<PAGE> 1
As filed with the Securities and Exchange Commission on January 6, 1997
Registration No. 333-17775
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
----------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
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Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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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)
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Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Copies to:
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CHARLES C. PINCKNEY FRANK M. CONNER III MR. GARY A. COTOGNO
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD PICKERING, COTOGNO & DUNN
SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W. 301 MAGAZINE STREET
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 NEW ORLEANS, LOUISIANA 70130
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 (504) 581-1222
(205) 250-5000 (202) 508-3303
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Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
shall determine.
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<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
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<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
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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; Pro Forma Financial Information.
6. Material contacts with the company being acquired..... Summary; Description of the Transaction.
7. Additional information required for re-offering by
persons and parties deemed to be underwriters......... Not applicable.
8. Interest of named experts and counsel................. Opinions.
9. Disclosure of Commission position on indemnification
for Securities Act liabilities........................ Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants........... Documents Incorporated by Reference;
Summary; Business of Regions.
11. Incorporation of certain information by reference..... Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3 registrants.... Not Applicable.
13. Incorporation of certain information by reference..... Not Applicable.
14. Information with respect to registrants other than S-2
or S-3 registrants.................................... Not Applicable.
15. Information with respect to S-3 companies............. Not Applicable.
16. Information with respect to S-2 or S-3 companies...... Not Applicable.
17. Information with respect to companies other than S-2
or S-3 companies...................................... West Carroll Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Business of West Carroll; Voting Securities and
Principal Stockholders of West Carroll; Index
to West Carroll 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.
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Dear West Carroll Bancshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of
Stockholders of West Carroll Bancshares, Inc. ("West Carroll") to be held at
the main banking office of West Carroll National Bank (the "Bank"), 100 North
Horner Street, Oak Grove, Louisiana, 71263 on February 18, 1997, at 5:00 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 Merger (the "Agreement"), entered
into with Regions Financial Corporation ("Regions") pursuant to which West
Carroll will merge (the "Merger") with and into Regions, and West Carroll
National Bank, a wholly owned subsidiary of West Carroll, will become a wholly
owned subsidiary of Regions until combined with Regions Bank of Louisiana,
Regions' principal banking subsidiary in Louisiana. Upon consummation of the
Merger, each share of West Carroll common stock issued and outstanding (except
for certain shares held by West Carroll or Regions and shares held by
stockholders who perfect their dissenters' rights of appraisal) will be
converted into 4.0 shares of Regions common stock.
The accompanying Proxy Statement/Prospectus includes a description of
the proposed Merger and provides other specific information concerning the
Special Meeting. Please read these materials carefully and consider
thoughtfully the information set forth in them.
The Merger has been approved unanimously by your Board of Directors
and is recommended by the Board to you for approval. Each member of the Board
of Directors of West Carroll has agreed to vote those West Carroll shares over
which such member has voting authority (other than in a fiduciary capacity) in
favor of the Merger. Consummation of the Merger is subject to certain
conditions, including approval of the Agreement by West Carroll stockholders
and approval of the Merger by various regulatory agencies.
Stockholders of West Carroll 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 West Carroll shares in cash, as
provided by applicable law.
It is important to understand that approval of the Agreement requires
the affirmative vote of a majority of the common stock of West Carroll
represented in person or by proxy 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 enclosedproxy 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 West
Carroll, 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,
William E. Pratt
President
<PAGE> 4
WEST CARROLL BANCSHARES, INC.
100 NORTH HORNER STREET, OAK GROVE, LOUISIANA, 71263
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 18, 1997
Notice is hereby given that a Special Meeting of Stockholders (the
"Special Meeting") of West Carroll Bancshares, Inc. ("West Carroll"), the
parent bank holding company of West Carroll National Bank (the "Bank"), will be
held at the main office of the Bank, 100 North Horner Street, Oak Grove,
Louisiana, 71263 on February 18, 1997, at 5:00 p.m., local time, for the
following purposes:
1. Merger. To consider and vote on the Agreement and Plan of Merger,
dated as of June 25, 1996 (the "Agreement"), by and between West Carroll and
Regions Financial Corporation ("Regions") pursuant to which (i) Regions will
acquire all of the issued and outstanding common stock of West Carroll through
the merger of West Carroll with and into Regions (the "Merger") and (ii) each
share of West Carroll common stock (except for certain shares held by West
Carroll or Regions and shares held by stockholders who perfect their
dissenters' rights of appraisal) will be converted into 4.0 shares of Regions
common stock, 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, or any adjournment thereof.
Only stockholders of record at the close of business on January 3,
1997, are entitled to receive notice of and to vote at the Special Meeting or
any adjournment thereof.
Stockholders of West Carroll 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 B. DISSENTING STOCKHOLDERS
WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF THE LOUISIANA BUSINESS
CORPORATION 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 West Carroll unanimously recommends that
holders of West Carroll 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 West Carroll 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
W. Elton Kennedy
Corporate Secretary
January 8, 1997
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WEST CARROLL BANCSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD FEBRUARY 18, 1997 (PAR VALUE $.625)
676,100 SHARES
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 West
Carroll Bancshares, Inc. ("West Carroll") upon consummation of the proposed
merger (the "Merger") described herein, by which West Carroll will merge with
and into Regions pursuant to the terms of an Agreement and Plan of Merger,
dated as of June 25, 1996, by and between Regions and West Carroll (the
"Agreement").
On the effective date of the Merger (the "Effective Date"), except as
described herein, (i) West Carroll will merge with and into Regions and (ii)
each outstanding share of the $1.00 par value common stock of West Carroll
("West Carroll Common Stock") (except for certain shares held by West Carroll or
Regions and shares held by stockholders who perfect their dissenters' rights of
appraisal) will be converted into 4.0 shares of Regions Common Stock. A copy
of the Agreement is attached to this Proxy Statement/Prospectus as Appendix A.
As a result of the Merger, the separate existence of West Carroll will
cease, and West Carroll National Bank (the "Bank"), the wholly owned subsidiary
of West Carroll, will become a wholly owned subsidiary of Regions until
combined with Regions Bank of Louisiana, Regions' principal banking subsidiary
in Louisiana. For a further description of the terms of the Merger, see
"Description of the Transaction."
This Prospectus also constitutes a Proxy Statement of West Carroll and
is being furnished to the stockholders of West Carroll in connection with the
solicitation of proxies by the Board of Directors of West Carroll for use at
its special meeting of stockholders, including any adjournment thereof (the
"Special Meeting"), to be held on February 18, 1997, 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 West
Carroll on or about January 8, 1997.
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 January 8, 1997.
<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. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
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 West Carroll. 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 West
Carroll 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 West
Carroll was supplied by West Carroll.
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 Reports on Form 10-Q for the three
months ended March 31, June 30, and September 30, 1996;
<PAGE> 7
3. Regions' Current Report on Form 8-K dated as of March 1,
1996, and amendment no. 1 thereto filed March 28, 1996;
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' Current Report on Form 8-K filed June 26, 1996;
6. Regions' Current Report on Form 8-K filed November 20, 1996;
7. Regions' report on Form 10-C filed March 11, 1996; and
8. 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 FEBRUARY
10, 1997.
3
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TABLE OF CONTENTS
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AVAILABLE INFORMATION .................................................................................................
DOCUMENTS INCORPORATED BY REFERENCE ...................................................................................
SUMMARY ...............................................................................................................
The Parties .....................................................................................................
Special Meeting of West Carroll Stockholders .....................................................................
Record Date; Vote Required .......................................................................................
The Merger; Exchange Ratio .......................................................................................
Dissenting Stockholders .........................................................................................
Reasons for the Merger; Recommendation of West Carroll's Board
of Directors .................................................................................................
Effective Date ...................................................................................................
Exchange of Stock Certificates ...................................................................................
Regulatory Approvals and Other Conditions .......................................................................
Waiver, Amendment, and Termination of the Agreement .............................................................
Interests of Certain Persons in the Merger .......................................................................
Certain Federal Income Tax Consequences of the Merger ...........................................................
Certain Differences in Stockholders' Rights .....................................................................
Comparative Market Prices of Common Stock .......................................................................
Comparative Per Share Data .......................................................................................
Selected Financial Data .........................................................................................
THE SPECIAL MEETING ...................................................................................................
General .........................................................................................................
Record Date; Vote Required .......................................................................................
DESCRIPTION OF THE TRANSACTION .......................................................................................
General .........................................................................................................
Treatment of West Carroll Options ...............................................................................
Background of and Reasons for the Merger .........................................................................
Effective Date of the Merger .....................................................................................
Distribution of Regions Stock Certificates
Conditions to Consummation of the Merger .........................................................................
Regulatory Approvals .............................................................................................
Waiver, Amendment, and Termination of the Agreement .............................................................
Conduct of Business Pending the Merger ...........................................................................
Management Following the Merger .................................................................................
Interests of Certain Persons in the Merger .......................................................................
Dissenting Stockholders .........................................................................................
Certain Federal Income Tax Consequences of the Merger ...........................................................
Accounting Treatment .............................................................................................
Expenses and Fees ...............................................................................................
Resales of Regions Common Stock .................................................................................
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS .......................................................................
Antitakeover Provisions Generally ...............................................................................
Authorized Capital Stock .........................................................................................
Amendment of Certificate of Incorporation and Bylaws .............................................................
Classified Board of Directors and Absence of Cumulative Voting ...................................................
Removal of Directors .............................................................................................
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Limitations on Director Liability .............................................................................
Indemnification ...............................................................................................
Special Meetings of Stockholders ...............................................................................
Actions by Stockholders Without a Meeting .....................................................................
Stockholder Nominations and Proposals .........................................................................
Mergers, Consolidations, and Sales of Assets Generally .........................................................
Business Combinations with Certain Persons .....................................................................
Dissenters' Rights of Appraisal ...............................................................................
Stockholders' Rights to Examine Books and Records .............................................................
Dividends .....................................................................................................
COMPARATIVE MARKET PRICES AND DIVIDENDS .............................................................................
WEST CARROLL MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................................................................
BUSINESS OF WEST CARROLL ...........................................................................................
General .......................................................................................................
Business and Properties .......................................................................................
Competition ...................................................................................................
Legal Proceedings .............................................................................................
Management .....................................................................................................
Employee Benefit Plans .........................................................................................
Transactions with Management ...................................................................................
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF WEST CARROLL .......................................................
BUSINESS OF REGIONS .................................................................................................
General .......................................................................................................
Recent Developments ...........................................................................................
SUMMARY PRO FORMA FINANCIAL DATA ...................................................................................
Selected Pro Forma Combined Data for Regions and West Carroll .................................................
Selected Pro Forma Combined Data for Regions, West Carroll, and
Other Pending Acquisitions .................................................................................
CERTAIN REGULATORY CONSIDERATIONS ...................................................................................
General .......................................................................................................
Payment of Dividends ...........................................................................................
Capital Adequacy ...............................................................................................
Support of Subsidiary Institutions .............................................................................
Prompt Corrective Action .......................................................................................
FDIC Insurance Assessments .....................................................................................
DESCRIPTION OF REGIONS COMMON STOCK .................................................................................
STOCKHOLDER PROPOSALS ...............................................................................................
EXPERTS .............................................................................................................
OPINIONS ...........................................................................................................
INDEX TO WEST CARROLL FINANCIAL STATEMENTS ......................................................................... F-1
APPENDIX A--Agreement and Plan of Merger ........................................................................... A-1
APPENDIX B--Copy of Section 131 of the Louisiana Business Corporation Law............................................ B-1
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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 "West Carroll" refer to those
entities, respectively, and, where the context requires, to those entities and
their respective subsidiaries.
