<PAGE> 1
As filed with the Securities and Exchange Commission on June 7, 1996
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-----------------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
-----------------------------
<TABLE>
<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------------
Copies to:
<TABLE>
<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III LOUIS Y. FISHMAN
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD CORRERO, FISHMAN & CASTEIX, LLP
SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W. 201 ST. CHARLES AVENUE, 47TH FLOOR
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 NEW ORLEANS, LA 70170
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 (504) 586-5253
(205) 250-5000 (202) 508-3303
</TABLE>
----------------------------
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. / /
----------------------------
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit* offering price* registration fee
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock 844,992 $19.2001 $ 16,224,000 $ 5,594.48
================================================================================================================================
</TABLE>
*Calculated in accordance with Rule 457(f).
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...................................... Summary; Delta Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Business of Delta; Index to Delta 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>
2
<PAGE> 3
Dear Delta Bank & Trust Company Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Delta Bank & Trust Company ("Delta") to be held at Delta's main office, 8018
Highway 23, Belle Chasse, Louisiana, 70037 on , 1996, at 00 p.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 Reorganization entered into with
Regions Financial Corporation ("Regions") and the related Joint Agreement of
Merger pursuant to which Delta will merge (the "Merger") with and into Regions
Bank of Louisiana, a wholly owned banking subsidiary of Regions. Upon
consummation of the Merger, each share of Delta common stock issued and
outstanding (except for certain shares held by Delta or Regions and shares held
by stockholders who perfect their dissenters' rights of appraisal) will be
converted into 2.2568 shares of Regions common stock, subject to possible
adjustment, and, under certain circumstances, an additional cash payment of up
to $4.51.
The accompanying Proxy Statement/Prospectus includes a description of the
proposed Merger and provides other specific information concerning the Special
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.
The Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of Delta has agreed to vote those Delta shares beneficially owned by
such member in favor of the Merger. Consummation of the Merger is subject to
certain conditions, including approval of the Agreement by Delta stockholders
and approval of the Merger by various regulatory agencies.
Stockholders of Delta who perfect their dissenters' rights of appraisal
prior to the proposed Merger and comply with applicable law will be entitled to
receive the fair value of their Delta shares in cash, as provided by applicable
law.
It is important to understand that approval of the Merger requires the
affirmative vote of at least two-thirds of the common stock of Delta entitled
to vote 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 Delta, 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,
Raymond P. Markase
President
<PAGE> 4
DELTA BANK & TRUST COMPANY
8018 HIGHWAY 23, BELLE CHASSE, LOUISIANA, 70037
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1996
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Delta Bank & Trust Company ("Delta"), a commercial bank, will be
held at Delta's main office, 8018 Highway 23, Belle Chasse, Louisiana, 70037 on
, 1996, at :00 .m., local time, for the following purposes:
1. Merger. To consider and vote on the Agreement and Plan of
Reorganization, dated as of January 11, 1996 (the "Agreement"), by and between
Delta and Regions Financial Corporation ("Regions") and the related Joint
Agreement of Merger pursuant to which (i) Regions will acquire all of the
issued and outstanding common stock of Delta through the merger (the "Merger")
of Delta with and into Regions Bank of Louisiana, a wholly owned banking
subsidiary of Regions; (ii) each share of Delta common stock (except for
certain shares held by Delta or Regions and shares held by stockholders who
perfect their dissenters' rights of appraisal) will be converted into 2.2568
shares of Regions common stock, subject to possible adjustment, and, under
certain circumstances, an additional cash payment of up to $4.51; and (iii)
each Delta stockholder will receive cash in lieu of any remaining fractional
share interest, all as described more fully in the accompanying Proxy
Statement/Prospectus; and
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 , 1996, are
entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of Delta have a right to dissent from the Merger and obtain
payment of the fair value of their shares in cash by complying with the
applicable provisions of applicable law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix D. DISSENTING SHAREHOLDERS WHO COMPLY
WITH THE PROCEDURAL REQUIREMENTS OF THE LOUISIANA BANKING LAW 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.
The Board of Directors of Delta unanimously recommends that holders of
Delta common stock vote to approve the proposals listed above.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
Delta an instrument of revocation or a duly executed proxy bearing a later date
or by electing to vote in person at the Special Meeting.
By Order of the Board of Directors
Alan Popich
Corporate Secretary
, 1996
<PAGE> 5
DELTA BANK & TRUST COMPANY REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD , 1996 (PAR VALUE $.625)
This Prospectus of Regions Financial Corporation, a regional bank holding
company organized and existing 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 Delta
Bank & Trust Company ("Delta") upon consummation of the proposed merger (the
"Merger") described herein, by which Delta will merge with and into Regions
Bank of Louisiana ("Regions Bank"), a wholly owned banking subsidiary of
Regions, pursuant to the terms of an Agreement and Plan of Reorganization,
dated as of January 11, 1996, by and between Regions and Delta (the
"Agreement") and the related Joint Agreement of Merger between Delta and
Regions Bank (together with the Agreement, the "Agreements").
On the effective date of the Merger (the "Effective Date"), except as
described herein, (i) Delta will merge with and into Regions Bank; (ii) each
outstanding share of the $5.00 par value common stock of Delta ("Delta Common
Stock") will be converted into 2.2568 shares of Regions Common Stock, subject
to possible adjustment, and, under certain circumstances, an additional cash
payment of up to $4.51; and (iii) each holder of Delta Common Stock will
receive cash in lieu of any remaining fractional 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 Delta will cease, and
the subsidiaries of Delta will become subsidiaries of Regions Bank. For a
further description of the terms of the Merger, see "Description of the
Transaction."
This Prospectus also constitutes a Proxy Statement of Delta and is being
furnished to the stockholders of Delta in connection with the solicitation of
proxies by the Board of Directors of Delta for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on , 1996, 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 Delta on or
about , 1996.
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 , 1996.
<PAGE> 6
AVAILABLE INFORMATION
Regions is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and, in accordance therewith,
files reports, proxy statements, and other information with the Securities and
Exchange Commission (the "SEC"). Copies of such reports, proxy statements, and
other information can be obtained, at prescribed rates, from the SEC by
addressing written requests for such copies to the Public Reference Section at
the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In
addition, such reports, proxy statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
This Proxy Statement/Prospectus constitutes part of the Registration
Statement on Form S-4 of Regions (including any exhibits and amendments
thereto, the "Registration Statement") filed with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the securities
offered hereby. This Proxy Statement/Prospectus does not include all of the
information in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. For further
information about Regions and the securities offered hereby, reference is made
to the Registration Statement. The Registration Statement may be inspected and
copied, at prescribed rates, at the SEC's public reference facilities at the
addresses set forth above. Regions Common Stock is traded in the Nasdaq
National Market. Reports, proxy statements, and other information concerning
Regions may be inspected at the offices of the National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington, D.C.
20006.
No person is authorized to give any information or to make any
representations other than those included in this Proxy Statement/Prospectus,
and if given or made, such information or representations must not be relied
upon as having been authorized by Regions or Delta. 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 Delta
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 Delta
was supplied by Delta.
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, 1995 (which includes supplemental consolidated financial
statements of Regions, giving effect to the March 1, 1996 combination of
First National Bancorp with Regions, accounted for as a pooling of
interests);
2. Regions' Quarterly Report on Form 10-Q for the three months ended
March 31, 1996;
3. Regions' Current Report on Form 8-K dated as of March 1, 1996, and
amendment no. 1 thereto filed March 28, 1996;
2
<PAGE> 7
4. Regions' Current Report on Form 8-K filed June 4, 1996; (which
includes management's discussion and analysis of financial condition
and results of operations of Regions, giving effect to the combination
of First National Bancorp with Regions, accounted for as a pooling of
interests);
5. Regions' report on Form 10-C filed March 11, 1996; and
6. 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.
Regions' Annual Report on Form 10-K for the year ended December 31, 1995,
incorporates by reference specific portions of Regions' Annual Report to
Stockholders for that year (the "Regions Annual Report to Stockholders"), but
does not incorporate other portions of the Regions Annual Report to
Stockholders. Only those portions of the Regions Annual Report to Stockholders
captioned "Financial Summary & Review 1995," "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. In
particular, reference is made to the Regions' Annual Report on Form 10-K for
the year ended December 31, 1995, and Regions' Current Report on Form 8-K dated
June 4, 1996, which include supplemental consolidated financial statements and
the related management's discussion and analysis of financial condition and
results of operations of Regions, giving effect to the combination of First
National Bancorp with Regions, effected March 1, 1996, and accounted for as a
pooling of interests. See "Summary" and "Business of Regions--Recent
Developments."
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) 832-8401). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1996.
3
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Meeting of Delta Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reasons for the Merger; Recommendation of Delta's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Delta's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certain Differences in Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Adjustment of Exchange Ratio and Computation of Possible Cash Payment . . . . . . . . . . . . . . . . . . . . . 15
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Opinion of Delta's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Resales of the Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
4
<PAGE> 9
<TABLE>
<S> <C>
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Stockholder Nominations and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Business Combinations with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
DELTA MANAGEMENT'S DISCUSSION AND ANALYIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
BUSINESS OF DELTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
INDEX TO DELTA FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX A--Agreement and Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Joint Agreement of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C--Opinion of Chaffe & Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
APPENDIX D--Copy of Section 6:376 of the Louisiana Banking Law . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
5
<PAGE> 10
SUMMARY
The following is a summary of certain information relating to the Special
Meeting, the proposed 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 "Delta" refer to those entities,
respectively, and, where the context requires, to those entities and their
respective subsidiaries.
THE PARTIES
Delta. Delta is a commercial bank organized and existing under the laws of
the state of Louisiana, with its principal executive office located in Belle
Chasse, Louisiana. Delta operates through its nine offices in Plaquemines and
Jefferson Parishes, Louisiana, through which it provides a range of retail
banking services. At March 31, 1996, Delta had total consolidated assets of
approximately $197 million, total consolidated deposits of approximately $175
million, and total consolidated stockholders' equity of approximately $16
million. Delta's principal executive office is located at 8018 Highway 23,
Belle Chasse, Louisiana, 70037 and its telephone number at such address is
(504) 394-9595.
Regions. Regions is a regional bank holding company organized and existing
under the laws of the state of Delaware and headquartered in Birmingham,
Alabama, with approximately 353 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of March 31, 1996. At that date, Regions
had total consolidated assets of approximately $17.5 billion, total
consolidated deposits of approximately $14.2 billion, and total consolidated
stockholders' equity of approximately $1.5 billion. Regions is the third
largest bank holding company headquartered in Alabama in terms of assets, based
on March 31, 1996 information. Regions operates banking subsidiaries in
Alabama, Florida, Georgia, Louisiana, and Tennessee and 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.
Since March 31, 1996, Regions has completed the acquisition of a
financial institution in Georgia. Regions also has entered into definitive
agreements to acquire, in addition to Delta, three additional financial
institutions, one of which is located in Louisiana and two of which are located
in Georgia (the "Other Pending Acquisitions"). For information with respect to
the Other Pending Acquisitions see "Documents Incorporated by Reference" and
"Business of Regions--Recent Developments."
Regions commenced operations in 1971 as a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
Regions' principal executive offices are located at 417 North 20th Street,
Birmingham, Alabama 35203, and its telephone number at such address is (205)
326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
SPECIAL MEETING OF DELTA STOCKHOLDERS
The Special Meeting will be held at :00 p.m., local time, on ,
1996, at Delta's main office, 8018 Highway 23, Belle Chasse, Louisiana, 70037,
for the purpose of considering and voting on approval of the Agreement. See
"The Special Meeting."
6
<PAGE> 11
RECORD DATE; VOTE REQUIRED
Only holders of record of Delta Common Stock at the close of business on
, 1996 (the "Record Date"), will be entitled to vote at the Special Meeting.
The affirmative vote of at least two-thirds of the Delta Common Stock entitled
to vote at the Special Meeting will be required to approve the Agreements. As of
the Record Date, there were 374,420 shares of Delta Common Stock outstanding
and entitled to be voted.
The directors and executive officers of Delta and their affiliates
beneficially owned, as of the Record Date, shares (or approximately % of
the outstanding shares) of Delta Common Stock. Each member of the Board of
Directors of Delta has agreed to vote those Delta shares beneficially owned by
such member 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 Delta Common Stock. As of that date, neither Delta nor Regions held
any shares of Delta Common Stock in a fiduciary capacity for others. See "The
Special Meeting--Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreements provide for the acquisition of Delta by Regions pursuant to
the Merger of Delta with and into Regions Bank, a wholly owned banking
subsidiary of Regions. On the Effective Date, each share of Delta Common Stock
then issued and outstanding (excluding any shares held by stockholders who
perfect their dissenters' rights of appraisal and shares held by Delta,
Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or in satisfaction of debts previously contracted) will be
converted into 2.2568 shares of Regions Common Stock, subject to possible
adjustment (the "Exchange Ratio"), and, under certain circumstances, an
additional cash payment of up to $4.51 (the "Cash Consideration"). Accordingly,
the total per share consideration to be received by the holders of each share
of Delta Common Stock (the "Merger Consideration") consists of a share
component based on the final Exchange Ratio (the "Share Consideration") and the
possible Cash Consideration. See "Description of the Transaction--Adjustment of
the Exchange Ratio and Computation of Possible Cash Consideration." 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 Delta stockholder
would be entitled upon consummation of the Merger, based on the closing price
of Regions Common Stock on the Nasdaq National Market (as reported by The Wall
Street Journal, or, if not reported thereby, by another authoritative source
selected by Regions) on the last full trading day immediately preceding the
Effective Date. See "Description of the Transaction--General."
DISSENTING STOCKHOLDERS
If the Merger is not approved by at least 80% of the total voting power of
Delta, holders of Delta Common Stock entitled to vote on approval of the
Agreements 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 Delta Common Stock in cash
in accordance with the applicable provisions of Section 6:376 of the Louisiana
Banking Law (the "LBL"). In the event the Merger is approved by 80% or more of
the total voting power of Delta, then dissenters' rights of appraisal, in
accordance with the LBL, will not be available. The procedures to be followed
by dissenting stockholders are summarized under "Description of the
Transaction--Dissenters' Rights," and Section 6:376 of the LBL is reproduced as
Appendix D to this Proxy Statement/Prospectus.
REASONS FOR THE MERGER; RECOMMENDATION OF DELTA'S BOARD OF DIRECTORS
Delta's Board of Directors has unanimously approved the Merger and the
Agreements and has determined that the Merger is fair to, and in the best
interests of, Delta and its stockholders. Accordingly, Delta's Board
unanimously recommends that Delta's stockholders vote FOR approval of the
Agreements. EACH MEMBER OF THE BOARD OF DIRECTORS OF DELTA HAS AGREED TO VOTE
SHARES OF DELTA COMMON STOCK BENEFICIALLY OWNED BY SUCH MEMBER IN
7
<PAGE> 12
FAVOR OF THE AGREEMENTS. In approving the Merger, Delta's directors considered
Delta's financial condition, the financial terms and the income tax
consequences of the Merger, the likelihood of the Merger being approved by
regulatory authorities without undue conditions or delay, legal advice
concerning the proposed Merger, and the opinion of Chaffe & Associates, Inc.
("Chaffe") that, as of the date of its opinion, the consideration to be
received in the Merger was fair, from a financial point of view, to the
stockholders of Delta. See "Description of the Transaction--Background of and
Reasons for the Merger."
OPINION OF DELTA'S FINANCIAL ADVISOR
Chaffe has rendered an opinion to Delta 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
consideration to be received in the Merger is fair, from a financial point of
view, to the stockholders of Delta. The opinion of Chaffe is attached as
Appendix C to this Proxy Statement/Prospectus. Delta 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 Delta'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
Joint Agreement of Merger reflecting the Merger is filed with the Louisiana
Commissioner of Financial Institutions (the "Louisiana Commissioner"). Unless
otherwise agreed upon by Regions and Delta, 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 tenth business
day following the last of the following events to occur: (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 Agreements are approved by the requisite vote of Delta stockholders; or such
later date within five business 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 third quarter of
1996, 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 an exchange agent
selected by Regions (the "Exchange Agent"), to mail to the former stockholders
of Delta a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of Delta Common
Stock for certificates representing shares of Regions Common Stock. DELTA
STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE
FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. See "Description of the
Transaction--Distribution of Regions Stock Certificates and Payment for
Fractional Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Federal Deposit Insurance
Corporation (the "FDIC") and the Louisiana Commissioner. Applications for the
requisite approvals have been filed with these agencies, each of which has yet
to issue its approval of the Merger. There can be no assurance that the
approvals of the Louisiana Commissioner and the FDIC will be given or as to the
timing or conditions of such approvals.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of Delta stockholders, receipt of an
opinion of counsel or a ruling from the Internal Revenue Service 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."
8
<PAGE> 13
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
Delta and Regions, or by action of the Board of Directors of either company
under certain circumstances, including if the Merger is not consummated by
November 30, 1996, unless the failure to consummate by such time is the result
of an uncured breach of the obligation to consummate the Merger by the party
seeking to terminate. If for any reason the Merger is not consummated, Delta
will continue to operate as a commercial bank 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 Delta's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of Delta
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 on the receipt of an opinion of
counsel to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the exchange in the Merger of Delta
Common Stock for Regions Common Stock will not give rise to gain or loss to
Delta stockholders with respect to such exchange, except to the extent of any
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. 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, DELTA
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, Delta stockholders, whose rights are governed by the
LBL and by Delta's Articles of Incorporation and Bylaws, will automatically
become Regions stockholders, and their rights as Regions stockholders will be
determined by the Delaware General Corporation Law (the "Delaware GCL") and by
Regions' Certificate of Incorporation and Bylaws.
The rights of Regions stockholders differ from the rights of Delta
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. There is no public trading market for Delta Common
Stock. The following table sets forth, as of the indicated dates, (i) the last
sale price of Regions Common Stock, and (ii) the equivalent per share price (as
explained below) of Delta Common Stock. The indicated dates of November 14,
1995, and , 1996 represent, respectively, the last trading day
immediately preceding public announcement of the proposed acquisition of Delta
by Regions and the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus.
9
<PAGE> 14
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS OF DELTA
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------
<S> <C> <C>
November 14, 1995 $ 41.38 $ 93.39
, 1996
</TABLE>
The equivalent per share price of Delta Common Stock at each specified date
represents the last sale price of a share of Regions Common Stock on such date
multiplied by the Exchange Ratio of 2.2568. Stockholders are advised to obtain
current market quotations for Regions Common Stock. No assurance can be given
as to the market price of Regions Common Stock at or after the Effective Date.
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating
to net income, cash dividends, and book value on (i) an historical basis for
Regions and Delta, (ii) a pro forma combined basis per share of Regions Common
Stock, giving effect to the Merger, and (iii) an equivalent pro forma basis per
share of Delta Common Stock, giving effect to the Merger. The Regions and Delta
pro forma combined information and the Delta pro forma Merger equivalent
information give effect to the Merger on a purchase accounting basis and assume
an Exchange Ratio of 2.2568. See "Description of the Transaction--Accounting
Treatment." 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 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 Delta, including the respective notes thereto. Regions' historical
financial information has been restated to give effect to the combination of
First National Bancorp with Regions, effected March 1, 1996, and accounted for
as a pooling of interests. See "Documents Incorporated by Reference,"
"--Selected Financial Data," and "Business of Regions--Recent Developments."
10
<PAGE> 15
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions
and Delta historical)
<S> <C> <C> <C> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE
PER COMMON SHARE
Regions historical . . . . . . . . . . . . . $ .85 $ .81 $ 3.21 $ 3.10 $ 2.81
Delta historical . . . . . . . . . . . . . . 1.39 1.51 4.42 4.24 3.79
Regions and Delta pro forma combined(1) . . . .85 3.19
Delta pro forma Merger equivalent(2) . . . . 1.92 7.20
DIVIDENDS DECLARED PER COMMON
SHARE
Regions historical . . . . . . . . . . . . . $ .35 $ .33 $ 1.32 $ 1.20 $ 1.04
Delta historical . . . . . . . . . . . . . . .50 .00 2.00 2.00 2.00
Delta pro forma Merger equivalent(3) . . . . .79 .74 2.98 2.71 2.35
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions historical . . . . . . . . . . . . . $ 23.84 $ 21.92 $ 23.38 $ 21.26 $ 19.85
Delta historical. . . . . . . . . . . . . . . 43.33 41.52 43.18 39.19 38.20
Regions and Delta pro forma combined(4) . . . 23.86
Delta pro forma Merger equivalent(2) . . . . 53.85
</TABLE>
- ---------------------
(1) Represents the combined results of Regions and Delta as if the Merger
were consummated on January 1, 1995, and were accounted for as a purchase.
(2) Represents pro forma combined information multiplied by the Exchange
Ratio of 2.2568 shares of Regions Common Stock for each share of Delta Common
Stock.
(3) Represents historical dividends declared per share by Regions
multiplied by the Exchange Ratio of 2.2568 shares of Regions Common Stock for
each share of Delta Common Stock.
(4) Represents the combined results of Regions and Delta as if the Merger
were consummated on March 31, 1996, and were accounted for as a purchase.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and Delta. The data for Regions have been restated to
give effect to the combination with First National Bancorp consummated on March
1, 1996, which was accounted for as a pooling of interests. The data should be
read in conjunction with the historical financial statements, related notes,
and other financial information concerning Regions and Delta incorporated by
reference or included herein. Interim unaudited data for the three months ended
March 31, 1996 and 1995 of Regions and Delta reflect, in the opinion of the
respective managements of Regions and Delta, all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of such
data. Results for the three months ended March 31, 1996, are not necessarily
indicative of results which may be expected for any other interim period or for
the year as a whole. See "Documents Incorporated by Reference."
<PAGE> 16
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
----------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . $ 329,005 $ 299,945 $ 1,259,600 $ 991,693 $ 746,544 $ 737,094 $ 778,848
Total interest expense . . . 165,119 147,415 635,336 436,157 296,195 324,420 428,083
Net interest income . . . . . 163,886 152,530 624,264 555,536 450,349 412,674 350,765
Provision for loan losses . . 6,874 5,050 30,271 20,580 24,695 39,367 34,879
Net interest income after
loan loss provision . . 157,012 147,480 593,993 534,956 425,654 373,307 315,886
Total noninterest income
excluding security
gains (losses) . . . . . 55,551 43,912 187,830 171,705 169,318 148,007 129,232
Security gains (losses) . . . 131 7 (424) 344 831 2,353 (89)
Total noninterest expense . . 135,008 116,229 487,461 442,376 383,130 343,279 302,795
Income tax expense . . . . . 24,892 24,920 96,109 84,109 66,169 56,405 41,502
Net income . . . . . . . . . $ 52,794 $ 50,250 $ 197,829 $ 180,520 $ 146,504 $ 123,983 $ 100,732
PER SHARE DATA:
Net income . . . . . . . . . $ .85 $ .81 $ 3.21 $ 3.10 $ 2.81 $ 2.42 $ 2.01
Cash dividends . . . . . . . .35 .33 1.32 1.20 1.04 .91 .87
Book value . . . . . . . . . 23.84 21.92 23.38 21.26 19.85 17.13 15.47
OTHER INFORMATION:
Average number of shares
outstanding 61,985 61,907 61,670 58,206 52,153 51,192 50,192
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . $17,531,422 $16,200,279 $16,851,774 $15,810,076 $13,163,161 $10,457,676 $9,188,048
Securities . . . . . . . . . 4,120,997 3,296,536 3,863,781 3,346,291 2,993,417 2,255,732 2,076,199
Loans, net of unearned
income . . . . . . . . . 11,864,356 11,412,740 11,542,311 10,855,195 8,430,931 6,657,557 5,726,818
Total deposits . . . . . . . 14,182,607 13,121,692 13,497,612 12,575,593 11,025,376 8,923,801 8,047,731
Long-term debt . . . . . . . 501,520 606,662 632,019 599,476 525,820 151,460 24,461
Stockholders' equity . . . . 1,482,790 1,358,964 1,429,253 1,286,322 1,106,361 886,116 779,002
PERFORMANCE RATIOS:
Return on average assets (1). 1.24% 1.28% 1.21% 1.27% 1.38% 1.29% 1.15%
Return on average stockholders'
equity (1) . . . . . . . 14.51 15.38 14.29 15.26 15.76 15.04 13.58
Net interest margin (1) . . . 4.22 4.31 4.21 4.37 4.77 4.85 4.58
Efficiency (2) . . . . . . . 60.49 57.94 58.79 59.44 60.23 59.62 60.92
Dividend payout . . . . . . . 41.18 40.74 41.12 38.71 37.01 37.60 43.28
ASSET QUALITY RATIOS:
Net charge-offs to average
loans, net of unearned
income (1) . . . . . . . .06% .03% .17% .19% .23% .36% .45%
Problem assets to net loans
and other real estate
(3) . . . . . . . . . . .61 .71 .59 .75 1.12 1.29 1.62
Nonperforming assets to net
loans and other real
estate (4) . . . . . . . .70 .76 .68 .80 1.28 1.39 1.74
Allowance for loan losses to
loans, net of unearned
income . . . . . . . . . 1.41 1.34 1.38 1.32 1.48 1.51 1.34
Allowance for loan losses to
nonperforming assets
(4) . . . . . . . . . 200.73 175.18 202.55 164.48 115.88 107.97 76.76
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 8.56% 8.31% 8.44% 8.35% 8.76% 8.60% 8.49%
Average loans to average
deposits . . . . . . . . 84.75 86.68 86.12 79.90 76.41 71.59 72.34
Tier 1 risk-based capital (5). 11.34 10.66 11.14 10.69 11.13 11.68 11.85
Total risk-based capital (5). 14.30 14.23 14.61 14.29 13.48 14.44 13.19
Tier 1 leverage (5) . . . . . 7.81 7.43 7.49 8.21 10.11 8.44 8.40
</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.
<PAGE> 17
Selected Historical Financial Data of Delta
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . $ 3,541 $ 3,699 $ 14,585 $ 13,605 $ 13,613 $ 11,320 $ 12,176
Total interest expense . . . 1,245 1,227 4,884 4,029 3,948 4,001 6,014
Net interest income . . . . . 2,296 2,472 9,701 9,576 9,665 7,319 6,162
Provision for loan losses . . 150 -- -- 405 620 570 330
Net interest income after
loan loss provision . . 2,146 2,472 9,701 9,171 9,045 6,749 5,832
Total noninterest income
excluding security gains
(losses) . . . . . . . . 646 545 1,949 1,894 2,040 1,344 1,496
Security gains (losses) . . . -- (18) 7 (60) 58 139 109
Total noninterest expense . . 2,062 2,199 9,217 8,884 9,186 5,727 5,219
Income tax expense . . . . . 211 234 787 535 688 711 600
Net income . . . . . . . . . 519 566 1,653 1,586 1,269(6) 1,794 1,618
PER SHARE DATA:
Net income . . . . . . . . . $ 1.39 $ 1.51 $ 4.42 $ 4.24 $ 3.39 $ 4.79 $ 4.32
Cash dividends . . . . . . . .50 -- 2.00 2.00 2.00 1.75 1.50
Book value . . . . . . . . . 43.33 41.52 43.18 39.19 38.20 36.77 33.73
OTHER INFORMATION:
Average number of shares
outstanding . . . . . . 374 374 374 374 374 374 374
BALANCE SHEET DATA (PERIOD END):
Total assets . . . . . . . . $ 197,129 $207,202 $205,908 $ 212,816 $ 204,682 $ 195,877 $143,591
Securities . . . . . . . . . 81,847 96,633 85,305 95,092 86,542 65,996 58,050
Loans, net of unearned
income . . . . . . . . . 89,517 86,443 89,767 85,238 87,174 94,093 69,978
Total deposits . . . . . . . 175,018 185,243 182,210 190,602 187,542 178,914 126,512
Long-term debt . . . . . . . -- -- -- -- -- -- --
Stockholders' equity . . . . 16,224 15,546 16,169 14,673 14,301 13,769 12,630
PERFORMANCE RATIOS:
Return on average assets (1) 1.04% 1.07% .83% .77% .64% 1.21% 1.16%
Return on average stockholders'
equity (1) . . . . . . . 12.95 14.76 10.26 10.66 8.59 13.28 13.06
Net interest margin (1) . . . 5.30 5.36 5.53 5.33 5.60 5.59 5.03
Efficiency (2) . . . . . . . 48.36 50.88 79.11 77.45 78.48 66.11 68.13
Dividend payout . . . . . . . 36.09 -- 45.30 47.22 59.01 36.52 34.72
ASSET QUALITY RATIOS:
Net charge-offs to average
loans, net of unearned
income (1) . . . . . . . .08% .27% .61% .33% 1.08% .76% .12%
Problem assets to net loans and
other real estate (3) . 2.53 5.34 2.63 6.30 8.00 6.13 6.21
Nonperforming assets to net
loans and other real
estate (4) . . . . . . . 2.70 5.54 3.10 6.38 8.40 7.85 7.80
Allowance for loan losses to loans,
net of unearned income . 1.25 1.56 1.17 1.86 1.67 1.92 2.57
Allowance for loan losses to
nonperforming assets
(4) . . . . . . . . . . 46.09 27.89 37.45 28.71 19.73 24.20 32.70
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 8.02% 7.26% 8.05% 7.22% 7.45% 9.08% 8.90%
Average loans to average
deposits . . . . . . . . 50.40 45.72 49.71 44.77 50.00 55.97 56.30
Tier 1 risk-based capital
(5) . . . . . . . . . . 15.31 15.51 14.91 14.16 13.52 12.25 16.44
Total risk-based capital
(5) . . . . . . . . . . 16.37 16.76 15.88 15.64 14.77 13.50 17.69
Tier 1 leverage (5) . . . . 8.23 7.50 7.85 6.88 6.99 7.03 8.80
</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.
(6) 1993 income before cumulative effect of a change in accounting principle
is $1,420,000 or $3.79 per share.
<PAGE> 18
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of Delta
Common Stock in connection with the solicitation by the Delta Board of
Directors of proxies for use at the Special Meeting, at which Delta
stockholders will be asked to vote upon a proposal to approve the Agreements.
The Special Meeting will be held at :00 .m., local time, on
, 1996, at the main offices of Delta, located at 8018 Highway 23, Belle
Chasse, Louisiana, 70037.
Delta stockholders are requested promptly to sign, date, and return the
accompanying proxy card to Delta 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
Agreements.
Any Delta stockholder who has delivered a proxy may revoke it at any
time before it is voted either (i) by giving notice of revocation in writing or
submitting to Delta a signed proxy card bearing a later date, provided that
such notice or proxy card is actually received by Delta before the vote of
stockholders or (ii) in open meeting prior to the taking of the stockholder
vote at the Special Meeting. Any notice of revocation should be sent to Delta
Bank & Trust Company, 8018 Highway 23, Belle Chasse, Louisiana, 70037,
Attention: Alan Popich, Corporate Secretary. A proxy will not be revoked by
death or supervening incapacity of the stockholder executing the proxy unless,
before the vote, notice of such death or incapacity is filed with the
Corporate Secretary of Delta. The shares of Delta 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 AGREEMENTS 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
AGREEMENTS. As of the date of this Proxy Statement/Prospectus, Delta 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
Delta, 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.
Delta stockholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
Delta's Board of Directors has established the close of business on ,
1996, as the Record Date for determining the Delta stockholders entitled to
notice of and to vote at the Special Meeting. Only Delta stockholders of record
as of the Record Date will be entitled to vote at the Special Meeting. Approval
of the Agreements will require the affirmative vote of the holders of at least
two-thirds of the Delta Common Stock entitled to vote at the Special Meeting,
and not just two-thirds of the votes cast. Therefore, an abstention or
failure to return a properly executed proxy card will have the same effect as a
vote against the Agreements, as will a broker's submitting a proxy card without
exercising discretionary voting authority with respect to the Agreements. As of
the Record Date, there were approximately holders of 374,420 shares of
Delta 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
Delta to beneficially own more than 5.0% of the outstanding shares of Delta
Common Stock as of the Record Date, see "Voting Securities and Principal
Stockholders of Delta."
The presence, in person or by proxy, of a majority of the outstanding
shares of Delta Common Stock is
14
<PAGE> 19
necessary to constitute a quorum of the stockholders in order to take action at
the Special Meeting. For these purposes, shares of Delta Common Stock that are
present, or represented by proxy, at the Special Meeting will be counted for
quorum purposes regardless of whether the holder of the shares or proxy fails
to vote on the Agreements or whether a broker with discretionary authority fails
to exercise its discretionary voting authority with respect to the Agreements.
Once a quorum is established, approval of the Agreements requires the
affirmative vote of the holders of at least two-thirds of the Delta Common
Stock entitled to vote at the Special Meeting.
The directors and executive officers of Delta and their affiliates
beneficially owned, as of the Record Date, shares (or approximately % of
the outstanding shares) of Delta Common Stock. The directors and executive
officers of Regions and their affiliates beneficially owned, as of the Record
Date, no shares of Delta Common Stock. As of that date, no subsidiary of either
Delta or Regions held any shares of Delta 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
Each share of Delta Common Stock (excluding any shares held by Delta,
Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or held as a result of debts previously contracted, and
shares held by stockholders who perfect their dissenters' rights of appraisal)
issued and outstanding at the Effective Date will be converted into the Merger
Consideration, consisting of (i) the Share Consideration of 2.2568 shares of
Regions Common Stock, subject to possible adjustment as described below under
the caption "Adjustment of Exchange Ratio and Computation of Possible Cash
Payment," and (ii) under certain circumstances, the Cash Consideration of up to
$4.51. Each share of Regions Common Stock outstanding immediately prior to the
Effective Date will remain outstanding and unchanged as a result of the Merger.
No fractional shares of Regions Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, Regions will make a cash
payment equal to the fractional part of share which a Delta stockholder would
otherwise receive multiplied by the closing price of Regions Common Stock on
the Nasdaq National Market (as reported by The Wall Street Journal, or, if not
reported thereby, by another authoritative source selected by Regions), on the
last full trading day prior to the Effective Date.
ADJUSTMENT OF EXCHANGE RATIO AND COMPUTATION OF POSSIBLE CASH PAYMENT
The Cash Consideration is payable under the Agreement, and the Exchange
Ratio will be adjusted under the Agreement, only under certain circumstances
relating principally to the average of the closing sales prices of Regions
Common Stock over a specified period. For purposes of the following
description of the applicable provisions of the Agreement and their operation,
"Determination Date" means the later of the date on which the approval of the
Merger by the FDIC is received and the date the stockholders of Delta approve
the Merger, and "Average Closing Price" means the average of the daily last
sales prices of Regions Common Stock as reported on the Nasdaq National Market
(as reported by The Wall Street Journal, or, if not reported thereby, by
another authoritative source selected by Regions) during the ten consecutive
full trading days in which such shares are traded on the Nasdaq National
Market, ending at the close of trading on the fifth trading day before the
Determination Date. Whether and to what extent the Exchange Ratio will be
adjusted and the Cash Consideration will become payable depends on the Average
Closing Price.
No Adjustment and No Cash Consideration. If the Average Closing Price is
between $40.00 and $46.00,
15
<PAGE> 20
there will be no adjustment to the Exchange Ratio and no Cash Consideration
will be payable.
Downward Adjustment of Exchange Ratio. If the Average Closing Price is
greater than $46.00, then the Exchange Ratio will be decreased to equal the
quotient obtained by dividing (1) the product of (x) $46.00 and (y) the
Exchange Ratio of 2.2568 by (2) the Average Closing Price.
Computation of Cash Consideration. If the Average Closing Price is less
than $40.00, then the holder of each share of Delta Common Stock will be
entitled to additional Cash Consideration per share in addition to the Share
Consideration, in an amount computed as follows. If the Average Closing Price
is less than $40.00 and not less than $38.00, the Cash Consideration will equal
the product of (1) the difference between (x) $40.00 and (y) the Average
Closing Price, and (2) the Exchange Ratio of 2.2568. If the Average Closing
Price is less than $38.00, then the Cash Consideration is computed as if the
Average Closing Price were nonetheless $38.00, yielding an amount of $4.51.
Upward Adjustment of Exchange Ratio. The Agreement provides that if the
Average Closing Price is less than $34.00, then Delta may elect not to effect
the Merger. If Delta so elects, it must give prompt written notice to Regions.
During the seven day period commencing on receipt of such notice, Regions will
have the option at its sole discretion to increase the Exchange Ratio to equal
the quotient obtained by dividing (1) the product obtained by multiplying (x)
$34.00 by (y) the Exchange Ratio of 2.2568 by (2) the Average Closing Price. If
Regions so elects within the seven day period, it shall give prompt written
notice to Delta of the election and the revised Exchange Ratio, whereupon no
termination shall have occurred and the Agreement shall remain in effect in
accordance with its terms, except that all references to the Exchange Ratio
will be as revised. If Delta elects not to effect the Merger and does not
withdraw notice of such election within ten days after the Determination Date,
and further if Regions does not exercise its option to adjust the Exchange
Ratio, then the Agreement would be terminated in accordance with its terms and
the Merger would not occur. Regions is under no obligation to adjust the
Exchange Ratio.
The operation of the Exchange Ratio and the adjustment mechanisms described
above is illustrated by the following table, which shows the effect that
various Average Closing Prices would have on the Exchange Ratio, the Share
Consideration, and the Cash Consideration, assuming, in the case of an Average
Closing Prices of less than $34.00, that Delta elects not to effect the Merger
at the original Exchange Ratio and that Regions elects to proceed with a
revised Exchange Ratio.
<TABLE>
<CAPTION>
Value Per Delta Share of
Average Closing --------------------------------------------
Price of Regions Exchange Share Cash Merger
Common Stock Ratio Consideration Consideration Consideration
-------------- ------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
$30.00 2.5577 76.73 $4.51 81.24
32.00 2.3979 76.73 4.51 81.24
34.00 2.2568 76.73 4.51 81.24
36.00 2.2568 81.24 4.51 85.75
38.00 2.2568 85.76 4.51 90.27
39.00 2.2568 88.01 2.26 90.27
40.00 2.2568 90.27 -- 90.27
42.00 2.2568 94.79 -- 94.79
44.00 2.2568 99.30 -- 99.30
46.00 2.2568 103.81 -- 103.81
48.00 2.1628 103.81 -- 103.81
50.00 2.0763 103.81 -- 103.81
</TABLE>
This table 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 Merger Consideration. Moreover, Delta
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
16
<PAGE> 21
certificates for shares of Delta Common Stock may be more or less than the
Average Closing Price. Delta 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 Prices and
Dividends."
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 have included the increased emphasis and dependence on automation,
specialization of products and services, increased competition from other
financial institutions, and a trend toward consolidation and geographic
expansion, coupled with a relaxation of regulatory restrictions on interstate
conduct of business of financial institutions.
Between 1990 and 1994 Delta received from several financial institutions
informal inquiries about possible mergers between the inquirers and Delta. None
of these inquiries advanced beyond the most preliminary stages. In 1994,
Hibernia Corporation, the parent holding company of Hibernia National Bank
("Hibernia") approached Delta with overtures to initiate discussions about a
merger between Delta and Hibernia. Thereafter, representatives of Delta and
Hibernia informally discussed the possibility of a merger. However, the Board
of Directors of Delta determined that it would be in the best long-term
interests of the stockholders and the community for Delta to remain an
independent community bank. The Board based its decision on a number of
factors including the steadily improving financial condition of Delta, its
still incomplete assimilation of the assets of Investors Bank and Trust Company
and the generally improving condition of the banking market in Louisiana. This
position was communicated to Hibernia and then to the stockholders of Delta at
the annual meeting of stockholders in April 1995. On April 13, 1995, the Board
of Directors wrote a letter to all stockholders informing them that large bank
holding companies had expressed interest in acquiring Delta and that the Board
had resolved to decline these overtures for the reasons discussed at the annual
meeting.
In a letter dated May 31, 1995, Hibernia informed Delta's directors that
Hibernia had acquired from unnamed Delta stockholders options to purchase Delta
Common Stock equaling 18.2% of the issued and outstanding Delta Common Stock
and made a formal offer to Delta's directors to consummate a tax-free
reorganization whereby Hibernia would convey Hibernia stock worth approximately
$80.00 for each share of Delta Common Stock, subject to adjustments based upon
due diligence reviews and qualification for accounting treatment as a pooling
of interests.
Immediately after Hibernia sent its letter of May 31 to Delta, Hibernia
filed a series of notices and applications and made a number of public
statements that announced its intention to acquire Delta. On June 5, 1995
Hibernia published a notice in local newspapers that it intended to acquire
100% of the Delta Common Stock. On June 6, 1995, Hibernia filed an application
with the Board of Governors of the Federal Reserve
17
<PAGE> 22
System seeking permission to acquire up to 100% of the Delta Common Stock on
the same terms as those proposed in the letter of May 31. However, Hibernia
stated in its application, but in no other communication with either Delta or
Delta's stockholders generally, that it might seek to acquire all of the
remaining shares of Delta not already subject to its option at a cash price of
$75.00 per share. On June 8, 1995, Hibernia filed with the FDIC an Acquisition
Statement in which it disclosed its beneficial ownership of 18.2% of the
outstanding Delta Common Stock based upon the option agreements described
above. On June 16, 1995, an article appeared in The Times-Picayune reporting
that Hibernia was offering to pay $75.00 in cash for Delta Common Stock. On
June 20, 1995, another article appeared which reported that Hibernia was not
presently offering $75.00 per share for 100% of Delta Common Stock. The June 20
article did not say, however, that Hibernia had abandoned its intention to make
a tender offer for Delta stock in the future.
During the first three weeks of June 1995, the Board met informally with
counsel to consider the strategic options available to Delta in light of
Hibernia's announced intention to acquire control of it. On June 21, 1995,
Delta's Board of Directors voted to retain Chaffe as its financial advisor to
assist the Board in evaluating Hibernia's offer and other strategic options
available to Delta. The Board also adopted, subject to approval by the
Louisiana Commissioner, a Common Stock Purchase Rights Plan (the "Rights
Plan"). Under the terms of the Rights Plan, every Delta stockholder would
receive as a dividend a Right to purchase additional shares of Delta stock or
the stock of any entity that consummated a business combination with Delta.
The Rights are not initially exercisable and trade automatically with the
common shares in connection with which they were issued. Ten days after a
person or group acquires 10% or more of Delta Common Stock, or ten business
days (or such later date as may be determined by the Board prior to a person or
group acquiring 10% or more of the Bank's shares) after a person or group
announces an offer the consummation of which would result in such person or
group owning 10% or more of Delta Common Stock (even if no purchases actually
occur), the Rights will become exercisable and separate certificates
representing the Rights will be distributed. At no time will the Rights have
any voting power.
When the Rights first become exercisable, unless a person or group has
acquired 10% or more of Delta Common Stock, a holder will be entitled to buy
from Delta one share of common stock for $150. If Delta is involved in a merger
or other business combination at any time after a person or group has acquired
10% or more of Delta Common Stock, the "flip-over" provision of the Rights will
entitle a holder (other than such person or any member of such group) to buy a
number of shares of common stock of the acquiring company having a market value
of twice the exercise price of each Right. If any person or group acquires 10%
or more of Delta Common Stock, the "flip-in" provision of the Rights will be
triggered and the Rights will entitle a holder (other than such person or any
member of such group) to buy a number of additional shares of common stock of
Delta having a market value of twice the exercise price of each Right.
