with and into Regions and (ii) each
outstanding share of the $12.00 par value common stock of ABI ("ABI Common
Stock") will be converted into 2.4445 shares of Regions Common Stock. A copy of
the Agreement is attached to this Proxy Statement/Prospectus as Appendix A.
As a result of the Merger, the separate existence of ABI will cease, and
all subsidiaries of ABI, including First American Bank & Trust of
Louisiana, a wholly-owned subsidiary of ABI (the "Bank"), will become a
wholly-owned subsidiary of Regions. After the Merger, the Bank will continue
in operation serving its current markets as a state-chartered commercial bank
until combined with other banking subsidiaries of Regions operating in
Louisiana. For a further description of the terms of the Merger, see
"Description of the Transaction."
This Prospectus also constitutes a Proxy Statement of ABI and is being
furnished to the stockholders of ABI in connection with the solicitation of
proxies by the Board of Directors of ABI for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on November 8, 1994, to consider and vote on the proposed
Merger and related matters. This Proxy Statement/Prospectus and the
accompanying proxy card are first being mailed to stockholders of ABI on or
about October 10, 1994.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is October 10, 1994.
<PAGE> 6
AVAILABLE INFORMATION
Regions is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and, in accordance therewith,
files reports, proxy statements, and other information with the Securities and
Exchange Commission (the "SEC"). Copies of such reports, proxy statements, and
other information can be obtained, at prescribed rates, from the SEC by
addressing written requests for such copies to the Public Reference Section at
the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In
addition, such reports, proxy statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
This Proxy Statement/Prospectus constitutes part of the Registration
Statement on Form S-4 of Regions (including any exhibits and amendments
thereto, the "Registration Statement") filed with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the securities
offered hereby. This Proxy Statement/Prospectus does not include all of the
information in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. For further
information about Regions and the securities offered hereby, reference is made
to the Registration Statement. The Registration Statement may be inspected and
copied, at prescribed rates, at the SEC's public reference facilities at the
addresses set forth above. Regions Common Stock is traded in the Nasdaq
National Market. Reports, proxy statements, and other information concerning
Regions may be inspected at the offices of the National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington, D.C.
20006.
No person is authorized to give any information or to make any
representations other than those included in this Proxy Statement/Prospectus,
and if given or made, such information or representations must not be relied
upon as having been authorized by Regions or ABI. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby in any jurisdiction to or from
any person to or from whom it is unlawful to make such an offer or
solicitation. Neither the delivery of this Proxy Statement/Prospectus nor any
distribution of securities made hereunder shall under any circumstances create
an implication that there has been no change in the affairs of Regions or ABI
since the date hereof or that the information herein is correct as of any time
subsequent to the date hereof.
All information included or incorporated by reference in this Proxy
Statement/Prospectus with respect to Regions was supplied by Regions, and all
information included or incorporated by reference herein with respect to ABI
was supplied by ABI.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by Regions pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. Regions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
2. Regions' Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1994;
3. Regions' Current Reports on Form 8-K dated as of December 31,
1993, and July 8, July 18, September 6, and September 8, 1994;
4. The description of Regions Common Stock under the heading "Item 1.
Capital Stock to be Registered" in the registration statement on Form
8-A of Regions relating to Regions Common Stock and in any amendment or report
filed for the purpose of updating such description;
5. Regions' reports on Form 10-C dated as of December 31, 1993, and
May 2, 1994.
<PAGE> 7
Regions' Annual Report on Form 10-K for the year ended December 31, 1993,
incorporates by reference specific portions of Regions' Annual Report to
Stockholders for that year (the "Regions Annual Report to Stockholders"), but
does not incorporate other portions of the Annual Report to Stockholders. Only
those portions of the Annual Report to Stockholders captioned "Financial
Summary & Review 1993," "Financial Statements and Notes," and "Historical
Financial Summary" are incorporated herein. Other portions of the Annual Report
to Stockholders are NOT incorporated herein and are not a part of the
Registration Statement.
All documents filed by Regions pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference in this Proxy Statement/Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed to constitute a part hereof, except as so modified or superseded.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE
UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), FROM RONALD C.
JACKSON, STOCKHOLDER ASSISTANCE, REGIONS FINANCIAL CORPORATION, P.O. BOX 1448,
MONTGOMERY, ALABAMA 36102 (TELEPHONE (205) 832-8450). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY NOVEMBER 1, 1994.
3
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Meeting of ABI Stockholders . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reasons for the Merger; Recommendation of ABI's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . 8
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . 8
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . 9
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . 9
Certain Differences in Stockholders' Rights . . . . . . . . . . . . . . . . . . . 9
Comparative Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . 10
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . 16
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . 18
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . 19
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . 20
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . 21
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 22
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . 22
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . 25
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Resales of the Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . 26
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . 26
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . 27
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Amendment of Certificate and Articles of Incorporation and Bylaws . . . . . . . . 28
Classified Board of Directors and Absence of Cumulative Voting . . . . . . . . . . 29
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Limitations on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . 29
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 30
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . 31
Stockholder Nominations and Proposals . . . . . . . . . . . . . . . . . . . . . . 31
Business Combinations With Certain Persons . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
4
<PAGE> 9
<TABLE>
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Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . 32
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . 33
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
COMPARATIVE MARKET PRICE AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . 34
ABI MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 35
BUSINESS OF ABI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Business and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Transactions with Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF ABI . . . . . . . . . . . . . . . . . . 43
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SUMMARY PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Selected Pro Forma Combined Data for Regions and ABI . . . . . . . . . . . . . . . 46
Selected Pro Forma Combined Data for Regions, ABI, and
Other Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . . . . . . . . . 53
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Brokered Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Safety and Soundness Standards . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Depositor Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . 56
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
INDEX TO ABI FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX A--Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Excerpt of Dissenters' Rights Section of Louisiana Business Corporation
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
5
<PAGE> 10
SUMMARY
The following is a summary of certain information relating to the Special
Meeting, the Merger, and the offering of shares of Regions Common Stock to be
issued upon consummation thereof. This summary does not purport to be complete
and is qualified in its entirety by the more detailed information appearing
elsewhere or incorporated by reference in this Proxy Statement/Prospectus.
Stockholders are urged to read carefully the entire Proxy Statement/Prospectus,
including the Appendices. As used in this Proxy Statement/Prospectus, the terms
"Regions" and "ABI" refer to those entities, respectively, and, where the
context requires, to those entities and their respective subsidiaries.
THE PARTIES
ABI. ABI is a bank holding company organized under the laws of the state of
Louisiana, with its principal executive offices located in Monroe, Louisiana.
ABI operates principally through the Bank, which is a state-chartered
commercial bank and which provides a range of retail banking services through 8
offices in the Louisiana parishes of Ouachita, Caddo, and Bossier. At June 30,
1994, ABI had total consolidated assets of approximately $289 million, total
consolidated deposits of approximately $261 million, and total consolidated
stockholders' equity of approximately $27 million. ABI's principal executive
office is located at 1500 North 18th Street, Monroe, Louisiana 71201, and its
telephone number at such address is (318) 362-8200.
Regions. Regions is a regional bank holding company headquartered in
Birmingham, Alabama, which operated 247 banking offices located in Alabama,
Florida, Georgia, Louisiana, and Tennessee as of June 30, 1994 . At that date,
Regions had total consolidated assets of approximately $10.8 billion, total
consolidated deposits of approximately $8.8 billion, and total consolidated
stockholders' equity of approximately $905 million. Regions is the third
largest bank holding company headquartered in Alabama in terms of assets, based
on June 30, 1994 information. Regions operates seven state-chartered
commercial bank subsidiaries and one federal stock savings bank in Alabama,
Florida, Georgia, Louisiana, and Tennessee and four banking-related
subsidiaries engaged in mortgage banking, credit life insurance, leasing, and
securities brokerage activities with offices in various Southeastern states.
Through its subsidiaries, Regions offers a broad range of banking and
banking-related services.
During the 1994 fiscal year, Regions has completed the acquisitions of
four financial institutions in Alabama, Louisiana, and Georgia and has entered
into a definitive agreement to acquire an additional financial institution in
Alabama. Information with respect to such acquisitions is included under
"Business of Regions--Recent Developments" and "Summary Pro Forma Financial
Data" and in the documents incorporated by reference herein.
Regions was organized under the laws of the state of Delaware and commenced
operations in 1971 as a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Regions' principal executive
offices are located at 417 North 20th Street, Birmingham, Alabama 35203, and
its telephone number at such address is (205) 326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
SPECIAL MEETING OF ABI STOCKHOLDERS
6
<PAGE> 11
The Special Meeting will be held at 10:00 a.m., local time, on November 8,
1994, at ABI's main office, 1500 North 18th Street, Monroe, Louisiana 71201,
for the purpose of considering and voting on approval of the Agreement. See
"The Special Meeting."
7
<PAGE> 12
RECORD DATE; VOTE REQUIRED
Only holders of record of ABI Common Stock at the close of business on
September 30, 1994 (the "Record Date"), will be entitled to vote at the Special
Meeting. The affirmative vote of at least two-thirds of the ABI Common Stock
represented in person or by proxy at the Special Meeting will be required to
approve the Agreement. As of the Record Date, there were 729,937 shares of ABI
Common Stock outstanding and entitled to be voted.
The directors and executive officers of ABI and their affiliates
beneficially owned, as of the Record Date, 484,022 shares (or approximately
66.31% of the outstanding shares) of ABI Common Stock. Each member of the Board
of Directors of ABI has agreed to vote those ABI shares over which he has
voting authority (other than in a fiduciary capacity) in favor of the Merger.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Record Date, no shares of ABI Common Stock. As of
that date, neither ABI nor Regions held any shares of ABI Common Stock in a
fiduciary capacity for others. See "The Special Meeting--Record Date; Vote
Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of ABI by Regions pursuant to
the Merger of ABI with and into Regions. At the Effective Date, each share of
ABI Common Stock (excluding any shares held by ABI, Regions, or their
respective subsidiaries, other than shares held in a fiduciary capacity or in
satisfaction of debts previously contracted and shares held by stockholders who
perfect their dissenters' rights of appraisal) issued and outstanding at the
Effective Date will be converted into 2.4445 shares of Regions Common Stock
(the "Exchange Ratio"). No fractional shares of Regions Common Stock will be
issued. Rather, cash will be paid in lieu of any fractional share interest to
which any ABI stockholder would be entitled upon consummation of the Merger,
based on the closing price of Regions Common Stock on the Nasdaq National
Market (as reported by The Wall Street Journal, or, if not reported thereby, by
another authoritative source selected by Regions) on the last full trading day
immediately preceding the Effective Date (the "Closing Price"). See
"Description of the Transaction--General."
DISSENTERS' RIGHTS
Holders of ABI Common Stock entitled to vote on approval of the Agreement
have the right to dissent from the Merger and, upon consummation of the Merger
and the satisfaction of certain specified procedures and conditions, to receive
the fair value of such holders' shares of ABI Common Stock in cash in
accordance with the applicable provisions of Section 12:131 of the Louisiana
Business Corporation Law (the "Louisiana Act"). In the event the Merger is
approved by 80% or more of the total voting power of ABI, then dissenters'
rights of appraisal, in accordance with the Louisiana Act, will not be
available. The procedures to be followed by dissenting stockholders are
summarized under "Description of the Transaction--Dissenters' Rights," and
Section 12:131 of the Louisiana Act is reproduced as Appendix B to this Proxy
Statement/Prospectus.
REASONS FOR THE MERGER; RECOMMENDATION OF ABI'S BOARD OF DIRECTORS
ABI's Board of Directors has unanimously approved the Merger and the
Agreement and has determined that the Merger is fair to, and in the best
interests of, ABI and its stockholders. Accordingly, ABI's Board unanimously
recommends that ABI's stockholders vote FOR approval of the Agreement. In
approving the Merger, ABI's directors considered ABI's financial condition, the
financial terms and the income tax consequences of the Merger, the likelihood
of the Merger being approved by regulatory authorities without undue conditions
or delay, legal advice concerning the proposed Merger, and in general the
fairness of the terms of the Merger to ABI stockholders. See "Description of
the Transaction--Background of and Reasons for the Merger." Each member of the
Board of Directors of ABI has agreed to vote those shares of ABI Common Stock
over which he has voting authority (other than in a fiduciary capacity) in
favor of the Merger.
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of
8
<PAGE> 13
Merger are filed and become effective with, respectively, the Delaware
Secretary of State and the Louisiana Secretary of State. Unless otherwise
agreed upon by Regions and ABI, and subject to the conditions to the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on the first business
day following the last to occur of (i) the effective date (including the
expiration of any applicable waiting period) of the last federal or state
regulatory approval required for the Merger and (ii) the date on which the
Agreement is approved by the requisite vote of ABI stockholders; or such later
date within 30 days thereof as specified by Regions. The parties expect that
all conditions to consummation of the Merger will be satisfied so that the
Merger can be consummated during the fourth quarter of 1994, although there can
be no assurance as to whether or when the Merger will occur. See "Description
of the Transaction--Effective Date of the Merger," "--Conditions to
Consummation of the Merger," and "--Waiver, Amendment, and Termination of the
Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause First Alabama Bank,
acting in its capacity as exchange agent for Regions (the "Exchange Agent"), to
mail to the former stockholders of ABI a form letter of transmittal, together
with instructions for the exchange of such stockholders' certificates
representing shares of ABI Common Stock for certificates representing shares of
Regions Common Stock. ABI STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK
CERTIFICATES UNTIL THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND
INSTRUCTIONS. See "Description of the Transaction--Distribution of Regions
Stock Certificates and Payment for Fractional Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the Louisiana Commissioner of
Financial Institutions (the "Louisiana Commissioner"). An application has been
filed with each of these agencies for the requisite approvals and each of such
agencies has approved the Merger.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of ABI stockholders, receipt of an
opinion of counsel as to the tax-free nature of certain aspects of the Merger,
and certain other customary conditions. See "Description of the
Transaction--Conditions to Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual action of the Boards of Directors of both
ABI and Regions or by action of the Board of Directors of either company under
certain circumstances, including if the Merger is not consummated by March 31,
1995, unless the failure to consummate by such time is due to a breach of the
Agreement by the party seeking to terminate. If for any reason the Merger is
not consummated, ABI will continue to operate as a bank holding company under
its present management. See "Description of the Transaction--Waiver, Amendment,
and Termination of the Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of ABI's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of ABI generally.
Those interests relate to, among other things, provisions in the Agreement
regarding indemnification and eligibility for certain Regions employee
benefits. In addition, the Agreement provides that William R. Boles, Sr.,
currently Chairman of the Board of ABI, will be elected to the Board of
Directors of Regions after the Effective Date. See "Description of the
Transaction--Interests of Certain Persons in the Merger."
9
<PAGE> 14
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned upon the receipt of an opinion of
counsel to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the exchange in the Merger of ABI
Common Stock for Regions Common Stock will not give rise to gain or loss to ABI
stockholders, except to the extent of any cash received in lieu of fractional
share interests or as a result of a stockholder's perfecting such holder's
dissenters' rights of appraisal. See "Description of the Transaction--Certain
Federal Income Tax Consequences of the Merger."
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER, ABI
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND FOREIGN
TAX LAWS.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, ABI stockholders, whose rights are governed by ABI's
Articles of Incorporation and Bylaws and by the Louisiana Act, will
automatically become Regions stockholders, and their rights as Regions
stockholders will be determined by Regions' Certificate of Incorporation and
Bylaws and by the Delaware General Corporation Law (the "Delaware GCL").
The rights of Regions stockholders differ from the rights of ABI
stockholders in certain important respects, some of which constitute additional
antitakeover provisions provided for in Regions' governing documents. See
"Effect of the Merger on Rights of Stockholders."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock is traded in the over-the-counter market and quoted on
the Nasdaq National Market. ABI Common Stock is not traded in any established
market.
The following table sets forth as of the indicated dates (i) the last
sale price of Regions Common Stock, (ii) the sale price in the last known
transaction of purchase and sale of ABI Common Stock, which occurred in the
first quarter of 1994, and (iii) the equivalent per share price (as explained
below) of ABI Common Stock. The indicated dates represent, respectively, the
last trading day immediately preceding public announcement of the proposed
Merger and the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS ABI OF ABI
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
June 1, 1994 $ 34.44 $ 20.00 $84.19
October 6, 1994 34.50 20.00 84.34
</TABLE>
The equivalent per share price of ABI Common Stock at each specified date
represents the last sale price of a share of Regions Common Stock on such date
multiplied by the Exchange Ratio of 2.4445. Stockholders are advised to obtain
current market quotations for Regions Common Stock and ABI Common Stock. No
assurance can be given as to the market price of Regions Common Stock at or
after the Effective Date.
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating
to net income, cash dividends, and book value on (i) an historical basis for
Regions and ABI, (ii) a pro forma combined basis per share of Regions Common
Stock, giving effect to the Merger, (iii) an equivalent pro forma basis per
share of ABI Common Stock, giving effect to the Merger, (iv) a pro forma
combined basis per share of Regions Common
10
<PAGE> 15
Stock, giving effect to the Merger and the Other Acquisitions (as defined under
"Business of Regions--Recent Developments"), and (v) as appropriate, an
equivalent pro forma basis per share of ABI Common Stock, giving effect
to the Merger and the Other Acquisitions. The Regions and ABI pro forma
combined information and the ABI pro forma Merger equivalent information give
effect to the Merger on a purchase accounting basis and assume an Exchange
Ratio of 2.4445 of a share of Regions Common Stock for each share of ABI Common
Stock. See "Description of the Transaction--Accounting Treatment." The Regions,
ABI, and Other Acquisitions pro forma combined information and the ABI pro
forma Merger and Other Acquisitions equivalent information give effect to (i)
the Merger as described in the preceding sentence and (ii) the Other
Acquisitions as described under "Summary Pro Forma Financial Data--Selected Pro
Forma Combined Data for Regions, ABI, and Other Acquisitions." The pro forma
data are presented for informational purposes only and are not necessarily
indicative of the results of operations or combined financial position that
would have resulted had the Merger or the Other Acquisitions been consummated
at the dates or during the periods indicated, nor are they necessarily
indicative of future results of operations or combined financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions
and ABI, including the respective notes thereto, and the pro forma financial
information included or incorporated by reference herein. See "Documents
Incorporated by Reference," "--Selected Financial Data," "Business of
Regions--Recent Developments," and "Summary Pro Forma Financial Data."
11
<PAGE> 16
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- ------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
(Unaudited) (Unaudited except
(Regions and ABI historical)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical . . . . . . . . . . . $ 1.65 $ 1.49 $ 3.01 $ 2.60 $ 2.16
ABI historical . . . . . . . . . . . . . 3.38 3.35 6.70 4.93 3.50
Regions and ABI pro forma combined(1) . . 1.65 3.00
ABI pro forma Merger equivalent(2) . . . 4.03 7.33
Regions, ABI, and Other Acquisitions
pro forma combined(3) . . . . . . . . 1.67 3.01
ABI pro forma Merger and Other Acquisitions
equivalent(2) . . . . . . . . . . . . 4.08 7.36
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical . . . . . . . . . . . $ 0.60 $ 0.52 $ 1.04 $ 0.91 $ 0.87
ABI historical . . . . . . . . . . . . . 0.00 0.00 0.00 0.00 0.00
ABI pro forma Merger equivalent(4) . . . 1.47 1.27 2.54 2.22 2.13
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical . . . . . . . . . . . $ 21.60 $ 18.48 $20.73 $17.62 $15.76
ABI historical. . . . . . . . . . . . . . 36.58 31.67 35.02 29.70 26.02
Regions and ABI pro forma combined(1) . . 21.70
ABI pro forma Merger equivalent(2) . . . 53.05
Regions, ABI, and Other Acquisitions
pro forma combined(3) . . . . . . . . 21.58
ABI pro forma Merger and Other Acquisitions
equivalent(2) . . . . . . . . . . . . 52.75
</TABLE>
_____________________
(1) Represents the pro forma combined information of Regions and ABI as if the
Merger were consummated on January 1, 1993, and were accounted for as a
purchase.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of 2.4445 shares of Regions Common Stock for each share of ABI Common
Stock.
(3) Represents the pro forma combined information of Regions, ABI, and the
Other Acquisitions as if the Merger were consummated at the time and
pursuant to the accounting basis described in Note (1) and the Other
Acquisitions were consummated at the time and pursuant to the accounting
bases described under "Summary Pro Forma Financial Data--Selected Pro Forma
Combined Data for Regions, ABI, and Other Acquisitions."
(4) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of 2.4445 shares of Regions Common Stock for each share
of ABI Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial data for
Regions and ABI. The data should be read in conjunction with the historical
financial statements, related notes, and other financial information concerning
Regions and ABI incorporated by reference or included herein. See "Documents
Incorporated by Reference" and "Index to ABI Financial Statements."
12
<PAGE> 17
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
------------------ -----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . . . . . $ 356,621 $ 273,590 $ 555,667 $ 536,747 $ 556,821 $ 519,753 $ 496,392
Total interest expense . . . . . . . 152,323 104,771 213,614 224,068 292,017 297,613 292,687
Net interest income . . . . . . . . . 204,298 168,819 342,053 312,679 264,804 222,140 203,705
Provision for loan losses . . . . . . 9,179 13,300 21,533 27,072 24,005 24,208 15,800
Net interest income after
loan loss provision . . . . . . . 195,119 155,519 320,520 285,607 240,799 197,932 187,905
Total noninterest income
excluding security gains (losses) 72,466 63,155 131,949 119,130 101,964 94,730 71,976
Security gains (losses) . . . . . . . 106 42 78 (53) (507) (982) 506
Total noninterest expense . . . . . . 164,036 135,096 287,026 264,659 230,340 195,611 176,707
Income tax expense . . . . . . . . . . 34,435 28,257 53,476 44,977 33,660 27,175 21,046
Net income . . . . . . . . . . . . . . $ 69,220 $ 55,363 $ 112,045 $ 95,048 $ 78,256 $ 68,894 $ 62,634
PER SHARE DATA:
Net income . . . . . . . . . . . . . . $ 1.65 $ 1.49 $ 3.01 $ 2.60 $ 2.16 $ 1.91 $ 1.72
Cash dividends . . . . . . . . . . . . 0.60 0.52 1.04 0.91 0.87 0.84 0.76
Book value . . . . . . . . . . . . . . 21.60 18.48 20.73 17.62 15.76 14.54 13.48
OTHER INFORMATION:
Average number of shares outstanding . 41,925 37,172 37,205 36,532 36,191 36,097 36,331
BALANCE SHEET DATA (PERIOD END):
Total assets . . . . . . . . . . . . . $10,822,808 $8,070,569 $10,476,348 $7,881,026 $6,745,053 $ 6,344,406 $ 5,549,612
Securities . . . . . . . . . . . . . . 2,428,865 1,610,389 2,368,445 1,670,170 1,575,725 1,489,200 1,133,087
Loans, net of unearned income . . . . 7,297,575 5,432,548 6,833,246 5,142,531 4,274,958 4,092,262 3,552,082
Total deposits . . . . . . . . . . . . 8,787,549 6,863,551 8,770,694 6,701,142 5,917,028 5,353,211 4,744,364
Long-term debt . . . . . . . . . . . . 437,488 141,819 462,862 136,990 18,782 19,707 45,343
Stockholders' equity . . . . . . . . . 905,450 686,656 850,965 656,655 572,971 524,132 489,441
PERFORMANCE RATIOS:
Return on average assets (1) . . . . . 1.32% 1.44% 1.40% 1.34% 1.23% 1.23% 1.20%
Return on average stockholders' equity (1) 15.82 16.60 16.14 15.64 14.27 13.64 13.25
Net interest margin (1) . . . . . . . 4.31 4.91 4.82 4.98 4.78 4.67 4.65
Efficiency (2) . . . . . . . . . . . . 58.16 56.96 59.24 59.87 60.77 59.22 60.68
Dividend payout . . . . . . . . . . . 36.36 34.90 34.55 35.00 40.28 43.98 44.19
ASSET QUALITY RATIOS:
Net charge-offs to average
loans, net of unearned income (1) 0.10% 0.04% 0.19% 0.28% 0.35% 0.44% 0.42%
Problem assets to net loans and
other real estate (3) . . . . . . 0.68 0.75 0.84 0.70 0.89 0.98 0.72
Nonperforming assets to net loans and
other real estate (4) . . . . . . 0.76 0.81 1.03 0.81 1.01 1.12 0.94
Allowance for loan losses to loans,
net of unearned income . . . . . 1.48 1.59 1.47 1.43 1.28 1.10 1.05
Allowance for loan losses to
nonperforming assets (4) . . . . 196.00 194.60 143.05 175.92 126.32 98.18 110.71
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . . . . . 8.31% 8.65% 8.70% 8.59% 8.63% 9.03% 9.06%
Average loans to average deposits . . 79.10 77.53 78.14 72.46 73.40 76.67 75.23
Tier 1 risk-based capital (5) . . . . 11.82 11.63 11.13 11.68 11.85 11.31 n/a
Total risk-based capital (5) . . . . . 14.15 14.32 13.48 14.44 13.19 12.51 n/a
Tier 1 leverage (5) . . . . . . . . . 8.08 8.30 10.11 8.44 8.40 7.65 8.36
</TABLE>
__________________________
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%, depending on the
risk profile of the institution and other factors.
13
<PAGE> 18
Selected Historical Financial Data of ABI
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
--------------- --------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . $ 10,888 $ 10,684 $ 22,082 $ 21,570 $ 23,052 $ 22,827 $ 20,762
Total interest expense . . . . 3,254 3,159 6,474 7,619 11,032 12,646 11,850
Net interest income . . . . . . 7,634 7,525 15,608 13,951 12,020 10,181 8,912
Provision for loan losses . . . 455 544 1,280 1,156 1,197 1,245 2,013
Net interest income after
loan loss provision . . . . 7,179 6,981 14,328 12,795 10,823 8,936 6,899
Total noninterest income
excluding security gains
(losses) . . . . . . . . . 2,486 2,046 4,118 3,457 2,987 2,696 2,300
Security gains (losses) . . . . -- 17 17 -- (12) (4) 122
Total noninterest expense . . . 6,135 5,946 11,930 11,595 10,795 9,399 8,034
Income tax expense . . . . . . . 1,126 1,025 2,144 1,444 826 558 239
Cumulative effect of a change
in an accounting principle -- 187 187 -- -- -- --
Net income . . . . . . . . . . . $ 2,404 $ 2,260 $ 4,576 $ 3,213 $ 2,177 $ 1,671 $ 1,048
Per Share Data:
Net income . . . . . . . . . . . $ 3.38 $ 3.35 $ 6.70 $ 4.93 $ 3.50 $ 2.82 $ 1.86
Cash dividends . . . . . . . . . 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Book value . . . . . . . . . . . 36.58 31.67 35.02 29.70 26.02 23.28 21.54
Other Information:
Average number of shares outstanding 710 674 682 652 622 593 564
Balance Sheet Data (Period End):
Total assets . . . . . . . . . . $ 289,326 $ 294,599 $ 305,131 $ 286,284 $ 259,371 $ 232,890 $ 229,229
Securities . . . . . . . . . . . 37,236 42,070 34,796 46,828 41,235 42,847 38,032
Loans, net of unearned income. . 210,998 197,432 209,109 185,510 165,975 154,688 147,813
Total deposits . . . . . . . . . 261,077 271,040 279,834 265,017 240,041 215,373 212,888
Long-term debt . . . . . . . . . -- -- -- -- 220 551 828
Stockholders' equity . . . . . . 26,701 21,868 24,185 19,545 16,382 13,963 12,306
Performance Ratios:
Return on average assets (1) . . 1.68% 1.68% 1.63% 1.23% 0.88% 0.74% 0.52%
Return on average stockholders'
equity(1) . . . . . . . . . 19.00 22.56 21.15 19.64 14.02 12.78 8.82
Net interest margin (1) . . . . 5.71 5.49 5.50 5.35 4.83 5.04 4.58
Efficiency (2) . . . . . . . . . 60.37 60.93 59.91 66.60 70.45 71.69 71.55
Dividend payout . . . . . . . . -- -- -- -- -- -- --
Asset Quality Ratios:
Net charge-offs to average loans,
net of unearned income (1) 0.25% 0.23% 0.28% 0.73% 0.71% 0.64% 1.47%
Problem assets to net loans and
other real estate (3) . . . 0.33 0.65 0.41 1.19 1.80 3.08 5.09
Nonperforming assets to net loans and
other real estate (4) . . . 0.76 1.35 1.00 2.46 3.63 3.98 5.05
Allowance for loan losses to loans,
net of unearned income . . 1.51 1.26 1.39 1.17 1.37 1.45 1.29
Allowance for loan losses to
nonperforming assets (4) . 203.67 91.53 139.66 50.17 36.43 36.62 24.28
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets . . . . . . 8.82% 7.53% 7.69% 6.87% 6.03% 6.03% 6.28%
Average loans to average deposits 80.29 75.63 75.79 78.67 71.76 72.79 72.43
Tier 1 risk-based capital (5) . 10.00 11.52 11.45 10.01 9.16 9.07 7.79
Total risk-based capital (5) . . 13.87 12.91 12.78 11.12 10.42 10.46 9.49
Tier 1 leverage (5) . . . . . . 9.22 7.42 7.92 6.82 6.31 6.00 5.36
</TABLE>
__________________________
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%, depending on the
risk profile of the institution and other factors.
14
<PAGE> 19
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
ABI Common Stock in connection with the solicitation by the ABI Board of
Directors of proxies for use at the Special Meeting, at which ABI stockholders
will be asked to vote on a proposal to approve the Agreement. The Special
Meeting will be held at 10:00 a.m., local time, on November 8, 1994, at the main
offices of ABI, located at 1500 North 18th Street, Monroe, Louisiana 71201.
ABI stockholders are requested to promptly sign, date, and return the
accompanying proxy card to ABI in the enclosed postage-paid, addressed
envelope.
Any ABI stockholder who has delivered a proxy may revoke it at any
time before it is voted by giving notice of revocation in writing or submitting
to ABI a signed proxy card bearing a later date, provided that such notice or
proxy card is actually received by ABI before the vote of stockholders or in
open meeting prior to the taking of the stockholder vote at the Special
Meeting. Any notice of revocation should be sent to American Bancshares, Inc.,
1500 North 18th Street, Monroe, Louisiana 71201, Attention: William R. Boles,
Jr., Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Corporate Secretary. The
shares of ABI Common Stock represented by properly executed proxies received at
or prior to the Special Meeting and not subsequently revoked will be voted as
directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY
PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND IN THE
DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME
BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE
GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE
SPECIAL MEETING TO PERMIT FURTHER SOLICITATION OF PROXIES IN ORDER TO OBTAIN
SUFFICIENT VOTES TO APPROVE THE AGREEMENT. As of the date of this Proxy
Statement/Prospectus, ABI is unaware of any other matter to be presented at the
Special Meeting.
Solicitation of proxies will be made by mail, but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
ABI, who will receive no additional compensation for such solicitation, but may
be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
ABI STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS.
RECORD DATE; VOTE REQUIRED
ABI's Board of Directors has established the close of business on
September 30, 1994, as the Record Date for determining the ABI stockholders
entitled to notice of and to vote at the Special Meeting. Only ABI stockholders
of record as of the Record Date will be entitled to vote at the Special
Meeting. The affirmative vote of the holders of two-thirds of the ABI Common
Stock represented in person or by proxy at the Special Meeting is required in
order to approve the Agreement. Therefore, returning an executed proxy card
marked as an abstention will have the same effect as a vote against the
Agreement, as will a broker's submitting a proxy card without exercising
discretionary voting authority with respect to the Agreement. Nonvotes in the
form of failing to return a properly executed proxy card, unlike explicit
abstentions, will have the effect of reducing the number of affirmative votes
required for approval of the Agreement, but will not be counted toward a quorum
at the Special Meeting. As of the Record Date, there were approximately 297
holders of 729,937 shares of ABI Common Stock outstanding and entitled to vote
at the Special Meeting, with each share entitled to one vote. For information
as to persons known by ABI to beneficially own more than 5.0% of the
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<PAGE> 20
outstanding shares of ABI Common Stock as of the Record Date, see "Voting
Securities and Principal Stockholders of ABI."