THE PARTIES
West Carroll. West Carroll is a bank holding company organized under
the laws of the state of Louisiana, with its principal executive office located
in Oak Grove, Louisiana. West Carroll operates principally through the Bank,
which is a wholly owned subsidiary of West Carroll and a national bank and
which provides a range of retail banking services in West Carroll and Morehouse
Parishes, Louisiana through three full-service offices and two additional
drive-up offices. At September 30, 1996, West Carroll had total consolidated
assets of approximately $125 million, total consolidated deposits of
approximately $110 million, and total consolidated stockholders' equity of
approximately $14 million. West Carroll's principal executive office is located
at 100 North Horner Street, Oak Grove, Louisiana, 71263 and its telephone
number at such address is (318) 428-4221.
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 373 banking offices located in Alabama,
Florida, Georgia, Louisiana, and Tennessee as of September 30, 1996. At that
date, Regions had total consolidated assets of approximately $18.7 billion,
total consolidated deposits of approximately $15.2 billion, and total
consolidated stockholders' equity of approximately $1.6 billion. Regions is the
second largest bank holding company headquartered in Alabama in terms of
assets, based on September 30, 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 December 31, 1995, Regions has completed the acquisitions of
eight financial institutions, six of which are located in Georgia and two of
which are located in Louisiana (referred to as the "Recently Completed
Acquisitions"). Regions also has entered into definitive agreements to
acquire, in addition to West Carroll, three additional financial institutions,
one of which is located in each of Florida, Georgia, and Louisiana (the "Other
Pending Acquisitions"). For information with respect to the Recently Completed
Acquisitions and the Other Pending Acquisitions, see "Documents Incorporated by
Reference" and "Business of Regions--Recent Developments." In addition,
Regions has announced entering into agreements to acquire three additional
financial institutions. See "Business of Regions--Recent Developments."
Regions commenced operations in 1971 under its former name First
Alabama Bancshares, Inc. 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.
6
<PAGE> 11
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 WEST CARROLL STOCKHOLDERS
The Special Meeting will be held at 5:00 p.m., local time, on February
18, 1997, at the Bank's main office, 100 North Horner Street, Oak Grove,
Louisiana, 71263, for the purpose of considering and voting on approval of the
Agreement and related matters. See "The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of West Carroll Common Stock at the close of
business on January 3, 1997 (the "Record Date"), will be entitled to vote at
the Special Meeting. The affirmative vote of a majority of the shares of the
West Carroll Common Stock represented in person or by proxy at the Special
Meeting will be required to approve the Agreement. As of the Record Date,
there were 152,000 shares of West Carroll Common Stock outstanding and entitled
to be voted.
The directors and executive officers of West Carroll and the Bank and
their affiliates and associates beneficially owned, as of the Record Date,
73,300 shares (or approximately 48.22% of the outstanding shares) of West
Carroll Common Stock. Each member of the Board of Directors of West Carroll
has agreed to vote those West Carroll 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 West
Carroll Common Stock. As of that date, neither West Carroll nor Regions held
any shares of West Carroll Common Stock in a fiduciary capacity for others.
See "The Special Meeting--Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of West Carroll by Regions
pursuant to the Merger of West Carroll with and into Regions. On the Effective
Date, each share of West Carroll Common Stock then issued and outstanding
(excluding any shares held by stockholders who perfect their dissenters' rights
of appraisal and shares held by West Carroll, Regions, or their respective
subsidiaries, other than shares held in a fiduciary capacity or as a result of
debts previously contracted) will be converted into 4.0 shares of Regions
Common Stock (the "Exchange Ratio"). No fractional shares of Regions Common
Stock will be issued. See "Description of the Transaction--General."
DISSENTING STOCKHOLDERS
Holders of West Carroll Common Stock entitled to vote on approval of
the Agreement have the right to dissent from the Merger and, upon consummation
of the Merger and the satisfaction of certain specified procedures and
conditions, to receive fair value of such holders' shares of West Carroll
Common Stock in cash in accordance with the applicable provisions of the
Louisiana Business Corporation Law (the "Louisiana Act"). The procedures to be
followed by dissenting stockholders are summarized under "Description of the
7
<PAGE> 12
Transaction--Dissenting Stockholders," and the applicable provisions of the
Louisiana Act are reproduced as Appendix B.
REASONS FOR THE MERGER; RECOMMENDATION OF WEST CARROLL'S BOARD OF DIRECTORS
West Carroll's Board of Directors has unanimously approved the Merger
and the Agreement and has determined that the Merger is in the best interests
of West Carroll and its stockholders, the Bank, its employees, customers and
the communities which the Bank serves. Accordingly, West Carroll's Board
unanimously recommends that West Carroll's stockholders vote FOR approval of
the Agreement. EACH MEMBER OF THE BOARD OF DIRECTORS OF WEST CARROLL HAS AGREED
TO VOTE THOSE SHARES OF WEST CARROLL COMMON STOCK BENEFICIALLY OWNED BY SUCH
MEMBER IN FAVOR OF THE AGREEMENT. In approving the Merger, West Carroll's
directors considered, among other things, West Carroll's financial condition,
the consideration to be received from Regions, the financial terms and the
income tax consequences of the Merger, the financial condition and prospects of
Regions, the likelihood of the Merger being approved by regulatory authorities
without undue conditions or delay, and legal advice concerning the proposed
Merger. See "Description of the Transaction--Background of and Reasons for the
Merger."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger are
filed and become effective with, respectively, the Delaware Secretary of State
and the Louisiana Secretary of State. Unless otherwise agreed upon by Regions
and West Carroll, 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 by the last business day of the month in
which the last of the following events occurs: (i) the effective date
(including the expiration of any applicable waiting period) of the last federal
or state regulatory approval or consent required for the Merger and (ii) the
date on which the Agreement is approved by the requisite vote of West Carroll
stockholders; or such later date within 30 days thereof as specified by
Regions. The parties expect that all conditions to consummation of the Merger
will be satisfied so that the Merger can be consummated during the first
quarter of 1997, 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 West Carroll a form letter of transmittal, together with
instructions for the exchange of such stockholders' certificates representing
shares of West Carroll Common Stock for certificates representing shares of
Regions Common Stock. WEST CARROLL 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."
8
<PAGE> 13
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the
Federal Reserve System (the "Federal Reserve") and the Commissioner of
Financial Institutions of the state of Louisiana (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 Federal Reserve 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 West Carroll 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."
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
West Carroll and Regions, or by action of the Board of Directors of either
party under certain circumstances, including if the Merger is not consummated
by April 30, 1997, unless the failure to consummate by such time is due to a
breach of the Agreement by the party seeking to terminate. If for any reason
the Merger is not consummated, West Carroll will continue to operate as a bank
holding company under its present management. See "Description of the
Transaction--Waiver, Amendment, and Termination of the Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of West Carroll's management and Board of Directors
have interests in the Merger in addition to their interests as stockholders of
West Carroll generally. Those interests relate to, among other things,
provisions in the Agreement regarding indemnification, eligibility for certain
Regions employee benefits, existing employment agreements and the payments to
be made thereunder as a consequence of the Merger, and the treatment of
outstanding incentive stock options to acquire West Carroll Common Stock. 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 West
Carroll Common Stock for Regions Common Stock will not give rise to gain or
loss to West Carroll stockholders, except to the extent of any cash received
by a dissenting stockholder. Gain recognition, if any, will not be in excess of
the amount of cash received. See "Description of the Transaction--Certain
Federal Income Tax Consequences of the Merger."
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER,
WEST CARROLL 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.
9
<PAGE> 14
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, West Carroll stockholders, whose rights are
governed by the Louisiana Act and by West Carroll'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 West
Carroll 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. West Carroll Common Stock is not traded
in any established market. The following table sets forth, as of the indicated
dates, (i) the last sale price of Regions Common Stock and (ii) the equivalent
per share price (as explained below) of West Carroll Common Stock. The
indicated dates of June 24, 1996, and January 3, 1997 represent, respectively,
the last trading day immediately preceding public announcement of the proposed
combination of West Carroll with Regions and the latest practicable date prior
to the mailing of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS OF WEST CARROLL
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------
<S> <C> <C>
June 24, 1996 $ 46.50 $ 186.00
January 3, 1997 51.38 205.52
</TABLE>
The equivalent per share price of West Carroll 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 4.0. 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. There is no established market for West Carroll
Common Stock and management of West Carroll is not aware of, and the
stockholder records of West Carroll do not reflect, any recent purchase and
sale of West Carroll Common Stock.
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 West Carroll, (ii) a pro forma combined basis per share
of Regions Common Stock, giving effect to the Merger, (iii) an equivalent
pro forma basis per share of West Carroll Common Stock, giving effect to the
Merger, (iv) a pro forma combined basis per share of Regions Common Stock,
giving effect to the Merger and the Other Pending Acquisitions (as defined
under "Business of Regions--Recent Developments"), and (v) an equivalent pro
forma basis per share of West Carroll Common Stock, giving effect to the Merger
and the Other Pending Acquisitions. The Regions and West Carroll pro forma
combined information and the West Carroll pro forma Merger equivalent
information give effect to the Merger on a pooling-of-interests accounting
basis and assume an Exchange Ratio of 4.0. The Regions, West Carroll, and Other
Pending Acquisitions pro forma combined information and the West Carroll pro
forma Merger and Other Pending Acquisitions equivalent information give effect
to (i) the Merger
10
<PAGE> 15
as described in the preceding sentence and (ii) the Other Pending Acquisitions
as described under "Summary Pro Forma Financial Data--Selected Pro Forma
Combined Data for Regions, West Carroll, and Other Pending Acquisitions." 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 West Carroll, including the respective notes thereto. Regions' historical
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 "Index to West Carroll Financial Statements."
11
<PAGE> 16
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- -------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions
and West Carroll historical)
<S> <C> <C> <C> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
PER COMMON SHARE
Regions historical ................................................. $ 2.66 $ 2.49 $ 3.21 $ 3.10 $ 2.81
West Carroll historical (1) ........................................ 11.00 11.76 15.54 15.06 13.25
Regions and West Carroll pro forma combined(2) ..................... 2.66 3.22 3.11 2.82
West Carroll pro forma Merger equivalent(3) ......................... 10.64 12.88 12.44 11.28
Regions, West Carroll, and Other Pending Acquisitions
pro forma combined(4) ......................................... 2.63 3.23 3.10 2.83
West Carroll pro forma Merger and Other Pending
Acquisitions equivalent(3) ..................................... 10.52 12.92 12.40 11.32
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical ................................................. $ 1.05 $ .99 $ 1.32 $ 1.20 $1.04
West Carroll historical ............................................. 1.75 .00 .00 .00 .00
West Carroll pro forma Merger equivalent(5) ......................... 4.20 3.96 5.28 4.80 4.16
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical ................................................. $24.86 $23.00 $23.38 $21.26 $19.85
West Carroll historical. ........................................... 91.45 76.78 82.33 62.69 49.17
Regions and West Carroll pro forma combined(2) ..................... 24.84
West Carroll pro forma Merger equivalent(3) ......................... 99.36
Regions, West Carroll, and Other Pending Acquisitions
pro forma combined(4) ......................................... 24.89
West Carroll pro forma Merger and Other Pending
Acquisitions equivalent(3) ..................................... 99.56
</TABLE>
- ------------------------
(1) Represents earnings per share on a fully diluted basis.