Following the acquisition by any person or group of 10% or more of Delta Common
Stock, but only prior to acquisition by a person or group of a 50% stake, the
Board of Directors will also have the ability to exchange the Rights (other
than Rights held by such person or group), in whole or in part, for one share
of common stock per Right. At any time before a person or group acquires more
than 10% of Delta Common Stock, the Board of Directors may, at its option,
redeem the Rights for a redemption price of $.01 per Right.
The Rights Plan was designed to deter an acquisition of Delta until the
Board had an adequate opportunity to ascertain the probable value of Delta and
to evaluate whether it would be in the best interests of the stockholders for
Delta to remain an independent community bank or to enter into a business
combination with either a large regional financial institution or one or more
community institutions. Hibernia's aggressive acquisition of options to
purchase almost 20% of Delta Common Stock and its attempt to obtain regulatory
approval to complete an acquisition of 100% of the stock posed a genuine risk
that, without the deterrence of the Rights Plan, Hibernia might force Delta
into a business combination on terms that would not permit Delta's stockholders
to maximize the value of their stock.
On July 5, Chaffe reported to the Board that, in their opinion based on
current market data and their
18
<PAGE> 23
review of Delta, Hibernia's offer of either $80 per share in a tax free
exchange or $75 in cash was inadequate and was based on a price for Delta
Common Stock that was substantially below present market value. Chaffe also
advised the Board that based on Delta's past financial performance and current
market conditions, a sale of Delta in a controlled auction would probably
provide a greater return on investment to stockholders than future earnings of
Delta on a stand-alone basis.
On July 12, 1995 the Board deliberated the alternatives available to Delta
and the advice of its financial and legal advisors. At the conclusion of its
deliberations, the Board resolved to authorize Chaffe to conduct an auction of
Delta and to commence the auction immediately by soliciting expressions of
interest from local and regional financial institutions.
Over the following weeks, seven financial institutions, including Regions,
expressed interest in bidding on Delta. Each prospective bidder was asked to
sign a confidentiality agreement which contained a "standstill" provision that,
once having been allowed to participate in the auction, each bidder would abide
by the results of the auction and for a period of two years would not attempt
to acquire Delta if another bidder were selected as Delta's merger partner.
Upon delivery to Delta of an executed confidentiality agreement, each
prospective bidder was provided with certain financial information about Delta
to enable the bidder to submit to Chaffe a range of values that the bidder
would be willing to offer for Delta, subject to the outcome of a full due
diligence review.
During this initial phase of the auction, representatives of Delta met with
representatives of Hibernia to ascertain whether Hibernia intended to
participate in the auction. Although Hibernia's representatives indicated that
Hibernia desired to participate, they refused to execute the form of
confidentiality agreement that the other prospective bidders had executed with
few, if any, modifications. Moreover, Hibernia continued to pursue approval of
its application with the Federal Reserve to acquire 100% of Delta Common Stock
and to oppose approval of the Rights Plan by the Louisiana Commissioner.
Despite Hibernia's opposition, the Louisiana Commissioner approved the Rights
Plan on August 30,1995.
In early September, the prospective bidders (other than Hibernia) reviewed
the preliminary financial information supplied to them by Delta, and on
September 12, 1995, three of the six institutions submitted the range of values
that each might be willing to pay for Delta. Two of these three institutions
(Regions and one other) were invited to conduct a full due diligence review of
Delta's financial condition and to submit firm offers to acquire the Bank.
Meanwhile, in the belief that having Hibernia as a participant in the
auction would enhance stockholder value, Delta continued to negotiate with
Hibernia a confidentiality agreement that would permit Hibernia to participate
in the auction and would protect the results of the auction from collateral
attack by an unsuccessful bidder. After lengthy negotiations, on October 13,
1995 Delta and Hibernia executed a confidentiality agreement that contained
specific guidelines governing the auction process and a standstill provision
substantially different from the one contained in the confidentiality
agreements signed by the other bidders at the outset of the auction.
The bidding procedures provided that prospective buyers would submit a
range of values that each would be willing to pay for Delta. Each prospective
buyer within 20% of the top of the highest range would be invited to conduct
due diligence and to submit a bid. In the event that any prospective buyer who
submitted a bid was asked to bid again, then each bidder who had submitted an
equal or higher bid would also be invited to bid again.
The confidentiality agreement also called for bids to be submitted in a
preferred structure. The primary structure called for all bids to be in the
form of a fixed dollar amount payable in shares of the bidder's stock. Bids
could be submitted either without any structural limitations on fluctuations in
the value of the bidder's common stock to be delivered at closing, or subject
to a "collar" meeting certain specifications. The collar was to establish an
equidistant range of at least 10% above and below the market price of the
bidder's
19
<PAGE> 24
common stock on the date of a definitive agreement to acquire Delta. The collar
would function so that the stock price used to calculate the number of shares
delivered at closing would be the actual price if the stock was then trading
within the collar, the top of the collar if it was then trading above such top,
and the bottom of the collar if it was then trading below such bottom.
Moreover, the terms of such a collar were to provide that Delta could terminate
the definitive agreement if, at the time of closing, the market price of the
bidder's common stock had declined more than 20% from its price at the time of
the definitive agreement.
The confidentiality agreement provided further that, if an "Early
Termination Event" occurred, Hibernia's obligations under the standstill would
terminate twenty days after Hibernia had received notice that an Early
Termination Event had occurred. An Early Termination Event included, among
other things, Delta's (i) failure to enter into a definitive agreement by
January 8, 1996; (ii) failure, in any material sense, to abide by the
established auction process; (ii) decision to terminate the auction process;
and (iii) acceptance of a bid not in the preferred structure, or one in the
preferred structure, but for an amount more than 2.5% less than Hibernia's
offer.
On October 17, 1995, Delta informed the other auction participants,
including Regions, of the terms of the agreement with Hibernia and offered to
amend each of the confidentiality agreements with the other participants on
identical terms. The other participants accepted the offer, and the auction
proceeded on the terms set forth in the Hibernia agreement.
On October 25, 1995, the three remaining bidders, Regions, Hibernia, and
one other bidder (the "Third Bidder") responded to Delta's request for bids.
The Third Bidder declined to submit a bid. Of the bids submitted by Regions and
Hibernia, Regions' bid was higher. However, Regions' bid, unlike Hibernia's,
departed from the preferred structure in that it was expressed as a fixed
number of shares rather than a fixed dollar amount. In addition, Hibernia's bid
included a collar substantially on the terms proposed in the confidentiality
agreement, while Regions' bid contained no collar.
Over the following days, Delta, through Chaffe, offered Hibernia an
opportunity to increase its bid. At the same time, Chaffe requested that
Regions agree to place a collar on its bid. Hibernia declined to increase its
bid. Regions, however, after extensive negotiations, agreed to the collar
arrangement set forth in the Merger Agreement. See Description of the
Transaction - Adjustment of Exchange Ratio and Computation of Possible Cash
Payment. Thereafter, on November 8, 1995 Chaffe requested that Hibernia submit
a new bid in the format of Regions' bid of fixed shares subject to a collar
similar to the one negotiated with Regions. Hibernia declined to submit a new
bid on these or any other terms.
On November 9 and 10, 1995 Delta's Board met to review the final bids.
After presentations by Chaffe and Delta's counsel, the Board voted unanimously
to accept Regions' bid, subject to negotiation of an agreement and plan of
merger satisfactory to Delta's counsel. On November 10, 1995 Delta notified
Hibernia that an Early Termination Event had occurred. On November 15, 1995
Hibernia notified the Board of Governors of the Federal Reserve System that
Hibernia was abandoning its application for prior approval to acquire up to
100% of Delta Common Stock. The Agreement was approved by Delta's Board on
January 10, 1996 and was executed on January 11, 1996.
The Board of Directors of Delta believes that approval of the Agreements is
in the best interests of Delta and its stockholders. Among the factors
considered by the Board in recommending the Merger, in addition to the
financial terms, was the likelihood that Delta would continue to face
significant additional competitive pressures in its market area from larger
banking and other financial institutions capable of offering a broad array of
financial services. Given Delta's relatively small size and market position,
the Board believes that this increasing competition could adversely impact the
performance of Delta. Other factors considered by the Board were the liquidity
that would be afforded to Delta's stockholders by the ownership of a publicly
traded stock and a review of the business and prospects of Regions.
The financial and other terms of the Merger were arrived at through
arm's length negotiations between
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<PAGE> 25
representatives of Delta and Regions. Determination of the consideration to be
received by Delta's stockholders in exchange for their stock was based upon
various factors considered by the Boards of Director of the parties, including
primarily the comparative financial condition, historical results of
operations, current business and future prospects of Delta and Regions, the
market price, dividends, and historical earnings per share of the common stock
of Delta and Regions, and the desirability of combining the financial and
managerial resources of Regions and Delta to pursue available consumer and
commercial banking business in the market area served by Delta.
DELTA'S REASONS FOR THE MERGER. In approving the Merger, the directors of
Delta considered a number of factors. Without assigning any relative or
specific weights to the factors, the Delta Board of Directors considered the
matters set forth in the two preceding paragraphs and the following material
factors:
(a) the information presented to the directors by the management of Delta
concerning the business, operations, earnings, asset quality, and financial
condition of Delta, including compliance with regulatory capital requirements
on an historical and prospective basis;
(b) the financial terms of the Merger, including the relationship of the
merger price to the market value, tangible book value, and earnings per share
of Delta Common Stock, the partial protection against a decline in the market
value of Regions Common Stock, and the partial participation in any
appreciation in value of Regions Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of Delta Common Stock for Regions Common Stock
for federal and state income tax purposes;
(d) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay;
(e) the report of Delta's financial advisor reviewing a comparison of Delta
to selected peer banks, premiums paid in other merger transactions, a
mark-to-market analysis of Delta, and a discounted cash-flow analysis of Delta;
and
(f) the opinion rendered by Delta's financial advisor to the effect that,
from a financial point of view, the exchange of Delta Common Stock for Regions
Common Stock for the Merger Consideration set forth in the Agreement is fair,
from a financial point of view, to the holders of Delta Common Stock.
The terms of the Merger were the result of arms-length negotiations between
representatives of Delta and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of Delta
unanimously approved the Merger as being in the best interests of Delta and its
stockholders. Each member of the Board of Directors of Delta has agreed to vote
such member's shares in favor of the Merger.
Delta's Board of Directors unanimously recommends that Delta stockholders
vote for approval of the Agreements.
REGIONS' REASONS FOR THE MERGER. The Regions Board of Directors has
approved the Agreement and determined that the Merger is in the best interests
of Regions and its stockholders. In approving the Agreement, the Regions Board
considered a number of factors. Without assigning any relative or specific
weights to the factors, the Regions Board of Directors considered the following
material factors:
(a) a review, based in part on a presentation by Regions management, of (i)
the business, operations, earnings, and financial condition, including the
capital levels and asset quality, of Delta 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 Delta operates, including existing competition, history of the market
areas with respect to financial institutions, and average demand
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<PAGE> 26
for credit, on an historical and prospective basis, and (iii) the results of
Regions' due diligence review of Delta; and
(b) a variety of factors affecting and relating to the overall strategic
focus of Regions, including Regions' desire to expand into markets in the
general vicinity of its core markets.
OPINION OF DELTA'S FINANCIAL ADVISOR
Delta retained Chaffe to act as its financial advisor in connection with
the Merger in July 1995. Chaffe was selected by Delta's Board of Directors as
the financial advisor on the basis of Chaffe's experience and expertise in
transactions similar to the Merger and Chaffe's reputation in the banking and
investment communities. Chaffe is a recognized investment banking firm and is
experienced in the securities industry, in investment analysis and appraisal,
and in related corporate finance and investment banking activities, including
mergers and acquisitions, corporate recapitalization, and valuations for
estate, corporate and other purposes. It is frequently retained to perform
similar services for other banks and bank holding companies.
In connection with Chaffe's engagement to act as Delta's financial
advisor with respect to the Merger, Delta instructed Chaffe to evaluate the
fairness to Delta stockholders, from a financial point of view, of the Exchange
Ratio, pursuant to the provisions of the Agreement, and to conduct such
investigations as Chaffe deemed appropriate for such purposes. Delta did not
place any limitations on the scope or manner of Chaffe's investigation and
review. The Exchange Ratio to be received by Delta's stockholders in the Merger
was determined by Delta and Regions in their negotiations.
Chaffe rendered its opinion to Delta's Board on January 11, 1996, to the
effect that, based upon and subject to the assumptions made, the factors
considered, the review undertaken and the limitations stated and based upon
such other matters as Chaffe considered relevant, on the date thereof, the
Exchange Ratio was fair, from a financial point of view, to the holders of
Delta Common Stock (other than Regions and its affiliates). Chaffe subsequently
confirmed its opinion in a written opinion also dated January 11, 1996 (the
"January Fairness Opinion"). In addition, Chaffe updated its opinion dated
____________, which concluded on the same basis, that the Exchange Ratio was
fair, from a financial point of view, to the holders of Delta Common Stock
(other than Regions and its affiliates)(the "Proxy Fairness Opinion"). The
Proxy Fairness Opinion is substantially identical to the January Fairness
Opinion other than for references to Chaffe's having considered materials
bearing upon the financial and operating condition of Delta, Regions and
comparable companies subsequent in time to those to which reference is made in
the January Fairness Opinion.
The full text of Chaffe's Proxy Fairness Opinion is attached hereto as
Appendix C and is incorporated by reference. The summary description of the
Proxy Fairness Opinion set forth herein is qualified in its entirety by
reference to Appendix C. Delta's stockholders are urged to read the Proxy
Fairness Opinion in its entirety in connection with the Proxy Statement/
Prospectus for a description of the procedures followed, assumptions made,
matters considered and limitations on the review undertaken by Chaffe.
Chaffe's opinion relates only to the Exchange Ratio to be received by Delta's
stockholders, from a financial point of view, and does not constitute a
recommendation to any Delta stockholder as to how such stockholder should vote
at the Special Meeting.
In connection with rendering its opinions, Chaffe, among other things: (i)
reviewed the Proxy Statement in substantially the form to be sent to
stockholders, including a copy of the Agreement; (ii) reviewed and analyzed
certain publicly-available financial statements and other information of Delta
and Regions, respectively; (iii) reviewed and analyzed certain internal
financial statements and other financial and operating data concerning Delta,
prepared by the management of Delta, including financial projections; (iv)
discussed the past and current operations and financial condition, and the
prospects of Regions and Delta with senior executives of Regions and Delta,
respectively; (v) reviewed the historical prices and trading volumes of the
shares of Regions Common Stock and Delta Common Stock; (vi) compared the
financial performance of Delta and Regions, and the prices and trading activity
of the Delta Common Stock and Regions Common Stock,
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<PAGE> 27
with that of certain other comparable publicly-traded companies and their
securities; (vii) reviewed the financial terms of business combinations in the
commercial banking industry specifically and other industries generally, which
Chaffe deemed generally comparable to the Merger; (viii) considered a number of
valuation methodologies, including among others, those that incorporate book
value, deposit base premium and capitalization of earnings; and (ix) performed
such other studies and analyses as Chaffe deemed appropriate to its opinion.
In its review, Chaffe relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial
information, and all other information reviewed by it for the purposes of its
opinions. Chaffe did not make or obtain an independent review of Delta's or
Regions' assets or liabilities, nor was Chaffe furnished with any such
appraisals. Chaffe relied solely on Delta and Regions for information as to the
adequacy of their respective loan loss reserves and values of other real estate
owned. With respect to Delta's projected financial results, Chaffe has assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of Delta of future
financial performance of Delta. Regions did not allow Chaffe to review any
information other than publicly-available information. The Proxy Fairness
Opinion was necessarily based upon market, economic and other conditions as
they existed on, and could be evaluated as of, the date thereof. Chaffe
expressed no opinion on the tax consequences of the proposed transaction or the
effect of any tax consequences on the value to be received by the shareholders
of Delta Common Stock.
The following is a summary of selected analyses performed by Chaffe in
connection with its January Fairness Opinion. The summary set forth below does
not purport to be a complete description of the analyses performed in this
regard, but does include all material analyses.
Analysis of Selected Financial Data. Chaffe analyzed the historical
performances of Delta and Regions, and considered the current financial
conditions, operations and prospects for each company. Chaffe noted strengths
of Delta, including its consistent profitability, dominant market share in its
primary market, strong net interest margin in 1995, and high level of
non-interest bearing deposits. Chaffe also noted Delta's low earnings level
when compared to peers, and high overhead expense. In regard to Regions, Chaffe
noted that as of September 30, 1995, the return on average assets, annualized
for 1995, was 1.29%, and the return on average equity, also annualized for
1995, was 15.87%. Regions' efficiency ratio had improved to 56%. Its tangible
equity to total assets as of September 30, 1995 was 6.80%, and its ratio of
non-performing assets to total assets for that date was 0.36%. Chaffe noted
further that in 1996, Regions may be subject to a special assessment on
deposits which are insured through the Saving Association Insurance Fund.
Chaffe also reviewed Regions' history of bank acquisitions over the past 30
months, including the then recently announced transaction with First National
Bancorp, Gainesville, GA.
Stock Price and Dividend Review. Chaffe reviewed certain historical market
information for Delta Common Stock and noted that no independent market exists
for these shares. In addition, Chaffe reviewed the trading prices of Regions
Common Stock from January 1, 1995 to January 10, 1996, and noted that as of
January 10, 1996, the closing price of Regions Common Stock was $43.00, near its
52-week high of $45.00. Chaffe also compared the trading prices of Regions
Common Stock versus the NASD Financial Index from January 1, 1995 to January
10, 1996.
Chaffe reviewed the dividend histories and current dividend levels of Delta
and Regions, and noted that Delta's and Regions' annual dividend per share were
$2.00 and $1.32, respectively. Chaffe determined that as of January 10, 1996,
based on the Exchange Ratio outlined in the Agreement, each share of Delta
Common Stock would receive an annual dividend on Regions Common Stock of $2.98.
Analysis of Selected Merger Transactions. In order to obtain a valuation
range for Delta, Chaffe performed an analysis of prices paid for selected banks
with characteristics comparable to Delta, although Chaffe noted no transaction
was identical to the Merger then proposed. Comparable transactions were
considered to be transactions announced in the United States for the period
January 9, 1995 through January 9, 1996, in which
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<PAGE> 28
the sellers had total assets of between $125 million and $400 million, a
tangible equity ratio between 6.25% and 10.0%, a return on average assets
between 0.50% and 1.25%, and non-performing assets less than 2.5% of total
assets. In addition, Chaffe performed an analysis of prices paid for a similar
group of selected banks, limited in geographic area to sixteen states in the
southern United States. Finally, Chaffe performed an analysis of prices paid
for substantially all Louisiana banks sold during the period January 9, 1995
through January 9, 1996. With respect to each of these groups of transactions
and the proposed Merger, Chaffe compared the prices to be received by the peer
groups as a multiple of their tangible equity, their earnings per share for the
four quarters prior to the announcement of such a transaction, their premium
over tangible equity to core deposits, and their total assets. The following
table summarizes certain results of this analysis.
<TABLE>
<CAPTION>
REGIONS U.S. SOUTHERN LOUISIANA
/DELTA PEER GROUP PEER GROUP PEER GROUP
<S> <C> <C> <C> <C>
Seller Total Assets
(000'S)
- Mean $212,896 $201,023 $658,603
- Median $207,757 $222,953 $210,695 $105,979
Seller Tangible Equity 7.82% 8.00% 8.17% 8.18%
Seller YTD ROAA 0.86% 1.01% 1.03% 1.23%
Seller YTD ROAE 11.33% 11.35% 11.98% 15.17%
Seller NPA/Assets 0.70% 0.57% 0.41% 0.47%
Price/Tangible Equity 2.24x 2.15x 2.11x 2.06x
Price/4-Quarter EPS 20.74x 18.97x 18.97x 14.38x
Price-Tangible
Equity/Core Deposits 11.56% 10.75% 10.95% 8.87%
Price/Assets 17.49% 16.29% 17.19% 17.36
</TABLE>
Discounted Cash Flow Analysis. Using a discounted cash flow analysis of
Delta, Chaffe determined a range of net present values for the Delta Common
Stock based on the stream after-tax cash flows of Delta, which included
forecast of net income for the years 1996 and 1997 and assumptions relating to
earnings and growth thereafter. Chaffe reviewed these forecasts and assessed
the likelihood of Delta achieving such forecasts. Chaffe then discounted these
cash flow streams assuming an estimated required rate of return for Delta of
12.1%. Chaffe also analyzed the estimated future dividend stream of Delta
through the year 2000 plus a terminal value for Delta Common Stock as part of
its determination of a range of net present values for shares of Delta Common
Stock.
In connection with the Proxy Fairness Opinion, Chaffe confirmed the
appropriateness of its reliance on the analyses by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection therewith. Chaffe found results of the analyses for its Proxy
Fairness Opinion to be substantially similar to the results of its January
Fairness Opinion.
Chaffe noted that, in March 1996, Regions had completed its merger with
First National Bancorp increasing Regions' asset size by approximately 23%. In
addition, Chaffe reviewed the trading prices of Regions' Common Stock since
January 10, 1995 and noted the increase in the value of Regions' Common Stock
since the January Fairness Opinion. The closing price of Regions' Common Stock
as of the date of the Proxy Fairness Opinion was $______________. The Proxy
Fairness Opinion was necessarily based upon market, economic and other
conditions as they existed on and could be evaluated as of, the date thereof.
Chaffe expressed no opinion on the tax consequences of the proposed transaction
or the effect of any tax consequences on the value
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<PAGE> 29
to be received by the shareholders of Delta Common Stock. Chaffe also noted the
increase in Regions' annual dividend per share to $1.40. Chaffe determined that
as of the date of the Proxy Fairness Opinion, based on the Exchange Ratio, each
share of Delta Common Stock would receive an annual dividend on Regions Common
Stock of $3.16.
In arriving at its fairness opinions, Chaffe did not rely on any single
analysis, but relied on a combination of factors derived from all of the
analytical procedures employed. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Conclusions based on these analyses are not necessarily
mathematical. Chaffe believes that the summary set forth above and Chaffe's
analysis must be considered as a whole and that selecting portions of its
analyses performed by Chaffe are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the value of
businesses do not purport to be appraisals or necessarily reflect the prices at
which businesses actually may be sold. The fact that any specific analysis has
been referred to in the summary above is not meant to indicate that such
analysis was given greater weight than any other analysis.
Prior to its retention in July 1995 to act as Delta's financial advisor,
Chaffe had provided no services to Delta. Neither Chaffe nor any of its
officers or employees has any interest in the Common Stocks of Delta, or
Regions. Delta has paid Chaffe approximately $222,769 in fees plus
out-of-pocket expenses for its services, including its services in rendering
the Proxy Fairness Opinion. For any other services requested of Chaffe by
Delta, Delta has agreed to pay Chaffe on an hourly basis. The fees received by
Chaffe in connection with its services to Delta were not dependent or
contingent upon the occurrence or lack thereof of any transaction.
Delta has agreed to indemnify and hold harmless Chaffe, its subsidiaries
and affiliates, and its officers, directors, shareholders, employees,
attorneys, agents and representatives, and the successor and assigns of each of
the foregoing parties from and against any person claiming to have relied on
Chaffe's advice or services, or the performance or nonperformance thereof, or
claiming to have been entitled to some benefit therefrom, or claiming that such
services were not adequately performed, and all related damage, claim, demand,
expense or cost of any kind or nature, including reasonable attorney fees and
expenses, arising directly or indirectly, from or in any way related to, the
opinions or any other services performed by Chaffe, provided that Chaffe has
not been negligent or guilty of reckless or willful misconduct in connection
with the opinions, or any other services.
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
Joint Agreement of Merger reflecting the Merger is filed with the Louisiana
Commissioner. Unless otherwise agreed upon by Regions and Delta, 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 tenth business day following the later of the following events occur:
(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 Delta stockholders; or such later date within five 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 Delta anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the third quarter of 1996. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or Delta generally may terminate
the Agreement if the Merger is not consummated by November 30, 1996, unless the
failure to consummate by that date is the result of an uncured breach of the
obligation to consummate the Merger by the party seeking termination. See
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"--Conditions to Consummation of the Merger" and "--Waiver, Amendment, and
Termination of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions to mail to the former stockholders of Delta a form letter
of transmittal, together with instructions for the exchange of such
stockholders' certificates representing shares of Delta Common Stock for
certificates representing shares of Regions Common Stock.
DELTA STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to the
Exchange Agent of certificates for Delta Common Stock, together with a properly
completed letter of transmittal, there will be issued and mailed to each holder
of Delta Common Stock submitting such items a certificate or certificates
representing the number of shares of Regions Common Stock to which such holder
is entitled, if any, and, if applicable, a check for the amount of cash
payable, representing the Cash Consideration and the amount to be paid
in lieu of any fractional share interest, both without interest. After the
Effective Date, to the extent permitted by law, Delta stockholders of record as
of the Effective Date will be entitled to vote at any meeting of holders of
Regions Common Stock the number of whole shares of Regions Common Stock into
which their Delta Common Stock has been converted, regardless of whether such
stockholders have surrendered their Delta Common Stock certificates. No
dividend or other distribution payable after the Effective Date with respect to
Regions Common Stock, however, will be paid to the holder of any unsurrendered
Delta certificate until the holder duly surrenders such certificate. Upon such
surrender, all undelivered dividends and other distributions and, if
applicable, a check for the amount of cash payable will be delivered to such
stockholder, in all cases without interest.
After the Effective Date, there will be no transfers of shares of Delta
Common Stock on Delta's stock transfer books. If certificates representing
shares of Delta Common Stock are presented for transfer after the Effective
Date, they will be canceled and exchanged for the shares of Regions Common
Stock and a check for the amount due in lieu of fractional shares, if any,
deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) approval of the Merger from the FDIC and the Louisiana Commissioner
without any conditions or restrictions that would, in the reasonable
judgment of Regions' Board of Directors, so materially adversely impact the
economic or business benefits of the transactions contemplated by the
Agreement as to render inadvisable the consummation of the Merger, and the
expiration of all applicable waiting periods;
(b) the approval of the Agreements by the holders of the requisite number
of shares of the Delta Common Stock represented in person or by proxy at the
Special Meeting;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(d) the receipt of a reasonably 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 Delta Common Stock for
Regions Common Stock will not give rise to recognition of gain or loss to Delta
stockholders with respect to such exchange, except to the extent of any cash
received; and
(e) notification for listing on the Nasdaq National Market of the shares of
Regions Common Stock to be issued in the Merger.
Consummation of the Merger is also subject to the satisfaction or waiver of
various other conditions
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<PAGE> 31
specified in the Agreement, including, among others: (i) the delivery by
Regions and Delta 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; (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; and
(iii) the receipt of an opinion of Delta's financial advisor updated to a date
not more than five days prior to this Proxy Statement/Prospectus that the
consideration to be received in the Merger by the stockholders of Delta is fair
to such stockholders from a financial point of view.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. There also can be no
assurance that such approvals will not be accompanied by a conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Agreement. Applications for the approvals described below have
been submitted to the appropriate regulatory agencies.
Regions and Delta are not aware of any material governmental approvals or
actions that are required for consummation of the Merger, except as described
below. Should any other approval or action be required, it presently is
contemplated that such approval or action would be sought.
The Merger requires the prior approval of the FDIC. In granting its
approval the FDIC must take into consideration, 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 FDIC from approving the Merger (i) if it would result in
a monopoly or be in furtherance of any combination or conspiracy to monopolize
or attempt to monopolize the business of banking in any part of the United
States or (ii) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it
would be a restraint of trade in any other manner, unless the FDIC 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 Bank Merger Act, the Merger may not be
consummated until the 30th day, which may be shortened to the 15th day,
following the date of FDIC 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 FDIC's approval, unless a court specifically orders otherwise.
The Merger also is subject to the approval of the Louisiana Commissioner.
In its evaluation, the office of the Louisiana Commissioner will take into
account considerations similar to those applied by the FDIC.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party
benefitted by the provision or (ii) amended by a written agreement between
Regions and Delta approved by their respective Boards of Directors; provided,
however, that after approval by the Delta stockholders, no amendment that
pursuant to the LBL requires the further approval of Delta stockholders may
be made without the further approval of such stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by Delta
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required regulatory approval;
(b) by the Board of Directors of either party, if the holders of at least
two-thirds of the shares of Delta Common Stock represented at the Special
Meeting shall not have approved the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and Delta;
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<PAGE> 32
(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 November 30, 1996, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's uncured
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 breach of the Agreement giving rise to such
termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Delta and Regions generally has agreed, unless the prior consent of
the other party 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, maintain its rights and franchises, and
take no 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 either
Delta or Regions prior to consummation of the Merger, as described below.
DELTA. Delta 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 the Articles of Incorporation or Bylaws or other governing instrument
of Delta and its subsidiaries; (ii) becoming responsible for any obligation for
borrowed money in excess of an aggregate amount outstanding at any time 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
paying any dividend or other distribution in respect of its capital stock,
except that Delta may, but shall not be legally obligated to, declare and pay
quarterly cash dividends at a rate not in excess of $.50 per share; (iv)
issuing or selling any additional shares of any Delta capital stock, any rights
to acquire any such stock, or any security convertible into such stock (except
as set forth in the Agreement or pursuant to the exercise of outstanding stock
options); (v) adjusting, splitting, combining, or reclassifying any of its
capital stock; (vi) making any material investment in any other entity; (vii)
granting any increase in compensation or benefits to employees or officers
(except in accordance with past practice as previously disclosed to Regions or
as required by law), paying any bonus (except as previously disclosed to
Regions or in accordance with any existing program or plan), entering into or
amending any severance agreements with officers (except as previously disclosed
to Regions), or granting any increase in compensation or other benefits to
directors; (viii) entering into or amending any employment contract that it
does not have the unconditional right to terminate (except as previously
disclosed to Regions and except for any amendment required by law); (ix)
adopting any new employee benefit plan or program, or materially changing any
existing plan or program (except as previously 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 litigation (except in accordance with past
practices), or settling any litigation for money damages in excess of $100,000
or which imposes material restrictions upon the operations of Delta or any of
its subsidiaries; or (xii) modifying or terminating any material contract.
In addition, Delta has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. Delta 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, Delta has
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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.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of Regions. Information concerning the management of Regions is
included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement provides that Regions will, and will cause Regions Bank to,
maintain all rights of indemnification existing in favor of each person
entitled to indemnification from Delta or any of its subsidiaries to the full
extent permitted by Louisiana law and by the Articles of Incorporation or
Bylaws of Delta, and that such rights will continue in full force and effect
for ten years from the Effective Date with respect to matters occurring at or
prior to the Effective Date.
The Agreement also provides that, after the Effective Date, Regions will
provide generally to officers and employees of Delta and its subsidiaries who
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) on terms and conditions that,
taken as a whole, are substantially similar to those currently provided by
Regions and its subsidiaries to their similarly situated officers and
employees. For purposes of participation and vesting (but not benefit accrual)
under such employee benefit plans, service with Delta or its subsidiaries prior
to the Effective Date will be treated as service with Regions or its
subsidiaries. The Agreement further provides that Regions will cause Delta to
honor all employment, severance, consulting, and other compensation contracts
previously disclosed to Regions between Delta or its subsidiaries and any
current or former director, officer, or employee, and all provisions for vested
amounts earned or accrued through the Effective Date under Delta's benefit
plans.
As of the Record Date, directors and executive officers of Delta owned no
shares of Regions Common Stock.
DISSENTING STOCKHOLDERS
General. Each Delta stockholder who objects to the Merger shall be entitled
to the rights and remedies of dissenting stockholders provided in Section 6:376
of the LBL, a copy of which is included as Appendix D to this Proxy
Statement/Prospectus.
Statutory Requirements. The following is a summary of the steps to be taken
by a Delta stockholder who is interested in perfecting such holder's
dissenters' rights, and should be read in conjunction with the full text of
Section 6:376 of the LBL. Each of the steps enumerated below must be taken in
strict compliance with the applicable provisions of the statute in order for
holders of Delta Common Stock to perfect their dissenters' rights. If the
Merger is approved by 80% or more of the total voting power of Delta, then no
stockholder will
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be entitled to exercise dissenters' rights of appraisal.
Any written objection, demand, or notice required by the LBL in connection
with the exercise of dissenters' rights must be sent to Delta, at 8018 Highway
23, Belle Chasse, Louisiana, 70037, Attention: Alan Popich, Corporate
Secretary. It is recommended that all required documents to be delivered by
mail be sent by registered or certified mail with return receipt requested.
Any holder of Delta 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 without regard
to any appreciation or depreciation thereof in anticipation of the Merger) may
elect to do so by taking all of the following steps:
(a) Such stockholder must file with Delta, prior to or at the Special
Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares 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, Delta 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 Delta's records.
(c) Each such stockholder must, within 20 days after the mailing of such
notice to such holder, but not thereafter, file with Delta a demand in writing
for the fair cash value of such holder's shares 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 Delta may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in Plaquemines Parish the certificates
representing such holder's shares, duly endorsed and transferred to Delta upon
the sole condition that such certificates shall be delivered to Delta upon
payment of the value of the shares determined in accordance with the provisions
of Section 6:376.
(e) With the demand, the stockholder must deliver to Delta the written
acknowledgment of such bank or trust company that it so holds such holder's
certificates of 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 Delta does not agree to the
value so stated and demanded, or does not agree that a payment is due, it
shall, within 20 days after receipt of such demand and acknowledgment, notify
the stockholder in writing, at the designated post office address, of its
disagreement and shall state in such notice the value it will agree to pay if
any payment should be held to be due; otherwise it shall be liable for, and
shall pay to the dissatisfied stockholder, the value demanded.
In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions described
above, the dissatisfied stockholder, within 60 days after receipt of notice
in writing of Delta's disagreement, but not thereafter, may file suit
against Regions Bank (the merged corporation) in the district court of the
parish in which the merged corporation is domiciled (East Baton Rouge Parish),
praying the court to fix and decree the fair cash value of the dissatisfied
stockholder's shares of Delta Common Stock as of the day before the Merger was
consummated, 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 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 Delta for the fair cash value of such holder's shares of Delta
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 Delta
conclusively shall bind the stockholder (i) by Delta's statement that no
payment is due or (ii) if Delta does not contend that no payment is due, to
accept the value of such holder's shares of Delta Common Stock as fixed by
Delta in its notice of disagreement.
Any stockholder who fails timely to take each of the required actions
outlined above conclusively will be
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presumed to have consented to the Agreements and 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 upon the effectuation of the proposed Merger, until those rights are
modified by the effectuation of the proposed 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 6:376 of the LBL. Such a demand may be withdrawn by the
stockholder at any time before Delta gives notice of disagreement, as provided
by the LBL. After such notice of disagreement is given, withdrawal of a notice
of election shall require the written consent of Delta. If a notice of election
is withdrawn, or the Merger is abandoned or rescinded, or a court shall
determine that the stockholder is not entitled to receive payment for such
holder's shares of Delta Common Stock, or the stockholder shall otherwise lose
such holder's dissenter's rights, such holder shall not have the right to
receive payment for such holder's shares of Delta 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 Delta),
and such holder shall be reinstated to all rights as a stockholder 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 Regions Bank of
Louisiana as successor to Delta, the fair value thereof in cash as determined
by Regions Bank of Louisiana 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 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 Delta concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the Delaware
GCL and the LBL, the Merger will be a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(D). Delta, Regions Bank, and Regions will
each be a "party to a reorganization" within the meaning of Section 368(b).
(b) The stockholders of Delta will recognize no gain or loss upon the
exchange of their Delta Common Stock solely for shares of Regions Common Stock.
(c) No loss will be recognized by a Delta stockholder upon the exchange of
such stockholder's Delta
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Common Stock for shares of Regions Common Stock and any Cash Consideration paid
in cash. Gain, if any, will be recognized by a Delta stockholder in an amount
equal to the excess of the fair market value of Regions Common Stock received
(including any fractional share interest) plus any Cash Consideration paid in
cash over such stockholder's tax basis in the Delta Common Stock exchanged
therefor, but not in excess of the total cash received.
(d) If an exchange has the effect of the distribution of a dividend
(determined with the application of certain constructive ownership rules), the
amount of gain recognized that is not in excess of a Delta stockholder's
ratable share of undistributed earnings and profits will be treated as a
dividend taxable as ordinary income. The remainder, if any, of the gain
recognized will be capital gain, provided the Delta Common Stock is held as a
capital asset in the hands of the exchanging stockholder on the Effective Date.
Whether an exchange has the effect of the distribution of a dividend will be
determined under the principles of Section 302 as though there were a
redemption by Regions of the portion of its stock the Delta stockholders would
have received if they had received Regions Common Stock instead of the Cash
Consideration received in cash, if any. In general, under Section 302, dividend
treatment will result unless the redemption is (i) a complete termination of
the stockholder's interest, (ii) substantially disproportionate with respect to
the stockholder, or (iii) not essentially equivalent to a dividend. With
respect to whether a stockholder will have completely terminated his interest,
as former Delta stockholders who do not exercise dissenters' rights will
receive and hold shares of Regions Common Stock, there will not be a complete
termination of their interest in Regions. As to the second test, a redemption
will be substantially disproportionate if the stockholder owns less than fifty
percent (50%) of the total combined voting power of all classes of stock
entitled to vote and the percentage of the voting stock owned by the
stockholder after the redemption is less than eighty percent (80%) of the
percentage of the voting stock he owned before the redemption. Finally, even if
the redemption is not considered to be substantially disproportionate with
respect to the stockholder, the distribution may be considered to be not
essentially equivalent to a dividend. Whether a redemption is not essentially
equivalent to a dividend will depend upon the facts and circumstances. The
Internal Revenue Service has ruled, for example, that where there is a
meaningful reduction in a stockholder's interest in the redeeming corporation,
the relative interest of the stockholder is minimal and the stockholder
exercises no control over the affairs of the corporation, the redemption is not
essentially equivalent to a dividend. Rev. Rul. 76-385, 1976-2 C.B. 92.
(e) The basis of the Regions Common Stock to be received by a Delta
stockholder (including any fractional share interest) will be the same as the
basis of the Delta Common Stock surrendered in exchange therefor, decreased by
any Cash Consideration received in cash, and increased by the amount, if any,
treated as a dividend and the amount of the gain recognized by such stockholder
with respect to the Merger.
(f) The holding period of the Regions Common Stock to be received by a
Delta stockholder (including the holding period of any fractional share
interest) will include the period during which the Delta Common Stock
surrendered in exchange therefor was held by the Delta stockholder, provided
such stock was held as a capital asset in the hands of the Delta stockholder on
the date of the exchange.
(g) The payment of cash in lieu of fractional shares of Regions Common
Stock will be treated as if the fractional shares were issued as part of the
exchange and then redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the
fractional shares of Regions Common Stock redeemed as provided in Section
302(a). Generally, any gain or loss recognized upon such exchange will be
capital gain or loss, provided the fractional share would constitute a capital
asset in the hands of the exchanging stockholder.
(h) Where solely cash is received by a Delta stockholder in exchange for
his Delta Common Stock pursuant to the exercise of dissenters' rights, such
cash will be treated as having been received in redemption of his Delta Common
Stock, subject to the provisions and limitations of Section 302.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE MERGER. DELTA
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STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES OF THE PROPOSED TRANSACTION 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 Delta 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 Delta.
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 THE REGIONS COMMON STOCK
The Regions Common Stock to be issued to Delta 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, Delta (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 who Delta reasonably believes will be an affiliate of Delta has
delivered to Regions a written agreement providing that such person generally
will not sell, pledge, transfer, or otherwise dispose of any Regions Common
Stock to be received by such person upon consummation of the Merger, except in
compliance with the Securities Act and the rules and regulations of the SEC
promulgated thereunder.
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EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of Delta Common Stock will be exchanging
their shares of a Louisiana banking corporation governed by the LBL and Delta'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 Delta stockholders and
those of Regions stockholders. The differences deemed material by Delta and
Regions are summarized below. In particular, Regions' Certificate and Bylaws
contain several provisions that may be deemed to have an antitakeover effect in
that they could impede or prevent an acquisition of Regions unless the
potential acquirer has obtained the approval of Regions' Board of Directors.
The following discussion is necessarily general; it is not intended to be a
complete statement of all differences affecting the rights of stockholders and
their respective entities, and it is qualified in its entirety by reference to
the LBL and the Delaware GCL as well as to Regions' Certificate and Bylaws and
Delta'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," "--Limitations on Director
Liability," "--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 believes 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 62,185,402 shares were issued as of
March 31, 1996, none of which were held as treasury shares. Regions' Board of
Directors may authorize the issuance of additional shares of Regions Common
Stock without further action by Regions' stockholders, unless such action is
required in a particular case by
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applicable laws or regulations or by any stock exchange upon which Regions'
capital stock may be listed. The Certificate does not provide preemptive rights
to Regions stockholders.
The authority to issue additional shares of Regions Common Stock provides
Regions with the flexibility necessary to meet its future needs without the
delay resulting from seeking stockholder approval. The authorized but unissued
shares of Regions Common Stock will be issuable from time to time for any
corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Regions.
In addition, the sale of a substantial number of shares of Regions Common Stock
to persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
Common Stock (or the right to receive Regions Common Stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions.
Delta. Delta's authorized capital stock consists of 1,000,000 shares of
Delta Common Stock, which is the only class of capital stock authorized and of
which 374,420 shares were issued and outstanding as of the Record Date.
Pursuant to the LBL, Delta's Board of Directors may authorize the issuance
of additional shares of Delta Common Stock without further action by Delta's
stockholders. The Articles, as amended, provide the stockholders of Delta with
preemptive rights to purchase a pro rata portion of certain issuances of Delta
Common stock, in accordance with the LBL. Section 271 of the LBL provides that
each holder of shares having voting rights, upon the issuance of shares for
cash, shall have the preemptive right to subscribe for such proportion of the
shares to be issued as the number of shares having voting rights held by such
holder bears to the total number of shares having voting rights then
outstanding. Such preemptive rights shall exist during a reasonable period to
be fixed by the Board of Directors, which period need not exceed fifteen days
after the giving or mailing of written notice of the terms upon which the
holder may subscribe for the additional shares. Preemptive rights are not
available with respect to (i) shares issued for consideration other than cash;
(ii) shares issued to satisfy option or conversion rights, or (iii) shares
issued pursuant to an employee benefit plan.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock, election, classification, and removal of directors, the approval
required for certain business combinations, meetings of stockholders, and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions Common Stock.
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 outstanding shares
of Regions Common Stock.
Delta. The LBL generally provides that a Louisiana banking corporation's
articles of incorporation may be amended by the affirmative vote of a majority
of the shares entitled to vote thereon, unless the articles of incorporation
provide for a higher requirement or a lower voting requirement not less than a
majority of the voting power represented at a meeting of stockholders called
for the purpose of amending the articles of incorporation, provided that the
notice of such meeting sets forth the proposed amendment or a summary of the
changes to be made thereby. The Articles provide that the affirmative vote of
at least 80% of the
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outstanding voting shares and at least two-thirds of all shares held by
disinterested stockholders is required to amend Article VIII of the Articles
(dealing with certain business combinations), and is otherwise silent as to the
vote required to amend the Articles.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
Regions. The Certificate provides that Regions' Board of Directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office.
The effect of Regions' having a classified Board of Directors is that only
approximately one-third of the members of the Board are elected each year;
consequently, two annual meetings are effectively required 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, therefore, 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.
Delta. The Articles do not provide for a classified board of directors, and
do not provide for cumulative voting rights.
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 at least 75% of Regions' voting stock.