The presence, in person or by proxy, of a majority of the outstanding
shares of ABI Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For purposes of
determining the presence of a quorum, shares of ABI Common Stock that are
represented in person, or by proxy at the Special Meeting will be counted
regardless of whether the holder of the shares or proxy fails to vote on the
Agreement or whether a broker with discretionary authority fails to exercise
its discretionary voting authority with respect to the Agreement. Once a quorum
is established, approval of the Agreement requires the affirmative vote of the
holders of two-thirds of the ABI Common Stock represented in person or by proxy
at the Special Meeting.
The directors and executive officers of ABI and their affiliates
beneficially owned, as of the Record Date, 484,022 shares (or approximately
66.31% of the outstanding shares) of ABI Common Stock. Each member of the Board
of Directors and each executive officer of ABI has agreed to vote those shares
of ABI Common Stock over which he has voting authority (other than in a
fiduciary capacity) in favor of the Merger. The directors and executive
officers of Regions and their affiliates beneficially owned, as of the Record
Date, no shares of ABI Common Stock. As of that date, no subsidiary of either
ABI or Regions held any shares of ABI Common Stock in a fiduciary capacity for
others.
16
<PAGE> 21
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement, which is attached
as Appendix A to this Proxy Statement/Prospectus and incorporated herein by
reference. All stockholders are urged to read the Appendices in their entirety.
GENERAL
Upon consummation of the Merger, ABI will merge with and into Regions,
the separate existence of ABI will cease, and each of the subsidiaries of ABI
will become subsidiaries of Regions. The Bank will continue in operation as a
wholly-owned subsidiary of Regions serving its current markets as a
state-chartered commercial bank until it is combined with other banking
subsidiaries of Regions operating in Louisiana. The other first- and
second-tier subsidiaries of ABI, namely American Land Company in Monroe, Inc.,
American Leasing Company of Monroe, Inc., and American Bancshares Leasing
Company (each, an "ABI Subsidiary" and, collectively with the Bank, the "ABI
Subsidiaries") will become first- or second-tier subsidiaries of Regions, as
the case may be.
ABI Common Stock will be converted into Regions Common Stock as
described below under "--Exchange Ratio." Each share of Regions Common Stock
outstanding immediately prior to the Effective Date will remain outstanding and
unchanged as a result of the Merger.
EXCHANGE RATIO
Each share of ABI Common Stock (excluding any shares held by ABI,
Regions, or their respective subsidiaries, in each case other than shares held
in a fiduciary capacity or in satisfaction of debts previously contracted and
shares held by stockholders who perfect their dissenters' rights of appraisal)
issued and outstanding at the Effective Date will be converted into 2.4445
shares of Regions Common Stock.
No fractional shares of Regions Common Stock will be issued. Rather,
cash will be paid in lieu of any fractional share interest to which any ABI
stockholder would be entitled upon consummation of the Merger, based on the
Closing Price.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. During the last several years, there have
been significant developments in the banking and financial services industry.
These developments include an accelerated trend towards consolidation and
geographic expansion by regional bank holding companies, specialization of
products and services offered by banking institutions, increased competition
from financial institutions which are not subject to bank regulatory oversight,
and increasing regulatory compliance requirements for banking institutions.
In May 1994, the executive officers and Board of Directors
of ABI began to evaluate whether the interests of the stockholders, officers
and employees, customers, and the community would be better served by combining
ABI with a regional bank holding company if a fair price could be negotiated or
by retaining its independent status. It was the unanimous consensus of the
Board of Directors that a merger at a fair price to stockholders with a
regional bank holding company which recognized the importance of the banking
philosophy at ABI, and also enhanced its relationship with its customers,
employees, and community, was in the best interest of all constituencies which
ABI serves. In reaching this conclusion, the Board of Directors unanimously
concluded that ABI had insufficient assets and was unlikely to develop
sufficient assets
17
<PAGE> 22
to justify the cost to be incurred to develop new and specialized products to
compete with those being offered by its larger and better capitalized
competitors and to justify the increased cost of regulatory compliance.
Further, the directors concluded that the current favorable market evaluation
of successful independent local bank holding companies might not continue after
the regional bank holding companies complete their geographic expansion
efforts.
ABI's Reasons for the Merger. In approving the Merger, the directors
of ABI considered a number of factors. Without assigning any relative or
specific weights to the factors, the ABI Board of Directors considered the
following material factors:
(a) the information presented to the directors by the management of
ABI concerning the business, operations, earnings, asset quality, and financial
condition of ABI, including compliance with regulatory capital requirements on
an historical and prospective basis;
(b) the financial terms of the Merger, including the relationship of
the value of the Regions Common Stock issuable in the Merger to the market
value, tangible book value, and earnings per share of ABI Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of ABI Common Stock for Regions Common Stock
for federal income tax purposes;
(d) the likelihood of the Merger being approved by applicable
regulatory authorities without undue conditions or delay; and
(e) in general, the fairness of the Merger to ABI and its stockholders.
The terms of the Merger were the result of arms-length negotiations
between representatives of ABI and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of ABI
unanimously approved the Merger as being in the best interests of ABI and its
stockholders. Each member of the Board of Directors of ABI has agreed to vote
those shares of ABI Common Stock over which he has a voting authority (other
than in a fiduciary capacity) in favor of the Merger and for the Agreement.
ABI'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ABI STOCKHOLDERS
VOTE FOR APPROVAL OF THE AGREEMENT.
Regions' Reasons for the Merger. The Regions Board of Directors has
approved the Agreement and determined that the Merger is in the best interests
of Regions and its stockholders. In approving the Agreement, the Regions Board
considered a number of factors. Without assigning any relative or specific
weights to the factors, the Regions Board of Directors considered the following
material factors:
(a) a review, based in part on a presentation by Regions management,
of (i) the business, operations, earnings, and financial condition, including
the capital levels and asset quality, of ABI on an historical, prospective, and
pro forma basis and in comparison to other financial institutions in the area,
(ii) the demographic, economic, and financial characteristics of the markets in
which ABI operates, including existing competition, history of the market areas
with respect to financial institutions, and average demand for credit, on an
historical and prospective basis, and (iii) the results of Regions' due
diligence review of ABI; and
(b) a variety of factors affecting and relating to the overall
strategic focus of Regions, including Regions' desire to expand into certain
markets in the southeastern United States.
18
<PAGE> 23
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Louisiana Secretary of State. Unless otherwise
agreed upon by Regions and ABI, and subject to the conditions to the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on the last business
day of the month in which the last of the following events occurs: (i) the
effective date (including the expiration of any applicable waiting period) of
the last federal or state regulatory approval required for the Merger and (ii)
the date on which the Agreement is approved by the requisite vote of ABI
stockholders; or such later date within 30 days thereof as specified by
Regions.
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. Regions and ABI anticipate that all conditions
to consummation of the Merger will be satisfied so that the Merger can be
consummated during the fourth quarter of 1994. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or ABI generally may
terminate the Agreement if the Merger is not consummated by March 31, 1995,
unless the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See "--Conditions to Consummation
of the Merger" and "--Waiver, Amendment, and Termination of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause First Alabama
Bank, acting in the capacity of the Exchange Agent to mail to the former
stockholders of ABI a form letter of transmittal, together with instructions
for the exchange of such stockholders' certificates representing shares of ABI
Common Stock for certificates representing shares of Regions Common Stock.
ABI STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of certificates for ABI Common
Stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of ABI Common Stock surrendering such items a
certificate or certificates representing the number of shares of Regions Common
Stock to which such holder is entitled, if any, and a check for the amount to
be paid in lieu of any fractional share, without interest. After the Effective
Date, to the extent permitted by law, ABI stockholders of record as of the
Effective Date will be entitled to vote at any meeting of Regions stockholders
the number of whole shares of Regions Common Stock into which their shares of
ABI Common Stock have been converted, regardless of whether such stockholders
have surrendered their ABI Common Stock certificates. Whenever a dividend or
other distribution is declared by Regions on the Regions Common Stock, the
record date for which is at or after the Effective Date, the declaration shall
include dividends or other distributions on all shares issuable pursuant to the
Agreement, but no dividend or other distribution payable after the Effective
Date with respect to Regions Common Stock will be paid to the holder of any
unsurrendered ABI certificate until the holder duly surrenders such
certificate. Upon surrender of such ABI Common Stock certificate, however, both
the Regions Common Stock certificate, together with all such undelivered
dividends or other distributions (without interest) and any undelivered cash
payments to be paid in lieu of any fractional shares (without interest), shall
be delivered and paid with respect to each share represented by such
certificate.
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<PAGE> 24
After the Effective Date, there will be no transfers of shares of ABI
Common Stock on ABI's stock transfer books. If certificates representing shares
of ABI Common Stock are presented for transfer after the Effective Date, they
will be canceled and exchanged for the shares of Regions Common Stock and a
check for the amount due in lieu of fractional shares, if any, deliverable in
respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions,
including, but not limited to:
(a) approval from the Federal Reserve and the Louisiana Commissioner,
without any conditions or restrictions that, in the reasonable judgment of
Regions' Board of Directors, would so materially adversely impact the economic
or business benefits of the transactions contemplated by the Agreement so as to
render inadvisable the consummation of the Merger, and expiration of any
applicable waiting period;
(b) the approval of the Agreement by the required vote of the holders
of ABI Common Stock represented at the Special Meeting;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under Section
368(a) of the Code and that the exchange of ABI Common Stock for Regions Common
Stock will not give rise to recognition of gain or loss to ABI stockholders,
except to the extent of any cash received; and
(e) the approval for listing on the Nasdaq National Market of the
shares of Regions Common Stock to be issued in the Merger.
Consummation of the Merger also is subject to the satisfaction or
waiver of various other conditions specified in the Agreement, including, among
others: (i) the delivery by Regions and ABI of opinions of their respective
counsel and certificates executed by their respective chief executive officers
and chief financial officers as to compliance with the Agreement and (ii) as of
the Effective Date, the accuracy of certain representations and warranties and
the compliance in all material respects with the agreements and covenants of
each party.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. Applications for the approvals described below have been
submitted to the appropriate regulatory agencies, and each of such agencies has
approved the Merger without the imposition of a condition as described under
"--Conditions to Consummation of the Merger."
Regions and ABI are not aware of any material governmental approvals
or actions that are required for consummation of the Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
The Merger requires the prior approval of the Federal Reserve,
pursuant to Section 3 of the BHC Act. In granting its approval under Section 3
of the BHC Act, the Federal Reserve considered, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs
20
<PAGE> 25
of the communities to be served. The relevant statutes prohibit the Federal
Reserve from approving the Merger (i) if it would result in a monopoly or be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States or (ii) if
its effect in any section of the country may be to substantially lessen
competition or to tend to create a monopoly, or if it would be a restraint of
trade in any other manner, unless the Federal Reserve finds that any
anticompetitive effects are outweighed clearly by the public interest and the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. Under the BHC Act, the Merger may not be consummated
until the 30th day following the date of Federal Reserve approval, during which
time the United States Department of Justice may challenge the transaction on
antitrust grounds. The commencement of any antitrust action would stay the
effectiveness of the Federal Reserve's approval, unless a court specifically
orders otherwise.
The Merger also is subject to the approval of the Louisiana
Commissioner. In its evaluation, the Louisiana Commissioner took into account
considerations similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and ABI
approved by their respective Boards of Directors; provided, however, that after
approval by the ABI stockholders, no amendment that, pursuant to the Louisiana
Act, requires further approval by such stockholders may be made without the
further approval of such stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by ABI
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final,
nonappealable denial of any required regulatory approval, or by the Board of
Directors of Regions if any required regulatory approval is conditioned or
restricted in the manner described above under "--Conditions to Consummation of
the Merger";
(b) by the Board of Directors of either party, if the stockholders of
ABI fail to vote their approval of the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and ABI;
(d) by the Board of Directors of either party, in the event of a
breach of any provision of the Agreement which meets certain standards
specified in the Agreement; or
(e) by the Board of Directors of either party if the Merger shall not
have been consummated by March 31, 1995, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's breach
of the Agreement.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination will not relieve the parties from the
consequences of any uncured willful and knowing breach of the Agreement giving
rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
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<PAGE> 26
ABI generally has agreed, unless the prior consent of Regions is
obtained, and except as otherwise contemplated by the Agreement, to operate its
business only in the ordinary course, preserve intact its business
organizations and assets, and maintain its rights and franchises. Regions has
agreed to continue to conduct its business in a manner designed in its
reasonable judgment to enhance the long-term value of Regions Common Stock, to
enhance the business prospects of Regions and its subsidiaries, and to the
extent consistent therewith, to preserve intact the core businesses and
goodwill of Regions. Each of ABI and Regions has agreed not to take any action
that would affect, adversely and materially, the ability of either party to
perform its covenants and agreements under the Agreement or to obtain any
consent or approval required for the consummation of the transactions
contemplated by the Agreement. In addition, the Agreement contains certain
other restrictions applicable to the conduct of the business of each of ABI and
Regions prior to consummation of the Merger, as described below.
ABI. ABI has agreed not to take certain actions relating to the
operation of its business pending consummation of the Merger without the prior
approval of Regions. Those actions generally include, without limitation: (i)
amending its Articles of Incorporation or Bylaws; (ii) incurring, or permitting
any ABI Subsidiary to incur, any additional debt or other obligation for
borrowed money in excess of an aggregate of $100,000 (except in the ordinary
course of business consistent with past practices); (iii) acquiring or
exchanging any shares of its capital stock or any securities convertible into
such shares, or paying any distribution in respect of its capital stock,
provided that in the event the Effective Date occurs subsequent to the Record
Date for the payment of the cash dividend to be paid on Regions Common Stock
for the fourth quarter of 1994, ABI may, to the extent legally and
contractually permitted to do so, declare and pay cash dividends at a rate not
in excess of an amount equal to the product of the Exchange Ratio and the
amount of the per share cash dividend declared by Regions on outstanding shares
of Regions Common Stock for the fourth quarter of 1994; (iv) issuing, selling,
or otherwise disposing of any additional shares of ABI capital stock or of
capital stock of any ABI Subsidiary, any rights to acquire any such
stock, or any security convertible into such stock (except as set forth in the
Agreement); (v) adjusting or reclassifying any capital stock; (vi) acquiring
direct or indirect control over any other entity; (vii) granting any increase
in compensation or benefits to employees or officers of ABI or any ABI
Subsidiary (except as disclosed to Regions or as required by law), paying any
bonus (except as disclosed to Regions or in accordance with any existing
program or plan), entering into or amending any severance agreements with
officers (except as disclosed to Regions), or granting any increase in
compensation or other benefits to directors of ABI or any ABI Subsidiary;
(viii) entering into or amending any employment contract between ABI or any ABI
Subsidiary and any person that it does not have the unconditional right to
terminate (except as disclosed to Regions and except for any amendment required
by law); (ix) adopting any new employee benefit plan or program of ABI or any
ABI Subsidiary or materially changing any existing plan or program of ABI or
any ABI Subsidiary (except as disclosed to Regions and except for any change
required by law or advisable to maintain the tax qualified status of any such
plan); (x) making any significant change in any tax or accounting methods or
systems of internal accounting controls (except in conformity to changes in tax
laws or generally accepted accounting principles ("GAAP")); (xi) commencing any
material litigation (except in accordance with past practices) or settling any
litigation for an amount in excess of $100,000 or imposing material
restrictions on the operations of ABI or any ABI Subsidiary; or (xii) modifying
or terminating any material contract.
In addition, ABI has agreed not to solicit, directly or indirectly,
any acquisition proposal from any other person or entity. ABI also has agreed
not to negotiate with respect to any such proposal, provide nonpublic
information to any party making such a proposal, or enter into any agreement
with respect to any such proposal, except in compliance with the fiduciary
obligations of its Board of Directors. In addition, ABI has agreed to use
reasonable efforts to cause its advisors and other representatives not to
engage in any of the foregoing activities.
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<PAGE> 27
Regions. The Agreement prohibits Regions, prior to the earlier of the
Effective Date or the termination of the Agreement, from taking any action that
would materially adversely affect the ability of either party to obtain the
requisite governmental approvals or to perform its covenants and agreements
under the Agreement. Regions has agreed not to amend its Certificate of
Incorporation or Bylaws in any manner which is adverse to and discriminates
against holders of ABI Common Stock.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of Regions. Information concerning the management of Regions is
included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Indemnification and Advancement of Expenses. The Agreement provides
that Regions will maintain all rights of indemnification and advancement of
expenses incurred in the defense of any litigation existing in favor of each
person entitled to indemnification from ABI or any ABI Subsidiary on terms no
less favorable than the rights provided in the Articles of Incorporation or
Bylaws of ABI or any of the ABI Subsidiaries, as the case may be, or the rights
otherwise in effect on the date of the Agreement and that such rights will
continue in full force and effect for six years from the Effective Date with
respect to matters occurring at or prior to the Effective Date.
Employee Benefits. The Agreement also provides that, after the
Effective Date, Regions will provide generally to officers and employees of ABI
and the ABI Subsidiaries who become officers or employees of Regions or its
subsidiaries, employee benefits under employee benefit plans (other than stock
option plans) on terms and conditions that, when taken as a whole, are
substantially similar to those currently provided by Regions and its
subsidiaries to their similarly situated officers and employees. For purposes
of participation and vesting (but not benefit accrual) under such employee
benefit plans, service with ABI or any ABI Subsidiary prior to the Effective
Date will be treated as service with Regions or its subsidiaries. The Agreement
further provides that Regions will cause ABI to honor all employment,
severance, consulting, and other compensation contracts disclosed to Regions
between ABI or any ABI Subsidiary and any current or former director, officer,
or employee, and all provisions for vested amounts earned or accrued through
the Effective Date under ABI's benefit plans.
Regions Stock Ownership. As of the Record Date, the directors and
executive officers of ABI owned no shares of Regions Common Stock.
The Agreement provides that at the first regularly scheduled meeting
of the Board of Directors of Regions after the Effective Date, Regions will
effect all action necessary to elect William R. Boles, Sr., currently Chairman
of the Board of ABI, to the Board of Directors of Regions.
DISSENTERS' RIGHTS
General. Each ABI stockholder who objects to the Merger shall be
entitled to the rights and remedies of dissenting stockholders provided in
Section 12:131 of the Louisiana Act, a copy of which is included as Appendix B
to this Proxy Statement/Prospectus.
Statutory Requirements. The following is a summary of the steps to be
taken by an ABI stockholder who is interested in perfecting such holder's
dissenters' rights and should be read in conjunction with the full
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text of Section 12:131 of the Louisiana Act. Each of the steps enumerated below
must be taken in strict compliance with the applicable provisions of the
statute in order for holders of ABI Common Stock to perfect their dissenters'
rights. If the Merger is approved by 80% or more of the total voting power of
ABI, then dissenters' rights of appraisal, in accordance with the Louisiana
Act, will not be available.
Any written objection, demand, or notice required by the Louisiana Act
in connection with the exercise of dissenters' rights should be sent to ABI at
1500 North 18th Street, Monroe, Louisiana 71201, Attention: William R. Boles,
Jr., Corporate Secretary. It is recommended that all required documents to be
delivered by mail be sent by registered or certified mail with return receipt
requested.
Any holder of ABI Common Stock who disapproves of or objects to the
proposed Merger and who wishes to receive in cash the "fair value" of such
shares (determined immediately before the Merger is consummated) may elect to
do so by taking all of the following steps:
(a) Such stockholder must file with ABI, prior to or at the Special
Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares of ABI Common
Stock against the Merger. If the Merger is approved by the required vote, but
by less than 80% of the total voting power, and the Merger authorized thereby
is effected, ABI promptly thereafter shall give written notice thereof, by
registered mail, to each stockholder who filed such written objection to, and
voted such holder's shares against, the Merger, at such stockholder's last
address on ABI's records.
(c) Each such stockholder, within 20 days after the mailing of such
notice to such holder, but not thereafter, must file with ABI a demand in
writing for the fair cash value of such holder's shares of ABI Common Stock as
of the day before such vote was taken, and such holder must state in such
demand the value demanded and a post office address to which the reply of ABI
may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in Ouachita Parish the certificates
representing such holder's shares of ABI Common Stock, duly endorsed and
transferred to ABI upon the sole condition that such certificates shall be
delivered to ABI upon payment of the value of the shares determined in
accordance with the provisions of Section 12:131 of the Louisiana Act.
(e) With the demand, the stockholder must deliver to ABI the written
acknowledgment of such bank or trust company that it so holds such holder's
certificates of ABI Common Stock.
Unless the objection, demand, and acknowledgment are made and
delivered by the stockholder within the required time period, such holder
conclusively shall be presumed to have acquiesced in the Merger. If ABI does
not agree to the value so stated and demanded, or does not agree that a payment
is due, within 20 days after receipt of such demand and acknowledgment, it
shall notify the stockholder in writing, at the designated post office address,
of its disagreement and shall state in such notice the value it will agree to
pay if any payment should be held to be due; otherwise it shall be liable for,
and shall pay to the dissatisfied stockholder, the value demanded.
In case of disagreement as to such fair cash value, or as to whether
any payment is due, after compliance by the parties with the provisions
described above, the dissatisfied stockholder, within 60 days after receipt of
notice in writing of ABI's disagreement, but not thereafter, may file suit
against ABI, or the merged or consolidated corporation, as the case may be, in
the district court of Ouachita Parish, praying the court to
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fix and decree the fair cash value of the dissatisfied stockholder's shares of
ABI Common Stock as of the day before such corporate action complained of was
taken, and the court, on such evidence as may be adduced in relation thereto,
shall determine summarily whether any payment is due and, if so, such cash
value and render judgment accordingly. Any stockholder entitled to file such
suit, within such 60-day period, but not thereafter, may intervene as a
plaintiff in such suit filed by another stockholder and recover therein
judgment against ABI for the fair cash value of such holder's shares of ABI
Common Stock. Failure of the stockholder to bring suit, or to intervene in such
a suit, within 60 days after receipt of notice of disagreement by ABI
conclusively shall bind the stockholder (i) by ABI's statement that no payment
is due or (ii) if ABI does not contend that no payment is due, to accept the
value of such holder's shares of ABI Common Stock as fixed by ABI in its notice
of disagreement.
Any stockholder who fails to take each of the required actions
outlined above in a timely manner will not be entitled to exercise the rights
of a dissenting stockholder. Any stockholder who timely takes each of the
required actions outlined above thereafter shall retain all rights of a
stockholder, except the right to receive shares of Regions Common Stock, until
those rights are modified upon consummation of the Merger.
A stockholder, upon filing a demand for the value of such holder's
shares, shall cease to have any of the rights of a stockholder, except the
rights accorded by Section 12:131 of the Louisiana Act. Such a demand may be
withdrawn by the stockholder at any time before ABI gives notice of
disagreement, as provided by the Louisiana Act. After such notice of
disagreement is given, withdrawal of a notice of election shall require the
written consent of ABI. Dissenters' rights will not be available if any of the
following occurs: (i) the stockholder withdraws the notice of election of
dissenters' rights; (ii) the Merger is abandoned or rescinded, (iii) a court
determines the stockholder is not entitled to receive payment for such holder's
shares of ABI Common Stock; or (iv) the stockholder otherwise loses such
dissenters' rights. In any such case, such holder shall not have the right to
receive payment for such holder's shares of ABI Common Stock; such holder's
share certificates shall be returned (and, on such holder's request, new
certificates shall be issued in exchange for the old ones endorsed to ABI); and
such holder shall be reinstated to all rights as a stockholder as of the filing
of such holder's demand for value, including any intervening preemptive rights,
and the right to payment of any intervening dividend or other distribution, or
if any such rights have expired or any such dividend or distribution other than
in cash has been completed, in lieu thereof, at the election of ABI, the fair
value thereof in cash as determined by the ABI Board or, if the Merger shall
have been consummated, the Regions Board as of the time of such expiration or
completion, but without prejudice otherwise to any corporate proceedings that
may have been taken in the interim.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX
LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
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EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and ABI concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the
Delaware GCL and the Louisiana Act, the Merger will be a reorganization within
the meaning of Section 368(a)(1)(A). ABI and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b).
(b) ABI will recognize no gain or loss upon the transfer of its assets
to Regions in exchange solely for Regions Common Stock and the assumption by
Regions of the liabilities of ABI.
(c) No gain or loss will be recognized by Regions on receipt of ABI's
assets in exchange for Regions Common Stock.
(d) The basis of ABI's assets in the hands of Regions will, in each
case, be the same as the basis of those assets in the hands of ABI immediately
prior to the transaction.
(e) The holding period of the assets of ABI in the hands of Regions
will, in each case, include the period during which such assets were held by
ABI.
(f) The stockholders of ABI will recognize no gain or loss upon the
exchange of their ABI Common Stock solely for shares of Regions Common Stock.
(g) The basis of the Regions Common Stock received by the ABI
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the ABI Common Stock surrendered in exchange therefor.
(h) The holding period of the Regions Common Stock received by the ABI
stockholders will, in each instance, include the period during which the ABI
Common Stock surrendered in exchange therefor was held, provided that the ABI
Common Stock was held as a capital asset on the date of the exchange.
(i) The payment of cash to ABI stockholders in lieu of fractional
share interests of Regions Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the stock
redeemed as provided in Section 302(a).
(j) Where solely cash is received by an ABI stockholder in exchange
for such holder's ABI Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of such
holder's ABI Common Stock, subject to the provisions and limitations of Section
302.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE MERGER. ABI STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE MERGER TO THEM
INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
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It is anticipated that the Merger will be accounted for as a
"purchase," as that term is used pursuant to GAAP, for accounting and financial
reporting purposes. Under the purchase method of accounting, the assets and
liabilities of ABI as of the Effective Date will be recorded at their estimated
respective fair values and added to those of Regions. Financial statements of
Regions issued after the Effective Date will reflect such values and will not
be restated retroactively to reflect the historical financial position or
results of operations of ABI.
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear
and pay its own expenses in connection with the transactions contemplated by
the Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions Common Stock to be issued to ABI stockholders in the
Merger has been registered under the Securities Act, but that registration does
not cover resales of those shares by persons who control, are controlled by, or
are under common control with, ABI (such persons are referred to hereinafter as
"affiliates" and generally include executive officers, directors, and 10%
stockholders) at the time of the Special Meeting. Affiliates may not sell
shares of Regions Common Stock acquired in connection with the Merger, except
pursuant to an effective registration statement under the Securities Act or in
compliance with SEC Rule 145 or another applicable exemption from the
Securities Act registration requirements.
Each person whom ABI reasonably believes to be an affiliate of ABI has
delivered to Regions a written agreement providing that such person generally
will not sell, pledge, transfer, or otherwise dispose of any Regions Common
Stock to be received by such person upon consummation of the Merger, except in
compliance with the Securities Act and the rules and regulations of the SEC
promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of ABI Common Stock will be
exchanging their shares of a Louisiana corporation governed by the Louisiana
Act and ABI's Articles of Incorporation, as amended (the "Articles"), and
Bylaws, as amended, for shares of Regions, a Delaware corporation governed by
the Delaware GCL and Regions' Certificate of Incorporation (the "Certificate")
and Bylaws. Certain significant differences exist between the rights of ABI
stockholders and those of Regions stockholders. The differences deemed material
by ABI and Regions are summarized below. In particular, Regions' Certificate
and Bylaws contain several provisions that may be deemed to have an
antitakeover effect in that they could impede or prevent an acquisition of
Regions unless the potential acquirer has obtained the approval of Regions'
Board of Directors. The following discussion is necessarily general; it is not
intended to be a complete statement of all differences affecting the rights of
stockholders and their respective entities, and it is qualified in its entirety
by reference to the Louisiana Act and the Delaware GCL as well as to Regions'
Certificate and Bylaws and ABI's Articles and Bylaws.
ANTITAKEOVER PROVISIONS GENERALLY
The provisions of Regions' Certificate and Bylaws described below
under the headings "Authorized Capital Stock," "Amendment of Certificate of
Incorporation and Articles of Incorporation and Bylaws," "Classified Board of
Directors and Absence of Cumulative Voting," "Removal of Directors,"
"Limitations on Director Liability," "Special Meetings of Stockholders,"
"Actions by Stockholders Without a Meeting," "Stockholder Nominations and
Proposals," and
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"Mergers, Consolidations, and Sales of Assets Generally," and the provisions of
the Delaware GCL described under the heading "Business Combinations With
Certain Persons," are referred to herein as the "Protective Provisions." In
general, one purpose of the Protective Provisions is to assist Regions' Board
of Directors in playing a role in connection with attempts to acquire control
of Regions, so that the Board can further and protect the interests of Regions
and its stockholders as appropriate under the circumstances, including, if the
Board determines that a sale of control is in their best interests, by
enhancing the Board's ability to maximize the value to be received by the
stockholders upon such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
The Protective Provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believe such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 43,510,939 shares were issued,
including 1,590,579 treasury shares as of June 30, 1994. Regions' Board of
Directors may cause additional shares of Regions Common Stock to be issued (up
to the amount authorized in the Certificate) without further action by Regions'
stockholders, unless such action is required in a particular case by applicable
laws or regulations or by any stock exchange upon which Regions' capital stock
may be listed.
The authority to issue additional shares of Regions Common Stock
provides Regions with the flexibility necessary to meet its future needs
without the delay resulting from seeking stockholder approval. The authorized
but unissued shares of Regions Common Stock will be issuable from time to time
for any corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Regions.
In addition, the sale of a substantial number of shares of Regions Common Stock
to persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
Common Stock (or the right to receive Regions Common Stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions.
Regions' stockholders have no preemptive rights to purchase or
subscribe to Regions stock or other Regions securities.
ABI. ABI's authorized capital stock consists of 1,000,000 shares of
ABI Common Stock, of which 729,937 shares were issued and outstanding as of
June 30, 1994. At that date ABI held no shares of ABI Common Stock as treasury
shares.
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Pursuant to the Louisiana Act and ABI's Bylaws, ABI's Board of
Directors may cause additional shares of ABI Common Stock to be issued (up to
the total amount authorized) without further action by ABI stockholders.
ABI's Articles grant the stockholders of ABI preemptive rights to
purchase or subscribe to (i) any unissued authorized shares or treasury shares
of ABI Common Stock, (ii) any obligations, evidences of indebtedness, or other
securities of ABI convertible into or exchangeable for any such shares, (iii)
any option or warrant for the purchase of any such shares, or (iv) any other
securities that may be issued or sold by ABI. ABI's Articles also provide that
such preemptive rights may be extinguished by the vote of two-thirds of the
affected stockholders.
AMENDMENT OF CERTIFICATE AND ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class, is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock; election, classification, and removal of directors; the approval
required for certain business combinations; meetings of stockholders; and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions voting stock, voting together as a single class.
The Certificate also provides that the Board of Directors has the
power to adopt, amend, or repeal the Bylaws. Any action taken by the
stockholders with respect to adopting, amending, or repealing any Bylaws may be
taken only upon the affirmative vote of the holders of at least 75% of the
voting power of Regions' voting stock.
ABI. Under the Louisiana Act, the Articles may be amended by the
affirmative vote of at least two-thirds of the voting power present at a
stockholders meeting.
The Articles also provide that ABI's Board of Directors can alter,
amend, or repeal the Bylaws or adopt new Bylaws, subject to the concurrent
power of the stockholders of ABI to alter, amend, or repeal the Bylaws or to
adopt new Bylaws. Pursuant to ABI's Articles, the stockholders can provide that
any or all Bylaws altered, amended, repealed, or adopted by the stockholders
shall not be altered, amended, or repealed by the Board. Pursuant to ABI's
Bylaws, the stockholders can repeal the Board's authority to alter, amend, or
repeal the Bylaws or to adopt new Bylaws.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
Regions. The Certificate provides that Regions' Board of Directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office.
The effect of Regions' having a classified Board of Directors is that
only approximately one-third of the members of the Board are elected each year,
which effectively requires two annual meetings for Regions' stockholders to
change a majority of the members of the Board.
Pursuant to the Certificate, each stockholder generally is entitled to
one vote for each share of Regions stock held and is not entitled to cumulative
voting rights in the election of directors. With cumulative voting, a
stockholder has the right to cast a number of votes equal to the total number
of such holder's shares multiplied by the number of directors to be elected.
