<PAGE> 1
As filed with the Securities and Exchange Commission on February 8, 1995
Registration No. 33-57481
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
------------------------------
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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)
------------------------------
Copies to:
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CHARLES C. PINCKNEY FRANK M. CONNER III ANTHONY J. CORRERO, III
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD CORRERO, FISHMAN & CASTEIX
SOMERVILLE SUITE 350 201 PLACE ST. CHARLES
417 NORTH 20TH STREET, SUITE 1700 700 THIRTEENTH STREET, NW 47TH FLOOR
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20005 NEW ORLEANS, LOUISIANA 70170-4700
(205) 250-5000 (202) 508-3303 (504) 586-5253
</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.
- --------------------------------------------------------------------------------
<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
- ---------------------------------------------------------- ---------------------------------------------
<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; Comparative 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.
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...................................... FCB Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Business of FCB; Voting Securities and Principal
Stockholders of FCB; Index to FCB 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;
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
First Commercial Bancshares, Inc.
8301 Judge Perez Drive
Chalmette, Louisiana 70043-1656
Dear First Commercial Bancshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders
(the "Special Meeting") of First Commercial Bancshares, Inc. ("FCB") to be held
at FCB's main office, 8301 West Judge Perez Drive, Chalmette, Louisiana
70043-1656 on March 14, 1995, 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 FCB will
merge (the "Merger") with and into Regions, and First National Bank of St.
Bernard Parish, a wholly-owned subsidiary of FCB (the "Bank"), will merge with
and into Regions Bank of Louisiana, the principal banking subsidiary of Regions
operating in Louisiana. Upon consummation of the Merger, each share of FCB
common stock issued and outstanding (except for certain shares held by FCB or
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)
will be converted, at the election of the holder thereof, into either (i) a
combination of (x) $40.77 in cash and (y) 1.444 shares of Regions common stock
(subject to possible adjustment as described in the accompanying Proxy
Statement/Prospectus) (this election being referred to as the "Stock and Cash
Election") or (ii) 2.626 shares of Regions common stock (subject to possible
adjustment as described in the accompanying Proxy Statement/Prospectus) (this
election being referred to as the "All Stock Election").
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. ALSO ENCLOSED WITH THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS IS A FORM OF ELECTION TO BE USED BY EACH STOCKHOLDER OF
FCB TO ELECT EITHER THE STOCK AND CASH ELECTION OR THE ALL STOCK ELECTION FOR
SUCH HOLDER'S SHARES OF FCB COMMON STOCK. THE FORM OF ELECTION MUST BE PROPERLY
COMPLETED, EXECUTED, AND DELIVERED TO FCB PRIOR TO THE COMMENCEMENT OF THE
SPECIAL MEETING. ANY STOCKHOLDER FAILING TO MAKE A VALID ELECTION WILL BE
DEEMED TO HAVE MADE THE STOCK AND CASH ELECTION.
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 FCB has agreed to vote those FCB shares over which such member 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 FCB stockholders and approval of the Merger by various
regulatory agencies.
Stockholders of FCB 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 FCB shares in cash, as provided by
applicable law.
It is important to understand that approval of the Agreement will require
the affirmative vote of a majority of the common stock of FCB represented in
person or by proxy at the Special Meeting, not just a majority of the votes
cast. 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
<PAGE> 4
affirmative votes required for approval of the Agreement, but will not be
counted toward a quorum at the Special Meeting.
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 FCB 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,
Edward F. Butler
President and Chief Executive Officer
<PAGE> 5
FIRST COMMERCIAL BANCSHARES, INC.
8301 WEST JUDGE PEREZ DRIVE
CHALMETTE, LOUISIANA 70043-1656
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 14, 1995
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of First Commercial Bancshares, Inc. ("FCB") will be held at FCB's
main office, 8301 West Judge Perez Drive, Chalmette, Louisiana 70043-1656 on
March 14, 1995, at 10:00 a.m., local time, for the following purposes:
1. Merger. To consider and vote on a proposal to approve the Agreement
and Plan of Merger, dated as of October 20, 1994 (the "Agreement"), by and
between FCB and Regions Financial Corporation ("Regions") pursuant to which (i)
Regions will acquire all of the issued and outstanding common stock of FCB
through the merger of FCB with and into Regions (the "Merger"); (ii) each share
of FCB common stock (except for certain shares held by FCB or 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) will be
converted, at the election of the holder thereof, into either (a) a combination
of (x) $40.77 in cash and (y) 1.444 shares of Regions common stock (subject to
adjustment as described in the accompanying Proxy Statement/Prospectus), or (b)
2.626 shares of Regions common stock (subject to adjustment as described in the
accompanying Proxy Statement/Prospectus); and (iii) each FCB 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 February 6, 1995,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of FCB have a right to dissent from the Merger and obtain
payment in cash of the fair value of their shares of FCB common stock if the
Merger is consummated. The right of any stockholder to receive such payment is
conditioned on strict compliance with the applicable provisions of Louisiana
law, which are attached to the accompanying Proxy Statement/Prospectus as
Appendix C. 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 therefore urge you to sign and return the enclosed proxy card 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 card by
filing an instrument of revocation or a duly executed proxy card bearing a
later date with the Secretary of FCB, or by electing to vote in person at the
Special Meeting.
By Order of the Board of Directors
Philip J. Dorsey
Secretary
Chalmette, Louisiana
February 8, 1995
<PAGE> 6
FIRST COMMERCIAL BANCSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD MARCH 14, 1995 (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 First Commercial Bancshares,
Inc. ("FCB") upon consummation of the proposed merger (the "Merger") described
herein by which FCB will merge with and into Regions pursuant to the terms of
the Agreement and Plan of Merger, dated as of October 20, 1994, by and between
Regions and FCB (the "Agreement").
At the time (the "Effective Date") that the Merger becomes effective: (i)
Regions will acquire all of the issued and outstanding common stock of FCB
through the merger of FCB with and into Regions (the "Merger"); (ii) each share
of the $1.00 par value common stock of FCB ("FCB Common Stock") issued and
outstanding at the Effective Date (except for certain shares held by FCB or
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)
will be converted, at the election of the holder thereof, into either (a) a
combination of (x) $40.77 in cash and (y) 1.444 shares of Regions Common Stock
(subject to adjustment as described herein) or (b) 2.626 shares of Regions
Common Stock (subject to adjustment as described herein); and (iii) each FCB
stockholder will receive cash in respect of any remaining fractional share
interest. 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 FCB will cease, and
immediately following the Merger, First National Bank of St. Bernard Parish, a
wholly-owned subsidiary of FCB (the "Bank"), will merge with and into Regions
Bank of Louisiana, the principal banking subsidiary of Regions operating in
Louisiana. As successor by merger to the Bank, Regions Bank of Louisiana will
continue serving the customers of the Bank as a full-service commercial bank.
For a further description of the terms of the Merger and related matters, see
"Description of the Transaction."
This Prospectus also constitutes a Proxy Statement of FCB that is being
furnished to the stockholders of FCB in connection with the solicitation of
proxies by the Board of Directors of FCB for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on March 14, 1995, 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 FCB on or
about February 8, 1995.
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 February 8, 1995.
<PAGE> 7
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., 1735 K Street, N.W., Washington, D.C. 20006.
No person is authorized to give any information or to make any
representation other than those included in this Proxy Statement/Prospectus,
and if given or made, such information or representation must not be relied
upon as having been authorized by Regions or FCB. 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 FCB
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 FCB
was supplied by FCB.
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 three months ended
March 31, June 30, and September 30, 1994;
3. Regions' Current Reports on Form 8-K, dated as of December 31,
1993, and July 8, July 18, September 6, September 14, and November 23,
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.
Regions' Annual Report on Form 10-K for the year ended December 31, 1993,
incorporates by reference
<PAGE> 8
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 Regions Annual Report to Stockholders. Only those portions of
the Regions 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 (334) 832-8450). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 7, 1995.
3
<PAGE> 9
TABLE OF CONTENTS
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Meeting of FCB Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Election Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reasons for the Merger; Recommendation of FCB's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Opinion of FCB's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Differences in Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Comparative Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Adjustment of Applicable Common Stock Exchange Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Election Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Opinion of FCB's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Distribution of Regions Stock Certificates and
Cash Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Resales of Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Amendment of Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Classified Board of Directors and Absence of Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . 36
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Limitations on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Stockholder Nominations and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Business Combinations With Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
4
<PAGE> 10
<TABLE>
<S> <C>
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
FCB MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OF FCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Transactions With Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SUMMARY PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Selected Pro Forma Combined Data for Regions and FCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Selected Pro Forma Combined Data for Regions, FCB, and
Other Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Support of Subsidiary Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Brokered Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Safety and Soundness Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Depositor Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
APPENDIX A--Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Opinion of Wheat, First Securities, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C--Excerpt of Dissenters' Rights Section of Louisiana Business Corporation Law . . . . . . . . . . . . . . . C-1
APPENDIX D--Form of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
5
<PAGE> 11
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 "FCB" refer to those entities, respectively, and, where the
context requires, to those entities and their respective subsidiaries.
THE PARTIES
FCB. FCB is a bank holding company organized under the laws of the state of
Louisiana. FCB operates principally through its wholly owned subsidiary First
National Bank of St. Bernard Parish (the "Bank"), which is a
federally-chartered commercial bank and which provides a range of retail
banking services through five offices in St. Bernard Parish, Louisiana. At
September 30, 1994, FCB had total consolidated assets of approximately $114
million, total consolidated deposits of approximately $97 million, and total
consolidated stockholders' equity of approximately $11 million. FCB's principal
executive offices are located at 8301 West Judge Perez Drive, Chalmette,
Louisiana 70043-1656, and its telephone number at such address is (504)
277-5801.
Regions. Regions is a regional bank holding company headquartered in
Birmingham, Alabama, which operated 256 banking offices located in Alabama,
Florida, Georgia, Louisiana, and Tennessee as of September 30, 1994. At that
date, Regions had total consolidated assets of approximately $ 11.7 billion,
total consolidated deposits of approximately $9.3 billion, and total
consolidated stockholders' equity of approximately $ 902 million. Regions is
the third largest bank holding company headquartered in Alabama in terms of
assets, based on September 30, 1994 information. Regions operates seven
state-chartered commercial bank subsidiaries 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 completed the acquisitions of six
financial institutions in Alabama, Georgia, and Louisiana (the "Recently
Completed Acquisitions") and entered into a definitive agreement to acquire one
additional financial institution in addition to FCB. Information with respect
to the Recently Completed Acquisitions and the other pending acquisition is
included under "Business of Regions--Recent Developments" and "Summary Pro
Forma Financial Data" and in certain of the documents incorporated by reference
in this Proxy Statement/Prospectus. See "Documents Incorporated by Reference."
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
office is 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."
6
<PAGE> 12
SPECIAL MEETING OF FCB STOCKHOLDERS
The Special Meeting will be held at 10:00 a.m., local time, on March 14,
1995, at FCB's main office, 8301 West Judge Perez Drive, Chalmette, Louisiana
70043-1656, for the purpose of considering and voting on approval of the
Agreement. See "The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of FCB Common Stock at the close of business on
February 6, 1995 (the "Record Date"), will be entitled to vote at the Special
Meeting. Approval of the Agreement requires the affirmative vote of a majority
of the FCB Common Stock represented in person or by proxy at the Special
Meeting. As of the Record Date, there were 226,396 shares of FCB Common Stock
outstanding and entitled to be voted.
The directors and executive officers of FCB and their affiliates
beneficially owned, as of the Record Date, 161,253 shares (or approximately
71.23% of the outstanding shares) of FCB Common Stock. Each member of the Board
of Directors of FCB has agreed to vote those FCB shares over which such member
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 FCB Common Stock. As of
that date, neither FCB nor Regions held any shares of FCB 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 FCB by Regions pursuant to
the Merger of FCB with and into Regions. At the Effective Date, each share of
FCB Common Stock then issued and outstanding (excluding shares held by FCB,
Regions, or their respective subsidiaries, in each case other than shares held
in a fiduciary capacity or in satisfaction of debts previously contracted and
excluding any shares held by stockholders who perfect their dissenters' rights
of appraisal) will be converted, at the election of the holder thereof, into
either (a) a combination of (x) $40.77 in cash and (y) 1.444 shares of Regions
Common Stock (subject to adjustment as described below) (the "Stock and Cash
Election") or (b) 2.626 shares of Regions Common Stock (subject to adjustment
as described below) (the "All Stock Election"). The respective exchange ratios
of Regions Common Stock for each share of FCB Common Stock resulting from the
Stock and Cash Election and from the All Stock Election are referred to as the
"Applicable Common Stock Exchange Ratio."
If the "Average Closing Price" (defined in the Agreement as the average of
the daily closing sale prices of Regions Common Stock on the Nasdaq National
Market (as reported by The Wall Street Journal or, if not reported thereby,
another authoritative source chosen by Regions) for the 20 consecutive full
trading days on which such shares are traded on the Nasdaq National Market
ending at the close of trading on the fifth trading day preceding the Effective
Date) is between $31.90 and $37.10, then the Applicable Common Stock Exchange
Ratios will remain unchanged as set forth above with no adjustment. If the
Average Closing Price is either equal to or less than $31.90 or equal to or
greater than $37.10, then the Applicable Common Stock Exchange Ratios will be
adjusted in the manner described under the caption "Description of the
Transaction--Adjustment of Applicable Common Stock Exchange Ratios."
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 FCB
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price. See "Description of the Transaction-- General."
The consideration to be issued in the Merger for each share of FCB Common
Stock as a result of the All Stock Election or the Stock and Cash Election is
referred to in this Proxy Statement/Prospectus as the "Merger
7
<PAGE> 13
Consideration."
ELECTION PROCEDURES
Elections by holders of FCB Common Stock will be made by properly
completing, dating, and executing the enclosed yellow Form of Election and
returning it to FCB prior to the commencement of the Special Meeting (the
"Election Deadline").
An election will have been validly made by a holder of FCB Common Stock
only if a properly completed and executed Form of Election is received by FCB
prior to the Election Deadline.
Additional information concerning the limitations and conditions on FCB
stockholders' rights to make the election is set forth herein under
"Description of the Transaction--Election Procedures." In the absence of a
valid election on behalf of an FCB stockholder, such holder will be deemed for
all purposes to have made the Stock and Cash Election.
A holder of FCB Common Stock may, but is not required to, transmit a
certificate or certificates representing the shares of FCB Common Stock as to
which such election is being made with the Form of Election. Any such holder
desiring to transmit a stock certificate or certificates with the Form of
Election must complete, date, sign, and return the enclosed blue letter of
transmittal and must comply fully with the instructions thereon. Holders of FCB
Common Stock also will have the opportunity to transmit their certificate or
certificates representing FCB Common Stock following the Effective Date. See
"--Exchange of Stock Certificates" and "Description of the
Transaction--Distribution of Regions Stock Certificates and Cash Payments."
DISSENTERS' RIGHTS
Holders of FCB 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 FCB Common Stock in cash
in accordance with the applicable provisions of Section 131 of the Louisiana
Business Corporation Law (the "LBCL"). In the event the Merger is approved by
80% or more of the total voting power of FCB, then dissenters' rights of
appraisal, in accordance with the LBCL, will not be available. The procedures
to be followed by dissenting stockholders are summarized under "Description of
the Transaction--Dissenters' Rights," and Section 131 of the LBCL is reproduced
as Appendix C to this Proxy Statement/Prospectus.
REASONS FOR THE MERGER; RECOMMENDATION OF FCB'S BOARD OF DIRECTORS
FCB'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, FCB and its stockholders. Accordingly, FCB's Board unanimously
recommends that FCB's stockholders vote FOR approval of the Agreement. EACH
MEMBER OF THE BOARD OF DIRECTORS OF FCB HAS AGREED TO VOTE THOSE SHARES OF FCB
COMMON STOCK OVER WHICH SUCH MEMBER HAS VOTING AUTHORITY (OTHER THAN IN A
FIDUCIARY CAPACITY) IN FAVOR OF THE AGREEMENT.
In approving the Merger, FCB's directors considered, among other things,
FCB'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, an opinion of Wheat, First Securities, Inc. ("Wheat") that,
as of the date of its opinion, the Merger Consideration was fair, from a
financial point of view, to the stockholders of FCB, and in general the
fairness of the terms of the Merger to FCB stockholders. See "Description of the
Transaction--Background of and
8
<PAGE> 14
Reasons for the Merger."
OPINION OF FCB'S FINANCIAL ADVISOR
Wheat has rendered an opinion to FCB that, based on and subject to the
procedures, matters, and limitations described in its opinion and such other
matters as it considered relevant, as of the date of its opinion, the Merger
Consideration was fair, from a financial point of view, to the stockholders of
FCB. The opinion of Wheat is attached as Appendix B to this Proxy
Statement/Prospectus. FCB stockholders are urged to read the opinion in its
entirety for a description of the procedures followed, matters considered, and
limitations on the reviews undertaken in connection therewith. See "Description
of the Transaction--Opinion of FCB's Financial Advisor."
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 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 FCB, 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 day of the month in which occurs 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 the FCB 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 first quarter of 1995, 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")
(and upon surrender to the Exchange Agent to the extent not previously
surrendered with the Form of Election, of certificate(s) for FCB Common Stock
for cancellation), to issue and mail to each holder of FCB Common Stock, the
Merger Consideration elected to be received by such holder. In no event will
the holder of any surrendered certificate(s) be entitled to receive interest on
any cash to be issued to such holder, and in no event will Regions, FCB, or the
Exchange Agent be liable to any holder of FCB Common Stock for any Regions
Common Stock or dividends thereon or cash delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat, or similar
law.
Regions shall be liable for all transfer or other taxes required by reason
of the issuance of checks and certificates for Regions Common Stock upon
consummation of the Merger; provided, however, that it will be a condition to
the issuance of any check or certificate for Regions Common Stock in any name
other than the name in which the surrendered certificate for FCB Common Stock
is registered that the person requesting the issuance of such check or
certificate for Regions Common Stock either pay to the Exchange Agent any
transfer or other taxes required by reason of such issuance, or establish to
the satisfaction of the Exchange Agent that such tax (i) has been paid or (ii)
is not applicable. See "Description of the Transaction--Distribution of
Regions Stock Certificates and Cash Payments."
9
<PAGE> 15
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 FCB 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
FCB and Regions, or by action of the Board of Directors of either company under
certain circumstances, including if the Merger is not consummated by June 30,
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, FCB 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 FCB's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of FCB generally.
Those interests relate to, among other things, provisions in the Agreement
regarding indemnification and eligibility for certain Regions employee
benefits. See "Description of the Transaction--Interests of Certain Persons in
the Merger."
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"). The stockholders of FCB who exchange
their shares of FCB Common Stock solely for shares of Regions Common Stock will
recognize no gain or loss upon the exchange. If, however, a stockholder of FCB
exchanges FCB Common Stock for Regions Common Stock and cash pursuant to the
Stock and Cash Election, then such stockholder will be required to recognize
any gain realized on the exchange, and no loss will be recognized. Gain
recognition, if any, will not be in excess of the amount of cash received.
Subject to the provisions and limitations of Section 302(a) of the Code, gain
or loss will be recognized upon the receipt of cash in lieu of fractional share
interests or as a result of a stockholder's perfecting such holder's
dissenters' rights of appraisal. Gain recognition, if any, will not be in
excess of the amount of cash received. 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, FCB
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, FCB stockholders, whose rights are governed by FCB's
Articles of Incorporation
10
<PAGE> 16
and Bylaws and by the LBCL, 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 FCB
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. FCB 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 purchase
and sale of FCB Common Stock, and (iii) the equivalent per share prices (as
explained below) of FCB 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>
ALL STOCK STOCK AND
ELECTION CASH ELECTION
EQUIVALENT EQUIVALENT
PER PER
SHARE PRICE SHARE PRICE
REGIONS FCB OF FCB OF FCB
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
October 19, 1994 $34.00 $24.50 $89.28 $89.87
February 6, 1995 33.38 24.50 87.65 88.97
</TABLE>
The All Stock Election equivalent per share price of FCB Common Stock at
each specified date represents the last sale price of a share of Regions Common
Stock on such date multiplied by the assumed applicable common stock exchange
ratio for the All Stock Election of 2.626, based on the closing sales price of
Regions Common Stock on the indicated dates. The Stock and Cash Election
equivalent per share price of FCB Common Stock at each specified date represents
the last sale price of a share of Regions Common Stock on such date multiplied
by the assumed applicable common stock exchange ratio of 1.444, based on the
closing sales price of Regions Common Stock on the indicated dates, to which has
been added the pre-tax cash component of the Merger consideration of $40.77 per
share of FCB Common Stock. Stockholders are advised to obtain current market
quotations for Regions Common Stock and FCB 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 income, cash dividends, and book value on (i) an historical basis for
Regions and FCB; (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 FCB Common Stock, giving effect to the Merger; (iv) a pro forma
combined basis per share of Regions Common Stock, giving effect to the Merger
and the Other Acquisitions (as defined below under "Business of Regions --
Recent Developments"); and (v) an equivalent pro forma basis per share of
FCB Common Stock, giving effect to the Merger and the Other Acquisitions. The
Regions and FCB pro forma combined information and the FCB pro forma Merger
equivalent information give effect to the Merger on a purchase accounting basis
and assumes an applicable common stock exchange ratio of 2.626 for the All Stock
Election and an applicable common stock exchange ratio of 1.444 for the Stock
and Cash Election (based on the closing sale price of Regions Common Stock as
reported by the Nasdaq National Market on February 6, 1995, and assuming the All
Stock Election is selected with respect to 50% of the outstanding shares of FCB
Common Stock and the Stock and Cash Election is selected with respect to the
remaining 50% of the outstanding shares of FCB Common Stock). See "Description
of the Transaction--Accounting Treatment." The Regions, FCB, and Other
Acquisitions pro forma combined information and the FCB pro forma Merger and
Other
11
<PAGE> 17
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, FCB, and Other Acquisitions." The pro forma data are presented for
information 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 FCB, 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," "Summary Pro Forma Financial Data," and "Index
to FCB Financial Statements."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- --------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions
and FCB historical)
<S> <C> <C> <C> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . $ 2.52 $ 2.26 $ 3.01 $ 2.60 $ 2.16
FCB historical . . . . . . . . . . . . . . . . . 10.24 7.31 10.32 6.41 2.15
Regions and FCB pro forma combined(1) . . . . . . 2.51 3.02
FCB pro forma Merger equivalent - All Stock
Election (2) . . . . . . . . . . . . . . . . . 6.59 7.93
FCB pro forma Merger equivalent - Stock and Cash
Election (3) . . . . . . . . . . . . . . . . . 3.62 4.36
Regions, FCB, and Other Acquisitions
pro forma combined(4) . . . . . . . . . . . . 2.54 3.03
FCB pro forma Merger and Other Acquisitions
equivalent - All Stock Election (2) . . . . . 6.67 7.96
FCB pro forma Merger and Other Acquisitions
equivalent - Stock and Cash Election (3) . . 3.67 4.38
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . $ 0.90 $ 0.78 $ 1.04 $ 0.91 $ 0.87
FCB historical . . . . . . . . . . . . . . . . . 0.30 0.00 0.60 0.00 0.00
FCB pro forma Merger equivalent - All
Stock Election (5) . . . . . . . . . . . . . . 2.36 2.05 2.73
FCB pro forma Merger equivalent - Stock and
Cash Election (6) . . . . . . . . . . . . . . 1.30 1.13 1.50
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical . . . . . . . . . . . . . . . $ 21.46 $ 19.00 $ 20.73 $ 17.62 $ 15.76
FCB historical. . . . . . . . . . . . . . . . . . 48.74 36.10 38.81 26.55 20.15
Regions and FCB pro forma combined(1) . . . . . . 21.56
FCB pro forma Merger equivalent - All Stock
Election (2) . . . . . . . . . . . . . . . . . 56.62
FCB pro forma Merger equivalent - Stock
and Cash Election (3) . . . . . . . . . . . . 31.13
Regions, FCB, and Other Acquisitions
pro forma combined(4) . . . . . . . . . . . . 21.76
FCB pro forma Merger and Other Acquisitions
equivalent - All Stock Election (2) . . . . . 57.14
FCB pro forma Merger and Other Acquisitions
equivalent - Stock and Cash Election (3) . . 31.42
</TABLE>
_____________________
(1) Represents the pro forma combined information of Regions and FCB as if the
Merger were consummated on January 1, 1993, and were accounted for as a
purchase, assuming the All Stock Election is selected with respect to 50%
of the outstanding shares of FCB Common Stock and the Stock and Cash
Election is selected with respect to the remaining 50% of the outstanding
shares of FCB Common Stock.
12
<PAGE> 18
(2) Represents pro forma combined information multiplied by an assumed
applicable common stock exchange ratio of 2.626 shares of Regions Common
Stock for each share of FCB Common Stock for the All Stock Election.
(3) Represents pro forma combined information multiplied by an assumed
applicable common stock exchange ratio of 1.444 shares of Regions Common
Stock for each share of FCB Common Stock for the Stock and Cash Election,
with no equivalent value attributed to the pre-tax cash component of the
Merger consideration of $40.77 per share of FCB Common Stock.
(4) Represents the pro forma combined information of Regions, FCB, 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, FCB, and Other Acquisitions."
(5) Represents historical dividends declared per share by Regions multiplied by
an assumed applicable common stock exchange ratio of 2.626 shares of Regions
Common Stock for each share of FCB Common Stock for the All Stock Election.
(6) Represents historical dividends declared per share by Regions multiplied by
an assumed applicable common stock exchange ratio of 1.444 shares of Regions
Common Stock for each share of FCB Common Stock for the Stock and Cash
Election, with no equivalent value attributed to the pre-tax cash component
of the Merger consideration of $40.77 per share of FCB Common Stock.
(7) The foregoing combined and equivalent pro forma share data assumes an
applicable common stock exchange ratio for the All Stock Election of 2.626,
and an applicable common stock exchange ratio for the Stock and Cash
Election of 1.444, which are based on an assumed Average Closing Price of
$33.38. The FCB pro forma Merger equivalent data will change based on
different exchange ratios resulting from different Average Closing Prices.
For illustration purposes, certain Regions and FCB combined and FCB pro
forma Merger equivalent data is presented below based on (i) an assumed
Average Closing Price of $26.00, yielding an applicable common stock
exchange ratio of 3.222 for the All Stock Election and an applicable common
stock exchange ratio of 1.772 for the Stock and Cash Election, and (ii) an
assumed Average Closing Price of $38.00, yielding an applicable common
stock exchange ratio of 2.564 for the All Stock Election and an applicable
common stock exchange ratio of 1.410 for the Stock and Cash Election, in
each case with no equivalent value attributed with respect to the Stock
and Cash Election to the pre-tax cash component of the Merger consideration
for the Stock and Cash Election of $40.77 per share of FCB Common Stock.
This data is presented for illustration purposes only, and no inference is
intended or may be drawn concerning the actual Average Closing Price which
may occur or the resulting Applicable Common Stock Exchange Ratios. For
additional information with respected to the calculation of the Average
Closing Price and the resulting Applicable Common Stock Exchange Ratios,
see "Description of the Transaction -- Adjustment of Applicable Common
Stock Exchange Ratios." In all instances the presentation assumes the All
Stock Election is selected with respect to 50% of the outstanding shares
of FCB Common Stock and the Stock and Cash Election is selected with
respect to the remaining 50% of the outstanding shares of FCB Common Stock.