Delta. Pursuant to the LBL, any one or more of the directors may be
removed, with or without cause, by the affirmative vote of a majority of the
total outstanding stock of Delta at a special meeting called for that purpose.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. The Certificate provides that a director of Regions will have no
personal liability to Regions or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of
36
<PAGE> 41
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.
Delta. The LBL generally permits a corporation's articles of incorporation
to relieve directors of liability for money damages for good faith conduct. The
Articles of Incorporation of Delta provide that directors shall not be liable
for money damages for breach of duty as a director except for actions taken not
in good faith or that involve intentional misconduct or certain unlawful
transactions. Such limitations on director liability are substantially similar
to those applicable to Regions.
INDEMNIFICATION
Regions. The Certificate provides that Regions will indemnify its officers,
directors, employees, and agents to the full extent permitted by the Delaware
GCL. Under Section 145 of the Delaware GCL as currently in effect, other than
in actions brought by or in the right of Regions, such indemnification would
apply if it were determined in the specific case that the proposed indemnitee
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of Regions and, with respect to any criminal
proceeding, if such person had no reasonable cause to believe that the conduct
was unlawful. In actions brought by or in the right of Regions, such
indemnification probably would be limited to reasonable expenses (including
attorneys' fees) and would apply if it were determined in the specific case
that the proposed indemnitee acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of Regions,
except that no indemnification may be made with respect to any matter as to
which such person is adjudged liable to Regions, unless, and only to the extent
that, the court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent that any director, officer, employee, or agent of Regions has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
Delta. The Articles provide for indemnification of its directors, officers,
employees, and agents in substantially the same manner and with substantially
the same effect as in the case of Regions.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that special meetings of
stockholders 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.
Delta. Under Delta's Bylaws, a special meeting of Delta stockholders may be
called by the Chairman, the President, a majority of the Board of Directors,
or upon the written request of the holders of an aggregate of 30% or more of
the voting power of Delta Common Stock.
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
37
<PAGE> 42
on a business combination, except at an annual meeting or special meeting
called by the Board of Directors, chief executive officer, or secretary, even
if a majority of the stockholders were in favor of such action.
Delta. Under the LBL, action requiring or permitting stockholder approval
may be approved by unanimous written consent of all stockholders entitled to
vote thereon.
STOCKHOLDER NOMINATIONS
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.
Delta. Neither the LBL nor Delta's Articles and 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 to include,
generally, mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203 to include, generally, the beneficial owner of 15%
or more of the corporation's outstanding voting stock). Section 203 generally
applies to Delaware corporations, such as Regions, that have a class of voting
stock listed on a national securities exchange, authorized for quotation on an
interdealer quotation system of a registered national securities association,
or held of record by more than 2,000 stockholders, unless the corporation
expressly elects in its certificate of incorporation or bylaws not to be
governed by Section 203.
Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination
by Regions or a subsidiary with an interested stockholder within three years
after the person or entity becomes an interested stockholder, unless (i) prior
to the time when the person or entity becomes an interested stockholder,
Regions' Board of Directors approved either the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder, (ii) upon consummation of the transaction in which the person or
entity became an interested stockholder, the interested stockholder held at
least 85% of the outstanding Regions voting stock (excluding shares held by
persons who are both officers and directors and shares held by certain employee
benefit plans), or (iii) once the person or entity becomes an interested
stockholder, the business combination is approved by Regions' Board of
Directors and by the holders of at least two-thirds of the outstanding Regions
voting stock, excluding shares owned by the interested stockholder.
Delta. Article VIII of the Articles provides that, in addition to any vote
otherwise required by law or by the Articles, a "Business Combination" with an
"Interested Shareholder" must be approved by 80% of the votes entitled to be
cast by outstanding voting stock of Delta voting as a single group, and 66 2/3%
of the votes entitled to be cast by holders of voting stock other than that
held by the Interested Shareholder who is,
38
<PAGE> 43
or whose Affiliate is, a party to the Business Combination. An Interested
Shareholder is defined as the beneficial owner, directly or indirectly, of 10%
or more of the outstanding voting stock of Delta, or an affiliate of Delta who,
at any time within two years of the Business Combination, owned beneficially
10% or more of Delta stock. A Business Combination is defined, generally, to
include, among other things, a merger, consolidation or share exchange with, or
sale, lease, or transfer of substantial Delta assets to an Interested
Shareholder. The voting requirements of Article VIII do not apply in general
where stockholders other than the Interested Shareholder receive in the
Business Combination substantially similar consideration for their Delta Stock
in terms of price and method of payment as set forth in Article VIII. Since
Regions is not an Interested Shareholder under Article VIII, the voting
requirements set forth therein will not apply to the Merger.
On June 21, 1995, Delta's Board of Directors adopted the Rights Plan. See
The Merger - Background of the Merger. The Board of Directors will redeem the
Rights before the Effective Date.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The Certificate generally requires the affirmative vote of the
holders of at least 75% of the outstanding voting stock of Regions to effect
(i) any merger or consolidation with or into any other corporation, or (ii) any
sale or lease of any substantial part of the assets of Regions to any party
that beneficially owns 5.0% or more of the outstanding shares of Regions voting
stock, unless the transaction was approved by Regions' Board of Directors
before the other party became a 5.0% beneficial owner or is approved by 75% or
more of the Board of Directors after the party becomes such a 5.0% beneficial
owner. In addition, the Delaware GCL generally requires the approval of a
majority of the outstanding voting stock of Regions to effect (i) any merger or
consolidation with or into any other corporation, (ii) any sale, lease, or
exchange of all or substantially all of Regions property and assets, or (iii)
the dissolution of Regions. However, pursuant to the Delaware GCL, Regions may
enter into a merger transaction without stockholder approval if (i) Regions is
the surviving corporation, (ii) the agreement of merger does not amend the
Certificate in any respect, (iii) each share of Regions stock outstanding
immediately prior to the effective date of the merger is to be an identical
outstanding or treasury share of Regions after the effective date of the
merger, and (iv) either no shares of Regions Common Stock and no shares,
securities, or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of Regions Common Stock to be issued or delivered under the
plan of merger plus those initially issuable upon conversion of any other
shares, securities, or obligations to be issued or delivered under such plan do
not exceed 20% of the shares of Regions Common Stock outstanding immediately
prior to the effective date of the merger.
Delta. The LBL 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 any merger or
consolidation with or into any other bank. Except in the case of certain
business combinations with an "Interested Stockholder" (as described above), the
Articles do not establish special voting requirements for such transactions
generally.
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
39
<PAGE> 44
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.
Delta. The rights of appraisal of dissenting stockholders under the LBL,
while generally similar to those afforded under the Delaware GCL, differ in
certain details. For a full description of the rights of dissenting
stockholders under the LBL, 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.
Delta. Pursuant to the LBL, any stockholder, except a business competitor,
who is and has been the holder of record of at least 2.0% of the outstanding
shares of a state bank for at least six months, has the right to examine and
inspect certain bank records, including but not limited to, stockholder lists,
stock transfer records, records of proceedings of the stockholders, directors
and committees of the board, the bank's articles of incorporation and bylaws,
and books and records of the bank except files and records relating to credit
information, loan transactions and deposit accounts of individual customers of
the bank 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 40%
of all outstanding shares of the corporation for a period of six months before
exercising the right to examine and inspect the bank'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 "Certain Regulatory Considerations--Payment of Dividends."
Delta. Pursuant to the LBL, the Board of Directors of Delta may declare and
Delta may pay quarterly semi-annual or annual dividends provided that Delta has
unimpaired surplus equal to 50% of the outstanding capital stock of the Delta,
and the bank's unimpaired surplus shall not be reduced below 50% by the payment
of any dividend. Prior approval of the Louisiana Commissioner is required if
the total of all dividends paid during any one year would exceed the total of
Delta's net profits (as defined in Section 263B(2) of the LBL) of that year
combined with the net profits for the immediately preceding year. Regulatory
authorities may also limit the payment of dividends if such payments are deemed
an unsafe or unsound practice, or if the authority deems the Delta's capital
inadequate.
40
<PAGE> 45
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." Delta 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
and the cash dividends declared per share of Regions Common Stock and Delta
Common Stock for the indicated periods. Delta management is not aware of the
trading prices in recent arms-length transactions of purchase and sale of Delta
Common Stock.
<TABLE>
<CAPTION>
REGIONS
PRICE RANGE DELTA
----------- CASH DIVIDENDS CASH DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE PER SHARE
---- --- --------- ---------
<S> <C> <C> <C> <C>
1994
First Quarter . . . . . . $ 33.50 $ 30.13 $ .30 $ .00
Second Quarter . . . . . . 36.13 30.50 .30 .00
Third Quarter . . . . . . 36.75 34.63 .30 .00
Fourth Quarter . . . . . . 35.00 29.75 .30 2.00
1995
First Quarter . . . . . . 36.50 31.63 .33 .00
Second Quarter . . . . . . 37.44 34.50 .33 .00
Third Quarter . . . . . . . 41.25 37.00 .33 .00
Fourth Quarter . . . . . . 44.88 39.63 .33 2.00
1996
First Quarter . . . . . . . 48.00 40.75 .35 .50
Second Quarter (through
) . . . . . . . . .35 .79
</TABLE>
On , 1996, the last reported sale price of Regions Common Stock as
reported on the Nasdaq National Market was $ . On November 14, 1995,
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 was $41.38.
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 "Certain Regulatory
Considerations--Payment of Dividends."
Delta's dividend policy has been to pay annual dividends of $2.00 per share
consistent with the requirements of the LBL. The existence of minimum capital
requirements effectively restricts dividend payments by all banks, including
Delta, because dividends are paid out of capital. Regulatory authorities can
further limit payment of dividends if it is found that the payment would
constitute an unsafe or unsound practice. In addition, Louisiana law provides
that dividends may not be paid if the result would be to reduce Delta's surplus
to a level of less than 50% of its capital stock account; and requires prior
approval of the
41
<PAGE> 46
Louisiana Commissioner if total dividends during a year would exceed total net
profits of that and the preceding year.
DELTA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion provides certain information concerning the
financial condition and results of operations of Delta for the three years
ended December 31, 1995, 1994, and 1993. Management's discussion should be read
in connection with the financial statements and accompanying notes presented
elsewhere in this Proxy Statement/Prospectus.
OVERVIEW
Delta reported consolidated net income for 1995 of $1,653,000 compared to
$1,586,000 for 1994 and $1,269,000 for 1993. Return on average assets was .83%
and return on average equity was 10.26% for 1995, compared to .77% and 10.66%
respectively, for 1994, and .64% and 8.59% respectively, for 1993. The
following table summarizes performance ratio base on return on equity and
assets.
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------
1995 1994 1993
------ ----- ----
<S> <C> <C> <C>
Return on average assets .83% .77% .64%
Return on average equity 10.26% 10.66% 8.59%
Dividend payout ratio 45.30% 47.22% 59.01%
Average equity to average assets ratio 8.05% 7.22% 7.45%
</TABLE>
The increase in earnings from 1994 to 1995 was due primarily to decreases
in the provision for loan losses, and salaries and wages partially offset by
an increase in other operating expenses. The increase in earnings from 1993 to
1994 was due primarily to a decrease in operating expenses and the provision
for loan losses partially offset by decreases in net interest income and other
income. The decrease in earnings from 1992 to 1993 was due primarily to an
increase in operating expenses partially offset by an increase in other income.
Average assets in 1995 decreased by $5,804,000 or 2.82%, from 1994
primarily due to reductions in the taxable investment securities portfolio and
Federal Funds sold, partially offset by an increase in the loan portfolio. A
decline in interest bearing NOW and money market deposits, and other savings
deposits in 1995 was partially offset by an increase in securities sold under
agreement to repurchase and increases in time deposits and non-interest bearing
deposits. Average assets in 1994 increased by $7,763,000 or 3.92%,
from 1993 primarily due to increased investments in taxable and tax-exempt
securities partially offset by reductions in the loan portfolio and in Federal
Funds sold. The funding for increases in earning assets resulted from increases
in NOW and money market deposits, securities sold under agreement to
repurchase and non-interest bearing demand deposits, partially offset by
decreases in other saving deposits.
The net interest margin, the ratio of net interest income to average
earning assets, increased in 1995, from 5.33% to 5.53%, primarily due to
increased yields on investment securities and loans, partially offset by
increased costs of deposits. The net interest margin decreased in 1994 from
5.60% to 5.33%, primarily due to decreases in the yield on investment
securities and loans and a decrease in average loan balances. The favorable
net interest margin of 5.53% in 1995 and 5.33% in 1994, reflects the continued
low interest rates paid on deposits and the wider spread between rates on
deposits and yields on investments and loans which have resulted in increases
in net interest income. Average earning assets comprised 89.85%, 89.66% and
89.11% of total average assets in 1995, 1994 and 1993, respectively.
42
<PAGE> 47
DESCRIPTION OF BUSINESS
Delta is engaged in commercial banking with nine offices throughout
Plaquemines and Jefferson Parishes. Business activities include the taking of
demand deposits, the granting of loans (secured and unsecured) to individuals,
associations, partnerships and corporations, and rendering services normally
connected with the banking industry. Delta is not engaged in the performance of
trust services.
RESULTS OF OPERATIONS
Net Interest Income. Net interest income for 1995, 1994 and 1993
was $9,701,000, $9,576,000, and $9,665,000, respectively . The increase of
$125,000 from 1994 to 1995 resulted primarily from an increase in interest
rates earned on investment securities and increased loan volume, partially
offset by a reduction in volume of investment securities. The increase in the
cost of funds for 1995 resulted from an increase in the rate on interest
bearing liabilities, partially offset by a decrease in the volume of interest
bearing liabilities. The $89,000 decrease in net interest income from 1993 to
1994 was caused primarily by a decrease in the interest rate earned on
investment securities and loans, and an increase in interest rates on interest
bearing deposits. Net interest income in 1994 was further reduced because of
changes in the asset mix where the volume of lower yielding investment
securities grew as the volume of higher yielding loans shrank. The cost of
funds in 1994 compared to 1993 increased primarily due to increased volume of
money market and NOW accounts, and certificates of deposits, compounded by an
increase in the money market and NOW rates, partially offset by a reduction in
certificates of deposit rates. The increased volume of interest deposits was
mainly offset by the change in the mix of deposits where the greatest
growth occurred in the lower yielding money market and NOW accounts and other
security deposits.
The major components of average earning assets are loans and investment
securities. Loans were the largest component of average earning assets in
1995, with investment securities comprising the largest component in 1994.
In 1995 loans totaled $88,098,000 or 49% of average earning assets, with
investment securities comprising $86,424,000 or 48% of average earning assets.
In 1994, laons totaled $83,481,000 or 45% of average earning assets, with
investment securities totaling $92,804,000 or 50% of average earning assets.
Federal funds sold and interest bearing deposits with other financial
institutions comprised the remaining component of earning assets in 1995
and 1994.
In 1995 the yield on loans increased 40 basis points, from 10.18% to
10.58% and the yield on investment securities increased 58 basis points from
5.41% to 5.99%. The yield on total earning assets increased 73 basis points
from 7.51% to 8.24%. The cost of total interest bearing funds increased 84
basis points from 2.73% to 3.57% in 1995. These changes resulted in the net
spread on interest earning assets decreasing 11 basis points in 1995 from 4.78%
to 4.67%.
In 1994 the yield on loans decreased 2 basis points from 10.20% to 10.18%.
The yield on investment securities decreased 29 basis points in 1994 from 5.70%
to 5.41%. The yield on total earning assets decreased 32 basis points from
7.83% to 7.51% in 1994. The cost of total interest bearing funds decreased 1
basis point in 1994 from 2.74% to 2.73%. These changes resulted in the net
spread on interest earning assets decreasing 31 basis points in 1994 from 5.09%
to 4.78%.
Condensed average balance sheets, related interest income/expense and
applicable yields/rates for the last three years are shown in the following
table.
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<PAGE> 48
Average Balance Sheets and Net Interest Yield Analysis
<TABLE>
<CAPTION>
December 31,
1995 1994 1993
----------------------- ------------------------ ---------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate Balance Expense Rate
- ---------------------- ------- ------- ---- ------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Interest bearing deposits with
other banks $ 95 $ 6 6.32% $ 0 $ 0 .00% $ 0 $ 0 0.00%
Investment securities:
Taxable 74,815 4,349 5.81% 81,157 4,147 5.11% 67,764 3,626 5.35%
Tax-exempt (1) 11,609 828 7.13% 11,647 870 7.47% 9,007 750 8.33%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total investment securities 86,424 5,177 5.99% 92,804 5,017 5.41% 76,771 4,376 5.70%
Loans-net of unearned income (2) 88,098 9,325 10.58% 83,481 8,495 10.18% 90,253 9,205 10.20%
Federal funds sold and securities
purchased under agreement to
resell 5,298 313 5.91% 8,462 355 4.20% 9,659 262 2.71%
-------- ------- ----- ------- ------- ----- -------- ------- -----
Total earning assets 179,915 14,821 8.24% 184,747 13,867 7.51% 176,683 13,843 7.83%
-------- ------- ----- ------- ------- ----- -------- ------- -----
Cash and due from banks 11,494 11,572 11,471
Bank premises and equipment 5,276 5,691 5,448
Reserve for loan losses (1,340) (1,640) (1,633)
Other resources (less letters of
credit) 4,894 5,673 6,311
-------- -------- --------
Total assets $200,239 $206,043 $198,280
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest bearing funds:
Money market and NOW accounts $ 50,704 $ 1,543 3.04% $ 59,665 $ 1,460 2.45% $ 56,615 $ 1,263 2.23%
Other savings deposits 37,535 923 2.46% 43,800 960 2.19% 45,085 1,170 2.60%
Certificates of deposit and other
time deposits $100,000 or more 10,904 580 5.32% 8,479 320 3.77% 7,606 293 3.85%
Other time deposits 33,474 1,628 4.86% 33,163 1,198 3.61% 34,867 1,222 3.50%
Securities sold under repurchase
agreement 4,309 210 4.87% 2,251 91 4.04% 0 0 .00%
Note payable due within one year 0 0 0.00% 0 0 0.00% 0 0 .00%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total interest bearing funds 136,926 4,884 3.57% 147,358 4,029 2.73% 144,173 3,948 2.74%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Non-interest bearing demand deposits 44,598 41,363 36,348
Other accrued liabilities (less
letters of credit) 2,603 2,443 2,985
-------- -------- --------
Total liabilities 184,127 191,164 183,506
-------- -------- --------
Shareholders' equity 16,112 14,879 14,774
-------- -------- --------
Total liabilities and shareholders'
equity $200,239 $206,043 $198,280
======== ======== ========
Net interest income, taxable
equivalent basis
$ 9,937 $ 9,838 $ 9,895
Taxable equivalent adjustment 236 262 230
------- ------- -------
Net interest income
$ 9,701 $ 9,576 $ 9,665
======= ======= =======
Spread (1) 4.67% 4.78% 5.09%
===== ===== =====
Net interest yield (1) 5.53% 5.33% 5.60%
===== ===== =====
</TABLE>
(1) Fully taxable equivalent basis using a 34% tax rate in 1995, 1994 and 1993.
(2) Includes non-performing loans.
44
<PAGE> 49
A comparative analysis of the increases and decreases in the major
categories of interest income and interest expense resulting from changes in
rates and volume for the periods indicated is presented in the following table.
Changes which are not due solely to rate or volume have been allocated
proportionately.
Rate/Volume Analysis
<TABLE>
<CAPTION>
DECEMBER 31,
1995/1994 1994/1993 1993/1992
CHANGE TOTAL CHANGE TOTAL CHANGE TOTAL
ATTRIBUTABLE INCREASE ATTRIBUTABLE INCREASE ATTRIBUTABLE INCREASE
(DOLLARS IN THOUSANDS) RATE VOLUME (DECREASE) RATE VOLUME (DECREASE) RATE VOLUME (DECREASE)
---- ------ ---------- ---- ------ ---------- ---- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Interest bearing deposits with
other banks $ 0 $ 6 $ 6 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Investment securities:
Taxable 571 (369) 202 (163) 684 521 (547) 1,005 458
Tax-exempt (39) (3) (42) (77) 197 120 (114) 219 105
------- ------ ------ ------ ------ ------ ------ ------ -------
Total investment securities 532 (372) 160 (240) 881 641 (661) 1,224 563
Loans - net of unearned income* 341 489 830 (21) (689) (710) 4 1,668 1,672
Federal funds sold and securities
purchased under agreement
to resell 145 (187) (42) 143 (50) 93 (31) 120 89
------- ------ ------ ------ ------- ------ ------ ------ -------
Total interest income 1,018 (64) 954 (118) 142 24 (688) 3,012 2,324
Interest bearing funds:
Money market and NOW accounts 356 (273) 83 123 74 197 (247) 314 67
Other savings deposits 117 (154) (37) (182) (28) (210) (255) 374 119
Certificates of deposit and other
time deposits of $100,000 or
more 131 129 260 (6) 33 27 (30) (43) (73)
Other time deposits 415 15 430 38 (62) (24) (376) 211 (165)
Securities sold under repurchase
agreement 19 100 119 0 91 91 0 (1) (1)
------- ------ ------ ------ ------ ------ ------ ------- -------
Total interest expense 1,038 (183) 855 (27) 108 81 (908) 855 (53)
Net interest income $ (20) $ 119 $ 99 $ (91) $ 34 $ (57) $ 220 $2,157 $ 2,377
======= ====== ====== ====== ====== ====== ====== ====== =======
</TABLE>
*Includes non-performing loans
Interest Rate Sensitivity. The interest rate sensitivity gap is the
difference between the amount of interest bearing assets and interest bearing
liabilities maturing in any given time frame. A primary objective of
asset/liability management is to achieve reasonable stability in net interest
income throughout interest rate cycles. At December 31, 1995, and December 31,
1994, Delta's one year repricing gap, defined as repricing assets minus
repricing liabilities, as a percentage of total assets, was respectively, a
negative 1.59% and a negative 5.18%, i.e. more of Delta's liabilities than
assets reprice within a one year time frame. A negative gap implies that net
interest income would increase in a falling interest rate environment and
decrease in a rising interest rate environment. However, the degree of interest
rate sensitivity is not equal for all types of assets and liabilities. Delta's
experience has indicated that the repricing of interest-bearing demand, savings
and money market accounts does not move with the same magnitude as general
market rates. Additionally, these deposit categories, along with non-interest
bearing demand, have historically been stable sources of funds for Delta, which
indicates a much longer implicit maturity than their contractual maturity.
Therefore, it is unlikely that an increase or decrease in market interest rates
would result in an immediate repricing of all assets and liabilities, thereby
reducing the volatility on net interest income of an increase or decrease in
interest rates.
45
<PAGE> 50
Provision for Loan Losses. No provision for possible loan losses was
made in 1995, compared to $405,000 in 1994 and $620,000 in 1993. Net
charge-offs totaled $540,000 in 1995, $275,000 in 1994 and $975,000 in 1993.
The allowance for possible loan losses at December 31, 1995 was $1,046,000
representing 1.17% of outstanding loans and 54.59% of non-performing loans. Net
loan charge-offs in 1995 were $539,000 and represented approximately .61% of
average outstanding loans.
Quarterly, the Loan Loss Reserve Committee reviews all non-accrual and
possible problem loans. Special reserves are allocated for these individual
loans. A general reserve is set up on the remainder of the loan portfolio.
Based on these reviews, regular examinations conducted by supervisory
authorities and management's judgment with respect to current and expected
economic conditions and their impact on the existing loan portfolio, management
considers that the level of the allowance for possible loan losses was adequate
at December 31, 1995.
Delta's policy is to charge off that portion of any credit which is
considered uncollectible, when it becomes evident to management and the Loan
Committee that such is the case. Management submits quarterly to the Loan
Committee a list of all installment loans 90 days or more past due along with
recommendations as to which loans are felt to be uncollectible. The Loan
Committee reviews these loans and at its discretion directs the charge off of
all or a portion of the loan and reports such action to the Board of Directors.
Any unsecured loans on which no payment has been made for 90 days must,
under Bank internal policy, be charged off in total. If no payment has been
made for 90 days on a secured loan that is not well secured and in the
process of collection, a charge-off must be made to reduce the loan balance to
a level equal to the liquidation value of the collateral.
Management is not aware of any loans classified for regulatory purposes
which:(1) represents or result from trends or uncertainties that will
materially impact future operating results, liquidity, or capital resources, or
(2) represent material credits about which management is aware of any
information which causes doubts as to the ability of such borrowers to comply
with the loan repayment terms.
The following tables present information concerning changes in Delta's
reserve for possible loan losses and an allocation of Delta's reserve for loan
losses among major categories of loans.
46
<PAGE> 51
Reserve for Possible Loan Losses
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1995 1994 1993
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Reserve at Beginning of the Year $ 1,585 $ 1,456 $ 1,811
Provision charged to operating expense 0 405 620
Loans charged off:
Real estate 240 113 172
Installment 159 83 137
Commercial 236 229 942
--------- --------- --------
Total 635 425 1,251
Recoveries of amounts previously charged off:
Real estate 33 23 13
Installment 32 42 67
Commercial 31 84 196
--------- --------- --------
Total 96 149 276
Net loans charged off 539 276 975
--------- --------- --------
Reserve at End of the Year $ 1,046 $ 1,585 $ 1,456
========= ========= ========
Loans outstanding at December 31 $ 89,767 $ 85,238 $ 87,174
========= ========= ========
Average Loans outstanding $ 88,098 $ 83,481 $ 90,253
========= ========= ========
Ratio of net charge-offs to average loans
outstanding 0.61% 0.33% 1.08%
========= ========= ========
Ratio of net charge-offs to loans outstanding
at year-end 0.60% 0.32% 1.12%
========= ========= ========
Ratio of allowance to non-performing loans
at year-end 54.59% 38.12% 22.97%
========= ========= ========
</TABLE>
The following chart discloses management's estimate, as of the
respective dates shown, of the manner in which the allowance for possible loan
losses might be allocated to categories of loans if the Bank was required to do
so under generally accepted accounting principles uniformly applied. The level
of the allowance is based upon management's continuing evaluation of the
current risk in the loan portfolio along with past loan loss experience and the
current economic environment.
The reader is cautioned that in the opinion of management, it is not
possible to accurately predict what amount of the allowance will be required to
absorb future losses in each category. Furthermore, under generally accepted
accounting principles, as well as regulations promulgated by federal and state
banking regulatory agencies, the entire allowance is available to absorb losses
in all categories. Thus, the critical function of the allowance is to be
adequate in view of the aggregate risk of all loan losses.
47
<PAGE> 52
The allocation of the allowance for possible loan losses by major categories
of loans follows:
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1995 1994 1993
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Real Estate $ 265 $ 407 $ 287
Commercial 179 204 386
Unallocated 602 974 783
-------- -------- --------
Total $ 1,046 $ 1,585 $ 1,456
======== ======== ========
</TABLE>
Non-Interest Income. Other income increased to $1,948,979 in 1995 from
$1,893,916 in 1994, as compared to $2,040,807 in 1993 and $1,343,541 in
1992. The increase in 1995 was due primarily to losses recorded in 1994 on the
disposition of property and equipment. The decrease in 1994 was due primarily
to a decrease in deposit account service charges and fee income and losses on
the disposition of property and equipment. The increase between 1993 and 1992
was due primarily to an increase in deposit account service charges. In
addition, in 1995 Delta realized a gain in the sale of securities of $6,817
compared to a loss of $59,830 in 1994 and gains in the amounts of $57,527 and
$139,009 in 1993 and 1992, respectively.
Non-Interest Expense. During 1995 non-interest (operating) expenses
increased 3.74% to $9,216,031 as compared to $8,883,759 in 1994, $9,186,726 in
1993, and $5,726,703 in 1992. The increase in 1995 was due primarily to an
increase in legal and other professional fees of approximately $500,000, an
increase in deferred compensation expenses of approximately $485,000, partially
offset by a decrease in salaries by approximately $225,000 and a decrease in
FDIC assessments of approximately $200,000. The decease in 1994 was primarily
due to the decrease in the lump sum payments paid out to certain participants
in the Deferred Compensation Plan and redemption of the related split dollar
insurance policies, which resulted in a loss of $74,818 in 1994 and $310,247 in
1993. The increase in 1993 was in salaries and wages, other employee costs,
occupancy expense of bank premises, and other operating expenses. The increase
in 1993 from 1992 was primarily due to additional expenses incurred after the
acquisition of Investors Bank and Trust Company from the FDIC.
Income Taxes. The effective tax rate for 1995 was 32.26% compared to 25.22%
for 1994 and 27.43% for 1993.
ANALYSIS OF FINANCIAL CONDITION
Investment Securities. In 1995, average investment securities decreased
from $92,804,000 to $86,424,000, or $6,380,000, from 1994. The investment
securities portfolio is used as a source of liquidity and a means of managing
interest rate sensitivity. In addition, the portfolio serves as a source of
collateral on certain deposits. The following tables set forth the composition
of Delta's investment portfolio at the end of each period presented, by
categories of contractual maturities, and allocated as securities held to
maturity and securities available for sale. Expected maturities will differ
from contractual maturities because the issuers may have the right to prepay
obligations with or without penalties.
48
<PAGE> 53
Investment Securities
The carrying values and weighted average yields of investment securities
at the end of the last three years were:
<TABLE>
<CAPTION>
December 31,
1995 1994
---------------------- ---------------------
Increase
Weighted Weighted (Decrease)
Carrying Average Carrying Average in Carrying
Value (1) Yield (2) Value (1) Yield (2) Value
---------- --------- ---------- --------- ------
<S> <C> <C> <C> <C> <C>
Investment securities consist of the following:
Investments Held to Maturity
U.S. Treasury Securities:
Maturing within one year $ 13,096,550 5.29% $ 12,815,154 4.45% $ 281,396
Maturing after one year but within five years 6,557,090 5.99% 13,271,248 5.48% (6,714,158)
------------ ---- ------------ ---- ------------
19,653,640 5.52% 26,086,402 4.97% (6,432,762)
Federal Agency Securities (3):
Maturing within one year 7,927,148 5.36% 6,005,378 4.69% 1,921,770
Maturing after one year but within five years 11,995,615 6.24% 25,650,848 5.74% (13,655,233)
Maturing after ten years 0 0.00% 1,000,000 7.75% (1,000,000)
------------ ---- ------------ ---- ------------
19,922,763 5.89% 32,656,226 5.61% (12,733,463)
Obligations of States and
Political subdivisions (4)(5):
Maturing within one year 1,647,899 8.00% 1,515,850 8.50% 132,049
Maturing after one year but within five years 4,224,586 7.38% 4,226,110 7.59% (1,524)
Maturing after five years but within ten years 4,509,281 7.71% 6,398,887 7.76% (1,889,606)
------------ ---- ------------ ---- ------------
10,381,766 7.62% 12,140,847 7.79% (1,759,081)
Other Securities:
Maturing within one year 0 .00% 100,000 9.09% (100,000)
Maturing after one year but within five years 100,000 7.00% 245,550 8.10% (145,550)
------------ ---- ------------ ---- ------------
100,000 7.00% 345,550 8.39% (245,550)
Total Investments Held
to Maturity $ 50,058,169 6.11% $ 71,229,025 5.76% $(21,170,856)
============ ==== ============ ==== ============
</TABLE>
(CONTINUED)
49
<PAGE> 54
Investment Securities
<TABLE>
<CAPTION>
December 31,
1993
----------------------
Increase
Weighted (Decrease)
Carrying Average in Carrying
Value (1) Yield (2) Value
--------- --------- --------
<S> <C> <C> <C>
Investment securities consist of the following:
Investments Held to Maturity
U.S. Treasury Securities:
Maturing within one year $ 17,618,861 5.07% $ (4,803,707)
Maturing after one year but within five years 19,884,854 4.90% (6,613,606)
------------ ---- ------------
37,503,715 4.98% (11,417,313)
Federal Agency Securities (3):
Maturing within one year 2,993,347 5.14% 3,012,031
Maturing after one year but within five years 15,598,680 5.39% 10,052,168
Maturing after ten years 0 0.00% 1,000,000
------------ ---- ------------
18,592,027 5.35% 14,064,199
Obligations of States and Political
subdivisions (4)(5):
Maturing within one year 1,144,898 9.63% 370,952
Maturing after one year but within five years 3,276,297 8.41% 949,813
Maturing after five years but within ten years
6,790,146 7.71% (391,259)
------------ ---- ------------
11,211,341 8.11% 929,506
Other Securities:
Maturing within one year 0 .00% 100,000
Maturing after one year but within five years 100,000 9.09% 145,550
------------ ---- ------------
100,000 9.09% 245,550
Total Investments Held to Maturity $ 67,407,083 5.61% $ 3,821,942
============ ==== ============
</TABLE>
(CONTINUED)
50
<PAGE> 55
Investment Securities
<TABLE>
<CAPTION>
December 31,
1995 1994
---------------------- ----------------------
Increase
Weighted Weighted (Decrease)
Carrying Average Carrying Average in Carrying
Value (1) Yield (2) Value (1) Yield (2) Value
----------- ---------- ---------------------- ------
<S> <C> <C> <C> <C> <C>
Investment securities consist of the following:
Investments Available for Sale
U.S. Treasury Securities:
Maturing within one year $ 8,067,500 6.48% $ 970,937 4.20% $ 7,096,563
Maturing after one year but within five years 2,035,625 6.32% 17,618,438 6.44% (15,582,813)
------------ ---- ------------ ---- -------------
10,103,125 6.45% 18,589,375 6.32% (8,486,250)
Federal Agency Securities (3):
Maturing within one year 4,011,875 5.24% 0 .00% 4,011,875
Maturing after one year but within five years 17,362,305 5.79% 5,146,094 6.04% 12,216,211
Maturing after five years but within ten years 1,098,189 6.31% 127,029 7.96% 971,160
------------ ---- ------------ ---- ------------
22,472,369 5.71% 5,273,123 6.09% 17,199,246
Obligations of States and Political
subdivisions (4)(5):
Maturing after one year but within five years 540,377 7.33% 0 0.00% 540,377
Maturing after five years but within ten years 888,536 7.80% 0 0.00% 888,536
------------ ---- ------------ ---- ------------
1,428,913 7.62% 0 0.00% 1,428,913
Other Securities:
Maturing after one year but within five years 1,242,656 6.61% 0 0.00% 1,242,656
------------ ---- ------------ ---- ------------
1,242,656 6.61% 0 0.00% 1,242,656
Total Investments Available for Sale $ 35,247,063 6.03% $ 23,862,498 6.27% $ 11,384,565
============ ==== ============ ==== ============
Total Investment Securities $ 85,305,232 6.08% $ 95,091,523 5.89% $ (9,786,291)
============ ==== ============ ==== ============
</TABLE>
(CONTINUED)
51
<PAGE> 56
Investment Securities
<TABLE>
<CAPTION>
December 31,
1993
-----------------------------------------
Increase
Weighted (Decrease)
Carrying Average Carrying
Value (1) Yield (2) Value
--------- --------- -----
<S> <C> <C> <C>
Investments Available for Sale
U.S. Treasury Securities:
Maturing within one year $10,928,581 3.47% $(9,957,644)
Maturing after one year but within five
years 1,001,016 4.20% 16,617,422
----------- ---- -----------
11,929,597 3.53% 6,659,778
Federal Agency Securities (3):
Maturing within one year 0 0.00% 0
Maturing after one year but within five
years 4,766,791 5.64% 379,303
Maturing after five years but within
ten years 2,438,234 5.50% (2,311,205)
----------- ---- ------------
7,205,025 5.59% (1,931,902)
Obligations of States and Political subdivisions
(4)(5):
Maturing after one year but within five
years 0 0.00% 0
Maturing after five years but within ten
years 0 0.00% 0
----------- ---- -----------
0 0.00% 0
Other Securities:
Maturing after one year but within five
years 0 0.00% 0
----------- ---- -----------
0 0.00% 0
Total Investments Available for Sale $19,134,622 4.31% $ 4,727,876
=========== ==== ===========
Total Investment Securities $86,541,705 5.32% $ 8,549,818
=========== ==== ===========
</TABLE>
(1) As of December 31, 1993, the Bank adopted Statement of Financial
Accounting Standards No. 115 on accounting for certain investment securities.
This statement requires investment securities to be classified into one of the
following categories: held-to-maturity, available-for-sale, or trading.
Investment securities classified as held-to-maturity are measured at amortized
cost while investment securities classified as available-for-sale or trading
are measured at fair value. Prior to 1993, all investment securities were
classified as Investments Held to Maturity in accordance with accounting
standards.
(2) The weighted average yields are based on carrying value.
(3) For mortgage-backed securities, contractual maturities have been used for
reporting in the table above; however, based upon prepayment assumptions, the
estimated life may be less.
(4) The weighted average yields on state and municipal obligations are
presented on a taxable equivalent basis using the reciprocal of the Federal
statutory rate of 34% or a factor of 1.515.
(5) Aggregate investment securities issued by various agencies of Plaquemines
Parish (Louisiana) totalled $6,695,266 carrying value ($6,782,565 market value)
as of December 31, 1995, $7,400,000 carrying value ($7,125,366 market value) as
of December 31, 1994, and $6,029,944 carrying value ($6,169,105 market value)
as of December 31, 1993. Of these securities held at December 31, 1995,
$2,905,000 carrying value ($2,979,252 market value) were bonds issued by
Plaquemines Parish Law Enforcement; $1,680,000 carrying value ($1,668,757
market value) were bonds issued by Plaquemines Parish Port Harbor and Terminal
District; and $1,630,000 carrying value ($1,629,783 market value) were bonds
issued by Plaquemines Parish Government. Of these securities held at December
31, 1994, $2,905,000 carrying value ($2,771,953 market value) were bonds issued
by Plaquemines Parish Law Enforcement; and $1,845,000 carrying value
($1,737,669 market value) were bonds issued by Plaquemines Parish Port Harbor
and Terminal District; and $2,120,000 carrying value ($2,071,630 market value)
were bonds issued by the Plaquemines Parish Government. Of these securities
held at December 31, 1993, $2,905,000 carrying value ($3,020,961 market value)
were bonds issued by Plaquemines Parish Law Enforcement; and $2,000,000
carrying value ($1,969,352 market value) were bonds issued by Plaquemines
Parish Port Harbor and Terminal District. At the end of December 31, 1995, 1994
and 1993 the value of each of these issues, and the aggregate values of all
investment securities issued by various agencies of Plaquemines Parish,
significantly exceeded ten percent of the amount of the Bank's total capital as
of these dates.
52
<PAGE> 57
On December 31, 1993, Delta adopted Financial Accounting Standards
Board's Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". Under this
standard, securities are classified into one of three classification: held to
maturity, available for sale, or trading. Held to maturity securities are those
debt securities which Delta has the positive intent and ability to hold to
maturity. These criteria are not considered satisfied when a security would be
available to be sold in response to significant interest rate changes which
were not anticipated in Delta's asset and liability management strategies,
changes in the types of products offered by Delta, changes in its deposit
structure, or potential liquidity needs. Trading securities are defined as
securities bought and held principally for the purpose of selling them in the
near term. Securities not meeting the criteria for classification as held to
maturity or trading are classified as securities available for sale. The
available for sale securities are recorded at market value with the net
unrealized gain or loss reflected in shareholders' equity, net of the related
tax effect.
Loans. Loans outstanding at December 31, 1995 totaled $89,767,000,
compared to $85,238,000 at December 31, 1994. Average loans in 1995 were
$88,098,000, an increase of $4,617,000 from the average for 1994 of
$83,481,000, a decrease of $6,772,000 from the average for 1993.
Real estate loans comprise 63.09%, 68.24% and 64.06% and commercial loans
comprise 21.66%, 19.45% and 23.72% of the loan portfolio at December 31, 1995,
1994 and 1993, respectively.
At December 31, 1995 fixed rate loans totaled $31,257,000 and variable
rate loans totaled $44,051,000. At December 31, 1994, fixed rate loans totaled
$36,460,000 and variable rate loans totaled $37,051,000. At December 31, 1993,
fixed rate loans totaled $42,392,000 and variable rate loans totaled
$30,460,000.
The following tables show the amounts of loans outstanding by major
category, percentage of portfolio, and amount of fixed rate verses variable
loans according to the type of loan for each of the periods indicated.
Loan Portfolio
The distribution of the Bank's loan portfolio for 1995, 1994 and 1993 was
as follows:
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1995 1994 1993
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Real estate loans $ 56,637 $ 58,167 $ 55,844
Commercial and industrial loans 19,442 16,577 20,675
Loans to individuals 14,212 11,093 11,445
All other loans 344 249 178
-------- -------- --------
Total loans 90,635 86,086 88,142
Less: Unearned discount 868 848 968
-------- -------- --------
Loans, net $ 89,767 $ 85,238 $ 87,174
======== ======== ========
</TABLE>
53
<PAGE> 58
The ratio of major loan categories to total loans outstanding is presented
below:
<TABLE>
<CAPTION>
December 31,
1995 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Real estate loans 63.09% 68.24% 64.06%
Commercial and industrial loans 21.66% 19.45% 23.72%
Loans to individuals 15.83% 13.01% 13.13%
All other loans .38% .29% 0.20%
------ ------ ------
Total loans 100.96% 100.99% 101.11%
Less: Unearned discount .96% .99% 1.11%
------ ------ ------
Loans, net 100.00% 100.00% 100.00%
====== ====== ======
</TABLE>
The maturity and rate sensitivity schedule of the commercial and real
estate loan portfolios (excluding non-accrual loans) as of December 31, 1995,
1994 and 1993 is presented below:
1995 Remaining Maturity
<TABLE>
<CAPTION>
Within One to After
(Dollars in thousands) One Year Five Years Five Years Total
- ---------------------- -------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Real estate $ 10,410 $ 24,361 $ 21,224 $ 55,995
Commercial 3,943 13,278 2,092 19,313
----------- ----------- ---------- ----------
$ 14,353 $ 37,639 $ 23,316 $ 75,308
=========== =========== ========== ==========
Predetermined rate $ 9,988 $ 19,889 $ 1,380 $ 31,257
Variable rate 4,365 17,750 21,936 44,051
----------- ----------- ---------- ----------
$ 14,353 $ 37,639 $ 23,316 $ 75,308
=========== =========== ========== ==========
</TABLE>
1994 Remaining Maturity
<TABLE>
<CAPTION>
Within One to After
(Dollars in thousands) One Year Five Years Five Years Total
- ---------------------- -------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Real estate $ 24,220 $ 16,542 $ 16,407 $ 57,169
Commercial 9,440 5,748 1,154 16,342
----------- ----------- ---------- ----------
$ 33,660 $ 22,290 $ 17,561 $ 73,511
=========== =========== ========== ==========
Predetermined rate $ 20,104 $ 14,601 $ 1,755 $ 36,460
Variable rate 13,556 7,689 15,806 37,051
----------- ----------- ---------- ----------
$ 33,660 $ 22,290 $ 17,561 $ 73,511
=========== =========== ========== ==========
</TABLE>
54
<PAGE> 59
1993 Remaining Maturity
<TABLE>
<CAPTION>
Within One to After
(Dollars in thousands) One Year Five Years Five Years Total
- ---------------------- -------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Real estate $ 30,482 $ 11,733 $ 10,488 $ 52,703
Commercial 11,457 7,308 1,384 20,149
----------- ----------- ---------- ----------
$ 41,939 $ 19,041 $ 11,872 $ 72,852
=========== =========== ========== ==========
Predetermined rate $ 28,671 $ 11,138 $ 2,583 $ 42,392
Variable rate 13,268 7,903 9,289 30,460
----------- ----------- ---------- ----------
$ 41,939 $ 19,041 $ 11,872 $ 72,852
=========== =========== ========== ==========
</TABLE>
Non-Performing Loans\Risk Elements. Delta's collection department has the
primary responsibility for the identification, reporting and monitoring of
non-performing loans and the Loan Loss Reserve Committee, comprised of officers
of Delta, monitors potential problem loans. This department and committee
provide an evaluation of the loan portfolio by detecting deteriorating credits
using available resources.