The stockholder has the right to cast all of such holder's votes in favor of
one candidate or to distribute such holder's votes in any manner among any
number of candidates. Directors are elected by a plurality of the total votes
cast by all stockholders. With cumulative
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voting, it may be possible for minority stockholders to obtain representation
on the Board of Directors. Without cumulative voting, the holders of more than
50% of the shares of Regions Common Stock generally have the ability to elect
100% of the directors. As a result, the holders of the remaining Regions Common
Stock effectively may not be able to elect any person to the Board of
Directors. The absence of cumulative voting thus could make it more difficult
for a stockholder who acquires less than a majority of the shares of Regions
Common Stock to obtain representation on Regions' Board of Directors.
ABI. ABI does not have a classified Board of Directors. The Louisiana
Act generally provides that there shall be no fewer than three directors, and
ABI's Bylaws generally provide that the number of directors constituting the
Board of ABI shall be determined by resolution of the Board or the stockholders
of ABI at any meeting thereof. There were 14 directors constituting the Board
as of September 30, 1994. Directors are elected by plurality vote of the
stockholders of ABI and hold office until the next annual meeting of
stockholders or until their successors are elected and qualified. As with
Regions, the Articles prohibit cumulative voting by the stockholders for the
election of directors.
REMOVAL OF DIRECTORS
Regions. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of 75% or more of Regions' voting stock.
ABI. Pursuant to ABI's Bylaws, at any meeting of stockholders called
expressly for that purpose, any director or the entire Board may be removed,
with or without cause, by a vote of the holders of a majority of the ABI shares
then entitled to vote on the election of directors.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. The Certificate provides that a director of Regions will
have no personal liability to Regions or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) the payment of
certain unlawful dividends and the making of certain unlawful stock purchases
or redemptions, or (iv) any transaction from which the director derived an
improper personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefitted Regions and its stockholders. The SEC has taken the
position that similar provisions added to other corporations' certificates of
incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
ABI. The limitations on director liability provided in ABI's Articles
are virtually identical to those provided in Regions' Certificate. Among the
differences is the fact that, under ABI's Articles, a director would not have
such protection if sued directly by ABI. ABI's Articles further provide that,
to the extent the Louisiana Act is amended to provide directors greater
protection from personal liability in stockholder actions, whether derivative
or direct, then the liability of directors shall be so limited under the
Articles.
ABI's Articles also provide that if (i) a director discloses such
director's interest (whether direct or indirect) in any transaction with ABI,
or such director's interest is otherwise known to ABI's directors or
stockholders who approved such transaction, and (ii) such transaction was fair
to ABI as of the time it was authorized, approved or ratified by ABI's Board,
then a director of ABI is relieved of liability which might
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otherwise exist for entering into such transaction with ABI, whether or not
such interested director's presence at a meeting, or such director's vote, was
necessary to obligate ABI in such transaction.
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INDEMNIFICATION
Regions. The Certificate provides that Regions will indemnify its
officers, directors, employees, and agents to the full extent permitted by the
Delaware GCL. Under Section 145 of the Delaware GCL as currently in effect,
other than in actions brought by or in the right of Regions, such
indemnification would apply if it were determined in the specific case that the
proposed indemnitee acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of Regions and, with
respect to any criminal proceeding, if such person had no reasonable cause to
believe that the conduct was unlawful. In actions brought by or in the right of
Regions, such indemnification probably would be limited to reasonable expenses
(including attorneys' fees) and would apply if it were determined in the
specific case that the proposed indemnitee acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of Regions, except that no indemnification may be made with respect to any
matter as to which such person is adjudged liable to Regions, unless, and only
to the extent that, the court determines upon application that, in view of all
the circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent that any director, officer, employee, or agent of Regions has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by him in connection therewith.
ABI. The indemnifying provisions in ABI's Articles are virtually
identical to those in the Delaware GCL. Under ABI's Articles, however, such
indemnification applies only to ABI's directors and officers, and does not
extend to ABI's employees generally or to ABI's agents.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that such meetings
may be called at any time, but only by the chief executive officer, the
secretary, or the Board of Directors of Regions. Regions stockholders do not
have the right to call a special meeting or to require that Regions' Board of
Directors call such a meeting. This provision, combined with other provisions
of the Certificate and the restriction on the removal of directors, would
prevent a substantial stockholder from compelling stockholder consideration of
any proposal (such as a proposal for a business combination) over the
opposition of Regions' Board of Directors by calling a special meeting of
stockholders at which such stockholder could replace the entire Board with
nominees who were in favor of such proposal.
ABI. Under ABI's Bylaws, a special meeting of stockholders may be
called at any time by the president, the Board, or the holders of not less than
10% of all shares of ABI stock entitled to vote at such meeting.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. The Certificate provides that any action required or
permitted to be taken by Regions stockholders must be effected at a duly called
meeting of stockholders and may not be effected by any written consent by the
stockholders. These provisions would prevent stockholders from taking action,
including action on a business combination, except at an annual or special
meeting called by the Board of Directors, even if a majority of the
stockholders were in favor of such action.
ABI. ABI's Bylaws provide that action required or permitted to be
taken at a meeting of stockholders may be taken without a meeting only if a
consent in writing (in one or more counterparts), setting forth the action so
taken, is signed by all of the holders of shares of ABI voting stock.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Regions. Regions' Certificate and Bylaws provide that any nomination
by stockholders of individuals for election to the Board of Directors must be
made by delivering written notice of such nomination (the
32
<PAGE> 37
"Nomination Notice") to the secretary of Regions not less than 14 days nor more
than 50 days before any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the meeting
is given to stockholders, the Nomination Notice must be delivered to the
secretary of Regions not later than the seventh day following the day on which
notice of the meeting was mailed to stockholders. The Nomination Notice must
set forth certain background information about the persons to be nominated,
including information concerning (i) the name, age, business, and, if known,
residential address of each nominee, (ii) the principal occupation or
employment of each such nominee, and (iii) the number of shares of Regions
capital stock beneficially owned by each such nominee. The Board of Directors
is not required to nominate in the annual proxy statement any person so
proposed; however, compliance with this procedure would permit a stockholder to
nominate the individual at the stockholders' meeting, and any stockholder may
vote such holder's shares in person or by proxy for any individual such holder
desires.
ABI. No procedure for stockholder nominations or proposals at regular
stockholder meetings is set forth in the Louisiana Act, in ABI's Articles, or
in ABI's Bylaws; as to special meetings of stockholders, ABI's Bylaws provide
that no business may be transacted at such meetings unless the business is
stated or indicated in a notice of the meeting delivered at the appropriate
time.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware GCL ("Section 203") places
certain restrictions on "business combinations" (as defined in Section 203 to
include, generally, mergers, sales and leases of assets, issuances of
securities, and similar transactions) by Delaware corporations with an
"interested stockholder" (as defined in Section 203 to include, generally, the
beneficial owner of 15% or more of the corporation's outstanding voting stock).
Section 203 generally applies to Delaware corporations, such as Regions, that
have a class of voting stock listed on a national securities exchange,
authorized for quotation on an interdealer quotation system of a registered
national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
Regions has not specifically elected to avoid the application of
Section 203. As a result, Section 203 generally would prohibit a business
combination by Regions or a subsidiary with an interested stockholder within
three years after the person or entity becomes an interested stockholder,
unless (i) prior to the time when the person or entity becomes an interested
stockholder, Regions' Board of Directors approved either the business
combination or the transaction pursuant to which such person or entity became
an interested stockholder, (ii) upon consummation of the transaction in which
the person or entity became an interested stockholder, the interested
stockholder held at least 85% of the outstanding Regions voting stock
(excluding shares held by persons who are both officers and directors and
shares held by certain employee benefit plans), or (iii) once the person or
entity becomes an interested stockholder, the business combination is approved
by Regions' Board of Directors and by the holders of at least two-thirds of the
outstanding Regions voting stock, excluding shares owned by the interested
stockholder.
ABI. Section 12:133 of the Louisiana Act ("Section 12:133") places
similar restrictions on "business combinations" (as defined in Section
12:132(4) of the Louisiana Act, generally including mergers, consolidations,
share exchanges, sales and leases of assets, issuances of securities, and
similar transactions) by Louisiana corporations with an "interested
stockholder" (as defined in Section 12:132(9) of the Louisiana Act, generally
the beneficial owner of 10% or more of the voting power of the then outstanding
voting stock). Section 12:133 generally applies to business combinations of
Louisiana corporations having greater than 100 beneficial owners of its stock
or which did not have an interested stockholder on January 1, 1985, unless the
articles of incorporation expressly provide otherwise. Section 12:133 generally
does not apply provided the stockholders receive in the business combination
substantially similar consideration for their shares of stock in the
corporation in terms of price and method of payment, as determined in
accordance with Section 12:134B
33
<PAGE> 38
of the Louisiana Act, as the interested stockholder received for its shares of
stock in the corporation acquired by such interested stockholder within two
years of such business combination.
As ABI has not specifically elected to avoid the application of
Section 12:133, Section 12:133 generally would prohibit a business combination
by ABI with an interested stockholder unless the business combination is
recommended by ABI's Board and approved by the affirmative vote of at least
each of the following: (i) 80% of the votes entitled to be cast by outstanding
shares of ABI voting stock voting together as a single voting group and (ii)
two-thirds of the votes entitled to be cast by holders of ABI voting stock,
other than voting stock held by the interested stockholder who is a party to
the business combination with ABI, voting together as a single voting group. As
Regions is not an "interested stockholder" with respect to ABI, Section 12:133
does not apply to the Merger.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The Certificate generally requires the affirmative vote of
the holders of at least 75% of the outstanding voting stock of Regions to
effect (i) any merger or consolidation with or into any other corporation or
(ii) any sale or lease of any substantial part of the assets of Regions to any
party that beneficially owns 5.0% or more of the outstanding shares of Regions
voting stock, unless the transaction was approved by Regions' Board of
Directors before the other party became a 5.0% beneficial owner or is approved
by 75% or more of the full Board after the party becomes such a 5.0% beneficial
owner.
ABI. Under the Louisiana Act, the affirmative vote of at least
two-thirds of the voting power present at a meeting of ABI stockholders is
required to effect (i) any merger or consolidation with or into any other
corporation or (ii) any sale or lease of any substantial part of the assets of
ABI if ABI is not insolvent.
DISSENTERS' RIGHTS
Regions. The rights of appraisal of dissenting stockholders of
Regions are governed by the Delaware GCL. Pursuant thereto, except as described
below, any stockholder has the right to dissent from any merger of which
Regions could be a constituent corporation. No appraisal rights are available,
however, for (i) the shares of any class or series of stock that is either
listed on a national securities exchange, quoted on the Nasdaq National Market,
or held of record by more than 2,000 stockholders or (ii) any shares of stock
of the constituent corporation surviving a merger if the merger did not require
the approval of the surviving corporation's stockholders, unless, in either
case, the holders of such stock are required by an agreement of merger or
consolidation to accept for that stock something other than: (a) shares of
stock of the corporation surviving or resulting from the merger or
consolidation; (b) shares of stock of any other corporation that will be listed
at the effective date of the merger on a national securities exchange, quoted
on the Nasdaq National Market, or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of stock described in
clause (a) or (b) immediately above; or (d) any combination of the shares of
stock and cash in lieu of fractional shares described in clauses (a) through
(c) immediately above. Because Regions Common Stock is quoted on the Nasdaq
National Market and is held of record by more than 2,000 stockholders, unless
the exception described immediately above applies, holders of Regions Common
Stock do not have dissenters' rights of appraisal.
ABI. The rights of appraisal of dissenting stockholders under the
Louisiana Act, while generally similar to those afforded under the Delaware
GCL, differ in certain details. For a full description of the rights of
dissenting stockholders under the Louisiana Act, see "Description of the
Transaction--Dissenters' Rights."
34
<PAGE> 39
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware GCL provides that a stockholder may inspect
books and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as
a stockholder.
ABI. Pursuant to the Louisiana Act, upon at least five days' written
notice any stockholder, except a business competitor, who is and has been the
holder of record of at least 5.0% of the outstanding shares of any class of a
corporation for at least six months, has the right to examine any records and
accounts of the corporation at any reasonable time for any reasonable purpose.
In the case of a business competitor, such competitor must own at least 25% of
all outstanding shares of the corporation for six months before exercising the
right to examine the corporation's records.
DIVIDENDS
Regions. The Delaware GCL provides that, subject to any restrictions
in the corporation's certificate of incorporation, dividends may be declared
from the corporation's surplus or, if there is no surplus, from its net profits
for the fiscal year in which the dividend is declared and the preceding fiscal
year. Dividends may not be declared, however, if the corporation's capital has
been diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by Regions are derived from its
subsidiary depository institutions. There are various statutory limitations on
the ability of Regions' subsidiary depository institutions to pay dividends to
Regions. See "Supervision and Regulation--Payment of Dividends."
ABI. Pursuant to the Louisiana Act, a board of directors may from
time to time declare dividends in cash, property, or its own shares out of
unreserved surplus, unless the corporation is insolvent or would thereby be
made insolvent or the declaration or payment of the dividend would be contrary
to any restrictions contained in the articles of incorporation. If the
corporation has no surplus available for dividends, it may pay dividends out of
its net profits for the then current or the preceding fiscal year or both.
However, no dividend may be paid at a time when, either before or after the
payment of the dividend, the corporation's liabilities exceed its assets or the
net assets are less than the aggregate amount payable on liquidation upon the
issued shares, if any, which have a preferential right to participate in the
corporation's assets in the event of liquidation. No dividends may be paid in
shares, other than treasury shares, except upon transfer to stated capital from
capital surplus of (i) an amount not less than the aggregate par value of the
issued par value shares and (ii) such amount as the board of directors of the
corporation may determine in respect of issued shares without par value. No
dividend payable in shares of any class shall be paid to stockholders of any
other class, unless the articles of incorporation so permit or such payment is
authorized by the holders of a majority of the shares of the class in which the
payment is to be made. ABI's Bylaws place no additional restrictions on payment
of dividends, and provide that declaration and payment of dividends shall be at
the discretion of the Board.
35
<PAGE> 40
COMPARATIVE MARKET PRICE AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." ABI Common Stock is not traded in any established market. The
following table sets forth, for the indicated periods, the high and low closing
sale prices for Regions Common Stock as reported on the Nasdaq National Market,
the high and low prices for ABI Common Stock to the extent available, and the
cash dividends declared per share of Regions Common Stock and ABI Common Stock
for the indicated periods. The stock prices and historical dividends for
Regions have been adjusted to reflect a 10% stock dividend paid by Regions on
April 1, 1993. The prices indicated for ABI are based on actual transactions in
ABI Common Stock of which ABI management is aware; however, for the indicated
period there has been only a very limited number of transactions and all such
transactions have involved limited numbers of shares in ABI Common Stock in the
indicated periods, and no assurance can be given that the indicated prices
represent the actual market value of the ABI Common Stock.
<TABLE>
<CAPTION>
REGIONS ABI
PRICE RANGE CASH DIVIDENDS PRICE RANGE CASH DIVIDENDS
----------- DECLARED ----------- DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- --------- ---- --- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992
First Quarter . . . . . . . . . $28.13 $23.75 $.2275 $ -- $ -- $ -0-
Second Quarter . . . . . . . . 30.00 25.13 .2275 -- -- -0-
Third Quarter . . . . . . . . . 30.75 27.50 .2275 18.16 18.00 -0-
Fourth Quarter . . . . . . . . 33.88 28.38 .2275 -- -- -0-
1993
First Quarter . . . . . . . . . 38.38 31.25 .26 -- -- -0-
Second Quarter . . . . . . . . 38.25 30.25 .26 18.00 18.00 -0-
Third Quarter . . . . . . . . . 35.25 31.25 .26 18.00 18.00 -0-
Fourth Quarter . . . . . . . . 35.00 29.63 .26 -- -- -0-
1994
First Quarter . . . . . . . . 33.50 30.13 .30 20.00 20.00 -0-
Second Quarter . . . . . . . . 36.13 30.50 .30 -- -- -0-
Third Quarter . . . . . . . . . 36.75 34.62 .30 -- -- -0-
Fourth Quarter
(through October 6, 1994) . . 35.00 34.14 -0- -- -- -0-
</TABLE>
On October 6, 1994, the last reported sale price of Regions Common
Stock as reported on the Nasdaq National Market, and the price of ABI Common
Stock in the last known transaction, which occurred in the first quarter of
1994, were $34.50 and $20.00, respectively. On June 1, 1994, the last business
day prior to public announcement of the proposed Merger, the last reported sale
price of Regions Common Stock as reported on the Nasdaq National Market, and
the last known price of ABI Common Stock, were $34.44 and $20.00, respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971.
Although Regions currently intends to continue to pay quarterly cash dividends
on Regions Common Stock, there can be no assurance that Regions' dividend
policy will remain unchanged after completion of the
36
<PAGE> 41
Merger. The declaration and payment of dividends thereafter will depend upon
business conditions, operating results, capital and reserve requirements, and
the Board of Directors' consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions, particularly First Alabama Bank. Regions'
subsidiary depository institutions are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. See "Supervision and
Regulation--Payment of Dividends."
ABI has not paid cash dividends during the past five years. It has been
ABI's policy to devote earnings and profits to internally generated capital,
and to conserve cash. To this end, the Board of Directors of ABI has declared
only stock dividends over such period.
ABI MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
ABI derives all of its income from the Bank, its wholly-owned subsidiary.
The Bank's results of operation are primarily affected by its net
interest income. Net interest income is defined as interest and fees on loans
and investments, less interest expense on deposits. Interest from loans and
investments is a function of the average balance outstanding during the period
and the average rates earned. The Bank's cost of funds is a function of the
average rates paid on such deposits. Trust and custodial fees also affect
income as do service charges and other fees. The Bank's net income is further
affected by the level of other expenses such as employee compensation and
benefits, occupancy cost, advertising and insurance.
INTEREST RATE SENSITIVITY
The relationship between rate-sensitive earning assets and rate-sensitive
interest-bearing liabilities within given maturity ranges (interest rate
sensitivity) can have a potential impact on the stability of a financial
institution's net interest income. Gap analysis is one method of assessing
interest rate sensitivity. Under this method, the difference between earning
assets and interest-sensitive liablities is derived within ranges of
maturities; the difference is referred to as the asset funding gap if such
earning assets exceed interest-sensitive liabilities, or the liability funding
gap if such earning assets are exceeded by interest-sensitive liabilities.
As a matter of policy, the Board of Directors monitors interest rate
sensitivity by comparing actual dollar changes in net interest income to
budgeted financial goals. The following analysis indicates the rate sensitivity
of earning assets and interest-bearing liabilities at June 30, 1994.
37
<PAGE> 42
Interest Rate Sensitivity Analysis
As of June 30, 1994
<TABLE>
<CAPTION>
Repricing Within
0-90 91-365 Over
Days Days 1 Year Total
---- ---- ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Earning Assets
Loans . . . . . . . . . . . . . . . . . . . . . $105,389 $34,614 $70,995 $210,998
Securities . . . . . . . . . . . . . . . . . . 5,142 3,818 28,276 37,236
Funds sold . . . . . . . . . . . . . . . . . . 5,000 0 0 5,000
------- ------ ------ -------
Total earning assets . . . . . . . . . . . . . 115,531 38,432 99,271 253,234
Interest-Bearing Liabilities
Interest-bearing deposits . . . . . . . . . . . 88,459 31,303 62,883 182,645
------ ------ ------ -------
Total interest-bearing deposits . . . . . . . . 88,459 31,303 62,883 182,645
------ ------ ------ -------
Interest-sensitivity gap . . . . . . . . . . . . $ 27,072 $ 7,129 $36,388 $ 70,589
====== ====== ====== =======
Cumulative gap at June 30, 1994 . . . . . . . . . $ 27,072 $34,201 $70,589
====== ====== ======
Cumulative gap at December 31, 1993 . . . . . . . $ 32,872 $18,647 $64,142
====== ====== ======
</TABLE>
LIQUIDITY
The Bank manages liquidity to ensure that there is sufficient cash flow to
satisfy demands for credit, deposit withdrawals, and other banking needs.
Traditional sources of liquidity include asset maturities and growth in core
deposits. Wholesale purchased liabilities, such as negotiable certificates of
deposit, federal funds purchased, and securities sold under agreements to
repurchase, represent other major sources of funding. Liquidity has not been a
problem, nor does management expect it will be as the economy expands, given
the Bank's current liquidity position. The loan to deposit ratio at June 30,
1994, and 1993, was 80.8% and 72.8%, respectively.
CAPITAL RESOURCES
Although the Bank has not made commitments for significant capital
expenditures, the Bank's capital is subject to regulatory constraints.
Regulatory agencies measure capital adequacy within a framework that makes
capital requirements sensitive to the risk profiles of individual banks. As
described in further detail under "Supervision and Regulation--Capital
Adequacy," the Bank is required to maintain a "Total Capital" ratio of 8.0%, a
"Tier 1 Capital" of 4.0% and a "Leverage Ratio" of at least 3.0% plus an
additional cushion of 100 to 200 basis points. At June 30, 1994, the Bank's
consolidated Tier 1 Capital and Total Capital ratios were 10.00% and 13.87%,
respectively. Also at such date, the Bank's Leverage Ratio was 9.22%.
Accordingly, the Bank has the requisite capital levels to qualify it as a
"well-capitalized" institution under the prompt corrective action regulations.
See "Supervision and Regulation--Prompt Corrective Action."
38
<PAGE> 43
RESULTS OF OPERATIONS
Net interest income is the Bank's principal source of revenue and is
measured by the difference between interest income earned on loans and
investments and interest expense incurred on deposits and borrowings. In 1993,
net interest income increased by $ 1,657,000 or 11.9% as compared to an
increase of $1,931,000 or 16.1% in 1992. The Bank's net interest margin (that
is, net interest income divided by average interest-earning assets) increased
from 4.83% in 1991, to 5.35% in 1992, and to 5.50% in 1993. The primary
determinant of the increase in net interest income from 1991 to 1992 was the
decline in interest rates during 1991 and the further decline in 1992. The Bank
was able to reprice its deposits at a faster rate than its loans due to the
Bank's internal pricing policy on loans. The Bank's net interest income further
increased during 1993, as a result of its leverage factor (interest-earning
assets divided by interest-bearing liabilities) increasing from 1.28% in 1992
to 1.33% in 1993. Net interest income increased $109,346, or 1.45% for the six
months ended June 30, 1994, compared to the same period in 1993. The primary
reason for the increase was due to an increase in earning asset yields, with
little change in deposit costs.
The provision for loan losses, which is charged to income from operations,
is based upon the changes in the loan portfolio, the amount of net loan losses
incurred, and management's estimate of potential future losses based on several
factors including, but not limited to, current economic conditions, loan
portfolio composition, nonaccrual loans, problem loans, and prior loan loss
experience. The provision for loan losses was $1,280,568 in 1993, $1,156,181 in
1992, and $1,197,000 in 1991.
Nonaccrual loans, which are loans on which interest recognition has been
suspended until realized because of doubts as to the borrower's ability to
repay principal or interest, were $552,000 at December 31, 1993, as compared to
$783,000 at December 31, 1992. The decrease in the Bank's nonaccrual loans
during 1993 can be attributed to principal pay-downs, charge-downs of problem
loans, and transfers to other real estate. Net charge-offs of loans in 1993,
1992, and 1991 were $550,000, $1,266,000, and $1,140,000 respectively.
The allowance for possible loan losses at December 31, 1993, was $2,898,424
or 1.39% of net loans outstanding compared to $2,167,153 or 1.17% of net loans
outstanding at December 31, 1992. It is management's opinion that the allowance
for possible loan losses at December 31, 1993, is adequate, based upon the
Bank's review of the loan portfolio and its aggressive charge-off and
collection practices.
Non-interest income increased from $2,987,000 in 1991, to $3,457,000 in
1992, and to $4,118,000 in 1993. Service charges, the largest component of
non-interest income, accounted for most of these increases and amounted to
$1,658,726 in 1991, $1,721,084 in 1992, and $1,817,959 in 1993. The increase
in service charge income is due to the growth of deposits and increases in
scheduled service charge fees.
The next largest component of non-interest income is trust and custodial
income. It totaled $861,394 in 1991, $1,127,222 in 1992, and $1,603,369 in
1993.
As the Bank has continued to grow, non-interest expenses have also
increased from $10,795,000 in 1991, to $11,594,912 in 1992, a 7.1% increase
over 1991, and to $11,929,591 in 1993, a 2.9% increase over 1992. Salaries and
employee benefits increased by $629,223 from 1991 to 1992, a 13.2% increase,
and by $524,823 from 1992 to 1993, a 9.7% increase, due to normal adjustments
to salaries for merit and inflation and increases in the total number of
employees. At December 31, 1993, 1992, and 1991, the Bank employed 183, 177,
and 174 full-time equivalent employees, respectively.
Net income was $4,575,913 in 1993, a 42.4% increase over 1992, $3,212,923
in 1992, a 47.6% increase over 1991, and $2,176,578 in 1991.
39
<PAGE> 44
IMPACT OF INFLATION AND CHANGING PRICES
The majority of assets and liabilities of a financial institution are
monetary in nature and therefore differ greatly from those of other commercial
and industrial companies that have significant investments in fixed assets or
inventories. In industries with a high proportion of fixed assets, there is a
greater potential for earnings to be inflated by understated depreciation
charges, as well as the potential for significant understatement of the current
values of these assets. Likewise, in industries with high levels of
inventories, reported earnings may reflect significant increases in inventory
values. Neither of these factors is important in the banking industry. However,
inflation does have an important impact on the growth of total assets in the
banking industry and the resulting need to increase equity capital at higher
than normal rates in order to maintain an appropriate equity-to-assets ratio.
Although inflation affects the growth of total assets, it is difficult to
measure the impact precisely. Only new assets acquired in each year are
directly affected rather than the total asset portfolio, so a simple adjustment
of asset totals by use of an inflation index is not satisfactory. The results
of operations also have been affected by inflation, but again there is no
simple way to measure the effect on various types of income and expense.
Interest rates in particular are significantly affected by inflation, but
neither the timing nor the magnitude of the changes coincides with changes in
the consumer price index. These factors in turn affect the composition of
sources of funds by reducing growth of core deposits and increasing the need
for purchased funds. On the other hand, many categories of operating expense
are more directly affected by current rates of inflation.
FINANCIAL CONDITION
The Bank functions as a financial intermediary, and as such its financial
condition should be examined in terms of trends in its sources and uses of
funds. The Bank's primary use of funds is for loans. Loans outstanding have
continued to increase in recent years due to increased loan demand and
strategic marketing of the Bank's products and services. As a result, average
loans increased from $160,487,000 in 1991 to $175,681,000 in 1992, and to
$196,280,000 in 1993.
Securities decreased from $46,828,000 at December 31, 1992, to
$34,796,000 at December 31, 1993, a decrease of 25.7% or $12,032,000 and
increased $161,832 from the period ending June 30, 1993 to June 30, 1994.
Securities serve as a repository for funds and a source for the Bank
to meet its liquidity needs.
Deposits are the Bank's primary source of funds. Total deposits have
continued to increase and were $240,041,144, $265,016,653, and $279,833,864 at
the end of 1991, 1992, and 1993, respectively. Non-interest-bearing demand
deposits made up 26.8% of total deposits at the end of 1991, 31.8% at the end
of 1992, and 34.4% at the end of 1993.
PROBLEM ASSETS AND ASSET CLASSIFICATION
Loans are reviewed on a regular basis and are placed on nonaccrual status
when, in the opinion of management, the collection of additional interest is
doubtful. Generally, this occurs when either principal or interest is 90 days
or more past due. Interest accrued and unpaid at the time a loan is placed on
nonaccrual status is charged against interest income. Subsequent payments are
either applied to the outstanding principal balance or recorded as interest
income, depending on the assessment of the ultimate collectibility of the loan.
40
<PAGE> 45
Real estate acquired by the Bank as a result of foreclosure or by deed in
lieu of foreclosure is classified as real estate owned until such time as it is
sold. When such property is acquired, it is recorded at the lower of the unpaid
principal balance of the related loan or its fair value less estimated cost to
sell. Any writedown of the property subsequent to acquisition is charged to
operations.
The following table presents information concerning loans with risk
elements. Risk elements include (i) loans accounted for on a nonaccrual basis,
(ii) accruing loans which are contractually past due 90 days or more as to
principal or interest payments, (iii) loans not included above which are
"troubled debt restructurings," and (iv) real estate acquired through
foreclosures or repossessions.
<TABLE>
<CAPTION>
Nonperforming Assets
December 31,
June 30, --------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Loans accounted for on a nonaccrual
basis . . . . . . . . . . . . . . . . . . . . $ 320 $ 597 $ 552 $ 783 $1,127
Accruing loans which are contractually
past due 90 days or more as to
principal or interest payments . . . . . . . . 191 107 365 135 192
Restructured loans (exclusive of non-
accrual loans and loans past due ninety
days or more) . . . . . . . . . . . . . . . . 139 199 172 213 14
Real estate acquired through foreclosure
or repossession . . . . . . . . . . . . . . . 436 302 1,398 1,854 2,715
----- ----- ----- ----- -----
Total . . . . . . . . . . . . . . . . . . . . . $1,086 $1,205 $2,487 $2,985 $4,048
===== ===== ===== ===== =====
</TABLE>
ALLOWANCE FOR POSSIBLE LOSSES ON LOANS AND REAL ESTATE
In making loans, the Bank recognizes that credit losses will be experienced
and that the risk of loss will vary with, among other things, the type of loan
being made, the credit worthiness of the borrower over the term of the loan,
and, in the case of a secured loan, the quality of the security for the loan.
It is management's policy to maintain adequate allowances for estimated
losses on loans and real estate acquired. Such allowances are based on, among
other things, estimates of the historical loan loss experience, evaluation of
economic conditions in general and in various sectors of the Bank's customer
base, and periodic reviews of loan portfolio quality by the Bank's personnel.
Specific allowances will be provided for individual loans where management
considers the ultimate collection questionable after reviewing the current
status of loans which are contractually past due and considering the net
realizable value of the loan or guarantees, if applicable.
The following analysis sets forth information with respect to the Bank's
loan loss experience and loan loss allowance for the periods indicated.
41
<PAGE> 46
Analysis of Loan Loss Experience
<TABLE>
<CAPTION>
June 30, December 31,
---------------------- ---------------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Allowance for possible loan losses:
Balance at beginning of year $2,898 $2,167 $2,167 $2,277 $2,220
Loans charged off:
Real estate 68 40 69 384 378
Consumer 192 128 458 530 786
Commercial 18 146 220 846 337
------ ------ ------ ------ ------
Total 278 314 747 1,760 1,501
Recoveries:
Real estate 16 21 25 84 31
Consumer 24 31 105 98 259
Commercial 67 40 67 312 71
------ ------ ------ ------ ------
Total 107 92 197 494 361
Net loans charged off:
Real estate 52 19 44 300 347
Consumer 168 97 353 432 527
Commercial (49) 106 153 534 266
------ ------ ------ ------ ------
Total 171 222 550 1,266 1,140
Provision charged to expense 455 544 1,281 1,156 1,197
------ ------ ------ ------ ------
Balance at end of year $3,182 $2,489 $2,898 $2,167 $2,277
====== ====== ====== ====== ======
Net charge-offs as percent of
average loans outstanding during
the period .25% .23% .28% .73% .71%
</TABLE>
42
<PAGE> 47
BUSINESS OF ABI
ABI is a bank holding company organized under the laws of the state of
Louisiana with its principal executive office located in Monroe, Louisiana. ABI
operates principally through the Bank, which is a state-chartered commercial
bank and which provides a range of retail banking services through eight
offices in the Louisiana parishes of Ouachita, Caddo, and Bossier. At June 30,
1994, ABI had total consolidated assets of approximately $289 million, total
consolidated deposits of approximately $261 million, and total consolidated
stockholders' equity of approximately $27 million. ABI's principal executive
office is located at 1500 North 18th Street, Monroe, Louisiana 71201, and its
telephone number at such address is (318) 362-8200.
Business and Properties
ABI offers a full range of traditional commercial banking services,
including demand, savings, and time deposits, consumer, commercial, and real
estate loans, safe deposit boxes, access to a retail credit plan ("VISA"), and
access to 24-hour teller machines ("ATM's") through the "Cirrus," "Pulse" and
"Impact" networks. The Bank has been granted full trust powers and presently
offers corporate and personal trust services. Drive-in banking facilities are
located at all banking locations, except those at 400 Travis Street,
Shreveport, Louisiana.