<TABLE>
<CAPTION>
Applicable Common Stock Exchange Ratio
---------------------------------------------------
(3.222 All Stock Election) (2.564 All Stock Election)
(1.772 Stock and Cash Election) (1.410 Stock and Cash Election)
---------------------- ----------------------
Nine Months Year Nine Months Year
Ended Ended Ended Ended
September 30, December 31, September 30, December 31,
1994 1993 1994 1993
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE PER COMMON SHARE
Regions and FCB pro forma combined . . . . . . . . . . . . . . . . . $ 2.51 $ 3.02 $ 2.51 $ 3.02
FCB pro forma equivalent -- All Stock Election . . . . . . . . . . . 8.09 9.73 6.44 7.74
FCB pro forma equivalent -- Stock and Cash Election . . . . . . . . 4.45 5.35 3.54 4.26
DIVIDENDS DECLARED PER COMMON SHARE
FCB pro forma equivalent -- All Stock Election . . . . . . . . . . . 2.90 3.35 2.31 2.67
FCB pro forma equivalent -- Stock and Cash Election . . . . . . . . 1.59 1.84 1.27 1.47
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions and FCB pro forma combined . . . . . . . . . . . . . . . . . 21.56 21.56
FCB pro forma equivalent -- All Stock Election . . . . . . . . . . . 69.47 55.28
FCB pro forma equivalent -- Stock and Cash Election . . . . . . . . 38.20 30.40
</TABLE>
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and FCB. The data should be read in conjunction with
the historical financial statements, related notes, and other financial
information concerning Regions and FCB incorporated by reference or included
herein. See "Documents Incorporated by Reference" and "Index to FCB Financial
Statements."
13
<PAGE> 19
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER YEAR ENDED 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 . . . . . . . $ 568,358 $ 413,443 $ 555,667 $ 536,747 $ 556,821 $ 519,753 $ 496,392
Total interest expense . . . . . . 246,294 158,519 213,614 224,068 292,017 297,613 292,687
Net interest income . . . . . . . . 322,064 254,924 342,053 312,679 264,804 222,140 203,705
Provision for loan losses . . . . . 13,804 17,401 21,533 27,072 24,005 24,208 15,800
Net interest income after
loan loss provision . . . . . . 308,260 237,523 320,520 285,607 240,799 197,932 187,905
Total noninterest income
excluding security gains (losses) 108,552 96,965 131,949 119,130 101,964 94,730 71,976
Security gains (losses) . . . . . . 444 76 78 (53) (507) (982) 506
Total noninterest expense . . . . . 254,376 209,632 287,026 264,659 230,340 195,611 176,707
Income tax expense . . . . . . . . . 54,243 40,946 53,476 44,977 33,660 27,175 21,046
Net income . . . . . . . . . . . . . $ 108,637 $ 83,986 $ 112,045 $ 95,048 $ 78,256 $ 68,894 $ 62,634
PER SHARE DATA:
Net income . . . . . . . . . . . . . $ 2.52 $ 2.26 $ 3.01 $ 2.60 $ 2.16 $ 1.91 $ 1.72
Cash dividends . . . . . . . . . . . 0.90 0.78 1.04 0.91 0.87 0.84 0.76
Book value . . . . . . . . . . . . . 21.46 19.00 20.73 17.62 15.76 14.54 13.48
OTHER INFORMATION:
Average number of shares outstanding 43,029 37,167 37,205 36,532 36,191 36,097 36,331
BALANCE SHEET DATA (PERIOD END):
Total assets . . . . . . . . . . . . $11,469,957 $8,145,838 $10,476,348 $7,881,026 $6,745,053 $6,344,406 $5,549,612
Securities . . . . . . . . . . . . . 2,484,835 1,646,778 2,368,445 1,670,170 1,575,725 1,489,200 1,133,087
Loans, net of unearned income . . . 8,037,888 5,585,955 6,833,246 5,142,531 4,274,958 4,092,262 3,552,082
Total deposits . . . . . . . . . . . 9,269,856 7,043,046 8,770,694 6,701,142 5,917,028 5,353,211 4,744,364
Long-term debt . . . . . . . . . . . 612,198 141,842 462,862 136,990 18,782 19,707 45,343
Stockholders' equity . . . . . . . . 901,533 706,016 850,965 656,655 572,971 524,132 489,441
PERFORMANCE RATIOS:
Return on average assets (1) . . . . 1.31% 1.43% 1.40% 1.34% 1.23% 1.23% 1.20%
Return on average stockholders' equity (1) 15.99 16.49 16.14 15.64 14.27 13.64 13.25
Net interest margin (1) . . . . . . 4.30 4.87 4.82 4.98 4.78 4.67 4.65
Efficiency (2) . . . . . . . . . . . 57.99 58.28 59.24 59.87 60.77 59.22 60.68
Dividend payout . . . . . . . . . . 35.71 34.51 34.55 35.00 40.28 43.98 44.19
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1) . . 0.11% 0.11% 0.19% 0.28% 0.35% 0.44% 0.42%
Problem assets to net loans and
other real estate (3) . . . . . 0.60 0.54 0.84 0.70 0.89 0.98 0.72
Nonperforming assets to net loans and
other real estate (4) . . . . . 0.67 0.65 1.03 0.81 1.01 1.12 0.94
Allowance for loan losses to loans,
net of unearned income . . . . 1.40 1.56 1.47 1.43 1.28 1.10 1.05
Allowance for loan losses to
nonperforming assets (4) . . . 209.25 238.92 143.05 175.92 126.32 98.18 110.71
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . . . . 8.21% 8.67% 8.70% 8.59% 8.63% 9.03% 9.06%
Average loans to average deposits . 80.17 78.06 78.14 72.46 73.40 76.67 75.23
Tier 1 risk-based capital (5) . . . 10.93 11.70 11.13 11.68 11.85 11.31 n/a
Total risk-based capital (5) . . . . 14.79 14.36 13.48 14.44 13.19 12.51 n/a
Tier 1 leverage (5) . . . . . . . . 7.71 8.44 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.
14
<PAGE> 20
Selected Historical Financial Data of FCB
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED 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 . . . . . . . . $ 7,131 $ 6,885 $ 9,319 $ 9,011 $ 8,742 $ 8,767 $ 7,085
Total interest expense . . . . . . . 2,151 2,012 2,707 2,996 4,310 4,928 3,918
Net interest income . . . . . . . . . 4,980 4,873 6,612 6,015 4,432 3,839 3,167
Provision for loan losses . . . . . . 305 360 480 590 620 914 335
Net interest income after
loan loss provision . . . . . . . 4,675 4,513 6,132 5,425 3,812 2,925 2,832
Total noninterest income excluding
security gains (losses) . . . . . 661 669 839 847 804 748 783
Security gains (losses) . . . . . . . - - - 113 116 (1) -
Total noninterest expense . . . . . . 3,574 3,559 4,710 4,935 4,244 4,045 3,320
Total tax benefit . . . . . . . . . . (556) (31) (75) - - - -
Cumulative effect of a change
in an accounting principle . . . - 574 574 - - - -
Net income (loss) . . . . . . . . . . $ 2,318 $ 2,228 $ 2,910 $ 1,450 $ 488 $ (373) $ 295
PER SHARE DATA:
Net income (loss) . . . . . . . . . . $ 10.24 $ 9.84 $ 12.85 $ 6.41 $ 2.15 $ (1.65) $ 1.30
Cash dividends . . . . . . . . . . . .30 - .60 - - - -
Book value . . . . . . . . . . . . . 48.74 36.10 38.81 26.55 20.15 18.00 19.64
OTHER INFORMATION:
Average number of shares
outstanding . . . . . . . . . . . 226 226 226 226 226 226 226
BALANCE SHEET DATA (PERIOD END):
Total assets . . . . . . . . . . . . $114,150 $103,362 $103,794 $96,336 $93,102 $87,621 $76,358
Securities . . . . . . . . . . . . . 6,328 7,598 7,473 10,213 13,780 8,472 9,025
Loans, net of unearned income . . . . 91,682 84,187 84,437 74,494 69,672 60,641 56,777
Total deposits . . . . . . . . . . . 97,080 89,255 88,959 89,512 87,330 82,506 71,089
Stockholders' equity . . . . . . . . 11,036 8,172 8,786 6,012 4,562 4,074 4,447
PERFORMANCE RATIOS:
Return on average assets (1) . . . . 2.77% 2.69% 2.80% 1.50% .53% (.43)% .41%
Return on average stockholders'
equity (1) . . . . . . . . . . . 37.04 37.68 37.86 31.93 12.06 (8.46) 7.41
Net interest margin (1) . . . . . . . 5.85 6.28 6.37 6.22 4.84 4.44 4.37
Efficiency (2) . . . . . . . . . . . 63.36 64.22 63.21 71.92 81.06 88.18 84.06
Dividend payout (3) . . . . . . . . . 2.93 - 4.67 - - - -
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1) . . . .23% .36% .48% 1.33% .97% .75% 1.53%
Problem assets to net loans and
other real estate (4) . . . . . . .37 1.20 1.02 2.90 6.45 6.66 3.91
Nonperforming assets to net loans
and other real estate (5) . . . . .64 1.54 1.31 3.52 6.85 7.11 6.13
Allowance for loan losses to loans,
net of unearned income . . . . . 1.16 1.00 1.14 1.18 1.81 2.11 1.51
Allowance for loan losses to
nonperforming assets (5) . . . . 181.11 72.40 86.87 32.63 25.52 28.91 24.11
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . . . . . 9.09% 6.89% 7.13% 4.69% 4.42% 5.10% 5.50%
Average loans to average deposits . . 91.95 86.28 87.98 82.37 78.09 81.88 76.65
Tier 1 risk-based capital . . . . . . 10.31 9.19 9.29 8.00 6.43 6.10 7.20
Total risk-based capital(6) . . . . . 11.43 10.25 10.39 9.17 7.68 7.35 8.45
Tier 1 leverage (6) . . . . . . . . . 8.69 7.91 7.93 6.17 4.86 4.61 5.76
</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) Dividend payout ratio is computed based on dividends declared rather than
dividends paid.
(4) Problem assets include loans on a nonaccrual basis, restructured loans, and
foreclosed properties.
(5) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(6) The required minimum Tier 1 and total risk-based capital ratios are 4.0%
and 8.0%, respectively. The minimum leverage ratio of Tier1 capital to
total adjusted assets is 3.0% to 5.0%, depending on the risk profile of the
institution and other factors.
15
<PAGE> 21
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
FCB Common Stock in connection with the solicitation by the FCB Board of
Directors of proxies for use at the Special Meeting, at which FCB stockholders
will be asked to vote upon a proposal to approve the Agreement. The Special
Meeting will be held at 10:00 a.m., local time, on March 14, 1995, at the main
office of FCB, located at 8301 West Judge Perez Drive, Chalmette, Louisiana
70043-1656.
FCB stockholders are urged to sign, date, and promptly return the
accompanying proxy card to FCB in the enclosed postage-paid, addressed
envelope. A stockholder's failure to return a properly executed proxy card or
to vote at the Special Meeting will have the same effect as a vote against the
Agreement.
Any FCB 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 FCB a signed proxy card bearing a later date, provided that such notice or
proxy card is actually received by FCB 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 First Commercial
Bancshares, Inc., 8301 West Judge Perez Drive, Chalmette, Louisiana 70043-1656,
Attention: Phillip J. Dorsey, 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 Secretary. The
shares of FCB 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, FCB 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
FCB, 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.
RECORD DATE; VOTE REQUIRED
FCB's Board of Directors has established the close of business on
February 6, 1995, as the Record Date for determining the FCB stockholders
entitled to notice of and to vote at the Special Meeting. Only FCB stockholders
of record as of the Record Date will be entitled to vote at the Special
Meeting. The affirmative vote of the holders of a majority the FCB Common Stock
represented in person or by proxy at the Special Meeting will be 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 360
holders of 226,396 shares of FCB 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 FCB to beneficially own more than 5.0% of the
outstanding shares of FCB Common Stock as of the Record Date, see "Voting
Securities and Principal Stockholders of FCB."
The presence, in person or by proxy, of a majority of the outstanding
shares of FCB Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these
purposes, shares of FCB Common Stock that are present, or represented by proxy,
at the Special Meeting will
16
<PAGE> 22
be counted for quorum purposes 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 the requisite number of shares, as
described above.
The directors and executive officers of FCB and their affiliates
beneficially owned, as of the Record Date, 161,253 shares (or approximately
71.23% of the outstanding shares) of FCB Common Stock. Each member of the Board
of Directors of FCB has agreed to vote the shares of FCB Common Stock over which
such director 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 FCB Common
Stock. As of that date, neither FCB nor Regions held any shares of FCB Common
Stock in a fiduciary capacity for others.
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, FCB will merge with and into Regions
and the separate existence of FCB will cease. Immediately following the
Merger, the Bank will merge with and into Regions Bank of Louisiana, the
principal banking subsidiary of Regions operating in Louisiana. As successor by
merger to the Bank, Regions Bank of Louisiana will continue serving the
customers of the Bank as a full-service commercial bank.
At the Effective Date each share of FCB Common Stock then issued and
outstanding (excluding any shares held by stockholders who perfect their
dissenters' rights of appraisal and shares held by FCB, Regions, or their
respective subsidiaries, in each case other than shares held in a fiduciary
capacity or in satisfaction of debts previously contracted), will be converted,
at the election of the holder thereof, into either (a) a combination of (x)
$40.77 in cash and (y) 1.444 shares of Regions Common Stock (subject to
adjustment as described under "--Adjustment of Applicable Common Stock Exchange
Ratios")(referred to as the "Stock and Cash Election") or (b) 2.626 shares of
Regions Common Stock (subject to adjustment as described under "--Adjustment of
Applicable Common Stock Exchange Ratios")(referred to as the "All Stock
Election").
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 FCB
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price.
Accompanying this Proxy Statement/Prospectus is a Form of Election to
be used by each FCB stockholder to elect whether such holder desires to receive
in exchange for such holder's shares of FCB Common Stock either the Stock and
Cash Election or the All Stock Election. The procedures to be followed in
making such election are described below under "--Election Procedures" and on
the Form of Election attached to this Proxy Statement/Prospectus as Appendix D.
In order for an election to be valid, the FCB stockholder entitled to make the
election must submit a duly completed and executed Form of Election to FCB
prior to the commencement of the Special Meeting. Any holder of FCB Common
Stock failing to make a valid election will be deemed to have elected to
receive the Stock and Cash Election.
17
<PAGE> 23
ADJUSTMENT OF APPLICABLE COMMON STOCK EXCHANGE RATIOS
The Agreement provides that in the event the Average Closing Price of
Regions Common Stock is equal to or
(a) less than $31.90, each share of FCB Common Stock (subject to the
exclusions set forth above under "--General") issued and outstanding at the
Effective Date will be converted into (i) $40.77 in cash (in the case of a
Stock and Cash Election only) and (ii) that number of shares of Regions Common
Stock (rounded to the nearest one-thousandth) equal to the quotient obtained by
dividing (x) $46.06 in the case of the Stock and Cash Election and $83.77 in
the case of the All Stock Election by (y) the Average Closing Price, or
(b) greater than $37.10, each share of FCB Common Stock (subject
to the exclusions set forth above under "--General") issued and outstanding at
the Effective Date will be converted into (i) $40.77 in cash (in the case of a
Stock and Cash Election only) and (ii) that number of shares of Regions Common
Stock (rounded to the nearest one-thousandth) equal to the quotient obtained by
dividing (x) $53.57 in the case of the Stock and Cash Election and $97.43 in
the case of the All Stock Election by (y) the Average Closing Price.
The operation of the formulas is illustrated by the following tables,
which show the effect that various Average Closing Prices would have on the
Applicable Common Stock Exchange Ratios and the corresponding value per share
of FCB Common Stock that would be received based on the various Average Closing
Prices and the resulting Applicable Common Stock Exchange Ratios for each of
the Stock and Cash Election and All Stock Election. The indicated corresponding
values per share of FCB Common Stock do not take into account any tax effects
of the Merger. See "Description of the Transaction -- Certain Federal Income
Tax Consequences of the Merger."
STOCK AND CASH ELECTION
<TABLE>
<CAPTION>
APPLICABLE CORRESPONDING
COMMON STOCK AMOUNT OF CASH VALUE PER SHARE OF
AVERAGE CLOSING EXCHANGE RATIO PAYMENT PER FCB FCB COMMON
PRICE OF REGIONS FOR STOCK AND SHARE FOR STOCK STOCK FOR STOCK
COMMON STOCK CASH ELECTION AND CASH ELECTION AND CASH ELECTION
---------------- ------------- ----------------- -----------------
<S> <C> <C> <C>
$26.00 1.772 $40.77 $86.84
27.00 1.706 40.77 86.83
28.00 1.645 40.77 86.83
29.00 1.588 40.77 86.82
30.00 1.535 40.77 86.82
31.00 1.486 40.77 86.84
32.00 1.444 40.77 86.98
33.00 1.444 40.77 88.42
34.00 1.444 40.77 89.87
35.00 1.444 40.77 91.31
36.00 1.444 40.77 92.75
37.00 1.444 40.77 94.20
38.00 1.410 40.77 94.35
</TABLE>
18
<PAGE> 24
ALL STOCK ELECTION
<TABLE>
<CAPTION>
APPLICABLE CORRESPONDING
COMMON STOCK VALUE PER SHARE OF
AVERAGE CLOSING EXCHANGE RATIO FCB COMMON
PRICE OF REGIONS FOR ALL STOCK STOCK FOR ALL STOCK
COMMON STOCK ELECTION ELECTION
---------------- -------------- -------------------
<S> <C> <C>
$26.00 3.222 $83.77
27.00 3.103 83.78
28.00 2.992 83.78
29.00 2.889 83.78
30.00 2.792 83.76
31.00 2.702 83.76
32.00 2.626 84.03
33.00 2.626 86.66
34.00 2.626 89.28
35.00 2.626 91.91
36.00 2.626 94.54
37.00 2.626 97.16
38.00 2.564 97.43
</TABLE>
These tables are presented for purposes of illustration only, and no
inference is intended or may be drawn concerning the actual Average Closing
Price which may occur or the resulting Applicable Common Stock Exchange Ratios.
The determination of the Average Closing Price will not be completed until
a date after the Election Deadline. As a result, FCB stockholders will be
required to make an election prior to the determination as to whether any
adjustment to the Applicable Common Stock Exchange Ratio will be made. As of
February 6, 1995, the closing sale price of Regions Common Stock on the Nasdaq
National Market was $33.38. Accordingly, if the Average Closing Price equals
such closing sale price, there would not be an adjustment to the Applicable
Common Stock Exchange Ratio.
FCB stockholders should be aware that the actual market value of a share of
Regions Common Stock at the Effective Date and at the time certificates for
those shares are delivered following surrender and exchange of certificates for
shares of FCB Common Stock may be more or less than the Average Closing Price.
FCB stockholders are urged to obtain information on the trading value of
Regions Common Stock that is more recent than that provided in this Proxy
Statement/Prospectus. See "Comparative Market Price and Dividends."
ELECTION PROCEDURES
Elections by Holders of FCB Common Stock. The Agreement provides that the
holders of shares of FCB Common Stock will have the right to elect to receive,
upon conversion of such shares upon consummation of the Merger, either the
Stock and Cash Election or the All Stock Election.
Procedures for Elections. Elections by holders of FCB Common Stock will be
made by properly completing, dating, and executing the enclosed yellow Form of
Election and returning it to FCB prior to the commencement of the Special
Meeting (the "Election Deadline").
An election will have been validly made by a holder of FCB Common Stock
only if a properly completed and executed Form of Election is received by FCB
prior to the Election Deadline.
Modification of Elections. Any holder of FCB Common Stock who has made an
election may at any time prior to the Election Deadline change such holder's
election by submitting to FCB a revised Form of Election,
19
<PAGE> 25
properly completed and executed, that is received by FCB prior to the Election
Deadline.
Revocation of Elections; Withdrawal of Shares. Any holder of FCB Common
Stock may at any time prior to the Election Deadline revoke such holder's
election and withdraw any certificates for FCB Common Stock deposited with FCB
with respect to such election by written notice to FCB received on or before
the Election Deadline. In the event the Agreement should be terminated and the
Merger abandoned, any certificates deposited by a holder of FCB Common Stock
with FCB will be promptly returned to such holder. See "Description of the
Transaction--Waiver, Amendment, and Termination of the Agreement."
Limitation on Elections. Subject to the procedures for revocation or
change of election as described above, no record holder of FCB Common Stock
will be entitled to make more than one type of election with respect to the FCB
Common Stock held by that holder.
Election by Nominees. Record holders of FCB Common Stock who are nominees
may submit a separate Form of Election for each beneficial owner for whom such
record holder is a nominee, indicating on the form an election covering up to
the aggregate number of shares of FCB Common Stock owned by such record holder.
However, upon the request of Regions, such record holder will be required to
certify to the satisfaction of Regions that such record holder holds such FCB
Common Stock as nominee for the beneficial owners thereof. Each beneficial
owner for whom such a Form of Election is so submitted will be treated as a
separate holder of FCB Common Stock.
FCB Common Stock Held in Different Names. A single holder who holds FCB
Common Stock in two or more different names and who so certifies to the
satisfaction of Regions, may submit a joint Form of Election covering the
aggregate number of shares of FCB Common Stock owned by such single holder.
Each such single holder who submits a joint Form of Election will be treated as
a single holder of FCB Common Stock.
Modification of Election Procedures. Regions may establish other
reasonable procedures and make reasonable determinations, not inconsistent with
the terms of the Agreement, governing all matters in connection with the
Agreement, including but not limited to, the validity of elections (including
any reasonable alterations in the procedure for elections described above), and
the issuance and delivery of the consideration into which shares of FCB Common
Stock are converted upon consummation of the Merger. Regions has not yet
established any such procedures or made any such determinations. Regions would
establish such procedures or make such determinations only with the consent of
FCB and only to the extent deemed to be reasonably necessary to fairly handle
unforeseen circumstances and ministerial matters in connection with the Merger.
As of the date of this Proxy Statement/Prospectus, Regions and FCB do not have
any intention of modifying the terms of the Agreement.
Option to Transmit FCB Stock Certificates. A holder of FCB Common Stock
may, but is not required to, transmit to FCB with the Form of Election a
certificate or certificates representing the shares of FCB Common Stock as to
which such election is being made. Any such holder desiring to transmit a
stock certificate or certificates with the Form of Election must complete,
date, sign, and return the enclosed blue letter of transmittal and must
comply fully with the instructions thereon. Holders of FCB Common Stock also
will have the opportunity to transmit their certificate or certificates
representing FCB Common Stock following the Effective Date. See "--Distribution
of Regions Stock Certificates and Cash Payments."
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
20
<PAGE> 26
regulatory oversight, and increasing regulatory compliance requirements for
banking institutions.
In early 1994, the executive officers and Board of Directors of FCB began
to evaluate whether the interests of the stockholders, officers and employees,
customers, and the community would be better served by combining FCB 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
FCB, and also enhanced its relationship with its customers, employees, and
community, was in the best interest of all constituencies which FCB serves. In
reaching this conclusion, the Board of Directors unanimously concluded that FCB
had insufficient assets and was unlikely to develop sufficient assets 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.
Accordingly, FCB contacted a number of regional bank holding companies for
indication of their interest and, after a review of all indications received,
requested firm proposals from three of such companies. The terms of the
proposal received from Regions provided, in the opinion of the Board, the most
favorable financial and other terms.
FCB's Reasons for the Merger. In approving the Merger, the directors of
FCB considered a number of factors. Without assigning any relative or specific
weights to the factors, the FCB Board of Directors considered the following
material factors:
(a) the information presented to the directors by the management of FCB
concerning the business, operations, earnings, asset quality, and financial
condition of FCB, 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 consideration issuable in the Merger to the market value, tangible
book value, and earnings per share of FCB Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of FCB 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;
(e) the report of Wheat reviewing a comparison of Regions to selected peer
banks, premiums paid in other merger transactions, and a discounted cash flow
analysis of FCB; and
(f) the opinion rendered by Wheat to the effect that, from a financial
point of view, the Merger Consideration was fair to the holders of FCB Common
Stock.
The terms of the Merger were the result of arm's-length negotiations
between representatives of FCB and representatives of Regions. Based upon its
consideration of the foregoing factors, the Board of Directors of FCB
unanimously approved the Merger as being in the best interests of FCB and its
stockholders. Each member of the Board of Directors of FCB has agreed to vote
those shares of FCB Common Stock over which such director has voting authority
(other than in a fiduciary capacity) in favor of the Merger and the Agreement.
FCB's Board of Directors unanimously recommends that FCB stockholders vote
FOR approval of the Agreement.
21
<PAGE> 27
Regions' Reasons for the Merger. In approving the Merger, 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 FCB 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 FCB 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 FCB; 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.
OPINION OF FCB'S FINANCIAL ADVISOR
FCB retained Wheat to act as its financial advisor in connection with the
Merger and to render a written opinion to the FCB Board of Directors as to the
fairness, from a financial point of view, to the stockholders of FCB of the
Merger Consideration being offered by Regions to FCB. Wheat is a nationally
recognized investment banking firm regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. The FCB Board of Directors selected Wheat to
serve as its financial advisor in connection with the Merger on the basis of
such firm's expertise.
A written opinion to the FCB Board of Directors reflecting Wheat's opinion
has been delivered and dated as of the date of this Proxy Statement/Prospectus
to the effect that, as of such date, the Merger Consideration was fair, from a
financial point of view, to the stockholders of FCB.
THE FULL TEXT OF WHEAT'S OPINION AS OF THE DATE OF THIS PROXY
STATEMENT/PROSPECTUS, WHICH SETS FORTH CERTAIN ASSUMPTIONS MADE, MATTERS
CONSIDERED, AND LIMITATIONS ON REVIEW UNDERTAKEN IS ATTACHED AS APPENDIX B TO
THIS PROXY STATEMENT/PROSPECTUS, IS INCORPORATED HEREIN BY REFERENCE, AND
SHOULD BE READ IN ITS ENTIRETY IN CONNECTION WITH THIS PROXY
STATEMENT/PROSPECTUS. THE SUMMARY OF THE OPINION OF WHEAT SET FORTH IN THIS
PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
OPINION. WHEAT'S OPINION IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL
POINT OF VIEW, OF THE MERGER CONSIDERATION TO THE STOCKHOLDERS OF FCB AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF FCB OR REGIONS AS TO HOW
SUCH STOCKHOLDER SHOULD VOTE ON THE MERGER.
In arriving at its written opinion, Wheat reviewed certain publicly
available business and financial information relating to FCB and Regions and
certain other information provided to it, including, among other things the
following: (i) FCB's Annual Reports to Stockholders, Consolidated Reports of
Condition and Income on Form FFIEC 034 and related financial information for
the three fiscal years ended December 31, 1993; (ii) FCB's quarterly
Consolidated Reports of Condition and Income on Form FFIEC 033 and related
financial information for the three months ended March 31, 1994, and for the
six months ended June 30, 1994, and financial information provided by
management for the nine months ended September 30, 1994; (iii) Regions' Annual
Reports to Stockholders, Annual Reports on Form 10-K and related financial
information for the three fiscal years ended December 31, 1993; (iv) Regions'
Quarterly Reports on Form 10-Q and related financial information for the three
months ended March 31, 1994, for the six months ended June 30, 1994 and for the
nine months ended September 30, 1994; (v) certain publicly available
information with respect to historical market prices and trading activity for
Regions Common Stock and for certain publicly traded financial institutions
which Wheat deemed relevant; (vi) certain publicly available information with
respect to banking companies and the financial terms of certain other mergers
and acquisitions which Wheat deemed relevant; (vii) the Agreement; (viii) the
Registration Statement of Regions, including this Proxy
22
<PAGE> 28
Statement/Prospectus; (ix) other financial information concerning the
businesses and operations of FCB and Regions, including certain audited
financial information and certain internal financial analyses and forecasts for
FCB prepared by senior management; and (x) such financial studies, analyses,
inquiries, and other matters as Wheat deemed necessary. In addition, Wheat met
with members of senior management of FCB and Regions to discuss the business
and prospects of each company.