(2) Represents the combined results of Regions and West Carroll as if the
Merger were consummated on January 1, 1993 (or September 30, 1996, in
the case of Book Value Per Share Data), and were accounted for as a
pooling of interests.
(3) Represents pro forma combined information multiplied by the Exchange
Ratio of 4.0 shares of Regions Common Stock for each share of West
Carroll Common Stock.
(4) Represents the pro forma combined information of Regions, West
Carroll, and Other Pending Acquisitions as if the Merger were
consummated at the time and pursuant to the accounting basis described
in note (2) and the Other Pending Acquisitions were consummated at the
time and pursuant to the accounting bases described under "Summary Pro
Forma Financial Data--Selected Pro Forma Combined Data for Regions,
West Carroll, and Other Pending Acquisitions."
(5) Represents historical dividends declared per share by Regions
multiplied by the Exchange Ratio of 4.0 shares of Regions Common Stock
for each share of West Carroll Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and West Carroll. 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 West Carroll incorporated by reference or included herein. Interim
unaudited data for the nine months ended September 30, 1996 and 1995 of Regions
and West Carroll reflect, in the opinion of the respective managements of
Regions and West Carroll, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such data. Results for the
nine months ended September 30, 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" and "Index to West Carroll Financial
Statements."
12
<PAGE> 17
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, 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 ................. $ 1,029,151 $ 937,180 $ 1,259,600 $ 991,693 $ 746,544 $ 737,094 $ 778,848
Total interest expense ............... 508,573 472,106 635,336 436,157 296,195 324,420 428,083
Net interest income ................... 520,578 465,074 624,264 555,536 450,349 412,674 350,765
Provision for loan losses ............. 21,734 17,275 30,271 20,580 24,695 39,367 34,879
Net interest income after
loan loss provision ............. 498,844 447,799 593,993 534,956 425,654 373,307 315,886
Total noninterest income excluding
security gains (losses) ......... 162,759 138,919 187,830 171,705 169,318 148,007 129,232
Security gains (losses) ............... 259 307 (424) 344 831 2,353 (89)
Total noninterest expense ............. 415,955 355,734 487,461 442,376 383,130 343,279 302,795
Income tax expense ................... 81,022 77,339 96,109 84,109 66,169 56,405 41,502
Net income ........................... 164,885 153,952 197,829 180,520 146,504 123,983 100,732
PER SHARE DATA:
Net income ........................... $ 2.66 $ 2.49 $ 3.21 $ 3.10 $ 2.81 $ 2.42 $ 2.01
Cash dividends ....................... 1.05 .99 1.32 1.20 1.04 .91 .87
Book value ........................... 24.86 23.00 23.38 21.26 19.85 17.13 15.47
OTHER INFORMATION:
Average number of shares outstanding... 61,980 61,765 61,670 58,206 52,153 51,192 50,192
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ......................... $18,731,424 $16,959,785 $16,851,774 $15,810,076 $13,163,161 $10,457,676 $9,188,048
Securities ........................... 4,005,675 3,848,618 3,863,781 3,346,291 2,993,417 2,255,732 2,076,199
Loans, net of unearned income ......... 13,032,238 11,567,327 11,542,311 10,855,195 8,430,931 6,657,557 5,726,818
Total deposits ....................... 15,186,950 13,329,310 13,497,612 12,575,593 11,025,376 8,923,801 8,047,731
Long-term debt ....................... 447,959 653,431 632,019 599,476 525,820 151,460 24,461
Stockholders' equity ................. 1,554,740 1,418,056 1,429,253 1,286,322 1,106,361 886,116 779,002
PERFORMANCE RATIOS:
Return on average assets (1) ......... 1.25% 1.26% 1.21% 1.27% 1.38% 1.29% 1.15%
Return on average stockholders'
equity (1) ....................... 14.83 15.06 14.29 15.26 15.76 15.04 13.58
Net interest margin (1) ............... 4.29 4.22 4.21 4.37 4.77 4.85 4.58
Efficiency (2) ....................... 59.97 57.70 58.79 59.44 60.23 59.62 60.92
Dividend payout ....................... 39.47 39.76 41.12 38.71 37.01 37.60 43.28
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1) ....... .10% .10% .17% .19% .23% .36% .45%
Problem assets to net loans and
other real estate (3) ........... .54 .65 .59 .75 1.12 1.29 1.62
Nonperforming assets to net loans
and other real estate (4) ....... .73 .71 .68 .80 1.28 1.39 1.74
Allowance for loan losses to loans,
net of unearned income ........... 1.37 1.36 1.38 1.32 1.48 1.51 1.34
Allowance for loan losses to
nonperforming assets (4) ......... 186.89 191.54 202.55 164.48 115.88 107.97 76.76
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets ................... 8.41% 8.39% 8.44% 8.35% 8.76% 8.60% 8.49%
Average loans to average deposits ..... 85.01 86.91 86.12 79.90 76.41 71.59 72.34
Tier 1 risk-based capital (5) ......... 10.71 10.82 11.14 10.69 11.13 11.68 11.85
Total risk-based capital (5) ......... 13.53 14.28 14.61 14.29 13.48 14.44 13.19
Tier 1 leverage (5) ................... 7.57 7.25 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.
13
<PAGE> 18
Selected Historical Financial Data of West Carroll
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income ....................... $ 8,237 $ 7,671 $ 10,431 $ 8,208 $ 7,097 $ 7,102 $ 7,668
Total interest expense ..................... 3,230 2,642 3,660 2,553 2,158 2,393 3,561
Net interest income ......................... 5,007 5,029 6,771 5,655 4,939 4,709 4,107
Provision for loan losses ................... 285 205 250 (30) (151) 240 190
Net interest income after
loan loss provision ................... 4,722 4,824 6,521 5,685 5,090 4,469 3,917
Total noninterest income
excluding security gains (losses) ..... 838 742 932 805 759 449 463
Security gains (losses) ..................... -- -- (7) -- (109) (123) 44
Total noninterest expense ................... 2,843 2,728 3,668 3,449 2,724 2,565 3,012
Income tax expense ......................... 879 956 1,275 752 845 886 550
Net income (1) .............................. $ 1,838 $ 1,882 $ 2,503 $ 2,289 $ 2,171 $ 1,344 $ 862
PER SHARE DATA(2)
Primary earnings per share ................. $ 11.14 $ 11.91 $ 15.77 $ 15.06 $ 14.28 $ 8.90 $ 5.79
Fully diluted earnings per share ........... 11.00 11.76 15.54 15.06 14.28 8.90 5.79
Cash dividends ............................. 1.75 -- -- -- -- -- --
Book value ................................. 91.45 76.78 82.33 62.69 49.17 34.89 25.98
OTHER INFORMATION:
Shares outstanding at end of period.......... 152 152 152 152 152 152 149
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ............................... $125,220 $107,762 $117,071 $101,188 $ 83,844 $ 78,750 $ 79,415
Securities .................................. 33,099 24,799 28,674 26,736 28,499 36,150 26,717
Loans, net of unearned income ............... 81,166 76,044 71,031 63,573 46,370 30,066 30,728
Total deposits ............................. 110,288 93,916 103,812 90,936 75,630 72,437 73,340
Long-term debt ............................. -- -- -- -- 123 245 370
Stockholders' equity ....................... 13,900 11,671 12,514 9,529 7,474 5,303 3,883
PERFORMANCE RATIOS:
Return on average assets (3) ............... 2.01% 2.38% 2.35% 2.50% 2.65% 1.70 % 1.11%
Return on average stockholders'
equity (3) ............................. 20.28 25.82 23.04 27.47 33.41 25.25 17.96
Net interest margin (3) ..................... 5.86 6.89 6.76 6.45 6.28 6.02 5.61
Dividend payout ............................. 14.41 0.00 0.00 0.00 0.00 0.00 0.00
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (3) ............. .52% .10% .19% .17% .19% (.06)% .32%
Problem assets to net loans and
other real estate (4) .................. .11 .11 .33 .40 .19 .23 .58
Nonperforming assets to net loans
and other real estate (5) ............. 1.01 1.29 1.07 1.57 .90 1.45 1.91
Allowance for loan losses to loans,
net of unearned income ................. .67 .75 .78 .69 1.23 2.70 1.73
Allowance for loan losses to
nonperforming assets (5) ............... 66.55 58.00 73.58 44.65 137.53 186.12 76.18
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets ......................... 9.92% 9.20% 9.26% 9.26% 7.89% 6.46% 6.39%
Average loans to average deposits ........... 69.66 74.60 74.08 71.35 53.91 42.93 46.08
Tier 1 risk-based capital (6) ............... 16.41 16.88 17.25 14.56 14.86 15.25 14.09
Total risk-based capital (6) ............... 17.06 17.72 18.03 15.22 15.99 16.51 15.34
Tier 1 leverage (6) ......................... 11.13 10.75 10.71 9.72 8.90 7.25 6.70
</TABLE>
- ------------------------
(1) Income for 1993 before cumulative effect of a change in accounting
principle is $2,014,000 or $13.25 per share.
(2) Years prior to 1994 restated as result of 25 to 1 stock split declared
November 1994.
(3) Interim period ratios are annualized.
(4) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(5) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(6) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%, depending on the
risk profile of the institution and other factors.
14
<PAGE> 19
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
West Carroll Common Stock in connection with the solicitation by the West
Carroll Board of Directors of proxies for use at the Special Meeting, at which
West Carroll stockholders will be asked to vote upon a proposal to approve the
Agreement. The Special Meeting will be held at 5:00 p.m., local time, on
February 18, 1997, at the main office of the Bank, located at 100 North Horner
Street, Oak Grove, Louisiana, 71263.
West Carroll stockholders are requested promptly to sign, date, and
return the accompanying proxy card to West Carroll in the enclosed
postage-paid, addressed envelope.
Any West Carroll stockholder who has delivered a proxy may revoke it
at any time before it is voted by giving notice of revocation in writing or
submitting to West Carroll a signed proxy card bearing a later date, provided
that such notice or proxy card is actually received by West Carroll at or
before the Special Meeting. Any notice of revocation should be sent to West
Carroll Bancshares, Inc., 100 North Horner Street, Oak Grove, Louisiana, 71263,
Attention: W. Elton Kennedy, 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
Secretary. The shares of West Carroll Common Stock represented by properly
executed proxies received at or prior to the Special Meeting unless
subsequently revoked will be voted as directed in such proxies. IF INSTRUCTIONS
ARE NOT GIVEN, SHARES REPRESENTED BY PROXIES RECEIVED WILL BE VOTED FOR
APPROVAL OF THE AGREEMENT AND IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY
OTHER MATTERS THAT PROPERLY MAY COME BEFORE THE SPECIAL MEETING. IF NECESSARY,
AND UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN
FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING. As of the date of this
Proxy Statement/Prospectus, West Carroll 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
West Carroll, 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.
West Carroll stockholders should not forward any stock certificates
with their proxy cards.
RECORD DATE; VOTE REQUIRED
West Carroll's Board of Directors has established the close of
business on January 3, 1997, as the Record Date for determining the West Carroll
stockholders entitled to notice of and to vote at the Special Meeting. Only
West Carroll stockholders of record as of the Record Date will be entitled to
vote at the Special Meeting. The affirmative vote of the holders of a majority
of the West Carroll Common Stock represented in person or by proxy at the
Special Meeting is required in order to approve the Agreement. As of the Record
Date, there were approximately 78 holders of 152,000 shares of West Carroll
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 West Carroll
to beneficially own more than 5.0% of the outstanding shares of West Carroll
Common Stock as of the Record Date, see "Voting Securities and Principal
Stockholders of West Carroll."