The Bank owns all but one of its eight locations, the Travis
Street location. Other Bank locations are the main office at 1500 North
Eighteenth Street, Monroe, Louisiana 71201; 601 Sterlington Road, Monroe,
Louisiana 71203; 2103 North Seventh Street, West Monroe, Louisiana 71291; 4908
Monkhouse Drive, Shreveport, Louisiana 71109; 3100 West Market Street,
Shreveport, Louisiana 71107; 4344 Youree Drive, Shreveport, Louisiana 71105;
and 2719 East Texas Street, Bossier City, Louisiana 71111. The Bank also leases
office space for its marketing and mortgage loan departments from a partnership
of which the Bank owns a 33-1/3% interest.
As of June 30, 1994, the Bank had approximately 209 employees. ABI
has no salaried employees, although certain executive officers hold parallel
positions with the Bank. No employees are represented by unions or other
bargaining units, and management considers its relations with employees to be
satisfactory.
Competition
The Bank encounters vigorous competition in its market areas from a
number of sources, including bank holding companies and commercial banks,
thrift institutions, other financial institutions and financial intermediaries.
Regional interstate banking laws and other recent federal and state laws have
resulted in increased competition from both conventional banking institutions
and other businesses offering financial services and products. The Bank also
competes for interest-bearing funds with a number of other financial
intermediaries and investment alternatives, including brokerage firms "money
market" funds, government bonds, corporate bonds and other securities. The
Bank competes in the Caddo, Ouachita and Bossier Parish markets with other
banks and financial institutions, some of which have greater financial
resources than the Bank. At the end of 1993, there were approximately 128
commercial bank branches, 6 savings bank branches, and 34 credit union branches
competing in Caddo, Ouachita and Bossier Parishes.
Legal Proceedings
ABI and the Bank are not parties to any material legal proceedings
other than ordinary routine litigation incidental to their business.
43
<PAGE> 48
Management
The directors and executive officers of the bank will continue in
their capacities as such following consummation of the Merger. ABI and the
Bank share a common board of directors. The following table presents
information about the directors and executive officers:
<TABLE>
<CAPTION>
Present Occupation Position and Director or Number of Shares Beneficially
and Principal Offices Held Executive Owned at August 31, 1994
Occupation for With ABI Officer ------------------------
Name Age Last Five Years and Bank Since Directly Indirectly % Outstanding
- -------------- --- --------------- -------- ----- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kent Anderson 67 Vice Chairman of the Board, Vice Chairman 1973 155,844 21.35%
at the Bank of Board at Bank
and President of
ABI
Stanley Bagwell 67 President, First Finance Director 1964 1,252 5,479 .92%
& Thrift Co., Inc.
Murphy Blackwell,
Jr. 70 Attorney, Blackwell, Director 1964 2,898 .40%
Chambliss, Henry, Harrod
Caldwell & Cagle
William R. Boles 67 Attorney, Boles, Boles, Chairman of the 1964 173,520 23.77%
& Ryan Board at Bank
and ABI
William R. Boles, Jr 38 Attorney, Boles, Boles, Secretary of Bank 1985 8,750 1,326 1.38%
& Ryan and Secretary/
Treasurer of ABI
George M. Campbell 46 President & CEO President & CEO of 1978 268 21,982 3.05%
at the Bank Bank and Exec.
Vice President
& CEO of ABI
Russell C. Fleeman 76 President, Fleeman Aviation Director 1976 18,935 2.59%
Alex J. George 62 Owner-Operator, McDonald's Director 1986 4,314 3,920 1.13%
Gregory T. Jackson 45 Senior Vice President and Senior Vice 1980 17 81 .01%
Controller, at the Bank President &
Controller at
Bank
W. Clifford Jones, Jr. 51 Senior Vice President, Senior Vice 1980 288 .04%
at the Bank President
Ronald P. King 54 Executive Vice President, of Executive Vice 1993 248 .03%
the Bank President at Bank
1988-92 Premier Bank, Baton
Rouge
1975-88 Terrebone Bank, Houma
John L. Luffey 70 Certified Public Accountant, Director 1974 8,720 1.19%
Luffey, Huffman & Monroe
A.J. McGinn, Jr. 51 Executive Vice President, Executive Vice 1988 65 .01%
of the Bank President at Bank
Glen F. Post, III 41 Vice Chairman, President Director 1992 234 .03%
& Chief Executive Officer,
Century Telephone
Enterprises, Inc.
Sam Rubin, Jr. 67 President, R & A Jewelers Director 1974 1,922 .26%
David W. Turrentine 50 Chairman of the Board and Director 1985 3,843 296 .57%
President, Standard
Enterprises, Inc.
O.D. Westbrook 72 Investments Director 1964 34,565 4.74%
Clarke M. Williams 72 Chairman of the Board, Director 1972 228 35,025 4.83%
Century Telephone
Enterprises, Inc.
</TABLE>
Employee Benefit Plans
The Bank currently maintains for its employees comprehensive
employee benefit plans providing such benefits as a qualified defined benefit
pension plan, health insurance, including hospitalization, major medical and
dental coverage, paid sick leave, vacation, and long-term disability and life
insurance.
Transactions with Management
In the ordinary course of business, the Bank has loans, deposits and
other transactions with its executive officers, directors and organizations
with which such persons are associated. Such transactions are on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with others. The aggregate amount of
loans to the aforementioned persons and companies in which they have a 10% or
more ownership interest as of December 31, 1993 were $14,326,000. At December
31, 1993, $669,601 of these loans were unsecured.
In the year ended December 31, 1993, the Bank paid approximately
$175,500 to the law firm of Boles, Boles & Ryan which is owned by William R.
Boles, Chairman of the Board of ABI and the Bank. These payments were for
legal services incurred in the ordinary course of banking operations. In
addition, the Bank leases space in the operations building to Boles, Boles &
Ryan under an operating lease which expires December 31, 2003. The Bank
recorded approximately $38,000 rental income under this lease for the year
ended December 31, 1993.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF ABI
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of ABI Common Stock, as of August 31, 1994.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock Boles Family Limited 166,690 22.8%
Partnership (direct)
1805 Tower Drive
P.O. Box 2065
Monroe, La. 71207
Common Stock Anderson Family Limited 155,844 21.4
Partnership (direct)
2707 Pargoud Blvd.
Monroe, La. 71201
</TABLE>
44
<PAGE> 49
BUSINESS OF REGIONS
GENERAL
Regions is a regional bank holding company headquartered in Birmingham,
Alabama which operated as of June 30, 1994, 247 banking offices in Alabama,
Florida, Georgia, Louisiana, and Tennessee. At that date, Regions had total
consolidated assets of approximately $10.8 billion, total consolidated deposits
of approximately $8.8 billion, and total consolidated stockholders' equity of
approximately $905 million. Regions operates seven state-chartered commercial
bank subsidiaries and one federal stock savings bank (collectively, the
"Subsidiary Institutions") in Alabama, Florida, Georgia, Louisiana, and
Tennessee and four banking-related subsidiaries engaged in mortgage banking,
credit life insurance, leasing, and securities brokerage activities with
offices in various Southeastern states. Through its subsidiaries, Regions
offers a broad range of banking and banking-related services.
In Alabama, Regions operates through First Alabama Bank, which at June
30, 1994, had total consolidated assets of approximately $8.2 billion, total
consolidated deposits of approximately $6.8 billion, and total consolidated
stockholders' equity of approximately $667 million. First Alabama Bank
operates 172 banking offices throughout Alabama.
In Florida, Regions operates through Regions Bank of Florida, which at
June 30, 1994, had total consolidated assets of approximately $499 million,
total consolidated deposits of approximately $447 million, and total
consolidated stockholders' equity of approximately $49 million. Regions Bank of
Florida operates 27 banking offices in the panhandle region of Florida.
In Georgia, Regions operates through (i) Regions Bank of Georgia and
(ii) First Rome Bank, which at June 30, 1994, had total combined assets of
approximately $234 million, total combined deposits of approximately $214
million, and total combined stockholders' equity of approximately $19 million.
Regions Bank of Georgia operates three banking offices in Columbus, Georgia,
and First Rome Bank operates two banking offices in Rome, Georgia.
In Louisiana, Regions operates through (i) Secor Bank, Federal Savings
Bank ("Secor"), a federal savings bank which Regions acquired on December 31,
1993, (ii) Guaranty Bank and Trust Company ("Guaranty"), which Regions acquired
on May 31, 1994, and (iii) Bank of New Roads ("New Roads"), which Regions
acquired on August 31, 1994. At June 30, 1994, Secor, Guaranty, and New Roads
had total combined assets of approximately $1.7 billion, total combined
deposits of approximately $1.2 billion, and total combined stockholders' equity
of approximately $165 million. Secor, Guaranty, and New Roads operate 30
banking offices in Louisiana.
In Tennessee, Regions operates through Regions Bank of Tennessee,
which at June 30, 1994, had total consolidated assets of approximately $451
million, total consolidated deposits of approximately $391 million, and total
consolidated stockholders' equity of approximately $38 million. Regions Bank of
Tennessee operates 24 banking offices in middle Tennessee.
Regions was organized under the laws of the state of Delaware and
commenced operations in 1971 under the name First Alabama Bancshares, Inc. On
May 2, 1994, the name of First Alabama Bancshares, Inc. was changed to Regions
Financial Corporation.
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business
combinations involving cash, debt, or
45
<PAGE> 50
equity securities can be expected. Any future business combination or series of
business combinations that Regions might undertake may be material, in terms of
assets acquired or liabilities assumed, to Regions' financial condition. Recent
business combinations in the banking industry have typically involved the
payment of a premium over book and market values. This practice could result in
dilution of book value and net income per share for the acquirer.
Additional information about Regions and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement/Prospectus. See
"Available Information" and "Documents Incorporated by Reference."
RECENT DEVELOPMENTS
Recently Completed Acquisitions. During the first six months of 1994,
Regions (i) acquired Guaranty, located in Baton Rouge, Louisiana, contributing
approximately $187 million in assets, $136 million in loans and $173 million in
deposits to Regions' consolidated balance sheet and (ii) consummated certain
transactions with the Resolution Trust Corporation ("RTC"), as a result of
which Regions Bank of Florida acquired four branch offices in Panama City,
Florida, and First Alabama Bank acquired one branch office in each of Atmore
and Brewton, Alabama, with combined deposits in the six offices of
approximately $50 million. For additional information with respect to these
transactions, see Regions' Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994, incorporated herein by reference.
Since June 30, 1994, Regions has completed the acquisition of the
following institutions:
<TABLE>
<CAPTION>
Consideration
-------------------------
Approximate
---------------------
Accounting
Institution Asset Size Value Type Treatment
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
First Fayette Bancshares, Inc. ("Fayette") and its subsidiary, Cash
First Bank of Fayette, located in Fayette, and
Alabama . . . . . . . . . . . . . . . . . . . . . $ 78 $ 17 Notes Purchase
BNR Bancshares, Inc. ("BNR") and its subsidiary, Regions
Bank of New Roads, located in New Roads, Common Pooling of
Louisiana. . . . . . . . . . . . . . . . . . . . 139 26 Stock Interests
First Community Bancshares, Inc. ("First Community") and Regions
its subsidiary, First Bank of Rome, located in Common Pooling of
Rome, Georgia . . . . . . . . . . . . . . . . . 129 24 Stock Interests
---- ----
Totals . . . . . . . . . . . . . . . . . $346 $ 67
==== ====
</TABLE>
Also since June 30, 1994, Regions consummated certain additional
transactions with the RTC, as a result of which Secor acquired one branch office
in Houma, Louisiana and Guaranty acquired two branch offices in Baton Rouge,
Louisiana, with combined deposits in the three offices of approximately $39
million. (Such RTC transactions and the acquisitions of Fayette, BNR, and First
Community are referred to as the "Recently Completed Acquisitions"). In
addition, ABI consummated a transaction with the RTC as a result of which ABI
acquired deposits of approximately $24 million.
46
<PAGE> 51
Pending Acquisition. As of the date of this Proxy
Statement/Prospectus, Regions has pending one acquisition in addition to ABI.
Regions has entered into a definitive agreement to acquire Union Bank & Trust
Company, Montgomery, Alabama ("Union"). The acquisition of Union (the "Union
Acquisition") would add approximately $429 million in assets to Regions'
consolidated balance sheet and would result in the issuance of shares of
Regions Common Stock having an approximate value of $65 million, computed as of
the date of public announcement of the proposed transaction. Regions
anticipates accounting for the Union Acquisition as a purchase.
Consummation of the Union Acquisition is subject to the approval of
certain regulatory agencies and of the stockholders of Union and to the
effectiveness of a registration statement to be filed with the SEC. Moreover,
the closing of the Union Acquisition is subject to various contractual
conditions precedent. No assurance can be given that the conditions precedent
to consummating the Union Acquisition will be satisfied in a manner that will
result in the consummation of the transaction.
The Recently Completed Acquisitions and the Union Acquisition are
referred to collectively as the "Other Acquisitions."
If the Other Acquisitions and the Merger had been consummated on
June 30, 1994, based on June 30, 1994 pro forma financial information, Regions'
total consolidated assets would have increased by approximately $1.2 billion to
approximately $12.0 billion; its total consolidated deposits would have
increased by approximately $951 million to approximately $9.7 billion; and its
total consolidated stockholders' equity would have increased by approximately
$29 million to approximately $934 million. See "Summary Pro Forma Financial
Data" and the related pro forma financial information in Regions' Current
Report on Form 8-K dated September 6, 1994, and "Documents Incorporated by
Reference."
In connection with the acquisitions of ABI and Union, Regions has
announced that it may purchase, in the open market, an equivalent number of
some or all of the shares of Regions Common Stock to be issued in such
transactions. As a result of the ABI and Union transactions, Regions
anticipates that it may purchase in the
47
<PAGE> 52
open market as much as approximately $126 million of Regions Common Stock. The
timing and amount of such possible purchases will be determined based on the
Regions Common Stock price, capital needs and other factors. As of September
15, 1994, Regions had purchased, in the open market, approximately $43.2
million of Regions Common Stock pursuant to this repurchase program.
Issuance of Subordinated Notes. On July 21, 1994, Regions issued
$25 million of subordinated indebtedness designated 7.65% Subordinated Notes
Due 2001 (the "7.65% Notes") and on September 15, 1994, Regions issued $100
million of subordinated indebtedness designated 7 3/4% Subordinated Notes Due
2024 (the "7 3/4% Notes"). The 7.65% Notes and the 7 3/4% Notes are
subordinate to all senior indebtedness (as defined) of Regions and payment of
the principal of such notes may be accelerated only in the case of certain
events involving bankruptcy, insolvency proceedings, or reorganization of
Regions. The net proceeds from the issuance of the 7.65% Notes have been used
for general corporate purposes, including the repurchase of an equivalent
number of shares of Regions Common Stock in the open market to be issued in
connection with the acquisition of ABI as described above under "--Recent
Developments--Pending Acquisition." The net proceeds from the issuance
of the 7 3/4% Notes will be used for general corporate purposes.
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the acquisition of ABI, the Recently Completed Acquisitions,
and the Union Acquisition as of the dates and for the periods indicated and
pursuant to the accounting bases described below. The unaudited pro forma
financial data are presented for informational purposes only and are
not necessarily indicative of the combined financial position or results of
operation which actually would have occurred if the transactions had been
consummated at the date and for the periods indicated or which may be obtained
in the future. The information should be read in conjunction with the unaudited
pro forma financial information included in Regions' Current Report on Form 8-K
dated September 6, 1994. For additional information relating to specific
transactions within the scope of the Other Acquisitions, see "Business of
Regions--Recent Developments."
SELECTED PRO FORMA COMBINED DATA FOR REGIONS AND ABI
The following unaudited pro forma combined data give effect to the
acquisition of ABI as of the date or at the beginning of the periods indicated,
assuming such acquisition is treated as a purchase.
<TABLE>
<CAPTION>
As of
June 30,
1994
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,149,671
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,466,101
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,508,573
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,048,626
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516,032
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909,626
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.70
</TABLE>
48
<PAGE> 53
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
1994 1993
---- ----
(In thousands except per share data)
<S> <C> <C>
Income Statement Data:
Total interest income $ 367,484 $ 577,749
Total interest expense 157,908 224,752
------- -------
Net interest income 209,576 352,997
Provision for loan losses 9,634 22,814
------- -------
Net interest income after loan loss
provision 199,942 330,183
Total noninterest income 75,052 136,162
Total noninterest expense 171,158 300,989
Income tax expense 34,684 53,866
------- -------
Net income $ 69,152 $ 111,490
======== =========
Net income per share $ 1.65 $ 3.00
Average common shares outstanding 41,925 37,205
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, ABI, AND OTHER ACQUISITIONS
The following unaudited pro forma combined data as of June 30, 1994,
and for the six months ended June 30, 1994, and the year ended December 31,
1993, give effect to (i) the acquisitions of BNR and First Community by
Regions, assuming such acquisitions are accounted for as poolings of interests,
and (ii) the acquisitions of First Fayette, Union, and ABI by Regions, assuming
such acquisitions are treated as purchases for accounting purposes, as if all
such transactions had been consummated on June 30, 1994, in the case of the
data included under "Balance Sheet Data," and on January 1, 1993, in the case
of the data included under "Income Statement Data."
49
<PAGE> 54
<TABLE>
<CAPTION>
As of
June 30,
1994
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,011,049
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,811,761
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,831,664
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,738,626
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599,175
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 934,464
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.58
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
1994 1993
---- ----
(In thousands except per share data)
<S> <C> <C>
Income Statement Data:
Total interest income $ 391,581 $ 626,848
Total interest expense 171,180 251,862
------- -------
Net interest income 220,401 374,986
Provision for loan losses 8,115 23,242
------- -------
Net interest income after loan loss
provision 212,286 351,744
Total noninterest income 79,408 142,675
Total noninterest expense 183,191 324,458
Income tax expense 36,281 53,949
------- -------
Income before cumulative effect of
change in accounting principle $ 72,222 $ 116,012
======== =========
Income before cumulative effect of
change in accounting principle per
share $ 1.67 $ 3.01
Average common shares outstanding 43,312 38,592
</TABLE>
50
<PAGE> 55
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements
of the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to Regions.
GENERAL
Regions is a bank holding company, registered with the Federal Reserve
under the BHC Act. As such, Regions and its subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or
control more than 5.0% of the voting shares of the bank, (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of the bank, or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint
of trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy, and consideration of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977 (the "CRA"),
both of which are discussed below.
The BHC Act prohibits the Federal Reserve from approving a bank holding
company's application to acquire a bank or bank holding company located outside
the state in which the deposits of its banking subsidiaries were greatest on
the date the company became a bank holding company (Alabama in the case of
Regions), unless such acquisition is specifically authorized by statute of the
state in which the bank or bank holding company to be acquired is located.
Alabama has adopted reciprocal interstate banking legislation permitting
Alabama-based bank holding companies to acquire banks and bank holding
companies in other states and allowing bank holding companies located in
Arkansas, the District of Columbia, Florida, Georgia, Kentucky, Louisiana,
Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Texas,
Virginia, and West Virginia to acquire Alabama banks and bank holding
companies. Under the provisions of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 ("the Interstate Banking Act"), which was
signed into law by President Clinton on September 29, 1994, the existing
restrictions on interstate acquisitions of banks by bank holding companies,
including the regional interstate banking legislation adopted by the state of
Alabama, will be repealed one year following enactment such that Regions and
any other bank holding company located in Alabama would be able to acquire a
bank located in any other state, and a bank holding company located outside
Alabama could acquire any Alabama-based bank, in either case subject to certain
deposit percentage and other restrictions. The Interstate Banking Act also
generally provides that, after June 1, 1997, national and state-chartered banks
may branch interstate through acquisitions of banks in other states. By
adopting legislation prior to that date, a state has the ability either to "opt
in" and accelerate the date after which interstate branching is permissible or
"opt out" and prohibit interstate branching altogether. Assuming no state
action prior to June 1, 1997, Regions would be able to consolidate all of its
subsidiary banks into a single bank with interstate branches following that
date.
The BHC Act generally prohibits Regions from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or
unsound banking practices. For example, factoring accounts receivable,
acquiring or servicing loans, leasing personal property,
51
<PAGE> 56
conducting discount securities brokerage activities, performing certain data
processing services, acting as agent or broker in selling credit life insurance
and certain other types of insurance in connection with credit transactions,
and performing certain insurance underwriting activities all have been
determined by the Federal Reserve to be permissible activities of bank holding
companies. The BHC Act does not place territorial limitations on permissible
non-banking activities of bank holding companies. Despite prior approval, the
Federal Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Each of the Subsidiary Institutions is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, their deposits are insured by the
FDIC to the extent provided by law. Each Subsidiary Institution is also subject
to numerous state and federal statutes and regulations that affect its
business, activities, and operations, and each is supervised and examined by
one or more state or federal bank regulatory agencies.
Because each of Regions' subsidiary banks is a state-chartered bank
that is not a member of the Federal Reserve System, such banks are subject to
supervision and examination by the FDIC. Regions' subsidiary savings bank is a
federally-chartered savings bank that is a member of the Federal Home Loan Bank
System and is subject to supervision and examination by the Office of Thrift
Supervision ("OTS") and to the back-up supervisory authority of the FDIC. Such
agencies regularly examine the operations of the Subsidiary Institutions and
are given authority to approve or disapprove mergers, consolidations, the
establishment of branches, and similar corporate actions. Such agencies also
have the power to prevent the continuance or development of unsafe or unsound
banking practices or other violations of law.
The Subsidiary Institutions are subject to the provisions of the CRA.
Under the terms of the CRA, the appropriate federal bank regulatory agency is
required, in connection with its examination of a Subsidiary Institution, to
assess such institution's record in assessing and meeting the credit needs of
the community served by that institution, including low- and moderate-income
neighborhoods. The regulatory agency's assessment of the institution's record
is made available to the public. Further, such assessment is required of any
institution which has applied to (i) charter a national bank, (ii) obtain
deposit insurance coverage for a newly chartered institution, (iii) establish a
new branch office that will accept deposits, (iv) relocate an office, or (v)
merge or consolidate with, or acquire the assets or assume the liabilities of,
a federally regulated financial institution. In the case of a bank holding
company applying for approval to acquire a bank or other bank holding company,
the Federal Reserve will assess the records of each Subsidiary Institution of
the applicant bank holding company, and such records may be the basis for
denying the application.
In December 1993, the federal banking agencies proposed to revise
their CRA regulations in order to provide clearer guidance to depository
institutions on the nature and extent of their CRA obligations and the methods
by which those obligations would be assessed and enforced. The proposed
regulations would substitute for the current process-based CRA assessment
factors, a new evaluation system that would rate institutions based on their
actual performance in meeting community credit needs. Under the proposal, all
depository institutions would be subject to three CRA-related tests: a lending
test; an investment test; and a service test. The lending test, which would be
the primary test for all institutions other than wholesale and limited-purpose
banks, would evaluate an institution's lending activities by comparing the
institution's share of housing, small business, and consumer loans in low- and
moderate-income areas in its service area with its share of such loans in the
other parts of its service area. The agencies would also evaluate the
institution's performance independent of other lenders by examining the ratio
of such loans made by the institution to low- and moderate-income areas to all
such loans made by the institution. At the election of an institution, the
agencies would also consider "indirect" loans made by affiliates and
subsidiaries of the institution as well as lending consortia and other lenders
in which the institution had made lawful investments.
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The focus of the investment test, under which wholesale and
limited-purpose institutions would normally be evaluated, would be the amount
of assets (compared to its risk-based capital) that an institution has devoted
to "qualified investments" that benefit low- and moderate-income individuals
and areas in the institution's service area. The service test would evaluate an
institution based on the percentage of its branch offices that are located in
or are readily accessible to low- and moderate-income areas. Smaller
institutions, those having total assets of less than $250 million, would be
evaluated under more streamlined criteria.
The joint agency CRA proposal provides that an institution evaluated
under a given test would receive one of five ratings for that test:
outstanding; high satisfactory; low satisfactory; needs to improve; or
substantial non-compliance. The ratings for each test would then be combined to
produce an overall composite rating of either outstanding, satisfactory
(including both high and low satisfactory), needs to improve, or substantial
non-compliance. In the case of a retail-oriented institution, its lending test
rating would form the basis for its composite rating. That rating would then be
increased by up to two levels in the case of outstanding or high satisfactory
investment performance, increased by one level in the case of outstanding
service, and decreased by one level in the case of substantial non-compliance
in service. An institution found to have engaged in illegal lending
discrimination would be rebuttably presumed to have a less-than-satisfactory
composite CRA rating.
Under the proposal, an institution's CRA rating would continue to be
taken into account by a regulator in considering various types of applications.
In addition, an institution receiving a rating of "substantial non-compliance"
would be subject to civil money penalties or a cease and desist order under
Section 8 of the Federal Deposit Insurance Act (the "FDIA").
In response to widespread criticisms of the original CRA proposal, the
federal banking agencies have indicated that they will be issuing a revised
proposal this fall that will scale back a number of key provisions initially
proposed. The exact timing of the revised proposal, the specific tests and
other provisions that it will contain, and when and in what form any CRA
regulation may ultimately be adopted are uncertain at this time.
PAYMENT OF DIVIDENDS
Regions is a legal entity separate and distinct from its banking and
other subsidiaries. The principal source of cash flow of Regions, including
cash flow to pay dividends to its stockholders, is dividends from the
Subsidiary Institutions. There are statutory and regulatory limitations on the
payment of dividends by the Subsidiary Institutions to Regions as well as by
Regions to its stockholders.
As state nonmember banks, the subsidiary banks are subject to the
respective laws and regulations of the States of Alabama, Florida, Georgia,
Louisiana, and Tennessee and to the regulations of the FDIC as to the payment
of dividends. The subsidiary savings bank is subject to the regulations of the
OTS as to payment of dividends.
If, in the opinion of the federal regulatory agencies, an institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice. The Federal Reserve, the FDIC, and the OTS have indicated that
paying dividends that deplete an institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), an insured
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "--Prompt Corrective
Action." Moreover, the Federal Reserve and the FDIC have issued policy
statements which provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
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At June 30, 1994, under dividend restrictions imposed under federal
and state laws, the Subsidiary Institutions, without obtaining governmental
approvals, could declare aggregate dividends to Regions of approximately $237
million.
The payment of dividends by Regions and the Subsidiary Institutions
may also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES
There are various restrictions on the extent to which Regions and its
nonbank subsidiaries can borrow or otherwise obtain credit from the Subsidiary
Institutions. Each Subsidiary Institution (and its subsidiaries) is limited in
engaging in borrowing and other "covered transactions" with nonbank or
non-savings-bank affiliates to the following amounts: (i) in the case of any
such affiliate, the aggregate amount of covered transactions of the Subsidiary
Institution and its subsidiaries may not exceed 10% of the capital stock and
surplus of such Subsidiary Institution; and (ii) in the case of all affiliates,
the aggregate amount of covered transactions of the Subsidiary Institution and
its subsidiaries may not exceed 20% of the capital stock and surplus of such
Subsidiary Institution. "Covered transactions" are defined by statute to
include a loan or extension of credit as well as a purchase of securities
issued by an affiliate, a purchase of assets (unless otherwise exempted by the
Federal Reserve), the acceptance of securities issued by the affiliate as
collateral for a loan and the issuance of a guarantee, and the issuance of a
guarantee, acceptance, or letter of credit on behalf of an affiliate. Covered
transactions are also subject to certain collateralization requirements.
Further, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease, or sale of property or furnishing of services.
CAPITAL ADEQUACY
Regions and the Subsidiary Institutions are required to comply with
the capital adequacy standards established by the Federal Reserve in the case
of Regions, the FDIC in the case of the subsidiary banks, and the OTS in the
case of the subsidiary savings bank. There are two basic measures of capital
adequacy for bank holding companies that have been promulgated by the Federal
Reserve: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company to be considered in
compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items are assigned to broad risk categories, each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio of total capital ("Total Capital")
to risk-weighted assets (including certain off-balance-sheet items, such as
standby letters of credit) is 8.0%. At least half of the Total Capital must be
composed of common stock, minority interests in the equity accounts of
consolidated subsidiaries, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist
of subordinated debt, other preferred stock, and a limited amount of loan loss
reserves. At June 30, 1994, Regions' consolidated Tier 1 Capital and Total
Capital ratios were 11.82% and 14.15%, respectively.
In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio of Tier 1 Capital to average assets, less goodwill and certain
other intangible assets (the "Leverage Ratio"), of 3.0% for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3.0% plus an additional cushion of 100 to
200
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basis points. Regions' Leverage Ratio at June 30, 1994, was 8.08%. The
guidelines also provide that bank holding companies experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, the Federal Reserve has
indicated that it will consider a "tangible Tier 1 Capital leverage ratio"
(deducting all intangibles) and other indicia of capital strength in evaluating
proposals for expansion or new activities.
Each of Regions' subsidiary banks is subject to risk-based and
leverage capital requirements adopted by the FDIC, which are substantially
similar to those adopted by the Federal Reserve, and Regions' subsidiary
savings bank is subject to tangible, risk-based, and core capital requirements
adopted by the OTS. Each of the Subsidiary Institutions was in compliance with
applicable minimum capital requirements as of December 31, 1993. Neither
Regions nor any of the Subsidiary Institutions has been advised by any federal
banking agency of any specific minimum capital ratio requirement applicable to
it.
Failure to meet capital guidelines could subject a bank to a variety
of enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "--Prompt Corrective
Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC, and the OTS have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
which would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions is expected to act as a source
of financial strength to, and to commit resources to support, each of the
Subsidiary Institutions. This support may be required at times when, absent
such Federal Reserve policy, Regions may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of the Subsidiary
Institutions are subordinate in right of payment to deposits and to certain
other indebtedness of such Subsidiary Institution. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a Subsidiary
Institution will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Under the FDIA, a depository institution insured by the FDIC can be
held liable for any loss incurred by, or reasonably expected to be incurred by,
the FDIC after August 9, 1989, in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to any commonly controlled FDIC-insured depository institution "in
danger of default." "Default" is defined generally as the appointment of a
conservator or receiver, and "in danger of default" is defined generally as the
existence of certain conditions indicating that a default is likely to occur in
the absence of regulatory assistance. The FDIC's claim for damages is superior
to claims of stockholders of the insured depository institution or its holding
company but is subordinate to claims of depositors, secured creditors, and
holders of subordinated debt (other than affiliates) of the commonly controlled
insured depository institution. The Subsidiary Institutions are subject to
these cross-guarantee provisions. As a result, any loss suffered by the FDIC
in respect of any of the Subsidiary Institutions would likely result in
assertion of the cross-guarantee provisions, the assessment of such estimated
losses against Regions' other Subsidiary Institutions, and a potential loss of
Regions' investment in such other Subsidiary Institutions.
PROMPT CORRECTIVE ACTION
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FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well-capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized") and to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect
to institutions in the three undercapitalized categories, the severity of which
will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the FDICIA requires the banking
regulator to appoint a receiver or conservator for an institution that is
critically undercapitalized. The federal banking agencies have specified by
regulation the relevant capital level for each category.
Under the final agency rule implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital ratio of 10% or
greater, a Tier 1 Capital ratio of 6.0% or greater, and a Leverage Ratio of
5.0% or greater, and (ii) is not subject to any written agreement, order,
capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency, is deemed to be "well-capitalized." An
institution with a Total Capital ratio of 8.0% or greater, a Tier 1 Capital
ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or greater is considered
to be "adequately capitalized." A depository institution that has a Total
Capital ratio of less than 8.0%, a Tier 1 Capital ratio of less than 4.0%, or a
Leverage Ratio of less than 4.0% is considered to be "undercapitalized." A
depository institution that has a Total Capital ratio of less than 6.0%, a Tier
1 Capital ratio of less than 3.0%, or a Leverage Ratio of less than 3.0% is
considered to be "significantly undercapitalized," and an institution that has
a tangible equity capital to assets ratio equal to or less than 2.0% is deemed
to be "critically undercapitalized." For purposes of the regulation, the term
"tangible equity" includes core capital elements counted as Tier 1 Capital for
purposes of the risk-based capital standards plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets with certain exceptions. A depository institution may be
deemed to be in a capitalization category that is lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized, the institution is required
to submit an acceptable capital restoration plan to its appropriate federal
banking agency. Under FDICIA, a bank holding company must guarantee that a
subsidiary depository institution meet its capital restoration plan, subject to
certain limitations. The obligation of a controlling bank holding company under
FDICIA to fund a capital restoration plan is limited to the lesser of 5.0% of
an undercapitalized subsidiary's assets and the amount required to meet
regulatory capital requirements. An undercapitalized institution is also
generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches, or engaging in any new line of
business except in accordance with an accepted capital restoration plan or with
the approval of the FDIC. In addition, the appropriate federal banking agency
is given authority with respect to any undercapitalized depository institution
to take any of the actions it is required to or may take with respect to a
significantly undercapitalized institution as described below if it determines
"that those actions are necessary to carry out the purpose" of FDICIA.