In connection with its review, Wheat relied upon and assumed the accuracy
and completeness of all of the foregoing information provided to it or publicly
available, including representations and warranties of FCB and Regions included
in the Agreement, and Wheat has not assumed any responsibility for independent
verification of such information. Wheat relied upon the management of FCB as to
the reasonableness and achievability of its financial and operational forecasts
and projections, and the assumptions and bases therefor, provided to it and
assumed that such forecasts and projections reflect the best currently
available estimates and judgments of such management and that such forecasts
and projections will be realized in the amounts and in the time periods
currently estimated by such management. Wheat also assumed, without independent
verification, that the aggregate allowances for loan losses and other
contingencies for FCB and Regions are adequate to cover such losses. Wheat did
not review any individual credit files of FCB or Regions, nor did it make an
independent evaluation or appraisal of the assets or liabilities of FCB or
Regions.
Additionally, Wheat considered certain financial and stock market data of
FCB and Regions and compared that data with similar data for certain
publicly-held financial institutions and considered the financial terms of
certain other comparable transactions that recently have been announced or
effected, as further discussed below. Wheat also considered such other
information, financial studies, analyses, and investigations and financial,
economic, and market criteria as it deemed relevant.
In connection with rendering its opinion dated as of the date of this Proxy
Statement/Prospectus, Wheat performed a variety of financial analyses. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial analysis and the application
of those methods to the particular circumstances and, therefore, such an
opinion is not readily susceptible to partial analysis or summary description.
Moreover, the evaluation of the fairness, from a financial point of view, of
the Merger Consideration to holders of FCB Common Stock was to some extent a
subjective one based on the experience and judgment of Wheat and not merely the
result of mathematical analysis of financial data. Accordingly, notwithstanding
the separate factors summarized below, Wheat believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the evaluation process underlying its opinion. The
ranges of valuations resulting from any particular analysis described below
should not be taken to be Wheat's view of the actual value of FCB or Regions.
In performing its analyses, Wheat made numerous assumptions with respect to
industry performance, business and economic conditions, and other matters, many
of which are beyond the control of FCB or Regions. The analyses performed by
Wheat are not necessarily indicative of actual values or future results, which
may be significantly more or less favorable than suggested by such analyses.
Additionally, analyses relating to the values of businesses do not purport to
be appraisals or to reflect the prices at which businesses actually may be
sold. In rendering its opinion, Wheat assumed that, in the course of obtaining
the necessary regulatory approvals for the Merger, no conditions will be
imposed that will have a material adverse effect on the contemplated benefits
of the Merger, on a pro forma basis, to FCB.
Wheat's opinion is just one of the many factors taken into consideration by
the FCB Board of Directors in electing to approve the Agreement. Wheat's
opinion does not address the relative merits of the Merger as compared to any
alternative business strategies that might exist for FCB, nor does it address
the effect of any other business combination in which FCB might engage.
The following is a summary of the analyses performed by Wheat in connection
with its opinion delivered to the FCB Board of Directors on October 14, 1994 :
23
<PAGE> 29
Comparison of Selected Companies. Wheat compared the financial performance
and market trading information of Regions to that of a group of banks and bank
holding companies in Louisiana, Alabama, and Mississippi (the "Group"). The
Group included AmSouth Bancorporation, BancorpSouth, Inc., Colonial BancGroup,
Inc., Compass Bancshares, Inc., Deposit Guaranty Corporation, First Commerce
Corporation, Grenada Sunburst System Corporation, Hancock Holding Company,
Hibernia Corporation, Premier Bancorp, Inc., SouthTrust Corporation, Trustmark
Corporation, and Whitney Holding Corporation.
Based on financial data as of and for the twelve months ended June 30,
1994, Regions had: (i) tangible equity to tangible assets of 7.53% compared to
an average of 7.34% for the Group; (ii) nonperforming loans to loans of 0.55%
compared to an average of 0.76% for the Group; (iii) reserves for loan losses
to nonperforming loans of 269.56% compared to an average of 388.36% for the
Group; (iv) returns on average assets before securities gains, nonrecurring
expenses, and extraordinary items of 1.36% compared to an average of 1.28% for
the Group; and (v) returns on average equity before securities gains,
nonrecurring expenses, and extraordinary items of 15.99% compared to an average
of 16.33% for the Group.
Based on financial data for the twelve month periods ended December 31,
1989, 1990, 1991, 1992, and 1993 and for the six month period ended June 30,
1994, Regions had returns on average equity before extraordinary items of
13.25%, 13.64%, 14.27%, 15.64%, 16.14%, and 15.66%, respectively, compared to
an average of 0.56%, 8.34%, 6.12%, 13.61%, 17.92%, and 15.68%, respectively,
for the Group.
Analysis of Selected Transactions. Wheat performed an analysis of premiums
paid in 19 selected pending or recently completed acquisitions of banks or bank
holding companies headquartered in Louisiana, Alabama, and Georgia and
announced between June 30, 1993 and October 1, 1994 (the "Selected
Transactions"). Multiples of book value, tangible book value, trailing twelve
months earnings and annualized latest quarter earnings, as well as deposit
premiums paid in the Selected Transactions were compared to the multiples and
premiums implied by the consideration to be offered by Regions in the Merger.
The Selected Transactions included the following pending transactions: Hibernia
Corporation/American Bank, Hibernia Corporation/First State Bank and Trust
Company, Regions Financial Corporation/Union Bank & Trust Company, Hibernia
Corporation/Pioneer Bancshares Corporation, First Commerce Corporation/First
Bancshares, Inc., First Commerce Corporation/Lakeside National Bancshares,
Inc. and Regions Financial Corporation/American Bancshares, Inc. The Selected
Transactions also included the following completed transactions: Premier
Bancorp, Inc./Red River Valley Bank; Regions Financial Corporation/BNR
Bancshares, Inc.; Regions Financial Corporation/First Community Bancshares,
Inc.; Premier Bancorp, Inc./Heritage Financial Corporation; Regions Financial
Corporation/Guaranty Bancorp, Inc.; Premier Bancorp, Inc./National Bank of
Commerce of Lake Charles; Hibernia Corporation/First Continental Bancshares,
Inc.; Hancock Holding Company/First State Bank & Trust Company of East Baton
Rouge Parish; Hibernia Corporation/Bastrop National Bank; Hibernia
Corporation/First Bancorp of Louisiana, Inc.; Hibernia Corporation/Commercial
Bancshares, Inc.; and First Commerce Corporation/First Acadiana National
Bancshares, Inc.
Based on the market value of Regions Common Stock as of October 13, 1994
and financial data as of June 30, 1994, the analysis yielded ratios of the
implied consideration to be paid by Regions to FCB: (i) to book value of 209.0%
compared to an average of 207.4% for the Selected Transactions; (ii) to
tangible book value of 209.0%, compared to an average of 210.9% for the
Selected Transactions; (iii) to trailing twelve months earnings of 13.3x
compared to an average of 13.0x for the Selected Transactions; and (iv) to
latest quarter earnings annualized of 12.7x compared to an average of 13.0x for
the Selected Transactions. Additionally, Wheat examined the implied
consideration less tangible equity as a function of total deposits, yielding a
ratio of 11.2% compared to an average of 9.1% for the Selected Transactions.
Discounted Dividend Analysis. Using discounted dividend analysis, Wheat
estimated the present value of the future stream of dividends that FCB could
produce through 1998, under various circumstances, assuming the company
performed in accordance with the earnings forecasts of management and an
assumed level of expense savings were achieved. Wheat then estimated the
terminal values for FCB Common Stock at the end of the period by applying
multiples ranging from 9.00x to 11.00x projected 1998 earnings. The dividend
24
<PAGE> 30
streams and terminal values were then discounted to present values using
different discount rates (ranging from 10.0% to 15.0%) chosen to reflect
different assumptions regarding the required rates of return to holders or
prospective buyers of FCB Common Stock. This discounted dividend analysis
indicated reference ranges of between $74.69 and $102.48 per share for FCB
Common Stock. These values compare to the implied consideration to be offered
by Regions to FCB in the Merger of $90.60 based on the market value of Regions
Common Stock as of October 13, 1994.
No company or transaction used as a comparison in the above analysis is
identical to FCB, Regions, or the Merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies used for comparison in the above analysis.
Wheat's written opinion is dated as of the date of this Proxy
Statement/Prospectus and is based solely upon the information available to it
and the economic, market, and other circumstances as they existed as of such
date. Events occurring after that date could materially affect the assumptions
and conclusions contained in Wheat's opinion. Wheat has not undertaken to
reaffirm or revise its opinion or otherwise comment on any events occurring
after the date hereof.
Compensation to Financial Advisor. Wheat will receive a fee of $100,000
upon the completion of the Merger. FCB has agreed to reimburse Wheat for its
out-of-pocket expenses incurred in connection with the activities contemplated
by its engagement, up to $8,000, regardless of whether the Merger is
consummated. FCB has further agreed to indemnify Wheat against certain
liabilities, including certain liabilities under federal securities laws.
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 FCB, 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 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 the FCB 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 FCB anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the first quarter of 1995. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or FCB generally may terminate the
Agreement if the Merger is not consummated by June 30, 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 CASH PAYMENTS
Promptly after the Effective Date, Regions will cause First Alabama Bank,
acting in its capacity as the Exchange Agent (and upon surrender to the
Exchange Agent to the extent not previously surrendered with the
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Form of Election, of certificate(s) for FCB Common Stock for cancellation), to
issue and mail to each holder of FCB Common Stock, the Merger Consideration
elected to be received by such holder. In no event will the holder of any
surrendered certificate(s) be entitled to receive interest on any cash to be
issued to such holder, and in no event will Regions, FCB, or the Exchange Agent
be liable to a holder of FCB Common Stock for any Regions Common Stock or
dividends thereon or cash delivered in good faith to a public official pursuant
to any applicable abandoned property, escheat, or similar law.
Regions will bear the liability for all transfer or other taxes required by
reason of the issuance of checks and certificates for Regions Common Stock upon
consummation of the Merger; provided, however, that it will be a condition to
the issuance of any check or certificate for Regions Common Stock in any name
other than the name in which the surrendered certificate for FCB Common Stock
is registered that the person requesting the issuance of such check or
certificate for Regions Common Stock either pay to the Exchange Agent any
transfer or other taxes required by reason of such issuance, or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. After the Effective Date, to the extent permitted by law, FCB
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 FCB Common Stock have been converted in
accordance with their respective elections, regardless of whether such
stockholders have surrendered their FCB Common Stock certificates. Whenever a
dividend or other distribution is declared by Regions on 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 FCB certificate until the holder duly surrenders such
certificate. Upon surrender of such FCB 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 (without interest), shall be delivered and paid with
respect to each share represented by such certificate.
After the Effective Date, there will be no transfers of shares of FCB
Common Stock on FCB's stock transfer books. If certificates representing shares
of FCB Common Stock are presented for transfer after the Effective Date, they
will be canceled and exchanged for the consideration elected to be received by
the holder of such shares of FCB Common Stock.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) the approval of the Agreement by the required vote of the holders of
FCB Common Stock represented at the Special Meeting;
(b) 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;
(c) the receipt by each of Regions and FCB of all consents required for
consummation of the Merger;
(d) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(e) the filing of an effective Registration Statement under the Securities
Act and the absence of any stop order, action, suit, or proceeding by the SEC
to suspend the effectiveness of such Registration Statement;
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(f) 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 FCB Common Stock for Regions Common
Stock will not give rise to recognition of gain or loss to FCB stockholders,
except to the extent of any cash received; and
(g) 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 FCB 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 FCB 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 required 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 of the communities to be served. The relevant statutes
prohibit the Federal Reserve from approving the Merger if (i) 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) 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 of competent jurisdiction specifically orders
otherwise.
The Merger also was 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 benefited
by the provision or (ii) amended by a written agreement between Regions and FCB
approved by their respective Boards of Directors; provided, however, that after
approval by the FCB stockholders, no amendment that, pursuant to the LBCL,
requires further approval by such stockholders may be made without the further
approval of such stockholders.
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The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by FCB
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 FCB
fail to vote their approval of the Agreement;
(c) by mutual consent of the Boards of Directors of Regions and FCB;
(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 June 30, 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
FCB 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 FCB 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 FCB and Regions prior to
consummation of the Merger, as described below.
FCB. FCB 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
subsidiary of FCB ("FCB Subsidiary") to incur, any additional debt or other
obligation for borrowed money in excess of an aggregate of $150,000 (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: (1) FCB may, to the extent legally and
contractually permitted to do so, declare and pay regular quarterly cash
dividends on the outstanding shares of FCB Common Stock at a rate not in excess
of $.10 per share with usual and regular record payment dates in accordance
with past practice and an additional cash dividend on the outstanding shares of
FCB Common Stock for the fourth fiscal quarter of 1994 at a rate not in excess
of $.60 per share, (2) any dividend declared on the shares of FCB Common Stock
for the quarter during which the Effective Date occurs shall, unless otherwise
agreed upon in writing by the parties, be declared only if the record date for
payment of the
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quarterly dividend to holders of Regions Common Stock for the quarter in which
the Effective Date occurs is prior to the Effective Date and in such case such
FCB quarterly dividend shall be paid at a rate not in excess of the appropriate
amount set forth in (1) above per share of FCB Common Stock, and (3) in the
event Regions has delayed the Effective Date pursuant to the last clause of
Section 1.3 of the Agreement to a date within 30 days of the latest date
specified in (i) and (ii) of Section 1.3 of the Agreement such that the
Effective Date could have occurred at a date and time prior to the record date
for payment of the quarterly dividend to holders of Regions Common Stock for
the quarter in which the Effective Date occurs but for such delay, FCB may
declare and pay a dividend on the shares of FCB Common Stock for the quarter in
which the Effective Date occurs at a rate per share of FCB Common Stock not in
excess of the amount equal to the greater of (x) the amount otherwise payable
for such quarter under (1) above and (y) the product of the Applicable Common
Stock Exchange Ratio for the All Stock Election and the per share dividend
amount declared by Regions on Regions Common Stock for the quarter during which
the Effective Date occurs; (iv) issuing, selling, or otherwise disposing of any
additional shares of FCB Common Stock or of any capital stock of any FCB
Subsidiary, or 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 FCB or any FCB 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 FCB or any FCB Subsidiary; (viii) entering into or
amending any employment contract between FCB or any FCB 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 FCB or any FCB Subsidiary
or materially changing any existing plan or program of FCB or any FCB
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 FCB or any FCB Subsidiary; or (xii) modifying
or terminating any material contract.
In addition, FCB has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. FCB 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, FCB has agreed to use reasonable efforts
to cause its advisors and other representatives not to engage in any of the
foregoing activities.
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 FCB Common Stock. Regions has further agreed not to acquire
or enter into any agreement to acquire any bank or other financial institution
having its principal business location in St. Bernard Parish, Louisiana before
the consummation of the Merger.
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."
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain Agreements. Edward F. Butler, President and Chief Executive Officer
of FCB and the Bank, is a party to an employment agreement entered into with
FCB in December 1993, that provides upon the sale of FCB for termination of Mr.
Butler's employment by FCB and the Bank and a payment to Mr. Butler equal to
the sum of three times Mr. Butler's annual salary and bonus, and 1.2% of the
aggregate purchase price. Upon consummation of the Merger Mr. Butler would
become entitled to receive approximately $670,000 under such employment
agreement. FCB, Regions, and Mr. Butler are discussing a proposal to amend
such employment agreement prior to the Effective Date to provide for Mr.
Butler's continued employment.
Lawrence A. Taffaro, Executive Vice President of the Bank, is a party to an
employment agreement entered into with the Bank in December 1993. Such
employment agreement provides that following execution of a definitive
agreement for the sale of FCB, Mr. Taffaro will be entitled, upon the
occurrence of (i) termination of Mr. Taffaro's employment other than for cause
as defined in the agreement or (ii) resignation by Mr. Taffaro for good reason
as defined in the agreement, to a severance payment equal to three times his
annual salary and bonus (reduced proportionately for that portion of the three
year period following a sale that Mr. Taffaro remains employed by the Bank).
Dorsey & Company, Inc., an investment and brokerage services firm of which
FCB directors George P. Dorsey and Philip J. Dorsey are principals, entered
into a financial advisor agreement with FCB in December 1993, which provides
for payment to such firm upon consummation of a sale of FCB of a fee equal to
0.80% of the aggregate consideration received. Upon consummation of the
Merger, Dorsey & Company, Inc. will become entitled to a fee under such
agreement of approximately $160,000, estimated based on the closing sale price
of Regions Common Stock on the Nasdaq National Market on February 6, 1995.
Indemnification and Advancement of Expenses. The Agreement provides that
Regions will, and will cause the Bank to, maintain all rights of
indemnification and advancement of expenses existing in favor of each person
entitled to indemnification from FCB or any FCB Subsidiary on terms no less
favorable than the rights provided in the Articles of Incorporation or Bylaws
of FCB or any of the FCB 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 10 years from the Effective Date with
respect to matters occurring at or prior to the Effective Date.
In addition, the Agreement further provides that, for a period of one year
after the Effective Date, Regions shall use its reasonable efforts to maintain
in effect FCB's existing directors' and officers' liability insurance policy
(or comparable policies) with respect to claims arising from facts or events
which occurred prior to the Effective Date and covering persons who are
currently covered by such insurance; provided that Regions shall not be
obligated to make premium payments for such one-year period in respect of such
policy which exceed 150% of the annual premium payment for the prior fiscal
year.
The Agreement further provides that after the Effective Date Regions will
indemnify and hold harmless FCB and each of its directors and officers against
any losses, claims, damages, or liabilities arising out of or based upon an
untrue statement or alleged untrue statement of material fact contained in this
Proxy Statement/Prospectus or arising out of or based upon the omission or
alleged omission to state herein a material fact required to be stated herein
or necessary to make the statements herein not misleading and will reimburse
each such person for any legal or other expenses reasonably incurred by such
person in connection with investigating or defending any such action or claim;
provided, however, that Regions will not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or alleged omission
made in this Proxy Statement/Prospectus in reliance upon and in conformity with
information furnished to Regions by any indemnified person.
Employee Benefits. The Agreement also provides that, after the Effective
Date, Regions will provide generally to officers and employees of FCB and the
FCB Subsidiaries who, at or after the Effective Date, become officers or
employees of Regions or its subsidiaries, employee benefits under employee
benefit plans (other than stock option or other plans involving the potential
issuance of Regions Common Stock, except as set forth in the Agreement) 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 (i) service under any
qualified defined benefit plans of FCB shall be treated as service under
Regions' qualified defined benefit plans, (ii) service under any qualified
contribution plans of FCB shall be treated as service under Regions' qualified
defined contribution plans, and (iii) service under any other employee benefit
plans of FCB shall be treated as service under any similar employee benefits
plans maintained by Regions. The Agreement further provides that Regions will
cause FCB to honor all employment, severance, consulting, and other
compensation contracts disclosed to Regions between FCB or any FCB Subsidiary
and any current or former director, officer, or employee, and all provisions
for vested amounts earned or accrued through the Effective Date under FCB's
benefit plans.
Regions Stock Ownership. As of the Record Date, the directors and
executive officers of FCB owned no shares of Regions Common Stock.
DISSENTERS' RIGHTS
General. Each FCB stockholder who objects to the Merger shall be entitled
to the rights and remedies of dissenting stockholders provided in Section 131
of the LBCL, a
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copy of which is included as Appendix C to this Proxy Statement/Prospectus.
Statutory Requirements. The following is a summary of the steps to be
taken by an FCB stockholder who is interested in perfecting such holder's
dissenters' rights and should be read in conjunction with the full text of
Section 131 of the LBCL. Each of the steps enumerated below must be taken in
strict compliance with the applicable provisions of the statute in order for
holders of FCB Common Stock to perfect their dissenters' rights. If the Merger
is approved by 80% or more of the total voting power of FCB, then dissenters'
rights of appraisal, in accordance with the LBCL, will not be available.
Any written objection, demand, or notice required by the LBCL in connection
with the exercise of dissenters' rights should be sent to FCB at 8301 West
Judge Perez Drive, Chalmette, Louisiana 70043-1656, Attention: Philip J.
Dorsey, 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 FCB 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 FCB, prior to or at the Special
Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares of FCB 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, FCB 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 FCB's records.
(c) Each such stockholder, within 20 days after the mailing of such notice
to such holder, but not thereafter, must file with FCB a demand in writing for
the fair cash value of such holder's shares of FCB 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 FCB may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in St. Bernard Parish, Louisiana the
certificates representing such holder's shares of FCB Common Stock, duly
endorsed and transferred to FCB upon the sole condition that such certificates
shall be delivered to FCB upon payment of the value of the shares determined in
accordance with the provisions of Section 131 of the LBCL.
(e) With the demand, the stockholder must deliver to FCB the written
acknowledgment of such bank or trust company that it so holds such holder's
certificates of FCB 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 FCB 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
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of notice in writing of FCB's disagreement, but not thereafter, may file suit
against FCB, or the merged or consolidated corporation, as the case may be, in
the district court of St. Bernard Parish, Louisiana, praying the court to fix
and decree the fair cash value of the dissatisfied stockholder's shares of FCB
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 FCB for the fair cash value of such holder's shares of FCB
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 FCB
conclusively shall bind the stockholder (i) by FCB's statement that no payment
is due or (ii) if FCB does not contend that no payment is due, to accept the
value of such holder's shares of FCB Common Stock as fixed by FCB 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 131 of the LBCL. Such a demand may be withdrawn by the
stockholder at any time before FCB gives notice of disagreement, as provided by
the LBCL. After such notice of disagreement is given, withdrawal of a notice of
election shall require the written consent of FCB. 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 FCB 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 FCB 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 FCB); 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 FCB, the fair value thereof in cash as determined
by the FCB 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
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES
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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 FCB concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that:
(a) The Merger will be a reorganization within the meaning of Section
368(a) of the Code. FCB and Regions will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
(b) FCB 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 FCB.
(c) No gain or loss will be recognized by Regions on receipt of FCB's
assets in exchange for Regions Common Stock.
(d) The basis of FCB's assets in the hands of Regions will, in each case,
be the same as the basis of those assets in the hands of FCB immediately prior
to the transaction.
(e) The holding period of the assets of FCB in the hands of Regions will,
in each case, include the period during which such assets were held by FCB.
(f) The stockholders of FCB who exchange their shares of FCB Common Stock
solely for shares of Regions Common Stock will recognize no gain or loss upon
the exchange. If, however, a stockholder of FCB exchanges FCB Common Stock for
Regions Common Stock and cash, then such stockholder will be required to
recognize any gain realized on the exchange, and no loss will be recognized.
Gain recognition, if any, will not be in excess of the amount of cash received.
(g) The basis of the Regions Common Stock received by the FCB stockholders
who exchange their shares of FCB Common Stock solely for shares of Regions
Common Stock in the proposed transaction will, in each instance, be the same as
the basis of the FCB Common Stock surrendered in exchange therefor. If,
however, a stockholder of FCB exchanges FCB Common Stock for Regions Common
Stock and cash (pursuant to the Stock and Cash Election), then such
stockholder's basis in Regions Common Stock received will be the same as the
basis of FCB Common Stock surrendered in the exchange, reduced by the amount of
cash received, and increased by the amount of gain recognized in connection
with the exchange.
(h) The holding period of Regions Common Stock received by FCB
stockholders will, in each instance, include the period during which FCB Common
Stock surrendered in exchange therefor was held, provided that such FCB Common
Stock was held as a capital asset on the date of the exchange.
(i) The payment of cash to FCB 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) of the Code.
(j) Where solely cash is received by an FCB stockholder in exchange for
such holder's FCB Common Stock pursuant to the exercise of dissenters' rights,
such cash will be treated as having been received in redemption of such
holder's FCB Common Stock, subject to the provisions and limitations of Section
302 of the Code.
(k) Any holder of FCB Common Stock who receives cash and Regions Common
Stock pursuant to the
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Stock and Cash Election will be required to recognize any gain realized in the
exchange, but not in excess of the amount of cash received. Recognition of loss
will not be allowed. In determining whether gain will be recognized as ordinary
dividend income or as capital gain, such stockholders will be treated for
federal income tax purposes as if (a) Regions had issued solely Regions Common
Stock in exchange for their FCB Common Stock and (b) Regions redeemed a portion
of the shares issued. Thus, cash payments received by FCB stockholders
exercising the Stock and Cash Election will be treated as having been received
as distributions in full payment in exchange for the stock redeemed as provided
in Section 302(a) of the Code.
The tax opinion does not address any state, local, or other tax
consequences of the Merger. FCB 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
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 FCB 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 FCB.
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
Regions Common Stock to be issued to FCB 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, FCB (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 FCB reasonably believes to be an affiliate of FCB has
agreed to deliver 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 FCB Common Stock will be exchanging
their shares of a Louisiana corporation governed by the LBCL and FCB's Articles
of Incorporation, as amended, (the "Articles"), and Bylaws, 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 FCB stockholders and those
of Regions stockholders. The differences deemed material by FCB and Regions are
summarized below. In particular, Regions' Certificate and Bylaws contain
several provisions that
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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 LBCL and the Delaware
GCL as well as to Regions' Certificate and Bylaws and FCB'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 Bylaws," "Classified Board of Directors and Absence of
Cumulative Voting," "Removal of Directors," "Director Exculpation," "Special
Meetings of Stockholders," "Actions by Stockholders Without a Meeting,"
"Stockholder Nominations and Proposals," and "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 44,934,458 shares were issued,
including 2,919,179 treasury shares as of September 30, 1994. Regions' Board of
Directors may authorize the issuance of additional authorized shares of Regions
Common Stock 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
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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.
FCB. FCB's authorized capital stock consists of 1,000,000 shares of
FCB Common Stock, of which 226,396 shares were issued and outstanding as of
September 30, 1994. Pursuant to the LBCL, FCB's Board of Directors may
authorize the issuance of additional authorized shares of FCB Common Stock
without further action by FCB's stockholders. FCB's Articles, as amended, deny
the stockholders of FCB preemptive rights to purchase or subscribe to any
unissued authorized shares of FCB Common Stock or any option or warrant for the
purchase thereof.
AMENDMENT OF CERTIFICATE 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.
FCB. FCB's Articles provide that its articles of incorporation may be
amended by the affirmative vote of at least a majority of the voting power
present at an annual or special meeting of the stockholders.
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 is 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 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.
FCB. FCB's Articles generally provide that the number of directors
constituting the Board of FCB shall be determined by its Bylaws but shall not
be less than three nor more than fifteen persons. There are
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13 directors constituting the Board of Directors as of the date of this Proxy
Statement/Prospectus. Directors are elected by plurality vote of the
stockholders of FCB and hold office until the next annual meeting of
stockholders or until their successors are elected and qualified. The Articles
do not permit 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% of Regions' voting stock.
FCB. Pursuant to the LBCL, any director or the entire Board may be
removed, with or without cause, by the affirmative vote of a majority of the
total outstanding stock of FCB.
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 liability for (i) any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions that are 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 his 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.
FCB. FCB's Articles contain a provision limiting the liability of
directors and officers of FCB in a manner similar to Regions' Certificate.
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 indemnity 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, whether civil, criminal, administrative, or investigative, such
person must be indemnified against reasonable expenses incurred by him in
connection therewith.
FCB. FCB's Bylaws provide that FCB will indemnify its officers and
directors and may indemnify its
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employees and agents to the full extent permitted by Section 83 of the LBCL.
Section 83 is generally similar to Section 145 of the Delaware GCL.
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.
FCB. Under FCB's Bylaws, special meetings of the stockholders of FCB may
be called at any time by the President or Board of Directors, or upon the
written request of any two directors or of stockholders holding one-fifth of
the total voting power.
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.
FCB. The LBCL provides that action required or permitted to be taken at a
meeting of stockholders may be taken by unanimous consent of all stockholders
required to vote thereon.
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 "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.
FCB. Neither the LBCL nor FCB's Articles or Bylaws set forth any procedure
for stockholder nominations and proposals.
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, generally
including mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203, generally the beneficial owner of 15% or more of
the corporation's outstanding voting stock).
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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.