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The presence, in person or by proxy, of a majority of the outstanding
shares of West Carroll Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these
purposes, shares of West Carroll 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 Agreement or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to the Agreement. Once a quorum is
established, approval of the Agreement requires the affirmative vote of the
holders of a majority of the West Carroll Common Stock represented in person or
by proxy at the Special Meeting.
The directors and executive officers of West Carroll and their
affiliates beneficially owned, as of the Record Date, 73,300 shares (or
approximately 48.22% of the outstanding shares) of West Carroll Common Stock.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Record Date, no shares of West Carroll Common
Stock. As of that date, no subsidiary of either West Carroll or Regions held
any shares of West Carroll 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 West Carroll Common Stock (excluding any shares held by
West Carroll, Regions, or their respective subsidiaries, other than shares held
in a fiduciary capacity or 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 4.0 shares
of Regions Common Stock. 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.
TREATMENT OF WEST CARROLL OPTIONS
The Agreement provides that all rights with respect to West Carroll
Common Stock pursuant to stock options or stock appreciation rights granted by
West Carroll under its stock option plans which are outstanding at the
Effective Date, whether or not then exercisable, will be converted into and
will become rights with respect to Regions Common Stock, and Regions will
assume each of such options in accordance with the terms of the plan under
which it was issued and the agreement by which it is evidenced. After the
Effective Date, those options will become options to purchase Regions Common
Stock, with the exercise price and number of shares of Regions Common Stock
purchasable thereunder adjusted to reflect the Exchange Ratio. William E.
Pratt, President of West Carroll, holds outstanding options to purchase 17,025
shares of West Carroll Common Stock at $27.12 per share, pursuant to an
Incentive Stock Option Plan which was approved by West Carroll stockholders on
November 17, 1994 and a written Option Agreement (the "Option Agreement") dated
November 28, 1994. At the Effective Time of the Merger, William E. Pratt's
rights to purchase 17,025 shares of West Carroll Common Stock at $27.12 per
share will be converted into and will become rights to purchase
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68,100 shares of Regions Common Stock at $6.78 per share, and, in accordance
with the Merger Agreement, Regions will assume such West Carroll options under
West Carroll's Incentive Stock Option Plan and the Option Agreement.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF 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 from financial services companies such as insurance
companies, brokerage firms, credit unions and other financial intermediaries,
as well as a trend towards consolidation and geographic expansion, coupled with
a relaxation of regulatory restrictions on interstate conduct of business of
financial institutions.
The Board of Directors of West Carroll historically has provided policy
making direction to management with a primary emphasis on enhancing stockholder
value. This emphasis has been influenced by, among other things, the impact of
the Bank on the economic well being of the communities and areas served by the
Bank. In recent times, this emphasis has been particularly influenced by
increased competition from larger financial institutions which have acquired
independent community banks within the communities and areas served by the
Bank.
The Board of Directors of West Carroll investigated the potential
impact of this new and increased competition and the increased activities in
bank mergers and acquisitions in Louisiana, the Southeast Region, and the
nation as a whole. The Board of Directors concluded that potential growth for
the Bank could be limited by the foregoing factors. Options to enhance
stockholder value appeared to be limited to either acquisitions of other banks
or a merger with a larger, more automated, more competitive provider of
financial services.
In early December of 1995, William Pratt, President of West Carroll,
was introduced to Carl Jones, Regional President of Regions. During this
introductory meeting, the parties engaged in general discussions about economic
conditions, the banking industry, and each of their respective banking
organizations.
In the latter part of January of 1996, Mr. Jones met with W. Elton
Kennedy, Chairman and Corporate Secretary of West Carroll, to explore the
possibility of merging West Carroll with Regions. Following further preliminary
discussions between Regions' representatives and West Carroll's
representatives, Regions and West Carroll exchanged certain financial and other
information in mid-March of 1996.
In April of 1996, the Board of Directors of West Carroll created an
acquisition committee to further explore alternatives to enhance stockholder
value through either acquisitions or mergers. During April of 1996,
representatives of Regions also met with representatives of West Carroll
confirming Regions' interest in a possible acquisition of West Carroll.
In early June of 1996, Regions made a proposal for Regions'
acquisition of West Carroll. This proposal was not initially accepted, but did
provide the basis for further discussions between the parties.
After further discussions and negotiations between representatives of
Regions and representatives of West Carroll, West Carroll and its Board of
Directors concluded that it could best serve its stockholders and the Bank's
employees, customers and communities by combining with a regional banking
organization rather than remaining as an independent community banking
organization. In reaching this decision, the Board of Directors of West
Carroll considered a number of material factors, including but not limited to,
the prospect of continued growth for the Bank should it and West Carroll remain
independent; the impact of increasing competition from regional and national
financial institutions; the enhancement of liquidity to the stockholders for
their stock in a national trading market; the additional services available to
customers and the community by association with a larger and more geographical
diversified regional bank holding company; and the benefits and cost of
privately negotiating a transaction with one potential acquirer as opposed to
an auction of the Bank through competing offers. In its deliberations the
Board of Directors of West Carroll found Regions' proposal to be in the best
interests of the stockholders of West Carroll. The definitive terms of the
Agreement were negotiated and the Agreement was approved by the Board of
Directors of both West Carroll and Regions, and executed as of June 25, 1996.
WEST CARROLL'S REASONS FOR THE MERGER. In approving the Merger, the
directors of West Carroll considered a number of factors. Without assigning any
relative or specific weights to the factors, the West Carroll Board of
Directors considered, among other things, the following material factors:
(a) the information presented to the directors by the management of
West Carroll concerning the business, operations, earnings, asset quality, and
financial condition of West Carroll, 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 West Carroll Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of West Carroll 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 consideration being offered by Regions along with the
business, financial condition and earnings prospects of Regions;
(f) the social and economic effects of the proposed Merger on West
Carroll, the Bank and its employees, customers and the communities served; and
(g) the experience and integrity of Regions and its Management.
The terms of the Merger were the result of arms-length negotiations
between representatives of West Carroll and representatives of Regions. Based
upon the consideration of the foregoing factors, the Board of Directors of West
Carroll unanimously approved the Merger as being in the best interests of West
Carroll and its stockholders. Each member of the Board of Directors of West
Carroll has agreed to vote such member's shares in favor of the Merger.
West Carroll's Board of Directors unanimously recommends that West
Carroll stockholders vote for approval of the Agreement.
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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 West Carroll 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 West Carroll operates, including
existing competition, history of the market areas with respect to financial
institutions, and average demand for credit, on an historical and prospective
basis, and (iii) the results of Regions' due diligence review of West Carroll;
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.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Louisiana Secretary of State. Unless otherwise
agreed upon by Regions and West Carroll, and subject to the conditions and the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on the last business
day of the month in which the last of the following events occur: (i) the
effective date (including the expiration of any applicable waiting period) of
the last federal or state regulatory approval or consent required for the
Merger and (ii) the date on which the Agreement is approved by the requisite
vote of West Carroll stockholders; or such later date within 30 days thereof as
specified by Regions.
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. Regions and West Carroll anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated during the first quarter of 1997. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or West Carroll generally may
terminate the Agreement if the Merger is not consummated by April 30, 1997,
except that a party that has breached the obligation to consummate by that date
and has failed to cure such breach may not terminate for a failure to
consummate by April 30, 1997. See "--Conditions to Consummation of the Merger"
and "--Waiver, Amendment, and Termination of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause an exchange
agent selected by Regions to mail to the former stockholders of West Carroll a
form letter of transmittal, together with instructions for the exchange of such
stockholders' certificates theretofore representing shares of West Carroll
Common Stock for new certificates representing shares of Regions Common Stock.
WEST CARROLL 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 West Carroll Common Stock, together with
a properly completed letter of transmittal, there will be issued and mailed to
each holder of West Carroll Common Stock surrendering such items a certificate
or certificates representing the number of shares of Regions Common Stock to
which such holder is entitled. After the Effective Date, to the extent
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permitted by law, West Carroll 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 West Carroll
Common Stock has been converted, regardless of whether such stockholders have
surrendered their West Carroll 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 West Carroll
certificate until the holder duly surrenders such certificate. Upon such
surrender, all undelivered dividends and other distributions will be delivered
to such stockholder, in each case without interest.
The stock transfer books of West Carroll shall be closed on the
Effective Date. After the Effective Date, there will be no transfers of shares
of West Carroll Common Stock on West Carroll's stock transfer books. If
certificates representing shares of West Carroll Common Stock are presented for
transfer after the Effective Date, they will be canceled and exchanged for the
shares of Regions Common Stock deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions,
including, but not limited to:
(a) approval from the Federal Reserve and the Louisiana Commissioner
without any conditions or restrictions that 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 that had
such condition or requirement been known, Regions would not, in its reasonable
judgment, have entered into the Agreement, and the expiration of all applicable
waiting periods;
(b) the approval by the holders of the requisite number of shares of
West Carroll Common Stock;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting or making illegal consummation of the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under Section
368(a) of the Code and that the exchange of West Carroll Common Stock for
Regions Common Stock will not give rise to recognition of gain or loss to West
Carroll stockholders, 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 also is subject to the satisfaction or
waiver of various other conditions specified in the Agreement, including, among
others: (i) the delivery by Regions and West Carroll of opinions of their
respective counsel and certificates executed by their respective duly
authorized 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 by Regions of a letter from Regions' independent
accountants expressing that the Merger is expected to qualify for
pooling-of-interests accounting treatment.
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.
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Regions and West Carroll are not aware of any material governmental
approvals or actions that are required for consummation of the Merger, except
as described below. Should any other approval or action be required, it
presently is contemplated that such approval or action would be sought.
The Merger requires the prior approval of the Federal Reserve,
pursuant to Section 3 of the BHC Act. In granting its approval under Section 3
of the BHC Act, the Federal Reserve 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 Federal Reserve from approving the Merger (i) if
it would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or attempt to monopolize the business of banking in
any part of the United States or (ii) if its effect in any section of the
country may be to substantially lessen competition or to tend to create a
monopoly, or if it would be a restraint of trade in any other manner, unless
the Federal Reserve finds that any anticompetitive effects are outweighed
clearly by the public interest and the probable effect of the transaction in
meeting the convenience and needs of the communities to be served. Under the
BHC Act, the Merger may not be consummated until the 30th day following the
date of Federal Reserve approval, which may be shortened to the 15th day by the
Federal Reserve, during which time the United States Department of Justice may
challenge the transaction on antitrust grounds. The commencement of any
antitrust action would stay the effectiveness of the Federal Reserve's
approval, unless a court specifically orders otherwise.
The Merger also is subject to the approval of the Louisiana
Commissioner. In its evaluation, the Louisiana Commissioner will take into
account considerations similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and
West Carroll approved by their respective Boards of Directors; provided,
however, that after approval by the West Carroll stockholders, no amendment
that, pursuant to the Louisiana Act, requires further approval of West Carroll
stockholders, including an amendment which would decrease the consideration to
be received by West Carroll 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 West Carroll
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required regulatory approval, or by the Board of Directors of Regions if any
required regulatory approval is conditioned or restricted in the manner
described under " -- Conditions to Consummation of the Merger" above;
(b) by the Board of Directors of either party, if the holders of the
requisite number of shares of West Carroll Common Stock shall not have approved
the Agreement, provided that the terminating party is not then in material
breach of any provision of the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and West
Carroll;
(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 April 30, 1997, except that a party that has breached
the obligation to consummate the Merger by such date and has failed to cure
such breach may not terminate for a failure to consummate by April 30, 1997.