Non-performing loans consist of loans placed on non-accrual of interest
status and renegotiated loans that are not on non-accrual status. It is the
policy of Delta to place loans on non-accrual of interest status when the loan
exhibits the following characteristics: 1) a loan being maintained on a cost
recovery because of deterioration in the financial position of the borrower, 2)
a loan for which payment in full of interest or principal is not expected, 3) a
loan upon which principal or interest has been in default for a period of 90
days or more.
Non-performing loans decreased 53.9% in 1995 as compared to 1994, 34.4% in
1994 as compared to 1993, and in 1993 increased 35.7% as compared to 1992. The
decreases in 1995 and 1994 represented approximately 2.5% of loans outstanding
in 1995 and 1994. These decreases were due primarily to decreases in
non-accrual loans of $759,000 in 1995 and $2.18 million in 1994 and a decrease
in renegotiated loans not on non-accrual of $1.48 million in 1995. The 1993
increase, which represented less than 2.0% of total loans outstanding, resulted
from an increase in non-accrual real estate loans, offset partially by a
decrease in non-accrual commercial loans, and an increase in renegotiated real
estate loans that were not on non-accrual status at December 31, 1993.
Potential problem loans are characterized as credits not otherwise
classified as non-performing, where doubt exists as to the ability of the
borrower to comply with present repayment terms, but where the loans are
secured and are in the process of collection. Those credits are placed on
internal "watch" status for closer management review. Potential problem loans
decreased approximately 50.2% to $3.27 million as of December 31, 1995,
compared to December 31, 1994, while increasing approximately 34.3% to $6.56
million as of December 31, 1994 and approximately 9.4% to $4.88 million as of
December 31, 1993 when compared to 1992. These loans were primarily
concentrated in real estate, commercial and industrial loans.
Non-performing assets decreased approximately 56% in 1995 as compared to
1994 and decreased approximately 22% in 1994 as compared to 1993 and increased
approximately 20% in 1993 as compared to 1992. The 1995 decrease was due to
decreases in non-accrual loans, renegotiated loans not on non-accrual and other
real estate. The 1994 decrease was the result of decreased non-accrual loans
offset by an increase in other real estate from 1993 amounts. The 1993 increase
was primarily the result of increased non-accrual loans, renegotiated loans not
on non-accrual status, partially offset by a decrease in other real estate from
55
<PAGE> 60
1992 amounts. Management determined that the decreases are due to Delta's
efforts to improve loan and asset quality. The following tables set forth the
non-performing assets and loans past due 90 days or more by loan category at
December 31 and the effect of non-performing loans on income for each of the
three most recent years.
At December 31, 1995, 1994 and 1993, Delta did not have any concentrations
of loans exceeding 10% of total loans other than those categorized in the
distribution of the loan portfolio. The following table summarizes
non-performing assets and includes several ratios that measure the level of
non-performing assets.
Risk Elements
<TABLE>
<CAPTION>
December 31,
(Dollars in Thousands) 1995 1994 1993
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Non-performing loans:
Non-accrual loans:
Real estate $ 584 $ 1,061 $ 3,141
Installment 79 87 65
Commercial 128 402 526
-------- --------- -------
Total non-accrual loans 791 1,550 3,732
Renegotiated loans not on non-accrual:
Real estate 999 2,444 2,412
Installment 0 9 173
Commercial 126 155 23
-------- --------- -------
Total renegotiated loans 1,125 2,608 2,608
Total non-performing loans 1,916 4,158 6,340
Other real estate 432 1,270 684
Other collateral acquired 28 21 3
Total risk elements $ 2,376 $ 5,449 $ 7,027
======== ========= =======
Ratio of non-performing assets to total loans,
other real estate and other collateral acquired 2.63% 6.30% 8.00%
Ratio of non-performing assets to total assets 1.15% 2.56% 3.43%
Loans past due 90 days or more
December 31,
(Dollars in thousands) 1995 1994 1993
- ---------------------- ---- ---- ----
Loans contractually past due 90 days or more as to
principal or interest but not on non-accrual:
Real estate $ 152 $ 38 $ 188
Installment 77 32 80
Commercial 188 2 86
-------- --------- -------
Total loans past due 90 days or more $ 417 $ 72 $ 354
======== ========= =======
Ratio of 90 day past due loans to total loans .46% .08% .41%
======== ========= =======
</TABLE>
56
<PAGE> 61
Effect of non-performing loans on interest income
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1995 1994 1993
- ---------------------- ---- ---- ------
<S> <C> <C> <C>
Interest income due under original terms $ 227 $ 472 $ 734
Interest income recorded 210 364 303
------- ------- ------
Effect on interest income $ 17 $ 108 $ 431
======= ======= ======
</TABLE>
Deposits. The following tables set forth certain information concerning
allocations and average rates paid for the major categories of Delta's deposit
liabilities, for the years 1995, 1994, and 1993.
<TABLE>
<CAPTION>
(Dollars in thousands)
- ---------------------- December 31,
1995 1994 1993
----------------- ------------------ ------------------
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
--------- ------- ------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing demand deposits $ 44,598 .00% $ 41,363 .00% $ 36,348 .00%
Money market and NOW accounts 50,704 3.04% 59,665 2.45% 56,615 2.23%
Other savings deposits 37,535 2.46% 43,800 2.19% 45,085 2.60%
Certificates of deposit and other
time deposits of $100,000 or more 10,904 5.32% 8,479 3.77% 7,606 3.85%
Other time deposits 33,474 4.86% 33,163 3.61% 34,867 3.50%
----------- ----------- -----------
Total $ 177,215 $ 186,470 $ 180,521
=========== =========== ===========
</TABLE>
The following table sets forth the maturity distribution of certificates of
deposit of $100,000 or more as of December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1995 1994 1993
- ---------------------- -------- -------- ----------
<S> <C> <C> <C>
Three months or less $ 3,139 $ 2,914 $ 3,919
Over three through six months 2,363 2,277 2,376
Over six through twelve months 2,920 1,374 1,427
Over twelve months 600 1,673 300
--------- -------- --------
Total $ 9,022 $ 8,238 $ 8,022
========= ========= ========
</TABLE>
Capital Resources. All capital requirements of Delta in the coming year are
expected to be satisfied through retained earnings. Management has no present
plans to seek capital from outside sources. As of December 31, 1995, there were
no commitments for capital expenditures during 1996 that will not be paid
through retained earnings.
Liquidity. Liquidity is a measure of a bank's ability to fund loan
commitments and meet deposit maturities and withdrawals in a timely and cost
effective manner. These needs can be met by generating profits, converting
assets to cash and attracting new deposits.
Delta relies on its assets to meet liquidity needs. Management monitors
liquidity through a periodic review
57
<PAGE> 62
of maturity profiles; yield and rate behaviors; and loan and deposit forecasts
to minimize funding risks. The monitoring includes establishing an asset mix
which can be converted into cash as needed. Management believes that Delta's
asset value and maturity structure can support such needs. Ready sources of
liquidity include cash and due from banks, investment securities available for
sale, federal funds sold and maturing loans.
The Impact of Inflation on Delta. The majority of assets and liabilities
of a financial institution are monetary in nature; therefore, a financial
institution differs greatly from most commercial and industrial companies which
have significant investments in fixed assets or inventories. However,
inflation does have an important impact on the growth of total assets in the
banking industry and the resulting need to increase equity capital at higher
than normal rates in order to maintain an appropriate equity to assets
ratio. Inflation also affects other expenses which tend to rise during periods
of general inflation.
Management believes the most significant impact of inflation on financial
results is Delta's ability to react to changes in interest rates. As discussed
previously, management is attempting to maintain an essentially balanced
position between rate sensitive assets and liabilities in order to protect net
interest income from being affected by wide interest rate fluctuations.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 TO THREE MONTHS ENDED MARCH
31, 1995.
Net income for the first quarter of 1996 was $519,000 or $1.39 per
common share, compared to $566,000 or $1.51 per common share for the same
period in 1995. This $47,000 or 8.3% decrease in net income is primarily
attributable to a decline in net interest income and an increase in the
provision for loan losses. These were partially offset by a decline in
non-interest expense and an increase in non-interest income.
Net interest income declined $176,000 or 7% in the first quarter of
1996 compared to the same period last year. Average earning assets declined
from $190 million in the first quarter of 1995 to $179 million in the first
quarter of 1996, due primarily to a 15% decline in securities, partially offset
by a 3.5% increase in loans. The interest margin was 5.30% during 1996,
compared to 5.36% in the first quarter of 1995.
A $150,000 provision for loan losses was recorded in the first quarter
of 1996, compared to no provision during the same period last year.
Non-performing assets totaled $2.4 million at March 31, 1996, compared
to $4.8 million at March 31, 1995. Net charge-offs totaled 0.08% of average
loans during 1996, compared to 0.27% during the same period last year.
Total non-interest income increased $101,000 or 19% in the first
quarter of 1996, compared to the same period last year. Service charges on
deposit accounts increased $8,000 or 2%. Other income increased $91,000 or 60%
due primarily to a recovery of a wire transfer that was expensed in a prior
period.
Total non-interest expense declined $137,000 or 6% in the first quarter
of 1996, compared to the first quarter of 1995. Salaries and employee benefits
increased $42,000 or 4% due primarily to additional bonus accruals in 1996. A
$178,000 or 29% decline in other expense offset the increased salaries and
employee benefits. The decrease in other expenses was primarily attributable
to reduced FDIC assessments on insured deposits.
Annualized return on average assets was 1.04% during the first quarter
of 1996, compared to 1.07% during the first quarter of 1995. The annualized
return on average stockholders' equity was 12.95% in 1996, compared to 14.76%
during the first quarter of 1995.
MARKET AND DIVIDEND DATA
Delta paid an annual cash dividend of $2.00 per share in 1995, 1994, and
1993. There is no active market in Delta's stock. The infrequent trading that
does occur is in private transactions. Consequently, no information with
respect to the reported high and low bid prices is available. As of December
31, 1995, there were approximately 622 shareholders of record of Delta's common
stock.
ACQUISITION OF INVESTORS BANK AND TRUST
On November 13, 1992, Delta entered into a Purchase and Assumption
Agreement among the Federal Deposit Insurance Corporation, Receiver of
Investors Bank, Gretna, Louisiana, the FDIC and Delta. Pursuant to the
Agreement, Delta acquired from the FDIC the majority of the loans and certain
other assets, including without limitation short and long term securities and
other real estate, and assumed the deposits and certain other liabilities, of
Investors Bank. The aggregate consideration for the transaction was
$48,343,126, which amount included approximately $5,600,000 in assistance from
the FDIC. The assets received and the liabilities assumed by Delta were as
follows:
ASSETS
<TABLE>
<S> <C>
Cash and due from banks (including $5,600,000 in FDIC assistance) $ 9,615,525
Investment securities 5,649,472
Federal funds sold 4,609,899
Loans
Principal 26,462,843
Accrued Interest 136,934
Unearned Discount (135,123)
Buildings, furniture, fixture and equipment 1,494,934
Other real estate 992,233
Other assets 66,722
Discount on purchase (550,313)
------------
TOTAL $ 48,343,126
============
LIABILITIES
Demand deposits $12,643,706
Time deposits 35,627,165
Other liabilities 72,255
-----------
TOTAL $48,343,126
===========
</TABLE>
As a result of the acquisition, Delta has expanded its operations to
include four branch offices located in Jefferson Parish, Louisiana. The
acquisition impacted loan growth of Delta in fiscal 1992 by increasing loans by
approximately $26,000,000. Because the acquisition was consummated at the end
of the fiscal year, however, it did not significantly affect the earnings of
Delta in 1992.
58
<PAGE> 63
BUSINESS OF DELTA
PRINCIPAL BUSINESS
Delta is a banking association which was incorporated under the laws of the
State of Louisiana on April 15, 1955, and was licensed by the Louisiana
Commissioner and commenced operations as a state-chartered bank on January 4,
1956. Delta's business activities are conducted through Delta's main office
and its eight branch offices. See "--Properties." Delta employed, as of March
31, 1995, 146 persons full-time and seven persons part-time.
Delta is a commercial bank offering traditional commercial and consumer
banking services in Plaquemines, and Jefferson parish; however, Delta does not
offer trust services. As of March 31, 1996, Delta had total consolidated assets
of approximately $197 million, total deposits of approximately $175 million,
total net loans of approximately $90 million and shareholders equity of
approximately $16 million. Delta's executive offices are located at 8018
Highway 23, Belle Chasse, Louisiana 70037 and its telephone number at such
address is (504) 394-9595.
COMPETITIVE CONDITIONS
Delta has numerous competitors for the provision of depository institution
financial services from banks and savings and loan associations that are
domiciled in Plaquemines and Jefferson Parishes and in the five bordering
parishes (Orleans, St. Charles, St. Bernard, St. Tammany and Lafourche) in
which most of Delta's customers reside. Other competitors of Delta include
certain finance-related service organizations and non-traditional alternative
consumer investment vehicles, including consumer finance companies, commercial
finance companies, credit unions, money market funds, issuers of commercial
paper, and federal, state and municipal issuers of short-term obligations. Many
of these competitors are larger and have greater financial resources than
Delta.
PROPERTIES
Delta currently conducts all business activities through its nine branch
offices located in Plaquemines and Jefferson Parishes, Louisiana. The popular
names and addresses of these banking offices are as follows:
<TABLE>
<S> <C> <C> <C>
1. Main Office 2. Buras Branch
8018 Highway 23 36305 Highway 11
Belle Chasse, Louisiana 70037 Buras, Louisiana 70041
3. Gretna Branch 4. Lapalco Branch
2000 Belle Chasse Highway 3911 Lapalco Boulevard
Gretna, Louisiana 70056 Harvey, Louisiana 70058
5. Elmwood Branch 6. Port Sulphur Branch
5700 Citrus Boulevard, Suite K Highway 23
Harahan, Louisiana 70123 Port Sulphur, Louisiana 70083
7. Veterans Branch 8. River Ridge Branch
2200 Veterans Boulevard 8601 Jefferson Highway
Kenner, Louisiana 70062 River Ridge, Louisiana 70123
9. Venice Branch
42991 Highway 23
Venice, Louisiana 70091
</TABLE>
Delta owns the land and buildings of its Main Office, Buras, Gretna and
Lapalco Branches free of any encumbrances. Delta leases its six other branch
offices. Elmwood, Veterans, River Ridge, and Venice
60
<PAGE> 64
branches are leased from third parties. The Port Sulphur Branch is a land lease
only from a third party and Delta owns the building free of any encumbrances.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
As of January 15, 1996, no stockholders are known by Delta to own
beneficially more than 5% of Delta Common Stock, which is the only class of
voting securities outstanding.
The following table lists the 13 Directors of Delta and shows, as of
January 15, 1996, the age of each director and the number of shares of Delta
Common Stock beneficially owned by each Director and by Directors and Officers
of Delta, as a group.
<TABLE>
<CAPTION>
Number of Shares Beneficially Owned
at January 15, 1996
----------------------------------------------
Director Age Since Directly Indirectly % of Class
- --------- ---- ----- -------- ---------- ----------
<S> <C> <C>
Warren Burmaster 72 1978 800 488 <1%
Louis R. Chauvin 70 1984 1,982 798 <1%
Richard C. Ellzey 71 1972 4,724 0 1.26%
Numa C. Hero, Jr. 79 1984 1,200 0 <1%
Larry A. Johnson 55 1987 412 0 <1%
Edward Kurtich 51 1982 1,400 144 <1%
Arthur L. Lafrance 62 1983 436 0 <1%
Raymond P. Markase 69 1992 200 0 <1%
Leander H. Perez III 44 1978 9,376 5,830 4.06%
Thomas P. Popich 73 1978 16,091 1,440 4.68%
Robert E. Prest IV 54 1983 200 392 <1%
Howard H. Wilcox, Jr. 67 1967 608 0 <1%
Ernest D. Wooton 54 1985 200 0 <1%
All Directors & Officers as a group (16 persons) 46,724 12.48%
</TABLE>
PRINCIPAL STOCKHOLDERS
As of January 15, 1996, no stockholders are known by Delta to own
beneficially more than 5% of Delta Common Stock, which is the only class of
voting securities outstanding.
OFFICERS AND DIRECTORS
Directors. The following paragraphs identify the principal occupations of
each Director during the past five years, including the positions and offices
with Delta held by each Director and executive management. Except as otherwise
indicated, each Director has served for at least five years in the position
shown. No Director holds directorships in any other companies which are subject
to the reporting requirements under the Securities Exchange Act of 1934.
Mr. Burmaster is a Partner/Manager of Burmaster Tractor and Truck Service,
Inc., operator of heavy construction equipment, and of Burmaster Land &
Development, Inc., a real estate development company, both located in Belle
Chasse, Louisiana.
Mr. Chauvin is President of Chauvin Brothers Tractor Company, Belle Chasse,
Louisiana, which is engaged in the sale and service of tractors, marine engines
and farm equipment and, through its division, Chauvin Bros. Citrus Grove,
Nairn, Louisiana, in the sale of citrus.
<PAGE> 65
Mr. Ellzey is the President of Ellzey Marine Supplies, Inc., a marine
products supplier, located in Venice, Louisiana. Mr. Ellzey has served as
Chairman of the Board of Directors of Delta since November, 1988.
Mr. Hero is a Partner in both Numa C. Hero & Son and Wharves & Docks
Company and a director of Hero Lands Company, Hero Wall Company, and New City
Company, each of which is a real estate development company located in Belle
Chasse, Louisiana.
Mr. Johnson is a Pharmacist with J & P Drugs, Inc. in Buras, Louisiana for
which he serves as Secretary/Treasurer and Manager. He is also a Partner of J &
P Apartments of Buras, Louisiana, a real estate rental partnership, and a
Partner of Johnson's Boat Sheds, a dry storage boat rental partnership located
in Empire, Louisiana.
Mr. Kurtich is President of Eddie's Quality Oysters, Inc., a wholesale
oyster distributor, located in Port Sulphur, Louisiana.
Mr. Lafrance has been President of Lafrance Oyster Growers, Inc.,
Braithwaite, Louisiana since 1989. Prior to that time, Mr. Lafrance was
employed by the Plaquemines Parish Government as a Building Official in the
Department of Safety and Permits, as Superintendent of Sewerage District No. 2
and as Supervisor of the Parish Maintenance Department from 1960 to 1989.
Mr. Markase has served as President and Chief Executive Officer of Delta
since June, 1993. Prior to that time, he served as Executive Vice President of
Delta from 1989 to 1993. From 1981 to 1989, Mr. Markase served as Internal
Auditor of Delta.
Mr. Perez has served as Vice Chairman of the Board of Directors since
December, 1989. He was employed by Delta as Vice President from May, 1989 to
January, 1992 and Special Services Officer from January, 1982 to May, 1989.
Mr. Popich is the President of Offshore Shipyard, Inc., a marine repair
company, Venice Jo Boats, Inc., an operator of crew and supply boats both
located in Venice, Louisiana, and Popich Lands, Inc., a real estate development
company located in Belle Chasse, Louisiana, Popich Industries, Popich Brothers
Water Transport, Inc., a crew boat rental company and Diamond Barges, Inc., a
barge rental company, all located in Venice, Louisiana.
Mr. Prest is the President of Empire Machine Works, Inc., a marine repair
and supply business and is President of Plaquemines Wholesale Distributors,
Inc., a wholesale distribution company, both located in Empire, Louisiana.
Mr. Wilcox is retired as the Insurance Manager of Plaquemines Parish by the
Plaquemines Parish Government.
Mr. Wooton has been self-employed as a salesman since July, 1992. From
July, 1984 to July, 1992, Mr. Wooton served as Sheriff of Plaquemines Parish.
Principal Officers. The following table sets forth certain information, as
of March 23, 1995, concerning the principal officers of Delta, each of whom
serves at the pleasure of the Board of Directors of Delta. Information
concerning all positions and offices held by each such person with Delta is set
forth below. There are no arrangements or understandings relating to any
person's service or prospective service as a principal officer of Delta.
<TABLE>
<CAPTION>
Name Age Office Officer Since
----------------- --- ------------------------------------ -------------
<S> <C> <C> <C>
Raymond P. Markase 69 President 1981
</TABLE>
62
<PAGE> 66
<TABLE>
<S> <C> <C> <C>
Roger P. Solis 50 Sr. Vice President/Operations 1977
Bruce Rebar 47 Sr. Vice President/Lending 1982
Joseph A. Geeck 31 Sr. Vice President/Chief Financial Officer 1993
Karl J. Lepine 32 Assistant Vice President/Cashier 1993
</TABLE>
Business Experience. The following paragraphs identify all positions and
offices with Delta held by each of its principal officers.
Raymond P. Markase has been employed by Delta since 1981. From 1981 to
1989, he served as Internal Auditor; from May 1989 until August 1993, Mr.
Markase served as Executive Vice President-Administration of Delta; and since
August 1993, he has served as President and Chief Executive Officer of Delta.
Roger P. Solis has been employed by Delta since 1975. From 1985 to 1989,
Mr. Solis served as Vice President-Operations of Delta. From 1989 to 1992, he
served as Internal Auditor, and from 1992 until March 1993, he served as Vice
President-Operations. Mr. Solis has served as Senior Vice President-Operations
since March 1993.
Bruce Rebar has been employed by Delta since 1982 and served as Assistant
Vice President until 1988. From 1988 to May 1989, he served as Vice President
of Delta and since May 1989, Mr. Rebar has served as Senior Vice President of
Delta.
Joseph A. Geeck has been employed by Delta since March, 1992 and has served
as Senior Vice President and Chief Financial Officer since November 1993. Mr.
Geeck was employed by Security Homestead Association from September 1987 to
December 1989 and was employed by Landmark Land Company, Inc. from January 1990
to March 1992.
Karl J. Lepine has been employed by Delta since September 1985. Mr. Lepine
has served as Assistant Vice President of Delta since January 1993 and as
Cashier of Delta since March 1993.
EMPLOYEE BENEFIT PLANS
Pension Plan. Delta maintains a non-contributory defined-benefit plan which
covers all employees, including principal officers, who have at least one year
of service with Delta. Retirement benefits are based on the employee's highest
five consecutive year average compensation in an effort to minimize the effect
of inflation on employee benefits. The benefit formula excludes the one year
eligibility period. The benefit formula was changed during fiscal 1990 to
comply with the Tax Reform Act of 1986, which change was effective retroactive
to January 1, 1989.
The plan is integrated with Social Security such that it provides a benefit
to participants equal to 1.2% of average compensation of a participant,
multiplied by the participant's years of service, plus .5% of final average
compensation that is in excess of the participant's covered compensation for
Social Security purposes multiplied by years of service. The total number of
years of service to be considered is not to exceed 35 years. The plan provides
for early retirement provided the participant has attained age fifty-five and
completed twelve years of service. The retirement benefit would be reduced
actuarially for each year of service by which the early retirement date
precedes the normal retirement date. For the plan year ended December 31,
1995, aggregate contributions to the plan for covered employees were
approximately 6.00% of the total remuneration
63
<PAGE> 67
of those covered by the plan. The sum of contributions to the plan for the
fiscal year ended December 31, 1995 was $3,913 for Mr. Markase, and $8,450 for
the three remaining executive officers. As of December 31, 1995, Mr. Markase
had thirteen years of credited service under the Plan.
The following table reflects the retirement benefits a participant can
expect to receive at age 65 under Delta's defined-benefit plan, given the years
of service and the compensation levels indicated. Actual benefits will vary
depending on a participant's date of hire and year of birth.
ESTIMATED ANNUAL PENSION BENEFIT BASED ON SERVICE OF:
<TABLE>
<CAPTION>
Average Compensation:
At Age 65 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs. 35 Yrs. 40 Yrs. 45 Yrs.
--------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 25,000 $ 4,800 $ 6,400 $ 8,000 $ 9,600 $11,200 $11,200 $11,200
50,000 11,175 14,900 18,625 22,350 26,075 26,075 26,075
75,000 17,550 23,400 29,250 35,100 40,950 40,950 40,950
100,000 23,925 31,900 39,875 47,850 55,825 55,825 55,825
</TABLE>
Deferred Compensation Plans. As of September 1, 1982, Delta established two
Deferred Compensation Plans, one plan for all Directors and one plan for
certain principal officers. Under the terms of each Deferred Compensation Plan,
a participant executed an adoption agreement and agreed to defer a certain
portion of his or her salary, bonus or Director's fees, as the case may be.
Delta purchased life insurance policies covering each participant in the
respective Deferred Compensation Plans. A portion of the premium of those
policies was funded by the amounts of compensation deferred by the
participants, and the remainder was paid by Delta. All of the proceeds of these
policies are payable to Delta. Each of the Deferred Compensation Plans was
unfunded, and all benefits thereunder were to be paid only out of the general
assets of Delta. In 1991, the Deferred Compensation Plans were amended to
reduce the benefits payable thereunder, as a result of which, benefits payable
to many of the participants were to be phased out prior to their Normal
Retirement Date (as defined in the applicable Deferred Compensation Plan).
During the fiscal year ended December 31, 1993, in order to reduce its
non-interest expense and deferred compensation liability, Delta restructured
both of the Deferred Compensation Plans. As a result of the restructuring, most
participants in the Deferred Compensation Plans accepted a lump sum settlement
in exchange for relinquishing their respective rights to receive any future
retirement and/or death benefits under the applicable Deferred Compensation
Plan and/or the Split Dollar Plan (see "Split Dollar Plan" ). In connection
therewith, Delta paid such participants an aggregate of $965,056 to settle both
an aggregate accrued liability of $654,809 under the Deferred Compensation
Plans plus future funding requirements under the Split Dollar Plan (see "Split
Dollar Plan"). The remaining Director participants in the Deferred Compensation
Plans, who are either currently receiving benefits, or are to commence
receiving benefits in the near future, have had their benefits modified to
limit the maximum pay-out period to 15 years, to require a lump-sum
distribution to the estate of the participant upon his or her death and to
reduce the benefits payable to a surviving spouse if the participant
predeceases the surviving spouse.
In February, 1995 the Board of Directors terminated the Deferred
Compensation Plan for principal officers. In connection therewith, the
remaining participant was offered a single lump sum payment of $70,755 in
settlement his future benefits under the Deferred Compensation Plan. The
participant accepted the lump sum
64
<PAGE> 68
payment on May 16, 1995.
During the fiscal year ended December 31, 1995, Delta distributed an
aggregate of $216,751 to beneficiaries of deceased participants and
participants in the Plans who reached their Normal Retirement Date under the
Deferred Compensation Plans, including a distribution to Mr. Markase in the
amount of $18,072.
Split Dollar Plan. On March 12, 1991, as an alternative to the Deferred
Compensation Plans described above, and as a result of the 1991 amendments
reducing benefits thereunder, Delta instituted a series of split dollar
arrangements in which certain Directors and Principal Officers participated by
executing a Split Dollar Agreement with Delta. The Board of Directors
determined which Directors and Principal Officers participated in the
arrangements. Under the terms of the Split Dollar Agreements, each participant
purchased a life insurance policy on his or her life and designated a
beneficiary. Delta agreed to pay the premiums under each policy in full until
the participant reached his or her Normal Retirement Date, as defined in the
Agreement. Delta received a collateral assignment from each participant
pursuant to which the amount of all premiums paid by Delta on behalf of each
such participant will be repaid to Delta, in full, from the cash surrender
value of the policy.
During the fiscal year ended December 31, 1993, in conjunction with the
restructuring of the Deferred Compensation Plans and the settlement paid in
connection therewith, all but one of the Split Dollar Agreements were
terminated, and Delta obtained ownership of each of the life insurance policies
purchased in accordance therewith. Delta obtained ownership of the remaining
policies on May 25, 1995 and surrendered all split dollar policies for their
cash surrender value on May 25, 1995 and received $923,984. See "Deferred
Compensation Plans".
401K Plan. Delta adopted a defined contribution plan on April 1, 1995 and
it was made effective January 1, 1995. It is Delta's intent to have this plan
qualify under section 401 of the Internal Revenue Code of 1986, as amended. The
401k Plan covers all employees and officers, who have at least one year of
service with Delta and are at least 21 years of age. Delta as a Basic Matching
Contribution may contribute amounts equal to one hundred percent (100%) of each
Participant's Elective Contributions up to a maximum of three percent (3%) of
the Participant's Eligible Compensation. Delta may also contribute an
additional Profit-Sharing Contribution such as it deems appropriate.
For the plan year ended December 31, 1995, aggregate Bank Matching
Contributions to the plan for covered employees were approximately 1.99% of the
total remuneration of those covered by the 401k Plan. The sum of contributions
to the plan for the fiscal year ended December 31, 1995 was $0 for Mr. Markase,
and $4,773 for the three remaining Executive Officers.
INDEBTEDNESS OF MANAGEMENT
Delta has, from time to time, entered into loan transactions with certain
of its Directors and principal officers, and associates of those persons, and
Delta expects to enter into such loan transactions in the future. On January 1,
1995, such persons were indebted to Delta in the aggregate amount of
$2,748,591, which was the largest amount of their aggregate indebtedness to
Delta during the fiscal year ended December 31, 1995. All extensions of credit
to the Directors and principal officers of Delta or to any associate of such
persons, were made on substantially the same terms, including interest rates,
collateral and repayment terms, as those prevailing at the time for comparable
transactions with persons not affiliated with Delta, were made in the ordinary
course of business, and did not involve more than a normal risk of
collectability or present other unfavorable features. Moreover, the aggregate
amount of credit outstanding to a Director or principal officer of Delta,
together with such person's associates, at any time during the period January
1, 1995 through
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January 15, 1996, did not exceed 10% of the equity capital accounts of Delta at
the time.
Delta, during the fiscal year ended December 31, 1995, paid no overdrafts
on the checking accounts of its Directors or principal officers and associates
of such persons.
LEGAL PROCEEDINGS
Delta is not a party to, nor is any of its properties the subject of, any
material pending legal proceedings, other than ordinary, routine litigation
incidental to the business of Delta.
There are no family relationships between any principal officers of Delta.
No principal officer of Delta listed in Item 9(b) has been involved, during the
past five years, in any bankruptcy, criminal, or other similar proceeding.
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BUSINESS OF REGIONS
GENERAL
Regions is a regional bank holding company organized and existing under the
laws of the state of Delaware and headquartered in Birmingham, Alabama, with
approximately 353 banking offices located in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of March 31, 1996. At that date, Regions had total
consolidated assets of approximately $17.5 billion, total consolidated
deposits of approximately $14.2 billion, and total consolidated stockholders'
equity of approximately $1.5 billion. Regions operates banking subsidiaries in
Alabama, Florida, Georgia, Louisiana, and Tennessee and banking-related
subsidiaries engaged in mortgage banking, credit life insurance, and investment
brokerage activities with offices in various Southeastern states. Through its
subsidiaries, Regions offers a broad range of banking and banking-related
services.
The following table presents information about Regions' banking operations
in the states in which its subsidiary depository institutions are located,
based on March 31, 1996 information:
<TABLE>
<CAPTION>
NUMBER OF TOTAL TOTAL
BANKING OFFICES ASSETS DEPOSITS
--------------- ------ --------
(In thousands)
<S> <C> <C> <C>
Alabama . . . . . . 181 $10,717,943 $8,330,187
Florida . . . . . . 36 1,225,590 1,102,605
Georgia . . . . . . 71 3,569,536 2,995,178
Louisiana . . . . . 41 2,049,759 1,626,968
Tennessee . . . . . 24 485,584 433,493
</TABLE>
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' principal executive offices are located at 417
North 20th Street, Birmingham, Alabama 35203, and its telephone number at such
address is (205) 326-7100.
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."
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RECENT DEVELOPMENTS
Recent Acquisition. Since March 31, 1996, Regions has completed the
acquisition of First Federal Bank of Northwest Georgia, Federal Savings Bank,
located in Cedartown, Georgia, with total assets of approximately $90 million.
The consideration for this acquisition, which was accounted for as a pooling of
interests, consisted of Regions Common Stock having an approximate value on
the date of acquisition of $17.1 million.
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending three acquisitions in addition to
Delta, certain aspects of which transactions are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
-----------------------
ACCOUNTING
INSTITUTION ASSET SIZE VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
First Gwinnett Bancshares, Inc., located in $ 68 $ 13 Regions Purchase
Norcross, Georgia (the "First Gwinnett Acquisition") Common
Stock
American Bancshares of Houma, Inc., located in 88 17 Regions Purchase
Houma, Louisiana (the "Houma Acquisition") Common
Stock
Rockdale Community Bank, located in Conyers, 46 13 Regions Purchase
Georgia (the "Rockdale Acquisition") Common
Stock
-------- ------
Totals $ 202 $ 43
======== ======
</TABLE>
- --------------
(1) Computed as of the date of announcement of the transaction.
The First Gwinnett Acquisition, the Houma Acquisition, and the Rockdale
Acquisition are referred to in this Proxy Statement/Prospectus as the "Other
Pending Acquisitions." Consummation of the Other Pending Acquisitions is
subject to the approval of certain regulatory agencies, and of the stockholders
of the institutions to be acquired. Moreover, the closing of each transaction
is subject to various contractual conditions precedent. No assurance can be
given that the conditions precedent to consummating the transactions will be
satisfied in a manner that will result in their consummation.
Pro forma information giving effect to the Recent Acquisition described
above and the Other Pending Acquisitions are not considered material in
relation to Regions' financial condition and results of operations.
In connection with the Merger and the Other Pending Acquisitions, Regions
has announced that it may purchase, in the open market, some or all of the
shares of Regions Common Stock to be issued in such transactions. Regions
anticipates that it may purchase in the open market as much as approximately
1.8 million shares 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 , 1996, Regions had purchased, in
the open market, approximately shares of Regions Common Stock for an
aggregate purchase price of approximately $_____ to be issued in the Merger and
Other Pending Acquisitions.
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<PAGE> 72
CERTAIN REGULATORY CONSIDERATIONS
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 and Delta. Additional
information is available in Regions' Annual Report on Form 10-K for the fiscal
year ended December 31, 1995. See "Documents Incorporated by Reference."
GENERAL
Regions is a bank holding company registered with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") under the BHC Act. As such,
Regions and its non-bank subsidiaries are subject to the supervision,
examination, and reporting requirements of the BHC Act and the regulations of
the Federal Reserve. In addition Regions is also registered under the Home
Owners Loan Act with the OTS as a savings and loan holding company, and is
subject to regulation, supervision, examination, and reporting requirements of
the OTS.
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 any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require savings and loan holding
companies and other companies to obtain the prior approval of the OTS before
acquiring direct or indirect ownership or control of a savings association.
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, which is discussed below.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks
by bank holding companies, such that Regions, and any other bank holding
company located in Alabama may now acquire a bank located in any other state,
and any bank holding company located outside Alabama may lawfully acquire any
Alabama-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage, aging requirements, 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. As of the date of this Proxy Statement/Prospectus,
neither Alabama, Louisiana, nor any other state in which the banking
subsidiaries of Regions are located have "opted in" or "opted out." Assuming no
state action prior to June 1, 1997, Regions would be able to consolidate all of
its bank subsidiaries into a single bank with interstate branches following
that date.
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<PAGE> 73
The BHC Act generally prohibits Regions from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity
is permissible, the Federal Reserve must consider whether the performance of
such an activity reasonably can be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act
does not place territorial limitations on permissible non-banking activities of
bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a holding company or its subsidiaries to terminate any activity
or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that continuation of such activity or such
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company.
Each of the subsidiary depository institutions of Regions is a member of
the Federal Deposit Insurance Corporation (the "FDIC"), and as such, its
deposits are insured by the FDIC to the maximum extent provided by law. Each
such subsidiary 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.
The regulatory agencies having supervisory jurisdiction over Delta and
the subsidiary institutions of Regions (the FDIC and the applicable state
authority in the case of state-chartered nonmember banks, the OTS in the case
of federally chartered thrift institutions, the Federal Reserve in the case of
state-chartered member banks, and the Comptroller of the Currency (the "OCC")
in the case of national banks) regularly examine the operations of such
institutions and have authority to approve or disapprove mergers,
consolidations, the establishment of branches, and similar corporate actions.
Such regulatory agencies also have the power to prevent the continuance or
development of unsafe or unsound banking practices or other violations of law.
PAYMENT OF DIVIDENDS
Regions is a legal entity separate and distinct from its banking, thrift,
and other subsidiaries. The principal sources of cash flow of both Regions,
including cash flow to pay dividends to its stockholders, are dividends from
its subsidiary depository institutions. There are statutory and regulatory
limitations on the payment of dividends by these subsidiary depository
institutions to Regions, as well as by Regions to its stockholders.
As to the payment of dividends, Delta and all of Regions' state-chartered
banking subsidiaries are subject to the respective laws and regulations of the
state in which the bank is located, and to the regulations of the bank's
primary federal regulator. Regions' subsidiaries that are thrift institutions
are subject to the OTS' capital distributions regulation, and those that are
national banks are subject to the regulations of the OCC.
If, in the opinion of the federal banking regulatory agency, a depository
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
depository institution, could include the payment of dividends), such agency
may require, after notice and hearing, that such institution cease and desist
from such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level
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<PAGE> 74
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 agencies have issued policy statements which
provide that bank holding companies and insured banks should generally pay
dividends only out of current operating earnings.
At March 31, 1996, under dividend restrictions imposed under federal and
state laws, the subsidiary depository institutions of Regions, without
obtaining governmental approvals, could declare aggregate dividends to Regions
of approximately $205 million, and Delta, without obtaining governmental
approvals, could declare dividends to its stockholders of approximately $__.__.
The payment of dividends by Delta, Regions and Regions' subsidiary
depository institutions may also be affected or limited by other factors, such
as the requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Delta, Regions, and Regions' subsidiary depository institutions are
required to comply with the capital adequacy standards established by the
Federal Reserve in the case of Regions and the appropriate federal banking
regulator in the case of Delta and each of Regions' subsidiary depository
institutions. There are two basic measures of capital adequacy for bank holding
companies that have been promulgated by the Federal Reserve: a risk-based
measure and a leverage measure. All applicable capital standards must be
satisfied for a bank holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.
The minimum guideline for the ratio (the "Total Capital 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 comprise 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 ("Tier 2 Capital"). At March 31, 1996, Regions'
consolidated Total Capital Ratio and its Tier 1 Capital Ratio (i.e., the ratio
of Tier 1 Capital to risk-weighted assets) were 14.30% and 11.34%,
respectively, and Delta's Total Capital and Tier 1 Capital Ratios were 16.37%
and 15.31%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, 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' and Delta's respective Leverage Ratios at March 31, 1996, were
7.81% and 8.23%. 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
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<PAGE> 75
a "tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and
other indicia of capital strength in evaluating proposals for expansion or new
activities.
Delta and each of Regions' subsidiary depository institutions is subject to
risk-based and leverage capital requirements adopted by its federal banking
regulator, which are substantially similar to those adopted by the Federal
Reserve for bank holding companies. Each of the subsidiary depository
institutions was in compliance with applicable minimum capital requirements as
of March 31, 1996. Neither Delta, Regions, nor any of Regions' subsidiary
depository institutions has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank (or thrift) to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"--Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the OCC, and the FDIC have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
that 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. The OTS has already included an
interest-rate risk component in its risk-based capital guidelines for savings
associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions is expected to act as sources of
financial strength for, and to commit resources to support, each of its banking
subsidiaries. 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 its banking subsidiaries are
subordinate in right of payment to deposits and to certain other indebtedness
of such banks. 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 banking subsidiary will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(i) the default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to any commonly controlled
FDIC-insured depository institution "in danger of default." "Default" is
defined generally as the appointment of a conservator or receiver, and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of stockholders
of the insured depository institution or its holding company, but is
subordinate to claims of depositors, secured creditors, and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. The subsidiary depository institutions of Regions are
subject to these cross-guarantee provisions. As a result, any loss suffered by
the FDIC in respect of any of these subsidiaries would likely result in
assertion of the cross-guarantee provisions, the assessment of such estimated
losses against the depository institution's banking or thrift affiliates, and a
potential loss of Regions' investments in such other subsidiary depository
institutions.
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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 rules 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 or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches, or engaging in any new line of business, except in
accordance with an accepted capital restoration plan or with the approval of
the FDIC. In addition, the appropriate federal banking agency is given
authority with respect to any undercapitalized depository institution to take
any of the actions it is required to or may take with respect to a
significantly undercapitalized institution as described below if it determines
"that those actions are necessary to carry out the purpose" of FDICIA.
For those institutions that are 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
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non-bank 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.
At March 31, 1996, all of the subsidiary depository institutions of Regions
had the requisite capital levels to qualify as well capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, 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 replaced a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, as well as the
prior transitional system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates for members of both
the Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund
("SAIF") for the first half of 1995, as they had been during 1994, ranged from
23 basis points (0.23% of deposits) for an institution in the highest category
(i.e., "well capitalized" and "healthy") to 31 basis points (0.31% of deposits)
for an institution in the lowest category (i.e., "undercapitalized" and
"substantial supervisory concern"). These rates were established for both funds
to achieve a designated ratio of reserves to insured deposits (i.e., 1.25%)
within a specified period of time.
Once the designated ratio for the BIF was reached in May 1995, the FDIC was
authorized to reduce the minimum assessment rate below the 23 basis points and
to set future assessment rates at such levels that would maintain the fund's
reserve ratio at the designated level. In August 1995, the FDIC adopted final
regulations reducing the assessment rates for BIF-member banks. Under the
revised schedule, BIF-member banks, starting with the second half of 1995, will
pay assessments ranging from 4.0 basis points to 31 basis points, with an
average assessment rate of 4.5 basis points. Refunds with interest were paid
for assessments for the month(s) after the month in which the designated
reserve ratio for the BIF was reached. Subsequently, on November 14, 1995, the
FDIC announced that, beginning in 1996, it would further reduce the deposit
insurance premiums for 92% of all BIF members that are in the highest capital
and supervisory categories to $2,000 per
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year, regardless of deposit size. At the same time, the FDIC elected to retain
the existing assessment rate range of 23 to 31 basis points for SAIF members
for the foreseeable future given the undercapitalized nature of that insurance
fund.
By virtue of the BIF assessments being reduced, Regions' subsidiary banks
realized savings of approximately $7.9 million pre-tax, during the second half
of 1995, and anticipate annual savings of approximately $16.3 million pre-tax,
with respect to their deposits that are assessed at BIF rates. However, given
that approximately 28% of the total deposits of the Regions subsidiary banks as
of December 31, 1995 were (and are now being) assessed at the much higher SAIF
premium rates, Regions' subsidiary banks are now paying substantially more in
insurance premium costs than they would be if they did not hold any SAIF-
assessed deposits.