For those institutions that are (i) significantly undercapitalized or
(ii) undercapitalized and either fail to submit an acceptable capital
restoration plan or fail to implement an approved capital restoration plan, the
appropriate federal banking agency must require the institution to take one or
more of the following actions: (i) sell enough shares, including voting shares,
to become adequately capitalized; (ii) merge with (or be sold to) another
institution (or holding company), but only if grounds exist for appointing a
conservator or receiver; (iii) restrict certain transactions with banking
affiliates as if the "sister bank" exception to the requirements of Section 23A
of the Federal Reserve Act did not exist; (iv) otherwise restrict transactions
with bank or nonbank affiliates; (v) restrict interest rates that the
institution pays on deposits to "prevailing rates" in the institution's
"region"; (vi) restrict asset growth or reduce total assets; (vii) alter,
reduce, or terminate activities; (viii) hold a new election of directors; (ix)
dismiss any director or senior executive officer who held office for more than
180 days immediately before the institution became undercapitalized; provided
that in requiring dismissal of
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a director or senior officer, the agency must comply with certain procedural
requirements, including the opportunity for an appeal in which the director or
officer will have the burden of proving his or her value to the institution;
(x) employ "qualified" senior executive officers; (xi) cease accepting deposits
from correspondent depository institutions; (xii) divest certain nondepository
affiliates which pose a danger to the institution; or (xiii) be divested by a
parent holding company. In addition, without the prior approval of the
appropriate federal banking agency, a significantly undercapitalized
institution may not pay any bonus to any senior executive officer or increase
the rate of compensation for such an officer without regulatory approval.
At June 30, 1994, all of the Subsidiary Institutions had the requisite
capital levels to qualify as well capitalized.
BROKERED DEPOSITS
The FDIC has adopted regulations governing the receipt of brokered
deposits. Under the regulations, a depository institution cannot accept, roll
over, or renew brokered deposits unless (i) it is well-capitalized or (ii) it
is adequately capitalized and receives a waiver from the FDIC. A depository
institution that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts. Whether or not
it has obtained such a waiver, an adequately capitalized depository institution
may not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates specified by regulation. There are no such
restrictions on a depository institution that is well-capitalized. Because all
of the Subsidiary Institutions had at June 30, 1994, the requisite capital
levels to qualify as well-capitalized, Regions believes the brokered deposits
regulation will have no material effect on the funding or liquidity of any of
the Subsidiary Institutions.
FDIC INSURANCE ASSESSMENTS
In July 1993, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994, and replaces a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well-capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, as well as the
prior transitional system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates for 1994, as they had
during 1993, will range from .23% of deposits for an institution in the highest
category (i.e., "well-capitalized" and "healthy") to .31% of deposits for an
institution in the lowest category (i.e., "undercapitalized" and "substantial
supervisory concern").
The FDIC is authorized to raise insurance premiums in certain
circumstances. The current assessment rates for the Bank Insurance Fund (the
"BIF") and the Savings Association Insurance Fund (the "SAIF") are designed to
increase the reserve ratios (i.e., the ratios of reserves to insured deposits)
for both funds to a designated ratio--1.25%--within a specified period of time.
Once the designated ratio is reached, the FDIC is to set future assessment
rates at such levels that will maintain a fund's reserve ratio at the
designated level.
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The attainment by either fund of its designated reserve ratio could cause a
reduction in assessment rates for that fund.
Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound
practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, rule, order, or condition imposed by
the FDIC.
SAFETY AND SOUNDNESS STANDARDS
In November 1993, federal banking agencies issued for comment proposed
safety and soundness standards relating to internal controls, information
systems and internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees, and benefits. With
respect to internal controls, information systems, and internal audit systems,
the standards describe the functions that adequate internal controls and
information systems must be able to perform, including (i) monitoring adherence
to prescribed policies, (ii) effective risk management, (iii) timely and
accurate financial, operational, and regulatory reporting, (iv) safeguarding
and managing assets, and (v) compliance with applicable laws and regulations.
The standards also include requirements that (a) those performing internal
audits be qualified and independent, (b) internal controls and information
systems be tested and reviewed, (c) corrective actions be adequately
documented, and (d) results of an audit be made available for review of
management actions.
As in the case of internal controls and information systems, the
proposal establishes general principles and standards, rather than specific
requirements, that must be followed in other areas. For example, loan
documentation and credit underwriting practices must be such that they enable
the institution to make an informed lending decision and assess credit risk on
an ongoing basis. Similarly, an institution must manage interest rate risk "in
a manner that is appropriate to the size of [the institution] and the
complexity of its assets and liabilities" and must conduct any asset growth in
accordance with a plan that has taken a variety of factors such as deposit
volatility, capital, and interest rate risk into account. The proposal also
prohibits "excessive compensation," which is defined as amounts paid that are
unreasonable or disproportionate to the services performed by an officer,
employee, director, or principal stockholder in light of all circumstances. In
order to help alert institutions and their regulators to deteriorating
financial conditions, the proposed rule also would impose a maximum ratio of
classified assets to total capital of 1.0 and, in the case of an institution
that had incurred a net loss over the last four quarters, would require that
institution to have sufficient capital to absorb a similar loss over the next
four quarters and still remain in compliance with its minimum capital
requirements.
DEPOSITOR PREFERENCE
The Omnibus Budget Reconciliation Act of 1993 provides that deposits
and certain claims for administrative expenses and employee compensation
against an insured depository institution would be afforded a priority over
other general unsecured claims against such an institution in the "liquidation
or other resolution" of such an institution by any receiver.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common
Stock, of which 43,510,939 shares were issued, including 1,590,579 treasury
shares, at June 30, 1994. No other class of stock is authorized.
Holders of Regions Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors out of funds legally available
therefore. Dividend payments are subject to certain limitations imposed in
Regions' debt instruments. Under the most restrictive of such limitations, $724
million was available for payment of dividends as of December 31, 1993.
However, the ability of Regions to pay dividends is further affected by the
ability of the Subsidiary Institutions to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At June 30, 1994,
under such requirements and guidelines, the
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Subsidiary Institutions had $237 million of undivided profits legally available
for the payment of dividends. See "Supervision and Regulation--Payment of
Dividends."
For a further description of Regions Common Stock, see "Effect of the
Merger on Rights of Stockholders."
STOCKHOLDER PROPOSALS
Regions expects to hold its next annual meeting of stockholders after
the Merger during April 1995. Under SEC rules, proposals of Regions
stockholders intended to be presented at that meeting must be received by
Regions at its principal executive offices no later than November 16, 1994, for
consideration by Regions for possible inclusion in such proxy materials.
If the Merger is not consummated, stockholder proposals of ABI
stockholders intended to be presented at the next annual meeting of
stockholders of ABI must be received by ABI at its principal executive offices
a reasonable time before the date ABI's proxy statement is released to its
stockholders for that meeting for consideration by ABI for possible inclusion
in such proxy materials.
EXPERTS
The consolidated financial statements of ABI as of December 31, 1993,
and 1992, and for each of the three years in the period ended December 31,
1993, included in the prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm, given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of Regions, incorporated by
reference in this Registration Statement, have been audited by Ernst & Young
LLP, independent auditors, for the periods indicated in their report thereon
which is included in the Annual Report to Stockholders which is incorporated by
reference in its Annual Report on Form 10-K for the year ended December 31,
1993. The financial statements audited by Ernst & Young LLP have been
incorporated herein by reference in reliance on their report given on their
authority as experts in accounting and auditing.
OPINIONS
The legality of the shares of Regions Common Stock to be issued in the
Merger will be passed upon by Lange, Simpson, Robinson & Somerville,
Birmingham, Alabama. Henry E. Simpson, partner in the law firm of Lange,
Simpson, Robinson & Somerville, is a member of the Board of Directors of
Regions. As of September 15, 1994, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 119,695 shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird, Atlanta, Georgia.
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INDEX TO ABI FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT.......................................................... F-2
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992:
Consolidated Statements of Condition................................................ F-3
Consolidated Statements of Earnings................................................. F-4
Consolidated Statements of Stockholders' Equity..................................... F-5
Consolidated Statements of Cash Flows............................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993 (Unaudited):
Consolidated Statements of Condition (Unaudited).................................... F-19
Consolidated Statements of Earnings (Unaudited)..................................... F-20
Consolidated Statements of Cash Flows (Unaudited)................................... F-21
Notes to Consolidated Interim Statements (Unaudited)................................ F-22
</TABLE>
F-1
<PAGE> 65
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
American Bancshares, Inc. and Subsidiaries
Monroe, Louisiana
We have audited the accompanying consolidated statements of condition of
American Bancshares, Inc. and Subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1993. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of American Bancshares, Inc. and
Subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
As discussed in Note 8 to the consolidated financial statements, effective
January 1, 1993 the Company changed its method of accounting for income taxes to
conform with Statement of Financial Accounting Standards No. 109.
Deloitte & Touche LLP
New Orleans, Louisiana
March 11, 1994
F-2
<PAGE> 66
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks......................................... $ 55,625,064 $ 39,775,928
Federal funds sold.............................................. -- 7,500,000
Securities held for sale (market value of $9,434,000)........... 9,293,367 --
Investment securities (market value of $26,052,000 and
$46,809,000).................................................. 25,502,465 45,930,725
Marketable equity securities.................................... -- 897,500
Loans, net of unearned discount................................. 209,108,672 185,509,860
Less allowance for loan losses.................................. (2,898,424) (2,167,153)
------------ ------------
Net loans....................................................... 206,210,248 183,342,707
Premises and equipment, net..................................... 4,732,603 4,252,630
Other real estate............................................... 302,299 1,398,200
Accrued interest receivable..................................... 1,673,375 1,815,055
Other assets.................................................... 1,791,643 1,371,145
------------ ------------
$305,131,064 $286,283,890
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing........................................ $ 96,311,890 $ 84,346,076
Interest-bearing........................................... 183,521,974 180,670,577
------------ ------------
Total deposits........................................ 279,833,864 265,016,653
Federal funds purchased and securities sold under repurchase
agreements................................................. -- 623,000
Accrued interest payable...................................... 513,033 522,593
Other liabilities............................................. 599,050 576,304
------------ ------------
Total liabilities..................................... 280,945,947 266,738,550
------------ ------------
Commitments and contingencies................................... -- --
Stockholders' equity:
Common stock, $12 par value, 1,000,000 shares authorized,
690,584 and 658,155 issued and outstanding at December 31,
1993 and 1992, respectively................................ 8,287,008 7,897,860
Capital surplus............................................... 4,121,896 3,861,752
Retained earnings............................................. 11,776,213 7,858,455
Unrealized loss on marketable equity securities............... -- (72,727)
------------ ------------
Total stockholders' equity............................ 24,185,117 19,545,340
------------ ------------
$305,131,064 $286,283,890
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 67
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees............................. $19,347,893 $18,130,222 $18,847,079
Investment securities:
Taxable........................................ 1,980,967 2,440,514 2,804,631
Non-taxable.................................... 485,143 541,200 548,681
Federal funds sold................................ 267,690 458,149 851,530
----------- ----------- -----------
22,081,693 21,570,085 23,051,921
----------- ----------- -----------
INTEREST EXPENSE:
Deposits.......................................... 6,455,266 7,581,726 10,984,272
Federal funds purchased and securities sold under
repurchase agreements.......................... 18,319 29,281 11,767
Long-term debt.................................... -- 7,801 35,909
----------- ----------- -----------
6,473,585 7,618,808 11,031,948
----------- ----------- -----------
NET INTEREST INCOME................................. 15,608,108 13,951,277 12,019,973
PROVISION FOR LOAN LOSSES........................... 1,280,568 1,156,181 1,196,783
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES............................................ 14,327,540 12,795,096 10,823,190
----------- ----------- -----------
NON-INTEREST INCOME:
Customer service fees............................. 1,817,959 1,721,084 1,658,726
Trust and custodian income........................ 1,603,369 1,127,222 861,394
Gain on sale of investment securities, net........ 16,890 -- --
Other............................................. 696,808 608,803 466,965
----------- ----------- -----------
4,135,026 3,457,109 2,987,085
----------- ----------- -----------
NON-INTEREST EXPENSE:
Salaries and employee benefits.................... 5,910,753 5,385,930 4,756,707
Net occupancy expense............................. 1,370,816 1,197,888 1,285,265
Advertising....................................... 492,368 491,721 322,620
Loss on sale of investment securities, net........ -- -- 12,438
Other............................................. 4,155,654 4,519,373 4,430,463
----------- ----------- -----------
11,929,591 11,594,912 10,807,493
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF A CHANGE IN AN ACCOUNTING PRINCIPLE............ 6,532,975 4,657,293 3,002,782
PROVISION FOR INCOME TAXES.......................... 2,144,062 1,444,370 826,204
----------- ----------- -----------
EARNINGS BEFORE CUMULATIVE EFFECT OF A CHANGE IN AN
ACCOUNTING PRINCIPLE.............................. 4,388,913 3,212,923 2,176,578
CUMULATIVE EFFECT OF A CHANGE IN AN ACCOUNTING
PRINCIPLE......................................... 187,000 -- --
----------- ----------- -----------
NET EARNINGS........................................ $ 4,575,913 $ 3,212,923 $ 2,176,578
========== ========== ==========
NET EARNINGS PER COMMON SHARE BEFORE CUMULATIVE
EFFECT OF A CHANGE IN AN ACCOUNTING PRINCIPLE..... $6.44 $4.93 $3.50
===== ===== =====
NET EARNINGS PER COMMON SHARE....................... $6.71 $4.93 $3.50
===== ===== =====
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 68
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
UNREALIZED
LOSS ON
COMMON STOCK MARKETABLE TOTAL
-------------------- CAPITAL RETAINED EQUITY STOCKHOLDERS'
SHARES AMOUNT SURPLUS EARNINGS SECURITIES EQUITY
------- ---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1991..................... 599,677 $7,196,124 $3,386,306 $ 3,698,571 $ (317,082) $ 13,963,919
Net earnings............... 2,176,578 2,176,578
Stock dividend (5%)........ 29,856 358,272 238,847 (597,119) --
Cash paid in lieu of
fractional shares........ (2,558) (2,558)
Decrease in net unrealized
loss on marketable equity
securities............... 244,355 244,355
------- ---------- ---------- ----------- ---------- -------------
Balance at
December 31, 1991........ 629,533 7,554,396 3,625,153 5,275,472 (72,727) 16,382,294
Net earnings............... 3,212,923 3,212,923
Stock dividend (5%)........ 31,355 376,260 250,840 (627,100) --
Cash paid in lieu of
fractional shares........ (2,433) (2,433)
Stock issued............... 172 2,064 2,782 4,846
Treasury stock purchased
and retired.............. (2,905) (34,860) (17,023) (407) (52,290)
------- ---------- ---------- ----------- ---------- -------------
Balance at
December 31, 1992........ 658,155 7,897,860 3,861,752 7,858,455 (72,727) 19,545,340
Net earnings............... 4,575,913 4,575,913
Stock dividend (5%)........ 32,785 393,420 262,280 (655,700) --
Cash paid in lieu of
fractional shares........ (2,455) (2,455)
Treasury stock purchased
and retired.............. (356) (4,272) (2,136) (6,408)
Decrease in net unrealized
loss on marketable equity
securities............... 72,727 72,727
------- ---------- ---------- ----------- ---------- -------------
Balance at
December 31, 1993........ 690,584 $8,287,008 $4,121,896 $11,776,213 $ -- $ 24,185,117
======= ========= ========= ========== ========= ==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 69
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
----------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings........................................ $ 4,575,913 $ 3,212,923 $ 2,176,578
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for loan losses........................ 1,280,568 1,156,181 1,196,783
Provision for losses on other real estate
owned.......................................... 200,681 363,147 270,756
Depreciation and amortization.................... 636,502 580,867 560,760
Amortization of discount on investments.......... (20,487) 16,965 344,345
Loss (gain) on sale of investment securities..... (16,890) -- 12,438
Deferred income tax (credit) charge.............. (311,543) (3,000) 64,000
Change in accrued interest receivable............ 141,680 248,703 112,098
Change in other assets........................... (108,955) (61,923) (99,423)
Change in accrued interest payable............... (9,560) (360,857) (429,551)
Change in other liabilities...................... 22,746 (259,202) (643,548)
----------- ------------ ------------
Net cash provided by operating activities...... 6,390,655 4,893,804 3,565,236
----------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in federal funds sold....... 7,500,000 8,500,000 (10,000,000)
Proceeds from sales of investment securities........ 4,027,431 -- --
Proceeds from maturities and calls of investment
securities....................................... 18,627,872 19,152,916 22,411,154
Purchases of investment securities.................. (10,512,806) (24,763,985) (20,813,594)
Loan originations, net of repayments................ (24,375,498) (21,634,641) (13,084,127)
Proceeds from sales of real estate acquired by
foreclosure...................................... 1,122,609 1,128,667 1,226,712
Purchase of premises and equipment.................. (1,131,451) (1,590,825) (301,501)
Net book value of premises and equipment
disposals........................................ 14,976 -- --
----------- ------------ ------------
Net cash used in investing activities.......... (4,726,867) (19,207,868) (20,561,356)
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits............................ 14,817,211 24,975,509 24,668,540
Net increase (decrease) in federal funds purchased
and securities sold under repurchase
agreements....................................... (623,000) (383,000) 734,498
Repayments of long-term debt........................ -- (220,000) (331,000)
Cash paid in lieu of fractional shares of stock
dividends........................................ (2,455) (2,433) (2,558)
Proceeds from issuance of common stock.............. -- 4,846 --
Payments to acquire treasury stock.................. (6,408) (52,290) --
----------- ------------ ------------
Net cash provided by financing activities...... 14,185,348 24,322,632 25,069,480
----------- ------------ ------------
NET INCREASE IN CASH AND DUE FROM BANKS............... 15,849,136 10,008,568 8,073,360
CASH AND DUE FROM BANKS, BEGINNING OF YEAR............ 39,775,928 29,767,360 21,694,000
----------- ------------ ------------
CASH AND DUE FROM BANKS, END OF YEAR.................. $55,625,064 $ 39,775,928 $ 29,767,360
========== =========== ===========
ADDITIONAL DISCLOSURES:
Income taxes paid................................... $ 2,140,000 $ 1,595,262 $ 1,278,145
========== =========== ===========
Interest paid....................................... $ 6,483,145 $ 7,979,665 $ 11,461,499
========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 70
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
The accounting and reporting policies of American Bancshares, Inc. and
subsidiaries conform to generally accepted accounting principles and the
prevailing practices within the banking industry. A summary of significant
accounting policies is as follows:
Basis of Presentation -- The consolidated financial statements include
the accounts of American Bancshares, Inc. (Company), its 99.26% owned
subsidiary, First American Bank and Trust of Louisiana (Bank), and its
wholly-owned subsidiary, American Bancshares Leasing Co., Inc. All
significant intercompany balances have been eliminated in consolidation.
Minority interest of $178,925 and $146,783 at December 31, 1993 and 1992,
respectively, is included in other liabilities.
Securities -- Investment securities are stated at cost adjusted for
amortization of premiums and accretion of discounts, computed by the
interest method, which are recognized as adjustments to interest income.
Market value for securities is determined from quoted prices or quoted
prices of similar securities of comparable risk and maturity where no
quoted market price exists. The adjusted cost of the specific security sold
is used to compute gains or losses on the sale of investment securities.
Securities held for sale are stated at the lower of aggregate amortized
cost or market value. Investment securities are not adjusted to market
because the Bank intends and believes it has the ability to hold such
securities within the foreseeable future.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investment in Debt and Equity Securities," which is effective in 1994. This
Statement requires securities to be classified into one of three reporting
categories (held-to-maturity, available for sale or trading). Securities
classified as held-to-maturity are carried at amortized cost. Those
classified as available for sale are carried at market value with the
unrealized gain or loss (net of income tax effect) reflected as a component
of stockholders' equity. Those classified as trading are carried at market
value with the unrealized gain or loss reflected in the statement of
earnings.
The Bank has completed a preliminary review of SFAS 115 relative to
its securities portfolio and has determined that upon adoption on January
1, 1994 securities with a maturity of three years or less will be
available-for-sale. Accordingly, the Bank reclassified securities with a
book value of $9,293,367 from investment securities to securities held for
sale. Preliminary calculations indicate an increase in shareholders' equity
of approximately $93,000, representing an unrealized gain from these
securities classified as available-for-sale, net of income taxes, will
result from adoption of this standard.
Marketable Equity Securities -- Marketable equity securities are
stated at the lower of aggregate cost or market. Declines which are deemed
to be temporary are adjusted by a charge or credit to a valuation account
within stockholders' equity called "Unrealized loss on marketable equity
securities". If the decline is deemed to be permanent, the amount is
charged to operations. All equity securities were sold during 1993.
Loans -- Loans are stated at the principal amount outstanding, net of
unearned discount. Unearned discount relates principally to consumer
installment loans. Interest on loans is credited to operations based on the
principal amount outstanding using methods which approximate the interest
method. In connection with the acquisition of a failed bank in 1989, the
Company recorded a loan discount which is being recognized as income
through the cost recovery method related to specific loans giving rise to
the discount. These discounts have been used to reduce specific loans to
net realizable value.
Non-Performing Loans -- Included in the non-performing loan category
are loans which have been categorized by management as non-accrual because
collection of interest is doubtful, and loans which
F-7
<PAGE> 71
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
have been restructured to provide a reduction in the interest rate or a
deferral of interest and/or principal payments.
When the payment of principal or interest on a loan is delinquent for
90 days, or earlier in some cases, the loan is placed on non-accrual
status, unless the loan is in the process of collection and the underlying
collateral fully supports the carrying value of the loan. If the decision
is made to continue accruing interest on the loan, periodic reviews are
made to confirm the accruing status of the loan. When a loan is placed on
non-accrual status, interest accrued is charged to operations. Generally,
any payments received on non-accrual loans are applied first to outstanding
loan amounts and next to the recovery of charged-off loan amounts. Any
excess is treated as recovery of lost interest.
Renegotiated loans are those loans on which concessions in terms have
been granted because of a borrower's financial difficulty. Interest is
generally accrued on such loans in accordance with the new terms.
Allowance for Loan Losses -- The allowance for loan losses is a
valuation allowance available for losses incurred on loans. All losses are
charged to the allowance for loan losses when the loss actually occurs or
when a determination is made that a loss is likely to occur. Recoveries are
credited to the allowance at the time of recovery.
Throughout the year, management estimates the likely level of future
losses to determine whether the allowance for loan losses is adequate to
absorb reasonably anticipated losses in the existing portfolio. Based on
these estimates, an amount is charged to the provision for loan losses and
credited to the allowance for loan losses in order to adjust the allowance
to a level determined to be adequate to absorb future losses.
Management's judgment as to the level of future losses on existing
loans involves the consideration of current and anticipated economic
conditions and their potential effects on specific borrowers; an evaluation
of the existing relationships among loans, potential loan losses, and the
present level of the allowance; results of examinations of the loan
portfolio by regulatory agencies; and management's internal review of the
loan portfolio. In determining the collectibility of certain loans,
management also considers the fair value of any underlying collateral.
It should be understood that estimates of future loan losses involve
an exercise of judgment. While it is possible that in particular periods
the Bank may sustain losses which are substantial relative to the allowance
for loan losses, it is the judgment of management that the allowance for
loan losses reflected in the consolidated statements of condition is
adequate to absorb possible losses in the existing loan portfolio.
Premises and Equipment -- Premises and equipment are carried at cost
less accumulated depreciation and amortization. Depreciation expense is
computed principally on the straight-line method over the estimated useful
lives of the assets.
Other Real Estate -- The Bank records other real estate at the lesser
of the outstanding loan amount or fair value at the time of foreclosure
loss estimated cost to sell. Real estate and other property acquired in
lieu of loan balances, net of an appropriate reserve for possible losses,
are included in the accompanying consolidated statements of condition.
Operating expenses of such properties, net of related income and gains and
losses on their disposition, are included in other non-interest expense.
Intangibles -- The Company purchased a failed bank in 1986. The excess
purchase price over the fair market value of the assets acquired is being
amortized over ten years. The unamortized premium amounted to $182,102 and
$242,803 at December 31, 1993 and 1992, respectively. This premium is
included in other assets in the consolidated statements of condition.
F-8
<PAGE> 72
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes -- The Company changed its method of accounting for
income taxes effective January 1, 1993, from the deferred method to the
liability method to comply with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." This
standard requires, among other things, recognition of future tax benefits,
measured by enacted tax rates, attributable to deductible temporary
differences between financial statement and income tax bases of assets and
liabilities to the extent that realization of such benefits is more likely
than not. The Company elected to report a cumulative effect in 1993 and not
restate any prior years. The cumulative effect of adopting SFAS No. 109 on
the consolidated financial statements was to increase income by $187,000
for the year ended December 31, 1993.
Earnings Per Share -- Earnings per share are based on the average
weighted number of shares outstanding and totaled 682,000, 652,000 and
622,000 shares for 1993, 1992 and 1991, respectively.
Statements of Cash Flows -- The Company has defined cash and cash
equivalents as those amounts included in the consolidated statements of
condition caption "Cash and due from banks".
Reclassifications -- Certain reclassifications have been made to the
1992 and 1991 consolidated financial statements in order to conform to
those classifications adopted for reporting in 1993.
2. CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances with the Federal
Reserve Bank. Cash and due from banks in the consolidated statements of
condition included amounts so restricted of $3,149,000 and $2,977,000 at
December 31, 1993 and 1992, respectively.
3. SECURITIES HELD FOR SALE
Beginning December 31, 1993 the Company designated as held for sale all
securities that could be sold prior to their contractual maturity in the event
of an unforeseen liquidity need. These securities are reported at cost adjusted
for amortization of premiums and accretion of discounts in the consolidated
statement of condition. The portfolio of securities held for sale consisted of
the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------------------------
GROSS GROSS
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
------ ---------- ---------- ------
<S> <C> <C> <C> <C>
U. S. Treasury securities......................... $ 997 $ -- $ 1 $ 996
Other U.S. Government obligations................. 6,488 76 6,564
Collateralized mortgage obligation................ 296 48 344
Mortgage-backed securities........................ 1,512 23 5 1,530
------ ---------- --- ------
$9,293 $147 $ 6 $9,434
====== ======== ======== ======
</TABLE>
The Company's collateralized mortgage obligations (CMO's) generally consist
of first and second tranche sequential pay, planned amortization class or
floating rate support tranche instruments. Interest income on CMO's and
mortgage-backed securities is generally included with interest on obligations of
other U.S. Government agencies due to their guarantees of underlying mortgages.
F-9
<PAGE> 73
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The book value and market value of investment securities at December 31,
1993, by contractual maturity, are shown below (in thousands). Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
securities.
<TABLE>
<CAPTION>
BOOK MARKET
VALUE VALUE
------ ------
<S> <C> <C>
Due in one year or less................................................ $2,998 $3,069
Due after one year through five years.................................. 3,487 3,486
Due after five years through ten years................................. 1,000 1,005
Mortgage-backed securities and CMO's................................... 1,808 1,874
------ ------
$9,293 $9,434
====== ======
</TABLE>
Proceeds from sales of investment securities and marketable equity
securities during 1993 were $4,027,431. Gross gains of $26,893 and gross losses
of $10,003 were realized on those sales in 1993. There were no sales in 1992.
Proceeds from the sales of uninvested securities and marketable equity
securities during 1991 were $10,201,222. Gross gains of $342,179 and gross
losses of $354,617 were realized on these sales in 1991.
4. INVESTMENT SECURITIES
The book and market values of the securities portfolio were as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-------------------------------------------------------
GROSS GROSS
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Other U.S. Government obligations... $ 6,186 $ 23 $ 6 $ 6,203
Obligations of states and political
subdivisions...................... 7,953 168 13 8,108
Mortgage-backed securities.......... 11,363 378 11,741
------- ---------- ---------- -------
$25,502 $ 569 $ 19 $26,052
======= ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1992
-------------------------------------------------------
GROSS GROSS
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. Treasury securities............ $ 1,000 $ 18 $ -- $ 1,018
Other U.S. Government obligations... 14,915 144 15,059
Obligations of states and political
subdivisions...................... 9,039 249 70 9,218
Collateralized mortgage
obligation........................ 434 36 470
Mortgage-backed securities.......... 20,543 540 39 21,044
------- ---------- ---------- -------
$45,931 $987 $109 $46,809
======= ======== ======== =======
</TABLE>
F-10
<PAGE> 74
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The book value and market value of the securities portfolio at December 31,
1993, by contractual maturity, are shown below (in thousands). Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
BOOK MARKET
VALUE VALUE
------- -------
<S> <C> <C>
Due in one year or less.................................................. $ 5,047 $ 5,081
Due after one year through five years.................................... 7,318 7,399
Due after five years through ten years................................... 1,242 1,281
Due after ten years...................................................... 532 550
Mortgage-backed securities............................................... 11,363 11,741
------- -------
$25,502 $26,052
======= =======
</TABLE>
Market value for securities is determined from quoted prices or quoted
prices of similar securities of comparable risk and maturity where no quoted
market price exists. Management does not anticipate a requirement to sell any of
the Bank's investment securities for liquidity or other operating purposes.
Securities with a book value of approximately $14,045,000 at December 31,
1993 and $9,629,000 at December 31, 1992, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other purposes
as required or permitted by law.
5. LOANS
The loan portfolio consists of the following loans classified by major
type:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1993 1992
------------ ------------
<S> <C> <C>
Commercial, financial and industrial.................... $ 47,697,781 $ 44,721,177
Real estate............................................. 93,427,284 86,993,439
Installment............................................. 67,620,640 54,166,809
Other................................................... 4,576,636 3,643,066
------------ ------------
213,322,341 189,524,491
Less unearned discount.................................. (4,213,669) (4,014,631)
------------ ------------
209,108,672 185,509,860
Less allowance for loan losses.......................... (2,898,424) (2,167,153)
------------ ------------
$206,210,248 $183,342,707
=========== ===========
</TABLE>
The Company generally makes loans in its market area of North Louisiana
comprising primarily Quachita, Caddo and Bossier Parishes.
As of December 31, 1993 and 1992, loans outstanding to directors, officers,
and their affiliates were approximately $14,326,000 and $4,602,000,
respectively. During 1993, advances of $14,856,000 and payments of $5,132,000
were made on these loans. In the opinion of management, all transactions entered
into between the Bank and such related parties have been and are, in the
ordinary course of business, made on the same terms and conditions as similar
transactions with unaffiliated persons and do not involve more than the normal
risk of collectibility.
At December 31, 1993, 1992 and 1991, loans on which the accrual of interest
has been discontinued or reduced amounted to approximately $552,000, $783,000
and $1,127,000, respectively. Interest income on these loans would have
approximated $8,000, $54,000 and $211,000 for 1993, 1992 and 1991, respectively.