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
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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 West Carroll 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 in all material respects its business organizations and
assets, maintain its rights and franchises, and take no action that would
materially adversely affect 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 West Carroll and Regions prior to
consummation of the Merger, as described below.
WEST CARROLL. West Carroll 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 West Carroll 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,
directly or indirectly, any shares or any securities convertible into shares of
its capital stock (other than exchanges in the ordinary course under employee
benefits plans) or declaring or paying any dividend or making any other
distribution in respect of its capital stock, except that West Carroll may, but
shall not be legally obligated to, declare and pay regular quarterly cash
dividends in accordance with past practice as to amounts and declaration dates;
(iv) issuing or selling any additional shares of any West Carroll capital
stock, any rights to acquire any such stock, or any security convertible into
such stock (except as set forth in the Agreement); (v) adjusting, splitting,
combining, or reclassifying any of its capital stock; (vi) making any material
investment in or otherwise acquiring control over any other entity; (vii)
granting any increase in compensation or benefits to employees, officers, or
directors (except in accordance with past practice or as previously approved by
the Board of Directors of West Carroll, in each case, as previously disclosed
to Regions or as required by law), paying any severance pay or bonus (except
pursuant to any existing written policies or contracts), entering into or
amending any severance agreements with officers, or voluntarily accelerating
the vesting of any employee benefits; (viii) grant any increase in fees or
other increases in compensation or other benefits to the directors of West
Carroll or any of its subsidiaries; (ix) entering into or amending (except for
any amendment required by law) any employment contract that it does not have
the unconditional right to terminate without liability (other than liability
for services already rendered); (x) 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); (xi) 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")); (xii) commencing any litigation
(except in accordance with past practices), or settling any litigation for
money damages in excess of $100,000 or restrictions upon the operations of West
Carroll or any of its subsidiaries; or (xiii) modifying or terminating any
material contract.
In addition, the Agreement prohibits West Carroll and its affiliates
or representatives (except in compliance with the fiduciary obligations of its
Board of Directors) to (i) solicit, directly or indirectly, any acquisition
proposal from any other person or entity, (ii) negotiate with respect to any
such proposal, (iii) provide nonpublic information to any party making such a
proposal, or (iv) enter into any agreement with respect to any such proposal.
In addition, West Carroll has agreed to use reasonable efforts to cause its
advisors and other representatives not to engage in any of the foregoing
activities.
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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 generally provides that Regions will, for a period of
six years after the Effective Date, indemnify, defend, and hold harmless the
present and former directors, officers, employees, and agents of West Carroll
or any of its subsidiaries against all liabilities arising out of actions or
omissions occurring on or prior to the Effective Date.
The Agreement also provides that, after the Effective Date, Regions
will provide generally to officers and employees of West Carroll 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 West Carroll
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 West Carroll to honor all provisions for vested amounts earned or accrued
through the Effective Date under West Carroll's benefit plans.
The Agreement also provides that Regions will cause West Carroll to
honor all employment, severance, consulting and other compensation contracts
previously disclosed to Regions between West Carroll or its subsidiaries and
any current or former director, officer or employee. The Bank currently is a
party to two written employment agreements (the "Existing Employment
Agreements") entered into on October 24, 1994, to retain the services and
ensure the continued availability of W. Elton Kennedy and William E. Pratt. The
Existing Employment Agreements provide, among other things, for certain
payments to be made to W. Elton Kennedy and William E. Pratt if a "change in
control" occurs at either West Carroll or the Bank by way of merger or
otherwise. Upon payment of any such payments, the Existing Employment
Agreements will terminate. If the Merger is consummated in the first quarter of
1997, W. Elton Kennedy and William E. Pratt will respectively receive estimated
payments of $_______ and $_______ as a consequence of the change in control and
their Existing Employment Agreements will be canceled. After the Effective Date
of the Merger, it is anticipated that W. Elton Kennedy and William E. Pratt
will remain employed by the Bank without the benefit of an Employment
Agreement.
As described above under "--Treatment of West Carroll Options," the
Agreement also provides that all rights with respect to West Carroll Common
Stock pursuant to stock options or stock appreciation rights granted by West
Carroll under its stock option plans which are outstanding at the Effective
Date, whether or not then exercisable, will be converted into and will become
rights with respect to Regions Common Stock, and Regions will assume each of
such options in accordance with its terms.
As of the Record Date, directors and executive officers of West
Carroll owned no shares of Regions Common Stock.
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DISSENTING STOCKHOLDERS
General. Each West Carroll stockholder who objects to the Merger shall
be entitled to the rights and remedies of dissenting stockholders provided in
Section 12:131 of the Louisiana Act, a copy of which is included as Appendix B
to this Proxy Statement/Prospectus.
Statutory Requirements. The following is a summary of the steps to be
taken by a West Carroll stockholder who is interested in perfecting such
holder's dissenters' rights and should be read in conjunction with the full
text of Section 12:131 of the Louisiana Act. Each of the steps enumerated below
must be taken in strict compliance with the applicable provisions of the
statute in order for holders of West Carroll Common Stock to perfect their
dissenters' rights. If the Merger is approved by 80% or more of the total
voting power of West Carroll, then dissenters' rights of appraisal, in
accordance with the Louisiana Act, will not be available.
Any written objection, demand, or notice required by the Louisiana Act
in connection with the exercise of dissenters' rights should be sent to West
Carroll at 100 North Horner Street, Oak Grove, Louisiana, 71263, Attention: W.
Elton Kennedy, 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 West Carroll Common Stock who disapproves of or objects
to the proposed Merger and who wishes to receive in cash the "fair value" of
such shares (determined immediately before the Merger is consummated) may elect
to do so by taking all of the following steps:
(a) Such stockholder must file with West Carroll, prior to or at the
Special Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares of West Carroll
Common Stock against the Merger. If the Merger is approved by the required
vote, but by less than 80% of the total voting power, and the Merger authorized
thereby is effected, West Carroll 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 West Carroll's records.
(c) Each such stockholder, within 20 days after the mailing of such
notice to such holder, but not thereafter, must file with West Carroll a demand
in writing for the fair cash value of such holder's shares of West Carroll
Common Stock as of the day before such vote was taken, and such holder must
state in such demand the value demanded and a post office address to which the
reply of West Carroll may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in West Carroll Parish the certificates
representing such holder's shares of West Carroll Common Stock, duly endorsed
and transferred to West Carroll upon the sole condition that such certificates
shall be delivered to West Carroll upon payment of the value of the shares
determined in accordance with the provisions of Section 12:131 of the Louisiana
Act.
(e) With the demand, the stockholder must deliver to West Carroll the
written acknowledgment of such bank or trust company that it so holds such
holder's certificates of West Carroll Common Stock.
Unless the objection, demand, and acknowledgment are made and
delivered by the stockholder within the required time period, such holder
conclusively shall be presumed to have acquiesced in the Merger. If West
Carroll does not agree to the value so stated and demanded, or does not agree
that a payment is due, within 20 days after receipt of such demand and
acknowledgment, it shall notify the stockholder in writing, at the designated
post office address, of its disagreement and shall state in such notice the
value it will agree to pay if any payment should be held to be due; otherwise
it shall be liable for, and shall pay to the dissatisfied stockholder, the
value demanded.
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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 West Carroll's disagreement, but not thereafter, may file
suit against West Carroll, or the merged or consolidated corporation, as the
case may be, in the district court of West Carroll Parish praying the court to
fix and decree the fair cash value of the dissatisfied stockholder's shares of
West Carroll Common Stock as of the day before such corporate action complained
of was taken, and the court, on such evidence as may be adduced in relation
thereto, shall determine summarily whether any payment is due and, if so, such
cash value and render judgment accordingly. Any stockholder entitled to file
such suit, within such 60-day period, but not thereafter, may intervene as a
plaintiff in such suit filed by another stockholder and recover therein
judgment against West Carroll for the fair cash value of such holder's shares
of West Carroll 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 West Carroll conclusively shall bind the stockholder (i) by
West Carroll's statement that no payment is due or (ii) if West Carroll does
not contend that no payment is due, to accept the value of such holder's shares
of West Carroll Common Stock as fixed by West Carroll in its notice of
disagreement.
Any stockholder who fails to take each of the required actions
outlined above in a timely manner will not be entitled to exercise the rights
of a dissenting stockholder. Any stockholder who timely takes each of the
required actions outlined above thereafter shall retain all rights of a
stockholder, except the right to receive shares of Regions Common Stock, until
those rights are modified upon consummation of the Merger.
A stockholder, upon filing a demand for the value of such holder's
shares, shall cease to have any of the rights of a stockholder, except the
rights accorded by Section 12:131 of the Louisiana Act. Such a demand may be
withdrawn by the stockholder at any time before West Carroll gives notice of
disagreement, as provided by the Louisiana Act. After such notice of
disagreement is given, withdrawal of a notice of election shall require the
written consent of West Carroll. 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 West
Carroll Common Stock, or the stockholder shall otherwise lose such holder's
dissenters' rights, such holder shall not have the right to receive payment for
such holder's shares of West Carroll 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 West Carroll), and
such holder shall be reinstated to all rights as a stockholder as of the filing
of such holder's demand for value, including any intervening preemptive rights,
and the right to payment of any intervening dividend or other distribution, or
if any such rights have expired or any such dividend or distribution other than
in cash has been completed, in lieu thereof, at the election of West Carroll,
the fair value thereof in cash as determined by the West Carroll Board or, if
the Merger shall have been consummated, the Regions Board as of the time of
such expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX
LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
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EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and West Carroll
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
applicable law, the Merger will be a reorganization within the meaning of
Section 368(a). West Carroll and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b).
(b) The stockholders of West Carroll will recognize no gain or loss
upon the exchange of their West Carroll Common Stock solely for shares of
Regions Common Stock.
(c) The basis of the Regions Common Stock received by the West Carroll
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the West Carroll Common Stock surrendered in exchange therefor
less the basis of any fractional share of Regions Common Stock settled by cash
payment.
(d) The holding period of the Regions Common Stock received by the
West Carroll stockholders will, in each instance, include the period during
which the West Carroll Common Stock surrendered in exchange therefor was held,
provided that the West Carroll Common Stock was held as a capital asset on the
date of the exchange.
(e) The payment of cash to West Carroll stockholders in lieu of
fractional share interests of Regions Common Stock will be treated for federal
income tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by Regions. These cash payments will be
treated as having been received as distributions in full payment in exchange
for the stock redeemed. 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.
(f) Where solely cash is received by a West Carroll stockholder in
exchange for his West Carroll Common Stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of his West Carroll 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. WEST CARROLL 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.
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ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling
of interests as that term is used pursuant to GAAP, for accounting and
financial reporting purposes. Under the pooling-of-interests method of
accounting, assets, liabilities, and equity of the acquired company are carried
forward to the combined entity at their stated amounts. See
"Summary--Comparative Per Share Data."