FCB. Section 133 of the LBCL places restrictions on "business
combinations" (as defined in Section 132(4) of the LBCL, 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 132(9) of the LBCL, generally
the beneficial owner of 10% or more of the voting power of the then outstanding
voting stock). Section 133 of the LBCL 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 133 of the LBCL 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 134B of the LBCL, 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 FCB has not specifically elected to avoid the application of Section 133
of the LBCL, Section 133 of the LBCL generally would prohibit a business
combination by FCB with an interested stockholder unless the business
combination is recommended by FCB'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 FCB voting stock voting together as a single voting
group, and (ii) two-thirds of the votes entitled to be cast by holders of FCB
voting stock, other than voting stock held by the interested stockholder who is
a party to the business combination with FCB, voting together as a single
voting group. As Regions is not an "interested stockholder" with respect to
FCB, Section 133 of the LBCL does not apply to the Merger.
Under Section 135 and following sections of the LBCL any person who
acquires more than 20% of the voting power of a corporation such as FCB may not
vote all or a portion of such shares unless the stockholders other than the
acquiring person have at a duly called stockholders meeting voted to permit the
acquiring person to exercise voting rights.
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% 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% beneficial owner or is approved by 75% or
more of the full Board after the party becomes such a 5% beneficial owner.
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FCB. The LBCL generally requires the affirmative vote of at least
two-thirds of the voting power present, or by such larger or smaller vote, but
not less than a majority, of the voting power present or of the total voting
power as the articles of incorporation may prescribe 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 the corporation if the corporation is
not insolvent. FCB's Articles provide that such actions may be effected by a
majority of the voting power present.
DISSENTERS' RIGHTS OF APPRAISAL
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.
FCB. The rights of appraisal of dissenting stockholders under Louisiana
law, 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 Louisiana law, see "Description of the
Transaction--Dissenting Stockholders."
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.
FCB. Pursuant to the LBCL, 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 and inspect any records and
accounts of the corporation at any reasonable time so long as there is a
reasonable purpose. In the case of a business competitor, such competitor must
own not less than 25% of all outstanding shares of the corporation for a period
of six months before exercising the right to examine and inspect 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 --
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Payment of Dividends."
FCB. Pursuant to the LBCL, the board of directors may from time to time
declare dividends in cash, property or its own shares out of surplus, except
earned surplus reserved by the board of directors, 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.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." FCB 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 FCB Common Stock and the cash dividends declared
per share of Regions Common Stock and FCB 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 FCB are based on actual transactions in FCB Common Stock
of which FCB 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 FCB Common Stock in the indicated
periods, and no assurance can be given that the indicated prices represent the
actual market value of the FCB Common Stock.
<TABLE>
<CAPTION>
REGIONS FCB
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>
1993
First Quarter . . . . . . . $38.38 $31.25 $.26 $10.00 $10.00 $.10
Second Quarter . . . . . . 38.25 30.25 .26 -- -- .10
Third Quarter . . . . . . . 35.25 31.25 .26 -- -- .10
Fourth Quarter . . . . . . 35.00 29.63 .26 -- -- .30
1994
First Quarter . . . . . . 33.50 30.13 .30 24.50 24.50 .10
Second Quarter . . . . . . 36.13 30.50 .30 -- -- .10
Third Quarter . . . . . . 36.75 34.63 .30 -- -- .10
Fourth Quarter . . . . . . 35.00 29.75 .30 -- -- .70
1995
First Quarter (through
February 6) . . . . . . . 33.38 31.63 .33 -- -- --
</TABLE>
On February 6, 1995, the last reported sale price of Regions Common Stock
as reported on the Nasdaq National
41
<PAGE> 47
Market, and the price of FCB Common Stock in the last known transaction, were
$33.38 and $24.50, respectively. On October 19, 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 price of FCB Common Stock in the last known transaction, were $34.00 and
$24.50, 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 the Regions Common Stock, there can be no assurance that Regions' dividend
policy will remain unchanged after completion of the 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."
The holders of FCB Common Stock are entitled to receive dividends when and
if declared by the Board of Directors out of funds legally available therefor.
Since April 1993, FCB has paid quarterly dividends of $.10 per share and an
additional amount in the first quarter of each year based on the Bank's
performance in the prior year.
42
<PAGE> 48
FCB MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
FCB derives all of its income from the Bank, its wholly owned
subsidiary.
The Bank's results of operations 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. Service charges and other fees also effect
income. 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 liabilities 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 September 30, 1994.
43
<PAGE> 49
Interest Rate Sensitivity Analysis
As of September 30, 1994:
<TABLE>
<CAPTION>
Repricing Within
0-90 91-365 Over
Days Days 1 Year Total
---- -------- ------ -----
(in thousands)
<S> <C> <C> <C> <C>
EARNING ASSETS:
Loans $ 8,515 $ 19,373 $64,240 $ 92,128
Securities 714 3,286 2,328 6,328
Funds sold 4,500 - - 4,500
-------- -------- ------- --------
Total earning assets 13,729 22,659 66,568 102,956
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits 66,944 13,140 821 80,905
-------- -------- ------- --------
Interest-sensitivity gap $(53,215) $ 9,519 $65,747 $ 22,051
======== ======== ======= ========
Cumulative gap at September 30, 1994 $(53,215) $(43,696) $22,051
======== ======== =======
Cumulative gap at December 31, 1993 $(53,641) $(40,434) $18,891
======== ======== =======
</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 September
30, 1994, and 1993, was 93% and 93%, 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 September 30, 1994, the
Bank's consolidated Tier 1 Capital and Total Capital ratios were 10.31% and
11.43%, respectively. Also at such date, the Bank's Leverage Ratio was 8.69%.
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."
44
<PAGE> 50
RESULTS OF OPERATIONS
Comparison of Nine Month Periods Ended September 30, 1994 and 1993
The following is management's discussion and analysis of the significant
changes in income and expenses in relation to the changes in financial position
for the nine months ended September 30, 1994 and 1993. This information should
be read in conjunction with FCB's interim financial statements and the notes
thereto included elsewhere herein. FCB is unaware of any trends, uncertainties,
or events which would or could have a material impact on future operating
results, liquidity, or capital.
Overview. Net income for the nine month period ended September 30, 1994, as
compared to the respective period of 1993, increased by $89,424. Both periods
were impacted by changes in the accounting for income taxes. Income before
income taxes and the cumulative effect of changes in the accounting for income
taxes increased in 1994 by $138,767.
Interest income for the nine month period ended September 30, 1994 was
$7,130,587, an increase of $245,399 over the same period in 1993. The primary
factors that affect interest income are the changes in volume and mix of
earning assets and changes in market interest rates.
Interest expense for the nine months ended September 30, 1994 increased
$138,573, or 6.9%, compared to the same period in 1993, mainly due to a
$8,117,418 increase in interest bearing deposits since the end of 1993. The
deposit liabilities are short-term and, therefore, reflect money market rate
changes over a short time span.
In the first nine months of 1994, FCB expensed $305,000 for potential loan
losses; however, in the similar 1993 period $360,000 was expensed. FCB's
continued improvement in loan quality has allowed for the reduced 1994 expense.
Total other income for the time period under consideration decreased
$8,475. Service charges on deposit accounts increased $13,587 to $475,408 for
the nine months ended September 30, 1994.
Total other expenses increased $14,584 to $3,574,052 in 1994.
Components of 1994 other expenses which have changed include: salary and
employee benefits (insurance, salaries, and retirement), up 8.1%; occupancy
expense, down 28.9%; net other real estate expense, down 62.8%; and other
expenses (postage, regulatory assessments, data processing, printing, supplies,
etc.), up 3.7%. The decline in occupancy expense is due to the purchase of the
Bank's main office building in July 1993.
Income tax benefits in the 1994 and 1993 periods are $556,000 and
$31,947, respectively. These amounts differ from the maximum corporate rate
applicable on ordinary income as a result of utilization of net operating loss
carryforwards and, changes in the valuation allowance applicable to the
deferred tax asset. In 1993 FCB booked a cumulative effect adjustment of
$573,396 net of a valuation allowance as a result of implementing SFAS No.109,
"Accounting for Income Taxes." At December 31, 1993, FCB had a valuation
allowance of approximately $1.1 million against that portion of the deferred
tax asset that management felt, more likely than not, would not be realized. At
December 31, 1993, management believed an allowance was warranted due to
uncertainties surrounding the ultimate realization of the full tax benefits of
its net operating loss carryforwards, because of the anticipated negative
impact of rising interest rates on the Bank's operations. The income tax
benefit for the nine months ended September 30, 1994, was $556,000 primarily as
the result of the elimination of this previously established valuation
allowance, due to the Bank's ability to maintain operating results in a rising
interest rate environment. (See note 3 to September 30,1994 condensed
consolidated financial statements.)
45
<PAGE> 51
Comparison of the Years Ended December 31, 1993 and 1992
The following is management's discussion and analysis of the significant
changes in income and expenses and related changes in financial position for
the year ended December 31, 1993. This information should be read in
conjunction with FCB's audited consolidated financial statements for the years
ended December 31, 1993 and 1992, and the notes thereto included elsewhere
herein.
Overview. FCB's net income for 1993 was $2,909,574 compared to $1,450,067
for 1992, an increase of 101%. The increase in net income for 1993 was mainly
attributable to an improved net interest margin, increased loan demand, a
smaller provision for loan losses and a cumulative effect of accounting change
for income taxes. FCB benefitted from recent improvements in the regional and
local economies.
Return on average assets was 2.80% and return on average equity was 37.86%
for 1993, compared to 1.50% and 31.93%, respectively, for 1992.
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 $597,851 or 9.9% as compared to an increase of
$1,583,017 or 35.7% in 1992. The primary determinant of the increase in net
interest income between 1991 and 1993 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 and investments 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 102% in 1992 to 107%
in 1993.
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 $480,000 in 1993, $590,000 in
1992, and $620,000 in 1991. The decline in the provision is due to the improved
quality of the loan portfolio.
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 $596,000 at December 31, 1993, as compared to
$844,000 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 $390,000, $973,000, and $643,000, respectively.
The allowance for possible loan losses at December 31, 1993, was $966,000
or 1.14% of net loans outstanding compared to $876,000 or 1.18% 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 changed from $920,085 in 1991, to $959,837 in 1992, and
to $838,704 in 1993. Service charges, the largest component of non-interest
income, account for most of the balance and amounted to $736,786 in 1991,
$765,225 in 1992, and $771,187 in 1993. The increase in service charge income
is due to the growth of deposits and increase in scheduled service charge fees.
The next largest component of non-interest income is gain on sale of
investments. It totaled $115,965 in 1991 and $113,199 in 1992. There were no
sales in 1993.
As the Bank has continued to grow, non-interest expenses net of expenses
related to other real estate have also increased from $4,080,936 in 1991, to
$4,503,015 in 1992, a 10.3% increase over 1991, and to $4,599,525 in 1993, a
2.1% increase over 1992. Salaries and employee benefits increased by $247,415
from 1991 to 1992, a 12.9% increase, and by $126,981 from 1992 to 1993, a 5.9%
increase, due to normal adjustments to salaries for merit and inflation and
increases in the total number of employees. At December
46
<PAGE> 52
31, 1993, 1992 and 1991, the Bank employed 82, 82.5, and 79 full-time
equivalent employees, respectively.
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-asset 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, loans
increased from $69,671,568 in 1991 to $74,494,433 in 1992, and to $84,436,518
in 1993.
Securities decreased from $10,212,828 at December 31, 1992, to $7,473,100
at December 31, 1993, a decrease of 26.8% or $2,739,728 and decreased
$1,145,158 from the period ended December 31, 1993 to September 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 $87,330,352, $89,512,090, and $88,959,328, at
the end of 1991, 1992, and 1993, respectively. Non-interest-bearing demand
deposits made up 14.7% of total deposits at the end of 1991, 16.3% at the end
of 1992, and 17.2% at the end of 1993. Deposits at September 30, 1994 are
$8,120,418 higher than at December 31, 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 payment are either applied to the outstanding
principal balance or recorded as interest income, depending on the assessment
of the ultimate collectibility of the loan. 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
47
<PAGE> 53
unpaid principal balance of the related loan or its fair market 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 payment, (iii) loans not included above which are
troubled debt restructuring, and (iv) real estate acquired through foreclosures
or repossession.
Nonperforming Assets
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans accounted for on a
nonaccrual basis $331 $621 $596 $925 $2,520 $2,553 $1,024
Accruing loans which are
contractually past due 90
days or more as to principal
or interest payments 246 288 243 479 289 280 1,291
Restructured loans (exclusive
of non-accrual loans and
loans past due ninety days
or more) - - - - - - -
Real estate acquired through
foreclosure or repossession 11 399 273 1,281 2,125 1,601 1,248
---- ----- ----- ------ ------ ------ ------
Total $588 $1,308 $1,112 $2,685 $4,934 $4,434 $3,563
==== ====== ====== ====== ====== ====== ======
</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.
48
<PAGE> 54
The following analysis sets forth information with respect to the Bank's
loan loss experience and loan loss allowance for the periods indicated.
Analysis of Loan Loss Experience
<TABLE>
<CAPTION>
September 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 $ 966 $876 $876 $1,259 $1,282
LOANS CHARGED OFF:
Real estate 19 51 82 510 277
Consumer 270 271 359 243 214
Commercial - 47 53 318 191
------ ---- ---- ------ ------
Total 289 369 494 1,071 682
RECOVERIES:
Real estate 30 5 6 32 3
Consumer 46 43 63 44 25
Commercial 7 32 35 22 11
------ ---- ---- ------ ------
Total 83 80 104 98 39
NET LOANS CHARGED OFF:
Real estate (11) 46 76 478 274
Consumer 224 228 296 199 189
Commercial (7) 15 18 296 180
------ ---- ---- ------ ------
Total 206 289 390 973 643
Provision charged to expense 305 360 480 590 620
------ ---- ---- ------ ------
Balance at end of period $1,065 $947 $966 $ 876 $1,259
====== ==== ==== ====== ======
Net charge-offs as percent of
average loans outstanding during
the period .24% .37% .50% 1.37% 1.01%
====== ==== ==== ====== ======
</TABLE>
49
<PAGE> 55
BUSINESS OF FCB
GENERAL
FCB is a bank holding company organized under the laws of the state of
Louisiana with its principal executive office located in Chalmette, Louisiana.
FCB operates principally through the Bank, which is a federally-chartered
commercial bank and which provides a range of retail banking services through
five offices in the Louisiana parish of St. Bernard. At September 30, 1994,
FCB had total consolidated assets of approximately $114 million, total
consolidated deposits of approximately $97 million, and total consolidated
stockholders' equity of approximately $11 million. FCB's principal executive
office is located at 8301 West Judge Perez Drive, Chalmette, Louisiana
70043-1656, and its telephone number at such address is (504) 277-5801.
BUSINESS AND PROPERTIES
FCB 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, and access to
24-hour teller machines through various networks. Drive-in banking facilities
are located at all banking locations.
FCB owns all but one of its five locations, the Arabi Office at 1101
Friscoville Avenue, Arabi, Louisiana. Other Bank locations are the main office
at 8301 West Judge Perez Drive, Chalmette, Louisiana; the Volpe Office at 1401
East Judge Perez Drive, Chalmette, Louisiana; the Paris Road Office at 3101
Paris Road, Chalmette, Louisiana; and the Poydras Office at 125 Bayou Road, St.
Bernard, Louisiana.
As of September 30, 1994, the Bank had approximately 91 employees. FCB 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
FCB 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. FCB 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. FCB
competes in the St. Bernard Parish markets with other banks and financial
institutions, some of which have greater financial resources than FCB. At the
end of 1993, there were approximately 17 commercial bank branches, one savings
bank branch, and three credit union branches competing in St. Bernard Parish.
LEGAL PROCEEDINGS
FCB and the Bank are not parties to any material legal proceedings other
than ordinary routine litigation incidental to their business.
50
<PAGE> 56
MANAGEMENT
The following table presents information about the directors and executive
officers of FCB and the Bank:
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
PRESENT OCCUPATION POSITION AND DIRECTOR OR OWNED AT SEPTEMBER 30, 1994
AND PRINCIPAL OFFICES HELD EXECUTIVE ---------------------------
OCCUPATION FOR WITH FCB OFFICER PERCENT OF
NAME AGE LAST FIVE YEARS AND BANK SINCE DIRECTLY INDIRECTLY CLASS
- --------------- --- ---------------- ----------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward F. Butler 55 President and CEO of Bank President, 1974 4,973 - 2.27%
Director of
FCB and Bank
Rose G. Campagna 51 EVP/CFO Exec. Officer 1985 144 - 0.06
of Bank
Valliere J. 84 President, Val J. Director of 1964 6,806 - 3.01
Dauterive Dauterive & Son FCB and Bank
Petroleum Jobber
Isabella L. 55 Alderman, City Director of 1979 2,807 8,864 (1) 5.15
delaHoussaye of Crowley FCB and Bank
George P. Dorsey (2) 71 Investment Advisor Director of 1986 200 4,314 1.99
Chairman, Dorsey & FCB
Company, Inc.
(Investment-Brokerage
Services)
G. Paul Dorsey, Jr. 47 Real Estate Director of 1976 3,874 100,447 46.07
(2) Investments FCB and Bank
Marc G. Dorsey (2) 35 Attorney-At-Law Director of 1989 50 98,459 43.51
FCB and Bank
Philip J. Dorsey (2) 45 Investment Advisor Director of 1986 290 102,885 45.57
President, Dorsey & Co. FCB
Company, Inc.
(Investment-Brokerage
Services)
William G. Pope 43 EVP/Credit Administration Exec. Officer 1989 80 - 0.03
of Bank of Bank
Francis A. Puglia 62 Retired Grocer Director of 1964 1,420 - 0.63
FCB and Bank
August A. Robin 52 Lobbyist and Director of 1984 1,652 - 0.73
Consultant FCB and Bank
Edwin M. Roy, Jr. 53 Editor, St. Bernard Voice Director of 1976 1,900 - 0.84
FCB and Bank
Henry A. Smith, Jr. 65 Marine Consultant Director of 1975 200 8,164 (3) 3.70
FCB and Bank
Lawence A. Taffaro 50 EVP and CAO ofBank Director of 1983 625 1,522 0.95
FCB and Bank
Raymond G. 60 President, Port Director of 1979 8,495 - 3.75
Willhoft, Sr. Ship Service, Inc. FCB and Bank
</TABLE>
(1) Includes 2,995 shares owned by Mrs. delaHoussaye's children, and 2,903
shares in a medical corporation profit sharing fund and 2,966 shares in a
medical corporation pension plan, both of which are owned by Mrs.
delaHoussaye's husband.
(2) George P. Dorsey is the father of G. Paul Dorsey, Jr., Marc G. Dorsey, and
Phillip J. Dorsey.
(3) Consists of shares owned by a corporation owned by Mr. Smith's sons.
51
<PAGE> 57
EMPLOYEE BENEFIT PLANS
FCB has a profit-sharing plan covering substantially all employees
after specific periods of service and attainment of minimum age requirement.
The plan allows employee contributions of which up to 50%, as limited by the
Internal Revenue Code, may be matched by FCB. Contributions by FCB to this plan
included in expenses in 1993, 1992, and 1991 were $24,550, $30,913, and $8,200,
respectively.
TRANSACTIONS WITH MANAGEMENT
In the ordinary course of business, FCB 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 $1,486,000. At December 31,
1993, all of these loans were secured.
During 1983, FCB acquired a parcel of land for future expansion having
a cost of $1,173,779. Prior to July 1993 this land was leased to Perez/Lafitte
Associates whose partners include certain directors of FCB other than Marc G.
Dorsey and Henry A. Smith and was used as a site for an office building which
contains the Bank's main office facility. In July 1993 FCB purchased the main
branch building from the partnership for $3.5 million and the lease terminated.
Total rental income from the land for 1993, 1992, and 1991 was $70,000,
$120,000, and $120,000, respectively. Prior to the acquisition FCB leased the
building from this partnership. Rental expense under this lease was $201,704,
$366,019 and $368,673 in 1993, 1992, and 1991, respectively.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FCB
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of FCB Common Stock, as of September 30,
1994.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock Dorsey Educational and Benefit Trust 98,459(1) 43.49%
511 Gravier Street, Suite 100
New Orleans, Louisiana 70130
Common Stock Paul Dorsey, Jr. 104,321(2) 46.07
129 Chartres Street
New Orleans, Louisiana 70130
Common Stock Phillip J. Dorsey 103,465(3) 45.57
511 Gravier Street, 3rd Floor
New Orleans, Louisiana 70130
Common Stock Lee C. Dorsey 98,665(4) 43.58
129 Chartres Street
New Orleans, Louisiana 70130
Common Stock Marc G. Dorsey 98,509(5) 43.51
511 Gravier Street, Suite 100
New Orleans, Louisiana 70130
Common Stock Isabella L. delaHoussaye 8,864 (6) 5.15
703 E. Third Street
Crowley, Louisiana 70526
</TABLE>
(1) All shares owned directly.
(2) Includes 1,988 shares owned by Mr. Dorsey's children and 98,459 shares
over which Mr. Dorsey exercises voting power as trustee of the Dorsey
Educational and Benefit Trust.
(3) Includes 1,043 shares owned by Mr. Dorsey's children, 3,383 shares held in
Keogh and IRA plans, and 98,459 shares over which Mr. Dorsey exercises voting
power as trustee of the Dorsey Educational and Benefit Trust.
(4) Includes 98,459 shares over which Mr. Dorsey exercises voting power as
trustee of the Dorsey Educational and Benefit Trust.
(5) Includes 50 shares in Mr. Dorsey's IRA and 98,459 over which Mr. Dorsey
exercises voting power as trustee of the Dorsey Educational and Benefit Trust.
(6) Includes 2,995 shares owned by Mrs. delaHoussaye's children, and 2,903
shares in a medical corporation profit sharing fund and 2,966 shares in a
medical corporation pension plan, both of which are owned by Mrs. delaHoussaye's
husband.
52
<PAGE> 58
BUSINESS OF REGIONS
GENERAL
Regions is a regional bank holding company headquartered in Birmingham,
Alabama which operated 256 banking offices in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of September 30, 1994. At that date, Regions had
total consolidated assets of approximately $11.7 billion, total consolidated
deposits of approximately $9.3 billion, and total consolidated stockholders'
equity of approximately $902 million. Regions operates seven state-chartered
commercial bank subsidiaries (collectively, the "Subsidiary Banks") 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 September
30, 1994, had total consolidated assets of approximately $8.9 billion, total
consolidated deposits of approximately $7.2 billion, and total consolidated
stockholders' equity of approximately $694 million. First Alabama Bank operates
172 banking offices throughout Alabama.
In Florida, Regions operates through Regions Bank of Florida, which at
September 30, 1994, had total consolidated assets of approximately $517
million, total consolidated deposits of approximately $464 million, and total
consolidated stockholders' equity of approximately $51 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 September 30, 1994, had total combined assets of
approximately $233 million, total combined deposits of approximately $212
million, and total combined stockholders' equity of approximately $18 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) Regions Bank of Louisiana and
(ii) Bank of New Roads. At September 30, 1994, Regions Bank of Louisiana and
Bank of New Roads had total combined assets of approximately $2.1 billion,
total combined deposits of approximately $1.4 billion, and total combined
stockholders' equity of approximately $196 million. Regions Bank of Louisiana
and Bank of New Roads operate 36 banking offices in Louisiana.
In Tennessee, Regions operates through Regions Bank of Tennessee, which at
September 30, 1994, had total consolidated assets of approximately $454
million, total consolidated deposits of approximately $393 million, and total
consolidated stockholders' equity of approximately $39 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 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."
53
<PAGE> 59
RECENT DEVELOPMENTS
1994 Operating Results. For the fourth quarter ended December 31, 1994,
Regions had net income of $37.2 million (or $0.88 per share), representing a
33% increase in net income (and a 17% increase on a per share basis) over the
same period of 1993. For the twelve months ended December 31, 1994, Regions
had net income of $145.9 million or $3.40 per share, representing a 13%
increase on a per-share basis in net income over 1993. The return on average
total assets for 1994 was 1.29%, and the return on average stockholders' equity
was 15.97%. At December 31, 1994, the ratio of stockholders' equity to total
assets was 7.90%. As of December 31, 1994, Regions had total consolidated
assets of approximately $12.8 billion, total consolidated deposits of
approximately $10.1 billion, and total consolidated stockholders' equity of
approximately $1.0 billion.
Recently Completed Acquisitions. During the first nine months of 1994,
Regions acquired (i) Guaranty Bank & Trust Company, located in Baton Rouge,
Louisiana, (ii) First Bank of Fayette, located in Fayette, Alabama, (iii) Bank
of New Roads, located in New Roads, Louisiana, and (iv) First Rome Bank,
located in Rome, Georgia, contributing an aggregate of approximately $527
million in assets, $291 million in loans, and $470 million in deposits to
Regions' consolidated balance sheet. Also during the same period, Regions
acquired four branch offices in Florida, two branch offices in Alabama, and
three branch offices in Louisiana in transactions with the Resolution Trust
Corporation (the "RTC"). For additional information with respect to these
acquisitions and RTC transactions, see Regions' Quarterly Reports on Form 10-Q
for the quarters ended June 30 and September 30, 1994, incorporated herein by
reference.
Since September 30, 1994, Regions has completed the acquisition of the
following institutions (the "Recently Completed Acquisitions"):
<TABLE>
<CAPTION>
Consideration
-------------------------
Approximate
---------------------
Accounting
Institution Asset Size Value Type Treatment
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
American Bancshares, Inc. ("American") and $307 $55 Regions Purchase
its subsidiary First American Bank and Trust Common
of Louisiana, located in Monroe, Louisiana Stock
Union Bank & Trust Company ("Union"), located 419 66 Regions Purchase
in Montgomery, Alabama Common
Stock
--- ---
Totals $726 $121
=== ===
</TABLE>
Other Pending Acquisition. As of the date of this Proxy
Statement/Prospectus, Regions has pending one acquisition in addition to the
acquisition of FCB. Regions has entered into a definitive agreement to acquire
Fidelity Federal Savings Bank ("Fidelity"), located in Dalton, Georgia. The
acquisition of Fidelity (the "Fidelity Acquisition") would add approximately
$287 million in assets to Regions' consolidated balance sheet and result in
the issuance of shares of Regions Common Stock having a value of approximately
$32 million, computed as of the date of public announcement of the proposed
transaction. Regions anticipates accounting for the Fidelity Acquisition as a
pooling of interests.
Consummation of the Fidelity Acquisition is subject to the approval of
certain regulatory agencies and of the stockholders of Fidelity and to the
effectiveness of a registration statement to be filed with the SEC. Moreover,
the closing of the Fidelity Acquisition is subject to various contractual
conditions precedent. No assurance can be given that the conditions precedent
to consummating the Fidelity Acquisition will be satisfied
54
<PAGE> 60
in a manner that will result in the consummation of the transaction.
The Recently Completed Acquisitions and the Fidelity Acquisition are
referred to, together, as the "Other Acquisitions."
If the Other Acquisitions and the Merger had been consummated on September
30, 1994, based on September 30, 1994 pro forma financial information, Regions'
total consolidated assets would have increased by approximately $1.1 billion to
approximately $12.8 billion; its total consolidated deposits would have
increased by approximately $946 million to approximately $10.2 billion; and its
total consolidated stockholders' equity would have increased by approximately
$77 million to approximately $978 million. See "Documents Incorporated by
Reference" and "Summary Pro Forma Financial Data" and the related pro forma
financial information in Regions' Current Report on Form 8-K dated November 23,
1994.
In connection with the acquisitions of American 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 American and Union transactions, Regions
anticipates that it may purchase in the 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 January 18, 1995, Regions had purchased, in the
open market, approximately $92.1 million of Regions Common Stock pursuant to
this repurchase program. Under rules of the SEC, Regions will not be permitted
to purchase shares of Regions Common Stock in the open market during a period
commencing prior to the mailing of this Proxy Statement/Prospectus and ending
immediately following the Special Meeting, during any period for determining the
Average Closing Price, and during any comparably corresponding period with
respect to the Fidelity Acquisition.