F-11
<PAGE> 75
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
An analysis of activity in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------------------
1993 1992 1991
---------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year..................... $2,167,153 $ 2,276,524 $ 2,220,047
Provision charged to operations................ 1,280,568 1,156,181 1,196,783
Loan losses:
Loans charged off........................... (746,354) (1,759,912) (1,501,491)
Recoveries.................................. 197,057 494,360 361,185
---------- ----------- -----------
Net loan losses........................... (549,297) (1,265,552) (1,140,306)
---------- ----------- -----------
Balance at end of year........................... $2,898,424 $ 2,167,153 $ 2,276,524
========= ========== ==========
</TABLE>
A total of $487,000, $835,000 and $1,992,000 was transferred from loans to
other real estate in 1993, 1992 and 1991 respectively.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan," was issued in May, 1993, and is scheduled
for implementation in 1995. Statement No. 114 will require impaired loans to be
measured based on the present value of their expected cash flows in determining
the adequacy of the allowance for possible loan losses. Where only lost
principal is currently covered by the allowance today, future reserves will be
required to cover lost interest as well. It is anticipated that the effect of
adopting this new accounting method will not be material.
6. PREMISES AND EQUIPMENT
Premises and equipment are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
----------- -----------
<S> <C> <C>
Land........................................................ $ 1,330,867 $ 1,071,007
Buildings................................................... 3,583,973 3,509,797
Leasehold improvements...................................... 14,438 14,438
Furniture, fixtures, and equipment.......................... 3,999,404 3,224,840
----------- -----------
8,928,682 7,820,082
Less accumulated depreciation and amortization.............. (4,196,079) (3,567,452)
----------- -----------
Premises and equipment, net................................. $ 4,732,603 $ 4,252,630
========== ==========
</TABLE>
A total of $201,000 was transferred from premises and equipment to other
real estate in 1992. No transfers were made in 1993 or 1991.
7. DEPOSITS
Deposits are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1993 1992
------------ ------------
<S> <C> <C>
Demand.................................................. $ 96,311,890 $ 84,346,076
Savings................................................. 32,820,568 29,987,593
Money Market accounts................................... 29,084,389 29,856,269
Time.................................................... 121,617,017 120,826,715
------------ ------------
$279,833,864 $265,016,653
=========== ===========
</TABLE>
F-12
<PAGE> 76
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Included in interest-bearing deposits are approximately $33,692,000 and
$29,553,000 of certificates of deposits in amounts of $100,000 or more at
December 31, 1993 and 1992, respectively. The Bank has no brokered deposits and
there are no major concentrations of deposits.
8. INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method as required by
Statement of Financial Accounting Standards No. 109. "Accounting for Income
Taxes." Prior years have not been restated.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 1993 are as
follows (in thousands):
<TABLE>
<S> <C>
Deferred tax assets:
Reserve for loan losses not currently deductible................ $502
Writedown of other real estate.................................. 53
Book over tax depreciation...................................... 15
Self insurance reserve.......................................... 30
----
600
----
Deferred tax liability:
Bond discount accretion......................................... 98
Amortization of intangible...................................... 30
Other........................................................... 47
----
175
----
$425
====
</TABLE>
The components of the provision for federal income taxes are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1992 1991
------ ------ ----
<S> <C> <C> <C>
Current.................................................... $2,274 $1,447 $762
Deferred................................................... (130) (3) 64
------ ------ ----
$2,144 $1,444 $826
====== ====== ====
</TABLE>
Deferred taxes, according to the temporary differences which caused them,
were as follows at December 31, 1992 and 1991 (in thousands):
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Depreciation................................................ $ 51 $(33)
Self insurance reserve...................................... (34) --
Provision for loan losses................................... 12 13
Amortization of acquisition expenses........................ 7 13
Other....................................................... (69) 24
Other real estate........................................... 30 51
---- ----
$ (3) $ 64
==== ====
</TABLE>
F-13
<PAGE> 77
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for federal income taxes differs from the amount computed by
applying the U.S. Federal income tax statutory rate (34% in 1993, 1992 and 1991)
on income as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Taxes calculated at statutory rate........... $2,221 33% $1,583 34% $1,021 34%
Increase (decrease) resulting from:
Tax-exempt interest........................ (174) (3)% (204) (4)% (219) (7)%
Other, net................................. 97 2 65 1% 24 1%
------ --- ------ --- ------ ---
$2,144 33% $1,444 31% $ 826 28%
====== == ====== == ====== ==
</TABLE>
9. PENSION PLAN
The Bank has established a defined benefit, non-contributory retirement
plan which covers all full-time employees. The defined benefit plan pays
benefits to employees at retirement based upon years of service and compensation
rates near retirement. The Bank's funding policy is generally to make
contributions equal to the normal cost and an amount to amortize any unfunded
actuarial liability. Contributions are intended to provide not only for benefits
attributable to service to date but also for those expected to be earned in the
future. Pension expense of $127,891, $85,111 and $60,568 was recorded in 1993,
1992 and 1991, respectively.
The following table sets forth the Plan's funded status as of December 31,
and amounts recognized in the consolidated financial statements:
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Actuarial present value of accumulated
benefit obligations:
Vested..................................... $ 1,464,419 $ 985,100
Non-vested................................. 223,361 227,215
----------- -----------
TOTAL.............................. $ 1,687,780 $ 1,212,315
========== ==========
Projected benefit obligation for service
rendered to date........................... (2,252,816) $(1,822,332)
Plan assets at fair value.................... 1,841,590 1,776,004
----------- -----------
Excess (deficiency) of plan assets over
projected benefit
obligation................................. (411,226) (46,328)
Remaining unrecognized net assets existing at
December 31, being amortized over 13
years...................................... (159,962) (179,957)
Unrecognized net loss from past experience
different from that assumed................ 587,448 275,186
----------- -----------
Accrued pension payable............ $ 16,260 $ 48,901
========== ==========
<CAPTION>
1993 1992 1991
----------- ----------- ---------
<S> <C> <C> <C>
Net pension expense includes the following
components:
Service costs-benefits earned during the
year.................................... 158,342 148,122 $ 112,234
Interest cost on projected benefit
obligation................................. 148,221 120,562 105,052
Actual return on plan assets................. (35,146) (93,695) (202,826)
Net amortization and deferral................ (143,526) (89,878) 46,108
----------- ----------- ---------
Net periodic pension expense....... $ 127,891 $ 85,111 $ 60,568
========== ========== =========
</TABLE>
F-14
<PAGE> 78
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1993 and 1992, the weighted average discount rate was 7.5%,
and expected long-term rate of return on assets was 10%. The rate of increase in
future compensation levels used in determining the actuarial present value of
the projected benefit obligation was 4%. The Plan's assets consist primarily of
certificates of deposits and common stocks.
10. RELATED PARTY TRANSACTIONS
In the years ended December 31, 1993, 1992 and 1991, the Bank paid
approximately $175,500, $170,000 and $193,000, respectively, to a director for
legal services incurred in the ordinary course of banking operations. In
addition, the Bank leases space in the operations building to the above
mentioned director under an operating lease which expires December 31, 2003. The
Bank recorded rental income under this lease for the years ended December 31,
1993, 1992 and 1991 of approximately $38,000, $6,000 and $6,000, respectively.
11. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to various financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial statements include commitments to extend credit and
standby letters of credit. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amounts recognized in the consolidated
statements of condition. The contract amounts of those instruments reflect the
extent of the involvement the Bank has in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making these commitments
and conditional obligations as it does for on-balance sheet instruments.
In the normal course of business, the Bank has made commitments to extend
credit of approximately $15,107,000 and $2,571,000 at December 31, 1993 and
1992, respectively, that are not reflected in the financial statements.
Additionally, the Bank has letters of credit outstanding of approximately
$2,356,000 and $2,905,000 at December 31, 1993 and 1992, respectively. Bank
management does not anticipate any material loss as a result of these
transactions.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being fully drawn upon, the total commitment amounts disclosed
above do not necessarily represent future cash requirements. The Bank evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained if considered necessary by the Bank upon extension of credit
is based on management's credit evaluation of the counterparty.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to its customers.
F-15
<PAGE> 79
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. COMMITMENTS AND CONTINGENCIES
A summary of approximate non-cancelable future operating lease commitments
follows:
<TABLE>
<S> <C>
1994........................................................... $ 80,000
1995........................................................... 87,000
1996........................................................... 77,000
1997........................................................... 63,000
1998........................................................... 57,000
Thereafter..................................................... 58,000
--------
$422,000
========
</TABLE>
It is expected that in the normal course of business, leases that expire
will be renewed or replaced by leases on other property or equipment.
Rent expense under all non-cancelable operating lease obligations
aggregated $68,000, $42,000 and $104,000 in 1993, 1992 and 1991, respectively.
Rents received on non-cancelable sublease agreements aggregated $11,200, $7,320
and $6,420 for these years, respectively.
Various lawsuits are pending against the Bank. Bank management, after
reviewing these suits with outside counsel, considers that the aggregate
liabilities, if any, will not be material to the financial statements.
13. CAPITAL REQUIREMENTS
The Bank is required to maintain certain minimum capital levels. At
December 31, 1993 the Bank was in compliance with the statutory minimum capital
requirements. Following is a summary of the minimum required capital levels and
the actual amounts at December 31, 1993:
<TABLE>
<CAPTION>
REQUIRED
MINIMUM ACTUAL
-------- -----
<S> <C> <C>
Tier I Leverage.................................................. 3% to 5% 7.8%
Tier I Risked-Based.............................................. 4% 11.4%
Total Risked-Based............................................... 8% 12.8%
</TABLE>
The minimum Tier 1 leverage ratio for all banks and bank holding companies
is 3%. Regulators may require a higher ratio dependent upon the condition of the
individual bank or bank holding company.
14. DIVIDENDS FROM SUBSIDIARY
Dividends paid by the Bank are subject to restrictions by certain
regulatory agencies. There was an aggregate of approximately $7,479,000
available for payment of dividends at December 31, 1993 under these restrictions
without prior approval. During 1993, the Bank paid dividends to the Company of
approximately $93,000.
15. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and Federal Funds Sold -- For those short-term investments, the
carrying amount is a reasonable estimate of fair value.
Investments and Marketable Equity Securities -- For investments and
marketable equity securities held for investment purposes, fair value equals
quoted market price, if available. If a quoted market price is not available,
fair value is estimated using quoted market prices for similar securities.
F-16
<PAGE> 80
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loans -- For certain homogenous categories of loans, such as some
residential mortgages, fair value is estimated using the quoted market prices
for securities backed by similar loans, adjusted for differences in loan
characteristics. The fair value of other types of loans is estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings and for the same
remaining maturities.
Deposits -- The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed-maturities certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining maturities.
Federal Funds Purchased and Securities Sold Under Repurchase
Agreements -- For those short-term liabilities, the carrying amount is a
reasonable estimate of fair value.
Commitments -- The fair value of commitments to extend credit was not
significant.
The estimated fair values of the Company's financial instruments are as
follows at December 31, 1993 and 1992 (in thousands):
<TABLE>
<CAPTION>
1993 1992
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Cash and federal funds sold........... $ 55,625 $ 55,625 $ 47,276 $ 47,276
Investment and marketable equity
securities......................... 34,795 35,486 46,828 47,707
Loans................................. 209,108 209,930 185,510 186,871
Less: allowance for loan losses....... (2,898) (2,898) (2,167) (2,167)
-------- -------- -------- --------
Loans, net of allowance............... 206,210 207,032 183,343 184,704
-------- -------- -------- --------
Financial liabilities:
Deposits.............................. 279,834 280,947 265,017 266,160
Federal funds purchased and securities
sold under repurchase agreements... -- -- 623 623
</TABLE>
The Company does not have unrecognized financial instruments requiring fair
value disclosure.
16. OTHER EXPENSES
The components of other expenses in the statements of earnings are as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Data processing.................................... $ 336,168 $ 526,227 $ 669,346
Stationary, supplies and printing.................. 331,709 322,151 267,030
Ad valorem taxes................................... 427,102 358,890 276,000
FDIC assessments................................... 577,524 529,750 445,209
Legal fees......................................... 255,759 299,790 275,242
Repo writedowns.................................... 200,681 363,147 310,629
Other.............................................. 2,026,711 2,119,418 2,187,007
---------- ---------- ----------
$4,155,654 $4,519,373 $4,430,463
========= ========= =========
</TABLE>
F-17
<PAGE> 81
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. SUMMARIZED FINANCIAL INFORMATION OF AMERICAN BANCSHARES, INC.
(PARENT ONLY)
The following are parent company only condensed statements of condition as
of December 31, 1993 and 1992, and condensed statements of operations and
condensed statements of cash flows for each of the three years in the period
ended December 31, 1993 (in thousands):
CONDENSED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1993 1992
------- -------
<S> <C> <C>
ASSETS:
Investment in subsidiaries..................................... $23,873 $19,315
Other assets................................................... 312 230
------- -------
$24,185 $19,545
======= =======
STOCKHOLDERS' EQUITY............................................. $24,185 $19,545
======= =======
</TABLE>
CONDENSED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Dividends received from subsidiaries......................... $ 93 $ 280 $ 420
Equity in undistributed earnings of subsidiaries............. 4,484 2,939 1,796
Interest and other expenses.................................. (1) (6) (40)
------ ------ ------
Net Earnings.......................................... $4,576 $3,213 $2,176
====== ====== ======
</TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings............................................ $ 4,576 $ 3,213 $ 2,176
Adjustments not affecting cash:
Deferred income tax.................................. -- (3) (20)
Equity in undistributed earnings of subsidiaries..... (4,484) (2,939) (1,796)
Net change in other assets and liabilities........... (11) (55) (24)
------- ------- -------
Net cash provided by operating activities............ 81 216 336
NET CASH USED BY FINANCING ACTIVITIES --
Payments on long-term debt.............................. -- (220) (331)
------- ------- -------
NET INCREASE (DECREASE) IN CASH........................... 81 (4) 5
CASH, BEGINNING OF YEAR................................... 7 11 6
------- ------- -------
CASH, END OF YEAR......................................... $ 88 $ 7 $ 11
======= ======= =======
</TABLE>
F-18
<PAGE> 82
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
JUNE 30, 1994
<TABLE>
<S> <C>
ASSETS
Cash and due from banks........................................................ $ 29,990,447
Federal funds sold............................................................. 5,000,000
Securities held for sale (at market value)..................................... 13,016,084
Investment securities (market value of $24,234,000 and $37,936,000)............ 24,220,322
Loans, net of unearned discount................................................ 210,998,355
Less allowance for loan losses................................................. (3,182,478)
------------
Net loans.................................................................... 207,815,877
Premises and equipment, net.................................................... 5,396,901
Other real estate.............................................................. 436,370
Accrued interest receivable.................................................... 1,653,939
Other assets................................................................... 1,795,720
------------
$289,325,660
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest bearing....................................................... $ 78,432,256
Interest-bearing.......................................................... 182,644,795
------------
Total deposits....................................................... 261,077,051
Accrued interest payable....................................................... 916,384
Other liabilities.............................................................. 631,052
------------
Total liabilities.................................................... 262,624,487
------------
Stockholder's equity:
Common stock, $12 par value, 1,000,000 shares authorized, 729,937 and 690,584
issued and outstanding at June 30, 1994, and 1993, respectively........... 8,759,244
Capital surplus.............................................................. 4,593,008
Retained earnings............................................................ 13,375,602
Unrealized loss on securities held for sale.................................. (26,681)
------------
Total stockholder's equity..................................................... 26,701,173
------------
$289,325,660
===========
</TABLE>
See notes to consolidated interim statements.
F-19
<PAGE> 83
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1994 1993
---------- ----------
<S> <C> <C>
INTEREST INCOME
Loans, including fees............................................. $9,699,053 $9,272,143
Investment securities
Taxable......................................................... 818,900 1,095,768
Non-taxable..................................................... 207,606 246,030
Federal funds sold................................................ 162,386 70,490
---------- ----------
10,887,945 10,684,431
---------- ----------
INTEREST EXPENSE
Deposits.......................................................... 3,252,400 3,144,763
Federal funds purchased and securities sold under repurchase
agreements...................................................... 1,201 14,670
---------- ----------
3,253,601 3,159,433
---------- ----------
NET INTEREST INCOME............................................... 7,634,344 7,524,998
PROVISION FOR LOAN LOSSES......................................... 455,337 544,363
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............... 7,179,007 6,980,635
---------- ----------
NON-INTEREST INCOME
Customer service fees............................................. 843,622 843,948
Trust and custodian income........................................ 905,404 725,469
Gain on sale of investment securities, net........................ -- 16,890
Other............................................................. 737,323 477,034
---------- ----------
2,486,349 2,063,341
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits.................................... 2,992,957 2,916,681
Net occupancy expense............................................. 746,677 680,757
Advertising....................................................... 265,708 246,614
Other............................................................. 2,130,351 2,102,212
---------- ----------
6,135,693 5,946,264
---------- ----------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF A CHANGE IN
AN ACCOUNTING PRINCIPLE......................................... 3,529,663 3,097,712
PROVISION FOR INCOME TAXES........................................ 1,125,796 1,024,883
---------- ----------
EARNINGS BEFORE CUMULATIVE EFFECT OF A CHANGE IN AN ACCOUNTING
PRINCIPLE....................................................... 2,403,867 2,072,829
CUMULATIVE EFFECT OF A CHANGE IN AN ACCOUNTING PRINCIPLE.......... -- 187,000
---------- ----------
NET EARNINGS...................................................... $2,403,867 $2,259,829
========= =========
</TABLE>
See notes to consolidated interim statements.
F-20
<PAGE> 84
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings.................................................... $ 2,403,867 $ 2,259,829
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Provision for loan losses..................................... 455,337 544,363
Provision for losses on other real estate owned............... -- 272,671
Depreciation and amortization................................. 362,915 325,290
Amortization of discount on investments....................... (9,487) 7,022
Gain on sale of investment securities......................... -- (16,890)
Deferred income tax credit.................................... (311,543) (3,000)
Change in accrued interest receivable......................... 19,436 174,740
Change in other assets........................................ (4,077) (352,260)
Change in accrued interest payable............................ 403,351 304,413
Change in other liabilities................................... 32,002 287,111
------------ ------------
Net cash provided by operating activities............. 3,351,801 3,803,289
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold................. (5,000,000) 2,500,000
Proceeds from sales of investment securities.................. -- 4,027,431
Proceeds from maturities and calls of investment securities... 8,069,935 10,165,467
Purchase of investment securities............................. (10,510,509) (4,856,295)
Loan originations, net of repayments.......................... (1,889,683) (11,922,307)
Proceeds from sales of real estate acquired by foreclosure.... 134,071 731,566
Purchase of premises and equipment............................ (1,051,424) (274,791)
Net book value of premises and equipment disposals............ 18,005 --
------------ ------------
Net cash (used) provided in investing activities...... (10,229,605) 371,071
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits........................... (18,756,813) 6,023,747
Net (decrease) in federal funds purchased and securities sold
under repurchase agreements................................ -- (623,000)
Cash paid in lieu of fractional shares of stock dividends..... -- (2,455)
------------ ------------
Net cash (used) provided by financing activities...... (18,756,813) 5,398,292
------------ ------------
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS............ (25,634,617) 9,572,652
CASH AND DUE FROM BANKS, BEGINNING OF YEAR.................... 55,625,064 39,775,928
------------ ------------
CASH AND DUE FROM BANKS, END OF PERIOD........................ $ 29,990,447 $ 49,348,580
=========== ===========
ADDITIONAL DISCLOSURES
Income taxes paid............................................. $ 1,413,500 $ 1,140,000
=========== ===========
Interest paid................................................. $ 2,850,250 $ 2,855,020
=========== ===========
</TABLE>
See notes to consolidated interim statements.
F-21
<PAGE> 85
AMERICAN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
American Bancshares, Inc. (ABI) and its wholly owned subsidiaries. Significant
intercompany balances and transactions have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present a fair presentation of the consolidated
financial condition and results of operation of ABI for the interim periods. The
results of operations for the six months ended June 30, 1994, are not
necessarily indicative of the results which may be expected for the entire year.
(2) CHANGE IN METHOD OF ACCOUNTING FOR DEBT AND EQUITY SECURITIES
Effective January 1, 1994, ABI adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". Available-for-sale securities are those which ABI
has the intent to hold indefinitely but are available for disposal.
Available-for-sale securities are stated at fair value, with unrealized gains
and losses reported as a net amount in a separate component of stockholder's
equity, net of deferred taxes. Held-to-maturity securities are those which ABI
has the positive intent and ability to hold to maturity. Held-to-maturity
securities are carried at amortized cost. Premiums and discounts on investment
securities are amortized over the expected lives of the securities according to
the interest method.
F-22
<PAGE> 86
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
AMERICAN BANCSHARES, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF JUNE 1, 1994
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TABLE OF CONTENTS
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Parties................................................................................
Preamble............................................................................... A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER.......................................... A-5
1.1 Merger....................................................................... A-5
1.2 Time and Place of Closing.................................................... A-5
1.3 Effective Time............................................................... A-5
ARTICLE 2 -- TERMS OF MERGER........................................................... A-6
2.1 Certificate of Incorporation................................................. A-6
2.2 Bylaws....................................................................... A-6
2.3 Directors and Officers....................................................... A-6
ARTICLE 3 -- MANNER OF CONVERTING SHARES............................................... A-6
3.1 Conversion of Shares......................................................... A-6
3.2 Anti-Dilution Provisions..................................................... A-6
3.3 Shares Held by ABI or Regions................................................ A-6
3.4 Dissenting Shareholders...................................................... A-6
3.5 Fractional Shares............................................................ A-7
ARTICLE 4 -- EXCHANGE OF SHARES........................................................ A-7
4.1 Exchange Procedures.......................................................... A-7
4.2 Rights of Former ABI Shareholders............................................ A-7
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF ABI..................................... A-8
5.1 Organization, Standing, and Power............................................ A-8
5.2 Authority; No Breach By Agreement............................................ A-8
5.3 Capital Stock................................................................ A-8
5.4 ABI Subsidiaries............................................................. A-8
5.5 Financial Statements......................................................... A-8
5.6 Absence of Undisclosed Liabilities........................................... A-10
5.7 Absence of Certain Changes or Events......................................... A-10
5.8 Tax Matters.................................................................. A-10
5.9 Environmental Matters........................................................ A-10
5.10 Compliance With Laws......................................................... A-11
5.11 Employee Benefit Plans....................................................... A-11
5.12 Material Contracts........................................................... A-12
5.13 Legal Proceedings............................................................ A-13
5.14 Statements True and Correct.................................................. A-13
5.15 Tax and Regulatory Matters................................................... A-13
5.16 State Takeover Laws.......................................................... A-14
5.17 Support Agreements........................................................... A-14
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS................................. A-14
6.1 Organization, Standing, and Power............................................ A-14
6.2 Authority; No Breach By Agreement............................................ A-14
6.3 Capital Stock................................................................ A-14
6.4 Financial Statements......................................................... A-15
6.5 Absence of Undisclosed Liabilities........................................... A-15
6.6 Absence of Certain Changes or Events......................................... A-15
6.7 Compliance With Laws......................................................... A-15
6.8 Legal Proceedings............................................................ A-16
6.9 Statements True and Correct.................................................. A-16
6.10 Tax and Regulatory Matters................................................... A-16
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ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................. A-16
7.1 Affirmative Covenants of ABI................................................. A-16
7.2 Negative Covenants of ABI.................................................... A-16
7.3 Covenants of Regions......................................................... A-18
7.4 Adverse Changes in Condition................................................. A-19
7.5 Reports...................................................................... A-19
ARTICLE 8 -- ADDITIONAL AGREEMENTS..................................................... A-19
8.1 Registration Statement; Proxy Statement; Shareholder Approval................ A-19
8.2 Exchange Listing............................................................. A-19
8.3 Applications................................................................. A-19
8.4 Filings with State Offices................................................... A-20
8.5 Agreement as to Efforts to Consummate........................................ A-20
8.6 Investigation and Confidentiality............................................ A-20
8.7 Press Releases............................................................... A-20
8.8 Certain Actions.............................................................. A-20
8.9 Tax Treatment................................................................ A-21
8.10 Agreements of Affiliates..................................................... A-21
8.11 Employee Benefits and Contracts.............................................. A-21
8.12 Indemnification.............................................................. A-21
8.13 Election to Regions' Board of Directors...................................... A-22
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......................... A-22
9.1 Conditions to Obligations of Each Party...................................... A-22
9.2 Conditions to Obligations of Regions......................................... A-23
9.3 Conditions to Obligations of ABI............................................. A-24
ARTICLE 10 -- TERMINATION.............................................................. A-24
10.1 Termination.................................................................. A-24
10.2 Effect of Termination........................................................ A-24
10.3 Non-Survival of Representations and Covenants................................ A-24
ARTICLE 11 -- MISCELLANEOUS............................................................ A-25
11.1 Definitions.................................................................. A-25
11.2 Expenses..................................................................... A-30
11.3 Brokers and Finders.......................................................... A-30
11.4 Entire Agreement............................................................. A-30
11.5 Amendments................................................................... A-30
11.6 Waivers...................................................................... A-31
11.7 Assignment................................................................... A-31
11.8 Notices...................................................................... A-31
11.9 Governing Law................................................................ A-32
11.10 Counterparts................................................................. A-32
11.11 Captions..................................................................... A-32
11.12 Enforcement of Agreement..................................................... A-32
11.13 Severability................................................................. A-32
Signatures............................................................................. A-32
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LIST OF EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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1. -- Form of Directors' Agreement. (sec. 5.17).
2. -- Form of agreement of affiliates of ABI. (sec.sec. 8.10, 9.2(f)).
3. -- Matters as to which Boles, Boles & Ryan will opine. (sec. 9.2(d)).
4. -- Form of Claims Letter (sec. 9.2(g)).
5. -- Matters as to which Lange, Simpson, Robinson & Somerville will opine.
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of June 1, 1994, by and between AMERICAN BANCSHARES, INC. ("ABI"), a
corporation organized and existing under the laws of the State of Louisiana,
with its principal office located in Monroe, Louisiana; and REGIONS FINANCIAL
CORPORATION ("Regions"), a corporation organized and existing under the laws of
the State of Delaware, with its principal office located in Birmingham, Alabama.
PREAMBLE
The Boards of Directors of ABI and Regions are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of ABI by
Regions pursuant to the merger of ABI into and with Regions. At the effective
time of such merger, the outstanding shares of the capital stock of ABI shall be
converted into shares of the common stock of Regions (except as provided
herein). As a result, shareholders of ABI shall become shareholders of Regions
and each of the subsidiaries of ABI shall continue to conduct its business and
operations as a wholly owned subsidiary of Regions. The transactions described
in this Agreement are subject to the approvals of the shareholders of ABI, the
Board of Governors of the Federal Reserve System, and the appropriate state
regulatory authorities and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, ABI shall be merged into and with Regions in accordance with the
provisions of Sections 12:111 and 12:112 of the LBCL and with the effect
provided in Section 12:115 of the LBCL and of Section 258 of the DGCL and with
the effect provided in Section 259 of the DGCL (the "Merger"). Regions shall be
the Surviving Corporation of the Merger and shall continue to be governed by the
Laws of the State of Delaware. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the Boards of
Directors of ABI and Regions.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The place of Closing shall be at the offices of Regions, in
Birmingham, Alabama, or such other place as may be mutually agreed upon by the
Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Louisiana
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Louisiana and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officers or chief financial officers of each Party, the Parties shall
use their reasonable efforts to cause the Effective Time to occur on the last
day of the month in which occurs the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date on which the shareholders of ABI approve
this Agreement to the extent such approval is required by applicable Law; or
such later date within 30 days thereof as may be specified by Regions.
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ARTICLE 2
TERMS OF MERGER
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of ABI Common Stock (excluding shares held by ABI or
any of its Subsidiaries or by Regions or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, and excluding shares held by shareholders who perfect their
dissenters' rights of appraisal as provided in Section 3.4 of this
Agreement) issued and outstanding at the Effective Time shall be converted
into and exchanged for 2.4445 shares of Regions Common Stock (the "Exchange
Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event ABI changes the number of
shares of ABI Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted. In the
event Regions changes the number of shares of Regions Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY ABI OR REGIONS. Each of the shares of ABI Common Stock
held by any ABI Company or by any Regions Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of ABI Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Part XIII of the LBCL shall be entitled to receive the value of
such shares in cash as determined pursuant to such provision of Law; provided,
that no such payment shall be made to any dissenting shareholder unless and
until such dissenting shareholder has complied with the applicable provisions of
the LBCL , including the provisions of Section 131 thereof relating to the
deposit in escrow, endorsement, and transfer of the certificate or certificates
representing the shares for which payment is being made. In the event that a
dissenting shareholder of ABI fails to perfect, or
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effectively withdraws or loses, his right to appraisal and of payment for his
shares, such Person shall not have the right to receive payment in cash for his
shares and, instead, as of the Effective Time the shares of ABI Common Stock
held by such Person shall be converted into and exchanged for that number of
shares of Regions Common Stock determined under Section 3.1 of this Agreement
and the delivery of certificates representing such Regions Common Stock and any
dividends or other distributions in respect thereof to which such holder may be
entitled shall be governed by Section 4.1 of this Agreement.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of ABI Common Stock exchanged pursuant to the
Merger, who would otherwise have been entitled to receive a fraction of a share
of Regions Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Regions Common Stock
multiplied by the market value of one share of Regions Common Stock at the
Effective Time. The market value of one share of Regions Common Stock at the
Effective Time shall be the closing sale price of Regions Common Stock on the
Nasdaq/NMS (as reported by The Wall Street Journal or, if not reported thereby,
another authoritative source chosen by Regions) for the last full trading day on
which such shares are traded on the Nasdaq/NMS preceding the Effective Time. No
such holder will be entitled to dividends, voting rights, or any other rights as
a shareholder in respect of any fractional shares.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions and
ABI shall cause the exchange agent selected by Regions (the "Exchange Agent") to
mail to the former shareholders of ABI appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of ABI Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of ABI Common Stock (other than shares to
be canceled pursuant to Section 3.3 of this Agreement or as to which dissenters'
rights of appraisal have been perfected and not withdrawn or forfeited under
Section 131 of the LBCL) issued and outstanding at the Effective Time, promptly
upon the surrender of the certificate or certificates representing such shares
to the Exchange Agent, shall receive in exchange therefor the certificate or
certificates representing the shares of Regions Common Stock into which such
shares of ABI Common Stock have been converted under Section 3.1 of this
Agreement, together with all undelivered dividends and other distributions in
respect of such shares (without interest thereon) pursuant to Section 4.2 of
this Agreement and, to the extent required by Section 3.5 of this Agreement,
cash in lieu of any fractional share of Regions Common Stock to which such
holder otherwise would be entitled (without interest). Until so surrendered,
each outstanding certificate of ABI Common Stock shall be deemed for all
purposes, other than as provided below with respect to the payment of dividends
or other distributions payable to the holders of shares of Regions Common Stock,
to represent the number of whole shares of Regions Common Stock into which the
number of shares of ABI Common Stock represented thereby prior to the Effective
Time shall have been converted. Regions shall not be obligated to deliver the
certificate or certificates representing the shares of Regions Common Stock to
which any former holder of ABI Common Stock is entitled as a result of the
Merger, or any dividends or distributions in respect of those shares, until such
holder surrenders his certificate or certificates representing the shares of ABI
Common Stock for exchange as provided in this Section or otherwise complies with
the procedures of the Exchange Agent with respect to lost, stolen, or destroyed
certificates. The certificate or certificates of ABI Common Stock so surrendered
shall be duly endorsed as the Exchange Agent may require. Any other provision of
this Agreement notwithstanding, neither Regions, ABI, nor the Exchange Agent
shall be liable to a holder of ABI Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 RIGHTS OF FORMER ABI SHAREHOLDERS. At the Effective Time, the stock
transfer books of ABI shall be closed as to holders of ABI Common Stock
immediately prior to the Effective Time and no transfer of ABI Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing
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shares of ABI Common Stock (other than shares to be canceled pursuant to
Sections 3.3 and 3.4 of this Agreement) shall from and after the Effective Time
represent for all purposes the number of shares of Regions Common Stock into
which the shares of ABI Common Stock represented thereby shall have been
converted under Section 3.1 of this Agreement and the cash issuable in lieu of
fractional shares under Section 3.5 of this Agreement. To the extent permitted
by Law, former shareholders of record of ABI shall be entitled to vote after the
Effective Time at any meeting of Regions shareholders the number of whole shares
of Regions Common Stock into which their respective shares of ABI Common Stock
are converted, regardless of whether such holders have exchanged their
certificates representing ABI Common Stock for certificates representing Regions
Common Stock in accordance with the provisions of this Agreement. Whenever a
dividend or other distribution is declared by Regions on the Regions Common
Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of Regions Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of ABI Common Stock issued and outstanding at
the Effective Time until such holder surrenders such certificate for exchange as
provided in Section 4.1 of this Agreement. However, upon surrender of such ABI
Common Stock certificate, both the Regions Common Stock certificate (together
with all such undelivered dividends or other distributions without interest) and
any undelivered cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ABI
ABI hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. ABI is a corporation duly organized
and validly existing, and in good standing under the Laws of the State of
Louisiana, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. ABI is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on ABI.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) ABI has the corporate power and
authority necessary to execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of ABI, subject to the approval of this Agreement by the required vote of
the outstanding ABI Common Stock, which is the only shareholder vote required
for approval of this Agreement and consummation of the Merger by ABI. Subject to
such requisite shareholder approval, this Agreement represents a legal, valid,
and binding obligation of ABI, enforceable against ABI in accordance with its
terms (except in all cases as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and (ii) application
of, and limitations on the application of, equitable principles and remedies,
including limitations on the availability of the equitable remedy of specific
performance or injunctive relief).