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 West Carroll 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, West Carroll (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 West Carroll reasonably believes will be an affiliate
of West Carroll 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 West Carroll Common Stock will
be exchanging their shares of a Louisiana corporation governed by the Louisiana
Act and West Carroll'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 West
Carroll stockholders and those of Regions stockholders. Certain of the
differences are summarized below. In particular, Regions' Certificate and
Bylaws contain several provisions that may be deemed to have an antitakeover
effect in that they could impede or prevent an acquisition of Regions unless
the potential acquirer has obtained the approval of Regions' Board of
Directors. The following discussion is necessarily general; it is not intended
to be a complete statement of all differences affecting the rights of
stockholders and their respective entities, and it is qualified in its entirety
by reference to the Louisiana Act and the Delaware GCL as well as to Regions'
Certificate and Bylaws and West Carroll'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
or Articles of Incorporation and Bylaws," "--Classified Board of Directors and
Absence of Cumulative Voting," "--Removal of Directors," "--Limitations on
Director Liability," "--Special Meetings of Stockholders," "--Actions by
Stockholders Without a Meeting," "--Stockholder Nominations," and "--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 62,810,998 shares were issued,
including 260,000 treasury shares as of September 30, 1996. 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.
West Carroll. West Carroll's authorized capital stock consists of
300,000 shares of West Carroll Common Stock, which is the only class of
capital stock authorized and of which 152,000 shares were issued and
outstanding as of the Record Date.
Pursuant to the Louisiana Act, West Carroll's Board of Directors may
authorize the issuance of additional shares of West Carroll Common Stock
without further action by West Carroll's stockholders. West Carroll's Articles
provide the stockholders of West Carroll with preemptive rights to purchase or
subscribe to any unissued authorized shares of West Carroll Common Stock or any
option or warrant for the purchase thereof except as to 17,500 shares reserved
for purposes of West Carroll's Incentive Stock Option Plan and an additional
1,000 shares reserved for issuance to the public.
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.
West Carroll. The Louisiana Act generally provides that a Louisiana
corporation's articles of incorporation may be amended by the affirmative vote
of at least two-thirds of the voting power present at a meeting, unless the
articles of incorporation provide for a higher or lower voting requirement, not
less than a majority of the voting power present. West Carroll's Articles
provide that any action of the stockholders may be taken upon the affirmative
vote of a majority of the votes cast on the matter. Accordingly, the Articles
may be amended upon approval by a majority of shares of West Carroll Common
Stock represented in person or by proxy at a meeting of stockholders.
The Articles also provide that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws, subject to the concurrent right of the
stockholders to adopt, amend, or repeal the Bylaws and to prescribe that Bylaws
adopted by the stockholders may not be amended or repealed by the Board of
Directors.
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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.
West Carroll. West Carroll's Articles do not provide for a classified
board of directors, and provide that voting stock does not have cumulative
voting rights. Directors are elected by a plurality of the total votes cast by
stockholders.
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.
West Carroll. Pursuant to West Carroll's Bylaws, a director of West
Carroll may be removed with or without cause at a meeting of stockholders with
respect to which notice of the purpose to remove one or more directors has been
given, by the affirmative vote of the holders of at least a majority of the
outstanding shares of West Carroll Common Stock then entitled to vote in an
election of directors.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. The Certificate provides that a director of Regions will have
no personal liability to Regions or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefitted Regions and its stockholders. The SEC has taken the
position that similar provisions added to other corporations' certificates of
incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
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West Carroll. The Louisiana Act generally permits a corporation's
articles of incorporation to relieve directors and officers of liability for
money damages for good faith conduct. The Articles of West Carroll do not
include limitations on director or officer liability.
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.
West Carroll. West Carroll's Articles and Bylaws 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.
West Carroll. Under the West Carroll Bylaws, a special meeting of West
Carroll stockholders may be called by its Board of Directors, the President, or
stockholders holding not less than 10% of the shares of West Carroll Common
Stock entitled to vote at the meeting.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. The Certificate provides that any action required or
permitted to be taken by Regions stockholders must be effected at a duly called
meeting of stockholders and may not be effected by any written consent by the
stockholders. These provisions would prevent stockholders from taking action,
including action on a business combination, except at an annual 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.
West Carroll. Under the Louisiana Act, any action requiring or
permitting stockholder approval may be approved by unanimous written consent of
stockholders, or, if specified in the articles of incorporation or
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bylaws, by the written consent of the holders of sufficient voting power to
determine the matter. West Carroll's Articles and bylaws do not address actions
of stockholders by written consent, so any action requiring or permitting
stockholder approval may be taken upon unanimous written consent of the holders
of West Carroll Common Stock.
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.
West Carroll. West Carroll's Articles and Bylaws do not provide for
advance notice of director nominations.
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 in any respect Regions' Certificate, (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.
West Carroll. The Louisiana Act generally requires the affirmative
vote of at least two-thirds of the voting power present, or by such larger or
smaller vote, but not less than a majority of the voting power present or of
the total voting power, as the Articles of Incorporation may prescribe to
effect (i) any merger or consolidation with or into any other corporation, or
(ii) any sale or lease of any substantial part of the assets of the corporation
if the corporation is not insolvent. West Carroll's Articles provide that any
action of the stockholders may be taken upon the affirmative vote of a majority
of the votes cast on the matter.
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Accordingly, such actions may be effected upon approval by a majority of shares
of West Carroll Common Stock represented in person or by proxy at a meeting of
stockholders.
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.
West Carroll. Section 133 of the Louisiana Act ("Section 133") places
similar restrictions on "business combinations" (as defined in Section 132(4)
of the Louisiana Act, generally including mergers, consolidations, share
exchanges, sales and leases of assets, issuances of securities, and similar
transactions) by Louisiana corporations with an "interested stockholder" (as
defined in Section 132(9) of the Louisiana Act, generally the beneficial owner
of 10% or more of the voting power of the then outstanding voting stock).
Section 133 generally applies to business combinations of Louisiana
corporations having greater than 100 beneficial owners of its stock or which
did not have an interested stockholder on January 1, 1985, unless the articles
of incorporation expressly provide otherwise. Section 133 generally does not
apply provided the stockholders receive in the business combination
substantially similar consideration for their shares of stock in the
corporation in terms of price and method of payment, as determined in
accordance with Section 134B of the Louisiana Act, as the interested
stockholder received for its shares of stock in the corporation acquired by
such interested stockholder within two years of such business combination.
As West Carroll has not specifically elected to avoid the application
of Section 133, Section 133 generally would prohibit a business combination by
West Carroll with an interested stockholder unless the business combination is
recommended by West Carroll's Board and approved by the affirmative vote of at
least each of the following: (i) 80% of the votes entitled to be cast by
outstanding shares of West Carroll voting stock voting together as a single
voting group and (ii) two-thirds of the votes entitled to be cast by holders of
West Carroll voting stock, other than voting stock held by the interested
stockholder who is a party to the business combination with West Carroll,
voting together as a single voting group. As Regions is not an "interested
stockholder" with respect to West Carroll, Section 133 does not apply to the
Merger.
Under Sections 135 through 140.2 of the Louisiana Act (the "Control
Share Law"), a person who acquires shares in certain Louisiana corporations
(including West Carroll) and as a result increases such person's voting power
in the corporation to or above any of three threshold levels (i.e., 20%, 33
1/3%, and 50%), acquires the voting rights with respect to such shares only to
the extent granted by a majority in voting interest of the
32
<PAGE> 37
pre-existing, disinterested stockholders of the corporation. Certain
acquisitions of shares are exempted from the provisions of the Control Share
Law, including acquisitions pursuant to a merger, consolidation, or share
exchange agreement to which the corporation is a party. Since Regions'
acquisition of West Carroll Common Stock is to be made pursuant to a merger and
West Carroll and Regions are parties to the Agreement with respect thereto, the
Control Share Law does not apply to the Merger.
DISSENTERS' RIGHTS OF APPRAISAL
Regions. The rights of appraisal of dissenting stockholders of Regions
are governed by the Delaware GCL. Pursuant thereto, except as described below,
any stockholder has the right to dissent from any merger of which Regions could
be a constituent corporation. No appraisal rights are available, however, for
(i) the shares of any class or series of stock that is either listed on a
national securities exchange, quoted on the Nasdaq National Market, or held of
record by more than 2,000 stockholders or (ii) any shares of stock of the
constituent corporation surviving a merger if the merger did not require the
approval of the surviving corporation's stockholders, unless, in either case,
the holders of such stock are required by an agreement of merger or
consolidation to accept for that stock something other than: (a) shares of
stock of the corporation surviving or resulting from the merger or
consolidation; (b) shares of stock of any other corporation that will be listed
at the effective date of the merger on a national securities exchange, quoted
on the Nasdaq National Market, or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of stock described in
clause (a) or (b) immediately above; or (d) any combination of the shares of
stock and cash in lieu of fractional shares described in clauses (a) through
(c) immediately above. Because Regions Common Stock is quoted on the Nasdaq
National Market and is held of record by more than 2,000 stockholders, unless
the exception described immediately above applies, holders of Regions Common
Stock do not have dissenters' rights of appraisal.
West Carroll. The rights of appraisal of dissenting stockholders under
Louisiana law are generally similar to those afforded under the Delaware GCL.
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.
West Carroll. Pursuant to the Louisiana Act, upon written notice of a
demand to inspect corporate records, a stockholder who owns at least 5% of the
outstanding stock (25% in the case of a business competitor) is entitled to
inspect specified corporate 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."
West Carroll. Pursuant to the Louisiana Act, a board of directors may
from time to time make distributions out of surplus, as defined in the
Louisiana Act, to its stockholders, subject to restrictions in its articles of
incorporation, except (i) when the corporation is insolvent, or (ii) at a time
when the corporation's
33
<PAGE> 38
assets are exceeded by its liabilities, or when the net assets are less than
the aggregate amount payable on liquidation to any shares of West Carroll
Common Stock which have preferential rights in the event of liquidation.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." West Carroll 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 West Carroll Common Stock for the indicated periods. Management of
West Carroll is unaware of and the stockholder records of West Carroll do not
reflect any purchase and sale of West Carroll Common Stock which occurred from
January 1, 1995 through January 3, 1997.
<TABLE>
<CAPTION>
REGIONS WEST CARROLL
PRICE RANGE CASH DIVIDENDS CASH DIVIDENDS
----------- DECLARED DECLARED
HIGH LOW PER SHARE PER SHARE
---- --- --------- ---------
<S> <C> <C> <C> <C>
1995
First Quarter ............... $36.50 $31.63 $.33 $ --
Second Quarter ............... 37.44 34.50 .33 --
Third Quarter ................. 41.25 37.00 .33 --
Fourth Quarter ............... 44.88 39.63 .33 --
1996
First Quarter ............... $48.00 $40.75 $.35 $1.75
Second Quarter ............... 48.38 42.25 .35 --
Third Quarter ................. 48.63 43.63 .35 --
Fourth Quarter 1997 ........... 53.75 48.77 .35 --
1997
First Quarter (through
January 3, 1997 ............. 51.63 51.38 -- --
</TABLE>
On January 3, 1997, the last reported sale price of Regions Common
Stock as reported on the Nasdaq National Market, was $51.38. On June 24, 1996,
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 $46.50.
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."
34
<PAGE> 39
Historically, West Carroll has retained net income from year to year
to ensure the maintenance of adequate capital, particularly during the Bank's
rapid growth in recent years. However, during 1995 the Board of Directors of
West Carroll reviewed and recognized West Carroll's trend of strong earnings,
its projection of future growth, its strong capital position, and its capacity
to pay dividends. On December 20, 1995, an annual dividend of $1.75 per share
was declared and subsequently paid in March of 1996. In addition, the Board of
Directors has indicated its desire to continue to pay dividends annually, when
appropriate, at or near the level declared on December 20, 1995. However, there
can be no assurance that West Carroll will continue to pay any dividend in the
future.