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 in the controlling indenture) 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 American acquisition as described above under
"--Recent Developments--Recently Completed Acquisitions." The net proceeds from
the issuance of the 7 3/4% Notes have been, and will continue to be, used for
general corporate purposes.
55
<PAGE> 61
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the Merger and the Other Acquisitions 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 operations 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 November 23, 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 FCB
The following unaudited pro forma combined data give effect to the
acquisition of FCB as of the date or at the beginning of the periods indicated,
assuming such acquisition is treated as a purchase.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1994
------------
(IN THOUSANDS
EXCEPT PER
SHARE DATA)
<S> <C>
BALANCE SHEET DATA:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,788,082
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,491,163
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,129,936
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,367,303
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650,955
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 916,227
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.56
</TABLE>
56
<PAGE> 62
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
INCOME STATEMENT DATA:
Total interest income $575,489 $564,987
Total interest expense 248,445 216,321
-------- --------
Net interest income 327,044 348,666
Provision for loan losses 14,109 22,013
-------- --------
Net interest income after loan loss
provision 312,935 326,653
Total noninterest income 109,657 132,865
Total noninterest expense 258,318 292,227
Income tax expense 54,827 53,401
-------- --------
Income before cumulative effect
of change in accounting principle $109,447 $113,890
======== ========
Income before cumulative effect
of change in accounting principle per share $ 2.51 $ 3.02
Average common shares outstanding 43,519 37,695
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, FCB, AND OTHER ACQUISITIONS
The following unaudited pro forma combined data as of September 30, 1994,
and for the nine months ended September 30, 1994, and the year ended December
31, 1993, give effect to (i) the acquisition of Fidelity by Regions, assuming
such acquisition is accounted for as a pooling of interests, and (ii) the
acquisitions of Union, American, and FCB by Regions, assuming such acquisitions
are treated as purchases for accounting purposes, as if all such transactions
had been consummated on September 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." The pro forma effects of the results of
operations of Fidelity for the years ended December 31, 1992 and 1991 are not
material.
57
<PAGE> 63
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1994
----
(IN THOUSANDS
EXCEPT PER
SHARE DATA)
<S> <C>
BALANCE SHEET DATA:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,771,778
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,645,339
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,756,305
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,216,207
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710,380
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 978,417
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.76
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1994 1993
-------------- --------------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . . . . . . . . . . . . . . $624,217 $629,573
Total interest expense . . . . . . . . . . . . . . . . . 275,864 253,171
-------- --------
Net interest income . . . . . . . . . . . . . . . . . . 348,353 376,402
Provision for loan losses . . . . . . . . . . . . . . . . 12,190 23,421
-------- --------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . . . . 336,163 352,981
Total noninterest income . . . . . . . . . . . . . . . . 121,838 146,926
Total noninterest expense . . . . . . . . . . . . . . . . 286,458 329,117
Income tax expense . . . . . . . . . . . . . . . . . . . 57,678 53,711
-------- --------
Income before cumulative effect of
change in accounting principle . . . . . . . . . . . . $113,865 $117,079
======== ========
Income before cumulative effect of
change in accounting principle per
share . . . . . . . . . . . . . . . . . . . . . . . . $ 2.54 $ 3.03
Average common shares outstanding . . . . . . . . . . . 44,857 38,699
</TABLE>
58
<PAGE> 64
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
59
<PAGE> 65
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, 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 nonbanking
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 Banks is a member of the Federal Deposit Insurance
Corporation ("the FDIC"), and as such, their deposits are insured by the FDIC
to the extent provided by law. Each Subsidiary Bank 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. The FDIC regularly examines the
operations of the Subsidiary Banks and is given authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The FDIC also has the power to prevent the continuance or
development of unsafe or unsound banking practices or other violations of law.
The Subsidiary Banks 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 bank 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. In response to widespread
criticisms of the December 1993 proposal, the agencies on September 26, 1994,
issued a revised proposal. Under the new proposal, the current process-based
CRA assessment factors would be replaced with a new evaluation system that
would rate institutions based on their actual performance in meeting community
credit needs. The evaluation system used to judge an institution's CRA
performance will consist of three tests: a lending test; an investment test;
and a service test. Each of these tests would be applied by the institution's
federal regulator in an assessment context that would take into account such
factors as: (i) demographic data about the community; (ii) the institution's
capacity and constraints; (iii) the institution's product offerings and
business strategy; and (iv) data on the prior performance of the institution
and similarly situated lenders.
The proposed lending test--the most important of the three tests for all
institutions other than wholesale and
60
<PAGE> 66
limited purpose (e.g., credit card) banks--would evaluate an institution's
lending activities as measured by its home mortgage loans, small business and
farm loans, community development loans, and, at the option of the institution,
its consumer loans. The institution's regulator would weigh each of these
lending categories to reflect their relative importance to the institution's
overall business and, in the case of community development loans, the
characteristics and needs of the institution's service area and the
opportunities available for this type of lending. Assessment criteria for the
lending test would include: (i) geographic distribution of the institution's
lending; (ii) distribution of the institution's home mortgage and consumer
loans among different economic segments of the community; (iii) the number and
amount of small business and small farm loans made by the institution; (iv) the
number and amount of community development loans outstanding; and (v) the
institution's use of innovative or flexible lending practices to meet the needs
of low- to moderate-income individuals and neighborhoods. At the election of an
institution, or if particular circumstances so warrant, the banking agencies
will take into account in making their assessments lending by the institution's
affiliates as well as community development loans made by lending consortia and
other lenders in which the institution has invested. As part of the proposal,
all financial institutions would be required to report data on their small
business and small farm loans as well as their home mortgage loans, which are
currently required to be reported under the Home Mortgage Disclosure Act.
The focus of the investment test would be the degree to which the
institution is helping to meet the needs of its service area through qualified
investments that (i) benefit low- to moderate-income individuals and small
businesses or farms, (ii) address affordable housing needs, or (iii) involve
donations of branch offices to minority or women's depository institutions.
Assessment of an institution's performance under the investment test would be
based upon the dollar amount of the institution's qualified investments, its
use of innovative or complex techniques to support community development
initiatives, and its responsiveness to credit and community development needs.
The service test would evaluate an institution's systems for delivering retail
banking services, taking into account such factors as (i) the geographic
distribution of the institution's branch offices and automated teller machines
("ATMs"), (ii) the institution's record of opening and closing branch offices
and ATMs, and (iii) the availability of alternative product delivery systems
such as home banking and loan production offices in low- to moderate-income
areas. The federal regulators would also consider an institution's community
development services as part of the service test. A separate community
development test would be applied to wholesale or limited purpose financial
institutions.
Smaller institutions (those having total assets of less than $250 million)
would be evaluated under more streamlined criteria. In addition, a financial
institution would have the option of having its CRA performance evaluated based
on a strategic plan of up to five years in length that it had developed in
cooperation with local community groups. In order to be rated under a strategic
plan, the institution would be required to obtain the prior approval of its
federal regulator.
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 noncompliance.
An institution would then receive a certain number of points for its rating on
each test, and the points would be combined to produce an overall composite
rating of either outstanding, satisfactory, needs to improve, or substantial
noncompliance. Under the agencies' proposed rating guidelines, an institution's
rating on the lending test would count for at least 50% of its overall rating,
and no institution can receive an overall rating of "satisfactory" unless it
receives a rating of at least "low satisfactory" on its lending test. The
proposed guidelines also provide that if an institution received no better than
a "needs to improve" rating on its previous two CRA exams, a "needs to improve"
rating on the third exam would be downgraded to "substantial noncompliance." In
any situation, evidence of discriminatory or other illegal credit practices
would adversely effect an institution's overall rating.
Under the proposal, an institution's CRA rating would continue to be taken
into account by its regulator in considering various types of applications. In
addition, an institution receiving a rating of "substantial noncompliance"
would be subject to civil money penalties or a cease and desist order under
Section 8 of the Federal Deposit Insurance Act (the "FDIA").
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<PAGE> 67
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 Banks.
There are statutory and regulatory limitations on the payment of dividends by
the Subsidiary Banks 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.
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 and the FDIC 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.
At September 30, 1994, under dividend restrictions imposed under federal
and state laws, the Subsidiary Banks, without obtaining governmental approvals,
could declare aggregate dividends to Regions of approximately $262 million.
The payment of dividends by Regions and the Subsidiary Banks 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
Banks. Each Subsidiary Bank (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 Bank and its
subsidiaries may not exceed 10% of the capital stock and surplus of such
Subsidiary Bank; and (ii) in the case of all affiliates, the aggregate amount
of covered transactions of the Subsidiary Bank and its subsidiaries may not
exceed 20% of the capital stock and surplus of such Subsidiary Bank. "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 Banks are required to comply with the capital
adequacy standards established by the Federal Reserve in the case of Regions
and the FDIC in the case of the Subsidiary Banks. 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
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<PAGE> 68
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 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 September 30, 1994, Regions' consolidated Tier 1 Capital and Total
Capital ratios were 10.93% and 14.79%, 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 basis
points. Regions' Leverage Ratio at September 30, 1994, was 7.71%. 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. Each of the Subsidiary Banks was in
compliance with applicable minimum capital requirements as of September 30,
1994. Neither Regions nor any of the Subsidiary Banks 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 and the FDIC 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 BANKS
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 Banks. 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 Banks are
subordinate in right of payment to deposits and to certain other indebtedness
of such Subsidiary Bank. 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 Bank 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
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<PAGE> 69
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 Banks are subject to these cross-guarantee provisions. As a result,
any loss suffered by the FDIC in respect of any of the Subsidiary Banks would
likely result in assertion of the cross-guarantee provisions, the assessment of
such estimated losses against Regions' other Subsidiary Banks, and a potential
loss of Regions' investment in such other Subsidiary Banks.
PROMPT CORRECTIVE ACTION
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, 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 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
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<PAGE> 70
are necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
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 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 September 30, 1994, all of the Subsidiary Banks 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 Banks had at September 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 Banks.
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
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<PAGE> 71
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 and the
Savings Association Insurance Fund are designed to increase the reserve ratios
(i.e., the ratios of reserves to insured deposits) for both funds to a
designated ratio (i.e., 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. 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
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Regions is authorized to issue 120,000,000 shares of Regions Common Stock,
of which 44,934,458 shares were issued, including 2,919,179 treasury shares, at
September 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 September 30, 1994.
However, the ability of Regions to pay dividends is further affected by the
ability of its Subsidiary Banks to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At September 30,
1994, under such requirements and guidelines, the Subsidiary Banks had $262
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 have been 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.
Proposals with respect to Regions' 1996 annual meeting of stockholders may be
submitted until the date specified in Regions' 1995 annual meeting proxy
statement.
EXPERTS
The consolidated financial statements of FCB 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 February 6, 1995, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 119,995 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 FCB FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
Consolidated Statements of Condition as of
December 31, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
Condensed Consolidated Statement of Condition
as of September 30, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-17
Condensed Consolidated Statements of Income (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18
Condensed Consolidated Statements of Cash Flows (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19
Notes to Unaudited Condensed Consolidated Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-20
</TABLE>
F-1
<PAGE> 74
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
First Commercial Bancshares, Inc.
and Subsidiary
Chalmette, Louisiana
We have audited the accompanying consolidated statements of condition of First
Commercial Bancshares, Inc. and subsidiary as of December 31, 1993 and 1992 and
the related consolidated statements of income, stockholders' equity, and cash
flows for 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 First Commercial Bancshares, Inc.
and subsidiary 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 financial statements, the Bank changed its method
of accounting for income taxes effective January 1, 1993 to conform with
Statement of Financial Accounting Standards No. 109.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New Orleans, Louisiana
January 28, 1994
F-2
<PAGE> 75
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31, 1993 AND 1992
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
ASSETS 1993 1992
---- ----
<S> <C> <C>
Cash and due from banks . . . . . . . . . . . . . . . . . . $ 3,848 $ 6,515
Federal funds sold . . . . . . . . . . . . . . . . . . . . 500 550
-------- -------
Cash and cash equivalents . . . . . . . . . . . . . . . 4,348 7,065
Investment securities (market value of $7,594
and $10,382) . . . . . . . . . . . . . . . . . . . . . . 7,473 10,213
Loans, net of unearned discount . . . . . . . . . . . . . . 84,437 74,494
Less allowance for loan losses . . . . . . . . . . . . . . (966) (876)
-------- -------
Net loans . . . . . . . . . . . . . . . . . . . . . . . 83,471 73,618
Bank premises and equipment, net . . . . . . . . . . . . . 6,515 3,109
Other real estate owned . . . . . . . . . . . . . . . . . . 273 1,281
Accrued interest receivable . . . . . . . . . . . . . . . . 651 700
Other assets . . . . . . . . . . . . . . . . . . . . . . . 375 350
Deferred tax asset - net . . . . . . . . . . . . . . . . . 688 -
-------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . $103,794 $96,336
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits . . . . . . . . . . . . . . . . . . . . $ 15,318 $14,551
Money market and NOW accounts . . . . . . . . . . . . . 17,620 17,288
Savings deposits . . . . . . . . . . . . . . . . . . . . 20,297 20,619
Time deposits of $100,000 and over . . . . . . . . . . . 3,438 2,238
Other time deposits . . . . . . . . . . . . . . . . . . 32,286 34,816
-------- -------
Total deposits . . . . . . . . . . . . . . . . . . . 88,959 89,512
Accrued interest payable . . . . . . . . . . . . . . . . . 552 465
Other liabilities . . . . . . . . . . . . . . . . . . . . . 497 347
Federal Home Loan Bank advances . . . . . . . . . . . . . . 5,000 -
-------- -------
Total liabilities . . . . . . . . . . . . . . . . . . 95,008 90,324
-------- -------
COMMITMENTS AND CONTINGENCIES . . . . . . . . . . . . . . . - -
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value;
1,000,000 shares authorized; 226,396 shares
issued and outstanding . . . . . . . . . . . . . . . . . 226 226
Surplus . . . . . . . . . . . . . . . . . . . . . . . . 5,508 5,508
Retained earnings . . . . . . . . . . . . . . . . . . . 3,052 278
-------- -------
Total stockholders' equity . . . . . . . . . . . . . 8,786 6,012
-------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . $103,794 $96,336
======== =======
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 76
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Amounts in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans . . . . . . . . . . . . . $8,734 $8,231 $7,673
Interest on investment securities:
U. S. Treasury securities . . . . . . . . . . . . . 271 422 552
Obligations of other U. S. Government agencies
and corporations . . . . . . . . . . . . . . . . 193 238 219
Obligations of state and political subdivisions . . 23 36 10
Interest on federal funds sold . . . . . . . . . . . 98 84 288
------ ------ ------
9,319 9,011 8,742
INTEREST EXPENSE - Deposits . . . . . . . . . . . . . . 2,707 2,996 4,310
------ ------ ------
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . 6,612 6,015 4,432
PROVISION FOR LOAN LOSSES . . . . . . . . . . . . . . . 480 590 620
------ ------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . 6,132 5,425 3,812
OTHER INCOME:
Service fees . . . . . . . . . . . . . . . . . . . . 771 765 737
Gain on sales of investment securities . . . . . . . - 113 116
Other . . . . . . . . . . . . . . . . . . . . . . . 68 81 67
------ ------ ------
839 960 920
OTHER EXPENSES:
Salaries and employee benefits . . . . . . . . . . . 2,291 2,164 1,916
Occupancy expenses . . . . . . . . . . . . . . . . . 452 509 521
Furniture and equipment expenses . . . . . . . . . . 267 287 284
Expenses related to other real estate owned, net . . 111 432 163
Other . . . . . . . . . . . . . . . . . . . . . . . 1,589 1,543 1,360
------ ------ ------
4,710 4,935 4,244
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES . . . . . . . . . . . . 2,261 1,450 488
INCOME TAXES:
Current tax expense . . . . . . . . . . . . . . . . 39 - -
Deferred tax benefit . . . . . . . . . . . . . . . . (114) - -
------ ------ ------
(75) - -
------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING FOR INCOME TAXES . . . . . . 2,336 1,450 488
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES . . . . . . . . . . . . . 574 - -
------ ------ ------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $2,910 $1,450 $ 488
====== ====== ======
NET INCOME PER SHARE OF COMMON STOCK:
Income before cumulative effect . . . . . . . . . $10.32 $ 6.41 $ 2.15
Cumulative effect of accounting change . . . . . . 2.53 - -
------ ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . $12.85 $ 6.41 $ 2.15
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 77
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Amounts in thousands)
<TABLE>
<CAPTION>
Common Stock Retained Total
------------------- Earnings Stockholders'
Shares Amount Surplus (Deficit) Equity
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1991 . . . . . . . . . 226 $226 $5,507 $(1,660) $4,074
Net income - 1991 . . . . . . . . . . . . . 488 488
--- ---- ------ ------- ------
Balance, December 31, 1991 . . . . . . . . 226 226 5,507 (1,172) 4,562
Net income - 1992 . . . . . . . . . . . . . 1,450 1,450
--- ---- ------ ------- ------
Balance, December 31, 1992 . . . . . . . . 226 226 5,507 278 6,012
Net income - 1993 . . . . . . . . . . . . . 2,910 2,910
Dividends - $.60 per share . . . . . . . . (136) (136)
--- ---- ------ ------- ------
Balance, December 31, 1993 . . . . . . . . 226 $226 $5,507 $ 3,052 $8,786
=== ==== ====== ======= ======
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 78
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Amounts in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 2,910 $ 1,450 $ 488
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . 245 206 200
Amortization of premiums on investment
securities, net of accretion of discounts . . . . . 39 (14) (114)
Provision for loan losses . . . . . . . . . . . . . 480 590 620
Provision for losses on other real estate owned . . 113 324 118
Deferred tax benefits . . . . . . . . . . . . . . . (688) - -
Loss on disposal of bank premises and equipment . . 25 - -
Gain on sales of other real estate owned . . . . . (53) (6) (2)
Gain on sales of investment securities . . . . . . - (113) (116)
Change in accrued interest receivable . . . . . . . 49 82 (60)
Change in other assets . . . . . . . . . . . . . . (25) 1 1
Change in accrued interest payable . . . . . . . . 87 (184) (217)
Change in other liabilities . . . . . . . . . . . . 150 136 35
------- ------- -------
Net cash provided by operating activities . . . . . 3,332 2,473 953
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of investment
securities . . . . . . . . . . . . . . . . . . . . . . 15,378 10,189 16,401
Purchases of investment securities . . . . . . . . . . (12,677) (6,495) (21,478)
Loan originations, net of repayments . . . . . . . . . (10,002) (8,945) (10,580)
Purchases of bank premises and equipment . . . . . . . (3,676) (94) (115)
Proceeds from sales of bank premises and equipment . . - 1 4
Proceeds from sales of other real estate owned . . . . 617 1,201 267
Proceeds from sales of loans . . . . . . . . . . . . . - 2,475 -
------- ------- -------
Net cash used in investing activities . . . . . . . (10,360) (1,669) (15,501)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits . . . . . . . . . (553) 2,182 4,824
Decrease in federal funds purchased . . . . . . . . . - (350) 350
Proceeds from other borrowed money . . . . . . . . . . 5,000 - -
Cash dividends paid . . . . . . . . . . . . . . . . . (136) - -
------- ------- -------
Net cash provided by financing activities . . . . . 4,311 1,832 5,174
------- ------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . (2,717) 2,635 (9,374)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . 7,065 4,430 13,804
------- ------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR . . . . . . . . . $ 4,348 $ 7,065 $ 4,430
======= ======= =======
SUPPLEMENTAL INFORMATION:
Loans transferred to other real estate owned . . . . . $ 305 $ 675 $ 907
======= ======= =======
Interest paid . . . . . . . . . . . . . . . . . . . . $ 2,620 $ 3,180 $ 4,526
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 79
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of First Commercial Bancshares, Inc.
(the Company) conform to generally accepted accounting principles and the
prevailing practices within the banking industry. A summary of significant
accounting and reporting policies follows:
Principles of Consolidation -- The consolidated financial statements of the
Company (a bank holding company) include the accounts of the Company and its
wholly--owned subsidiary, First National Bank of St.Bernard Parish (the Bank).
All significant intercompany items have been eliminated in consolidation.
Investment 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. The Bank intends
and believes it has the ability to hold its investment securities until
maturity.
The Financial Accounting Standards Board has issued Statement of Financial
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 does not believe that
the adoption of the Statement will have a material effect on its financial
statements.
Loans -- Loans are stated at the principal amount outstanding, net of
unearned discount and allowance for loan losses. 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. Fees, net of origination costs, if
applicable, are deferred and amortized over the life of the loan.
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 during the current year prior to the judgment of uncollectibility is
charged to operations. Interest accrued during prior periods is charged to the
allowance for loan losses. 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.
F-7
<PAGE> 80
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.
Periodically during 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 market 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
probable losses in the existing loan portfolio.
Bank Premises and Equipment -- Bank premises and equipment are stated at
cost, less accumulated depreciation and amortization. Depreciation is provided
principally on the straight--line basis over the estimated useful life of each
type of asset ranging from 3-40 years. Leasehold improvements are amortized
over the life of the respective lease or the estimated useful lives of the
improvements, whichever is shorter.
Other Real Estate Owned -- The Bank records other real estate owned at the
lesser of the outstanding loan amount or fair market value at the time of
foreclosure, net of disposal costs. Write--downs from the loan carrying value
to fair value at the time of foreclosure are charged to the allowance for loan
losses. Any subsequent deterioration in fair value is recognized by a charge
to operations. Determinations of fair value are based on periodic appraisals,
which are subject to significant fluctuations as economic conditions change.
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 operating expenses.
Income Taxes - The Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes," effective
January1, 1993. SFAS 109 changed the method used by the Company in providing
income tax expense in its financial statements.
SFAS 109 requires the Company to compute deferred income taxes based on the
difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. Under SFAS 109, the effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date.
F-8
<PAGE> 81
During 1992 and 1991, the Bank provided for income taxes based upon the
items of income and expenses reported in the financial statements, after
considering permanent differences. The major permanent difference related to
tax exempt interest income.
Deferred income taxes result primarily from the use of accelerated
depreciation methods for income tax purposes, from different methods of
accounting for the allowance for loan losses and the estimated future benefits
of available net operating loss carryforwards.
Statements of Cash Flows -- For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from banks, and federal
funds sold. Generally, federal funds sold are purchased and sold for one day
periods.
Reclassifications - Certain reclassifications have been made to the 1992 and
1991 financial statements in order to conform to those classifications adopted
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 $618,000 and $567,000 at December
31, 1993 and 1992, respectively.
3. INVESTMENT SECURITIES
The amortized cost and estimated market values of investment securities are
summarized as follows:
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In thousands)
<S> <C> <C> <C> <C>
U. S. Treasury securities $3,996 $ 57 $ - $4,052
Mortgage backed securities 1,478 7 (5) 1,481
Other securities 1,999 62 - 2,061
------ ---- --- ------
$7,473 $126 $(5) $7,594
====== ==== === ======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
-------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 7,023 $103 $(12) $ 7,113
Mortgage backed securities 1,778 8 (4) 1,783
Obligations of states and
political subdivisions 45 1 - 46
Other securities 1,367 73 - 1,440
------- ---- ---- -------
$10,213 $185 $(16) $10,382
======= ==== ==== =======
</TABLE>
F-9
<PAGE> 82
The amortized cost and estimated market value of debt securities at December
31, 1993, by contractual maturity are shown below. 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>
Amortized Estimated
Cost Market Value
(In thousands)
<S> <C> <C>
Due in one year or less $2,978 $2,981
Due after one year through five years 3,017 3,132
Mortgage--backed securities 1,478 1,481
------ ------
$7,473 $7,594
====== ======
</TABLE>
Proceeds from sales of investments in debt securities during 1992 and 1991
were $8,080,187 and $14,341,780, respectively. A gain of $113,980 and $122,671
and a loss of $781 and $6,706 was realized on these sales in 1992 and 1991,
respectively. There were no sales in 1993.
At December 31, 1993, securities with an aggregate book value of $5,616,000
and estimated market value of $5,730,000 were pledged to secure public deposits
and for other purposes as required or permitted by law.
4. LOANS
The composition of the loan portfolio at December 31, 1993 and 1992 was as
follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1993 1992
(In thousands)
<S> <C> <C>
Commercial $ 3,763 $ 4,416
Real estate 25,113 24,641
Installment 56,280 46,247
------- -------
85,156 75,304
Less:
Unearned discount (719) (810)
Allowance for loan losses (967) (876)
------- -------
Net loans $83,470 $73,618
======= =======
</TABLE>
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.
The Bank generally markets loans in its market area comprising primarily of
St. Bernard Parish.
Loans on which the accrual of interest had been discontinued amounted to
approximately $596,000 and $925,000 at December 31, 1993 and 1992,
respectively. If interest on those loans had been accrued, such income would
have approximated $43,000, $107,600 and $316,700 for 1993, 1992 and 1991,
respectively.
F-10
<PAGE> 83
In the ordinary course of business, loans have been made by the Bank to
certain executive officers, directors and principal stockholders (more than 10%
ownership) and their affiliates. In the opinion of management, these loans
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons.
An analysis of the activity during 1993 with respect to these loans was as
follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Balance, January 1, 1993 $2,276
New loans -
Repayments (790)
------
Balance, December 31, 1993 $1,486
======
</TABLE>
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
-----------------------------------------
1993 1992 1991
(In thousands)
<S> <C> <C> <C>
Balance at beginning of year $876 $1,259 $1,282
Provisions charged to operations 480 590 620
Loans charged off (494) (1,071) (682)
Recoveries 104 98 39
---- ------ ------
Net charge offs (390) (973) (643)
---- ------ ------
Balance at end of year $966 $ 876 $1,259
==== ====== ======
</TABLE>
5. BANK PREMISES AND EQUIPMENT
Major classifications of bank premises and equipment are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------
1993 1992
(In thousands)
<S> <C> <C>
Land $1,464 $1,424
Buildings 5,238 1,071
Furniture, fixtures and equipment 1,726 1,716
Leasehold improvements 159 821
------ ------
8,587 5,032
Less accumulated depreciation and amortization (2,072) (1,923)
------ ------
$6,515 $3,109
====== ======
</TABLE>
6. FEDERAL HOME LOAN BANK ADVANCES
At December 31, 1993 the Bank was indebted to the Federal Home Loan Bank
(FHLB) for $5,000,000 of advances, secured by a blanket pledge of and security
interest in certain of the Bank's assets. These advances consisted of
$3,000,000 bearing interest at 6.64% and due August 2008, $1,000,000 bearing
interest at 5.63% and due August 2008 and $1,000,000 bearing interest at 4.18%
and due March 1995.
F-11
<PAGE> 84
7. COMMITMENTS AND CONTINGENCIES
The Bank has rental commitments for land, buildings and equipment covered by
several operating leases expiring on various dates through 2001. The minimum
rental commitment at December 31, 1993 under these leases is as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
(In thousands)
<S> <C>
1994 $ 62
1995 62
1996 62
1997 64
1998 67
Thereafter 238
----
$555
====
</TABLE>
In July of 1993 the Bank purchased the main branch building, for
approximately $3,500,000, from a partnership whose partners included certain
directors and stockholders of the Bank. Prior to the acquisition the Bank
leased the building from this partnership. Rental expense under this lease was
$201,704, $366,019 and $368,673 in 1993, 1992 and 1991, respectively.
Total rental expense on operating leases was $268,665, $426,851 and $429,453
in 1993, 1992 and 1991, respectively.
The Bank is a defendant in legal actions arising from normal business
activities. Management believes that ultimate liability, if any, resulting
from such matters will not materially affect the Bank's financial position.
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
SFAS No. 109. Prior years have not been restated. The cumulative effect of
this accounting change amounted to $573,396 and is shown as a separate line
item on the consolidated statements of income.