Recognizing that the disparity between the SAIF and BIF premium rates have
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, on July 28, 1995, the FDIC,
the Treasury Department, and the OTS released statements outlining a proposed
plan (the "Proposed Plan") to recapitalize the SAIF, certain features of which
were subsequently approved by the Banking Committees of the House of
Representatives and the Senate of the United States in bills that provided for
different resolutions of the BIF-SAIF disparity. Under the Proposed Plan, as
approved by the members of the Banking Committees of the House and Senate, all
SAIF-member institutions were to pay a special assessment to recapitalize the
SAIF, and the assessment base for the payments on the FICO bonds would have
been expanded to include the deposits of both BIF- and SAIF-insured
institutions. As a result of the SAIF becoming fully capitalized, it was
anticipated that insurance premium rates for SAIF members shortly thereafter
would have been reduced to the same levels as those currently paid by BIF
members.
The amount of the special assessment required to recapitalize the SAIF was
estimated to be approximately 78 to 85 basis points. Under the latest version
of the Proposed Plan, banks that had acquired SAIF-insured deposits would have
paid a special assessment of approximately 64 basis points - 20% less than
SAIF-member institutions. The special assessment would have been payable some
time in 1996 based on deposits held on March 31, 1995. If the applicable 85 and
64 point assessments had been assessed against the Subsidiary Banks' deposits
as of March 31, 1995, the Subsidiary Banks would have been required to pay an
aggregate special assessment of $26.0 million pre-tax. However, the special
assessments paid by the Subsidiary Banks would have been at least partially
offset by a reduction in insurance premiums paid if, as expected, the FDIC were
to have reduced SAIF premiums to BIF levels following payment of the special
assessment and recapitalization of the SAIF.
Congress adopted the Proposed Plan as part of a budget bill. However, in
December 1995, the President vetoed the balanced budget legislation passed by
Congress which included the proposed provisions of the Proposed Plan. With no
prospect of a budget agreement between the Administration and Congress, as well
as significant opposition to the Proposed Plan now coming from many BIF-insured
banks, the fate of the SAIF special assessment provisions of the legislation is
uncertain, and it now appears possible that a significant disparity between
SAIF and BIF insurance premium rates could continue to exist for some time.
In view of the legislative uncertainty that currently exist, it cannot be
predicted whether the Proposed Plan or any other legislative proposal will be
enacted as described above or, if enacted, the amount of any special SAIF
assessment, whether ongoing SAIF premiums will be reduced to a level equal to
that of BIF premiums, or whether such legislation, if enacted, may contain
other provisions, for example, requiring all federally-chartered thrifts to
convert to bank charters. A significant increase in SAIF insurance premiums,
either absolutely relative to BIF premiums, a significant one-time fee to
recapitalize the SAIF, or a significant tax
75
<PAGE> 79
liability associated with the recapture of the bad debt reserve could have a
potentially adverse effect on the operating expenses and results of operations
of the Registrant.
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
The FDIA, as amended by FDICIA and the Riegle Community Development and
Regulatory Improvement Act of 1994, requires the federal bank regulatory
agencies to prescribe standards, by regulations or guidelines, relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate risk exposure, asset growth,
asset quality, earnings, stock valuation and compensation, fees and benefits,
and such other operational and managerial standards as the agencies deem
appropriate. The federal bank regulatory agencies have adopted, effective
August 9, 1995, a set of guidelines prescribing safety and soundness standards
pursuant to FDICIA, as amended. The guidelines establish general standards
relating to internal controls and information systems, internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth
and compensation, fees, and benefits. In general, the guidelines require, among
other things, appropriate systems and practices to identify and manage the
risks and exposures specified in the guidelines. The guidelines prohibit
excessive compensation as an unsafe and unsound practice and describe
compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director, or principal stockholders. The federal banking agencies determined
that stock valuation standards were not appropriate. In addition, the agencies
adopted regulations that authorize, but do not require, an agency to order an
institution that has been given notice by an agency that it is not satisfying
any of such safety and soundness standards to submit a compliance plan. If,
after being so notified, an institution fails to submit an acceptable
compliance plan or fails in any material respect to implement an accepted
compliance plan or fails in any material respect to implement an accepted
compliance plan, the agency must issue an order directing action to correct the
deficiency and may issue an order directing other actions of the types to which
an undercapitalized association is subject under the "prompt corrective action"
provisions of FDICIA. See "--Prompt Corrective Action." If an institution fails
to comply with such an order, the agency may seek to enforce such order in
judicial proceedings and to impose civil money penalties. The federal bank
regulatory agencies also proposed guidelines for asset quality and earnings
standards.
DEPOSITOR PREFERENCE
The Omnibus Budget Reconciliation Act of 1993 provides that deposits and
certain claims for administrative expenses and employee compensation against an
insured depository institution would be afforded a priority over other general
unsecured claims against such an institution in the "liquidation or other
resolution" of such an institution by any receiver.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common Stock,
of which 62,185,402 shares were issued as of March 31, 1996, none of which were
held as treasury shares. 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
therefor. The ability of Regions to pay dividends is affected by the
76
<PAGE> 80
ability of its Subsidiary Institutions to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At March 31, 1996,
under such requirements and guidelines, Regions' subsidiary institutions had
$205 million of undivided profits legally available for the payment of
dividends. See "Certain Regulatory Considerations--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 May 1997. Under SEC rules, proposals of Regions stockholders
intended to be presented at that meeting must be received by Regions at its
principal executive offices no later than December 2, 1996, for consideration
by Regions for possible inclusion in such proxy materials.
EXPERTS
The consolidated financial statements and the supplemental consolidated
financial statements of Regions incorporated by reference in or appearing as an
exhibit to Region's Annual Report (Form 10-K) for the year ended December 31,
1995, have been audited by Ernst & Young LLP, independent auditors, for the
periods indicated in their reports thereon incorporated by reference or
included therein and incorporated herein by reference. Such consolidated
financial statements and supplemental consolidated financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Delta, included in this
Registration Statement, have been audited by Duplantier, Hrapmann, Hogan &
Maher, independent auditors, for the periods indicated in their report thereon
which is included herein. The financial statements audited by Duplantier,
Hrapmann, Hogan & Maher have been included herein 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 June 3, 1996, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 118,845 shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
77
<PAGE> 81
INDEX TO DELTA FINANCIAL STATEMENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
Consolidated Balance Sheets as of December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Condensed Consolidated Balance Sheet as of March 31, 1996 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . F-28
Condensed Consolidated Statements of Income (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
Condensed Consolidated Statements of Cash Flows (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-30
Notes to Unaudited Condensed Consolidated Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-31
</TABLE>
F-1
<PAGE> 82
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND
STOCKHOLDERS OF DELTA BANK & TRUST COMPANY
We have audited the consolidated statements of financial condition of
Delta Bank and Trust Company and subsidiary as of December 31, 1995 and 1994
and the related consolidated statements of income, changes in capital accounts
and cash flows for each of the years in the three year period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Delta Bank & Trust
Company and its wholly-owned subsidiary, Delta Holding Company, Inc., as of
December 31, 1995 and 1994, and the results of their operations and cash flows
for each of the years in the three year period ended December 31, 1995 in
conformity with generally accepted accounting principles.
As discussed in Note 9 to the financial statements, the Bank changed
its method of computing income taxes in 1993. As discussed in Note 2 to the
financial statements, the Bank changed its method of computing the carrying
value of investment securities in 1993.
JANUARY 19, 1996 DUPLANTIER, HRAPMANN, HOGAN & MAHER
F-2
<PAGE> 83
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
------
Cash and Due from Banks (including reserve requirements
of $2,305 and $2,981 in 1995 and 1994,
respectively) (Notes 1 and 2) . . . . . . . . . . . . . . . . . $ 19,150 $ 14,642
Federal Funds Sold . . . . . . . . . . . . . . . . . . . . . . . 1,150 8,725
Interest-bearing Deposits in Other
Financial Institutions . . . . . . . . . . . . . . . . . . . . 0 0
Total Cash and Cash Equivalents . . . . . . . . . . . . . . . . . 20,300 23,367
Investment Securities (Notes 1 and 2):
Securities Held to Maturity . . . . . . . . . . . . . . . . . . 50,058 71,229
Securities Available for Sale . . . . . . . . . . . . . . . . . 35,247 23,863
Total Investment Securities . . . . . . . . . . . . . . . . . . 85,305 95,092
Loans (Notes 1 and 3) . . . . . . . . . . . . . . . . . . . . . . 89,767 85,238
Less:
Allowance for Possible Loan Losses (Notes 1 and 3) . . . . . 1,046 1,585
Deferred Loan Fees . . . . . . . . . . . . . . . . . . . . . 0 0
Net Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,721 83,653
Net Premises and Equipment (Notes 1 and 5) . . . . . . . . . . . 5,025 5,456
Other Assets:
Deferred Income Tax Benefit (Notes 1 and 9) . . . . . . . . . . 701 671
Deferred Income Tax Benefit on Unrealized Losses
on Securities (Notes 1 and 9) . . . . . . . . . . . . . . . . (72) 234
Organization Costs . . . . . . . . . . . . . . . . . . . . . . 0 0
Other Real Estate . . . . . . . . . . . . . . . . . . . . . . . 432 1,270
Other Assets (Notes 1, 4 and 9) . . . . . . . . . . . . . . . 5,496 3,073
Total Other Assets . . . . . . . . . . . . . . . . . . . . . . 6,557 5,248
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $205,908 $212,816
</TABLE>
SEE NOTES ACCOMPANYING DELTA FINANCIAL STATEMENTS
F-3
<PAGE> 84
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits:
Noninterest-bearing Deposits . . . . . . . . . . . . . . . . $ 41,382 $ 44,658
Interest-bearing Deposits (Note 13) . . . . . . . . . . . . . 140,828 145,944
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . 182,210 190,602
Short-term debt (Note 7) . . . . . . . . . . . . . . . . . . . 3,897 4,750
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . 3,632 2,791
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . 189,739 198,143
COMMITMENTS (Note 11)
Unused Lines of Credit . . . . . . . . . . . . . . . . . . . . 16,318 13,764
Standby Letters of Credit . . . . . . . . . . . . . . . . . . . 1,051 1,084
Purchase of Securities . . . . . . . . . . . . . . . . . . . . 344 0
SHAREHOLDERS' EQUITY:
Common Stock - $5 Par Value; 1,000,000 Shares
Authorized; 374,420 and 374,420 Shares Issued and
Outstanding for 1995 and 1994, respectively . . . . . . . . . 1,872 1,872
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,064 4,064
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . 10,094 9,190
Unrealized Gains (Losses) on Securities Available for
Sale, Net of Applicable Income Taxes (Note 2) . . . . . . . . 139 (453)
Less Treasury Stock, 0 Shares, at Cost . . . . . . . . 0 0
Total Shareholders' Equity . . . . . . . . . . . . . . . . 16,169 14,673
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . $205,908 $212,816
</TABLE>
SEE NOTES ACCOMPANYING DELTA FINANCIAL STATEMENTS
F-4
<PAGE> 85
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME:
Loans, Including Fees (Note 1) . . . . . . . . . . . . . . $ 9,325 $ 8,495 $ 9,205
Interest-bearing Deposits in Other Financial Institutions . 0 0 0
Investment Securities (Note 1) . . . . . . . . . . . . . . 4,947 4,754 4,146
Federal Funds Sold . . . . . . . . . . . . . . . . . . . . 313 356 262
Total Interest Income . . . . . . . . . . . . . . . . . . . 14,585 13,605 13,613
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 4,674 3,938 3,948
Short-term Borrowings . . . . . . . . . . . . . . . . . . . 210 91 0
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . 9,701 9,576 9,665
PROVISION FOR POSSIBLE LOAN LOSSES . . . . . . . . . . . . . 0 405 620
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES . . . . . . . . . . . . . . . . . 9,701 9,171 9,045
NONINTEREST INCOME:
Service Charges on Deposit Accounts . . . . . . . . . . . . 1,566 1,558 1,715
Gain on Sale of Investment Securities . . . . . . . . . . . 7 (60) 58
Other Operating Income . . . . . . . . . . . . . . . . . . 383 336 325
Total Noninterest Income . . . . . . . . . . . . . . . . . 1,956 1,834 2,098
NONINTEREST EXPENSE (NOTE 1):
Salaries and Employee Benefits (Note 6) . . . . . . . . . . 4,387 4,535 4,624
Net Occupancy and Equipment Expense . . . . . . . . . . . . 957 948 943
Amortization of Organization Costs . . . . . . . . . . . . 0 0 0
Other Operating Expenses (Note 14) . . . . . . . . . . . . 3,873 3,401 3,619
Total Noninterest Expense . . . . . . . . . . . . . . . . . 9,217 8,884 9,186
INCOME BEFORE INCOME TAXES AND ADJUSTMENT . . . . . . . . . . 2,440 2,121 1,957
INCOME TAXES (Notes 1 and 9):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . 817 480 507
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . (30) 55 30
Net Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 787 535 537
INCOME BEFORE CUMULATIVE EFFECT ADJUSTMENT . . . . . . . . . 1,653 1,586 1,420
CUMULATIVE EFFECT ADJUSTMENT, FOR THE
CHANGE IN INCOME TAX ACCOUNTING (Note 9) . . . . . . . . . 0 0 (151)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,653 $ 1,586 $ 1,269
EARNINGS PER SHARE (Note 1):
BEFORE CUMULATIVE EFFECT ADJUSTMENT . . . . . . . . . . . . $ 4.42 $ 4.24 $ 3.79
CUMULATIVE EFFECT OF ADJUSTMENT FOR THE CHANGE
IN INCOME TAX ACCOUNTING . . . . . . . . . . . . . . . . . 0 0 (.40)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 4.42 $ 4.24 $ 3.39
</TABLE>
SEE NOTES ACCOMPANYING DELTA FINANCIAL STATEMENTS
F-5
<PAGE> 86
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
Unrealized Gain
Common Retained Treasury (Loss) on
Stock Surplus Earnings Stock Securities Total
----- ------- -------- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1992 $ 1,872 $ 4,064 $ 7,833 $ 0 $ 0 $ 13,769
Dividends Paid (749) (749)
Net Income as Originally Reported 1,420 1,420
Cumulative Effect
Adjustment Due to SFAS 109 (151) (151)
Change in Unrealize Gain (Loss) 12 12
Balance - December 31, 1993 1,872 4,064 8,353 0 12 14,301
Dividend Distributions 0
Dividends Paid (749) (749)
Net Income 1,586 1,586
Change in Unrealize Gain (Loss) (465) (465)
Balance - December 31, 1994 1,872 4,064 9,190 0 (453) 4,673
Prior Period Adjustment -
Refund on Income Tax Over-
statement
Shares Purchased and Retired 0
Dividends Paid (749) (749)
Net Income 1,653 1,653
Change in Unrealized Gain (Loss) 592 592
Balance - December 31, 1995 $ 1,872 $ 4,064 $ 10,094 $ 0 $ 139 $ 16,169
</TABLE>
SEE NOTES ACCOMPANYING DELTA FINANCIAL STATEMENTS
F-6
<PAGE> 87
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,653 $ 1,586 $ 1,269
Adjustments to reconcile Net Income to Net Cash
Provided by Operating Activities:
Cumulative Effect of a Change in Accounting Principles 0 0 151
Provision for Possible Losses . . . . . . . . . . . . . . 0 405 620
Deferred Taxes . . . . . . . . . . . . . . . . . . . . . (30) 55 30
(Gain) Loss on Sale of Securities . . . . . . . . . . . (7) 60 (58)
Loss on Disposal of Proeprty and Equipment . . . . . . . 1 62 35
Depreciation . . . . . . . . . . . . . . . . . . . . . . 572 581 483
Amortization (Accretion), Net . . . . . . . . . . . . . . (37) (219) 150
(Increase) Decrease in Other Assets . . . . . . . . . . . (2,453) 2,415 911
(Increase) Decrease in other Real Estate . . . . . . . . 831 (604) 485
Increase (Decrease) in Other Liabilities . . . . . . . . 841 (48) (448)
Net Cash Provided by Operating Activities . . . . . . . . . . 1,371 4,293 3,628
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Increase in Loans to customers . . . . . . . . . . . . . (5,028) 356 5,642
Proceeds from Sale of Investment Securities
Available for Sale . . . . . . . . . . . . . . . . . . . 13,471 6,478 0
Proceeds from Maturities of Investment Securities
Held to Maturity . . . . . . . . . . . . . . . . . . . . 29,971 29,943 29,931
Proceeds from Maturities of Investment Securities
Available for Sale . . . . . . . . . . . . . . . . . . . 1,000 19,912 1,000
Purchases of Investment Securities Held to Maturity . . . . (21,466) (33,741) (51,557)
Purchases of Investment Securities Available for sale . . . (12,249) (31,688) 0
Purchases of Property and Equipment . . . . . . . . . . . . (143) (158) (1,495)
Proceeds from Sale of Property and Equipment . . . . . . . . 0 14 19
Net Cash Provided (Used) in Investing Activities . . . . . . . 5,556 (8,884) (16,460)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Demand Deposits
NOW Accounts and Savings Accounts . . . . . . . . . . . . (11,847) 4,693 10,018
Net Increase (Decrease) in Certificates of Deposits . . . . 3,455 (1,633) (1,391)
Net Incease (Decrease) Short-term Borrowings . . . . . . . . (853) 4,750 0
Dividend Paid . . . . . . . . . . . . . . . . . . . . . . . (749) (749) (655)
Net Cash Provided (Used) by Financing Activities . . . . . . . (9,994) 7,061 7,972
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . (3,067) 2,470 (4,860)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR . . . . . . . . 23,367 20,897 25,757
CASH AND CASH EQUIVALENTS - END OF YEAR . . . . . . . . . . . $ 20,300 $ 23,367 $ 20,897
</TABLE>
SEE NOTES ACCOMPANYING DELTA FINANCIAL STATEMENTS
F-7
<PAGE> 88
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accounting policies followed by Delta Bank and Trust Company (the
Bank) and their methods of application conform with generally accepted
accounting principles, consistently applied and generally practiced within the
banking industry. Situations and principles which significantly affect the
determination of the Bank's financial position, cash flows, or results of
operations are summarized below:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Bank
and its wholly-owned subsidiary, Delta Holding Company, Inc. All significant
intercompany balances and transactions have been eliminated.
INCOME AND EXPENSES:
Income and expenses of the Bank are generally recognized in the
accompanying statement under the accrual method. Unearned income on discount
basis loans is recognized as income under the "Rule of 78's", which
approximates the interest method.
INVESTMENT SECURITIES:
Investments for which the Bank has the positive intent and ability to
hold-to-maturity are classified as held- to-maturity and reported at amortized
cost. Gains and losses, which are determined using specific costs, are
recognized in the accounts upon realization or at such time as management
determines that a permanent decline in value has occurred.
All other securities of the Bank are classified as available-for-sale
and reported at fair value. Unrealized gains and losses are not included in
earnings of the Bank but are reported as a separate component of stockholders'
equity until realized.
The bank has in the past purchased "step-up" and "floating" rate
securities when management determined, based on market conditions and other
external factors, that these type securities were favorable investment
opportunities. These securities experience interest rate fluctuations based on
a specified indices or previously contracted rates. These securities are
classified in either the held-to-maturity (amortized cost) or the
available-for-sale (market value) categories. Gains or losses are realized
upon the sale of these securities.
Premiums and discounts on all investment securities are amortized
(deducted) and accredited (added), respectively, to interest income on
investment securities using the interest method over the period to maturity of
the related securities.
STATEMENT OF CASH FLOWS:
As required by generally accepted accounting principles the financial
statements include a statement of cash flows showing cash provided and used by
operating, investment, and financing activities.
For purposes of implementing the cash flow statement, the Bank has
defined cash equivalents as those amounts included in the balance sheet caption
as "Cash and Due from Banks" and "Federal Funds Sold."
F-8
<PAGE> 89
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: - Continued
The Bank paid interest and income taxes as follows:
<TABLE>
<CAPTION>
INTEREST INCOME TAXES
<S> <C> <C>
1995 $4,783,069 $ 997,104
1994 3,994,410 341,910
1993 4,057,516 885,000
</TABLE>
The Bank had the following non-cash investing activities:
<TABLE>
<CAPTION>
LOANS FORECLOSED AND
TRANSFERRED TO REAL ESTATE
OWNED AND OTHER ASSETS
<S> <C>
1995 $ 159,608
1994 1,458,877
1993 301,229
</TABLE>
The Bank had non-cash financing activities as follows:
<TABLE>
<CAPTION>
DIVIDENDS PAYABLE
<S> <C>
1995 $748,840
1994 748,840
1993 748,840
</TABLE>
BANK PREMISES AND EQUIPMENT:
Bank premises and equipment are stated at cost less accumulated
depreciation. Provisions for depreciation included in operating expenses were
computed primarily on the straight-line basis with the exception of the Belle
Chasse building for which depreciation is computed on the declining balance
basis.
EARNINGS PER SHARE:
Earnings per share are computed by dividing net income by the weighted
average of common shares outstanding during the period.
F-9
<PAGE> 90
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: - Continued
LOANS AND RESERVE FOR LOAN LOSSES:
Loans are stated at the amount of unpaid principal, reduced by
unearned discount and reserve for loan losses. The reserve for loan losses is
established through a provision for loan losses charged to expenses. Loans are
charged against the reserve for loan losses when management believes that the
collectibility of the principal is unlikely. The reserve is an amount that
management believes will be adequate to absorb possible losses on existing
loans that may become uncollectible, based on evaluations of the collectibility
of loans. The evaluations take into consideration several factors,
including: 1) Analytical reviews of loan loss experience in relation to
outstanding loans and an estimate of loan loss recoveries based on experience
to determine an adequate allowance for loan losses required for outstanding
loans;
2) Changes in the nature of the loan portfolio;
3) Continuing review of problem loans and overall portfolio quality;
4) Management judgement with respect to current and expected economic
conditions and their impact on the existing loan portfolio.
Accrual of interest is discontinued on a loan when management
believes, after considering economic and business conditions and collection
efforts, that the borrower's financial condition is such that collection of
interest is doubtful.
INCOME TAXES:
The Bank and its wholly-owned subsidiary file a consolidated federal
income tax return. Deferred income taxes result primarily from temporary
differences between financial and tax reporting. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
CONCENTRATION OF CREDIT RISK:
The majority of the Bank's lending activities are with customers
located within Plaquemines, Jefferson and surrounding parishes. The Bank
assesses the credit risk associated with lending activities using policies
formulated by management. The Bank evaluates the creditworthiness of the
borrower, fair value of collateral, and nature and size of the loan in
extending credit for secured loans. In extending credit for unsecured loans,
the Bank evaluates the creditworthiness of the borrower and nature and size of
the loan.
The Bank's cash on deposit with other financial institutions does at
times exceed the amount insured by the Federal Deposit Insurance Corporation
(FDIC). The Bank monitors accordingly, the credit worthiness of all banks
where accounts are maintained.
F-10
<PAGE> 91
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: - CONTINUED
DISCLOSURES OF FAIR VALUE OF FINANCIAL INSTRUMENTS:
Generally accepted accounting principles require the disclosure of
fair value of financial instruments for which it is considered practicable to
estimate fair value. The Bank used the following methodology to compute fair
value:
1) Quoted market price, if available.
2) Quoted market price of a financial instrument with similar characteristics
if quoted market price is not available.
3) Present value of estimated future cash flows, using a discount rate
estimated to be commensurate with the risks involved, if both quoted market
price and quoted market price of a financial instrument with similar
characteristics are not available.
4) The amounts reported in the financial statements for short-term financial
instruments including cash and due from banks, Federal Funds sold, Demand
Deposits, savings accounts, money market deposit accounts, and securities sold
under agreement to repurchase.
FORECLOSED ASSETS:
Foreclosed assets include real estate owned and other collateral
acquired upon default of loans. Foreclosed assets are recorded at the lower of
the balance of the loan plus related acquisition costs, or the estimated fair
value of the property acquired. A valuation reserve for foreclosed assets is
maintained by charges to operations, and is reported netted against other real
estate balance.
ADVERTISING:
The bank's policy is to expense all advertising fees incurred. Total
expense charged against income amounted to $161,022, $169,008, and $154,362 for
the years ending December 31, 1995, 1994, and 1993 respectively.
MANAGEMENT'S ESTIMATES AND ASSUMPTIONS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates; however,
management does not think that these differences will have a material adverse
effect on its consolidated financial statements.
F-11
<PAGE> 92
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
2. INVESTMENT SECURITIES:
<TABLE>
<CAPTION>
1995 AMORTIZED COST UNREALIZED UNREALIZED MARKET
INVESTMENTS HELD TO MATURITY (CARRYING VALUE) GAIN LOSS VALUE
- ---------------------------- ---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
U. S. Treasury Securities:
Maturing within one year $ 13,096,550 $ 37,697 $ 9,877 $ 13,124,370
Maturing after one year but within five years 6,557,090 107,973 0 6,665,063
------------ --------- --------- ------------
19,653,640 145,670 9,877 19,789,433
Federal Agency Securities:
Maturing within one year 7,927,148 14,277 7,224 7,934,201
Maturing after one year but within five years 11,995,615 303,498 36,456 12,262,657
------------ --------- --------- ------------
19,922,763 317,775 43,680 20,196,858
Obligations of states and political subdivisions:
Maturing within one year 1,647,899 8,624 477 1,656,046
Maturing after one year but within five years 4,224,586 63,970 9,585 4,278,971
Maturing after five years but within ten years 4,509,281 128,787 3,865 4,634,203
------------ --------- --------- ------------
10,381,766 201,381 13,927 10,569,220
Other securities:
Maturing after one year but within five years 100,000 0 0 100,000
------------ --------- --------- ------------
100,000 0 0 100,000
Total Investments Held To Maturity $ 50,058,169 $ 664,826 $ 67,484 $ 50,655,511
============ ========= ========= ============
<CAPTION>
MARKET VALUE
1995 UNREALIZED UNREALIZED (CARRYING
INVESTMENTS AVAILABLE FOR SALE AMORTIZED COST GAIN LOSS VALUE)
- ------------------------------ -------------- ---------- ---------- -------------
U.S. Treasury Securities:
Maturing within one year $ 7,998,348 $ 69,152 $ 0 $ 8,067,500
Maturing after one year but within five years 2,004,200 31,425 0 2,035,625
------------ --------- --------- ------------
10,002,548 100,577 0 10,103,125
Federal Agency Securities:
Maturing within one year 3,999,900 18,850 6,875 4,011,875
Maturing after one year but within five years 17,332,352 120,300 90,347 17,362,305
Maturing after five years but within ten years 1,090,892 7,297 0 1,098,189
------------ --------- --------- ------------
22,423,144 146,447 97,222 22,472,369
Obligations of states and political subdivisions:
Maturing after one year but within five years 529,632 10,745 0 540,377
Maturing after five years but within ten years 861,328 27,208 0 888,536
------------ --------- --------- ------------
1,390,960 37,953 0 1,428,913
Other securities:
Maturing after one year but within five years 1,219,741 26,017 3,102 1,242,656
------------ --------- --------- ------------
1,219,741 26,017 3,102 1,242,656
Total Investments Available for Sale $ 35,036,393 $ 310,994 $ 100,324 $ 35,247,063
============ ========= ========= ============
</TABLE>
F-12
<PAGE> 93
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
2. INVESTMENT SECURITIES: -Continued
<TABLE>
<CAPTION>
1994 AMORTIZED COST UNREALIZED UNREALIZED MARKET
INVESTMENT HELD TO MATURITY (CARRYING VALUE) GAIN LOSS VALUE
- --------------------------- ---------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
U. S. Treasury Securities:
Maturing within one year $ 12,815,154 $ 413 $ 185,942 $ 12,629,625
Maturing after one year but within five years 13,271,248 0 480,061 12,791,187
------------ --------- ----------- ------------
26,086,402 413 666,003 25,420,812
Federal Agency Securities:
Maturing within one year 6,005,378 6,019 245,147 5,766,250
Maturing after one year but within five years 25,650,848 19,855 897,632 24,773,071
Maturing after ten years 1,000,000 3,750 0 1,003,750
------------ --------- ----------- ------------
32,656,226 29,624 1,142,779 31,543,071
Obligations of states and political subdivisions:
Maturing within one year 1,515,850 7,389 1,927 1,521,312
Maturing after one year but within five years 4,226,110 19,609 100,170 4,145,549
Maturing after five years but within ten years 6,398,887 3,056 279,926 6,122,017
------------ --------- ----------- ------------
12,140,847 30,054 382,023 11,788,878
Other securities:
Maturing within one year 100,000 906 0 100,906
Maturing after one year but within five years 245,550 0 12,972 232,578
------------ --------- ----------- ------------
345,550 906 12,972 333,484
Total Investments Held To Maturity $ 71,229,025 $ 60,997 $ 2,203,777 $ 69,086,245
============ ========= =========== ============
<CAPTION>
MARKET VALUE
1994 UNREALIZED UNREALIZED (CARRYING
INVESTMENTS AVAILABLE FOR SALE AMORTIZED COST GAIN LOSS VALUE)
- ------------------------------ -------------- ---------- ----------- -------------
U.S. Treasury Securities:
Maturing within one year $ 1,000,511 $ 0 $ 29,574 $ 970,937
Maturing after one year but within five years 17,965,411 0 346,973 17,618,438
------------ --------- ----------- ------------
18,965,922 0 376,547 18,589,375
Federal Agency Securities:
Maturing after one year but within five years 5,453,019 0 306,925 5,146,094
Maturing after five years but within ten years 130,086 0 3,057 127,029
------------ --------- ----------- ------------
5,583,105 0 309,982 5,273,123
Total Investments Available for Sale $ 24,549,027 $ 0 $ 686,529 $ 23,862,498
============ ========= =========== ============
</TABLE>
Securities pledged to secure deposits of customers or sold under repurchase
agreements as of December 31, 1995, totalled $36,116,753 amortized cost
(carrying value) and $36,505,297 market value in the held-to-maturity category
and $19,240,042 amortized cost and $19,344,235 market value (carrying value) in
the available-for-sale category. Securities pledged to secure deposits of
customers as of December 31, 1994 totalled $52,033,905 (carrying value) and
$50,550,843 market value in the held-to-maturity category and $10,950,728
amortized cost and $11,681,563 market value (carrying value) in the
available-for-sale category.
F-13
<PAGE> 94
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
2. INVESTMENT SECURITIES: -Continued
Bonds issued by various agencies of Plaquemines Parish totalled
$6,695,266 carrying value and $6,782.565 market value as of December 31, 1995,
and $7,400,000 carrying value and $7,125,366 market value as of December 31,
1994.
As of December 31, 1993, the Bank adopted Statement of Financial
Accounting Standard No. 115 on accounting for certain investment securities.
This statement requires investment securities to be classified into one of the
following categories: held-to-maturity, available-for-sale, or trading.
Investment securities classified as held-to-maturity are measured at amortized
cost while investment securities classified as available-for-sale or trading
are measured at fair value. The effect of this change in accounting principle
is reflected in the "Capital" section of the Statement of Financial Condition
as an unrealized gain on investment securities available for sale of $12,484.
The change had no effect on prior years; therefore, proforma results for prior
years are not applicable. As allowed by the Financial Accounting Standards
Board, the Bank transferred securities totalling $12,702,288 amortized cost
with a $12,701,968 market value from held-to-maturity to available-for-sale on
December 11, 1995 resulting in a $320 unrealized loss charged to capital.
Because of a decrease in the credit worthiness of the bond issuer, an
investment with an amortized cost of $246,030 was sold from the
held-to-maturity category in 1995 resulting in a gain of $9,613.
F-14
<PAGE> 95
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
3. LOANS:
The Bank's loan portfolio consisted of the following on December 31:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Real estate loans $ 56,636,948 $ 58,167,034
Commercial and industrial loans 19,441,751 16,577,564
Loans to individuals 14,211,900 11,093,104
All other loans 344,264 248,642
------------- -------------
90,634,863 86,086,344
Unearned discount (867,501) (848,270)
------------- -------------
TOTAL LOANS $ 89,767,362 $ 85,238,074
============= =============
</TABLE>
Loans on which the accrual of interest had been discontinued are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Amount of loans on non-accrual $ 791,484 $ 1,549,531 $ 3,732,489
Interest income had the loans been on an accrual basis 113,318 167,404 398,583
Interest income recorded when received 99,642 129,750 36,257
</TABLE>
<TABLE>
<CAPTION>
90 DAY AND OVER
PAST DUE LOANS NON-ACCRUAL LOANS
---------------------------- ---------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Real estate loans $ 151,664 $ 37,966 $ 583,937 $ 1,061,167
Installment loans 77,238 31,907 79,189 86,345
Commercial loans 188,041 1,739 128,358 402,019
----------- ----------- ----------- -----------
$ 416,943 $ 71,612 $ 791,484 $ 1,549,531
=========== =========== =========== ===========
</TABLE>
F-15
<PAGE> 96
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
3. LOANS: -Continued
In the normal course of business, the Bank will sometimes agree to modify the
terms of loans for customers who are in need of temporary financial
restructuring in order to avoid foreclosure and repossession proceedings.
Analysis of such restructuring of loans is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Amounts of loans restructured $1,125,117 $ 2,608,126 $ 2,607,605
Interest income had the terms not been modified 113,307 304,477 335,456
Interest income included in operations
based upon the modified terms 110,281 233,891 266,553
</TABLE>
The following information relates to impaired loans for 1995; which are
included with the restructure loans:
<TABLE>
<CAPTION>
1995
----------
<S> <C>
Amount of impaired loans at year end, all of which
have an allowance for loss $ 134,786
Allowance for impaired loans 11,656
Average balance of impaired loans during the year 136,879
Interest income recognized during the year 10,877
Interest that would have been collected during the year under original terms 11,125
Commitments to lend additional funds to impaired borrowers 0
</TABLE>
Interest income for impaired loans is recognized using the interest method.
The maturity and rate sensitivity schedule of the loan portfolio is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------
WITHIN ONE TO AFTER
ONE YEAR FIVE YEARS FIVE YEARS TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Real estate loans $ 10,409,705 $ 24,944,901 $ 21,282,342 $ 56,636,948
Commercial loans 3,943,475 13,406,230 2,092,046 19,441,751
All other loans 3,757,190 9,836,007 962,967 14,556,164
------------ ------------ ------------ ------------
TOTALS $ 18,110,370 $ 48,187,138 $ 24,337,355 $ 90,634,863
============ ============ ============ ============
Predetermined rate $ 12,714,083 $ 28,383,571 $ 1,612,665 $ 42,710,319
Variable rate 5,396,287 19,803,567 22,724,690 47,924,544
------------ ------------ ------------ ------------
TOTALS $ 18,110,370 $ 48,187,138 $ 24,337,355 $ 90,634,863
============ ============ ============ ============
</TABLE>
F-16
<PAGE> 97
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
3. LOANS: -Continued
<TABLE>
<CAPTION>
DECEMBER 31, 1994
----------------------------------------------
WITHIN ONE TO AFTER
ONE YEAR FIVE YEARS FIVE YEARS TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Real estate loans $ 24,219,604 $ 17,540,422 $ 16,407,008 $ 58,167,034
Commercial loans 9,439,814 5,983,367 1,154,383 16,577,564
All other loans 3,482,747 7,050,939 808,060 11,341,746
------------ ------------ ------------ ------------
TOTALS $ 37,142,165 $ 30,574,728 $ 18,369,451 $ 86,086,344
============ ============ ============ ============
Predetermined rate $ 22,571,212 $ 21,203,052 $ 2,269,315 $ 46,043,579
Variable rate 14,570,953 9,371,676 16,100,136 40,042,765
------------ ------------ ------------ ------------
TOTALS $ 37,142,165 $ 30,574,728 $ 18,369,451 $ 86,086,344
============ ============ ============ ============
</TABLE>
The following is an analysis of the Loan Loss Reserve as of December 31:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Beginning Loan Loss Reserve $ 1,585,430 $ 1,455,518 $ 1,810,609
Loans charged off (635,276) (424,445) (1,251,045)
Recoveries of loans previously charged off 95,730 149,357 275,954
Provision from earnings 0 405,000 620,000
----------- ----------- -----------
ENDING LOAN LOSS RESERVE $ 1,045,884 $ 1,585,430 $ 1,455,518
=========== =========== ===========
</TABLE>
F-17
<PAGE> 98
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
4. FORECLOSED ASSETS:
Included in other resources are the following foreclosed assets as of
December 31:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Other real estate owned $ 432,448 $ 1,269,951
Other foreclosed assets 27,768 20,595
------------ ------------
Total $ 460,216 $ 1,290,546
============ ============
</TABLE>
5. BANK PREMISES AND EQUIPMENT:
On December 31, 1995 and 1994 bank premises, equipment, and accumulated
depreciation were classified as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------- -------------------------------------------
ACCUMULATED NET BOOK ACCUMULATED NET BOOK
COST DEPRECIATION VALUE COST DEPRECIATION VALUE
----------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Land $ 853,965 $ 0 $ 853,965 $ 853,965 $ 0 $ 853,965
Banking house 6,219,856 3,268,751 2,951,105 6,198,955 3,103,579 3,095,376
Furniture, fixtures
and equipment 2,767,541 1,784,635 982,906 2,744,372 1,448,217 1,296,155
Transportation equipment 85,119 42,889 42,230 81,853 45,606 36,247
Leasehold improvements 249,041 53,781 195,260 214,958 41,092 173,866
----------- ----------- ----------- ----------- ----------- -----------
TOTAL $10,175,522 $ 5,150,056 $ 5,025,466 $10,094,103 $ 4,638,494 $ 5,455,609
=========== =========== =========== =========== =========== ===========
</TABLE>
Depreciation and amortization expense amounted to $571,561, $580,500, and
$483,048 in 1995, 1994 and 1993 respectively.
F-18
<PAGE> 99
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
6. EMPLOYEE BENEFIT PLANS:
PENSION PLAN
The Bank has a defined benefit plan covering substantially all of its
employees. The plan is noncontributory and administered by a trustee.
The pension benefits are based on years of service and the employee's
compensation during employment. Net periodic pension cost includes the
following components:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Service cost of the current period $ 183,130 $ 197,831 $ 143,719
Interest cost on the projected benefit obligation 241,844 222,314 199,181
Actual return on assets held in the plan (621,421) 126,537 (155,076)
Net amortization of unrecognized net asset (28,000) (28,000) (28,000)
Deferred net asset gain (loss) 433,237 (315,143) (9,051)
Amortization of unrecognized prior service costs 38,684 10,000 10,000
Amortization of net loss (gain) from earlier periods 57,370 34,151 27,203
----------- ----------- -----------
PENSION EXPENSE $ 304,844 $ 247,690 $ 187,976
=========== =========== ===========
The following table sets forth the funded status of the plan as of December 31, 1995, 1994 and 1993:
Actuarial present value of accumulated plan benefits:
Vested $ 3,085,677 $ 2,122,081 $ 1,725,266
Non-vested 87,763 47,703 10,708
----------- ----------- -----------
Accumulated benefit obligation $ 3,173,440 $ 2,169,784 $ 1,735,974
=========== =========== ===========
Actuarial present value of projected benefit obligation for
service rendered to date $ 4,348,680 $ 3,417,084 $ 2,989,041
Plan assets at fair value 3,036,345 2,304,553 2,261,783
----------- ----------- -----------
Plan assets in excess (deficit) of projected
benefit obligation (1,312,335) (1,112,531) (727,258)
Unrecognized prior service costs 752,031 116,000 126,000
Unrecognized net (gain) or loss 835,558 1,287,129 952,547
Unrecognized net transition (asset) or liability (252,000) (280,000) (308,000)
----------- ----------- -----------
PREPAID PENSION COST $ 23,254 $ 10,598 $ 43,289
=========== =========== ===========
</TABLE>
During 1995 the Bank offered enhanced early retirement to employees
who had attained age 55 1/2 and had 12 1/2 years service as of December 31,
1994. As the result of the enhanced benefits, the pension plan recorded
additional unrecognized prior service costs associated with these enhanced
benefits for the year ended December 31, 1995.
F-19
<PAGE> 100
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
6. EMPLOYEE BENEFIT PLANS: -Continued
The weighted-average discount rate for 1995 was 7% and 7.5% for 1994
and 1993. The rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit for 1995, 1994
and 1993 was 5%. The expected long-term rate of return on plan assets was 8%
for 1995 and 1994 and 7.5% for 1993.
As required by Financial Accounting Standard No. 87, the Bank recorded
an additional liability of $160,348 and an intangible asset of $160,348 which
is equal to the unfunded accumulated benefit obligation of $137,094 plus
prepaid pension cost of $23,254. These amounts are classified in the financial
statements as other resources and other accrued liabilities.
401K PLAN
The Bank adopted a defined contribution plan on April 1, 1994 and it
was made effective January 1, 1994. It is the Bank's intent to have this plan
qualify under section 401 of the Internal Revenue Code of 1986, as amended.
This Plan covers all employees and officers who have at least one year of
service with the Bank and are at least 21 years of age. The employer as a
Basic Matching Contribution may contribute amounts equal to one hundred percent
(100%) of each Participant's elective contributions up to a maximum of three
percent (3%) of the Participant's Eligible Compensation. The employer may also
contribute an additional Profit-Sharing Contribution such as the employer deems
appropriate. Expenses for the Plan totalled $67,621 and $69,759 in 1995 and
1994, respectively.
F-20
<PAGE> 101
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
7. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE:
The Bank did not purchase federal funds or securities under agreement
to repurchase during 1993. Additional information regarding federal funds
purchased and securities sold under agreement to repurchase is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Average month-end balance $ 4,276,911 $ 1,854,167 $ 0
Highest amount outstanding on any month-end during the year 4,955,762 11,250,000 0
Average interest rate paid during the year 4.84% 4.02% 0
Average interest rate paid on December 31 4.45% 4.47% 0
Average maturity on December 31 8 days 5 days 0
Balance as of December 31 $ 3,896,621 $ 4,750,000 $ 0
</TABLE>
8. RELATED PARTY TRANSACTIONS:
In the normal course of business, the Bank may make loans to its
directors, principal officers, their immediate families, and affiliated
companies in which they are principal stockholders (commonly referred to as
related parties). This indebtedness has been incurred on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unrelated parties.
The aggregate loans outstanding to directors, principal officers,
principal stockholders, and their related parties as a group totaled
approximately $1,660,183 and $2,270,000 as of December 31, 1995 and 1994,
respectively.
9. INCOME TAXES:
A reconciliation of the total tax which would have been computed by
applying the federal income tax rate to income before tax and the actual tax
expense is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Tax expense at statutory rates $ 829,760 $ 721,090 $ 665,182
Increase (decrease) in taxes resulting from:
Tax exempt interest (175,735) (225,516) (160,520)
Recognition of taxable gain on life insurance policies 88,006 0 0
Other - net 45,368 39,271 32,077
------------ ----------- -----------
Total Tax Expense $ 787,399 $ 534,845 $ 536,739
============ =========== ===========
Income tax expense currently payable $ 816,920 $ 479,968 $ 506,699
============ =========== ===========
</TABLE>
F-21
<PAGE> 102
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
9. INCOME TAXES: -Continued
Deferred tax expense results from timing differences in the
recognition of revenue and expense for tax and financial statement purposes.