35
<PAGE> 40
WEST CARROLL MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED DECEMBER 31,1995, 1994, AND 1993
RESULTS OF OPERATIONS
West Carroll reported consolidated net income of approximately $2,503,000 in
1995, $2,289,000 in 1994, and $2,171,000 in 1993. The improvement in net
income each year was primarily attributable to continued growth in the loan
portfolio and improving net interest margins. A provision for loan losses of
$250,000 was made in 1995 compared to a reversal of $30,000 in 1994 and a
reversal of $151,000 in 1993.
Return on Average Assets was 2.4% and Return on Average Stockholders' Equity
was 23.0% in 1995, compared to 2.5% and 27.5%, respectively, for 1994, and 2.6%
and 33.4%, respectively, for 1993.
NET INTEREST INCOME
Net interest income is the primary source of West Carroll's earnings stream and
represents the difference between interest income generated from earning assets
and the interest expense paid on deposits and borrowed funds. West Carroll
reported net interest income of approximately $6,771,000 in 1995,
$5,655,000 in 1994, and $4,939,000 in 1993. Net interest margin is net
interest income as a percentage of total interest-earning assets. The
difference between the weighted yields of assets and rates on liabilities is
the net interest spread. West Carroll reported net interest margins of 6.76%
for 1995, 6.45% for 1994, and 6.28% for 1993, and net interest spreads of 5.66%
for 1995, 5.60% for 1994, and 5.58% for 1993.
The following table represents the average balances of the earning assets and
interest-bearing liabilities of West Carroll with their associated yields or
rates as of December 31, 1995, 1994, and 1993.
36
<PAGE> 41
<TABLE>
<CAPTION>
(Balances in thousands) 1995 1994
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
EARNING ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits with
financial institutions $ 4,473 $ 214 4.78% $ 2,415 $ 64 2.65%
Investment Securities 26,062 1,824 7.00% 28,751 1,810 6.30%
Loans, Net of Unearned Income (1) 69,682 8,393 12.04% 56,483 6,333 11.21%
Fed Funds Sold - - 0.00% - - 0%
---------------------------- ----------------------------
Total Earning Assets $100,217 $10,431 10.41% $87,649 $8,207 9.36%
INTEREST-BEARING LIABILITIES:
Money Market and Now Accounts $ 21,581 $ 717 3.32% $21,169 $ 673 3.18%
Savings Deposits 5,985 185 3.09% 5,580 172 3.08%
Certificates of Deposit 49,214 2,741 5.57% 37,536 1,537 4.09%
Fed Funds Purchased 293 17 5.80% 3,525 162 4.60%
Other Borrowed Funds - - 0.00% 61 8 13.11%
---------------------------- ----------------------------
Total Interest-bearing funds $ 77,073 $ 3,660 4.75% $67,871 $2,552 3.76%
---------------------------- ----------------------------
Net Interest Margin $ 6,771 6.76% $5,655 6.45%
Net Interest Spread 5.66% 5.60%
<CAPTION>
(Balances in thousands) 1993
Average Income/ Yield/
Balance Expense Rate
EARNING ASSETS:
<S> <C> <C> <C>
Interest-bearing deposits with
financial institutions $ 2,866 $ 67 2.34%
Investment Securities 36,887 2,433 6.60%
Loans, Net of Unearned Income (1) 38,563 4,589 11.90%
Fed Funds Sold 283 8 2.83%
----------------------------
Total Earning Assets $ 78,599 $ 7,097 9.03%
INTEREST-BEARING LIABILITIES:
Money Market and Now Accounts $ 19,371 $ 602 3.11%
Savings Deposits 4,567 141 3.09%
Certificates of Deposit 35,121 1295 3.69%
Fed Funds Purchased 3,324 103 3.10%
Other Borrowed Funds 184 17 9.24%
----------------------------
Total Interest-bearing funds $ 62,567 $ 2,158 3.45%
----------------------------
Net Interest Margin $ 4,939 6.28%
Net Interest Spread 5.58%
</TABLE>
(1)Includes non-performing loans
As shown above West Carroll was able to also increase yields on earning assets
as rates on interest-bearing liabilities increased resulting in substantially
unchanged net interest spreads. The continued improvements in the net interest
margins were due to average interest earning assets growing at a rate faster
than interest-bearing liabilities and careful management of the rates of these
assets and the rates on interest-bearing liabilities
37
<PAGE> 42
NON-INTEREST INCOME AND NON-INTEREST EXPENSE
Income from sources other than interest-earning assets and excluding securities
transactions is derived primarily from service charges and other fees on
customer deposits and transactions. Non-interest income, excluding securities
transactions, was approximately $933,000 in 1995 compared to $805,000 in 1994,
and $759,000 in 1993. The annual increases were due primarily to growth in the
deposit base, increases in service charges on customer deposit accounts, and
increases in service fees.
Non-interest expense was approximately $3,668,000 in 1995 as compared to
$3,449,000 in 1994 and $2,724,000 in 1993. The increases in non-interest
expense were primarily attributable to the growth of West Carroll as additional
equipment, facilities, and personnel were necessary to serve the increased
customer base. In addition, in 1994, West Carroll's motor bank facility in
Bastrop was opened which contributed to increased operating expenses primarily
in 1994.
INCOME TAXES
West Carroll's effective tax rate was 33.7% in 1995, 24.7% in 1994, and 33.2%
in 1993. The effective rate is less than the statutory rate primarily because
of tax-free income provided from state and municipal bonds. As state and
municipal bonds in the portfolio mature and are not replaced, the effective tax
rate could increase. The decrease in the tax rate for 1994 was attributable to
an adjustment of deferred taxes related to prior years.
FINANCIAL CONDITION
West Carroll's balance sheet has emphasized management's philosophy of
increasing net interest income through lending activities. For the last three
years, net loans have comprised 60.2%, 62.4%, and 54.6% of total assets for the
years 1995, 1994, and 1993, respectively. During this same period, total
assets have grown from approximately $83,884,000 as of December 31, 1993, to
$101,188,000 as of December 31, 1994, to $117,071,000 as of December 31, 1995.
The growth was attributable to successful efforts to increase market presence
in Morehouse Parish.
LOANS
West Carroll's loan portfolio consists primarily of commercial, mortgage, real
estate, agriculture, and installment loans. Net loans is defined as gross
loans minus allowance for loan losses, unearned discount, and discounts on
purchased loans. Net loans were approximately $70,474,000 at December 31, 1995
compared to $63,131,000 at December 31, 1994 and $45,802,000 as of December 31,
1993. The increase in loans during these periods was due to increased loan
demand and marketing efforts particularly in the real estate and installment
loan area.
Included in the loan portfolio as of December 31, 1995, 1994, and 1993 were
approximately $8,370,000, $10,351,000, and $10,867,000,respectively, of
mortgage loans purchased at significant discounts from the Resolution Trust
Corporation. Discounts related to these loans were approximately $2,420,000,
$3,079,000, and $3,674,000, respectively.
38
<PAGE> 43
MATURITY DISTRIBUTION OF LOANS:
West Carroll's lending activities are nearly equally divided between loans
with maturities of less than one year and adjustable interest rates and loans
with fixed rates that mature in greater than one year. The following table
presents an analysis of the maturity distribution of West Carroll's loan
portfolio at December 31, 1995:
LOAN MATURITY/REPRICING SCHEDULE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LOANS
<S> <C>
FIXED RATE LOAN MATURITIES:
3 MONTHS OR LESS $ 7,257
3 THRU 12 MONTHS 10,352
1 THRU 5 YEARS 23,225
OVER 5 YEARS 11,206
--------
TOTAL FIXED RATE $ 52,040
FLOATING RATE LOANS
REPRICING:
QUARTERLY $ 16,040
YEARLY 3,883
GREATER THAN ANNUAL 178
--------
TOTAL FLOATING RATE $ 20,101
--------
TOTAL LOANS (Net of discounts $ 72,141
on purchased loans) ========
</TABLE>
NON-PERFORMING ASSETS
A "past due" loan is an accruing loan that is contractually past due 90 days or
more as to principal or interest payments. Management classifies a loan as
nonaccrual when it becomes apparent that the principal and/or interest is
doubtful or when the loan becomes 90 days past due and is secured by collateral
with sufficient realizable value to recover at least the principal. When a
loan is placed on nonaccrual status, interest is no longer accrued or included
in interest income and previously accrued income is reversed. A loan is
restored to accrual status when all interest and principal payments are current
and the borrower has demonstrated the ability to make payments of principal and
interest as scheduled. Restructured loans include those for which there has
been a reduction in the stated interest rate, extension of maturity, reduction
in face amount of debt, or reduction in accrued interest. Real estate acquired
by the Bank as a result of foreclosure is classified as other real estate owned
until such time as it is sold.
The following is an analysis of nonaccrual, restructured, and past due loans
and other real estate of West Carroll at the dates indicated:
39
<PAGE> 44
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
(in thousands)
<S> <C> <C> <C> <C> <C>
NON-ACCRUAL LOANS
REAL ESTATE $ 160 $ 218 $ 42 $ 0 $ 0
ACCRUING LOANS WHICH ARE
CONTRACTUALLY PAST DUE 90 DAYS
OR MORE AS TO PRINCIPAL OR INTEREST
AND NOT ON NON-ACCRUAL
REAL ESTATE 220 506 150 278 134
COMMERCIAL 98 49 124 78 355
INDIVIDUAL 208 180 50 0 28
----- ----- ----- ----- -----
TOTAL 526 735 324 356 517
RESTRUCTURED LOANS NOT ON NON-ACCRUAL
REAL ESTATE 40 28 40 42 72
OTHER REAL ESTATE 31 9 7 27 108
----- ----- ----- ----- -----
TOTAL NONPERFORMING ASSETS $ 757 $ 990 $ 413 $ 425 $ 697
===== ===== ===== ===== =====
</TABLE>
Interest income foregone on nonperforming assets has not been significant to
West Carroll.
ALLOWANCE FOR LOAN LOSSES
The balance in the allowance for loan losses at December 31, 1995 was $557,000
compared to the December 31,1994 balance of $442,000 and the December 31, 1993
balance of $568,000.
Inherent in West Carroll's lending activities is the risk that loan losses will
be experienced and that the risk of loss will vary with the type of loan being
made and the creditworthiness of the borrower over the term of the loan. To
reflect the currently perceived risk of loss associated with West Carroll's
loan portfolio, provisions are made to the allowance for loan losses. The
allowance is created by direct charges against income and is available for loan
losses. The amount of the allowance for loan losses and the provision for loan
losses is evaluated quarterly, based on management's estimate of risk in the
overall loan portfolio and the estimated exposure on individual loans. In
evaluating the adequacy of the allowance and the amount of the provision,
consideration is given to such factors as: management's evaluation of specific
loans; the level and composition of classified loans; historical loss
experience; results of examination by regulatory agencies and an internal asset
review process; expectations of future national and local economic conditions
and their impact on particular industries and the individual borrowers; the
market value of collateral and strength of available guaranties; concentrations
of credit; and other judgmental factors.
In 1995, West Carroll made provisions totaling $250,000 to increase the
allowance for loan losses while in 1994 and 1993, West Carroll decreased the
allowance for loan losses and reversed $30,000 and $151,000, respectively. The
increase in 1995 was due to continued increases in loan balances particularly
installment loans. With the increase in loan demand West Carroll incurred
higher net charge-offs primarily related to installment loans. The reversals
in 1994 and 1993 were due to continued improvement in credit quality and an
upswing in the local economy. The allowance for loan losses at December 31,
1995, 1994, and 1993 was 0.78%, 0.69%, and 1.24%, respectively, of loans net
of unearned income. Management considers the allowance to be adequate based
on its assessment of the loan portfolio.