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 amounts used for income tax purposes. Significant components
of the Bank's deferred tax assets and liabilities as of December 31, 1993 are
as follows:
<TABLE>
<CAPTION>
Deferred Tax Assets: (In thousands)
<S> <C>
Other real estate write-downs $ 36
Reserve for loan losses 57
Alternative minimum tax credits 51
Net operating losses 1,976
------
2,120
Less valuation reserve (1,110)
------
1,010
Deferred Tax Liabilities:
Tax over book depreciation 287
Basis in loans 35
------
322
------
Net deferred tax asset $ 688
======
</TABLE>
F-12
<PAGE> 85
The provision (benefit) for federal income taxes differs from the amount
computed by applying the U.S. Federal income tax rate (34%) on income as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended
December 31,
------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
Taxes calculated at statutory rate $ 769 $ 493 $ 166
Tax exempt interest (8) (12) (3)
Tax loss in excess of book on other
real estate sales (116) - -
Utilization of net loss carryforward - (481) (163)
Change in valuation allowance (831) - -
Other, net 111 - -
----- ----- -----
$ (75) $ - $ -
===== ===== =====
</TABLE>
At December 31, 1993, the consolidated group has net operating loss
carryforwards of approximately $5,812,000 for income tax purposes. These
carryforwards, if not utilized to offset taxable income, will expire in years
2003 and 2004.
9. EMPLOYEE BENEFITS
The Bank has a profit--sharing plan covering substantially all employees
after specific periods of service and attainment of minimum age requirements.
The plan allows employee contributions of which up to fifty percent (50%), as
limited by the Internal Revenue Code, may be matched by the Bank.
Contributions by the Bank to this plan included in expenses in 1993, 1992 and
1991 were $24,550, $30,913 and $8,200, respectively.
10. LAND LEASED TO RELATED PARTY
During 1983 the Bank acquired a parcel of land for future expansion having a
cost of $1,173,779. Prior to July 1993 this land was leased to a partnership
whose partners include certain directors and stockholders of the Bank and was
used as a site for an office building which contains the Bank's main office
facility. In July 1993 the Bank purchased the main branch building from the
partners for $3.5 million and the lease terminated. Total rental income from
the land for 1993, 1992 and 1991 was $70,000, $120,000 and $120,000,
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 instruments 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 Bank uses the same credit policies in making
these commitments and conditional obligations as its does for on--balance sheet
instruments.
As of December 31, 1993 and 1992, the Bank has made various commitments to
extend credit totalling $3,513,000 and $3,126,000, respectively. Additionally,
unfunded letters of credit totalling $54,750 and $583,387 were outstanding as
of December 31, 1993 and 1992, respectively. Bank management does not
anticipate any material loss as a result of these transactions.
F-13
<PAGE> 86
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. The Bank uses the same credit
policies in making these commitments as it does for recorded loans.
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.
12. REGULATORY MATTERS
The Bank is required to maintain certain minimum capital levels. At
December 31, 1993 the Bank was in compliance with these statutory minimum
capital requirements. Following is a summary of the minimum required capital
levels and the actual amounts at December 31, 1993.
<TABLE>
<CAPTION>
Minimum
Required Actual
<S> <C> <C>
Tier I Leverage 3% to 5% 7.93%
Tier I Risk-Based 4% 9.29%
Total Risk-Based 8% 10.39%
</TABLE>
13. OTHER OPERATING EXPENSES
Other operating expenses consisted of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1993 1992 1991
(In thousands)
<S> <C> <C> <C>
FDIC assessments $ 242 $ 230 $ 191
Ad valorem taxes 114 79 59
Data processing 336 349 297
Legal expenses 82 75 84
Stationary, printing and postage 259 269 295
Write-down of repossessed assets 64 78 32
Other 492 463 402
------ ------ ------
$1,589 $1,543 $1,360
====== ====== ======
</TABLE>
F-14
<PAGE> 87
14. SUMMARIZED FINANCIAL INFORMATION OF FIRST COMMERCIAL 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 income 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>
Year Ended
December 31,
-------------------------------
1993 1992
<S> <C> <C>
ASSETS:
Investment in subsidiaries $8,253 $5,996
Other assets 601 17
------ ------
$8,854 $6,013
====== ======
STOCKHOLDERS' EQUITY $8,854 $6,013
====== ======
</TABLE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF INCOME
1993 1992 1991
<S> <C> <C> <C>
Dividends from First National Bank
of St. Bernard $ 150 $ - $ -
Equity in undistributed earnings of
subsidiaries 1,516 1,454 496
Interest and other expenses (11) (4) (8)
Income tax benefit 682 - -
Cumulative effect of change in
accounting for income taxes 573 - -
------ ------ ----
Net earnings $2,910 $1,450 $488
====== ====== ====
</TABLE>
F-15
<PAGE> 88
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings $2,910 $1,450 $488
Adjustments not affecting cash:
Equity in undistributed earnings
of subsidiaries (2,188) (1,454) (496)
Net change in other assets (584) (1) -
------ ------ ----
Net cash provided by operating
activities 138 (5) (8)
------ ------ ----
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash dividends paid (136) - -
------ ------ ----
NET INCREASE (DECREASE) IN CASH 2 (5) (8)
CASH, BEGINNING OF YEAR 17 22 30
------ ------ ----
CASH, END OF YEAR $ 19 $ 17 $ 22
====== ====== ====
</TABLE>
F-16
<PAGE> 89
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
SEPTEMBER 30, 1994
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
September 30,
ASSETS 1994
----
<S> <C>
Cash and due from banks . . . . . . . . . . . . . . . . . $ 4,143
Federal funds sold . . . . . . . . . . . . . . . . . . . 4,500
--------
Cash and cash equivalents . . . . . . . . . . . . . . 8,643
Investment securities (market value of $6,3520 . . . . . 6,328
Loans, net of unearned discount . . . . . . . . . . . . . 91,682
Less allowance for loan losses . . . . . . . . . . . . . (1,065)
--------
Net loans . . . . . . . . . . . . . . . . . . . . . . 90,617
Bank premises and equipment, net . . . . . . . . . . . . 6,310
Other real estate owned . . . . . . . . . . . . . . . . . 10
Accrued interest receivable . . . . . . . . . . . . . . . 620
Other assets . . . . . . . . . . . . . . . . . . . . . . 345
Deferred tax asset, net . . . . . . . . . . . . . . . . . 1,277
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . $114,150
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits . . . . . . . . . . . . . . . . . . . $ 16,175
Money market and NOW accounts . . . . . . . . . . . . 16,092
Savings deposits . . . . . . . . . . . . . . . . . . . 22,437
Time deposits of $100,000 and over . . . . . . . . . . 3,897
Other time deposits . . . . . . . . . . . . . . . . . 38,479
--------
Total deposits . . . . . . . . . . . . . . . . . 97,080
Accrued interest payable . . . . . . . . . . . . . . . . 655
Other liabilities . . . . . . . . . . . . . . . . . . . . 379
Federal Home Loan Bank advances . . . . . . . . . . . . . 5,000
--------
Total liabilities . . . . . . . . . . . . . . . 103,114
--------
COMMITMENTS AND CONTINGENCIES . . . . . . . . . . . . . . -
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value;
1,000,000 shares authorized; 226,396 shares
issued and outstanding . . . . . . . . . . . . . . 226
Surplus . . . . . . . . . . . . . . . . . . . . . . . 5,508
Retained earnings . . . . . . . . . . . . . . . . . . 5,302
--------
Total stockholders' equity . . . . . . . . . . . 11,036
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . $114,150
========
</TABLE>
See notes to consolidated financial statements.
F-17
<PAGE> 90
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1994 1993
---- ----
INTEREST INCOME:
<S> <C> <C>
Interest and fees on loans . . . . . . . . . . . . . . . $6,705 $6,420
Interest on investment securities:
U. S. Treasury securities . . . . . . . . . . . . . . 151 225
Obligations of other U. S. Government agencies
and corporations . . . . . . . . . . . . . . . . . 153 139
Obligations of state and political subdivisions . . . - 21
Interest on federal funds sold . . . . . . . . . . . . . 122 80
------ ------
7,131 6,885
INTEREST EXPENSE - Deposits . . . . . . . . . . . . . . . . 2,151 2,012
------ ------
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . 4,980 4,873
PROVISION FOR LOAN LOSSES . . . . . . . . . . . . . . . . . 305 360
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . . . 4,675 4,513
------ ------
OTHER INCOME:
Service fees . . . . . . . . . . . . . . . . . . . . . . 476 462
Other . . . . . . . . . . . . . . . . . . . . . . . . . 185 207
------ ------
661 669
------ ------
OTHER EXPENSES:
Salaries and employee benefits . . . . . . . . . . . . . 1,820 1,682
Occupancy expenses . . . . . . . . . . . . . . . . . . . 271 381
Furniture and equipment expenses . . . . . . . . . . . . 202 192
Expenses related to other real estate owned, net . . . . 40 107
Other . . . . . . . . . . . . . . . . . . . . . . . . . 1,241 1,197
------ ------
3,574 3,559
------ ------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES . . . . . . . . . . . . . . 1,762 1,623
INCOME TAXES:
Current tax expense . . . . . . . . . . . . . . . . . . 33 -
Deferred tax benefit . . . . . . . . . . . . . . . . . . (589) (31)
------ ------
(556) (31)
------ ------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING FOR INCOME TAXES . . . . . . . . . 2,318 1,654
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES . . . . . . . . . . . . . . . . - 574
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $2,318 $2,228
====== ======
NET INCOME PER SHARE OF COMMON STOCK:
Income before cumulative effect . . . . . . . . . . . . $10.24 $ 7.31
Cumulative effect of accounting change . . . . . . . . . - 2.53
------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $10.24 $ 9.84
====== ======
</TABLE>
See notes to consolidated financial statements.
F-18
<PAGE> 91
FIRST COMMERCIAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1994 1993
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . $2,318 $ 2,228
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . 247 169
Amortization of premiums on investment
securities, net of accretion of discounts . . . (38) 27
Provision for loan losses . . . . . . . . . . . . 305 360
Provision for losses on other real estate owned . - 113
Deferred tax benefits . . . . . . . . . . . . . . (589) (605)
Loss (gain) on sales of other real estate owned . 26 (49)
Change in accrued interest receivable . . . . . . 32 93
Change in other assets . . . . . . . . . . . . . . 30 (36)
Change in accrued interest payable . . . . . . . . 103 21
Change in other liabilities . . . . . . . . . . . (117) 102
------ -------
Net cash provided by operating activities . . . 2,317 2,423
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of investment
securities . . . . . . . . . . . . . . . . . . . . . 5,149 12,721
Purchases of investment securities . . . . . . . . . . . (3,966) (10,133)
Loan originations, net of repayments . . . . . . . . . . (7,452) (9,615)
Purchases of bank premises and equipment . . . . . . . . (42) (3,603)
Proceeds from sales of bank premises and equipment . . . - 27
Proceeds from sales of other real estate owned . . . . . 237 328
------ -------
Net cash used in investing activities . . . . . (6,074) (10,275)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits . . . . . . . . . . 8,120 (257)
Proceeds from other borrowed money . . . . . . . . . . . - 5,000
Cash dividends paid . . . . . . . . . . . . . . . . . . (68) (68)
------ -------
Net cash provided by financing activities . . . 8,052 4,675
------ -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . 4,295 (3,177)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . 4,348 7,065
------ -------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . $8,643 $ 3,888
====== =======
SUPPLEMENTAL INFORMATION:
Loans transferred to other real estate owned . . . . . . $ - $ 23
====== =======
Interest paid . . . . . . . . . . . . . . . . . . . . . $2,048 $ 1,991
====== =======
</TABLE>
See notes to consolidated financial statements.
F-19
<PAGE> 92
FIRST COMMERCIAL BANCSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993 (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by First Commercial Bancshares,
Inc. (FCB) and the methods of applying principles conform with generally
accepted accounting principles consistently applied and generally practiced
within the banking industry.
The consolidated financial statements include the accounts of First
Commercial Bancshares, Inc. and its wholly owned subsidiary, First National
Bank of St. Bernard. All significant intercompany transactions and balances
have been eliminated in consolidation.
The accompanying Unaudited Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10--Q and Rule
10--01 of Regulation S--X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for interim
periods are not necessarily indicative of the results that may be expected for
the entire year. For further information, refer to the consolidated financial
statements and notes thereto of FCB and subsidiary for the three years ended
December 31, 1993, included elsewhere herein.
2. PROPOSED MERGER
On October 20, 1994, the Company entered into an agreement and plan of
reorganization with Regions Financial Corporation, a bank holding company with
its principal office in Birmingham, Alabama, pursuant to which the Company will
merge with and into Regions. The proposed merger is subject to various
conditions, including approval by the shareholders of the Company and by
certain regulatory agencies. The agreement contemplates that the shareholders
of the Company will receive approximately 595,000 shares of Regions common
stock, subject to adjustment under certain circumstances.
3. INCOME TAXES
Effective January 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method required under APB11 to
the asset and liability method required by Statement of Financial Accounting
Standards No.109 (SFAS 109), "Accounting for Income Taxes." Under the deferred
method, annual income tax expense is matched with pretax accounting income by
providing deferred taxes at current tax rates for timing differences between
the determination of net income for financial reporting and tax purposes. The
objective of the assets and liability method is to establish deferred tax
assets and liabilities for temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
tax rates expected to be in effect when such amounts are realized or settled.
As permitted under the new rules, prior years' financial statements have not
been restated. In adopting SFAS 109 in the first quarter 1993, the Company
recorded income and a deferred tax asset equal to the cumulative effect of the
accounting change of $573,396 which was net of a valuation allowance. In the
second, third and fourth quarters of 1993, the Company increased its deferred
tax asset with a credit to applicable income taxes. The credit to applicable
income taxes in those periods in 1993 was an aggregate of $114,336. During the
third quarter of 1994, the Company reviewed its recent operating performance
and its projections for the future and determined that a reduction of its
previously established valuation allowance against its deferred tax asset was
appropriate at this time. The valuation allowance had been established with
respect to the likelihood of its future utilization of prior years' net
operating loss carryforwards. As a result of this review, the Company reduced
this valuation allowance by
F-20
<PAGE> 93
approximately $556,000 in the third quarter of 1994. The credit to applicable
income taxes in the first three quarters of 1994 was $589,000.
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes net of a valuation
allowance in 1993. There was a net deferred asset of $687,732 on December31,
1993 and $1,276,732 on September 30, 1994. Management anticipates that the
amount of this asset will decrease beginning in 1995 as the tax benefits of
operating loss carryforwards are utilized to offset tax expense attributable to
current operations. The decrease in deferred tax assets will be recorded as
debits to applicable income tax expense.
4. INVESTMENT SECURITIES
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No.115 (SFAS 115), "Accounting for Certain Investment in
Debt and Equity Securities." This Statement required 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 income.
The Bank has completed a preliminary review of SFAS 115 relative to
its securities portfolio and has determined that, upon adoption in fiscal year
1994 and at September 30, 1994, all owned securities will be classified as
held-to-maturity.
F-21
<PAGE> 94
APPENDIX A
FINAL AGREEMENT
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST COMMERCIAL BANCSHARES, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF OCTOBER 20, 1994
A-1
<PAGE> 95
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties................................................................................ A-5
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-7
3.3 Shares Held by FCB or Regions................................................ A-7
3.4 Dissenting Shareholders...................................................... A-7
3.5 Fractional Shares............................................................ A-7
ARTICLE 4 -- EXCHANGE OF SHARES........................................................ A-7
4.1 Exchange Procedures.......................................................... A-7
4.2 Rights of Former FCB Shareholders............................................ A-8
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF FCB..................................... A-8
5.1 Organization, Standing, and Power............................................ A-8
5.2 Authority; No Breach By Agreement............................................ A-9
5.3 Capital Stock................................................................ A-9
5.4 FCB Subsidiaries............................................................. A-9
5.5 Financial Statements......................................................... A-10
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-11
5.10 Compliance With Laws......................................................... A-11
5.11 Employee Benefit Plans....................................................... A-12
5.12 Material Contracts........................................................... A-13
5.13 Legal Proceedings............................................................ A-13
5.14 Statements True and Correct.................................................. A-14
5.15 Tax and Regulatory Matters................................................... A-14
5.16 State Takeover Laws.......................................................... A-14
5.17 Directors' 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-15
6.3 Capital Stock................................................................ A-15
6.4 Regions Subsidiaries......................................................... A-15
6.5 Financial Statements......................................................... A-16
6.6 Absence of Undisclosed Liabilities........................................... A-16
6.7 Absence of Certain Changes or Events......................................... A-16
6.8 Compliance With Laws......................................................... A-16
</TABLE>
A-2
<PAGE> 96
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.9 Legal Proceedings............................................................ A-17
6.10 Statements True and Correct.................................................. A-17
6.11 Tax and Regulatory Matters................................................... A-17
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................. A-18
7.1 Affirmative Covenants of FCB................................................. A-18
7.2 Negative Covenants of FCB.................................................... A-18
7.3 Covenants of Regions......................................................... A-20
7.4 Adverse Changes in Condition................................................. A-20
7.5 Reports...................................................................... A-20
ARTICLE 8 -- ADDITIONAL AGREEMENTS..................................................... A-21
8.1 Registration Statement; Proxy Statement; Shareholder Approval................ A-21
8.2 Exchange Listing............................................................. A-21
8.3 Applications................................................................. A-22
8.4 Filings with State Offices................................................... A-22
8.5 Agreement as to Efforts to Consummate........................................ A-22
8.6 Investigation and Confidentiality............................................ A-22
8.7 Press Releases............................................................... A-22
8.8 Certain Actions.............................................................. A-23
8.9 Tax Treatment................................................................ A-23
8.10 Agreement of Affiliates...................................................... A-23
8.11 Employee Benefits and Contracts.............................................. A-23
8.12 Indemnification.............................................................. A-23
8.13 Data Processing.............................................................. A-24
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......................... A-25
9.1 Conditions to Obligations of Each Party...................................... A-25
9.2 Conditions to Obligations of Regions......................................... A-26
9.3 Conditions to Obligations of FCB............................................. A-26
ARTICLE 10 -- TERMINATION.............................................................. A-27
10.1 Termination.................................................................. A-27
10.2 Effect of Termination........................................................ A-28
10.3 Non-Survival of Representations and Covenants................................ A-28
ARTICLE 11 -- MISCELLANEOUS............................................................ A-28
11.1 Definitions.................................................................. A-28
11.2 Expenses..................................................................... A-33
11.3 Brokers and Finders.......................................................... A-33
11.4 Entire Agreement............................................................. A-33
11.5 Amendments................................................................... A-33
11.6 Waivers...................................................................... A-34
11.7 Assignment................................................................... A-34
11.8 Notices...................................................................... A-34
11.9 Governing Law................................................................ A-35
11.10 Counterparts................................................................. A-35
11.11 Captions..................................................................... A-35
11.12 Enforcement of Agreement..................................................... A-35
11.13 Severability................................................................. A-35
Signatures............................................................................. A-36
</TABLE>
A-3
<PAGE> 97
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1. Form of Directors' Agreement. (sec. 5.17).
2. Form of agreement of affiliates of FCB. (sec.sec. 8.10, 9.2(f)).
3. Matters as to which Correro, Fishman & Casteix 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. (sec. 9.3(d)).
</TABLE>
A-4
<PAGE> 98
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of October 20, 1994, by and between FIRST COMMERCIAL BANCSHARES, INC.
("FCB"), a corporation organized and existing under the laws of the State of
Louisiana, with its principal office located in Chalmette, 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 FCB 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 FCB by
Regions pursuant to the merger of FCB into and with Regions. At the effective
time of such merger, the outstanding shares of the capital stock of FCB shall be
converted into shares of the common stock of Regions or a combination of cash
and shares of the common stock of Regions (except as provided herein). As a
result, shareholders of FCB shall become shareholders of Regions and each of the
subsidiaries of FCB 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 FCB, 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, FCB 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 FCB 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
A-5
<PAGE> 99
(ii) the date on which the shareholders of FCB 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.
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 FCB Common Stock (excluding shares held by FCB 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) issued and outstanding at the Effective
Time shall be converted, at the election of the holder thereof, into
either:
(i) (1) $40.77 in cash and (2) 1.444 shares of Regions Common Stock
(subject to adjustment as provided below) (this election being referred
to as the "Stock and Cash Election"); or
(ii) 2.626 shares of Regions Common Stock (subject to adjustment as
provided below) (this election being referred to as the "All Stock
Election");
provided, however, that in the event the Average Closing Price
is equal to or
(1) less than $31.90, each share of FCB Common Stock (subject to
the exclusions set forth above) issued and outstanding at the
Effective Time shall be converted into (i) $40.77 in cash (in the
case of the Stock and Cash Election only) and (ii) that number of
shares of Regions Common Stock (rounded to the nearest
one-thousandth) equal to the quotient obtained by dividing (x) $46.06
in the case of the Stock and Cash Election and $83.77 in the case of
the All Stock Election by (y) the Average Closing Price, or
(2) greater than $37.10, each share of FCB Common Stock (subject
to the exclusions set forth above) issued and outstanding at the
Effective Time shall be converted into (i) $40.77 in cash (in the
case of the Stock and Cash Election only) and (ii) that number of
shares of Regions Common Stock (rounded to the nearest
one-thousandth) equal to the quotient obtained by dividing (x) $53.57
in the case of the Stock and Cash Election and $97.43 in the
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case of the All Stock Election by (y) the Average Closing Price
($31.90 and $37.10 are collectively referred to as the "Average
Closing Price Limitations" and the respective exchange ratios of FCB
Common Stock into Regions Common Stock resulting from the Cash and
Stock Election and the All Stock Election are referred to as the
"Applicable Exchange Ratios").
3.2 ANTI-DILUTION PROVISIONS. In the event FCB changes the number of
shares of FCB 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 Applicable Exchange Ratios 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
Applicable Exchange Ratios and the Average Closing Price Limitations shall be
proportionately adjusted.
3.3 SHARES HELD BY FCB OR REGIONS. Each of the shares of FCB Common Stock
held by any FCB 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 FCB 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 FCB fails to perfect, or 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 FCB 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 FCB 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 Average Closing Price. 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
FCB shall cause the exchange agent selected by Regions (the "Exchange Agent") to
mail to the former shareholders of FCB appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of FCB Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of FCB Common Stock (other than shares to
be canceled pursuant to Section 3.3 of this Agreement or as to which dissenters'
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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 consideration into
which such shares of FCB 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 FCB 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 consideration into which the number of shares of FCB 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 or any cash payments to which
any former holder of FCB Common Stock is entitled as a result of the Merger, or
any dividends or distributions in respect of shares of Regions Common Stock,
until such holder surrenders such holder's certificate or certificates
representing the shares of FCB 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 FCB Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither Regions, FCB, nor the Exchange Agent shall be liable to
a holder of FCB 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 FCB SHAREHOLDERS. At the Effective Time, the stock
transfer books of FCB shall be closed as to holders of FCB Common Stock
immediately prior to the Effective Time and no transfer of FCB 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 shares of FCB 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 consideration
into which the shares of FCB Common Stock represented thereby shall have been
converted under Article 3 of this Agreement. To the extent permitted by Law,
former shareholders of record of FCB 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 FCB Common Stock
are converted, regardless of whether such holders have exchanged their
certificates representing FCB 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 FCB 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 FCB
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 (without interest) shall be delivered and paid
with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FCB
FCB hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. FCB 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. FCB is duly
qualified
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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 FCB.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) FCB 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 FCB, subject to the approval of this Agreement by the required vote of
the outstanding FCB Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by
FCB. Subject to such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of FCB, enforceable
against FCB 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 FCB, nor
the consummation by FCB of the transactions contemplated hereby, nor
compliance by FCB with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of FCB'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 FCB Company under, any Contract or Permit of any FCB 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 FCB, 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 FCB 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 FCB, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by FCB of the Merger
and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK. The authorized capital stock of FCB consists of
1,000,000 shares of FCB Common Stock, of which 226,396 shares are issued and
outstanding as of the date of this Agreement and not more than 226,396 shares
will be issued and outstanding at the Effective Time. All of the issued and
outstanding shares of capital stock of FCB are duly and validly issued and
outstanding and are fully paid and nonassessable under the LBCL. To the
Knowledge of FCB, none of the outstanding shares of capital stock of FCB has
been issued in violation of any preemptive rights of the current or past
shareholders of FCB. Except as set forth above or as disclosed in Section 5.3 of
the FCB Disclosure Memorandum, there are no shares of capital stock or other
equity securities of FCB outstanding and no outstanding Rights relating to the
capital stock of FCB.
5.4 FCB SUBSIDIARIES. FCB has disclosed in Section 5.4 of the FCB
Disclosure Memorandum all of the FCB Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 5.4 of the FCB Disclosure Memorandum,
FCB or one of its Subsidiaries owns all of the issued and outstanding shares of
capital stock of each FCB Subsidiary. No equity securities of any FCB Subsidiary
are or may become required to be issued (other than to another FCB Company) by
reason of any Rights, and there are no Contracts by which any FCB Subsidiary is
bound to issue (other than to another FCB Company) additional shares of its
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capital stock or Rights or by which any FCB Company is or may be bound to
transfer any shares of the capital stock of any FCB Subsidiary (other than to
another FCB Company). There are no Contracts relating to the rights of any FCB
Company to vote or to dispose of any shares of the capital stock of any FCB
Subsidiary. All of the shares of capital stock of each FCB Subsidiary held by a
FCB 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 FCB Company free and clear of any Lien. Each FCB 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 FCB 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 FCB. Each FCB 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. FCB has included in Section 5.5 of the FCB
Disclosure Memorandum copies of all FCB Financial Statements for periods ended
prior to the date hereof and will deliver to Regions copies of all FCB Financial
Statements prepared subsequent to the date hereof. The FCB Financial Statements
(as of the dates thereof and for the periods covered thereby) present or will
present, as the case may be, fairly the consolidated financial position of the
FCB Companies as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows of the FCB Companies
for the periods indicated, in accordance with GAAP 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. Except as disclosed in Section
5.6 of the FCB Disclosure Memorandum, no FCB Company has any Liabilities that
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FCB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of FCB as of June 30, 1994 included in the
FCB Financial Statements or reflected in the notes thereto. Except as disclosed
in Section 5.6 of the FCB Disclosure Memorandum, no FCB Company has incurred or
paid any Liability since June 30, 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 FCB.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1994, except as
disclosed in Section 57 of the FCB Disclosure Memorandum, or in the FCB
Financial Statements delivered prior to the date of this Agreement, to the
Knowledge of FCB, (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 FCB, and (ii) the FCB 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 FCB 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
FCB 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
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FCB and all returns filed are complete and accurate in all material
respects to the Knowledge of FCB. 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 FCB, except as reserved against in the FCB Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section
5.8 of the FCB 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 FCB 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 FCB, adequate provision for any Taxes due or
to become due for any of the FCB Companies for the period or periods
through and including the date of the respective FCB Financial Statements
has been made and is reflected on such FCB Financial Statements.
(d) Effective for the fiscal year ended December 31, 1993, FCB adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."
(e) Each of the FCB 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 FCB, each FCB 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 FCB.
(b) To the Knowledge of FCB, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any FCB 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 FCB 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 FCB, and to the Knowledge
of FCB, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of FCB, 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 FCB.
5.10 COMPLIANCE WITH LAWS. FCB is duly registered as a bank holding
company under the BHC Act. Each FCB 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 FCB. Except as disclosed in
Section 5.10 of the FCB Disclosure Memorandum, none of the FCB 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 FCB; and
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(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 FCB 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 FCB, (ii) threatening to revoke any Permits, or (iii) requiring any FCB
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) FCB has disclosed in Section 5.11 of the FCB 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
medical, vision, dental, or other written health plans, all 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 FCB 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 "FCB Benefit Plans"). Any of the FCB 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 a "FCB ERISA Plan." Each FCB ERISA
Plan which is also a "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code) is referred to herein as a "FCB Pension
Plan." No FCB Pension Plan is or has been a multi-employer plan within the
meaning of Section 3(37) of ERISA.