The sources of these differences in 1995, 1994, and 1993 and the tax effect of
each were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Provision for loan losses $ (1,989) $ (121,743) $ 124,389
Deferred compensation expense (157,900) 51,200 114,212
Tax (book) depreciation over book (tax) (12,585) 22,617 13,613
Discount on FDIC assisted acquisition 44,657 35,323 (135,760)
Interest on non-accrual loans 59,865 61,076 (104,598)
Other - net 38,431 6,404 18,184
---------- ---------- ----------
Deferred Income Tax Expense (Benefit) $ (29,521) $ 54,877 $ 30,040
========== ========== ==========
</TABLE>
The deferred tax-assets and (liabilities) recorded on the balance
sheet as of December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Deferred compensation plan $ 759,591 $ 601,691
Discount on FDIC assisted bank acquisition 52,783 128,128
Interest on non-accrual loans 65,808 125,674
Real Estate Owned 55,160 30,688
Investment securities (59,320) 247,240
Property and equipment (66,731) (79,316)
Reserve for loan losses (81,286) (83,275)
Life insurance policies (88,006) 0
Other (8,668) (65,974)
----------- ------------
Net Deferred Tax Assets $ 629,331 $ 904,856
=========== ============
</TABLE>
As of January 1, 1993, the Bank adopted Statement of Financial
Accounting Standards No. 109 on accounting for income taxes. The effect of
this change in accounting principle was to decrease net income for 1993 by
$150,750.
F-22
<PAGE> 103
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
10. LEASE COMMITMENTS:
At December 31, 1995, the Bank was committed under noncancellable operating
lease agreements for land, bank premises and equipment which expire in various
years through 2054. The minimum future rental payments under these lease
agreements are as follows for the years shown:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31 AMOUNT
----------- --------
<S> <C>
1996 $195,190
1997 167,690
1998 146,165
1999 66,608
2000 100
Thereafter $ 5,400
</TABLE>
Operating expense includes equipment and occupancy rentals of $272,854,
$257,573, and $241,181 in 1995, 1994 and 1993, respectively.
11. COMMITMENTS AND CONTINGENCIES:
In the normal course of business, the Bank makes various commitments
and incurs certain contingent liabilities that are not presented in the
accompanying financial statements. These financial instruments have
off-balance-sheet risk and include commitments to extend credit (unused lines
of credit) and standby letters of credit. Certain instruments involve, to
varying degrees, elements of credit risk in excess of the amount recognized in
the statements of financial position. The contract amounts of those
instruments reflect the extent of involvement the Bank has in particular
classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. The
following are off-balance-sheet financial instruments whose contract amounts
represent credit risk:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Commitments to extend credit (unused lines of credit) $16,318,305 $13,764,000
Standby letters of credit $ 1,050,795 $ 1,084,040
</TABLE>
As of December 31, 1995, the bank made commitments to purchase
investment securities in the amount of $344,466.
The Bank is involved in various litigation. The Bank does not expect
this litigation to have a material adverse effect on its consolidated financial
position or results of operations.
F-23
<PAGE> 104
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
12. LOANS SOLD WITH RECOURSE:
During 1991, the Bank entered into a Loan Purchase Agreement
(Agreement) with the Louisiana Public Facilities Authority. Under the
Agreement, the Bank may from time to time sell certain student loans which are
guaranteed under the Guaranteed Student Loan Program (Program) as to 100% of
principal and accrued interest.
The Agreement contains a repurchase obligation which would require the
Bank to repurchase the loans to the extent that:
1) The Bank made any representations or warranties (as defined in the
Agreement) that were breached, inaccurate or incorrect;
2) The Department of Education (or any guarantee agency) does not
honor the guarantee under the Program as a result of any action(s) or
inaction(s) by the Bank; or
3) A student refuses to make payments as a result of some act or
omission of the Bank.
Transactions relating to student loans sold by the Bank under the
Agreement resulted in the following:
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
Principal amount of student loans sold $ 10,473 $ 260,827 $ 789,510
Accrued interest of student loans sold 51 1,009 757
-------- --------- ---------
Total book value of student loans sold 10,524 261,836 790,267
Proceeds from sale of student loans 10,524 261,836 790,267
-------- --------- ---------
Gain or loss recognized on sale $ 0 $ 0 $ 0
======== ========= =========
</TABLE>
Since the inception of the agreement, book value of student loans sold
amounted to $2,208,175.
13. DEPOSITS:
Certificates of deposit equal to or exceeding $100,000 totaled
$9,021,661 and $8,237,639 as of December 31, 1995 and 1994. respectively.
14. CERTAIN BENEFIT PLANS:
The Bank has a deferred compensation plan for certain directors and
principal officers. A portion of present compensation is deferred currently in
order that additional compensation will be received in the future. Information
relating to the deferred compensation plan as of the years indicated is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Deferred compensation expense $ 667,731 $ 180,946 $ 378,758
Deferred compensation liability 2,234,090 1,769,679 1,920,269
Cash surrender value (net of policy loans) 927,829 861,992 880,997
Annuity contracts 2,234,090 0 0
</TABLE>
F-24
<PAGE> 105
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
14. CERTAIN BENEFIT PLANS: -Continued
During 1994 and 1993, the Bank amended the plan and many participants
received a lump sum settlement from the plan. The change resulted in a gain in
the amount of $57,248 in 1994 and a loss in the amount of $310,247 in 1993.
During 1995, the Bank purchased annuity contracts for the purpose of
funding future cash requirements of the plan. In conjunction with this, the
Bank changed its computation of estimating the deferred compensation liability.
This resulted in an additional charge to operations of $512,954 in 1995 and the
net annual deferred compensation expense after January 1, 1996 will be zero.
On March 12, 1991, the Bank established a split dollar plan for
certain directors and principal officers as an alternative to the Bank's
Deferred Compensation Plan. Under the plan, a participant purchases a life
insurance policy on his or her life, and the Bank pays the premiums thereunder,
in full, until the participant reaches his or her Normal Retirement Date. The
participant also defers a portion of his or her salary or director fees to
offset the lost earnings on the amount paid by the Bank as premiums, and such
amount is not refundable to the participant. The Bank has received a
collateral assignment from each participant pursuant to which the amount of all
premiums paid by the Bank on behalf of such participant will be repaid to the
Bank, in full, from the cash value of the policy upon the participant reaching
his or her Normal Retirement Date. All premiums paid by the Bank are shown as
other assets in the statement of financial condition of the Bank. The amount
of premiums paid by the Bank totalled $0 as of December 31, 1995 and 1994, and
$349,350, as of December 31, 1993. During 1994, the split dollar plan was
terminated by the Bank resulting in a loss of $132,066 when combined with the
gain on lump sum settlement of the certain deferred compensation plan of
$57,248 described above, the net loss on settlement of the plan amounted to
$74,818.
15. RETIRED EMPLOYEE'S BENEFITS:
The Bank pays for a portion of certain retiree's medical insurance
coverage with the retirees paying for the remaining portion. Insurance
coverage paid by the Bank amounted to $5,507 and $5,137 for the years ended
December 31, 1994 and 1993, respectively.
In 1995, the Bank adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Post Retirement Benefits Other Than
Pensions". The adoption of this standard changed the Bank's method of
accounting for post retirement benefits other than pensions from the cash
method to the accrued expected liability method. The effect of the change was
not material to the 1995 financial statement.
The accumulated post retirement benefit obligation at December 31,
1995 was determined using projected annual increases of health care cost of 5%.
The discount rate used in determining the accumulated post retirement benefit
obligation was 7.5%. All payments associated with the post retirement benefits
are paid from the Bank's general assets.
F-25
<PAGE> 106
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
15. RETIRED EMPLOYEE'S BENEFITS: -Continued
<TABLE>
<S> <C>
Net periodic post retirement benefit cost includes the following components:
Service cost incurred during the period $74,482
Interest cost on accumulated benefit obligations 5,970
-------
Net periodic post retirement benefit cost $80,452
=======
The following table sets forth the funded status of the plan as of December 31, 1995:
Accumulated Post retirement benefit obligation - retirees $63,203
Unrecognized prior service costs 0
-------
Accrued post retirement benefit obligation $63,203
=======
The effect of a one percent annual increase in the assumed cost trend rate would have the following effect:
Net periodic post retirement benefit costs $82,018
=======
Accumulated post retirement benefit obligation $64,769
=======
</TABLE>
16. FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standard No. 107,
the estimated fair value financial instruments as of December 31, 1995 and 1994
are as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash and due from banks $ 19,150,371 $ 14,642,220
Other Investment securities 72,441,324 80,872,507
Floating Rate Investment securities 5,454,375 3,019,730
Step-Up Investments securities 8,006,875 9,056,506
Loans, net of unearned income 90,536,000 85,056,000
Federal Funds Sold 1,150,000 8,725,000
Deposits 182,293,000 190,416,000
Securities sold under repurchase agreement 3,896,621 4,750,000
</TABLE>
F-26
<PAGE> 107
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
17. PROPOSED MERGER WITH REGIONS BANK:
Delta Bank entered into a Definitive Agreement and Plan of
Reorganization with Regions Financial Corporation ("Regions") on January 11,
1996. Under the terms of the Agreement, subject to necessary regulatory and
stockholder approvals, Delta Bank will be merged into Regions Bank of
Louisiana, a wholly owned subsidiary of Regions.
Under the terms of this agreement, Delta stockholders will receive
2.2568 shares of Regions stock per share of Delta stock if the average price of
Regions stock is not less than $40.00 and not more than $46.00 per share. This
represents a value ranging from $90.27 to $103.81 per Delta share. If the
average price of Regions stock exceeds $46.00 per share, then the number of
Regions shares will be reduced so that the value per Delta share remains at
$103.81. If the average price of Regions stock drops below $40.00, the
exchange ratio remains the same (2.2568 shares of Regions for each share of
Delta) so that the value per Delta share drops as the Regions price decreases,
except that Regions will make up the loss of value between $40.00 and $38.00
per share by adding extra cash or stock to the exchange. Regions is obligated
to make good the loss of value from $40.00 to $38.00 even if the average price
of Regions stock drops below $38.00. If the average price of Regions stock
reaches $34.00, then Delta may terminate the merger, unless Regions increases
the number of shares to be exchanged so that the value to Delta shareholders is
the same as it would have been with Regions stock price at $34.00.
Approval of bank regulatory authorities (such as the Office of
Financial Institutions and the Federal Deposit Insurance Corporation) and
certain filings with the Securities Exchange Commission are required before the
merger can be completed. Both Regions and Delta have begun the process of
obtaining these approvals and preparing the necessary filings. This process
should take several months. In addition, Delta's stockholders must approve the
merger.
18. RETENTION AGREEMENTS:
The Bank adopted the Delta Bank & Trust Company Employee Severance
Plan (the "Plan"), effective September 6, 1995 which is a welfare benefit plan
governed by the Employee Retirement Income Security Act of 1974 ("ERISA").This
Plan was established in order to recognize the value of the Bank's employees
and to encourage their continued employment despite concerns about a possible
loss of employment upon the proposed merger between Delta Bank and Regions
Bank. Benefits under the severance plan are based upon the employees years of
service. In order to qualify for the severance benefit the employee's
employment must be terminated within one year of the change in control. Total
liability under the plan, if all employees were terminated as of the change of
control is approximately $700,000.
The Bank also entered into Retention Agreements with key employees
which are essential to maintain the value of the Bank during the merger
negotiations, and needed to complete the proposed merger transaction. The
total liability under the retention agreements is approximately $140,000
provided that all key employees remain employed with the Bank on the day of the
change of control.
F-27
<PAGE> 108
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
RESOURCES: March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Cash & Due From Banks $ 11,081 $ 19,150
Investment Securities:
U.S. Treasury Securities 24,611 29,756
U.S. Govt. Agency Securities 39,849 38,085
Mortgage-Backed Securities 3,777 4,310
State & Municipal Securities 12,278 11,811
Corporate Securities & Other 1,332 1,343
-------- --------
81,847 85,305
Loans 90,340 90,635
Unearned income 823 868
-------- --------
89,517 89,767
Reserve for Loan Losses 1,121 1,046
-------- --------
88,396 88,721
Deferred Federal Income Tax 821 629
Federal Funds Sold & Securities Purchased
Under Repurchase Agreements 4,375 1,150
Bank Premises & Equipment, Net 4,889 5,026
Accrued Interest Receivable 1,713 1,676
Other Resources 4,007 4,251
-------- --------
15,805 12,732
-------- --------
TOTAL RESOURCES $197,129 $205,908
======== ========
LIABILITIES & CAPITAL
Deposits:
Demand Deposits $ 41,897 $ 41,382
Time Deposits 44,878 43,552
Savings Deposits 34,714 34,679
Official Checks 1,512 1,301
Money Market & NOW Accounts 52,017 61,296
-------- --------
175,018 182,210
Dividend Payable 187 749
Securities Sold Under Repurchase Agreement 2,529 3,897
Income Tax Payable 139 0
Other Accrued Liabilities 3,032 2,883
-------- --------
180,905 189,739
-------- --------
CAPITAL
Common Stock, $5.00 Par Value,
1,000,000 Shares Authorized,
374,420 Shares Issued and Outstanding 1,872 1,872
Surplus 4,064 4,064
Undivided Profits 10,426 10,094
Unrealized Gains (Losses) on Securities (138) 139
-------- --------
16,224 16,169
-------- --------
TOTAL LIABILITIES AND CAPITAL $197,129 $205,908
======== ========
</TABLE>
F-28
<PAGE> 109
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $2,250 $2,210
Interest on federal funds sold and
securities purchased under agreement to resell 69 73
Interest on investment securities:
Obligations of U.S. Government
and federal agencies 1,052 1,252
Obligations of state and political
subdivisions 150 152
Corporate securities 20 12
------ ------
3,541 3,699
INTEREST EXPENSE:
Deposits 1,212 1,176
Interest on federal funds purchased and
securities sold under agreement to repurchase 33 51
------ ------
1,245 1,227
NET INTEREST INCOME 2,296 2,472
PROVISION FOR LOAN LOSSES 150 0
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,146 2,472
OTHER INCOME:
Service charges on deposit accounts 403 395
Gain (loss) on sale of assets 1 (1)
Securities gains (losses) 0 (18)
Other income 242 151
------ ------
646 527
OPERATING EXPENSES:
Salaries and wages 797 857
Other employee costs 427 325
Expenses of premises and fixed assets 393 394
Other operating expenses 445 623
------ ------
2,062 2,199
INCOME BEFORE INCOME TAXES 730 800
INCOME TAXES 211 234
NET INCOME $ 519 $ 566
====== ======
NET INCOME PER SHARE OF COMMON STOCK $ 1.39 $ 1.51
</TABLE>
F-29
<PAGE> 110
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION> Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 519 $ 566
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Provision for loan loss 150 0
Deferred income tax (49) (216)
Gain (Loss) on sale of securities 0 18
Loss on disposal of property and equipment (1) 1
Depreciation of property, plant & equipment 139 139
Depreciation of Other Real Estate 5 0
Amortization of organization costs 0 0
Amortization (Accretion), Net (52) (53)
(Increase) Decrease in other assets 161 81
(Increase) Decrease in Other Real Estate 41 411
Increase (Decrease) in other liabilities (1,643) (404)
------- -------
Net Cash Provided by Operating Activities (730) 543
CASH FLOW FROM INVESTING ACTIVITIES
Net increase in loans to customers 174 (1,442)
Proceeds from sale of investment securities available for sale 1,000 1,014
Proceeds from maturities of investment securities held to mat. 9,469 7,387
Proceeds from maturities of investment securities avail. for sale 3,475 0
Purchases of investment securities held to maturity (101) (9,443)
Purchases of investment securities available for sale (10,751) 0
Purchase of property and equipment (2) (24)
Proceeds from sale of property and equipment 1 0
------- -------
Net Cash Provided (used) in Investing Activities 3,265 (2,508)
CASH FLOW FLOW FROM FINANCING ACTIVITIES
Net increase (Decrease) in Demand Deposits, NOW Accounts
and Savings Accounts (7,957) (9,191)
Net Increase (Decrease) in Certificates of Deposit 1,327 3,832
Dividends paid (749) (749)
------- -------
Net Cash Provided (Used) in Investing Activities (7,379) (6,108)
NET INCREASE (DECREASE) IN CASH EQUIVALENTS (4,844) (8,073)
CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR 20,300 23,367
------- -------
CASH AND CASH EQUIVALENTS-END OF FIRST QUARTER $15,456 $15,294
======= =======
</TABLE>
F-30
<PAGE> 111
DELTA BANK & TRUST COMPANY
AND WHOLLY OWNED SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. - Basis of presentation.
Earnings per share as reflected in the accompanying statements are
computed by dividing net income by the weighted average of common shares
outstanding for the period (374,420 during each period shown).
The March 31,1995 financial statements were retroactively restated to
reflect the January 1, 1995 implementation of Statement of Financial Accounting
Standard 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions."
The accompanying unaudited, consolidated financial statements reflect
all material adjustments which are, in the opinion management, necessary to a
fair statement of the results for the interim period presented.
These financial statements have been prepared without audit pursuant
to the rules and regulations of the Federal Deposit Insurance Corporation.
Certain information and footnote disclosures normally included in the financial
statements, have been condensed or omitted pursuant to such rules and
regulations: however, the bank believes that this information is fairly
presented. It is suggested that these statements be read in conjunction with
the Bank's Audited Financial Statements for the three years ended December 31,
1995. There have been no significant changes in the current period regarding
the information included in the notes therein except for the definition of Cash
Equivilants for the Statement of Cashflow. The definition of Cash Equivalents
was amended to include not only Cash & Due From Banks; but, to also include
Federal Funds Sold & Securities Purchased Under Repurchase Agreements.
F-31
<PAGE> 112
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
DELTA BANK AND TRUST COMPANY
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF JANUARY 11, 1996
A-1
<PAGE> 113
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Parties............................................................................ A-6
Preamble........................................................................... A-6
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER...................................... A-6
1.1 Merger....................................................................... A-6
1.2 Time and Place of Closing.................................................... A-6
1.3 Effective Time............................................................... A-6
ARTICLE 2 -- TERMS OF MERGER........................................................... A-7
2.1 Charter...................................................................... A-7
2.2 Bylaws....................................................................... A-7
2.3 Directors and Officers....................................................... A-7
ARTICLE 3 -- MANNER OF CONVERTING SHARES........................................... A-7
3.1 Conversion of Shares......................................................... A-7
3.2 Anti-Dilution Provisions..................................................... A-8
3.3 Shares Held by Delta or Regions.............................................. A-8
3.4 Dissenting Stockholders...................................................... A-8
3.5 Fractional Shares............................................................ A-8
3.6 Conversion of Stock Rights................................................... A-8
ARTICLE 4 -- EXCHANGE OF SHARES.................................................... A-10
4.1 Exchange Procedures.......................................................... A-10
4.2 Rights of Former Delta Stockholders.......................................... A-10
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF DELTA............................... A-11
5.1 Organization, Standing, and Power............................................ A-11
5.2 Authority; No Breach By Agreement............................................ A-11
5.3 Capital Stock................................................................ A-12
5.4 Delta Subsidiaries........................................................... A-12
5.5 Financial Statements......................................................... A-12
5.6 Absence of Undisclosed Liabilities........................................... A-12
5.7 Absence of Certain Changes or Events......................................... A-12
5.8 Tax Matters.................................................................. A-13
5.9 Assets....................................................................... A-13
5.10 Environmental Matters........................................................ A-14
5.11 Compliance With Laws......................................................... A-14
5.12 Employee Benefit Plans....................................................... A-14
5.13 Material Contracts........................................................... A-16
5.14 Legal Proceedings............................................................ A-16
5.15 Statements True and Correct.................................................. A-16
5.16 Accounting, Tax, and Regulatory Matters...................................... A-17
5.17 State Takeover Laws.......................................................... A-17
5.18 Directors' Agreements........................................................ A-17
5.19 Charter Provisions........................................................... A-17
5.20 Derivatives Contracts........................................................ A-18
</TABLE>
A-2
<PAGE> 114
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS................................. A-18
6.1 Organization, Standing, and Power............................................ A-18
6.2 Authority; No Breach By Agreement............................................ A-18
6.3 Capital Stock................................................................ A-18
6.4 Regions Subsidiaries......................................................... A-19
6.5 SEC Filings; Financial Statements............................................ A-19
6.6 Absence of Undisclosed Liabilities........................................... A-19
6.7 Absence of Certain Changes or Events......................................... A-20
6.8 Compliance With Laws......................................................... A-20
6.9 Legal Proceedings............................................................ A-20
6.10 Statements True and Correct.................................................. A-20
6.11 Accounting, Tax, and Regulatory Matters...................................... A-21
6.12 Authority of Regions Bank.................................................... A-21
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................. A-22
7.1 Affirmative Covenants of Delta............................................... A-22
7.2 Negative Covenants of Delta.................................................. A-22
7.3 Covenants of Regions......................................................... A-24
7.4 Adverse Changes in Condition................................................. A-24
7.5 Reports...................................................................... A-24
ARTICLE 8 -- ADDITIONAL AGREEMENTS..................................................... A-25
8.1 Registration Statement; Proxy Statement; Stockholder Approval................ A-25
8.2 Exchange Listing............................................................. A-26
8.3 Applications................................................................. A-26
8.4 Filings with State Offices................................................... A-26
8.5 Agreement as to Efforts to Consummate........................................ A-26
8.6 Investigation and Confidentiality............................................ A-26
8.7 Press Releases............................................................... A-27
8.8 Certain Actions.............................................................. A-27
8.9 Accounting and Tax Treatment................................................. A-27
8.10 State Takeover Laws.......................................................... A-27
8.11 Charter Provisions........................................................... A-27
8.12 Agreement of Affiliates...................................................... A-27
8.13 Employee Benefits and Contracts.............................................. A-28
8.14 Indemnification.............................................................. A-28
8.15 Regions Interim Bank Organization............................................ A-29
8.16 Average Closing Price Determination.......................................... A-29
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......................... A-29
9.1 Conditions to Obligations of Each Party...................................... A-29
9.2 Conditions to Obligations of Regions......................................... A-30
9.3 Conditions to Obligations of Delta........................................... A-31
ARTICLE 10 -- TERMINATION.............................................................. A-32
10.1 Termination.................................................................. A-32
10.2 Effect of Termination........................................................ A-33
10.3 Non-Survival of Representations and Covenants................................ A-33
</TABLE>
A-3
<PAGE> 115
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 11 -- MISCELLANEOUS............................................................ A-33
11.1 Definitions.................................................................. A-33
11.2 Expenses..................................................................... A-38
11.3 Brokers and Finders.......................................................... A-39
11.4 Entire Agreement............................................................. A-40
11.5 Amendments................................................................... A-40
11.6 Waivers...................................................................... A-40
11.7 Assignment................................................................... A-40
11.8 Notices...................................................................... A-40
11.9 Governing Law................................................................ A-41
11.10 Counterparts................................................................. A-41
11.11 Captions..................................................................... A-41
11.12 Interpretations.............................................................. A-41
11.13 Enforcement of Agreement..................................................... A-41
11.14 Severability................................................................. A-41
Signatures............................................................................. A-42
</TABLE>
A-4
<PAGE> 116
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<C> <C> <S>
1. -- Form of Joint Agreement of Merger. (sec. 1.1).
2. -- Form of Directors' Agreement. (sec. 5.17).
3. -- Form of agreement of affiliates of Delta. (sec.sec. 8.12, 9.2(e)).
4. -- Matters as to which Correro, Fishman & Casteix, L.L.P. will opine. (sec. 9.2(d)).
5. -- Form of Claims Letter (sec. 9.2(f)).
6. -- Matters as to which Lange, Simpson, Robinson & Somerville will opine.
(sec. 9.3(d)).
</TABLE>
A-5
<PAGE> 117
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of January 11, 1996, by and between DELTA BANK AND TRUST COMPANY
("Delta"), a state bank organized and existing under the laws of the State of
Louisiana, with its principal office located in Belle Chasse, 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 Delta and Regions are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective stockholders. This Agreement provides for the acquisition of Delta by
Regions pursuant to the merger (the "Merger") of Delta with and into Regions
Bank of Louisiana, a wholly owned subsidiary of Regions organized under the laws
of the State of Louisiana ("Regions Bank"). At the effective time of the Merger,
the outstanding shares of the common stock of Delta shall be converted into
shares of the common stock of Regions (except as provided herein). As a result,
stockholders of Delta shall become stockholders of Regions, and Regions Bank
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 stockholders of Delta, the Federal Deposit Insurance
Corporation, 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 (i) for federal
income tax purposes shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code, and that the exchange of Delta
common stock, to the extent exchanged for Regions common stock, will not give
rise to gain or loss to the holders of Delta common stock with respect to such
exchange, and (ii) for accounting purposes shall qualify for treatment as a
"pooling of interests."
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, Delta shall be merged into and with Regions Bank in accordance
with the provisions of Sections 6:351-355 of the LBL and with the effect
provided therein (the "Merger"). Regions Bank shall be the Surviving Bank of the
Merger and shall continue to be governed by the Laws of the State of Louisiana.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of Delta and
Regions and the Joint Agreement of Merger, in substantially the form of Exhibit
1, which has been approved and adopted by the Boards of Directors of Delta and
Regions Bank.
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 Joint Agreement
of Merger reflecting the Merger shall be filed with the Commissioner of
Financial Institutions of the State of Louisiana (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 10th business day following the last to occur of (i) the
effective date (including
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expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the stockholders of Delta approve this
Agreement and the Joint Agreement of Merger to the extent such approval is
required by applicable Law; or such later date within five business days thereof
as may be specified by Regions.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Charter of Regions Bank in effect immediately prior to
the Effective Time shall be the Charter of the Surviving Bank after the
Effective Time until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Regions Bank in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Bank after the Effective
Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Regions Bank 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 Bank
from and after the Effective Time in accordance with the Bylaws of the Surviving
Bank. The officers of Regions Bank 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 Bank from and after the Effective Time in
accordance with the Bylaws of the Surviving Bank.
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 Delta, Regions or the stockholders thereof, the shares of the constituent
entities 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 Regions Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(c) Each share of Delta Common Stock (excluding shares held by Delta
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 stockholders who
perfect their dissenters' rights of appraisal) issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for 2.2568 shares of Regions Common Stock (subject to
adjustment as described below and pursuant to Section 10.1(g) of this
Agreement, the "Exchange Ratio") provided however, that:
(i) (1) in the event that the Average Closing Price is less than
$40.00, but not less than $38.00, Regions shall, in addition to issuing
2.2568 shares of Regions Common Stock for each share of Delta Common
Stock (subject to the exclusions set forth above) issued and outstanding
at the Effective Time, make a cash payment for each such share of Delta
Common Stock (the "Cash Consideration") equal to the product of (1) the
difference between (x) $40.00 and (y) the Average Closing Price and (2)
the Exchange Ratio;
(2) in the event the Average Closing Price is less than $38.00, the
Cash Consideration calculated in clause (1) above shall be calculated as
if the Average Closing Price were nonetheless $38.00;
(3) Regions may, in its sole discretion and option, pay all or any
part of the Cash Consideration (if any) in shares of Regions Common
Stock valued at the Average Closing Price; and
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(ii) in the event that the Average Closing Price is greater than
$46.00, each share of Delta Common Stock (subject to the exclusions set
forth above) issued and outstanding at the Effective Time shall cease to
be outstanding and shall be converted into and exchanged for that number
of shares of Regions Common Stock equal to the quotient obtained by
dividing (1) the product of $46.00 and the Exchange Ratio (as then in
effect) by (2) the Average Closing Price.
3.2 ANTI-DILUTION PROVISIONS. In the event Delta changes the number of
shares of Delta Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be appropriately adjusted. In the
event Regions changes the number of shares of Regions Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be prior to the Effective Time, the Exchange
Ratio, and each of the dollar amounts set forth in Section 3.1(c)(i),
3.1(c)(ii), or 10.1(g) shall be appropriately adjusted.
3.3 SHARES HELD BY DELTA OR REGIONS. Each of the shares of Delta Common
Stock held by any Delta 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 STOCKHOLDERS. Any holder of shares of Delta Common Stock
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 6:376 of LBL 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 stockholder
unless and until such dissenting stockholder has complied with the applicable
provisions of the LBL, including the provisions of Section 376 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 stockholder of Delta 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 Delta Common Stock held by such
Person shall be converted into and exchanged for that number of shares of
Regions Common Stock (plus Cash Consideration, if applicable) 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 Delta Common Stock exchanged pursuant to the
Merger, who would otherwise have been entitled to receive a fraction of a share
of Regions Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Regions Common Stock
multiplied by the market value of one share of Regions Common Stock at the
Effective Time. The market value of one share of Regions Common Stock at the
Effective Time shall be the closing price of such common stock on the Nasdaq NMS
(as reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by Regions) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a stockholder in respect of any fractional shares.
3.6 CONVERSION OF STOCK RIGHTS. (a) At the Effective Time, each award,
option, or other right to purchase or acquire shares of Delta Common Stock
pursuant to stock options, stock appreciation rights, or stock awards ("Delta
Rights") granted by Delta under the Delta Stock Plans, which are outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to Regions Common Stock, and Regions shall assume
each Delta Right, in accordance with the terms of the Delta Stock Plan and stock
option agreement by which it is evidenced, except that from and after the
Effective Time,
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(i) Regions and its Compensation Committee shall be substituted for Delta and
the Committee of Delta's Board of Directors (including, if applicable, the
entire Board of Directors of Delta) administering such Delta Stock Plan, (ii)
each Delta Right assumed by Regions may be exercised solely for shares of
Regions Common Stock (or cash in the case of stock appreciation rights) and Cash
Consideration, if applicable, (iii) the number of shares of Regions Common Stock
subject to such Delta Right shall be equal to the number of shares of Delta
Common Stock subject to such Delta Right immediately prior to the Effective Time
multiplied by the Exchange Ratio, (iv) the amount of cash consideration, if
applicable, subject to such Delta Right shall be equal to the number of shares
of Delta Common Stock subject to such Delta Right immediately prior to the
Effective Time multiplied by the Cash Consideration, and (v) the per share
exercise price (or similar threshold price, in the case of stock awards) under
each such Delta Right shall be adjusted by dividing the per share exercise (or
threshold) price under each such Delta Right by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, Regions shall not be obligated to issue any fraction of a
share of Regions Common Stock upon exercise of Delta Rights and any fraction of
a share of Regions Common Stock that otherwise would be subject to a converted
Delta Right shall represent the right to receive a cash payment equal to the
product of such fraction and the difference between the market value of one
share of Regions Common Stock and the per share exercise price of such Right.
The market value of one share of Regions Common Stock shall be the closing price
of such common stock on the Nasdaq NMS (as reported by The Wall Street Journal
or, if not reported thereby, any other authoritative source selected by Regions)
on the date of exercise of such Delta Right. In addition, notwithstanding the
provisions of clauses (iii) and (iv) of the first sentence of this Section 3.6,
each Delta Right which is an "incentive stock option" shall be adjusted as
required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension, or
renewal of the option, within the meaning of Section 424(h) of the Internal
Revenue Code. Regions agrees to take all necessary steps to effectuate the
foregoing provisions of this Section 3.6.
(b) As soon as reasonably practicable after the Effective Time, Regions
shall deliver to the participants in each Delta Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants pursuant
to such Delta Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.6(a) after giving
effect to the Merger), and Regions shall comply with the terms of each Delta
Stock Plan to ensure, to the extent required by, and subject to the provisions
of, such Delta Stock Plan, that Delta Rights which qualified as incentive stock
options prior to the Effective Time continue to qualify as incentive stock
options after the Effective Time. At or prior to the Effective Time, Regions
shall take all corporate action necessary to reserve for issuance sufficient
shares of Regions Common Stock for delivery upon exercise of Delta Rights
assumed by it in accordance with this Section 3.6. As soon as reasonably
practicable after the Effective Time, Regions shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of Regions Common Stock subject
to such options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such options
remain outstanding. With respect to those individuals who subsequent to the
Merger will be subject to the reporting requirements under Section 16(a) of the
Exchange Act, where applicable, Regions shall administer the Delta Stock Plan
assumed pursuant to this Section 3.6 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act to the extent the Delta Stock Plan complied
with such rule prior to the Merger.
(c) All restrictions or limitations on transfer with respect to Delta
Common Stock awarded under the Delta Stock Plans or any other plan, program, or
arrangement of any Delta Company, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with respect to shares of Regions Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this Agreement.
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ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions and
the Surviving Bank shall cause the exchange agent selected by Regions (the
"Exchange Agent") to mail to the former stockholders of Delta appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Delta Common Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent). After the Effective Time, each holder of shares of Delta
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which dissenters' rights of appraisal have been perfected and
not withdrawn or forfeited under Section 376 of the LBL) 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 provided in 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 Delta 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 Delta 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 Delta 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 Delta Common Stock for exchange as provided in this
Section 4.1 or otherwise complies with the procedures of the Exchange Agent with
respect to lost, stolen, or destroyed certificates. The certificate or
certificates of Delta Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither Regions, Delta, nor the Exchange Agent shall be liable
to a holder of Delta 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 DELTA STOCKHOLDERS. At the Effective Time, the stock
transfer books of Delta shall be closed as to holders of Delta Common Stock
immediately prior to the Effective Time and no transfer of Delta 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 Delta 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 only the
right to receive the consideration provided in Sections 3.1 and 3.4 of this
Agreement in exchange therefor, subject, however, to the Surviving Bank's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which have been declared or made by Delta in
respect of such shares of Delta Common Stock in accordance with the terms of
this Agreement and which remain unpaid at the Effective Time. To the extent
permitted by Law, former stockholders of record of Delta shall be entitled to
vote after the Effective Time at any meeting of Regions stockholders the number
of whole shares of Regions Common Stock into which their respective shares of
Delta Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Delta 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 Delta 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 Delta
Common Stock certificate, both the Regions Common Stock certificate (together
with all such undelivered dividends or other distributions without interest),
the Cash Consideration (if any),
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and any undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DELTA
Delta hereby represents and warrants to Regions that, except as set forth
in the corresponding section of the Delta Disclosure Memorandum:
5.1 ORGANIZATION, STANDING, AND POWER. Delta is a bank 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. Delta 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 Delta. Delta 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.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Delta has the corporate
power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and the Joint Agreement of Merger and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance of this Agreement and the Joint Agreement of
Merger and the consummation of the transactions contemplated herein and
therein, including the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Delta, subject
to the approval of this Agreement and the Joint Agreement of Merger by the
required vote of the outstanding shares of Delta Common Stock, which is the
only stockholder vote required for approval of this Agreement and the Joint
Agreement of Merger and consummation of the Merger by Delta. Subject to
such requisite stockholder approval, this Agreement and the Joint Agreement
of Merger represent legal, valid, and binding obligations of Delta,
enforceable against Delta in accordance with their respective 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 or the Joint
Agreement of Merger by Delta, nor the consummation by Delta of the
transactions contemplated hereby or thereby, nor compliance by Delta with
any of the provisions hereof or thereof, will (i) conflict with or result
in a breach of any provision of Delta's Charter 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 Delta Company
under, any Contract or Permit of any Delta 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 Delta, 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 Delta
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 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 Delta, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Delta of
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the Merger and the other transactions contemplated in this Agreement and
the Joint Agreement of Merger.
5.3 CAPITAL STOCK. The authorized capital stock of Delta consists of
1,000,000 shares of Delta Common Stock, of which 374,420 shares are issued
and outstanding as of the date of this Agreement and not more than 374,420
shares will be issued and outstanding at the Effective Time. All of the
issued and outstanding shares of capital stock of Delta are duly and
validly issued and outstanding and are fully paid and nonassessable under
the LBL. To the Knowledge of Delta, none of the outstanding shares of
capital stock of Delta has been issued in violation of any preemptive
rights of the current or past stockholders of Delta. There are no shares of
capital stock or other equity securities of Delta outstanding and no
outstanding Rights relating to the capital stock of Delta.
5.4 DELTA SUBSIDIARIES. Delta has disclosed in Section 5.4 of the
Delta Disclosure Memorandum all of the Delta Subsidiaries as of the date of
this Agreement. Delta or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Delta Subsidiary. No equity
securities of any Delta Subsidiary are or may become required to be issued
(other than to another Delta Company) by reason of any Rights, and there
are no Contracts by which any Delta Subsidiary is bound to issue (other
than to another Delta Company) additional shares of its capital stock or
Rights or by which any Delta Company is or may be bound to transfer any
shares of the capital stock of any Delta Subsidiary (other than to another
Delta Company). There are no Contracts relating to the rights of any Delta
Company to vote or to dispose of any shares of the capital stock of any
Delta Subsidiary. All of the shares of capital stock of each Delta
Subsidiary held by a Delta Company are fully paid and nonassessable under
the applicable corporation Law of the jurisdiction in which such Subsidiary
is incorporated or organized and are owned by the Delta Company free and
clear of any Lien. Each Delta Subsidiary is a corporation, and is duly
organized, validly existing, and 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 Delta
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 Delta.
5.5 FINANCIAL STATEMENTS. Delta has included in Section 5.5 of the
Delta Disclosure Memorandum copies of all Delta Financial Statements for
periods ended prior to the date hereof and will deliver to Regions copies
of all Delta Financial Statements prepared subsequent to the date hereof.
The Delta 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 Delta Companies as of the dates
indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows of the Delta Companies for the periods
indicated, in accordance with GAAP (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto
or, in the case of interim financial statements, to normal recurring
year-end adjustments that are not material in amount or effect and to the
absence from interim financial statements of any footnote disclosures).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Delta Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Delta, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Delta as
of September 30, 1995 included in the Delta Financial Statements or
reflected in the notes thereto. No Delta Company has incurred or paid any
Liability since September 30, 1995, except for such Liabilities incurred or
paid in the ordinary course of business consistent with past business
practice or incurred in connection with the process leading up to the
execution and consummation of this Agreement and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on Delta.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995,
except as disclosed in the Delta Financial Statements delivered prior to
the date of this Agreement, to the Knowledge of Delta,
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(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 Delta, and (ii) the Delta 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 Delta provided in Article 7 of this Agreement,
other than conducting the process that has lead up to the execution and
consummation of this Agreement.
5.8 TAX MATTERS. (a) All Tax returns required to be filed by or on
behalf of any of the Delta 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, 1994, 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 Delta and all returns filed are complete and
accurate in all material respects to the Knowledge of Delta. 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 Delta, except as reserved against in the
Delta Financial Statements delivered prior to the date of this Agreement.
All Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the Delta Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
that is currently in effect.
(c) To the Knowledge of Delta, adequate provision for any Taxes due or
to become due for any of the Delta Companies for the period or periods
through and including the date of the respective Delta Financial Statements
has been made and is reflected on such Delta Financial Statements.
(d) Each of the Delta 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.
(e) None of the Delta Companies has made any payments, is obligated to
make any payments, or is a party to any contract, agreement, or other
arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal
Revenue Code.
(f) There are no Liens with respect to Taxes upon any of the assets of
the Delta Companies.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Delta Companies that occurred during or
after any Taxable Period in which the Delta Companies incurred a net
operating loss that carries over to any Taxable Period ending after
December 31, 1994.
(h) No Delta Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(i) All material elections with respect to Taxes affecting the Delta
Companies as of the date of this Agreement have been or will be timely made
as set forth in Section 5.8 of the Delta Disclosure Memorandum. After the
date hereof, no election with respect to Taxes will be made without the
prior written consent of Regions, which consent will not be unreasonably
withheld.
(j) No Delta Company has or has had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
5.9 ASSETS. The Delta Companies have good and marketable title, free
and clear of all Liens, to all of their respective owned Assets. All
tangible properties used in the businesses of the Delta Companies are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Delta's past practices. All
Assets which are material to Delta's business on a consolidated basis, held
under leases or subleases by any of the Delta Companies, are held under
valid
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Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other 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 proceedings may be brought),
and each such Contract is in full force and effect. The Delta Companies
currently maintain insurance similar in amounts, scope, and coverage to
that maintained by other peer banking organizations. None of the Delta
Companies has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. There are presently no claims
pending under such policies of insurance and no notices have been given by
any Delta Company under such policies. The Assets of the Delta Companies
include all Assets required to operate the business of the Delta Companies
as presently conducted.
5.10 ENVIRONMENTAL MATTERS. (a) To the Knowledge of Delta, each Delta
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 Delta.
(b) To the Knowledge of Delta, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any Delta Company or any of its Loan Properties or
Participation Facilities (or any Delta Company in respect of any such Loan
Property or Participation Facility) 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 Delta 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 Delta, and to the
Knowledge of Delta, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of Delta, there have been no releases 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 Delta.
5.11 COMPLIANCE WITH LAWS. Each Delta 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 Delta. None of the Delta 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 Delta; 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 Delta 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 Delta, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Delta, or (iii) requiring any Delta
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 material
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
5.12 EMPLOYEE BENEFIT PLANS. (a) Delta has disclosed in Section 5.12
of the Delta Disclosure Memorandum, and has delivered or made available to
Regions prior to the execution of this Agreement
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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 Delta 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 "Delta Benefit Plans"). Any of the Delta
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 "Delta ERISA
Plan." Each Delta 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 "Delta Pension Plan." No Delta Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) To the Knowledge of Delta, all Delta 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 Delta. Each Delta 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 Delta
is not aware of any circumstances likely to result in revocation of any
such favorable determination letter. To the Knowledge of Delta, no Delta
Company has engaged in a transaction with respect to any Delta Benefit Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, would subject any Delta 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 Delta.
(c) No Delta 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 Delta Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Delta Pension Plan, and (iii) no
increase in benefits under any Delta 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 Delta or
materially adversely affect the funding status of any such plan. Neither
any Delta Pension Plan nor any "single-employer plan," within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
Delta Company, or the single-employer plan of any entity which is
considered one employer with Delta under Section 4001 of ERISA or Section
414 of the Internal Revenue Code or Section 302 of ERISA (whether or not
waived) (an "ERISA Affiliate") has an "accumulated funding deficiency"
within the meaning of Section 412 of the Internal Revenue Code or Section
302 of ERISA. No Delta Company has provided, or is required to provide,
security to a Delta 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 Delta Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate. No Delta 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 Delta Pension Plan or by
any ERISA Affiliate within the 12-month period ending on the date hereof.
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(e) No Delta Company has any Liability for retiree health and life
benefits under any of the Delta Benefit Plans and, to the Knowledge of
Delta, there are no restrictions on the rights of such Delta Company to
amend or terminate any such Plan without incurring any Liability
thereunder.
(f) 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 Delta
Company from any Delta Company under any Delta Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Delta 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 Delta 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 Delta Financial Statements to
the extent required by and in accordance with GAAP.
5.13 MATERIAL CONTRACTS. Except as reflected in the Delta Financial
Statements, none of the Delta 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 Delta Company or the guarantee by
any Delta 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 Delta Companies, and (iv) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form F-2
filed by Delta with the Federal Deposit Insurance Corporation as of the
date of this Agreement if Delta were required to file a Form F-2 as of such
date (together with all Contracts referred to in Section 5.11(a) of this
Agreement, the "Delta Contracts"). With respect to each Delta Contract: (i)
the Contract is in full force and effect; (ii) no Delta Company is in
Default thereunder, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Delta;
(iii) no Delta Company has repudiated or waived any material provision of
any such Contract; and (iv) no other party to any such Contract is, to the
Knowledge of Delta, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Delta, or has repudiated or waived any material
provision thereunder. All of the indebtedness of any Delta Company for
money borrowed is prepayable at any time by such Delta Company without
penalty or premium.
5.14 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of Delta, 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 Delta
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 Delta, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding
against any Delta Company that is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Delta. Section 5.14 of
the Delta Disclosure Memorandum includes a summary report of all Litigation
as of the date of this Agreement to which any Delta Company is a party as a
defendant or cross-defendant.