(b) Neither the execution and delivery of this Agreement by ABI, nor the
consummation by ABI of the transactions contemplated hereby, nor compliance by
ABI with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of ABI's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any ABI Company under, any
Contract or Permit of any ABI Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on ABI, or, (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of
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this Agreement, violate any Law or Order applicable to any ABI Company or any of
their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or both with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on ABI, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by ABI of the Merger and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK. The authorized capital stock of ABI consists of
1,000,000 shares of ABI Common Stock, of which 729,937 shares are issued and
outstanding as of the date of this Agreement and not more than 729,937 shares
will be issued and outstanding at the Effective Time. All of the issued and
outstanding shares of capital stock of ABI are duly and validly issued and
outstanding and are fully paid and nonassessable under the LBCL. To the
Knowledge of ABI, none of the outstanding shares of capital stock of ABI has
been issued in violation of any preemptive rights of the current or past
shareholders of ABI. Except as set forth above, there are no shares of capital
stock or other equity securities of ABI outstanding and no outstanding Rights
relating to the capital stock of ABI.
5.4 ABI SUBSIDIARIES. ABI has disclosed in Section 5.4 of the ABI
Disclosure Memorandum all of the ABI Subsidiaries as of the date of this
Agreement. ABI or one of its Subsidiaries owns all of the issued and outstanding
shares of capital stock of each ABI Subsidiary. No equity securities of any ABI
Subsidiary are or may become required to be issued (other than to another ABI
Company) by reason of any Rights, and there are no Contracts by which any ABI
Subsidiary is bound to issue (other than to another ABI Company) additional
shares of its capital stock or Rights or by which any ABI Company is or may be
bound to transfer any shares of the capital stock of any ABI Subsidiary (other
than to another ABI Company). There are no Contracts relating to the rights of
any ABI Company to vote or to dispose of any shares of the capital stock of any
ABI Subsidiary. All of the shares of capital stock of each ABI Subsidiary held
by a ABI Company are fully paid and (except pursuant to 12 USC Section 55 in the
case of national banks and comparable, applicable state Law, if any, in the case
of state depository institutions) nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
and are owned by the ABI Company free and clear of any Lien. Each ABI Subsidiary
is either a bank, a savings association, or a corporation, and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each ABI Subsidiary is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on ABI. Each ABI Subsidiary that is
a depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder, and the deposits in
which are insured by the Bank Insurance Fund or the Savings Association
Insurance Fund, as appropriate, to the extent provided by applicable law.
5.5 FINANCIAL STATEMENTS. ABI has included in Section 5.5 of the ABI
Disclosure Memorandum copies of all ABI Financial Statements for periods ended
prior to the date hereof and will deliver to Regions copies of all ABI Financial
Statements prepared subsequent to the date hereof. The ABI Financial Statements
(as of the dates thereof and for the periods covered thereby) (i) are or, if
dated after the date of this Agreement, will be in accordance with the books and
records of ABI, which are or will be, as the case may be, complete and correct
and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (ii) present or will present, as
the case may be, fairly the consolidated financial position of the ABI Companies
as of the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows of the ABI Companies for the periods
indicated, in accordance with
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GAAP (subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments that are not material in amount of
effect and to the absence from interim financial statements of any footnote
disclosures).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No ABI Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on ABI, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of ABI as of March 31, 1994 included in the
ABI Financial Statements or reflected in the notes thereto. No ABI Company has
incurred or paid any Liability since March 31, 1994, except for such Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on ABI.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1994, except as
disclosed in Section 5.7 of the ABI Disclosure Memorandum, or in the ABI
Financial Statements delivered prior to the date of this Agreement, to the
Knowledge of ABI,(i) there have been no events, changes, or occurrences which
have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on ABI, and (ii) the ABI Companies have not taken any
action, or failed to take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement, would represent or
result in a material breach or violation of any of the covenants and agreements
of ABI provided in Article 7 of this Agreement.
5.8 TAX MATTERS. (a) All Tax returns required to be filed by or on behalf
of any of the ABI Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1993, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file or untimely filings, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on ABI and all returns
filed are complete and accurate in all material respects to the Knowledge of
ABI. All Taxes shown on filed returns have been paid. There is no audit
examination, deficiency, refund Litigation, or penalties due or owed with
respect to any Taxes that is reasonably and likely to result in a determination
that would have a Material Adverse Effect on ABI, except as reserved against in
the ABI Financial Statements delivered prior to the date of this Agreement or as
disclosed in Section 5.8 of the ABI Disclosure Memorandum. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the ABI Companies has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) To the Knowledge of ABI, adequate provision for any Taxes due or to
become due for any of the ABI Companies for the period or periods through and
including the date of the respective ABI Financial Statements has been made and
is reflected on such ABI Financial Statements.
(d) Effective for the fiscal year beginning January 1, 1993, ABI adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."
(e) Each of the ABI Companies is in compliance with, and its records
contain the information and documents (including properly completed IRS Forms
W-9) necessary to comply with, in all material respects, applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify the accounts subject to backup withholding under
Section 3406 of the Internal Revenue Code.
5.9 ENVIRONMENTAL MATTERS. (a) To the Knowledge of ABI, each ABI Company,
its Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for such instances of
non-compliance that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on ABI.
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(b) To the Knowledge of ABI, there is no Litigation pending or threatened
before any court, governmental agency, or authority or other forum in which any
ABI Company or any of its Loan Properties or Participation Facilities has been
or, with respect to threatened Litigation, may be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving a site owned, leased, or operated by any ABI Company or any of its
Loan Properties or Participation Facilities, except for such Litigation pending
or threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on ABI, and to the Knowledge of ABI, there
is no reasonable basis for any such Litigation.
(c) To the Knowledge of ABI, there have been no releases in violation of
Environmental Laws of Hazardous Material in, on, under, or affecting any
Participation Facility, or Loan Property, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
ABI.
5.10 COMPLIANCE WITH LAWS. ABI is duly registered as a bank holding
company under the BHC Act. Each ABI Company has in effect all Permits necessary
for it to own, lease, or operate its material Assets and to carry on its
business as now conducted, and there has occurred no Default under any such
Permit other than Defaults which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on ABI. None of the ABI
Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on ABI; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any ABI Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, where such noncompliance is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on ABI, (ii) threatening to revoke any Permits, or (iii) requiring any ABI
Company to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
5.11 EMPLOYEE BENEFIT PLANS. (a) ABI has disclosed in Section 5.11 of the
ABI Disclosure Memorandum, and has delivered or made available to Regions prior
to the execution of this Agreement copies in each case of, all written pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all written medical,
vision, dental, or other health plans, all written life insurance plans, and all
other written employee benefit plans or fringe benefit plans, including written
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to, by any ABI Company or Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "ABI Benefit Plans"). Any of the ABI Benefit
Plans which is an "employee pension benefit plan," as that term is defined in
Section 3(2) of ERISA, is referred to herein as ABI ERISA Plan." Each ABI ERISA
Plan which is also defined benefit plan" (as defined in Section 414(j) of the
Internal Revenue Code) is referred to herein as a "ABI Pension Plan." No ABI
Pension Plan is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA.
(b) To the Knowledge of ABI, all ABI Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on ABI. Except as
disclosed in Section 5.11(b) of the ABI Disclosure Memorandum, each ABI ERISA
Plan which is intended to be qualified under Section 401(a) of the Internal
Revenue Code has received a favorable determination letter from the Internal
Revenue Service, and ABI is not aware of any circumstances likely to result in
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revocation of any such favorable determination letter. To the Knowledge of ABI,
no ABI Company has engaged in a transaction with respect to any ABI Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any ABI Company to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on ABI.
(c) Except as disclosed in Section 5.11(c) of the ABI Disclosure
Memorandum, no ABI Pension Plan has any "unfunded current liability," as that
term is defined in Section 302(d)(8)(A) of ERISA, and the fair market value of
the assets of any such plan equals or exceeds the plan's "benefit liabilities,"
as that term is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any ABI Pension Plan, (ii) no change in the actuarial assumptions with respect
to any ABI Pension Plan, and (iii) no increase in benefits under any ABI Pension
Plan as a result of plan amendments or changes in applicable Law, which in each
case with respect to (i) through (iii) above, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on ABI or materially
adversely affect the funding status of any such plan. Neither any ABI Pension
Plan nor any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any ABI Company, or the
single-employer plan of any entity which is considered one employer with ABI
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. No ABI Company has provided, or
is required to provide, security to a ABI Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any ABI Company with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. No ABI Company has incurred any withdrawal Liability with respect to
a multiemployer plan under Subtitle B of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate). Except as disclosed in
Section 5.11(d) of the ABI Disclosure Memorandum, no notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
ABI Pension Plan or by any ERISA Affiliate within the 12-month period ending on
the date hereof.
(e) Except as disclosed in Section 5.11(e) of the ABI Disclosure
Memorandum, no ABI Company has any Liability for retiree health and life
benefits under any of the ABI Benefit Plans and, to the Knowledge of ABI, there
are no restrictions on the rights of such ABI Company to amend or terminate any
such plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.11(f) of the ABI Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any ABI Company from
any ABI Company under any ABI Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any ABI Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any ABI Company and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the ABI Financial Statements to the extent required
by and in accordance with GAAP.
5.12 MATERIAL CONTRACTS. Except as disclosed in Section 5.12 of the ABI
Disclosure Memorandum or otherwise reflected in the ABI Financial Statements,
none of the ABI Companies, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to
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any Person in any calendar year in excess of $50,000, (ii) any Contract relating
to the borrowing of money by any ABI Company or the guarantee by any ABI Company
of any such obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, fully-secured repurchase agreements, and Federal
Home Loan Bank advances of depository institution Subsidiaries, trade payables,
and Contracts relating to borrowings or guarantees made in the ordinary course
of business), (iii) any Contracts between or among ABI Companies, and (iv) any
other material Contract or amendment thereto that was entered into other than in
the ordinary course of business (together with all Contracts referred to in
Section 5.11(a) of this Agreement, the "ABI Contracts"). None of the ABI
Companies is in Default under any ABI Contract where such Default, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
ABI. All of the indebtedness of any ABI Company for money borrowed is prepayable
at any time by such ABI Company without penalty or premium.
5.13 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of ABI, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any ABI Company, or against any Asset, interest,
or right of any of them, that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on ABI, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any ABI Company that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on ABI.
5.14 STATEMENTS TRUE AND CORRECT. As of their respective dates, each
report and other document, including financial statements, exhibits, and
schedules thereto, filed by a ABI Company with any Regulatory Authority complied
in all material respects with all applicable Laws, and as of its respective
date, each such report and document did not, in all material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. No
statement, certificate, instrument, or other writing furnished or to be
furnished by any ABI Company or any Affiliate thereof to Regions pursuant to
this Agreement or any other document, agreement, or instrument referred to
herein contains or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any ABI Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Regions with
the SEC will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or contain any untrue statement of
a material fact, or omit to state any material fact required to be stated
thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any ABI Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to ABI shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by a ABI Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of ABI, be false or misleading
with respect to any material fact, or contain any misstatement of material fact,
or omit to state any material fact required to be stated thereunder or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact required to be stated thereunder or necessary to correct
any material statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents that any
ABI Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.15 TAX AND REGULATORY MATTERS. No ABI Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede receipt of any
Consents of Regulatory
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Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
5.16 STATE TAKEOVER LAWS. To the extent applicable, each ABI Company has
taken all necessary action to exempt the transactions contemplated by this
Agreement from Sections 132 et. seq. and 135 et. seq. of the LBCL and any
comparable provisions of the Articles of Incorporation of ABI.
5.17 SUPPORT AGREEMENTS. Each of the directors of ABI has executed and
delivered to Regions an agreement in substantially the form of Exhibit 1.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to ABI as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Regions is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. Regions is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions.
6.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Regions has the corporate power
and authority necessary to execute, deliver, and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Regions. This Agreement represents a legal, valid, and binding
obligation of Regions, enforceable against Regions in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Regions, nor
the consummation by Regions of the transactions contemplated hereby, nor
compliance by Regions with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Region's Certificate of Incorporation
or Bylaws, or (ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
Regions Company under, any Contract or Permit of any Regions Company, where such
Default or Lien, or any failure to obtain such Consent, is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Regions,
or, (iii) subject to receipt of the requisite approvals referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any Regions
Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation, or both, with respect to
any employee benefit plans, or under the HSR Act, and other than Consents,
filings, or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions, no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by Regions of the Merger and the other
transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Regions consists solely
of 120,000,000 shares of Regions Common Stock, of which 41,049,325 shares were
issued and outstanding and 1,470,700 shares were held as treasury shares as of
December 31, 1993. All of the issued and outstanding shares of Regions Common
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Stock are, and all of the shares of Regions Common Stock to be issued in
exchange for shares of ABI Common Stock upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will be, duly and validly
issued and outstanding, and fully paid and nonassessable under the DGCL. None of
the outstanding shares of Regions Common Stock has been, and none of the shares
of Regions Common Stock to be issued in exchange for shares of ABI Common Stock
upon consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of Regions.
6.4 FINANCIAL STATEMENTS. Regions has included in Section 6.4 of the
Regions Disclosure Memorandum all Regions Financial Statements for periods ended
prior to the date hereof and will deliver to ABI copies of all Regions Financial
Statements prepared subsequent to the date hereof. The Regions Financial
Statements (as of the dates thereof and for the periods covered thereby) (i) are
or, if dated after the date of this Agreement, will be in accordance with the
books and records of the Regions Companies, which are or will be, as the case
may be, complete and correct and which have been or will have been, as the case
may be, maintained in accordance with good business practices, and (ii) present
or will present, as the case may be, fairly the consolidated financial position
of the Regions Companies as of the dates indicated and the consolidated results
of operations, changes in shareholders' equity, and cash flows of the Regions
Companies for the periods indicated, in accordance with GAAP (subject to
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material in amount or effect and to
the absence from interim financial statements of complete footnote disclosures).
6.5 ABSENCE OF UNDISCLOSED LIABILITIES. No Regions Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Regions as of
March 31, 1994, included in the Regions Financial Statements or reflected in the
notes thereto. No Regions Company has incurred or paid any Liability since March
31, 1994, except for such Liabilities incurred or paid in the ordinary course of
business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1994, except as
disclosed in the Regions Financial Statements delivered prior to the date of
this Agreement, (i) there have been no events, changes, or occurrences which
have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, and (ii) the Regions Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement
would represent or result in a material breach or violation of any of the
covenants and agreements of Regions provided in Article 7 of this Agreement.
6.7 COMPLIANCE WITH LAWS. Regions is duly registered as a bank holding
company under the BHC Act. Each Regions Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions. No
Regions Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any Regions Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions, (ii) threatening to revoke any Permits, or (iii)
requiring any Regions Company to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
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6.8 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of Regions, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Regions Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Regions Company, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions.
6.9 STATEMENTS TRUE AND CORRECT. As of their respective dates, each report
and other document, including financial statements, exhibits, and schedules
thereto, filed by a Regions Company with any Regulatory Authority complied in
all material respects with all applicable Laws, and as of its respective date,
each such report and document did not, in all material respects, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. No statement,
certificate, instrument, or other writing furnished or to be furnished by any
Regions Company or any Affiliate thereof to ABI pursuant to this Agreement or
any other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied or
to be supplied by any Regions Company or any Affiliate thereof for inclusion in
the Registration Statement to be filed by Regions with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or contain any untrue statement of a material fact, or omit
to state any material fact required to be stated thereunder or necessary to make
the statements therein not misleading. None of the information supplied or to be
supplied by any Regions Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to ABI shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any Regions
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of ABI, be false or misleading with respect to
any material fact, or contain any misstatement of a material fact or, omit to
state any material fact required to be stated thereunder or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement, or any amendment
thereof or supplement thereto, at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated thereunder or necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that any Regions Company or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.10 TAX AND REGULATORY MATTERS. No Regions Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii) materially impede receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF ABI. Unless the prior written consent of the
chief executive officer, appropriate regional president, or chief financial
officer of Regions shall have been obtained, and except as otherwise expressly
contemplated herein or disclosed in Section 7.1 of the ABI Disclosure
Memorandum, ABI shall and shall cause each of its Subsidiaries to, from the date
of this Agreement until the Effective Time or termination of this Agreement, (i)
operate its business only in the usual, regular, and ordinary course,
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(ii) preserve intact in all material respects its business organization and
Assets and maintain its rights and franchises, and (iii) take no action which
would (x) materially adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c) of this Agreement, or (y) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 NEGATIVE COVENANTS OF ABI. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, ABI
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer, appropriate regional
president, or chief financial officer of Regions, which consent shall not be
unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any ABI Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a ABI Company to another ABI
Company) in excess of an aggregate amount outstanding at any time of
$100,000 (for the ABI Companies on a consolidated basis) except in the
ordinary course of the business of ABI Subsidiaries consistent with past
practices (which shall include, for ABI Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank, whether
or not such ABI Subsidiaries have previously received any such advances,
overnight borrowings to meet temporary liquidity needs, and entry into
repurchase agreements fully secured by U.S. Government or agency
securities), or impose, or suffer the imposition, on any Asset of any ABI
Company of any Lien or permit any such Lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise of trust
powers, Liens to secure debt obligations or other obligations for borrowed
money permitted under this paragraph (b), and Liens that would not have a
Material Adverse Effect on ABI); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any ABI Company, or declare or pay any dividend or
make any other distribution in respect of ABI's capital stock , provided
that in the event the Effective Time occurs subsequent to the record date
for the payment of the cash dividend to be paid on Regions Common Stock for
the fourth quarter of 1994, ABI may, to the extent legally and
contractually permitted to do so, (but shall not be obligated to) declare
and pay a cash dividend on each issued and outstanding share of ABI Common
Stock at a rate not in excess of an amount equal to the product of (i) the
Exchange Ratio and (ii) the amount of the per share cash dividend declared
by Regions on the outstanding shares of Regions Common Stock for the fourth
quarter of 1994; or
(d) issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional
shares of ABI Common Stock or any other capital stock of any ABI Company,
or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any ABI
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of ABI Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any ABI Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another ABI Company) or any Asset having a
book value in excess of $100,000 other than in the ordinary course of
business for reasonable and adequate consideration and other than
dispositions in the ordinary course of business of (i) investment
securities, (ii) loans, including dispositions thereof through loan
participation agreements, and (iii) other real estate owned by any ABI
Company; or
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(f) except for purchases of securities in accordance with past
practice, purchase any securities or make any material investment, either
by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned ABI Subsidiary, or otherwise acquire direct or indirect control over
any Person, other than in connection with (i) foreclosures in the ordinary
course of business, or (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any ABI Company, except in accordance with past practice or
previously approved by the Board of Directors of ABI or as required by Law;
pay any severance or termination pay or any bonus other than pursuant to
written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 7.2(g) of the ABI Disclosure Memorandum;
and enter into or amend any severance agreements with officers of any ABI
Company; grant any increase in fees or other increases in compensation or
other benefits to directors of any ABI Company ; or voluntarily accelerate
the vesting of any stock options or other stock-based compensation or
employee benefits; or
(h) enter into or amend any employment Contract between any ABI
Company and any Person (unless such amendment is required by Law) that the
ABI Company does not have the unconditional right to terminate without
Liability (other than Liability for severance payments under the existing
severance policies of ABI disclosed in Section 7.2(h) of the ABI Disclosure
Memorandum), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any ABI Company or make any
material change in or to any existing employee benefit plans of any ABI
Company other than any such change that is required by Law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any material Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any ABI
Company for money damages in excess of $100,000 or imposing material
restrictions upon the operations of any ABI Company; or
(l) modify, amend, or terminate any material Contract (other than any
loan Contract, the modification, amendment, or termination of which does
not result in the ABI Companies recognizing a loss that exceeds $50,000) or
waive, release, compromise, or assign any material rights or claims, other
than in connection with the modification, amendment, or termination of a
loan Contract permitted under the preceding clause of this paragraph (1).
7.3 COVENANTS OF REGIONS. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Regions
covenants and agrees that, except as disclosed in Section 7.3 of the Regions
Disclosure Memorandum, it shall and shall cause each of its Subsidiaries to (x)
continue to conduct its business and the business of its Subsidiaries in a
manner designed in its reasonable judgment, to enhance the long-term value of
the Regions Common Stock and the business prospects of the Regions Companies and
to the extent consistent therewith use all reasonable efforts to preserve intact
the Regions Companies' core businesses and goodwill with their respective
employees and the communities they serve, (y) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c) of this Agreement, or (ii) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement; provided, that the foregoing shall not prevent any Regions Company
from discontinuing or disposing of any of its Assets or business if such action
is, in the judgment of Regions, desirable in the conduct of the business of
Regions and its Subsidiaries and such discontinuance or disposition would not
represent a material portion of the Assets of
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the Regions Companies, and (z) amend the Certificate of Incorporation or Bylaws
of Regions, in each case, in any manner which is adverse to, and discriminates
against, the holders of ABI Common Stock.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flow for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material and to the absence
from interim financial statements of any (in the case of ABI) or complete (in
the case of Regions) footnote disclosures). As of the respective dates, such
reports filed with the SEC will comply in all material respects with the
Securities Laws and will not contain any untrue statement of 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. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. Regions
shall prepare and file the Registration Statement with the SEC, and shall use
its reasonable efforts to cause the Registration Statement to become and remain
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Regions Common Stock upon consummation of the Merger. ABI
acknowledges that Regions shall delay filing the Registration Statement with the
SEC and causing it to become effective until such time as Regions has purchased
in the market in accordance with applicable Securities Laws sufficient shares of
Regions Common Stock to satisfy its obligations under the terms of this
Agreement. ABI shall furnish all information concerning it and the holders of
its capital stock as Regions may reasonably request in connection with such
action. ABI shall call a Shareholders' Meeting for the purpose of voting upon
approval of this Agreement and such other related matters as it deems
appropriate. In connection with the Shareholders' Meeting, (i) ABI shall mail
the Proxy Statement to its shareholders, (ii) the Parties shall furnish to each
other all information concerning them that they may reasonably request in
connection with such Proxy Statement, (iii) the Board of Directors of ABI shall
recommend (subject to compliance with their fiduciary duties as advised by
counsel) to its shareholders the approval of this Agreement, and (iv) the Board
of Directors and officers of ABI shall (subject to compliance with their
fiduciary duties as advised by counsel) use their reasonable efforts to obtain
such shareholders' approval.
8.2 EXCHANGE LISTING. Regions shall use its reasonable efforts to list,
prior to the Effective Time, on the Nasdaq/NMS the shares of Regions Common
Stock to be issued to the holders of ABI Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Regions shall prepare and file, and ABI shall cooperate
in the preparation and, where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated by
this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. Regions shall permit ABI reasonable
opportunity to review and comment upon such applications prior to the filing
thereof with the Regulatory Authorities.
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8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Regions shall execute and file the Louisiana
Certificate of Merger with the Secretary of State of the State of Louisiana and
Regions shall execute and file the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
efforts to obtain all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY. (a) Prior to the Effective Time,
each Party shall keep the other Party advised of all material developments
relevant to its business and to consummation of the Merger and shall permit the
other Party to make or cause to be made such investigation of the business and
properties of it and its Subsidiaries and of their respective financial and
legal conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. ABI shall
cooperate with Regions in obtaining, at Regions' election and expense,
environmental audits of any or all of the properties owned or occupied by ABI.
No investigation by a Party shall affect the representations and warranties of
the other Party.
(b) Each Party shall, and shall cause its Representatives to, maintain the
confidentiality of all written, oral, and other confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions ("Confidential Information") and
shall not use such information for any purpose except in furtherance of the
transactions contemplated by this Agreement. Each Party shall maintain the
confidentiality of all Confidential Information obtained in connection with this
Agreement or the transactions contemplated hereby unless (i) such information
becomes publicly available through no fault of such Party, or was, is, or
becomes available to that Party from a source other than the other Party or its
Representatives, which source was itself not bound by a confidentiality
agreement with, or other contractual, legal, or fiduciary obligation of
confidentiality with respect to that information, or (ii) the furnishing or use
of such information is required by proper judicial, administrative, or other
legal proceeding, provided that the other Party is promptly notified in writing
of such request, unless such notification is not, in the opinion of counsel,
permitted by Law. Each Party and its Representatives will hold and maintain all
Confidential Information in confidence and will not disclose to any third party
or permit any third party access to any Confidential Information or the
substance thereof; provided that a Party may disclose Confidential Information
to such of its Representatives who need to know such information in connection
with the transactions contemplated hereby. If this Agreement is terminated prior
to the Effective Time, each Party shall promptly return all documents and copies
thereof, and all work papers containing Confidential Information received from
the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, ABI and Regions shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no ABI Company nor any Affiliate thereof nor
any Representative retained by any ABI Company shall directly or indirectly
solicit any Acquisition Proposal by any Person. Except to the extent necessary
to comply with the fiduciary duties as advised by counsel of ABI's Board of
Directors, no ABI Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
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negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but ABI may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it or its
directors are required to do so in order to comply with its or their fiduciary
duties as advised by counsel. ABI shall promptly notify Regions orally and in
writing in the event that it receives any inquiry or proposal relating to any
such transaction. ABI shall (i) immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any Persons conducted
heretofore with respect to any of the foregoing, and (ii) direct and use its
reasonable efforts to cause all of its Representatives not to engage in any of
the foregoing.
8.9 TAX TREATMENT. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 AGREEMENT OF AFFILIATES. ABI has disclosed in Section 8.10 of the ABI
Disclosure Memorandum each Person whom it reasonably believes is an "affiliate"
of ABI for purposes of Rule 145 under the 1933 Act. ABI shall use its reasonable
efforts to cause each such Person to deliver to Regions not later than 30 days
prior to the Effective Time, a written agreement, substantially in the form of
Exhibit 2, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of ABI Common Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of Regions Common Stock to
be received by such Person upon consummation of the Merger except in compliance
with applicable provisions of the 1933 Act and the rules and regulations
thereunder. Regions shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of Regions
Common Stock by such affiliates.
8.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Regions shall provide generally to officers and employees of the ABI Companies
employee benefits under employee benefit plans (other than stock compensation
plans), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Regions Companies to their similarly
situated officers and employees. For purposes of participation and vesting (but
not accrual of benefits) under such employee benefit plans, the service of the
employees of the ABI Companies prior to the Effective Time shall be treated as
service with a Regions Company participating in such employee benefit plans.
Regions also shall cause ABI and its Subsidiaries to honor in accordance with
their terms all employment, severance, consulting, and other compensation
Contracts disclosed in Section 8.11 of the ABI Disclosure Memorandum to Regions
between any ABI Company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the ABI Benefit Plans.
8.12 INDEMNIFICATION. (a) For a period of six years after the Effective
Time, Regions shall indemnify, defend, and hold harmless the present and former
directors, officers, employees, and agents of the ABI Companies (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the full extent permitted under Louisiana Law
and by ABI's Articles of Incorporation and Bylaws as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any Litigation, provided, however, that the indemnification provided
by this Section 8.12(a) shall not apply to any claim against an Indemnified
Party if such Indemnified Party knew of the existence of the claim and failed to
make a good faith effort to require ABI to notify its director and officer
liability insurance carrier of the existence of such claim prior to the
Effective Time. Without limiting the foregoing, in any case in which approval is
required to effectuate any indemnification, the determination of any such
approval shall be made, at the election of the Indemnified Party, by independent
counsel mutually agreed upon between Regions and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 8.12, upon learning of any such Liability or Litigation,
shall promptly notify Regions thereof. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) Regions shall have the
right to assume the defense thereof and Regions shall not be liable to such
Indemnified Parties for any legal expenses
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of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if Regions elects
not to assume such defense or counsel for the Indemnified Parties advises in
writing that there are material substantive issues which raise conflicts of
interest between Regions or ABI and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Regions shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided; that (i) Regions shall
be obligated pursuant to this paragraph (b) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties
will cooperate in the defense of any such Litigation, and (iii) Regions shall
not be liable for any settlement effected without its prior written consent,
which shall not be unreasonably withheld, and provided further that ABI shall
not have any obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
8.13 ELECTION TO REGIONS' BOARD OF DIRECTORS. At the first
regularly-scheduled meeting of the Board of Directors of Regions after the
Effective Time, Regions shall effect all action necessary under the DGCL and the
Certificate of Incorporation and Bylaws of Regions to elect William R. Boles,
Sr. to the Board of Directors of Regions.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(A) SHAREHOLDER APPROVAL. The shareholders of ABI shall have approved
this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law or by
the provisions of any governing instruments.
(B) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the raising of additional capital or the disposition of Assets) which in
the reasonable judgment of the Board of Directors of Regions would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent so obtained
which is necessary to consummate the transactions contemplated hereby shall
be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of Regions would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
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(E) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of Regions Common Stock issuable
pursuant to the Merger shall have been received.
(F) EXCHANGE LISTING. The shares of Regions Common Stock issuable
pursuant to the Merger shall have been approved for listing on the
Nasdaq/NMS.
(G) TAX MATTERS. Each Party shall have received a written opinion of
Alston & Bird, special counsel to Regions, in form reasonably satisfactory
to the Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of ABI Common Stock
for Regions Common Stock will not give rise to gain or loss to the
shareholders of ABI with respect to such exchange (except to the extent of
any cash received), and (iii) neither ABI nor Regions will recognize gain
or loss as a consequence of the Merger. In rendering such Tax Opinion,
counsel for Regions shall be entitled to rely upon representations of
officers of ABI and Regions reasonably satisfactory in form and substance
to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF REGIONS. The obligations of Regions to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Regions pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of ABI set forth or referred to in this Agreement shall be true
and correct in all respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this Agreement,
which shall be true in all material respects) the inaccuracies of which
relate to matters that are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on ABI.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of ABI to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. ABI shall have delivered to Regions (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.2(a) and 9.2(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by ABI's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as Regions and its counsel shall request.
(D) OPINION OF COUNSEL. Regions shall have received an opinion of
Boles, Boles & Ryan, counsel to ABI, dated as of the Effective Time, in
form reasonably satisfactory to Regions, as to the matters set forth in
Exhibit 3.
(E) AFFILIATES AGREEMENTS. Regions shall have received from each
Affiliate of ABI the Affiliate's letter referred to in Section 8.10 of this
Agreement.
(F) CLAIMS LETTERS. Each of the directors and officers of ABI shall
have executed and delivered to Regions letters in substantially the form of
Exhibit 4.
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9.3 CONDITIONS TO OBLIGATIONS OF ABI. The obligations of ABI to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by ABI pursuant to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Regions set forth or referred to in this Agreement shall be
true and correct in all respects as of the date of this Agreement and as of
the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 16.3 of this Agreement,
which shall be true in all material respects) the inaccuracies of which
relate to matters that are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Regions to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(C) CERTIFICATES. Regions shall have delivered to ABI (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.3(a) and 9.3(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Regions' Board of Directors evidencing the
taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as ABI and
its counsel shall request.