(b) To the Knowledge of FCB, all FCB 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 FCB. Except as disclosed in Section 5.11(b) of the FCB Disclosure
Memorandum, each FCB 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 FCB is not
aware of any circumstances likely to result in revocation of any such
favorable determination letter. To the Knowledge of FCB, no FCB Company has
engaged in a transaction with respect to any FCB Benefit Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, would subject any FCB 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 FCB.
(c) No FCB 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 FCB Pension Plan, (ii) no change in the
actuarial assumptions with respect to any FCB Pension Plan, and (iii) no
increase in benefits under any FCB Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FCB or
materially adversely affect the funding status of any such plan. Neither
any FCB Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any FCB
Company, or the single-employer plan of any entity which is considered one
employer with FCB 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
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Section 412 of the Internal Revenue Code or Section 302 of ERISA. No FCB
Company has provided, or is required to provide, security to a FCB 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 FCB Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate. No FCB 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). 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 FCB 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 of the FCB Disclosure
Memorandum, no FCB Company has any Liability for retiree health and life
benefits under any of the FCB Benefit Plans and, to the Knowledge of FCB,
there are no restrictions on the rights of such FCB Company to amend or
terminate any such Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.11 of the FCB 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 FCB
Company from any FCB Company under any FCB Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any FCB 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 FCB 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 FCB 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 FCB
Disclosure Memorandum or otherwise reflected in the FCB Financial Statements,
none of the FCB 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 any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by any
FCB Company or the guarantee by any FCB 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 FCB Companies, and (iv) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by FCB with the SEC as of the date of this Agreement if FCB were
required to file a Form 10-K with the SEC (together with all Contracts referred
to in Section 5.11(a) of this Agreement, the "FCB Contracts"). None of the FCB
Companies is in Default under any FCB Contract where such Default, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
FCB. All of the indebtedness of any FCB Company for money borrowed is prepayable
at any time by such FCB Company without penalty or premium.
5.13 LEGAL PROCEEDINGS. Except as disclosed in Section 5.13 of the FCB
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of FCB, 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 FCB 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 FCB, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any FCB Company that is reasonably likely to have,
individually or in the aggregate, a Material Adverse
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Effect on FCB. Section 5.13 of the FCB Disclosure Memorandum includes a summary
report of all Litigation as of the date of this Agreement to which any FCB
Company is a party and which names a FCB Company as a defendant or
cross-defendant.
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 FCB 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 FCB 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 FCB 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 FCB Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to FCB shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by a FCB 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 FCB, 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
FCB 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 FCB 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.
5.16 STATE TAKEOVER LAWS. To the extent applicable, each FCB 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 FCB.
5.17 DIRECTORS' AGREEMENTS. Each of the directors of FCB 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 FCB 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
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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 Regions'
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 of
120,000,000 shares of Regions Common Stock, of which 43,510,939 shares were
issued and outstanding and 1,590,579 shares were held as treasury shares as of
June 30, 1994. All of the issued and outstanding shares of Regions Common Stock
are, and all of the shares of Regions Common Stock to be issued in exchange for
shares of FCB 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 FCB 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 REGIONS SUBSIDIARIES. Regions has disclosed in Exhibit 21 of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1993, all of
the material Regions Subsidiaries as of the date of such report. Except as
disclosed in such report, Regions or one of its Subsidiaries, owns all of the
issued and outstanding shares of capital stock of each material Regions
Subsidiary. All of the shares of capital stock of each material Regions
Subsidiary held by a Regions 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 Regions Company free and clear of
any Lien. Each material Regions Subsidiary is either a bank, a savings
association, or a corporation, and is duly organized, validly
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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 material Regions 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 Regions. Each material Regions
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.
6.5 FINANCIAL STATEMENTS. Regions has included in Section 6.5 of the
Regions Disclosure Memorandum all Regions Financial Statements for periods ended
prior to the date hereof and will deliver to FCB 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) 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).
6.6 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
June 30, 1994, included in the Regions Financial Statements or reflected in the
notes thereto. Except as disclosed in Section 6.6 of the Regions Disclosure
Memorandum, no Regions Company has incurred or paid any Liability since June 30,
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.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 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.
6.8 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,
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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.
6.9 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.
6.10. 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 FCB 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 FCB
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
FCB, 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.
6.11 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 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.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF FCB. Unless the prior written consent of the
chief executive officer, vice chairmen, or appropriate regional president, of
Regions shall have been obtained, and except as otherwise expressly contemplated
herein or disclosed in Section 7.1 of the FCB Disclosure Memorandum, FCB 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, (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 FCB. Except as disclosed in Section 7.2 of the
FCB Disclosure Memorandum for the applicable paragraphs indicated below, from
the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, FCB 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, vice chairman, or appropriate regional president of
Regions, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any FCB Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a FCB Company to another FCB
Company) in excess of an aggregate amount outstanding at any time of
$150,000 (for the FCB Companies on a consolidated basis) except in the
ordinary course of the business of FCB Subsidiaries consistent with past
practices (which shall include, for FCB 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 FCB 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 FCB
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 in effect as of the
date hereof that are disclosed in the FCB Disclosure Memorandum); 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 FCB Company, or declare or pay any dividend or
make any other distribution in respect of FCB's capital stock, provided
that: (x) FCB may (to the extent legally and contractually permitted to do
so), but shall not be obligated to, declare and pay (i) regular quarterly
cash dividends on the shares of FCB Common Stock at a rate not in excess of
$.10 per share with usual and regular record and payment dates in
accordance with past practice disclosed in Section 7.2(c) of the FCB
Disclosure Memorandum and (ii) an additional cash dividend on the
outstanding shares of FCB Common Stock for the fourth fiscal quarter of
1994 at a rate not in excess of $.60 per share; (y) any dividend declared
on the shares of FCB Common Stock for the quarter during which the
Effective Time occurs shall, unless otherwise agreed upon in writing by
Regions and FCB, be declared only if the record date for payment of the
quarterly dividend to holders of Regions Common Stock for the quarter in
which the Effective Time occurs is prior to the Effective Time and in such
case such FCB quarterly dividend shall be paid at a rate not in excess of
the appropriate amount set forth in (x) above per share of FCB Common
Stock; and (z) in the event Regions has delayed the Effective Time pursuant
to the last clause of Section 1.3 of this Agreement to a date within thirty
(30) days of the latest date specified in (i) and
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(ii) of Section 1.3 of this Agreement such that the Effective Time could
have occurred at a time and date prior to the record date for payment of
the quarterly dividend to holders of Regions Common Stock for the quarter
in which the Effective Time occurs but for such delay, FCB may declare and
pay a dividend on the shares of FCB Common Stock for the quarter in which
the Effective Time occurs at a rate per share of FCB Common Stock not in
excess of the amount equal to the greater of (i) the amount otherwise
payable for such quarter under (x) above and (ii) the product of (1) the
Applicable Exchange Ratio for the All Stock Election and (2) the per share
dividend amount declared by Regions on the Regions Common Stock for the
quarter during which the Effective Time occurs; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof, or as disclosed in Section 7.2(d) of the
FCB Disclosure Memorandum, 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 FCB Common Stock or any other capital stock of any FCB
Company, or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any FCB
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of FCB Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any FCB Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another FCB 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 FCB
Company; or
(f) except for purchases of U.S. Treasury securities, U.S. Government
agency securities and mortgage backed balloon loans, which in each case
have maturities of five years or less, 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 FCB 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 FCB Company, except in accordance with past practice or
previously approved by the Board of Directors of FCB, in each case as
disclosed in Section 7.2(g) of the FCB Disclosure Memorandum or as required
by Law; except as disclosed in Section 7.2(g) of the FCB Disclosure
Memorandum, 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 FCB Disclosure
Memorandum; and enter into or amend any severance agreements with officers
of any FCB Company; grant any increase in fees or other increases in
compensation or other benefits to directors of any FCB Company except in
accordance with past practice disclosed in Section 7.2(g) of the FCB
Disclosure Memorandum; 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 FCB
Company and any Person (unless such amendment is required by Law) that the
FCB Company does not have the unconditional right to terminate without
Liability (other than Liability for severance payments under the existing
severance policies of FCB disclosed in Section 7.2(h) of the FCB Disclosure
Memorandum), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any FCB Company or make any
material change in or to any existing employee benefit plans of any FCB
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
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(k) commence any material Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any FCB
Company for money damages in excess of $100,000 or imposing material
restrictions upon the operations of any FCB 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 FCB Companies recognizing a loss that exceeds $100,000)
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 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 FCB
Common Stock. Regions further agrees that it shall not, directly or indirectly,
acquire or enter into any agreement in principle or definitive agreement to
acquire, any bank or savings and loan holding company, or any federal or state
chartered bank, savings bank, thrift homestead association, savings association,
savings and loan association, cooperative bank, or other similar financial
institution that has its principal business location in the Parish of St.
Bernard, Louisiana, whether by merger, consolidation, purchase, or otherwise, or
entering into discussions or negotiations with any such financial institution
with respect thereto.
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 it's 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 FCB) 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.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
(a) Regions shall promptly 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. FCB shall furnish all
information concerning it and the holders of its capital stock as Regions
may reasonably request in connection with such action. FCB 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) FCB 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 FCB
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 FCB shall (subject to
compliance with their fiduciary duties as advised by counsel) use their
reasonable efforts to obtain such shareholders' approval.
(b) Regions shall indemnify and hold harmless FCB, each of its
directors and officers, and each Person, if any, who controls FCB within
the meaning of the 1933 Act against any losses, claims, damages, or
Liabilities, joint, several, or solitary, to which they or any of them may
become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages, or Liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of
material fact contained in the Registration Statement or the Proxy
Statement, or arising out of or based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse each such
Person for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim;
provided, however, that Regions shall not be liable in any such case to the
extent that any such loss, claim, damage, or Liability (or action in
respect thereof) arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Proxy Statement in reliance upon and in
conformity with information furnished to Regions by any indemnified Person.
Promptly after receipt by an indemnified Person of notice of the
commencement of any action, such indemnified Person shall, if a claim in
respect thereof is to be made against Regions under this Section 8.1(b),
notify Regions in writing of the commencement thereof. In case any such
action shall be brought against any indemnified Person and it shall notify
Regions of the commencement thereof, Regions shall be entitled to
participate therein, and to the extent that it shall wish, to assume the
defense thereof, with counsel satisfactory to such indemnified Person, and,
after notice from Regions to such indemnified Person of its election to so
assume the defense thereof, Regions shall not be liable to such indemnified
party under this Section 8.1(b) for any legal expenses of other counsel or
any other expenses subsequently incurred by such indemnified Person, except
that if Regions elects not to assume such defense or counsel for an
indemnified Person or Persons advises in writing that there are material
substantive issues which raise conflicts of interests between Regions and
one or more indemnified Persons, such indemnified Person or Persons may
retain counsel satisfactory to them, and Regions shall pay all reasonable
fees and expenses of such counsel for the indemnified Persons, promptly as
statements therefor are received; provided that (i) Regions shall be
obligated pursuant to this Section 8.1 (b) to pay for only one firm of
counsel for all indemnified Persons in any jurisdiction and (ii) Regions
shall not be liable for any settlement effected without its prior written
consent.
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 FCB Common Stock pursuant to the Merger.
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8.3 APPLICATIONS. Regions shall promptly prepare and file, and FCB 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
FCB reasonable opportunity to review and comment upon such applications prior to
the filing thereof with the Regulatory Authorities.
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
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. FCB shall
cooperate with Regions in obtaining, at Regions' election and expense,
environmental audits of any or all of the properties owned or occupied by
FCB. 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, FCB 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
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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 FCB Company nor any Affiliate thereof nor
any Representative retained by any FCB 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 FCB's Board of
Directors, no FCB Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but FCB 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. FCB shall promptly notify Regions orally and in
writing in the event that it receives any inquiry or proposal relating to any
such transaction. FCB 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 for treatment 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. FCB has disclosed in Section 8.10 of the
FCB Disclosure Memorandum each Person whom it reasonably believes is an
"affiliate" of FCB for purposes of Rule 145 under the 1933 Act. FCB 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 FCB 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 FCB Companies,
who at or after the Effective Time become employees of a Regions Company,
employee benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of Regions Common Stock except as set
forth in this Section 8.11), 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, (i) service under any qualified defined benefit plans of FCB
should be treated as service under Regions' qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of FCB shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of FCB shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause FCB 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 FCB Disclosure Memorandum to Regions between
any FCB 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 FCB Benefit Plans.
8.12 INDEMNIFICATION.
(a) For a period of ten years after the Effective Time, Regions shall,
and shall cause the Bank to, indemnify, defend, and hold harmless the
present and former directors, officers, employees, and agents of the FCB
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
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Agreement) to the full extent permitted under Louisiana Law and by FCB'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 FCB 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) Regions shall use its reasonable efforts to maintain FCB's
existing directors' and officers' liability insurance policy (or a policy,
including Regions' existing policy, providing at least comparable coverage)
covering persons who are currently covered by such insurance for a period
of one (1) year after the Effective Time on terms generally no less
favorable than those in effect on the date of this Agreement; provided,
however, that Regions may substitute therefor policies providing at least
comparable coverage containing terms and conditions no less favorable than
those in effect on the date of this Agreement; and provided, further, that
Regions shall not be obligated to make premium payments for such one-year
period which exceed 150% of the aggregate premiums paid for such policy
during the most recent fiscal year.
(c) 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 or the Bank shall have the right to assume the defense thereof and
Regions shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except
that if Regions or the Bank 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 FCB
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Regions or the Bank 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 (c) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate (to the extent reasonably appropriate
under the circumstances) in the defense of any such Litigation, and (iii)
Regions shall not be liable for any settlement effected without its prior
written consent; and provided further that Regions 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 DATA PROCESSING. For a period beginning as soon as reasonably
practicable after the date of this Agreement and in no event later than January
6, 1995, and ending on the earlier of the Effective Time or the first
anniversary of the date of termination of this Agreement, Regions agrees to
provide, or cause to be provided, to FCB and the Bank data processing and
related services to the same extent and on substantially the same terms and
conditions, including cost, as are currently being provided to FCB and the Bank
pursuant to FCB's current data processing agreement, a copy of which has been
furnished to Regions.
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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 FCB 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. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall condition or restrict the operations of FCB after the
Effective Time in a manner which in the reasonable judgment of the Board of
Directors of FCB 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.
(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 FCB Common Stock
for Regions Common Stock will not give rise to gain or loss to the
shareholders of FCB with respect to such exchange (except to the extent of
any cash received), and (iii) neither FCB nor Regions will recognize gain
or loss as a
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consequence of the Merger. In rendering such Tax Opinion, counsel for
Regions shall be entitled to rely upon representations of officers of FCB
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 FCB 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 FCB.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of FCB 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. FCB 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 FCB'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
Correro, Fishman & Casteix, counsel to FCB, 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 FCB the affiliates letter referred to in Section 8.10 of this
Agreement.
(F) CLAIMS LETTERS. Each of the directors and officers of FCB shall
have executed and delivered to Regions letters in substantially the form of
Exhibit 4.
9.3 CONDITIONS TO OBLIGATIONS OF FCB. The obligations of FCB 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 FCB 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 6.3 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
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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 FCB (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 FCB and
its counsel shall request.
(D) OPINION OF COUNSEL. FCB shall have received an opinion of Lange,
Simpson, Robinson & Somerville, counsel to Regions, dated as of the
Effective Time, in form reasonably acceptable to FCB, as to the matters set
forth in Exhibit 5.
(E) FAIRNESS OPINION. FCB shall have received a letter from Wheat,
First Securities, Inc. or another financial adviser selected by FCB dated
not more than five days subsequent to the date of this Agreement and to be
updated to a date not more than five days prior to the date of the Proxy
Statement, to the effect that in the opinion of such firm, the
consideration to be received in the Merger by the shareholders of FCB is
fair to the shareholders of FCB from a financial point of view.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of FCB,
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 FCB; 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 FCB; 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 FCB fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the LBCL at the
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 June 30, 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.
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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 Sections 8.6(b) and (c) and 8.13 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 8.1(b), 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:
"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.
"AVERAGE CLOSING PRICE" shall mean the average of the daily closing
sale prices 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 20 consecutive full trading days on which
such shares are traded on the Nasdaq/NMS ending at the close of trading on
the fifth trading day preceding the Effective Time.
"BANK" shall mean First National Bank of St. Bernard.
"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.
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"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 control 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.
"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.
"FCB BENEFIT PLANS" shall have the meaning set forth in Section 5.11
of this Agreement.
"FCB COMMON STOCK" shall mean the $1.00 par value common stock of FCB.
"FCB COMPANIES" shall mean, collectively, FCB and all FCB
Subsidiaries.
"FCB DISCLOSURE MEMORANDUM" shall mean the written information
entitled "FCB 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.
"FCB FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of FCB as of June
30, 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 six
months ended June 30, 1994, and for each of the three years ended December
31, 1993, 1992, and 1991, included in the FCB Disclosure Memorandum, and
(ii) the consolidated balance sheets of FCB (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) with respect to periods ended subsequent to June 30,
1994.
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"FCB SUBSIDIARIES" shall mean the Subsidiaries of FCB, which shall
include the FCB Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of FCB in the future and owned by FCB at the Effective
Time.
"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, 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.
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"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 FCB 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 FCB or Regions, and "Parties" shall mean
both FCB 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.
"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 FCB 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 FCB Common Stock.
"REGIONS COMMON STOCK" shall mean the $0.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
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"REGIONS DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Regions Financial Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to FCB 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 June 30, 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 six months
ended June 30, 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 June 30, 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 FCB 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, 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.
"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
FCB 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.
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"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 or otherwise limit the
rights of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Dorsey and Company, Inc. and Wheat,
First Securities, Inc. as to FCB, 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
FCB or Regions, each of FCB 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, other than the
confidentiality agreement between the Parties, which shall remain in effect.
Except as contemplated by Articles 3 and 4 of this Agreement and Sections 8.1(b)
and 8.12 of this Agreement, 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 FCB 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, vice chairman, or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by FCB, to waive or extend the
time for the compliance or fulfillment by FCB 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, FCB, 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 FCB 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 FCB.
(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:
<TABLE>
<S> <C>
FCB: First Commercial Bancshares, Inc.
8301 W. Judge Perez Drive
Chalmette, Louisiana 70043-1656
Telecopy Number: (504) 278-1811
Attention: Edward F. Butler
President and Chief Executive Officer
Copy to Counsel: Correro, Fishman & Casteix
47th Floor
201 St. Charles Avenue
New Orleans, Louisiana 70170-4700
Telecopy Number: (504) 586-5250
Attention: Anthony J. Correro III
</TABLE>
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<TABLE>
<S> <C>
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
Copy to Counsel: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7099
Attention: Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
</TABLE>
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.
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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>
<CAPTION>
<S> <C>
ATTEST: FIRST COMMERCIAL BANCSHARES, INC.
/s/ PHILIP J. DORSEY By: /s/ EDWARD F. BUTLER
- ---------------------------------------------- ----------------------------------------
Philip J. Dorsey Edward F. Butler
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
/s/ SAMUEL E. UPCHURCH, JR. By: /s/ RICHARD D. HORSLEY
- ---------------------------------------------- ----------------------------------------
Samuel E. Upchurch, Jr. Richard D. Horsley
General Counsel and Corporate Secretary Vice Chairman and Executive Financial Officer
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
February 8, 1995
Board of Directors
First Commercial Bancshares, Inc.
8301 West Judge Perez Drive
Chalmette, Louisiana 70043-1656
Members of the Board:
First Commercial Bancshares, Inc. ("FCB") and Regions Financial Corporation
("Regions") have entered into an Agreement and Plan of Merger dated as of
October 20, 1994 (the "Agreement"), pursuant to which FCB will combine with
Regions by means of the merger of FCB with and into Regions. The combination of
FCB and Regions is referred to herein as the "Merger." The consideration to be
paid under the Stock and Cash Election (as defined in the Agreement) of $40.77
in cash and 1.444 shares of common stock of Regions ("Regions Common Stock") for
each share of common stock of FCB ("FCB Common Stock") and the All Stock
Election (as defined in the Agreement) of 2.626 shares of Regions Common Stock
for each share of FCB Common Stock (each of the Stock and Cash Election and the
All Stock Election being subject to adjustment as provided in the Agreement) is
referred to herein as the "Merger Consideration."
Wheat, First Securities, Inc. ("Wheat") as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. In the ordinary course of our business as a broker-dealer, we
may, from time to time, have a long or short position in, and buy or sell, debt
or equity securities of FCB or Regions for our own account or for the accounts
of our customers. Wheat will also receive a fee from FCB for rendering this
opinion.
You have asked us whether, in our opinion, the Merger Consideration is
fair, from a financial point of view, to the holders of FCB Common Stock.
In arriving at the opinion set forth below, we have conducted discussions
with members of senior management of FCB and Regions concerning their businesses
and prospects and have reviewed certain publicly available business and
financial information and certain other information prepared or provided to us
in connection with the Merger, including, among other things, the following:
(1) FCB's Annual Reports to Stockholders, Consolidated Reports of
Condition and Income on Form FFIEC 034 and related financial information
for the three fiscal years ended December 31, 1993;
(2) FCB's quarterly Consolidated Reports of Condition and Income on
Form FFIEC 033 and related financial information for the three months ended
March 31, 1994, and for the six months ended June 30, 1994, and financial
information provided by management for the nine months ended September 30,
1994;
(3) Regions' Annual Reports to Stockholders, Annual Reports on Form
10-K and related financial information for the three fiscal years ended
December 31, 1993;
(4) Regions' Quarterly Reports on Form 10-Q and related financial
information for the three months ended March 31, 1994, for the six months
ended June 30, 1994 and for the nine months ended September 30, 1994;
(5) Certain publicly available information with respect to historical
market prices and trading activity for Regions Common Stock and for certain
publicly traded financial institutions which Wheat deemed relevant;
(6) Certain publicly available information with respect to banking
companies and the financial terms of certain other mergers and acquisitions
which Wheat deemed relevant;
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(7) The Agreement;
(8) The Registration Statement on Form S-4 of Regions, including the
Proxy Statement/ Prospectus;
(9) Other financial information concerning the businesses and
operations of FCB and Regions, including certain audited financial
information and certain internal financial analyses and forecasts for FCB
prepared by senior management; and
(10) Such financial studies, analyses, inquiries and other matters as
we deemed necessary.
In preparing our opinion, we have relied on and assumed the accuracy and
completeness of all information provided to us or publicly available, including
the representations and warranties of FCB and Regions included in the Agreement,
and we have not assumed any responsibility for independent verification of such
information. We have relied upon the management of FCB as to the reasonableness
and achievability of its financial and operational forecasts and projections,
and the assumptions and bases therefor, provided to us, and we have assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of such management and that such forecasts and projections will be
realized in the amounts and in the time periods currently estimated by such
management. We also assumed, without independent verification, that the
aggregate allowances for loan losses and other contingencies for FCB and Regions
are adequate to cover such losses. Wheat did not review any individual credit
files of FCB or Regions, nor did it make an independent evaluation or appraisal
of the assets or liabilities of FCB or Regions. We also assumed that, in the
course of obtaining the necessary regulatory approvals for the Merger, no
conditions will be imposed that will have a material adverse effect on the
contemplated benefits of the Merger, on a pro forma basis, to FCB. Our opinion
is necessarily based upon market, economic and other conditions as they exist
and can be evaluated on the date hereof and the information made available to us
through the date hereof. Wheat's opinion is directed only to the fairness, from
a financial point of view, of the Merger Consideration to the stockholders of
FCB Common Stock and does not constitute a recommendation to any stockholder of
FCB as to how such stockholder should vote with respect to the Merger. Wheat's
opinion does not address the relative merits of the Merger as compared to any
alternative business strategies that might exist for FCB, nor does it address
the effect of any other business combination in which FCB might engage.
It is understood that this opinion may be included in its entirety in the
Proxy Statement/Prospectus. This opinion may not, however, be summarized,
excerpted from or otherwise publicly referred to without our prior written
consent.
On the basis of and subject to the foregoing, we are of the opinion that as
of the date hereof the Merger Consideration is fair, from a financial point of
view, to the holders of FCB Common Stock.
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
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<PAGE> 132
APPENDIX C
LOUISIANA STATUTES ANNOTATED-REVISED STATUTES 12:131
SEC. 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.
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APPENDIX D
FORM OF ELECTION
FIRST COMMERCIAL BANCSHARES, INC.
PLEASE READ AND FOLLOW CAREFULLY
THE ACCOMPANYING INSTRUCTIONS
To: First Commercial Bancshares, Inc., Election Agent
<TABLE>
<S> <C>
By Mail: By Hand:
First Commercial Bancshares, Inc. First Commercial Bancshares, Inc.
P.O. Box 861 8301 W. Judge Perez Drive
Chalmette, Louisiana 70044 Chalmette, Louisiana 70043-1656
Attention: Edward F. Butler Attention: Edward F. Butler
</TABLE>
This Form of Election is to be used in connection with the acquisition of
First Commercial Bancshares, Inc. ("FCB") by Regions Financial Corporation
("Regions") pursuant to the merger (the "Merger") of FCB into and with Regions,
in accordance with the terms of the Agreement and Plan of Merger (the
"Agreement"), dated as of October 20, 1994, by and between FCB and Regions. All
capitalized terms used but not defined herein shall have the respective meanings
given to such terms in the Agreement. A copy of the Agreement is included as
Appendix A to the Proxy Statement/Prospectus, dated February 8, 1995 (the "Proxy
Statement") relating to the Merger. Extra copies of the Proxy Statement will be
made available upon request to the Election Agent at one of the addresses set
forth above. Receipt of the Proxy Statement is hereby acknowledged.
The undersigned elects (the "Election"), as indicated below, to have all of
the undersigned's shares of the $1.00 par value common stock of FCB ("FCB Common
Stock"), represented by the certificate(s) identified herein (or enclosed with
the accompanying letter of transmittal) converted at the effective time of the
Merger (the "Effective Time") into, for each share of FCB Common Stock
represented by such certificate(s), only one of the following:
(1) a combination of $40.77 in cash and 1.444 shares of the $0.625 par
value common stock of Regions ("Regions Common Stock") (subject to possible
adjustment as described below and in greater detail in the accompanying
Proxy Statement) (the "Stock and Cash Election"); or
(2) 2.626 shares of Regions Common Stock (subject to possible
adjustment as described below and in greater detail in the accompanying
Proxy Statement) (the "All Stock Election").
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 FCB
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price.
The Average Closing Price is defined to mean the average of the daily
closing sale prices of Regions Common Stock on the Nasdaq National Market (as
reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source chosen by Regions) for the 20 consecutive full trading days
on which such shares are traded on the Nasdaq National Market ending at the
close of trading on the fifth trading day preceding the Effective Time.
The Agreement provides that if the Average Closing Price of Regions Common
Stock is equal to or
(1) less than $31.90, each share of FCB Common Stock issued and
outstanding at the Effective Time shall be converted into (i) $40.77 in
cash (in the case of the Stock and Cash Election only) and (ii) that number
of shares of Regions Common Stock (rounded to the nearest one-thousandth)
equal to the quotient obtained by dividing (x) $46.06 in the case of the
Stock and Cash Election and $83.77 in the case of the All Stock Election by
(y) the Average Closing Price, or
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(2) greater than $37.10, each share of FCB Common Stock issued and
outstanding at the Effective Time shall be converted into (i) $40.77 in
cash (in the case of the Stock and Cash Election only) and (ii) that number
of shares of Regions Common Stock (rounded to the nearest one-thousandth)
equal to the quotient obtained by dividing (x) $53.57 in the case of the
Stock and Cash Election and $97.43 in the case of the All Stock Election by
(y) the Average Closing Price (the respective exchange ratios of FCB Common
Stock into Regions Common Stock resulting from the Stock and Cash Election
and the All Stock Election are referred to as the "Applicable Common Stock
Exchange Ratios").