5.15 STATEMENTS TRUE AND CORRECT. Since January 1, 1992, or the date
of organization if later, each Delta Company has timely filed all reports
and statements, together with any amendments required to be made with
respect thereto, that it was required to file with any Regulatory
Authorities (except, in the case of state securities authorities, failures
to file which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Delta). At the time of filing (or
if amended or superseded
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by a filing prior to the date of this Agreement, then on the date of such
filing): (i) each report and other document, including financial
statements, exhibits, and schedules thereto, filed by a Delta Company with
any Regulatory Authority complied in all material respects with all
applicable Laws, and (ii) 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. The statements, certificates, instruments, or
other writings, taken as a whole, furnished or to be furnished by any Delta
Company or any Affiliate thereof to Regions pursuant to this Agreement or
any other document, agreement, or instrument referred to herein, do not and
will not contain any untrue statement of material fact or 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 Delta 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 Delta Company or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to Delta stockholders in connection with
the Stockholders' Meeting, and any other documents to be filed by a Delta
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 stockholders of Delta, 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 Stockholders' 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
Stockholders' Meeting. All documents that any Delta 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.
5.16 ACCOUNTING, TAX, AND REGULATORY MATTERS. Except as specifically
contemplated by this Agreement, no Delta Company or any Affiliate thereof
has taken any action, or agreed to take 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 for
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement. To the
Knowledge of Delta there exists no fact, circumstance, or reason why the
requisite Consents referred to in Section 9.1(b) of this Agreement cannot
be received in a timely manner without imposition of any condition of the
type described in the last sentence of such Section 9.1(b) or result in the
imposition of a condition or restriction of the type referred to in Section
9.3(f).
5.17 STATE TAKEOVER LAWS. To the extent applicable, each Delta
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 Charter of Delta.
5.18 DIRECTORS' AGREEMENTS. Each of the directors of Delta has
executed and delivered to Regions an agreement in substantially the form of
Exhibit 2.
5.19 CHARTER PROVISIONS. Each Delta Company has taken all action so
that the entering into of this Agreement and the Joint Agreement of Merger
and the consummation of the Merger and the other transactions contemplated
by this Agreement and the Joint Agreement of Merger do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws, or other governing instruments of any Delta Company
or restrict or impair the ability of Regions or any of its
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Subsidiaries to vote, or otherwise to exercise the rights of a stockholder
with respect to, shares of any Delta Company that may be directly or
indirectly acquired or controlled by it.
5.20 DERIVATIVES CONTRACTS. Neither Delta nor any of its Subsidiaries
is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar
financial contract, or any other interest rate or foreign currency
protection contract not included on its balance sheet which is a financial
derivative contract (including various combinations thereof) and which
might reasonably be expected to have a Material Adverse Effect on Delta.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to Delta as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Regions is a corporation duly
organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on
its business as now conducted and to own, lease, and operate its material
Assets. Regions is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed
is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions.
6.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Regions has the corporate
power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Regions. This
Agreement represents a legal, valid, and binding obligation of Regions,
enforceable against Regions in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding may be
brought).
(b) Neither the execution and delivery of this Agreement by Regions,
nor the consummation by Regions of the transactions contemplated hereby,
nor compliance by Regions with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of 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 46,052,128 shares
were issued and outstanding and 1,474,579 shares
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were held as treasury shares as of September 30, 1995. 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 Delta 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 Delta Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past stockholders of Regions.
6.4 REGIONS SUBSIDIARIES. Regions has disclosed in Exhibit 22 of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1994, 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 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 SEC FILINGS; FINANCIAL STATEMENTS. (a) Regions has filed and made
available to Delta all forms, reports, and documents required to be filed
by Regions with the SEC since December 31, 1991, other than registration
statements on Forms S-4 and S-8 (collectively, the "Regions SEC Reports").
The Regions SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in
such Regions SEC Reports or necessary in order to make the statements in
such Regions SEC Reports, in light of the circumstances under which they
were made, not misleading.
(b) Each of the Regions Financial Statements (including, in each case,
any related notes) contained in the Regions SEC Reports, including any
Regions SEC Reports filed after the date of this Agreement until the
Effective Time, complied or will comply as to form in all material respects
with the applicable published rules and regulations of the SEC with respect
thereto, was or will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
presented or will fairly present the consolidated financial position of
Regions and its Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
Section 6.6 of the Regions Disclosure Memorandum, and to the Knowledge of
Regions, no Regions Company has any Liabilities
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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
September 30, 1995, 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 September 30, 1995, 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 September 30, 1995,
except as disclosed in the Regions Financial Statements delivered prior to
the date of this Agreement, or in Section 6.7 of the Regions Disclosure
Memorandum, (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, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, or (iii) requiring any
Regions Company to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any
material 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. Since January 1, 1992, or the date
of organization if later, each Regions Company has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities (except,
in the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions). At the time of filing (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing): (i) 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 (ii) each such report and document did not,
in all material respects, contain any untrue statement of a material fact
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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. The statements, certificates,
instruments, or other writings, taken as a whole, furnished or to be
furnished by any Regions Company or any Affiliate thereof to Delta pursuant
to this Agreement or any other document, agreement, or instrument referred
to herein, do not and will not contain any untrue statement of material
fact or 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 Delta stockholders in
connection with the Stockholders' 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 stockholders of
Delta, 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 Stockholders' 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 Stockholders' 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 ACCOUNTING, TAX, AND REGULATORY MATTERS. Except as specifically
contemplated by this Agreement, no Regions Company or any Affiliate thereof
has taken any action, or agreed to take 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 for
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement. To the
Knowledge of Regions, there exists no fact, circumstance, or reason why the
requisite Consents referred to in Section 9.1(b) of this Agreement cannot
be received in a timely manner without imposition of any condition of the
type described in the last sentence of such Section 9.1(b), or result in
the imposition of a condition or restriction of the type referred to in
Section 9.3(f).
6.12 AUTHORITY OF REGIONS BANK. (a) Regions Bank is a wholly owned
subsidiary of Regions. Regions Bank is a bank duly organized and validly
existing 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. Regions Bank has the corporate
power and authority necessary to execute, deliver, and perform its
obligations under the Joint Agreement of Merger and to consummate the
transactions contemplated thereby. The execution, delivery, and performance
of the Joint Agreement of Merger and the consummation of the transactions
contemplated therein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of Regions Bank. The Joint Agreement of Merger represents a legal, valid,
and binding obligation of Regions Bank, enforceable against Regions Bank 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).
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(b) Neither the execution and delivery of the Joint Agreement of
Merger by Regions Bank, nor the consummation by Regions Bank of the
transactions contemplated thereby, nor compliance by Regions Bank with any
of the provisions thereof, will (i) conflict with or result in a breach of
any provision of Regions Bank's Charter 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 Bank Company under,
any Contract or Permit of any Regions Bank 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
Bank, 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 Bank Company or any of their respective material Assets.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF DELTA. Unless the prior written consent of
the chief executive officer, vice chairman, 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 Delta Disclosure
Memorandum, Delta 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 Sections 9.1(b), and 9.1(c) or in Section 9.3(f) 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 DELTA. Except as disclosed in Section 7.2 of the
Delta 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, Delta 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 Delta Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Delta Company to another Delta
Company) in excess of an aggregate amount outstanding at any time of
$150,000 (for the Delta Companies on a consolidated basis) except in the
ordinary course of the business of Delta consistent with past practices
(which shall include, for Delta, creation of deposit liabilities, purchases
of federal funds, advances from the Federal Reserve Bank or Federal Home
Loan Bank, whether or not Delta has 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 Delta
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 Delta 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 Delta Company, or declare or pay any dividend or
make any other distribution in respect of Delta's capital stock, provided
that Delta may (to the extent legally and
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contractually permitted to do so), but shall not be obligated to, declare
and pay quarterly cash dividends on the shares of Delta Common Stock at a
rate not in excess of $.50 per share with record and payment dates the same
as the record and payment dates declared by Regions for cash dividends on
the Regions Common Stock; provided, that the Parties shall cooperate in
selecting the record date of Delta's cash dividend for the quarter in which
the Effective Time is to occur to ensure that, with respect to such
quarterly period,, the holders of Delta Common Stock do not receive both a
dividend in respect of their Delta Common Stock and a dividend in respect
of Regions Common Stock or fail to receive any dividend; 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
Delta 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 Delta Common Stock or any other capital stock of any
Delta Company, or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
Delta Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Delta Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any Delta Subsidiary (unless any such shares of stock
are sold or otherwise transferred to another Delta 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 Delta
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 Delta 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 Delta Company, except in accordance with past practice or
previously approved by the Board of Directors of Delta, in each case as
disclosed in Section 7.2(g) of the Delta Disclosure Memorandum or as
required by Law; except as disclosed in Section 7.2(g) of the Delta
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 Delta
Disclosure Memorandum; and enter into or amend any severance agreements
with officers of any Delta Company; grant any increase in fees or other
increases in compensation or other benefits to directors of any Delta
Company except in accordance with past practice disclosed in Section 7.2(g)
of the Delta 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 Delta
Company and any Person (unless such amendment is required by Law) that the
Delta Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered) at any time
on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Delta Company or make
any material change in or to any existing employee benefit plans of any
Delta 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
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(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any material Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any Delta
Company for money damages in excess of $100,000 or imposing material
restrictions upon the operations of any Delta 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 Delta 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
Sections 9.1(b), and 9.1(c) or in Section 9.3(f) 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 (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 Delta 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
financial or other institution or business if such acquisition would be
reasonably likely to cause any Consent of any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby to be conditioned
or restricted in any manner that would cause the condition set forth in the
second sentence of Section 9.1(b) not to be satisfied, unless Regions waives
such condition in writing in advance of the earliest of such acquisition,
agreement and agreement in principle.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' 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 Delta) 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
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light of the circumstances under which they were made, not misleading. Any
financial statements contained in any other reports to another Regulatory
Authority shall be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL. (a) As
soon as reasonably practicable after execution of this Agreement, Regions shall
prepare and file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become 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. Delta shall furnish all
information concerning it and the holders of its capital stock as Regions may
reasonably request in connection with such action. Delta shall call a
Stockholders' Meeting for the purpose of voting upon approval of this Agreement
and such other related matters as it deems appropriate. In connection with the
Stockholders' Meeting, (i) Delta shall mail the Proxy Statement to its
stockholders, (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 Delta shall recommend (subject to
compliance with their fiduciary duties as advised by counsel) to its
stockholders the approval of this Agreement, and (iv) the Board of Directors and
officers of Delta shall (subject to compliance with their fiduciary duties as
advised by counsel) use their reasonable efforts to obtain such stockholders'
approval.
(b) Regions shall indemnify and hold harmless Delta, each of its directors
and officers, and each Person, if any, who controls Delta within the meaning of
the 1933 Act against any losses, claims, damages, or Liabilities, joint,
several, or solidary, 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 the 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, but failure to give prompt notice shall deprive the
indemnified Person of his or her right to be indemnified only to the extent that
Regions is thereby prejudiced. 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.
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8.2 EXCHANGE LISTING. Regions shall use its reasonable efforts to list,
prior to the Effective Time, on the Nasdaq NMS, subject to official notice of
issuance, the shares of Regions Common Stock to be issued to the holders of
Delta Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Regions shall promptly prepare and file, and Delta 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.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Regions Bank and Delta shall execute and file the
Joint Agreement of Merger with the Office of Financial Institutions of the State
of Louisiana.
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. Delta shall
cooperate with Regions in obtaining, at Regions' election and expense,
environmental audits of any or all of the properties owned or occupied by Delta.
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 or certify the
destruction of all documents and copies thereof, and all work papers containing
confidential information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any
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representation, warranty, covenant, or agreement of the other Party or which has
had or is reasonably likely to have a Material Adverse Effect on the other
Party.
8.7 PRESS RELEASES. Prior to the Effective Time, Delta and Regions shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Delta Company nor any Affiliate thereof nor
any Representative retained by any Delta 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 Delta's Board of
Directors, no Delta 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 Delta may communicate information about such an
Acquisition Proposal to its stockholders 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. Delta shall promptly notify Regions orally and in
writing in the event that it receives any inquiry or proposal relating to any
such transaction. Delta 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 subject to fiduciary duties as aforesaid.
8.9 ACCOUNTING AND 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 pooling of
interests or "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code for federal income tax purposes.
8.10 STATE TAKEOVER LAWS. Each Delta Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of Sections 132 et seq. of the
LBCL.
8.11 CHARTER PROVISIONS. Each Delta Company shall take all necessary
action to ensure that the entering into of this Agreement and the Joint
Agreement of Merger and the consummation of the Merger and the other
transactions contemplated hereby or thereby do not and will not result in the
grant of any rights to any Person under the Articles of Incorporation, Bylaws,
or other governing instruments of any Delta Company or restrict or impair the
ability of Regions or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a stockholder with respect to, shares of any Delta Company that
may be directly or indirectly acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. Delta has disclosed in Section 8.12 of the
Delta Disclosure Memorandum each Person whom it reasonably believes is an
"affiliate" of Delta for purposes of Rule 145 under the 1933 Act. Delta 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 3, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of Delta 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 and until such time as financial
results covering at least 30 days of combined operations of Regions and Delta
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. Shares of Regions Common Stock
issued to such affiliates of Delta in exchange for shares of Delta Common Stock
shall not be transferable until such time as financial results covering at least
30 days of combined operations of Regions and Delta have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.12 (and Regions shall be entitled to
place restrictive legends upon certificates for shares of Regions Common Stock
issued to affiliates
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of Delta pursuant to this Agreement to enforce the provisions of this Section
8.12). 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.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Regions shall provide generally to officers and employees of the Delta
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 8.13), 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 Delta
shall be treated as service under Regions' qualified defined benefit plans, (ii)
service under any qualified defined contribution plans of Delta shall be treated
as service under Regions' qualified defined contribution plans, and (iii)
service under any other employee benefit plans of Delta shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause the Surviving Bank and its Subsidiaries to honor in accordance
with their terms all employment, severance, consulting, and other compensation
Contracts disclosed in Section 8.13 of the Delta Disclosure Memorandum to
Regions between any Delta 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 Delta Benefit
Plans.
8.14 INDEMNIFICATION. (a) For a period of ten years after the Effective
Time, Regions shall, and shall cause the Surviving Bank to, indemnify, defend,
and hold harmless the present and former directors, officers, employees, and
agents of each of the Delta Companies (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the full extent permitted under Louisiana Law and by Delta'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 8.14(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 Delta to notify its director and officer liability insurance carrier
of the existence of such claim prior to the Effective Time. Without limiting the
foregoing, in any case in which approval is required to effectuate any
indemnification, the determination of any such approval shall be made, at the
election of the Indemnified Party, by independent counsel mutually agreed upon
between Regions and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 8.14, 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 Delta 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 Delta 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
Delta and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Regions or Delta 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.
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8.15 REGIONS BANK. Regions, as the sole stockholder of Regions Bank, shall
vote prior to the Effective Time the shares of Regions Bank Common Stock in
favor of the Joint Agreement of Merger and shall otherwise cause Regions Bank to
comply with this Agreement and the Joint Agreement of Merger.
8.16 AVERAGE CLOSING PRICE DETERMINATION. Within two business days of the
Determination Date, Regions will provide a written computation of the Average
Closing Price which, if not objected to by Delta, shall be determinative.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to 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) STOCKHOLDER APPROVAL. The stockholders of Delta shall have
approved this Agreement and the Joint Agreement of Merger, and the
consummation of the transactions contemplated hereby and thereby, 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 that, had such condition or
requirement been known, Regions would not, in its reasonable judgment, have
entered into this Agreement.
(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 or the Joint Agreement of Merger.
(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 subject to official notice of issuance.
(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 and updated to the Closing Date (the
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"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, and (ii) the exchange in the Merger of Delta Common Stock for Regions
Common Stock will not give rise to gain or loss to the stockholders of
Delta with respect to such exchange (except to the extent of any cash
received). In rendering such Tax Opinion, counsel for Regions shall be
entitled to rely upon representations of officers of Delta and Regions
reasonably satisfactory in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF REGIONS. The obligations of Regions to
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. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of Delta set
forth in this Agreement shall be assessed 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). The representations and
warranties of Delta set forth in Section 5.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Delta set forth in Sections 5.16,
5.17, and 5.19 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Delta set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.16, 5.17, and
5.19) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Delta; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of Delta or to a matter being "known"
by Delta shall be deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Delta 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. Delta 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 Delta's Board of Directors and stockholders
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, L.L.P., counsel to Delta, dated as of the
Effective Time, in form reasonably satisfactory to Regions, as to the
matters set forth in Exhibit 4.
(E) AFFILIATES AGREEMENTS. Regions shall have received from each
affiliate of Delta the affiliates letter referred to in Section 8.12 of
this Agreement.
(F) CLAIMS LETTERS. Each of the directors and officers of Delta shall
have executed and delivered to Regions letters in substantially the form of
Exhibit 5.
(G) POOLING LETTER. Regions shall have received a letter from Ernst &
Young LLP, dated as of the Effective Time, to the effect that the Merger
will qualify for pooling-of-interests accounting treatment under Accounting
Principles Board Opinion No. 16 if closed and consummated in accordance
with this Agreement.
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9.3 CONDITIONS TO OBLIGATIONS OF DELTA. The obligations of Delta to
consummate the Merger and the other transactions contemplated hereby are subject
to the satisfaction of the following conditions, unless waived by Delta pursuant
to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Regions set
forth in this Agreement shall be assessed 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). The representations and
warranties of Regions set forth in Section 6.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Regions set forth in Section 6.11 of
this Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
Regions set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.11) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Regions; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the "Knowledge"
of Regions or to a matter being "known" by Regions shall be deemed not to
include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Regions and Regions Bank to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(C) CERTIFICATES. Regions shall have delivered to Delta (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 Delta
and its counsel shall request.
(D) OPINION OF COUNSEL. Delta shall have received an opinion of
Lange, Simpson, Robinson & Somerville, counsel to Regions, dated as of the
Effective Time, in form reasonably acceptable to Delta, as to the matters
set forth in Exhibit 6.
(E) FAIRNESS OPINION. Delta shall have received a letter from Chaffe
& Associates, Inc. or another financial adviser selected by Delta 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 stockholders of Delta is
fair to the stockholders of Delta from a financial point of view.
(F) REGULATORY CONDITIONS. No consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall require any action to be taken prior to the Effective Time
that, in the reasonable judgment of the Board of Directors of Delta, would
adversely affect the financial position, business, or results of operations
of Delta should the Merger not occur.
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ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of Delta,
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 Delta; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Delta and Section 9.3(a) of
this Agreement in the case of Regions or in material breach of any covenant
or other agreement contained in this Agreement) in the event of an
inaccuracy of any representation or warranty of the other Party 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
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of Delta and
Section 9.3(a) of this Agreement in the case of Regions; 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
stockholders of Delta fail to vote their approval of this Agreement and the
Joint Agreement of Merger and the transactions contemplated hereby as
required by the LBL at the Stockholders' Meeting or any adjournment or
postponement thereof where the transactions were presented to such
stockholders 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 November 30, 1996, except that a
Party that has breached the obligation to consummate the Closing and has
failed to cure such breach may not terminate under this subsection; 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, other than the conditions in Section 9.2(a) in the case of Delta or
9.3(a) in the case of Regions, cannot be satisfied or fulfilled by the date
specified in Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of Delta, if it is determines by a vote
of a majority of the members of its entire Board of Directors, at any time
during the ten-day period commencing after the Determination Date, if the
Average Closing Price shall be less than $34.00; subject, however, to the
following three sentences. If Delta refuses to consummate the Merger
pursuant to this Section 10.1(g), it shall give prompt written notice
thereof to Regions; provided, that such notice of election to terminate may
be withdrawn at any time within the aforementioned ten-day period. During
the seven-day period commencing with its receipt of such notice, Regions
shall have the option in its sole discretion to elect to increase the
Exchange Ratio to equal the quotient obtained by dividing (i) the product
of $34.00 and the Exchange Ratio (as then in effect) by (ii) the Average
Closing Price. If Regions makes an election contemplated by the preceding
sentence, within such seven-day period, it shall give prompt written notice
to Delta of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 10.1(g) and this
Agreement shall remain in effect in accordance with its terms (except the
Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 10.1(g); or
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(h) By the Board of Directors of Regions, at any time prior to the
15th day after receipt by the General Counsel of Regions of the Delta
Disclosure Memorandum without any Liability of any Party in the event that
the review of any of the disclosures contained in the Delta Disclosure
Memorandum causes the Board of Directors of Regions to determine, in its
reasonable good faith judgment, that a fact or circumstance exists or is
likely to exist or result which materially and adversely impacts one or
more of the economic benefits to Regions of the transactions contemplated
by this Agreement so as to render inadvisable the consummation of the
Merger.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement and the Joint Agreement of Merger pursuant to
Section 10.1 of this Agreement, this Agreement shall become void and have no
effect, and neither Party shall have any claim or legal right to redress,
whether for breach of contract or otherwise, as a result of a breach of any
representation, warranty, covenant, or condition of this Agreement, except that
(i) the provisions of this Section 10.2 and Article 11 and Section 8.6(b) of
this Agreement shall survive any such termination and abandonment, and (ii) a
termination pursuant to Section 10.1(b), 10.1(c), or 10.1(f) of this Agreement
shall not relieve the breaching Party from Liability for an uncured willful and
knowing breach of a representation, warranty, material covenant, or material
agreement giving rise to such termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 of this Agreement and Sections 8.1(b), 8.12, and 8.14
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 any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by,
or under common control with such Person.
"AGREEMENT" shall mean this Agreement and Plan of Reorganization,
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 daily last sale prices
of Regions Common Stock as reported on the Nasdaq NMS (as reported by The
Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by Regions) for the ten consecutive full trading days in
which such shares are traded on the Nasdaq NMS ending at the close of
trading on the five days before the Determination Date. If the price of
Regions Common Stock is adjusted at any time following the first day of
such period and prior to the Effective Time by reason of any action by
Regions of the nature described in the second sentence of Section 3.2, then
all prices preceding such adjustment shall themselves be adjusted so as to
be comparable with those following such adjustment.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
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"BUSINESS COMBINATION" shall mean an acquisition of, merger or
combination with, share exchange involving any class of voting stock of,
sale of more than twenty-five percent (25%) of the consolidated assets by,
or other business combination involving, or tender offer for or sale or
issuance of any equity securities involving an acquisition by a third-party
of more than twenty-five percent (25%) of the voting stock of, Delta.
"CLOSING" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding 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 where, in any
such event, such Default is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on a Party.
"DELTA BENEFIT PLANS" shall have the meaning set forth in Section 5.11
of this Agreement.
"DELTA COMMON STOCK" shall mean the $5.00 par value common stock of
Delta.
"DELTA COMPANIES" shall mean, collectively, Delta and all Delta
Subsidiaries.
"DELTA DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Delta Bank and Trust Company Disclosure Memorandum" delivered
prior to the 15th day after 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.
"DELTA FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Delta as of
September 30, 1995, and as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the nine
months ended September 30, 1995, and for each of the three years ended
December 31, 1994, 1993, and 1992, included in the Delta Disclosure
Memorandum, and (ii) the consolidated balance sheets of Delta (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
September 30, 1995.
"DELTA SUBSIDIARIES" shall mean the Subsidiaries of Delta, which shall
include the Delta Subsidiaries described in Section 5.4 of this Agreement
and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Delta in the future and owned by Delta at the
Effective Time.
"DETERMINATION DATE" shall mean the later of the date on which the
Consent of the FDIC shall be received or the date the stockholders of Delta
shall approve the Merger.
"DGCL" shall mean the General Corporation Law of Delaware.
"EFFECTIVE TIME" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
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"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"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 6, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"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.
"JOINT AGREEMENT OF MERGER" shall mean the joint agreement of merger
providing for the Merger, in substantially the form of Exhibit 1.
"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.
"LBL" shall mean the Louisiana Banking Law.
"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,
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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 or
other 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, (iii) for
depository institution Subsidiaries of a Party, pledges to secure deposits,
and other Liens incurred in the ordinary course of the banking business,
and (iv) Liens that arise by operation of Law with respect to Liabilities
that are not delinquent or are being contested in good faith.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative, or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information about a potential claim
relating to or affecting a Party, its business, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.
"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 (a) changes in banking and
similar Laws of general applicability or interpretations thereof by courts
or governmental authorities, (b) changes in GAAP or regulatory accounting
principles generally applicable to banks and savings associations and their
holding companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, (d) circumstances
affecting regional bank holding companies generally, and (e) the Merger and
compliance with the provisions of this Agreement on the operating
performance of the Parties.
"MERGER" shall mean the merger of Delta into and with Regions Bank
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 Service of Nasdaq or other
principal exchange on which Regions Common Stock is listed or quoted at the
relevant time.
"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.
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"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 Delta or Regions, and "Parties" shall mean
both Delta 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 Delta to
solicit the approval of its stockholders 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 Delta Common
Stock.
"REGIONS BANK" shall mean Regions Bank of Louisiana, a wholly owned
subsidiary of Regions organized under the Laws of the State of Louisiana.
"REGIONS BANK COMMON STOCK" shall mean the $1.00 par value common
stock of Regions Bank.
"REGIONS BANK COMPANIES" shall mean, collectively, Regions Bank and
all Regions Bank Subsidiaries.
"REGIONS COMMON STOCK" shall mean the $0.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
"REGIONS DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Regions Financial Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to Delta 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 September 30, 1995, and as of December 31, 1994 and 1993, and
the related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the nine months
ended September 30, 1995, and for each of the three years ended December
31, 1994, 1993, and 1992, 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
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to September 30, 1995.
"REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions, which
shall include the Regions Subsidiaries described in Section 6.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Regions in the future and owned by
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
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the stockholders of Delta 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.
"STOCKHOLDERS' MEETING" shall mean the meeting of the stockholders of
Delta to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"SURVIVING BANK" shall mean Regions Bank as the surviving bank
resulting from the Merger.
"TAX" OR "TAXES" shall mean all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs
duties, capital stock, paid-up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative or
add-on minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States or any
state, local, foreign government or subdivision or agency thereof,
including any interest, penalties or additions 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.
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(b) Notwithstanding the foregoing, if:
(1) (i) this Agreement is terminated,
(a) by Regions pursuant to Sections 10.1(b), 10.1(c), or 10.1(f) (but only
on the basis of the failure to satisfy any of the conditions enumerated in
Sections 9.1(a) and (d) or 9.2(a) or (b)) of this Agreement, or
(b) by Delta pursuant to Section 10.1(f) (but only on the basis of the
failure to satisfy any of the conditions enumerated in Section 9.1(a) or (d) or
9.3(e)) of this Agreement, or
(c) by either Party pursuant to Section 10.1(d)(ii) of this Agreement,
or
(ii) the Merger is not consummated by reason of any failure to satisfy
the conditions enumerated in Sections 9.1(a) or 9.3(e) of this Agreement,
and
(2) (i) Delta receives a bona fide written proposal to engage in a
Business Combination with a third party,
and
(ii) Regions is not at the time of the event referred to in clause
(1)(i) or (1)(ii) (the "Trigger Event") in breach (after expiration of any
applicable cure period) of any representation or warranty contained in this
Agreement under the applicable standard set forth in Section 9.3(a) of this
Agreement or in material breach (after expiration of any applicable cure
period) of any covenant or other agreement contained in this Agreement,
and
(iii) the Trigger Event is directly or indirectly caused by or
contributed to in a material way by Delta's receipt of such proposal,
and
(3) within twelve (12) months after the Trigger Event, Delta enters
into a letter of intent, agreement in principle, or definitive agreement
(whether or not considered binding, non-binding, or conditional) with
respect to, or recommending stockholder acceptance of, any Business
Combination with any third-party,
such third-party that is a party to the Business Combination shall, if the
events specified in (1), (2), and (3) above have occurred, pay to Regions, at
the earlier of the time (i) the letter of intent, agreement in principle or
definitive agreement is entered into, or (ii) the Board of Directors of Delta
recommends stockholder acceptance of the Business Combination, an amount in cash
equal to $1,480,000, which sum represents the direct costs and expenses
(including, without limitation, fees and expenses of Regions' financial or other
consultants, printing costs, investment bankers, accountants, and counsel)
incurred by Regions in negotiating and carrying out the transactions
contemplated by this Agreement, and the indirect costs and expenses incurred by
Regions in connection with the transactions contemplated by this Agreement
including Regions' management time devoted to negotiation and preparation for
such transaction. In the event such third-party shall refuse to pay such
amounts, the amounts shall be an obligation of Delta and shall be paid by Delta
promptly upon notice to Delta by Regions.
(c) 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 Chaffe & Associates, Inc. as to
Delta, 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,
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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 Delta or Regions, each of Delta 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), 8.12 and 8.14 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
approval by the holders of Delta Common Stock, there shall be made no amendment
that pursuant to the LBL requires further approval by such stockholders without
the further approval of such stockholders.
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 Delta, to waive or extend the time for the
compliance or fulfillment by Delta 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
except that any unfulfilled conditions shall be deemed to have been waived at
the Effective Time.
(b) Prior to or at the Effective Time, Delta, 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 Delta 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 Delta except that any unfulfilled conditions
shall be deemed to have been waived at the Effective Time.
(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
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address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Delta: Delta Bank and Trust Company
8018 Highway 23
Belle Chasse, Louisiana 70037
Telecopy Number: (504) 394-1018
Attention: Raymond P. Markase
President
Copy to Counsel: Correro, Fishman & Casteix, L.L.P.
201 St. Charles Avenue -- 47th Floor
New Orleans, Louisiana 70170-4700
Telecopy Number (504) 586-5250
Attention: Louis Y. Fishman
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
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 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of the
Parties.
11.13 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.
11.14 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
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without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: DELTA BANK AND TRUST COMPANY
By: /s/ ALAN POPICH By: /s/ RAYMOND P. MARKASE
- ------------------------------------------ ---------------------------------------------
Alan Popich Raymond P. Markase
Secretary President
[BANK SEAL]
REGIONS FINANCIAL CORPORATION
By: /s/ SAMUEL E. UPCHURCH, JR. By: /s/ RICHARD D. HORSLEY
- ------------------------------------------ ---------------------------------------------
Samuel E. Upchurch, Jr. Its: Vice-Chairman
General Counsel and Corporate Secretary
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
JOINT AGREEMENT OF MERGER
THIS JOINT AGREEMENT OF MERGER is made and entered into effective as of
January 11, 1996, by and between REGIONS BANK OF LOUISIANA, a Louisiana banking
association ("Regions Bank"), and a wholly owned subsidiary of Regions Financial
Corporation, a Delaware corporation ("Regions"), and DELTA BANK AND TRUST
COMPANY, a Louisiana banking association ("Delta").
PREAMBLE
Concurrently with the execution and delivery of this Joint Agreement of
Merger, Delta and Regions are entering into an Agreement and Plan of
Reorganization (the "Agreement") pursuant to which Delta would merge with and
into Regions Bank. The Boards of Directors of Delta and Regions Bank are of the
opinion that the best interests of their respective institutions would be served
if Delta is merged with and into Regions Bank on the terms and conditions
provided in this Joint Agreement of Merger.
Capitalized terms not defined herein shall have their respective meanings
set forth in the Agreement.
In consideration of the premises and of the covenants contained herein, and
other good and valuable consideration, Regions Bank and Delta hereby make, adopt
and approve this Joint Agreement of Merger and prescribe the terms and
conditions of this Joint Agreement of Merger and the mode and manner of
effecting this Joint Agreement of Merger, as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth below
shall have the following meanings:
"AGREEMENT" shall mean the Agreement and Plan of Reorganization, dated
as of January 11, 1996, by and between Delta and Regions.
"AVERAGE CLOSING PRICE" shall mean the average daily last sale prices
of Regions Common Stock as reported on the Nasdaq NMS (as reported by The
Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by Regions) for the ten consecutive full trading days in
which such shares are traded on the Nasdaq NMS ending at the close of
trading on the five days before the Determination Date.
"DELTA COMMON STOCK" shall mean the $5.00 par value common stock of
Delta.
"DELTA COMPANIES" shall mean, collectively, Delta and all Delta
Subsidiaries.
"DELTA SUBSIDIARIES" shall mean the Subsidiaries of Delta, which shall
include the Delta Subsidiaries described in Section 5.4 of the Agreement
and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Delta in the future and owned by Delta at the
Effective Time.
"DETERMINATION DATE" shall mean the date on which the stockholders of
Delta shall approve the Merger.
"EFFECTIVE TIME" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of the Agreement.
"EXCHANGE AGENT" shall have the meaning provided in Section 4.1 of the
Agreement.
"EXCHANGE RATIO" shall have the meaning provided in Section 3.1(b) of
the Agreement.
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"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"JOINT AGREEMENT OF MERGER" shall mean this Joint Agreement of Merger
providing for the Merger.
"LBL" shall mean the Louisiana Banking Law.
"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.
"MERGER" shall mean the merger of Delta into and with Regions Bank
referred to in Section 1.1 of the Agreement.
"PARTY" shall mean either Delta or Regions Bank, and "PARTIES" shall
mean both Delta and Regions Bank.
"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.
"REGIONS COMMON STOCK" shall mean the $0.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
"REGIONS BANK" shall mean Regions Bank of Louisiana, a bank organized
and existing under the Laws of the State of Louisiana that is a wholly
owned subsidiary of Regions.
"REGIONS BANK COMMON STOCK" shall mean the $1.00 par value common
stock of Regions Bank.
"REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions, which
shall include the Regions Subsidiaries described in Section 6.4 of the
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Regions in the future and owned by
Regions at the Effective Time.
"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.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"SURVIVING BANK" shall mean Regions Bank as the surviving bank
resulting from the Merger.
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ARTICLE 2
TERMS OF MERGER
2.1 MERGER. Subject to the terms and conditions of this Joint Agreement of
Merger, at the Effective Time (as defined herein), Delta shall be merged into
and with Regions Bank (the "Merger") as authorized by the Section 6:351-355 of
the Louisiana Banking Law. Regions Bank shall be the Surviving Bank resulting
from the Merger and shall be a wholly owned subsidiary of Regions and shall
continue to be governed by the Laws of the State of Louisiana.
2.2 SURVIVING BANK. The business of the Surviving Bank from and after the
Effective Time shall continue to be that of a state bank organized under the
laws of the State of Louisiana. The business shall be conducted from its main
office and at its legally established branches, which shall also include the
main office and all branches, whether in operation or approved but unopened, at
the Effective Time.
2.3 ASSUMPTION OF RIGHTS. At the Effective Time, the separate existence
and corporate organization of Delta shall be merged into and continued in the
Surviving Bank. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time and thereafter, except as otherwise provided
herein, all the rights, privileges, immunities, and franchises, of a public as
well as of a private nature, of each of Delta and Regions Bank; and all
property, real, personal, and mixed, and all debts due on whatever account, and
all other choices of action, and all and every other interest of or belonging to
or due to each of Delta and Regions Bank shall be taken and deemed to be
transferred to and vested in the Surviving Bank without further act or deed; and
the title to any real estate, or any interest therein, vested in any of Delta
and Regions Bank shall not revert or be in any way impaired by reason of the
Merger. All rights, franchises, and interests of both Delta and Regions Bank in
and to every type of property (real, personal, and mixed), and all choices in
action of both Delta and Regions Bank shall be transferred to and vested in the
Surviving Bank without any deed or other transfer. The Surviving Bank, upon
consummation of the Merger and without any order or other action on the part of
any court or otherwise, shall hold and enjoy all rights of property, franchises,
and interests, including appointments, designations, and nominations, and all
other rights and interests as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estates, assignee, receiver, and committee of
estates of incompetent persons, and in every other fiduciary capacity, in the
same manner and to the same extent as such rights, franchises, and interests
were held or enjoyed by either Delta or Regions Bank at the Effective Time.
2.4 ASSUMPTION OF LIABILITIES. All liabilities and obligations of both
Delta and Regions Bank of every kind and description shall be assumed by the
Surviving Bank, and the Surviving Bank shall be bound thereby in the same manner
and to the same extent that Delta and Regions Bank were so bound at the
Effective Time.
2.5 CHARTER. The Charter of Regions Bank in effect immediately prior to
the Effective Time shall be the Charter of the Surviving Bank until otherwise
amended or repealed.
2.6 BYLAWS. The Bylaws of Regions Bank in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Bank until otherwise amended
or repealed.
2.7 DIRECTORS AND OFFICERS. The directors of Regions Bank 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 Bank
from and after Effective Time in accordance with the Bylaws of the Surviving
Bank. The officers of Regions Bank 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 Bank from and after the Effective Time in
accordance with the Bylaws of the Surviving Bank.
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 Delta, Regions or the stockholders thereof, the shares of the constituent
entities shall be converted as follows:
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(c) Each share of Delta Common Stock (excluding shares held by Delta
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 stockholders who
perfect their dissenters' rights of appraisal) issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for 2.2568 shares of Regions Common Stock (subject to
adjustment as described below and pursuant to Section 10.1(g) of the
Agreement, the "Exchange Ratio") provided however, that:
(i) (1) in the event that the Average Closing Price is less than
$40.00, but not less than $38.00, Regions shall, in addition to issuing
2.2568 shares of Regions Common Stock for each share of Delta Common
Stock (subject to the exclusions set forth above) issued and outstanding
at the Effective Time, make a cash payment for each such share of Delta
Common Stock (the "Cash Consideration") equal to the product of (1) the
difference between (x) $40.00 and (y) the Average Closing Price and (2)
the Exchange Ratio;
(2) in the event the Average Closing Price is less than $38.00, the
Cash Consideration calculated in clause (1) above shall be calculated as
if the Average Closing Price were nonetheless $38.00;
(3) Regions may, in its sole discretion and option, pay all or any
part of the Cash Consideration (if any) in shares of Regions Common
Stock valued at the Average Closing Price; and
(ii) in the event that the Average Closing Price is greater than
$46.00, each share of Delta Common Stock (subject to the exclusions set
forth above) issued and outstanding at the Effective Time shall cease to
be outstanding and shall be converted into and exchanged for that number
of shares of Regions Common Stock equal to the quotient obtained by
dividing (1) the product of $46.00 and the Exchange Ratio (as then in
effect) by (2) the Average Closing Price.
3.2 ANTI-DILUTION PROVISIONS. In the event Delta changes the number of
shares of Delta Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be approximately adjusted. In the
event Regions changes the number of shares of Regions Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be prior to the Effective Time, the Exchange
Ratio and each of the dollar amounts set forth in Section 3.1(c)(i), 2(c)(ii),
or 10.1(g) shall be appropriately adjusted.
3.3 SHARES HELD BY DELTA OR REGIONS. Each of the shares of Delta Common
Stock held by any Delta 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 STOCKHOLDERS. Any holder of shares of Delta Common Stock
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 6:376 of LBL 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 stockholder
unless and until such dissenting stockholder has complied with the applicable
provisions of the LBL, including the provisions of Section 376 thereof relating
to the deposit in escrow, endorsement, and transfer of the certificate or
certificates representing the
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shares for which payment is being made. In the event that a dissenting
stockholder of Delta 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 Delta Common Stock held by such Person shall be
converted into and exchanged for that number of shares of Regions Common Stock
(plus Cash consideration, if applicable) determined under Section 3.1 of this
Joint Agreement of Merger 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 Joint Agreement of Merger.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this Joint
Agreement of Merger, each holder of shares of Delta Common Stock exchanged
pursuant to the Merger, who would otherwise have been entitled to receive a
fraction of a share of Regions Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Regions Common Stock multiplied by the market value of one share of Regions
Common Stock at the Effective Time. The market value of one share of Regions
Common Stock at the Effective Time shall be the closing price of such common
stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a stockholder in respect of
any fractional shares.
3.6 CONVERSION OF STOCK RIGHTS. (a) At the Effective Time, each award,
option, or other right to purchase or acquire shares of Delta Common Stock
pursuant to stock options, stock appreciation rights, or stock awards ("Delta
Rights") granted by Delta under the Delta Stock Plans, which are outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to Regions Common Stock, and Regions shall assume
each Delta Right, in accordance with the terms of the Delta Stock Plan and stock
option agreement by which it is evidenced, except that from and after the
Effective Time, (i) Regions and its Compensation Committee shall be substituted
for Delta and the Committee of Delta's Board of Directors (including, if
applicable, the entire Board of Directors of Delta) administering such Delta
Stock Plan, (ii) each Delta Right assumed by Regions may be exercised solely for
shares of Regions Common Stock (or cash in the case of stock appreciation
rights) and Cash Consideration, if applicable, (iii) the number of shares of
Regions Common Stock subject to such Delta Right shall be equal to the number of
shares of Delta Common Stock subject to such Delta Right immediately prior to
the Effective Time multiplied by the Exchange Ratio, (iv) the amount of cash
consideration, if applicable, subject to such Delta Right shall be equal to the
number of shares of Delta Common Stock subject to such Delta Right immediately
prior to the Effective Time multiplied by the Cash Consideration, and (v) the
per share exercise price (or similar threshold price, in the case of stock
awards) under each such Delta Right shall be adjusted by dividing the per share
exercise (or threshold) price under each such Delta Right by the Exchange Ratio
and rounding up to the nearest cent. Notwithstanding the provisions of clause
(iii) of the preceding sentence, Regions shall not be obligated to issue any
fraction of a share of Regions Common Stock upon exercise of Delta Rights and
any fraction of a share of Regions Common Stock that otherwise would be subject
to a converted Delta Right shall represent the right to receive a cash payment
equal to the product of such fraction and the difference between the market
value of one share of Regions Common Stock and the per share exercise price of
such Right. The market value of one share of Regions Common Stock shall be the
closing price of such common stock on the Nasdaq NMS (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source
selected by Regions) on the date of exercise of such Delta Right. In addition,
notwithstanding the provisions of clauses (iii) and (iv) of the first sentence
of this Section 3.6, each Delta Right which is an "incentive stock option" shall
be adjusted as required by Section 424 of the Internal Revenue Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension, or renewal of the option, within the meaning of Section 424(h) of
the Internal Revenue Code. Regions agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 3.6.
(b) As soon as reasonably practicable after the Effective Time, Regions
shall deliver to the participants in each Delta Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants pursuant
to such Delta Stock Plan shall continue in effect on the same terms and
conditions (subject to
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the adjustments required by Section 3.6(a) after giving effect to the Merger),
and Regions shall comply with the terms of each Delta Stock Plan to ensure,
to the extent required by, and subject to the provisions of, such Delta
Stock Plan, that Delta Rights which qualified as incentive stock options prior
to the Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, Regions shall take all
corporate action necessary to reserve for issuance sufficient shares of Regions
Common Stock for delivery upon exercise of Delta Rights assumed by it in
accordance with this Section 3.6. As soon as reasonably practicable after the
Effective Time, Regions shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), with
respect to the shares of Regions Common Stock subject to such options and shall
use its reasonable efforts to maintain the effectiveness of such registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. With respect
to those individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, where
applicable, Regions shall administer the Delta Stock Plan assumed pursuant to
this Section 3.6 in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act to the extent the Delta Stock Plan complied with such rule
prior to the Merger.