(D) OPINION OF COUNSEL. ABI shall have received an opinion of Lange,
Simpson, Robinson & Somerville, counsel to Regions, dated as of the
Effective Time, in form reasonably acceptable to ABI, as to the matters set
forth in Exhibit 5.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of ABI,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of Regions and the
Board of Directors of ABI; or
(b) By the Board of Directors of either Party in the event of a
material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such
breach and which breach would provide the non-breaching Party the ability
to refuse to consummate the Merger under the standard set forth in Section
9.2(a) of this Agreement in the case of Regions and Section 9.3(a) of this
Agreement in the case of ABI; or
(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such breach;
or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of ABI fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the LBCL at the
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Shareholders' Meeting or any adjournment or postponement thereof where the
transactions were presented to such shareholders for approval and voted
upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by March 31, 1995, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party in the event that any of
the conditions precedent to the obligations of such Party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section
10.1(e) of this Agreement; or
(g) By the Board of Directors of Regions, at any time prior to the
31st day after execution of this Agreement without any Liability in the
event that the review of the Assets, business, financial condition, results
of operations, and prospects of ABI, undertaken by Regions during such time
period causes Regions to determine, in its reasonable good faith judgment,
that a fact or circumstance exists or is reasonably likely to exist or
result which materially and adversely impacts one or more of the economic
benefits to Regions of the transactions contemplated by this Agreement so
as to render inadvisable the consummation of the Merger.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, and neither Party shall have any
claim or legal right to redress, whether for breach of contract or otherwise, as
a result of a breach of any representation, warranty, covenant, or condition of
this Agreement, except that (i) the provisions of this Section 10.2 and Article
11 and Section 8.6(b) of this Agreement shall survive any such termination and
abandonment, and (ii) a termination pursuant to Section 10.1(b), 10.1(c), or
10.1(f) of this Agreement shall not relieve the breaching Party from Liability
for an uncured willful and knowing breach of a representation, warranty,
material covenant, or material agreement giving rise to such termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 of this Agreement and Sections 8.11, 8.12, and 8.13 of
this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"ABI BENEFIT PLANS" shall have the meaning set forth in Section 5.11
of this Agreement.
"ABI COMMON STOCK" shall mean the $12.00 par value common stock of
ABI.
"ABI COMPANIES" shall mean, collectively, ABI and all ABI
Subsidiaries.
"ABI DISCLOSURE MEMORANDUM" shall mean the written information
entitled "ABI Bancshares, Inc. Disclosure Memorandum" delivered prior to
the date of this Agreement to Regions describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"ABI FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of ABI as of March
31, 1994, and as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the three
months ended March 31, 1994, and for each of the three
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fiscal years ended December 31, 1993, 1992, and 1991, as filed by ABI in
SEC Documents, and (ii) the consolidated balance sheets of ABI (including
related notes and schedules, if any) and related statements of income,
changes in stockholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to March 31, 1994.
"ABI SUBSIDIARIES" shall mean the Subsidiaries of ABI, which shall
include the ABI Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of ABI in the future and owned by ABI at the Effective
Time.
"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any
of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by,
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CLOSING" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, or undertaking of any kind or character, or other document to
which any Person is a party or that is binding on any Person or its capital
stock, Assets, or business.
"DEFAULT" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order, or Permit.
"DELAWARE CERTIFICATE OF MERGER" shall mean the Delaware Certificate
of Merger to be executed by Regions and filed with the Secretary of State
of the State of Delaware relating to the Merger as contemplated by Section
1.1 of this Agreement.
"DGCL" shall mean the General Corporation Law of Delaware.
"EFFECTIVE TIME" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
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"ENVIRONMENTAL LAWS" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over pollution or protection of the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section 5.11 of
this Agreement.
"ERISA PLAN" shall have the meaning provided in Section 5.11 of this
Agreement.
"EXCHANGE AGENT" shall have the meaning provided in Section 4.1 of
this Agreement.
"EXCHANGE RATIO" shall have the meaning provided in Section 3.1(b) of
this Agreement.
"EXHIBITS" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or toxic
or hazardous substance, pollutant, chemical, or waste within the meaning of
the Comprehensive Environment Response, Compensation, and Liability Act, 42
U.S.C. sec. 9601 et seq., or any similar federal, state, or local Law (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities,
polychlorinated biphenyls, and petroleum and petroleum products).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person shall mean the actual
knowledge of the chairman, president, chief financial officer, chief
accounting officer, chief credit officer, general counsel, any assistant or
deputy general counsel, or any senior or executive vice president of such
Person.
"LBCL" shall mean the Louisiana Business Corporation Law.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any of the Regulatory Authorities.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute, or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) such imperfections of title and
encumbrances, if any, as do not materially detract from the value or
interfere with the present use of any of such Party's Assets,
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and (iii) for depository institution Subsidiaries of a Party, pledges to
secure deposits, and other Liens incurred in the ordinary course of the
banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative, or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information about a potential claim
relating to or affecting a Party, its business, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.
"LOUISIANA CERTIFICATE OF MERGER" shall mean the Louisiana Certificate
of Merger to be executed by Regions and filed with the Secretary of State
of the State of Louisiana relating to the Merger as contemplated by Section
1.1 of this Agreement.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, together with any other event, change, or occurrence, has
a material adverse impact on (i) the financial position, business, or
results of operations of such Party and its Subsidiaries, taken as a whole,
or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "material adverse impact"
shall not be deemed to include the impact of (x) changes in banking and
similar Laws of general applicability or interpretations thereof by courts
or governmental authorities, or (y) changes in GAAP or regulatory
accounting principles generally applicable to banks and savings
associations and their holding companies.
"MERGER" shall mean the merger of ABI into and with Regions referred
to in Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers' Automated Quotations System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either ABI or Regions, and "PARTIES" shall mean
both ABI and Regions.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
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"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by ABI to
solicit the approval of its shareholders of the transactions contemplated
by this Agreement, which shall include the prospectus of Regions relating
to the issuance of the Regions Common Stock to holders of ABI Common Stock.
"REGIONS COMMON STOCK" shall mean the $.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
"REGIONS DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Regions Financial Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to ABI describing in reasonable detail
the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"REGIONS FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of March 31, 1994, and as of December 31, 1993 and 1992, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the three months
ended March 31, 1994, and for each of the three years ended December 31,
1993, 1992, and 1991, as filed by Regions in SEC Documents and (ii) the
consolidated statements of condition of Regions (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to March 31, 1994.
"REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions at the
Effective Time.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Regions under the 1933 Act with respect to the shares of Regions Common
Stock to be issued to the shareholders of ABI in connection with the
transactions contemplated by this Agreement and which shall include the
Proxy Statement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of Thrift Supervision
(including its predecessor, the Federal Home Loan Bank Board), the Office
of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries, the NYSE, the NASD, and the SEC.
"REPRESENTATIVES" means with respect to any Party its directors,
officers, employees, agents, advisors, attorneys, accountants, and other
representatives.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to
be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
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"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
ABI to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean Regions as the surviving
corporation resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties,
and additions imposed thereon or with respect thereto.
Any singular term in this Agreement shall be deemed to include the plural,
and any plural term the singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 EXPENSES. (a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that Regions shall bear and pay the filing fees
payable in connection with the Registration Statement and the Proxy Statement
and printing costs incurred in connection with the printing of the Registration
Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful and knowing breach by a
Party of the terms of this Agreement.
11.3 BROKERS AND FINDERS. Each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
ABI or Regions, each of ABI and Regions, as the case may be, agrees to indemnify
and hold the other Party harmless of and from any Liability in respect of any
such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, that after any such
approval by the holders of ABI Common Stock, there shall be made no amendment
that pursuant to the LBCL requires further approval by such shareholders without
the further approval of such shareholders.
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11.6 WAIVERS. (a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by ABI, to waive or extend the time for the compliance or
fulfillment by ABI of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of Regions
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Regions.
(b) Prior to or at the Effective Time, ABI, acting through its Board of
Directors, chief executive officer, or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Regions, to waive or extend the time for the compliance or fulfillment by
Regions of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of ABI under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of ABI.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. 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 successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
ABI: American Bancshares, Inc.
1500 North 18th Street
Monroe, Louisiana 71201
Telecopy Number: (318)362-8832
Attention: George M. Campbell
President and Chief Executive
Officer
Copy to Counsel: Boles, Boles & Ryan
1805 Tower Drive
Monroe, Louisiana 71207-2065
Telecopy Number: (318) 329-9150
Attention: William R. Boles, Sr.
Regions: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive
Financial Officer
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11.9 GOVERNING LAW. Except to the extent the laws of the State of
Louisiana apply to the Merger, this Agreement shall be governed by and construed
in accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.13 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: AMERICAN BANCSHARES, INC.
/s/ A.J. McGinn, Jr. By: /s/ George M. Campbell
- --------------------- -----------------------
A.J. McGinn, Jr. George M. Campbell
Assistant Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
/s/ Virginia L. Martin By: /s/ Richard D. Horsley
- ----------------------- -----------------------
Virginia L. Martin Richard D. Horsley
Assistant Secretary Vice Chairman and Executive Financial
Officer
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
LOUISIANA STATUTES ANNOTATED -- REVISED STATUTES 12:131
SECTION 131. RIGHTS OF A SHAREHOLDER DISSENTING FROM CERTAIN CORPORATE ACTIONS
A. Except as provided in subsection B of this section, if a corporation
has, by vote of its shareholders, authorized a sale, lease or exchange of all of
its assets, or has, by vote of its shareholders, become a party to a merger or
consolidation, then, unless such authorization or action shall have been given
or approved by at least eighty per cent of the total voting power, a shareholder
who voted against such corporate action shall have the right to dissent. If a
corporation has become a party to a merger pursuant to R.S. 12:112(H), the
shareholders of any subsidiaries party to the merger shall have the right to
dissent without regard to the proportion of the voting power which approved the
merger and despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist in the
case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance
with their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at the
record date fixed to determine shareholders entitled to receive notice of
and to vote at the meeting of shareholders at which a merger or
consolidation was acted on, were listed on a national securities exchange,
unless the articles of the corporation issuing such stock provide otherwise
or the shares of such shareholders were not converted by the merger or
consolidation solely into shares of the surviving or new corporation.
C. Except as provided in the last sentence of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than eighty
per cent of the total voting power, and the merger, consolidation or sale, lease
or exchange of assets authorized thereby be effected, the corporation shall
promptly thereafter give written notice thereof, by registered mail, to each
shareholder who filed such written objection to, and voted his shares against,
such action, at such shareholder's last address on the corporation's records.
Each such shareholder may, within twenty days after the mailing of such notice
to him, but not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole condition
that said certificates shall be delivered to the corporation upon payment of the
value of the shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company that it so holds his
certificates of stock. Unless the objection, demand and acknowledgment aforesaid
be made and delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the corporate action
proposed or taken. In the case of a merger pursuant to R.S. 12:112(H), the
dissenting shareholder need not file an objection with the corporation nor vote
against the merger, but need only file with the corporation, within twenty days
after a copy of the merger certificate was mailed to him, a demand in writing
for the cash value of his shares as of the day before the certificate was filed
with the secretary of state, state in such demand the value demanded and a post
office address to which the corporation's reply may be sent, deposit the
certificates representing his shares in escrow as hereinabove provided, and
deliver to the corporation with his demand the acknowledgment of the escrow bank
or trust company as hereinabove prescribed.
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D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder, at
the designated post office address, of its disagreement, and shall state in such
notice the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied shareholder,
the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit filed
by another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the court
staying the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of the shareholder
to bring suit, or to intervene in such a suit, within sixty days after receipt
of notice of disagreement by the corporation shall conclusively bind the
shareholder (1) by the corporation's statement that no payment is due, or (2) if
the corporation does not contend that no payment is due, to accept the value of
his shares as fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay to the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as the
case may be; otherwise the costs of the proceeding shall be taxed against such
shareholder.
H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights accorded by
this section. Such a demand may be withdrawn by the shareholder at any time
before the corporation gives notice of disagreement, as provided in subsection D
of this section. After such notice of disagreement is given, withdrawal of a
notice of election shall require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed corporate action is abandoned
or rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him (and, on his request,
new certificates shall be issued to him in exchange for the old ones endorsed to
the corporation), and he shall be reinstated to all his rights as a shareholder
as of the filing of his demand for value, including any intervening preemptive
rights, and the right to payment of any intervening dividend or other
distribution, or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim.
B-2
<PAGE> 120
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the
Registrant to indemnify its officers and directors under certain circumstances.
The pertinent provisions of that statute read as follows:
"(a) A 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, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
"(b) A 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 or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
II-1
<PAGE> 121
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or (2) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the
stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person
II-2
<PAGE> 122
"(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court
of Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
The Registrant has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to
the Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on
inside information, illegal payments, dishonesty, accounting of securities
profits in violation of Section 16(b) of the Securities Exchange Act of 1934
and acts within the scope of the Pension Reform Act of 1974.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of June 1, 1994 by and between American Bancshares, Inc. and Regions Financial
Corporation -- included as Appendix A to the Proxy Statement/ Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4 Registration
Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of Regions
Financial Corporation, file no. 33-54231.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Deloitte & Touche -- previously filed.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the registration
statement.
99.1 -- Form of proxy
</TABLE>
ITEM 22. UNDERTAKINGS.
A. 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.
B. 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
II-3
<PAGE> 123
precedent, submit to a court of appropriate jurisdiction the question 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.
C.(1) 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.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) 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.
D. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 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.
E. 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.
II-4
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Birmingham, State of Alabama on this the 7th day of October, 1994.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
BY: /s/ Richard D. Horsley
--------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ------------------------------ ------------------
<S> <C> <C>
* J. Stanley Mackin Chairman of the Board and
- -------------------------- Chief Executive Officer and October 7, 1994
J. Stanley Mackin Director
/s/ Richard D. Horsley Vice Chairman of the Board and
- -------------------------- Executive Financial Officer October 7, 1994
Richard D. Horsley and Director
* Robert P. Houston Executive Vice President and
- -------------------------- Comptroller October 7, 1994
Robert P. Houston
* Sheila S. Blair Director
- -------------------------- October 7, 1994
Sheila S. Blair
* James B. Boone, Jr. Director
- -------------------------- October 7, 1994
James B. Boone, Jr.
* Albert P. Brewer Director
- -------------------------- October 7, 1994
Albert P. Brewer
* James S.M. French Director
- -------------------------- October 7, 1994
James S.M. French
</TABLE>
II-5
<PAGE> 125
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------- ------------------------------ ------------------
<S> <C> <C>
* Catesby ap C. Jones Director
- ---------------------------- October 7, 1994
Catesby ap C. Jones
Director
- ----------------------------
Olin B. King
* H. Manning McPhillips, Jr. Director
- ---------------------------- October 7, 1994
H. Manning McPhillips, Jr.
* Henry E. Simpson Director
- ---------------------------- October 7, 1994
Henry E. Simpson
* Robert E. Steiner, III Director
- ---------------------------- October 7, 1994
Robert E. Steiner, III
* Lee J. Styslinger, Jr. Director
- ---------------------------- October 7, 1994
Lee J. Styslinger, Jr.
* By /s/ Richard D. Horsley
----------------------- October 7, 1994
Richard D. Horsley, attorney-in-fact
</TABLE>
II-6
<PAGE> 126
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ---------------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of June 1, 1994 by and between American
Bancshares, Inc. and Regions Financial Corporation -- included as Appendix A to
the Proxy Statement/ Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by
reference from S-4 Registration Statement of Regions Financial Corporation, file
no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation.-- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Deloitte & Touche -- previously filed.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the
signature page of the registration statement.
99.1 -- Form of proxy
</TABLE>
<PAGE> 1
EXHIBIT 5
LANGE, SIMPSON, ROBINSON & SOMERVILLE
417 NORTH 20TH STREET, SUITE 1700
BIRMINGHAM, ALABAMA 35203
TELEPHONE (205) 250-5000
October 7, 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation--S4 Registration Statement, No. 33-55655
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger between American
Bancshares, Inc. ("ABI") and Regions (the "Merger") and in connection with the
registration of shares of common stock of Regions, par value $.625 per share
("Regions Common Stock"), on Form S-4 under the Securities Act of 1933. The
Merger provides for issuance of shares of Regions Common Stock to the
stockholders of ABI upon consummation of the Merger. The number of shares of
Regions Common Stock to be issued in the Merger will not exceed 1,784,331
shares of Regions Common Stock.
We have examined and are familiar with the registration statement on Form S-4
(33-55655) filed with the Securities and Exchange Commission, as such
registration statement has been amended to date. We have examined and are
familiar with the records relating to the organization of Regions and the
documents and records as we have deemed relevant for purposes of rendering this
opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of Regions Common Stock issued pursuant to the Merger will be duly
authorized, validly issued and outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
/s/ Lange, Simpson, Robinson & Somerville
<PAGE> 1
EXHIBIT 8
ALSTON & BIRD
(LOGO)
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777 Telex: 54-2996
Philip C. Cook Direct Dial (404) 881-7491
October 7, 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
American Bancshares, Inc.
1500 North 18th Street
Monroe, Louisiana 71201
Re: PROPOSED MERGER OF AMERICAN BANCSHARES, INC. WITH AND INTO
REGIONS FINANCIAL CORPORATION
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State
of Delaware, in connection with the proposed merger of American Bancshares,
Inc. ("ABI"), a corporation organized and existing under the laws of the State
of Louisiana, with and into Regions. The Merger will be effected pursuant to
the Agreement and Plan of Merger, dated as of June 1, 1994, by and between ABI
and Regions (the "Merger Agreement"). In our capacity as counsel to Regions,
our opinion has been requested with respect to certain of the federal income
tax consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury Regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Merger Agreement, and unless otherwise specified, all
section references herein are to the Code.
<PAGE> 2
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 2
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:
(1) the Merger Agreement;
(2) the proxy statement/prospectus included in Regions'
Registration Statement on Form S-4, being filed with the Securities and
Exchange Commission with respect to the proposed transaction; and
(3) such additional documents as we have considered
relevant.
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate.
We have also obtained such additional information and representations
as we have deemed relevant and necessary through consultation with various
officers and representatives of Regions and ABI and through the Certificate of
Representations provided by the management of Regions and the Certificate of
Representations provided by the management of ABI.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale, yield a wider
array of banking and banking-related services to consumers and businesses, and
provide for a stronger market position and for greater financial resources to
meet competitive challenges within the Monroe, Bossie City, and Shreveport,
Louisiana market area. To achieve these goals, the following will occur
pursuant to the Merger Agreement:
(1) ABI will merge with and into Regions pursuant to the
General Corporation Law of Delaware and the Louisiana Business Corporation Law.
Regions will, by operation of law, acquire all the assets and assume all the
liabilities of ABI. ABI's separate corporate existence will cease to exist, and
Regions will be the surviving corporation. Thereafter, Regions will continue
to conduct its business and will continue to operate the businesses of ABI
conducted prior to the Merger.
(2) Each share of ABI Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares as to which
dissenters' rights are duly exercised and except as provided below) shall, as
of the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive certificates
representing 2.4445 shares of Regions Common Stock, subject to adjustment as
provided in the Merger Agreement. At the Effective Time, any and all shares of
ABI Common Stock held by any ABI Company or any Regions Company (in each case
<PAGE> 3
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 3
other than in a fiduciary capacity or as a result of debts previously
contracted) shall be canceled and retired, and no consideration shall be paid
in exchange therefor. In the event Regions or ABI changes the number of shares
of Regions Common Stock or ABI Common Stock, respectively, issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization, the number of shares of Regions Common
Stock into which shares of ABI Common Stock shall be converted shall be
equitably adjusted to reflect the effect of such stock split, stock dividend,
or similar recapitalization.
(3) No fractional shares of Regions Common Stock will be
issued as a result of the Merger. In lieu of the issuance of fractional
shares, cash adjustments (without interest) will be paid to the holders of ABI
Common Stock, in respect of any fraction of a share of Regions Common Stock
that would otherwise be issuable, in an amount equal to such fractional part of
a share of Regions Common Stock multiplied by the market value of one share of
Regions Common Stock at the Effective Time. The market value of one share of
Regions Common Stock at the Effective Time shall be the closing sales price of
Regions Common Stock on the NASDAQ/NMS (as reported by The Wall Street Journal
or, if not reported thereby, another authoritative source chosen by Regions)
for the last full trading day on which such shares are traded on the NASDAQ/
NMS preceding the Effective Time. No such holder shall be entitled to
dividends, voting rights, or any other stockholder right in respect of any
fractional share.
(4) Any holder of shares of ABI Common Stock who objects to
the Merger and who exercises his statutory dissenters' rights of appraisal will
be entitled to receive the value of such shares in cash calculated and
determined pursuant to the applicable provisions of the Louisiana Business
Corporation Law and shall not be entitled to receive the consideration
otherwise provided by the Merger Agreement.
You have advised us that after the merger of ABI with and into Regions,
ABI's wholly-owned subsidiary, First American Bank and Trust Company of
Louisiana ("First American"), will be merged with and into the entity currently
existing as Secor Bank, FSB ("Secor"), a subsidiary of Regions Corporation.
Regions Corporation is a wholly-owned Regions subsidiary. The merger of First
American with and into Secor will occur only after 1) Secor converts its
charter from that of a federal savings bank to that of a Louisiana commercial
bank and 2) the appropriate regulatory approval for the merger is received.
<PAGE> 4
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 4
With your consent, we have also assumed that the following statements
are true on the date hereof and will be true on the date the proposed
transaction is consummated, unless Alston & Bird is notified to the contrary in
writing:
(1) The fair market value of the Regions Common Stock and
other consideration received by the stockholders of ABI will be, in each
instance, approximately equal to the fair market value of the ABI Common Stock
surrendered in exchange therefor.
(2) There is no plan or intention on the part of the
stockholders of ABI who own five percent (5%) or more of the ABI stock, and to
the best of the knowledge of the management of ABI, there is no plan or
intention on the part of the remaining stockholders of ABI to sell, exchange,
or otherwise dispose of a number of shares of Regions Common Stock to be
received in the proposed transaction that would reduce their holdings in
Regions Common Stock received to a number of shares having, in the aggregate, a
value as of the Effective Time of less than fifty percent (50%) of the total
value of all of the stock of ABI outstanding immediately prior to the Effective
Time. For purposes of this representation, shares of ABI stock exchanged for
cash or other property, surrendered by dissenters, or exchanged for cash in
lieu of fractional shares of Regions stock will be treated as outstanding ABI
stock as of the Effective Time. Moreover, shares of ABI stock and shares of
Regions stock held by ABI stockholders and otherwise sold, redeemed, or
disposed of prior or subsequent to the transaction will be considered in making
this representation.
(3) Regions has no plan or intention to reacquire any of
its stock issued in the transaction.
(4) Regions has no plan or intention to sell or otherwise
dispose of any of the assets of ABI acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers to a
corporation controlled by Regions.
(5) The liabilities of ABI assumed by Regions (as a result
of the Merger) and the liabilities to which the transferred assets of ABI are
subject were incurred by ABI in the ordinary course of its business.
(6) Following the transaction, Regions will continue the
historic business of ABI or use a significant portion of ABI's historic
business assets in a business.
(7) Regions, ABI, and the stockholders of ABI will pay
their respective expenses, if any, incurred in connection with the transaction,
except that Regions shall bear and pay the filing fees payable in connection
with the Registration Statement and the Proxy Statement and the printing costs
incurred in connection therewith.
(8) There is no intercorporate indebtedness existing
between ABI and Regions that was issued, acquired, or will be settled at a
discount.
(9) ABI is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership, foreclosure, or
similar proceeding in a federal or state court.
<PAGE> 5
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 5
(10) The fair market value and the total adjusted basis of
the assets of ABI transferred in the Merger to Regions will each equal or
exceed the sum of the liabilities assumed by Regions plus the amount of the
liabilities, if any, to which the transferred assets are subject.
(11) The payment of cash in lieu of fractional shares of
Regions stock is solely for the purpose of avoiding the expense and
inconvenience to Regions of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that will
be paid in the transaction to the ABI stockholders instead of issuing
fractional shares of Regions stock will not exceed one percent (1%) of the
total consideration that will be issued in the transaction to the ABI
stockholders in exchange for their shares of ABI stock. The fractional share
interests of each ABI stockholder will be aggregated, and no ABI stockholder
will receive cash in an amount equal to or greater than the value of one full
share of Regions stock.
(12) None of the compensation received by any
stockholder-employees of ABI will be separate consideration for, or allocable
to, any of their shares of ABI stock; none of the shares of Regions stock
received by any stockholder-employees will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to any
stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(13) At all times during the five-year period ending at the
Effective Time, the fair market value of all of ABI's United States real
property interests was and will have been less than fifty percent (50%) of the
total fair market value of (a) its United States real property interests, (b)
its interests in real property located outside the United States, and (c) its
other assets used or held for use in a trade or business. For purposes of the
preceding sentence, (x) United States real property interests include all
interests (other than an interest solely as a creditor) in real property and
associated personal property (such as movable walls and furnishings) located in
the United States or the Virgin Islands and interests in any corporation (other
than a controlled corporation) owning any United States real property interest,
(y) ABI is treated as owning its proportionate share (based on the relative
fair market value of its ownership interest to all ownership interests) of the
assets owned by any controlled corporation or any partnership, trust, or estate
in which ABI is a partner or beneficiary, and (z) any such entity in turn is
treated as owning its proportionate share of the assets owned by any controlled
corporation or any partnership, trust, or estate in which the entity is a
partner or beneficiary. As used in this paragraph, "controlled corporation"
means any corporation at least fifty percent (50%) of the fair market value of
the stock of which is owned by ABI, in the case of a first-tier subsidiary of
ABI or by a controlled corporation, in the case of a lower-tier subsidiary.
(14) For each of Regions and ABI, not more than twenty-five
percent (25%) of the fair market value of its adjusted total assets consists of
stock and securities of any one
<PAGE> 6
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 6
issuer, and not more than fifty percent (50%) of the fair market value of its
adjusted total assets consists of stock and securities of five or fewer
issuers. For purposes of the preceding sentence, (a) a corporation's
adjusted total assets exclude cash, cash items (including accounts receivable
and cash equivalents), and United States government securities, (b) a
corporation's adjusted total assets exclude stock and securities issued by any
subsidiary at least fifty percent (50%) of the voting power or fifty percent
(50%) of the total fair market value of the stock of which is owned by the
corporation, but the corporation is treated as owning directly a ratable share
(based on the percentage of the fair market value of the subsidiary's stock
owned by the corporation) of the assets owned by any such subsidiary, and (c)
all corporations that are members of the same "controlled group" within the
meaning of section 1563(a) of the Code are treated as a single issuer.
(15) ABI has not filed, and holds no assets subject to, a
consent under section 341(f) of the Code and the regulations thereunder.
(16) ABI is not a party to, and holds no assets subject to, a
"safe harbor lease" under former section 168(f)(8) of the Code and the
regulations thereunder.
(17) The Merger Agreement represents the entire
understanding of ABI and Regions with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Merger Agreement and that the representations made by Regions and ABI
(including the representation that ABI stockholders will maintain sufficient
equity ownership interests in Regions after the Merger) are true and correct at
the time of the consummation of the Merger, we are of the opinion that:
(1) Provided the Merger qualifies as a statutory merger
under the General Corporation Law of Delaware and the Louisiana Business
Corporation Law, the Merger will be a reorganization within the meaning of
section 368(a)(1)(A). ABI and Regions will each be "a party to a
reorganization" within the meaning of section 368(b).
(2) ABI will recognize no gain or loss upon the transfer of
its assets to Regions in exchange solely for Regions Common Stock and the
assumption by Regions of the liabilities of ABI. Sections 361(a) and 357(a).
(3) No gain or loss will be recognized by Regions on
receipt of ABI's assets in exchange for Regions Common Stock. Section 1032(a).
<PAGE> 7
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 7
(4) The basis of ABI's assets in the hands of Regions will,
in each case, be the same as the basis of those assets in the hands of ABI
immediately prior to the transaction. Section 362(b).
(5) The holding period of the assets of ABI in the hands of
Regions will, in each case, include the period during which such assets were
held by ABI. Section 1223(2).
(6) The stockholders of ABI will recognize no gain or loss
upon the exchange of their ABI Common Stock solely for shares of Regions Common
Stock. Section 354(a)(1).
(7) The basis of the Regions Common Stock received by the
ABI stockholders in the proposed transaction will, in each instance, be the
same as the basis of the ABI Common Stock surrendered in exchange therefor.
Section 358(a)(1).
(8) The holding period of the Regions Common Stock received
by the ABI stockholders will, in each instance, include the period during which
the ABI Common Stock surrendered in exchange therefor was held, provided that
the ABI Common Stock was held as a capital asset on the date of the exchange.
Section 1223(1).
(9) The payment of cash to ABI stockholders in lieu of
fractional share interests of Regions Common Stock will be treated for federal
income tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by Regions. These cash payments will be
treated as having been received as distributions in full payment in exchange
for the stock redeemed as provided in section 302(a). Rev. Rul. 66-365, 1966-2
C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574.
(10) Where solely cash is received by an ABI stockholder in
exchange for his ABI Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of his
ABI Common Stock, subject to the provisions and limitations of section 302.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinions are based solely on the
documents that we have examined, the additional information that we have
obtained, and the statements set out herein, which we have assumed and you have
confirmed to be true on the date hereof and will be true on the date on which
the proposed transaction is consummated. Our opinions cannot be relied upon if
any of the facts contained in such documents or if such additional information
is, or later becomes, inaccurate, or if any of the statements set out herein
is, or later becomes, inaccurate. Finally, our opinions are limited to the tax
matters specifically covered thereby, and we have not been asked to address,
nor have we addressed, any other tax consequences of the proposed transaction.
<PAGE> 8
Regions Financial Corporation
American Bancshares, Inc.
October 7, 1994
Page 8
We consent to this opinion as an exhibit to the Registration Statement
filed by Regions relating to the proposed Merger and to the references to our
firm in the proxy statement/prospectus included in the Registration Statement.
This opinion is being provided solely for the use of Regions, ABI and their
stockholders. No other person or party shall be entitled to rely on this
opinion.
Very truly yours,
ALSTON & BIRD
By: /s/ Philip C. Cook
------------------
Philip C. Cook
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 1,784,331 shares of its common stock
and to the incorporation by reference therein of our report dated February 4,
1994, with respect to the consolidated financial statements of Regions
Financial Corporation (formerly First Alabama Bancshares, Inc.) included in its
Annual Report to Stockholders which is incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1993, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Birmingham, Alabama
October 6, 1994
<PAGE> 1
EXHIBIT 99.1
AMERICAN BANCSHARES, INC.
1500 NORTH 18TH STREET, MONROE, LOUISIANA 71201
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints George M. Campbell and Kent Anderson, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each to represent and to vote, as designated below, all the shares of common
stock of American Bancshares, Inc. ("ABI") held of record by the undersigned, at
the Special Meeting of stockholders to be held November 8, 1994, or any
adjournment thereof, with respect to the following items or other matters as may
properly come before the meeting:
1. Proposal to approve the Agreement and Plan of Merger dated as June 1, 1994
(the "Agreement"), by and between ABI and Regions Financial Corporation
("Regions", formerly First Alabama Bancshares, Inc.) pursuant to which ABI
will merge with and into Regions and each share of common stock of ABI
(except for certain shares held by ABI or Regions and shares held by
stockholders who perfect their dissenters' rights of appraisal) will be
converted into the right to receive 2.4445 shares or Regions, and under such
other terms and conditions as are set forth in the Agreement, a copy of
which is available for inspection at the office of ABI indicated above:
/ / FOR / / AGAINST / / ABSTAIN
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted in favor of Proposal 1.
Should the undersigned be present and elect to vote at the Special Meeting
or at any adjournment thereof and after notification to the Secretary of ABI at
the meeting of the stockholder's decision to terminate this proxy, then this
proxy shall be deemed terminated and of no further force and effect. This proxy
may also be revoked by submission of a properly executed subsequently dated
proxy or by written notice to ABI for receipt prior to the Special Meeting.
The undersigned acknowledges receipt from ABI prior to the execution of this
proxy of notice of the Special Meeting, and a Proxy Statement/Prospectus dated
October 10, 1994.
Dated:
1994
---------------------------------,
--------------------------------------
(Print Name of Stockholder)
--------------------------------------
(Signature of Stockholder)
--------------------------------------
(Print Name of Stockholder)
--------------------------------------
(Signature of Stockholder)
Please sign exactly as your name
appears on the address label. When
signing as attorney, executor,
administrator, trustee or guardian,
please give your full title. If shares
are held jointly, each holder must
sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