THE DETERMINATION OF THE AVERAGE CLOSING PRICE WILL NOT BE COMPLETED UNTIL
A DATE AFTER THE ELECTION DEADLINE (AS DEFINED BELOW UNDER INSTRUCTION A(1)). AS
A RESULT, FCB STOCKHOLDERS WILL BE REQUIRED TO MAKE AN ELECTION PRIOR TO THE
DETERMINATION AS TO WHETHER ANY ADJUSTMENT TO THE APPLICABLE COMMON STOCK
EXCHANGE RATIO WILL BE MADE. AS OF FEBRUARY 6, 1995, THE CLOSING SALE PRICE OF
REGIONS COMMON STOCK ON THE NASDAQ NATIONAL MARKET WAS $33.38. ACCORDINGLY, IF
THE AVERAGE CLOSING PRICE EQUALS SUCH CLOSING SALE PRICE, THERE WOULD NOT BE AN
ADJUSTMENT TO THE APPLICABLE COMMON STOCK EXCHANGE RATIO. FOR INFORMATION WITH
RESPECT TO THE EFFECT THAT VARIOUS AVERAGE CLOSING PRICES WOULD HAVE ON THE
APPLICABLE COMMON STOCK EXCHANGE RATIO AND THE CORRESPONDING VALUE PER SHARE OF
FCB COMMON STOCK THAT WOULD BE RECEIVED BASED ON THE VARIOUS AVERAGE CLOSING
PRICES AND THE RESULTING APPLICABLE COMMON STOCK EXCHANGE RATIO FOR EACH STOCK
AND CASH ELECTION AND ALL STOCK ELECTION, SEE "DESCRIPTION OF THE
TRANSACTION -- ADJUSTMENT OF APPLICABLE COMMON STOCK EXCHANGE RATIO."
It is understood that the Election is subject to the terms, conditions, and
limitations set forth in the Agreement and the Proxy Statement.
CHECKS AND STOCK CERTIFICATES OF REGIONS WILL NOT BE SENT UNTIL THE RELATED
CERTIFICATES REPRESENTING SHARES OF FCB COMMON STOCK HAVE BEEN SURRENDERED. ANY
CERTIFICATE SUBMITTED MUST BE ACCOMPANIED BY THE ENCLOSED LETTER OF TRANSMITTAL,
PROPERLY COMPLETED.
NOTE: THE TAX CONSEQUENCES OF AN ELECTION TO A HOLDER OF FCB COMMON STOCK CAN
VARY DEPENDING ON THE ELECTION CHOSEN. FOR INFORMATION ON THE FEDERAL
INCOME TAX CONSEQUENCES OF EACH TYPE OF ELECTION, SEE "DESCRIPTION OF THE
TRANSACTION -- CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER" IN
THE PROXY STATEMENT. HOLDERS OF FCB COMMON STOCK SHOULD CONSULT THEIR OWN
ADVISORS AS TO THE TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDERS,
INCLUDING STATE AND LOCAL TAX EFFECTS.
IMPORTANT: TO BE EFFECTIVE, THIS FORM OF ELECTION MUST BE RECEIVED BY THE
ELECTION AGENT NO LATER THAN 10:00 A.M., CHALMETTE, LOUISIANA TIME,
ON MARCH 14, 1995 ("ELECTION DEADLINE").
The undersigned authorizes and instructs you, as Election Agent, to deliver
to Regions any certificate(s) delivered herewith and to receive on behalf of the
undersigned, in exchange for the shares of FCB Common Stock represented thereby,
any check and/or any certificate(s) for shares of Regions Common Stock issuable
to the undersigned pursuant to the Merger. If certificate(s) are not delivered
herewith, the undersigned understands that no checks or Regions stock
certificate(s) will be delivered until certificate(s) for FCB shares have been
surrendered. Accordingly, to avoid delays certificate(s), along with a properly
completed letter of transmittal, should be submitted with the Election Form.
INSTRUCTIONS
A. SPECIAL CONDITIONS
(1) Time In Which to Make An Election. To be effective, this Form of
Election (or a facsimile hereof), properly completed, must be received by the
Election Agent, at one of its two addresses set forth on the first page of this
Form of Election, no later than 10:00 A.M., Chalmette, Louisiana time, on March
14,
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1995 ("Election Deadline"). A holder of FCB Common Stock whose Form of Election
are not so received will be considered a Non-Electing Stockholder. See
Instruction D below.
(2) Change or Revocation of Election. A holder of FCB Common Stock who has
made an Election may at any time prior to the Election Deadline change such
holder's Election by submitting to the Election Agent a revised Form of Election
(or a facsimile thereof), properly completed and signed, that is received by the
Election Agent prior to the Election Deadline.
(3) Joint Forms of Election. For purposes of this Form of Election,
holders of FCB Common Stock who join in making a joint Election will be
considered to be a single holder of FCB Common Stock. Joint Forms of Election
may be submitted only by persons who hold certificates registered in different
forms of the same name (e.g., "John Smith" on one certificate and "J. Smith" on
another). If this Form of Election is submitted as a joint Form of Election,
each record holder of FCB Common Stock covered hereby must properly sign this
Form of Election in accordance with Instruction F(3), attaching additional
sheets if necessary. The signatures of such holders will be deemed to constitute
a certificate that the persons submitting a joint Form of Election are eligible
to do so.
(4) Forms of Election by Nominees. Any record holder of FCB Common Stock
who is a nominee may submit one or more Forms of Election, indicating on the
Form or Forms a combination of Elections covering up to the aggregate number of
shares of FCB Common Stock owned by such record holder. However, upon the
request of Regions, such record holder will be required to certify to the
satisfaction of Regions that such record holder holds such FCB Common Stock as
nominee for the beneficial owners of such FCB Common Stock.
(5) One Type of Election. Except as set forth in paragraph (4) above, no
holder of FCB Common Stock shall be entitled to make more than one type of
Election with respect to the FCB Common Stock held by that holder.
B. SHARES AS TO WHICH AN ALL STOCK ELECTION IS MADE
Each holder of FCB Common Stock may elect to have each of such holder's
shares of FCB Common Stock converted, upon consummation of the Merger, into the
right to receive a multiple of shares of Regions Common Stock (as set forth
below) for each share of FCB Common Stock, by checking "All Stock Election" in
the box entitled "Type of Election." All holders of FCB Common Stock who make
valid All Stock Elections will have their FCB Common Stock converted into the
right to receive 2.626 shares, subject to possible adjustment as described above
and in greater detail in the Proxy Statement, of Regions Common Stock upon
consummation of the Merger. See "Description of the Transaction -- Adjustment of
Applicable Common Stock Ratio" in the Proxy Statement.
C. SHARES AS TO WHICH A STOCK AND CASH ELECTION IS MADE
Each holder of FCB Common Stock may elect to have each of such holder's
shares of FCB Common Stock converted, upon consummation of the Merger, into the
right to receive a combination of (i) 40.77 in cash and (ii) 1.444 shares,
subject to possible adjustment as described above and in greater detail in the
Proxy Statement, of Regions Common Stock upon consummation of the Merger. See
"Description of the Transaction -- Adjustment of Applicable Common Stock Ratio"
in the Proxy Statement.
D. SHARES AS TO WHICH NO ELECTION IS MADE
Holders of FCB Common Stock who do not make a valid Election (or who
properly revoke their Elections) ("Non-Electing Stockholders") will be deemed to
have made the "Stock and Cash Election" and will have their FCB Common Stock
converted into cash and Regions Common Stock.
E. DISTRIBUTION OF REGIONS COMMON STOCK AND CASH PAYMENTS
As soon as practicable after the Effective Time, and upon surrender to the
Transfer Agent, to the extent not previously surrendered with the Form of
Election, of certificate(s) for FCB Common Stock for
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cancellation, there will be issued and mailed to each holder of FCB Common
Stock, the consideration elected to be received by such holder. In no event will
the holder of any surrendered certificate(s) be entitled to receive interest on
any cash to be issued to such holder, and in no event will the Election Agent,
Regions, or FCB be liable to a holder of FCB Common Stock for any Regions Common
Stock or dividends thereon or cash delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat, or similar law.
F. GENERAL
(1) Execution and Delivery. This Form of Election (or a facsimile hereof)
must be properly completed, dated and signed, and must be received by the
Election Agent by 10:00 A.M., Chalmette, Louisiana time, on March 14, 1995
("Election Deadline"), at the address set forth on the first page of this Form
of Election. The method of delivery of all documents is at the option and risk
of the FCB stockholder, but, if sent by mail, registered mail, properly insured,
is recommended.
(2) Insufficient Space. If there is insufficient space to list all the
certificates being identified or submitted, please attach a separate list.
(3) Signatures. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on the Form of Election should correspond
exactly with the name(s) as written on the face of the certificate(s) unless the
FCB Common Stock described on this Form of Election have been assigned by the
registered holder(s), in which event, this Form of Election should be signed in
exactly the same form as the name of the last transferee indicated on the
transfers attached to or endorsed on the certificate(s).
If this Form of Election is signed by a person other than the registered
owner of the certificate(s) listed, the Form of Election must be accompanied by
a properly completed letter of transmittal and by certificate(s), which in turn
must be endorsed or accompanied by appropriate stock power(s), in either case
signed by the registered owner(s) in the name(s) that appear on the
certificate(s), and the signature(s) guaranteed by a member of a registered
national securities exchange or of the NASD, Inc. or a commercial bank or trust
company in the United States. The certificate(s) may be surrendered by a firm
acting as agent for the registered holder(s) if such firm is a member of a
registered national securities exchange or of the NASD, Inc. or a commercial
bank or trust company in the United States.
If this Form of Election is signed by a trustee, executor, administrator,
guardian, officer of a corporation, attorney-in-fact, or by any others acting in
a representative or fiduciary capacity, the person signing, unless such person
is the registered owner, must give such person's full title in such capacity,
and appropriate evidence of authority to act in such capacity must be forwarded
to the Election Agent with this Form of Election.
(4) Stock Transfer Taxes. Regions will bear the liability for all transfer
or other taxes required by reason of the issuance of checks and certificates for
Regions Common Stock upon consummation of the Merger; provided, however, that it
will be a condition to the issuance of any check or certificate for Regions
Common Stock in any name(s) other than the name(s) in which the surrendered
certificate(s) for FCB Common Stock is (are) registered that the person(s)
requesting the issuance of such check or certificate for Regions Common Stock
either pay to the Election Agent any transfer or other taxes required by reason
of such issuance, or establish to the satisfaction of the Election Agent that
such tax has been paid or is not applicable.
(5) Lost Certificate. If any certificate representing FCB Common Stock has
been lost, stolen, or destroyed, the stockholder should immediately notify FCB
(Attention: Edward F. Butler -- telephone (504) 278-1660) for instructions as to
how to proceed. The Form of Election and related documents cannot be processed
until the lost, stolen, or destroyed certificate has been replaced. Accordingly,
if a holder of FCB Common Stock has lost a certificate and wishes to safeguard
his right to make an Election, such holder must act promptly.
(6) Termination of Merger. If the Agreement is terminated, certificates
submitted to the Election Agent will be returned as soon as practicable to the
person submitting them.
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(7) Determination of Questions. All questions with respect to this Form of
Election and Elections made by holders of FCB Common Stock (including, without
limitation, questions relating to the time limits or effectiveness or revocation
of any Elections) will be determined by Regions, whose determination shall be
conclusive and binding. Regions shall have the absolute right to reject any and
all Forms of Election not in proper form or to waive any irregularities in any
Form of Election.
(8) Miscellaneous. A single check and/or a single stock certificate, as
applicable, will be issued to each holder of FCB Common Stock unless such holder
attaches to the Form of Election written instructions to the contrary.
(9) Questions and Requests for Information. Questions and requests for
information or assistance relating to this Form of Election should be directed
to the Election Agent, Attention: Edward F. Butler -- (504) 278-1660. Additional
copies of this Form of Election may be obtained from the Election Agent at
either of the two addresses set forth on the first page of this Form of
Election.
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<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INDICATE BELOW TYPE OF ELECTION, FCB COMMON STOCK
TO WHICH ELECTION RELATES AND
NAME AND ADDRESS OF HOLDER(S) OF RECORD:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
TYPE OF ELECTION* FCB COMMON STOCK TO
(Choose Only One) WHICH ELECTION RELATES
- ------------------------------------------------------------------ --------------------------------------------
/ / All Stock Election Certificate Total Shares Represented
/ / Stock and Cash Election Number by Each Certificate
---------------- --------------------------
---------------- --------------------------
---------------- --------------------------
*You must make the same Election as to all of your FCB
Common Stock. For special conditions see Instruction ---------------- --------------------------
A. Shares as to which no valid Election is made will be
treated as though a Stock and Cash Election was made ---------------- --------------------------
as indicated in Instruction D.
---------------- --------------------------
Total Shares: --------------------------
- ----------------------------------------------------------------------------------------------------------------------
HOLDER(S) OF RECORD*:
(Exactly as Shown on Certificate(s))
Name(s)
- ------------------------------------------------------------------
----------------------------------------------------------
Address
----------------------------------------------------------
City State Zip
---------------------------- ----- ------------
Telephone Area Code ( )
--------------------------------------
*Please attach additional sheets if
necessary.
- ----------------------------------------------------------------------------------------------------------------------
/ / Check here if this is a revocation of an earlier Election and a change of
Election.
/ / Check here if this is a joint Form of Election relating to FCB Common Stock
held in more than one name. See Instruction A(3).
</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
HOLDER(S) OF FCB COMMON STOCK MUST SIGN BELOW:
(See Instruction F(3))
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Important Note Concerning Signatures: PLEASE SIGN HERE:
Must be signed by registered holder(s) exactly as
name(s) appear(s) on stock certificate(s) or ------------------------------------------------------
warrant(s) or by person(s) authorized to become Signature of Owner
registered holder(s) by certificate(s) and docu-
ments transmitted herewith. If signature is by ------------------------------------------------------
attorney-in-fact, executor, administrator, trustee, Signature of Owner
guardian, officer of a corporation, or others acting
in a representative or fiduciary capacity, set ------------------------------------------------------
forth full title and see Instruction F(3). Signature of Owner
------------------------------------------------------
Taxpayer Identification or
Social Security Number
</TABLE>
D-7
<PAGE> 141
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 Company
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
asto 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> 142
"(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
constituentcorporation (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> 143
"(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 Company 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 October 20, 1994 by
and between First Commercial 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 LLP.
23.3 -- Consent of Lange, Simpson, Robinson & Somerville --
included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
23.5 -- Consent of Wheat, First Securities, Inc.
24. -- Power of Attorney -- the manually signed power of attorney is
set forth in the signature page of the original 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
II-3
<PAGE> 144
in the opinion of its counsel the matter has been settled by controlling
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> 145
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 February, 1995.
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 February 7, 1995
- -------------------------- Chief Executive Officer and
J. Stanley Mackin Director
/s/ Richard D. Horsley Vice Chairman of the Board and February 7, 1995
- -------------------------- Executive Financial Officer
Richard D. Horsley and Director
* Robert P. Houston Executive Vice President and February 7, 1995
- -------------------------- Comptroller
Robert P. Houston
- -------------------------- Director
Sheila S. Blair
* James B. Boone, Jr.
- -------------------------- Director February 7, 1995
James B. Boone, Jr.
* Albert P. Brewer
- -------------------------- Director February 7, 1995
Albert P. Brewer
* James S.M. French
- -------------------------- Director February 7, 1995
James S.M. French
</TABLE>
II-5
<PAGE> 146
<TABLE>
<S> <C> <C>
* Catesby ap C. Jones Director February 7, 1995
- --------------------------------
Catesby ap C. Jones
* Olin B. King Director February 7, 1995
- --------------------------------
Olin B. King
* H. Manning McPhillips, Jr. Director February 7, 1995
- --------------------------------
H. Manning McPhillips, Jr.
* Henry E. Simpson Director February 7, 1995
- --------------------------------
Henry E. Simpson
* Robert E. Steiner, III Director February 7, 1995
- --------------------------------
Robert E. Steiner, III
* Lee J. Styslinger, Jr. Director February 7, 1995
- --------------------------------
Lee J. Styslinger, Jr.
* By /s/ Samuel E. Upchurch, Jr. February 7, 1995
- --------------------------------
attorney-in-fact
</TABLE>
<R/>
II-6
<PAGE> 147
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------ ------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as October 20, 1994 by and
between First Commercial 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 LLP.
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- included in
Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
23.5 -- Consent of Wheat, First Securities, Inc.
24. -- Power of Attorney -- the manually signed power of attorney is set forth
in the signature page of the original registration statement.
99.1 -- Form of proxy.
</TABLE>
<R/>
<PAGE> 1
EXHIBIT 5
[Lange, Simpson, Robinson & Somerville letterhead]
February 7, 1995
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation--S4 Registration Statement, No.
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger between First Commercial
Bancshares, Inc. ("FCB") 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 FCB upon consummation of the Merger. The number of shares
of Regions Common Stock to be issued in the Merger depends on the average of
the closing prices of Regions Common Stock over a specified period.
We have examined and are familiar with the registration statement on Form
S-4 (33-57481) 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.
<PAGE> 2
Regions Financial Corporation
February 7, 1995
Page 2
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
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
February 7, 1995
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
First Commercial Bancshares, Inc.
8301 West Judge Perez Drive
Chalmette, Louisiana 70043-1656
Re: Proposed Merger of First Commercial 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 First Commercial
Bancshares, Inc. ("FCB"), 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 October 20, 1994, by
and between FCB 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
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 FCB and through certificates
provided by the management of Regions and the management of FCB.
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 Chalmette, Louisiana market area. To
achieve these goals, the following will occur pursuant to the Merger Agreement:
(A) FCB will merge with and into Regions pursuant to the General
Corporation Law of Delaware and the Louisiana Business Corporation Law.
Regions will acquire all the assets and assume all the liabilities of FCB.
FCB'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 FCB conducted prior to
the Merger.
(B) 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:
(i) 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.
(ii) Each share of FCB Common Stock (excluding shares held by FCB
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
<PAGE> 3
appraisal) issued and outstanding at the Effective Time shall be
converted, at the election of the holder thereof, into either:
(a) (1) $40.77 in cash and (2) 1.444 shares of Regions Common
Stock (subject to adjustment as provided below)(this election
being referred to as the "Stock and Cash Election"); or
(b) 2.626 shares of Regions Common Stock (subject to adjustment
as provided below) (this election being referred to as the "All
Stock Election");
provided, however, that in the event the Average Closing Price is equal
to or
(1) less than $31.90, each share of FCB Common Stock (subject to
the exclusions set forth above) issued and outstanding at the Effective
Time shall be converted into (i) $40.77 in cash (in the case of the
Stock and Cash Election only) and (ii) that number of shares of Regions
Common Stock (rounded to the nearest one-thousandth) equal to the
quotient obtained by dividing (x) $46.06 in the case of the Cash and
Stock Election and $83.77 in the case of the All Stock Election by (y)
the Average Closing Price, or
(2) greater than $37.10, each share of FCB Common Stock (subject
to the exclusions set forth above) issued and outstanding at the
Effective Time shall be converted into (i) $40.77 in cash (in the
case of the Stock and Cash Election only) and (ii) that number of
shares of Regions Common Stock (rounded to the nearest one-thousandth)
equal to the quotient obtained by dividing (x) $53.57 in the case of
the Cash and Stock Election and $97.43 in the case of the All Stock
Election by (y) the Average Closing Price ($31.90 and $37.10 are
collectively referred to as the "Average Closing Price Limitations" and
the respective exchange ratios of FCB Common Stock into Regions Common
Stock resulting from the Cash and Stock Election and the All Stock
Election are referred to as the "Applicable Exchange Ratios").
(C) Each of the shares of FCB Common Stock held by any FCB 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.
(D) In the event FCB changes the number of shares of FCB 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 Applicable Exchange Ratios shall be proportionately adjusted. In the event
Regions changes the number or shares of Regions Common Stock issued and
<PAGE> 4
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 Applicable
Exchange Ratios and the Average Closing Price Limitations shall be
proportionately adjusted.
(E) Notwithstanding any other provision of the Merger Agreement, each
holder of shares of FCB 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 Average Closing Price. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
(F) Any holder of shares of FCB 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 FCB fails to perfect, or 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 FCB 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 the Merger 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 the Merger Agreement.
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:
(1) The Applicable Exchange Ratios determining the amount of Regions
Common Stock or other consideration to be received in the Merger by each
exchanging FCB shareholder, is a product of bona fide negotiations between
parties bargaining at arm's length.
(2) There is no plan or intention on the part of the stockholders of
FCB who own five percent (5%) or more of the FCB stock, and to the best of the
knowledge of the management of FCB, there is no plan or intention on the part
of the remaining stockholders of FCB 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
<PAGE> 5
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 FCB outstanding immediately
prior to the Effective Time. For purposes of this representation, shares of
FCB 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 FCB stock as of the Effective Time. Moreover, shares of
FCB stock and shares of Regions stock held by FCB 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 redeem or otherwise reacquire
any of its stock issued in the Merger, except for purchases of stock in the
open market in the normal course of business executed through an independent
broker in which Regions is not aware of the identity of any seller or in
private placement transactions in which the sellers are not former FCB
shareholders.
(4) Regions has no plan or intention to sell or otherwise dispose of
any of the assets of FCB 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 FCB assumed by Regions and the liabilities to
which the transferred assets of FCB are subject were incurred by FCB in the
ordinary course of its business.
(6) Following the transaction, Regions will continue the historic
business of FCB or use a significant portion of FCB's historic business assets
in a business.
(7) Regions, FCB, and the stockholders of FCB will pay their
respective expenses, if any, incurred in connection with the transaction.
Regions shall pay the fees and printing costs in connection with certain
regulatory proceedings before such authorities and in connection with the
Registration Statement and Proxy Statement/Prospectus (which are directly
related to the Merger).
(8) There is no intercorporate indebtedness existing between FCB and
Regions that was issued, acquired, or will be settled at a discount.
(9) FCB 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.
(10) The fair market value and the total adjusted basis of the assets
of FCB transferred 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 FCB stockholders instead of issuing fractional shares of
Regions stock will not exceed one percent (1%) of the total
<PAGE> 6
consideration that will be issued in the transaction to the FCB stockholders in
exchange for their shares of FCB stock. The fractional share interests of each
FCB stockholder will be aggregated, and no FCB 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
FCB will be separate consideration for, or allocable to, any of their shares of
FCB 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 on the Effective
Date of the Merger, the fair market value of all of FCB'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, (i) 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,
(ii) FCB 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 FCB is a partner or beneficiary, and (iii) 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 FCB, in the case of a first-tier subsidiary of
FCB or by a controlled corporation, in the case of a lower-tier subsidiary.
(14) For each of Regions and FCB, 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 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) The Merger Agreement represents the entire understanding of FCB
and Regions with respect to the Merger.
<PAGE> 7
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 FCB
(including the representation that FCB 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) The Merger will be a reorganization within the meaning of
section 368(a). FCB and Regions will each be "a party to a reorganization"
within the meaning of section 368(b).
(2) FCB 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 FCB. Sections 361(a) and 357(a).
(3) No gain or loss will be recognized by Regions on receipt of FCB's
assets in exchange for Regions Common Stock. Section 1032(a).
(4) The basis of FCB's assets in the hands of Regions will, in each
case, be the same as the basis of those assets in the hands of FCB immediately
prior to the transaction. Section 362(b).
(5) The holding period of the assets of FCB in the hands of Regions
will, in each case, include the period during which such assets were held by
FCB. Section 1223(2).
(6) The stockholders of FCB who exchange their shares of FCB Common
Stock solely for shares of Regions Common Stock will recognize no gain or loss
upon the exchange. If, however, a stockholder of FCB exchanges FCB Common
Stock for Regions Common Stock and cash, then such stockholder will be required
to recognize any gain realized on the exchange, and no loss will be recognized.
Gain recognition, if any, will not be in excess of the amount of cash received.
Section 354(a)(1).
(7) The basis of the Regions Common Stock received by FCB stockholders
who exchange their shares of FCB Common Stock solely for shares of Regions
Common Stock in the proposed transaction will, in each instance, be the same as
the basis of the FCB Common Stock surrendered in exchange therefor. If,
however, a stockholder of FCB exchanges FCB Common Stock for Regions Common
Stock and cash (pursuant to the Stock and Cash Election), then such
stockholder's basis in the Regions Common Stock received will be the same as
the basis of the FCB Common Stock surrendered in the exchange, reduced by the
amount of cash received, and increased by the amount of gain recognized in
connection with the exchange. Section 358(a)(1).
(8) The holding period of the Regions Common Stock received by the FCB
stockholders will, in each instance, include the period during which the FCB
Common Stock surrendered in exchange therefor was held, provided that the FCB
Common Stock was held as a capital asset on the date of the exchange. Section
1223(1).
<PAGE> 8
(9) The payment of cash to FCB 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 FCB stockholder in exchange
for such holder's FCB Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of such
holder's FCB Common Stock, subject to the provisions and limitations of section
302.
(11) Any holder of FCB Common Stock who receives cash and Regions
Common Stock pursuant to the Stock and Cash Election will be required to
recognize any gain realized on the exchange, but not in excess of the amount of
cash received. Recognition of loss will not be allowed. In determining
whether gain will be recognized as ordinary dividend income or as capital gain,
such stockholders will be treated for federal income tax purposes as if (a)
Regions had issued solely Regions Common Stock in exchange for their FCB Common
Stock and (b) Regions redeemed a portion of the shares issued. See
Commissioner v. Clark, 489 U.S. 726 (1989); Rev. Rul. 93-61, 1993-2 C.B. 118.
Thus, cash payments received by FCB stockholders exercising the Stock and Cash
Election will be treated as having been received as distributions in full
payment in exchange for the stock redeemed as provided in section 302(a).
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> 9
We consent to the attachment of 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, FCB 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 729,448 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
ERNST & YOUNG LLP
Birmingham, Alabama
February 6, 1995
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Regional Financial
Corporation on Form S-4 of our report dated January 28, 1994, appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
January 6, 1995
<PAGE> 1
EXHIBIT 23.5
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this Registration Statement on Form S-4 of our
letter to the Board of Directors of First Commercial Bancshares, Inc. included
as Appendix B to the Proxy Statement-Prospectus that is a part of this
Registration Statement, and to the references to such letters and to our firm
in such Proxy Statement-Prospectus. In giving such consent we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
/s/ Wheat, First Securities, Inc.
WHEAT, FIRST SECURITIES, INC.
Richmond, Virginia
February 7, 1995
<PAGE> 1
FIRST COMMERCIAL BANCSHARES, INC. PROXY
8301 WEST JUDGE PEREZ DRIVE - CHALMETTE, LA 70043
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST COMMERCIAL
BANCSHARES, INC.
The undersigned hereby appoints Valliere J. Dauterive and Edwin M. Roy, Jr., or
either of them, as proxies, each with full power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
shares of common stock of First Commercial Bancshares, Inc. ("FCB"') held of
record by the undersigned on February 6, 1995 at the special meeting of
stockholders to be held on March 14, 1995 (the "Special Meeting") or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. MERGER. To approve the Agreement and Plan of Merger, dated as of October 20,
1994 (the "Agreement"), by and between FCB and Regions Financial Corporation
("Regions") pursuant to which (i) Regions will acquire all of the issued and
outstanding common stock of FCB through the merger of FCB with and into Regions
(the "Merger"); (ii) each share of FCB common stock (except for certain shares
held by FCB or 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) will be converted, at the election of the holder thereof, into
either (a) a combination of (x) $40.77 in cash and (y) 1.444 shares of Regions
common stock (subject to adjustment as described in the accompanying Proxy
Statement/Prospectus), or (b) 2.626 shares of Regions common stock (subject to
adjustment as described in the accompanying Proxy Statement/Prospectus); and
(iii) each FCB stockholder will receive cash in lieu of any remaining fractional
share interest, all as described more fully in the accompanying Proxy
Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. OTHER BUSINESS. To vote in their discretion on such other business as may
properly come before the Special Meeting, including adjourning the Special
Meeting to permit, if necessary, further solicitation of proxies.
(Please see reverse side)
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
FOR Proposal 1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1995
------------------
------------------------------
Signature of Stockholder
------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