(c) All restrictions or limitations on transfer with respect to Delta
Common Stock awarded under the Delta Stock Plans or any other plan, program, or
arrangement of any Delta Company, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with respect to shares of Regions Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this Joint Agreement of Merger.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions and
Regions Bank shall cause the exchange agent selected by Regions (the "Exchange
Agent") to mail to the former stockholders of Delta appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Delta Common
Stock shall pass, only upon proper delivery of such certificates to the Exchange
Agent). After the Effective Time, each holder of shares of Delta Common Stock
(other than shares to be canceled pursuant to Section 3.3 of this Joint
Agreement of Merger or as to which dissenters' rights of appraisal have been
perfected and not withdrawn or forfeited under Section 376 of the LBL) 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 provided in Section 3.1 of
this Joint Agreement of Merger, together with all undelivered dividends and
other distributions in respect of such shares (without interest thereon)
pursuant to Section 4.2 of this Joint Agreement of Merger and, to the extent
required by Section 3.5 of this Joint Agreement of Merger, 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 Delta 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 Delta 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 Delta 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 Delta Common
Stock for exchange as provided in this Section 4.1 or otherwise complies with
the procedures of the Exchange Agent with respect to lost, stolen, or destroyed
certificates. The certificate or certificates of Delta Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Joint Agreement of Merger notwithstanding, neither Regions,
Delta, nor the Exchange Agent shall be liable to a holder of Delta Common Stock
for any amounts paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property Law.
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4.2 RIGHTS OF FORMER DELTA STOCKHOLDERS. At the Effective Time, the stock
transfer books of Delta shall be closed as to holders of Delta Common Stock
immediately prior to the Effective Time and no transfer of Delta 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 Joint
Agreement of Merger, each certificate theretofore representing shares of Delta
Common Stock (other than shares to be canceled pursuant to Sections 3.3 and 3.4
of this Joint Agreement of Merger) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Sections 3.1 and 3.4 of this Joint Agreement of Merger in exchange therefor,
subject, however, to the Surviving Bank's obligation to pay any dividends or
make any other distributions with a record date prior to the Effective Time
which have been declared or made by Delta in respect of such shares of Delta
Common Stock in accordance with the terms of this Joint Agreement of Merger and
which remain unpaid at the Effective Time. To the extent permitted by Law,
former stockholders of record of Delta shall be entitled to vote after the
Effective Time at any meeting of Regions stockholders the number of whole shares
of Regions Common Stock into which their respective shares of Delta Common Stock
are converted, regardless of whether such holders have exchanged their
certificates representing Delta Common Stock for certificates representing
Regions Common Stock in accordance with the provisions of this Joint Agreement
of Merger. 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 Joint Agreement of Merger, 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 Delta 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 Joint Agreement of Merger. However, upon
surrender of such Delta Common Stock certificate, both the Regions Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered dividends, the cash consideration (if
any), and cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.
ARTICLE 5
EFFECTIVENESS
5.1 CONDITIONS PRECEDENT. Consummation of the Merger and the other
transactions contemplated hereunder is conditioned upon the approval of this
Joint Agreement of Merger by the sole stockholder of Regions Bank and the
stockholders of Delta as to the extent provided by law, and the receipt of the
requisite regulatory approvals as set forth in the Agreement. Consummation of
the Merger is further conditioned upon the approval of the Merger by the Office
of Financial Institutions of the State of Louisiana (the "Commissioner").
Additionally, consummation of the Merger is conditioned on the fulfillment of
the conditions precedent set forth in Article Nine of the Agreement or the
waiver of such conditions as provided in Section 11.6 of the Agreement.
5.2 TERMINATION. This Joint Agreement of Merger may be terminated at any
time prior to the Effective Time by the Regions as provided in Section 3.2 of
the Agreement.
5.3 EFFECTIVENESS. The Merger and other transactions contemplated by this
Joint Agreement of Merger shall become effective on the date and at the time the
Louisiana Articles of Merger reflecting the Merger shall become effective with
the Commissioner (the "Effective Time").
ARTICLE 6
PROCEDURE
This Joint Agreement of Merger shall be submitted to the stockholders of
Regions Bank and Delta for their approval. If such approval is given, then the
fact of such approval shall be certified hereon by the Secretaries of Regions
Bank and Delta. This Joint Agreement of Merger, so approved and certified,
shall, as
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soon as practicable, be signed and acknowledged by the President or
Vice President of each of the Merging Banks. As soon as may be practicable
thereafter, this Joint Agreement of Merger, so certified, signed and
acknowledged, shall be delivered to the Commissioner of Financial Institutions
of the State of Louisiana for filing in the manner required by law and shall be
effective at the Effective Time; and thereafter, as soon as practicable, a copy
of the Certificate of Merger issued by the Commissioner of Financial
Institutions of the State of Louisiana, and certified by him to be a true copy,
shall be filed for record in the Office of the Recorder of Mortgages of the
parishes in which the Delta and Regions Bank have their respective registered
offices and in the Office of the Recorder of Conveyances of each parish in which
Regions Bank has immovable property.
ARTICLE 7
MISCELLANEOUS
7.1 AMENDMENT. To the extent permitted by law, this Joint Agreement of
Merger may be amended by a subsequent written instrument upon the approval of
the Boards of Directors of each of the parties hereto and upon execution of such
instrument by the duly authorized officers of each and by a majority of the
Boards of Directors of each of the Parties; provided, however, that after any
such approval by the holders of Delta Common Stock, there shall be made no
amendment decreasing the consideration to be received by Delta stockholders
without the further approval of such stockholders, and provided further, that no
amendment to this Joint Agreement of Merger shall modify the requirements of
regulatory approval required for the transactions contemplated by this Joint
Agreement of Merger.
7.2 HEADINGS. The headings in this Joint Agreement of Merger are for
convenience only and shall not affect the construction or interpretation of this
Joint Agreement of Merger.
7.3 COUNTERPARTS. This Joint Agreement of Merger may be executed in two or
more counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute one and the same instrument.
7.4 BINDING EFFECT; GOVERNING LAW. This Joint Agreement of Merger shall be
binding upon and inure to the benefit of the parties hereto, and their
respective shareholders, successors and assigns, and shall be governed by, and
construed in accordance with, the laws of the State of Louisiana.
IN WITNESS WHEREOF, Regions Bank and Delta have caused this Joint Agreement
of Merger to be executed in counterparts by a majority of the entire Board of
Directors of Regions Bank and Delta have hereunto subscribed their names.
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A MAJORITY OF THE ENTIRE BOARD OF DIRECTORS OF
DELTA BANK AND TRUST COMPANY
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
ATTEST:
- --------------------------------------
Secretary
[BANK SEAL]
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A MAJORITY OF THE ENTIRE BOARD OF DIRECTORS OF
REGIONS BANK OF LOUISIANA
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
- --------------------------------- ----------------------------------
ATTEST:
- ------------------------------------
Secretary
[BANK SEAL]
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EXECUTION BY BANKS
Considering the approval of this Joint Agreement of Merger by the
stockholders of Regions Bank of Louisiana and Delta Bank and Trust Company, as
certified above, this Joint Agreement of Merger is executed by such banks,
acting through their respective Presidents, this day of ,
1996.
REGIONS BANK OF LOUISIANA
By:
-----------------------------------
Its:
-----------------------------------
Attest:
- ------------------------------------------------------
Secretary
[BANK SEAL]
DELTA BANK AND TRUST COMPANY
By:
----------------------------------
Its:
----------------------------------
Attest:
- --------------------------------------
Secretary
[BANK SEAL]
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CERTIFICATE OF SECRETARY OF
REGIONS BANK OF LOUISIANA
I hereby certify that I am the duly elected Secretary of Regions Bank of
Louisiana, a bank presently serving in such capacity and that the foregoing
Joint Agreement of Merger was, in the manner required by law, duly approved,
without alteration or amendment, by the required vote of the stockholders of
Regions Bank of Louisiana.
Certificate dated , 1996
--------------------------------------
-------------------------, Secretary
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CERTIFICATE OF SECRETARY OF
DELTA BANK AND TRUST COMPANY
I hereby certify that I am the duly elected Secretary of Delta Bank and
Trust Company, a bank organized and existing under the laws of the State of
Louisiana, presently serving in such capacity and that the foregoing Joint
Agreement of Merger was, in the manner required by law, duly approved, without
alteration or amendment, by the required vote of the stockholders of Delta Bank
and Trust Company.
Certificate dated , 1996
--------------------------------------
-------------------------, Secretary
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ACKNOWLEDGMENT AS TO
REGIONS BANK OF LOUISIANA
STATE OF LOUISIANA
PARISH OF
-------------------
BEFORE ME, the undersigned authority, personally came and appeared
________________________________________, who, being duly sworn, declared and
acknowledged before me that he is the President of Regions Bank of Louisiana and
that in such capacity he was duly authorized to and did execute the foregoing
Joint Agreement of Merger on behalf of such bank, for the purposes therein
expressed and as his and such bank's free act and deed.
--------------------------------------
Appearer
Sworn to and subscribed before me
this _________ day of _____________, 1996.
_______________________________________________
Notary Public
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ACKNOWLEDGMENT AS TO
DELTA BANK AND TRUST COMPANY
STATE OF LOUISIANA
PARISH OF
-----------------------
BEFORE ME, the undersigned authority, personally came and appeared
________________________________________, who, being duly sworn, declared and
acknowledged before me that he is the President of Delta Bank and Trust Company
and that in such capacity he was duly authorized to and did execute the
foregoing Joint Agreement of Merger on behalf of such bank, for the purposes
therein expressed and as his and such bank's free act and deed.
--------------------------------------
Appearer
Sworn to and subscribed before me
this _________ day of _____________, 1996.
_______________________________________________
Notary Public
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APPENDIX C
June , 1996
The Board of Directors
Delta Bank and Trust Company
8018 Hwy. 23
Belle Chasse, LA 70037-2490
Gentlemen:
We understand that Delta Bank and Trust Company ("Delta") and Regions
Financial Corp. ("Regions")have entered into an Agreement and Plan of
Reorganization by and between Delta and Regions, dated as of January 11, 1996
(the "Agreement") which provides, among other things, for the merger of Delta
with and into a wholly-owned subsidiary of Regions (the "Merger"). Pursuant to
the Merger, each issued and outstanding share of Delta common stock, par value
$5.00 per share (the "Delta Common Stock"), excluding shares held by Delta or by
Regions or by any of their affiliates, (in each case in other than a fiduciary
capacity or as a result of debts previously contracted), and excluding shares
held by stockholders who perfect their dissenters' rights of appraisal, shall
cease to be outstanding and shall be converted into and exchanged for 2.2568
shares of Regions common stock, par value $0.625 per share (the "Regions Common
Stock"), pursuant to Sections 3.1(c)(i) and (ii), 3.5 and 10.1(g) of the
Agreement (the "Conversion Ratio"). The terms and conditions of the Merger and
the Exchange Ratio are more fully described in the Agreement.
You have asked our opinion as to whether the Exchange Ratio is fair, from a
financial point of view, to the stockholders of Delta (other than Regions and
its affiliates).
Chaffe & Associates, Inc. ("Chaffe"), through its experience in the
securities industry, investment analysis and appraisal, and in related corporate
finance and investment banking activities, including mergers and acquisitions,
corporate recapitalization, and valuations for estate, corporate and other
purposes states that it is competent to provide an opinion as to the fairness of
the Exchange Ratio contemplated herein. Neither Chaffe nor any of its officers
or employees has an interest in Delta Common Stock or Regions Common Stock.
During the past year, Chaffe has provided financial advisory services to Delta,
and assistance in negotiating the proposed transaction ("Advisory and Marketing
Services"). The fee received for the preparation and delivery of this opinion is
not, and fees received for the Advisory and Marketing Services were not,
dependent or contingent upon any transaction.
In connection with rendering its opinions, Chaffe, among other things: (i)
reviewed Delta's Proxy Statement for this proposed transaction in substantially
the form to be sent to stockholders, including a copy of the Agreement; (ii)
reviewed and analyzed certain publicly-available financial statements and other
information of Delta and Regions, respectively, (iii) reviewed and analyzed
certain internal financial statements and other financial and operating data
concerning Delta, prepared by the management of Delta, including financial
projections; (iv) discussed the past and current operations and financial
condition, and the prospects of Regions and Delta with senior executives of
Regions and Delta, respectively; (v) reviewed the historical prices and trading
volumes of the shares of Regions Common Stock and Delta Common Stock; (vi)
compared the financial performance of Delta and Regions, and the prices and
trading activity of the Delta Common Stock and Regions Common Stock, with that
of certain other comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms of business combinations in the commercial
banking industry specifically and other industries generally, which Chaffe
deemed generally comparable to the Merger; (viii) considered a number of
valuation methodologies, including among others, those that incorporate book
value, deposit base premium and capitalization of earnings; and (ix) performed
such other studies and analyses as we deemed appropriate to this opinion.
In its review, Chaffe relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial information,
and all other information reviewed by it for purposes of its opinions. Chaffe
did not make or obtained an independent review of Delta's or Regions assets or
liabilities, nor was Chaffe furnished with any such appraisals. Chaffe relied
solely on Delta and Regions for information as to
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June , 1996
Page 2
the adequacy of their respective loan loss reserves and values of other real
estate owned. With respect to Delta's projected financial results, Chaffe has
assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and judgements of the management of Delta of
future financial performances of Delta. Regions did not allow Chaffe to review
any information other than publicly-available information. This opinion was
necessarily based upon market, economic and other conditions as they existed on,
and could be evaluated as of, the date hereof. Chaffe expressed no opinion on
the tax consequences of the proposed transaction or the effect of any tax
consequences on the value to be received by the shareholders of Delta Common
Stock.
Based upon and subject to the foregoing and based upon such other matters
as we considered relevant, it is our opinion on the date hereof that the
Conversion Ratio is fair, from a financial point of view, to the holders of
Delta common stock (other than Regions and its affiliates).
Very truly yours,
CHAFFE & ASSOCIATES, INC.
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APPENDIX D
WEST'S LOUISIANA STATUTES ANNOTATED
LOUISIANA REVISED STATUTES
TITLE 6. BANKS AND BANKING
CHAPTER 3. STATE BANKS
SUBCHAPTER B. MERGERS, CONSOLIDATIONS, LIQUIDATIONS, AND CONVERSIONS
PART V. RIGHTS OF DISSENTING STOCKHOLDERS
SECTION 376. RIGHTS OF A STOCKHOLDER DISSENTING FROM CERTAIN ACTIONS
A. Except as provided in Subsection B of this Section, if a state bank has,
by vote of its stockholders, authorized a sale, lease, or exchange of all or
substantially all of its assets, or become a party to a merger or consolidation,
or authorized a conversion into a national bank, or authorized a voluntary
liquidation, then, unless such authorization or action shall have been given or
approved by at least eighty percent of the total voting power, a stockholder who
voted against such action shall have the right to dissent.
B. The right to dissent provided by this Section shall not exist in the
case of stockholders holding shares of any class of stock which, at the record
date fixed to determine stockholders entitled to receive notice of and to vote
at the meeting of stockholders at which a merger or consolidation was acted on,
are listed on a national securities exchange, unless the articles of the bank
issuing such stock provide otherwise, or the shares of such stockholders were
not converted by the merger or consolidation solely into shares of the surviving
or new bank.
C. (1) Except as provided in the last sentence of this Subsection, any
stockholder electing to exercise such right of dissent shall file with the bank,
prior to or at the meeting of stockholders at which such proposed action is
submitted to a vote, a written objection to such proposed action and shall vote
his shares against such action.
(2) If such proposed action be taken by the required vote but by less than
eighty percent of the total voting power, and the merger, consolidation, sale,
liquidation, or conversion authorized thereby be effected, the bank shall
promptly thereafter give written notice thereof, by registered mail, to each
stockholder who filed such written objection to and voted his shares against
such action at such stockholder's last address on the bank's records.
(3) Each such stockholder may, within twenty days after the mailing of such
notice to him but not thereafter, file with the bank 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 bank may be sent and at the same time deposit in escrow
in a bank or trust company located in the parish of the domicile of the bank the
certificates representing his shares, duly endorsed and transferred to the
escrow bank upon the sole condition that said certificates shall be delivered to
the bank upon payment of the value of the shares determined in accordance with
the provisions of this Section. With his demand, the stockholder shall deliver
to the bank the written acknowledgement of such escrow bank or trust company
with which such certificates have been deposited that it so holds his
certificates of stock.
(4) Unless the objection, demand, and acknowledgment aforesaid be made and
delivered by the stockholder within the period described in this Subsection, he
shall conclusively be presumed to have acquiesced in the action proposed or
taken.
D. If the bank 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 the receipt
of such demand and acknowledgment, notify in writing the stockholder 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 by him for his shares.
E. (1) 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
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<PAGE> 172
stockholder within sixty days after receipt of notice in writing of the bank's
disagreement but not thereafter may file suit against the bank or the merged or
consolidated bank, as the case may be, in the district court of the parish in
which the bank or the merged or consolidated bank, as the case may be, is
domiciled praying the court to fix and decree the fair cash value of the
dissatisfied stockholder's shares as of the day before the 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.
(2) Any stockholder entitled to file such a suit may, within such sixty-day
period but not thereafter, intervene as a plaintiff in such a suit filed by
another stockholder and recover therein judgment against the bank for the fair
cash value of his shares. No order or decree shall be made by the court staying
the proposed action, and any such action may be carried to completion
notwithstanding any such suit.
(3) Failure of the stockholder to bring suit or to intervene in such a suit
within sixty days after receipt of notice of disagreement by the bank shall
conclusively bind the stockholder:
(a) By the bank's statement that no payment is due; or
(b) If the bank does not contend that no payment is due, to accept the
value of his shares as fixed by the bank in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
stockholder and the bank, or when the bank has become liable for the value
demanded by the stockholder because of failure to give notice of disagreement
and of the value it will pay, or when the stockholder has become bound to accept
the value the bank agrees is due because of his failure to bring suit within
sixty days after receipt of notice of the bank's disagreement, the action of the
stockholder to recover such value must be brought within five years from the
date the value was agreed upon or the liability of the bank became fixed.
G. If the bank or the merged or consolidated bank, as the case may be,
shall, in its notice of disagreement, have offered to pay the dissatisfied
stockholder on demand an amount in cash deemed by it to be fair cash value of
his shares, and if, on the institution of a suit by the dissatisfied stockholder
claiming an amount in excess of the amount offered, the bank or the merged or
consolidated bank, 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 stockholder, 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 bank or the merged or
consolidated bank, as the case may be, and judicial interest may be awarded
against such bank only on the amount of the award in excess of the amount
deposited in the registry of the court; otherwise, the costs of the proceeding
shall be taxed against such stockholder.
H. Upon filing a demand for the value of his shares, the stockholder shall
cease to have any of the rights of a stockholder except the rights accorded by
this Section. Such a demand may be withdrawn by the stockholder at any time
before the bank 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 bank. If a notice of election
is withdrawn, or the proposed corporate action is abandoned or rescinded, or a
court could determine that the stockholder is not entitled to receive payment
for his shares, or the stockholder should otherwise lose his dissenter's rights:
(1) He shall not have the right to receive a payment for his shares;
(2) 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 bank; and
(3) He shall be reinstated to all his rights as a stockholder 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 rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the bank he shall receive 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 proceeding that may have been taken
in the interim.
D-2
<PAGE> 173
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 as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this
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<PAGE> 174
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.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or (2) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the
stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
II-2
<PAGE> 175
"(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.
"(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 Reorganization, dated as of January 11 by and between Delta Bank & Trust Company
and Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
2.2 -- Form of Joint Agreement of Merger to be entered into between Delta Bank & Trust Company and Regions Bank
of Louisiana -- included as Appendix B 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 Duplantier, Hrapmann, Hogan & Maher
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
registration statement.
</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.
II-3
<PAGE> 176
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
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> 177
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this 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 6th day of June, 1996.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
/s/ Richard D. Horsley
BY: -------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, or their substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
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>
/s/ J. Stanley Mackin
- -------------------------- Chairman of the Board and June 6, 1996
J. Stanley Mackin Chief Executive Officer and
Director
/s/ Richard D. Horsley
- -------------------------- Vice Chairman of the Board and June 6, 1996
Richard D. Horsley Executive Financial Officer
and Director
/s/ Robert P. Houston
- -------------------------- Executive Vice President and June 6, 1996
Robert P. Houston Comptroller
/s/ Shelia S. Blair
- -------------------------- Director June 6, 1996
Sheila S. Blair
/s/ William B. Boles, Sr.
- -------------------------- Director June 6, 1996
William B. Boles, Sr.
/s/ James B. Boone, Jr.
- -------------------------- Director June 6, 1996
James B. Boone, Jr.
/s/ Albert P. Brewer
- -------------------------- Director June 6, 1996
Albert P. Brewer
</TABLE>
II-5
<PAGE> 178
<TABLE>
<S> <C> <C>
/s/ James S.M. French
- -------------------------- Director June 6, 1996
James S.M. French
/s/ Catesby ap C. Jones
- -------------------------- Director June 6, 1996
Catesby ap C. Jones
/s/ Olin B. King
- -------------------------- Director June 6, 1996
Olin B. King
/s/ Henry E. Simpson
- -------------------------- Director June 6, 1996
Henry E. Simpson
/s/ Lee J. Styslinger, Jr.
- -------------------------- Director June 6, 1996
Lee J. Styslinger, Jr.
/s/ Robert J. Williams
- -------------------------- Director June 6, 1996
Robert J. Williams
</TABLE>
<PAGE> 179
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Reorganization, dated as of January 11 by and between Delta Bank & Trust Company
and Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
2.2 -- Form of Joint Agreement of Merger to be entered into between Delta Bank & Trust Company and Regions Bank
of Louisiana -- included as Appendix B 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 Duplantier, Hrapmann, Hogan & Maher
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
registration statement.
</TABLE>
<PAGE> 1
EXHIBIT 5
LANGE, SIMPSON, ROBINSON & SOMERVILLE
ATTORNEYS & COUNSELORS
417 20TH STREET NORTH, SUITE 1700
BIRMINGHAM, ALABAMA 35203-3272
TELEPHONE (205) 250-5000
FACSIMILE (205) 250-5034
June 6, 1996
Regions Financial Corporation
417 North 20th Street
Birmingham, AL. 35203
Re: Regions Financial Corporation -- S-4 Registration
Statement, Acquisition of Delta Bank & Trust Company
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation, ("Regions") in connection with the Acquisition of Delta Bank &
Trust Company ("Delta") and Regions (the "Merger") and in connection with the
registration of common stock of Regions on Form S-4 under the Securities Act
of 1933. The Merger provides for issuance of shares of common stock of
Regions, par value $.625 per share, issuable to the stockholders of First
Gwinnett upon consummation of the Merger. The maximum number of shares of
Regions to be issued in the Merger is 844,992.
<PAGE> 2
Regions Financial Corporation
June 6, 1996
Page 2
We have examined and are familiar with the registration statement on
Form S-4 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
proceedings taken by its directors to date, and we have examined such other
documents and records as we have deemed relevant for purposes of rendering this
opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of stock of Regions 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
[LETTERHEAD]
June 7, 1996
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Delta Bank & Trust Company
8018 Highway 23
Belle Chasse, Louisiana 70037
Re: Proposed Agreement and Plan of Reorganization involving Delta Bank &
Trust Company, Regions Financial Corporation, and Regions Bank of
Louisiana
Ladies and Gentlemen:
We have served as counsel to Regions Financial Corporation ("Regions") in
connection with the proposed reorganization of Delta Bank & Trust Company
("Delta") pursuant to the Agreement and Plan of Reorganization dated as of
January 11, 1996 (the "Agreement") which provides for the merger of Delta with
and into Regions Bank of Louisiana ("Regions Bank"), a wholly-owned subsidiary
of Regions. In our capacity as counsel to Regions, our opinion has been
requested with respect to certain of the federal income tax consequences of the
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 assumptions as more fully described below. All terms used herein without
definition shall have the respective meanings specified in the Agreement, and
unless otherwise specified, all section references herein are to the Code.
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such documents
as we have deemed appropriate, including:
(1) The Agreement;
(2) The Joint Agreement of Merger;
(3) The Registration Statement on Form S-4 filed by Regions with the
Securities and Exchange Commission under the Securities Act of 1933, on
June 7, 1996, including the Proxy Statement/ Prospectus for the Special
Meeting of the stockholders of Delta; and
(4) Such additional documents as we have considered relevant.
<PAGE> 2
In our examination of the 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 Delta and Regions and through certificates provided by
the management of Delta and the management of Regions.
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 Belle Chasse, Louisiana market area. To
achieve these goals, the following will occur pursuant to the Agreement:
(1) Subject to the terms and conditions of this Agreement, at the
Effective Time, Delta shall be merged into and with Regions Bank in
accordance with the provisions of Sections 6:351-355 of the LBL and with
the effect provided therein (the "Merger"). Regions Bank shall be the
Surviving Bank of the Merger and shall continue to be governed by the Laws
of the State of Louisiana. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the
respective Boards of Directors of Delta and Regions and the Joint Agreement
of Merger, in substantially the form of Exhibit 1 of the Agreement, which
has been approved and adopted by the Boards of Directors of Delta and
Regions Bank.
(2) Subject to the provisions of Article 3 of the Agreement, at the
Effective Time, by virtue of the Merger and without any action on the part
of Delta, Regions or the stockholders thereof, the shares of the
constituent entities 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 Regions Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of Delta Common Stock (excluding shares held by
Delta 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
stockholders who perfect their dissenters' rights of appraisal) issued
and outstanding at the Effective Time shall cease to be outstanding and
shall be converted into and exchanged for 2.2568 shares of Regions
Common Stock (subject to adjustment as described below and pursuant to
Section 10.1(g) of this Agreement, the "Exchange Ratio") provided
however, that:
(i) (1) in the event that the Average Closing Price is less than
$40.00, but not less than $38.00, Regions shall, in addition to
issuing 2.2568 shares of Regions Common Stock for each share of Delta
Common Stock (subject to the exclusions set forth above) issued and
outstanding at the Effective Time, make a cash payment for each such
share of Delta Common Stock (the "Cash Consideration") equal to the
product of (1) the difference between (x) $40.00 and (y) the Average
Closing Price and (2) the Exchange Ratio;
(2) in the event the Average Closing Price is less than $38.00,
the Cash Consideration calculated in clause (1) above shall be
calculated as if the Average Closing Price were nonetheless $38.00;
(3) Regions may, in its sole discretion and option, pay all or
any part of the Cash Consideration (if any) in shares of Regions
Common Stock valued at the Average Closing Price; and
(ii) in the event that the Average Closing Price is greater than
$46.00, each share of Delta Common Stock (subject to the exclusions
set forth above) issued and outstanding at the Effective Time shall
cease to be outstanding and shall be converted into and exchanged for
that
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number of shares of Regions Common Stock equal to the quotient
obtained by dividing (1) the product of $46.00 and the Exchange Ratio
(as then in effect) by (2) the Average Closing Price.
(3) In the event Delta changes the number of shares of Delta Common
Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, or similar recapitalization with respect to
such stock and the record date therefor (in the case of a stock dividend)
or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior
to the Effective Time, the Exchange Ratio shall be appropriately adjusted.
In the event Regions changes the number of shares of Regions Common Stock
issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior
to the Effective Time, the Exchange Ratio, and each of the dollar amounts
set forth above in 2(c)(i), 2(c)(ii), or Section 10.1(g) of the Agreement
shall be appropriately adjusted.
(4) Each of the shares of Delta Common Stock held by any Delta 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.
(5) Any holder of shares of Delta Common Stock who perfects such
holder's dissenters' rights of appraisal in accordance with and as
contemplated by Section 6:376 of LBL 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 stockholder
unless and until such dissenting stockholder has complied with the
applicable provisions of the LBL, including the provisions of Section 376
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 stockholder of Delta 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 Delta Common Stock held by such Person shall be converted into
and exchanged for that number of shares of Regions Common Stock (plus Cash
Consideration, if applicable) determined under Section 3.1 of the 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 Agreement.
(6) Notwithstanding any other provision of the Agreement, each holder
of shares of Delta Common Stock exchanged pursuant to the Merger, who would
otherwise have been entitled to receive a fraction of a share of Regions
Common Stock (after taking into account all certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Regions Common Stock
multiplied by the market value of one share of Regions Common Stock at the
Effective Time. The market value of one share of Regions Common Stock at
the Effective Time shall be the closing price of such common stock on the
Nasdaq NMS (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Regions) on the last
trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a stockholder in
respect of any fractional shares.
(7) At the Effective Time, each award, option, or other right to
purchase or acquire shares of Delta Common Stock pursuant to stock options,
stock appreciation rights, or stock awards ("Delta Rights") granted by
Delta under the Delta Stock Plans, which are outstanding at the Effective
Time, whether or not exercisable, shall be converted into and become rights
with respect to Regions Common Stock, and Regions shall assume each Delta
Right, in accordance with the terms of the Delta Stock Plan and stock
option agreement by which it is evidenced, except that from and after the
Effective Time, (i) Regions and its Compensation Committee shall be
substituted for Delta and the Committee of Delta's Board of Directors
(including, if applicable, the entire Board of Directors of Delta)
administering such Delta
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Stock Plan, (ii) each Delta Right assumed by Regions may be exercised
solely for shares of Regions Common Stock (or cash in the case of stock
appreciation rights) and Cash Consideration, if applicable, (iii) the
number of shares of Regions Common Stock subject to such Delta Right shall
be equal to the number of shares of Delta Common Stock subject to such
Delta Right immediately prior to the Effective Time multiplied by the
Exchange Ratio, (iv) the amount of cash consideration, if applicable,
subject to such Delta Right shall be equal to the number of shares of Delta
Common Stock subject to such Delta Right immediately prior to the Effective
Time multiplied by the Cash Consideration, and (v) the per share exercise
price (or similar threshold price, in the case of stock awards) under each
such Delta Right shall be adjusted by dividing the per share exercise (or
threshold) price under each such Delta Right by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding the provisions of clause
(iii) of the preceding sentence, Regions shall not be obligated to issue
any fraction of a share of Regions Common Stock upon exercise of Delta
Rights and any fraction of a share of Regions Common Stock that otherwise
would be subject to a converted Delta Right shall represent the right to
receive a cash payment equal to the product of such fraction and the
difference between the market value of one share of Regions Common Stock
and the per share exercise price of such Right. The market value of one
share of Regions Common Stock shall be the closing price of such common
stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on
the date of exercise of such Delta Right. In addition, notwithstanding the
provisions of clauses (iii) and (iv) of the first sentence of this section
(7), each Delta Right which is an "incentive stock option" shall be
adjusted as required by Section 424 of the Internal Revenue Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension, or renewal of the option, within the meaning of Section 424(h)
of the Internal Revenue Code. Regions agrees to take all necessary steps to
effectuate the foregoing provisions of this section (7).
(8) As soon as reasonably practicable after the Effective Time,
Regions shall deliver to the participants in each Delta Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto
and the grants pursuant to such Delta Stock Plan shall continue in effect
on the same terms and conditions (subject to the adjustments required by
section (7) after giving effect to the Merger), and Regions shall comply
with the terms of each Delta Stock Plan to ensure, to the extent required
by, and subject to the provisions of, such Delta Stock Plan, that Delta
Rights which qualified as incentive stock options prior to the Effective
Time continue to qualify as incentive stock options after the Effective
Time. At or prior to the Effective Time, Regions shall take all corporate
action necessary to reserve for issuance sufficient shares of Regions
Common Stock for delivery upon exercise of Delta Rights assumed by it in
accordance with Section 3.6 of the Agreement. As soon as reasonably
practicable after the Effective Time, Regions shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or
other appropriate forms), with respect to the shares of Regions Common
Stock subject to such options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain
the current status of the prospectus or prospectuses contained therein) for
so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable,
Regions shall administer the Delta Stock Plan assumed pursuant to Section
3.6 of the Agreement in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act to the extent the Delta Stock Plan complied with
such rule prior to the Merger.
(9) All restrictions or limitations on transfer with respect to Delta
Common Stock awarded under the Delta Stock Plans or any other plan,
program, or arrangement of any Delta Company, to the extent that such
restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall
remain in full force and effect with respect to shares of Regions Common
Stock into which such restricted stock is converted pursuant to Section 3.1
of the Agreement.
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With your consent, we have also assumed that the following statements are
true on the date hereof and will be true on the date on which the Merger is
consummated:
(1) The fair market value of the Regions Common Stock received by each
stockholder of Delta will, in each instance, be approximately equal to the
fair market value of the Delta Common Stock surrendered in exchange
therefor.
(2) The stockholders of Delta holding at least fifty percent (50%) of
the total value of the Delta Common Stock outstanding immediately prior to
the Merger will receive Regions Common Stock in exchange for their Delta
Common Stock.
(3) There is no plan or intention by any of the stockholders of Delta
who own five percent (5%) or more of the outstanding Delta Common Stock,
and to the best of the knowledge of the management of Delta, the remaining
Delta stockholders have no plan or intention, to sell, exchange, or
otherwise dispose of a number of shares of Regions Common Stock that they
will receive in the Merger that will reduce on the part of the Delta
stockholders such stockholders' ownership of Regions Common Stock to a
number of shares having an aggregate value as of the date of the Merger of
less than fifty percent (50%) of the aggregate value of all of the stock of
Delta outstanding immediately prior to the Merger. For purposes of this
representation, shares of Delta stock that are disposed of or exchanged for
cash in lieu of fractional shares of Regions Common Stock will be treated
as outstanding Delta stock immediately prior to the Merger. Moreover,
shares of Delta Common Stock and shares of Regions Common Stock held by
Delta stockholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the transactions will be considered outstanding immediately
prior to the Merger in making this representation.
(4) In the Merger, Regions Bank will acquire assets representing at
least ninety percent (90%) of the fair market value of the net assets and
at least seventy percent (70%) of the fair market value of the gross assets
held by Delta immediately prior to the Merger. For this purpose, all
redemptions and distributions (except for regular, normal dividends) made
by Delta immediately preceding the Merger and all amounts paid out of the
assets of Delta as reorganization expenses will be considered as assets
held by Delta immediately prior to the Merger. In addition, assets disposed
of in contemplation of the Merger will be considered as assets held by
Delta immediately prior to the Merger.
(5) Regions has no plan or intention to liquidate Regions Bank, or to
sell or otherwise dispose of its stock in Regions Bank or cause Regions
Bank to sell or otherwise dispose of any of the assets acquired by Regions
Bank from Delta, except for dispositions made in the ordinary course of
business or transfers to a corporation controlled by Regions Bank.
(6) From and after the consummation of the Merger, Regions Bank will
continue the historic business of Delta or use a significant portion of
Delta's business assets in a business.
(7) The liabilities of Delta to be assumed by Regions Bank in the
Merger (and the liabilities to which the assets to be transferred are
subject) were incurred or will be incurred by Delta in the ordinary course
of its business.
(8) There is not now nor will there be at the time of the Merger any
intercorporate indebtedness existing between Delta and Regions or between
Delta and Regions Bank that was issued, acquired, or will be settled at a
discount.
(9) Delta, Regions Bank, and Regions will each pay all direct costs
and expenses incurred by it or on its behalf in connection with the Merger,
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.
(10) None of Regions, Regions Bank or Delta are investment companies
as defined in Code Section 368(a)(2)(F).
(11) None of the parties are under the jurisdiction of a court in a
case under Title 11 of the United States Code, a receivership, foreclosure,
or similar proceeding in a federal or state court.
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(12) Prior to the Merger, Regions will be in control of Regions Bank.
For purposes of this assumption, as well as assumption 12, a corporation is
considered to control a corporation in which it holds at least eighty
percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of
shares of all other classes of stock.
(13) Following the Merger, Regions Bank will not issue additional
shares of Regions Bank Common Stock that would result in Regions losing
control of Regions Bank.
(14) The fair market value and adjusted basis of the assets to be
transferred from Delta to Regions Bank as a result of the Merger will equal
or exceed the sum of the liabilities of Delta to be assumed by Regions Bank
(plus the amount of liabilities to which the assets to be transferred are
subject).
(15) The payment of cash to Delta stockholders in lieu of fractional
shares of Regions Common Stock will not be a separately bargained for
consideration, but will be undertaken solely for the purpose of avoiding
the expense and inconvenience to Regions of issuing and transferring
fractional shares. The total cash consideration that will be paid in the
transaction to Delta stockholders instead of issuing fractional shares of
Regions Common Stock will not exceed one percent of the total consideration
that will be issued in the transaction to the Delta stockholders in
exchange for their shares of Delta Common Stock. The fractional share
interests of each Delta stockholder will be aggregated, and no Delta
stockholder will receive cash in lieu of fractional shares in an amount
equal to or greater than the value of one full share of Regions Common
Stock.
(16) Regions has no plan or intention to redeem or otherwise reacquire
any shares of Regions Common Stock that will be 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 Delta stockholders.
(17) None of the compensation received by any stockholder-employee of
Delta represents separate consideration for, or is allocable to, any of his
Delta stock. None of the Regions stock that will be received by Delta
stockholder-employees in the Merger represents separately bargained for
consideration which is allocable to any employment agreement or
arrangement. Any compensation to be paid to a Delta stockholder-employee
who continues as an employee of Regions or Regions Bank subsequent to the
Merger will be for services rendered and will be commensurate with amounts
paid to third parties bargaining at arms length for similar services.
(18) Delta has no plan or intention to make, and has not made, any
distributions other than regular, normal dividends to stockholders prior to
the Merger.
(19) No stock of Regions Bank will be issued in the Merger.
(20) Delta has not reacquired or redeemed any of its stock within the
last three (3) years.
(21) The reorganization of Regions, Regions Bank, and Delta will occur
pursuant the Agreement.
(22) Regions does not own, directly or indirectly, nor has it owned
during the past five (5) years, directly or indirectly, any stock of Delta.
OPINIONS
Based on the foregoing assumptions, we are of the opinion that:
(1) Provided the Merger qualifies as a statutory merger under the
Delaware GCL and the Louisiana Acts, the Merger be a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D). Delta, Regions Bank,
and Regions will each be "a party to a reorganization" within the meaning
of Section 368(b).
(2) The stockholders of Delta will recognize no gain or loss upon the
exchange of their Delta Common Stock solely for shares of Regions Common
Stock.
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(3) No loss will be recognized by a Delta stockholder upon the
exchange of such stockholder's Delta Common Stock for shares of Regions
Common Stock and any Cash Consideration paid in cash. Gain, if any, will be
recognized by a Delta stockholder in an amount equal to the excess of the
fair market value of Regions Common Stock received (including any
fractional share interest) plus any Cash Consideration paid in cash over
such stockholder's tax basis in the Delta Common Stock exchanged therefor,
but not in excess of the total cash received.
(4) If an exchange has the effect of the distribution of a dividend
(determined with the application of certain constructive ownership rules),
the amount of gain recognized that is not in excess of a Delta
stockholder's ratable share of undistributed earnings and profits will be
treated as a dividend taxable as ordinary income. The remainder, if any, of
the gain recognized will be capital gain, provided the Delta Common Stock
is held as a capital asset in the hands of the exchanging stockholder on
the Effective Date. Whether an exchange has the effect of the distribution
of a dividend will be determined under the principles of Section 302 as
though there were a redemption by Regions of the portion of its stock the
Delta stockholders would have received if they had received Regions Common
Stock instead of the Cash Consideration received in cash, if any. In
general, under Section 302, dividend treatment will result unless the
redemption is (i) a complete termination of the stockholder's interest,
(ii) substantially disproportionate with respect to the stockholder, or
(iii) not essentially equivalent to a dividend. With respect to whether a
stockholder will have completely terminated his interest, as former Delta
stockholders who do not exercise dissenters' rights will receive and hold
shares of Regions Common Stock, there will not be a complete termination of
their interest in Regions. As to the second test, a redemption will be
substantially disproportionate if the stockholder owners less than fifty
percent (50%) of the total combined voting power of all classes of stock
entitled to vote and the percentage of the voting stock owned by the
stockholder after the redemption is less than eighty percent (80%) of the
percentage of the voting stock he owned before the redemption. Finally,
even if the redemption is not considered to be substantially
disproportionate with respect to the stockholder, the distribution may be
considered to be not essentially equivalent to a dividend. Whether a
redemption is not essentially equivalent to a dividend will depend upon the
facts and circumstances. The Service has ruled, for example, that where
there is a meaningful reduction in a stockholder's interest in the
redeeming corporation, the relative interest of the stockholder is minimal
and the stockholder exercises no control over the affairs of the
corporation, the redemption is not essentially equivalent to a dividend.
Rev. Rul. 76-385, 1976-2 C.C. 92.
(5) The basis of the Regions Common Stock to be received by a Delta
stockholder (including any fractional share interest) will be the same as the
basis of the Delta Common Stock surrendered in exchange therefor, decreased by
any Cash Consideration received in cash, and increased by the amount, if any,
treated as a dividend and the amount of the gain recognized by such stockholder
with respect to the Merger.
(6) The holding period of the Regions Common Stock to be received by a
Delta stockholder (including the holding period of any fractional share
interest) will include the period during which the Delta Common Stock
surrendered in exchange therefor was held by the Delta stockholder, provided
such stock was held as a capital asset in the hands of the Delta stockholder on
the date of the exchange.
(7) The payment of cash in lieu of fractional shares of Regions Common
Stock will be treated as if the fractional shares were issued as part of the
exchange and then redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the
fractional shares of Regions Common Stock redeemed as provided in Section
302(a). Generally, any gain or loss recognized upon such exchange will be
capital gain or loss, provided the fractional share would constitute a capital
asset in the hands of the exchanging stockholder.
(8) Where solely cash is received by a Delta stockholder in exchange for
his Delta Common Stock pursuant to the exercise of dissenters' rights, such cash
will be treated as having been received in redemption of his Delta Common Stock,
subject to the provisions and limitations of Section 302.
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CONCLUSION
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 are true on the date hereof and
will be true on the date on which the Merger is consummated. Our opinions cannot
be relied upon if any of the facts pertinent to the Federal income tax treatment
of the Merger stated in such documents or in such additional information is, or
later becomes, inaccurate, or if any of the statements set out herein are, or
later become, 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 Merger, including for example any
issues related to intercompany transactions, accounting methods, or changes in
accounting methods resulting from the Merger.
This opinion is being provided solely for the benefit of Regions, Delta,
and their stockholders. No other person or party shall be entitled to rely on
this opinion.
We hereby consent to the use of this opinion and to the references made to
the firm under the captions "Summary -- Certain Federal Income Tax Consequences
of the Merger" and "Description of the Transaction -- Certain Federal Income Tax
Consequences of the Merger" in the Proxy Statement/Prospectus constituting part
of the Registration Statement on Form S-4 of Regions.
Very truly yours,
ALSTON & BIRD
By: /s/ Philip C. Cook
------------------------------------
Philip C. Cook
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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 844,992 shares of its common stock and
to the incorporation of our reports dated February 2, 1996 (except for the last
two paragraphs of Note Q as to which the date is March 1, 1996) and March 25,
1996, with respect to the consolidated financial statements and supplemental
consolidated financial statements, respectively, of Regions Financial
Corporation included or incorporated by reference in its Annual Report (Form
10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Birmingham, Alabama
June 3, 1996
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT ACCOUNTANT'S CONSENT
To The Board of Directors
Regions Financial Corporation
We consent to the use of our report dated January 19, 1996, with respect
to the consolidated balance sheets of Delta Bank and Trust Co. and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of income, changes in capital accounts, and cash flows for each of
the years in the three-year period ended December 31, 1995, which report appears
in the Form S-4 of Regions Financial Corporation for the year ended December 31,
1995 incorporated herein by reference.
Our report refers to a change in the method of accounting for income
taxes in 1993 to adopt the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," and a change in the method of
accounting for investment securities to adopt the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," at December 31, 1993.
/s/ Duplantier, Hrapmann, Hogan & Maher
June 6, 1996