40
<PAGE> 45
The following table presents an analysis of the allowance for loan losses for
the past five years:
ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
FOR YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1995 1994 1993 1992 1991
(in thousands)
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR POSSIBLE LOAN LOSSES:
BALANCE AT BEGINNING OF YEAR $ 442 $ 568 $ 791 $ 531 $ 447
RECOVERIES 82 19 3 69 11
LESS: CHARGEOFFS (217) (115) (75) (49) (117)
PROVISION FOR LOAN LOSSES 250 (30) (151) 240 190
------ ------ ------ ------ ------
BALNCE END OF PERIOD 557 442 568 791 531
====== ====== ====== ====== ======
CHARGE-OFFS:
REAL ESTATE 4 7 38 0 1
COMMERCIAL 4 36 25 49 115
INDIVIDUAL 209 72 12 0 1
------ ------ ------ ------ ------
TOTAL 217 115 75 49 117
====== ====== ====== ====== ======
RECOVERIES:
REAL ESTATE 1 6 0 21 11
COMMERCIAL 0 0 3 48 0
INDIVIDUAL 81 13 0 0 0
------ ------ ------ ------ ------
TOTAL $ 82 $ 19 $ 3 $ 69 $ 11
====== ====== ====== ====== ======
NET CHARGE-OFFS TO AVERAGE LOANS 0.19% 0.17% 0.19% (0.06)% 0.32%
====== ====== ====== ====== ======
</TABLE>
INVESTMENT SECURITIES
West Carroll has established uniform investment and funds management procedures
to satisfy its liquidity requirements while attempting to maximize earnings and
asset quality. Management assesses the short and long-term needs of West
Carroll through consideration of loan demand, interest rate factors, and
prevailing market conditions on a regular basis. This assessment leads to
recommendations for purchases and other transactions that are made considering
safety, liquidity, and maximization of return to West Carroll. Management's
strategy for securities is to maintain a high quality portfolio through
investing primarily in agency-issued mortgage securities and private-issued
mortgage securities. Management currently classifies all securities as
available-for-sale. West Carroll does not engage in the trading of securities.
Credit risk is minimized through agency backing. However, there are other
risks associated with mortgage-backed securities(MBS), collateralized
obligations(CMOs), and real estate mortgage investment conduits(REMICs). MBS
are securities which represent an undivided interest in a pool of loans. CMOs
and REMICs are structured obligations that are derived from a pool of mortgage
loans or agency mortgage backed securities. These type securities have widely
varying degrees of risk, which results from the prepayment risk on the
underlying mortgage loans and its effect on the cash flows of the security.
Changes in the average life due to prepayment and changes in interest rates in
general will cause the market value of MBS, CMOs, and REMICs to fluctuate.
41
<PAGE> 46
The investment security portfolio has remained relatively stable during the
years 1993 through 1995. As of December 31, 1995, 1994, and 1993, the
investment security portfolio totaled approximately $28,674,000, $26,736,000,
and $28,499,000, respectively.
DEPOSITS
At December 31, 1995, deposits totaled approximately $103,812,000, an increase
of approximately $12,876,000 from the December 31, 1994 balance of $90,936,000.
Deposits totaled $75,630,000 at December 31, 1993. The increases were due to
increased marketing efforts in Morehouse Parish and the customer attrition from
two of the largest competitors in the Morehouse Parish.
LIQUIDITY
Liquidity for West Carroll is the ability to raise funds at a reasonable cost,
fund asset growth, meet deposit withdrawals and customer's borrowing needs,
satisfy maturities of short-term borrowings and maintain reserve requirements.
In order to meet its liquidity needs, West Carroll invests in money market
assets such as federal funds sold, demand deposits, and interest-bearing
deposits with other financial institutions.
West Carroll monitors its liquidity position periodically in relation to
changes in long and short-term interest rates. The maturity distributions and
interest sensitivity of assets and liabilities are adjusted in response to
those changes.
As of December 31, 1995, 1994, and 1993 West Carroll's loan to deposit ratio
was 67.9%, 69.4%, and 60.6%, respectively. West Carroll has not had a problem
meeting its liquidity needs.
INTEREST RATE SENSITIVITY MANAGEMENT
The primary objective of monitoring West Carroll's interest rate sensitivity,
or inherent rate risk, is to provide management the tools necessary to manage
the balance sheet to minimize adverse changes in net interest income as a
result of changes in the direction and level of interest rates. Federal
Reserve Board monetary control efforts and legislative changes have been
significant factors affecting the management of interest rate sensitivity
positions in recent years.
Repricing characteristics are the time frames at which interest-earning assets
and interest-bearing liabilities are subject to changes in interest rates
either at replacement or maturity. Sensitivity is measured as the difference
between the volume of assets and liabilities in West Carroll's current
portfolio that are subject to repricing sensitivity gaps and are usually
calculated separately for various segments of time and on a cumulative basis.
Any excess of assets or liabilities results in an interest rate sensitivity
gap. A positive gap denotes asset sensitivity and a negative gap represents
liability sensitivity. The following table shows interest sensitivity for
three different intervals as of December 31, 1995.
42
<PAGE> 47
INTEREST RATE SENSITIVITY ANALYSIS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
0-90 91-365 OVER
DAYS DAYS 1 YEAR TOTAL
(in thousands)
<S> <C> <C> <C> <C>
EARNING ASSETS
LOANS (net of discounts) $ 23,297 $ 13,635 $34,099 $ 71,031
SECURITIES 2,196 7,562 18,916 28,674
SHORT-TERM INVESTMENTS 11,044 11,044
-------- -------- ------- --------
TOTAL 36,537 21,197 53,015 110,749
INTEREST-BEARING LIABILITIES
NOW ACCOUNTS 16,701 16,701
MMDA ACCOUNTS 6,259 6,259
REGULAR SAVINGS 6,169 6,169
CERTIFICATES OF DEPOSITS 18,813 28,245 8,590 55,648
-------- -------- ------- --------
TOTAL 47,942 28,245 8,590 84,777
INTEREST SENSITIVITY GAP $(11,405) $ (7,048) $44,425 $ 25,972
======== ======== ======= ========
CUMULATIVE GAP 12/31/95 $(11,405) $(18,453) $25,972
======== ======== =======
</TABLE>
West Carroll has a negative one year cumulative repricing gap of ($18,453,000)
as of December 31,1995. A negative gap implies that net interest income would
increase in a falling rate environment and decrease in a rising rate
environment. However, the degree of interest rate sensitivity is not equal for
all types of assets and liabilities. West Carroll'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, West Carroll considers these deposits to be "core" deposits along
with non-interest bearing deposits. This stability would indicate a much
longer implicit maturity than their contractual maturity. In addition on the
asset side, the investment portfolio is predominately mortgage-backed
securities which have monthly principal payments. These payments give the
investment portfolio an actual shorter maturity than their contractual
maturity. With these considerations, West Carroll feels that an increase or
decrease in market interest rates is unlikely to produce unacceptable
volatility in net interest income.
CAPITAL RESOURCES
West Carroll's shareholders' equity of $12,514,000 at December 31, 1995 remains
at a level considered to be adequate by management. The increase in undivided
profits from $6,587,000 December 31, 1993 to $11,379,000 at December 31, 1995
was due to continued profits. No dividends were paid during the period 1993 to
1995.
At December 31, 1995 the Bank had a Tier I and a total capital ratio of 17.25%
and 18.03%, respectively. At December 31, 1994, the Bank had a Tier I and a
total capital ratio of 14.56% and 15.22%, respectively. At December 31, 1993,
the Bank had a Tier I and a total capital ratio of 14.86% and 15.99%,
respectively. In addition, at December 31, 1995, 1994, and 1993, the Bank's
leverage ratio was 10.71%, 9.72%, and 8.90%, respectively.
43
<PAGE> 48
EFFECTS OF INFLATION
The majority of the 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 asset ratio. Inflation also affects non-interest
expenses which tend to rise during periods of general inflation and which will
lower bank profits.
MANAGEMENT DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
RESULTS OF OPERATIONS
Net income for the first nine months of 1996 was approximately $1,838,000 as
compared to approximately $1,882,000 for the first nine months of 1995. The
increase in interest income of approximately $566,000 for the first nine months
of 1996 over the same period in 1995 was attributable to continued growth in
loans and the investment securities portfolio, while an increase in interest
expense of approximately $588,000 for the first nine months of 1996 over the
same period in 1995 resulted from increased deposits, changes in deposit mix
and slightly higher rates on depositor accounts. The increase in interest
income was more than offset by the increase in interest expense resulting in a
small decline in net interest income for the first nine months of 1996 as
compared to same period in 1995. With the continued increase in loan demand,
West Carroll made a provision of $285,000 to the allowance for loan losses
during the first nine months of 1996 as compared to a provision of $205,000 for
the first nine months of 1995. Income tax expense for the nine months ended
September 30, 1996 and 1995 was $879,000 and $956,000 respectively.
NET INTEREST INCOME
For the nine months ended September 30, 1996, net interest income was
approximately $5,007,000 compared to $5,029,000 for the same period in 1995.
Interest income from loans improved by $149,000 over the same period in 1995
due to the increased volume of loans. Interest income on securities also
improved over the same period by approximately $300,000 due to growth in the
investment securities portfolio and West Carroll's reducing its investment in
interest-bearing deposits with other financial institutions and increasing
investment securities and loans in order to increase yields. These interest
income increases were more than offset, however, by an increase in interest
expense for the nine months ended September 30,1996, of $588,000 from the same
period in 1995. This increase was due primarily to the growth in the depositor
base, primarily in interest-bearing deposits which grew by approximately
$13,390,000 from the same period in 1995. In addition, rates paid on these
deposits also grew as a result of competitive pressures
PROVISION FOR LOAN LOSSES
For the nine months ended September 30, 1996, West Carroll increased its
allowance for loan losses through a provision of $285,000 compared to the
provision for loan losses of $205,000 made during the nine months ended
September 30, 1995. The increase in the provision for loan losses is
attributable to the continued growth in the loan portfolio, which increased
approximately $5,122,000 from September 30,1995, and the increase in net
charge-offs West Carroll experienced in the first nine months of 1996. West
Carroll experienced net charge-offs of $295,000 in the first nine months of
1996 compared to $76,000 in the same period in 1995. In 1996, West Carroll
implemented a more aggressive charge-off policy which is reflected in the
level of charge-offs and recoveries primarily related to installment loans.
NON-INTEREST INCOME AND NON-INTEREST EXPENSE
Other operating income for the first nine months of 1996 was $838,000 compared
to $742,000 for the first nine months of 1995. This increase is the result of
the growth in the deposit base which resulted in increased customer service
fees. There were no security transactions resulting in gains or losses in the
first nine months of 1996 or 1995. Other expenses of $2,843,000 through
September 30, 1996 increased slightly from $2,728,000 of other operating
expenses for the same period in 1995.
INCOME TAXES
Income tax expense for the first nine months of 1996 was $879,000 compared to
$956,000 in the same period in 1995. The effective tax rate for the first
nine months of 1996 and 1995, respectively, was 32.4% and 33.7%.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, West Carroll reported cash and cash equivalents of
approximately $6,444,000, an increase of approximately $1,791,000 from December
31, 1995. At September 30, 1996, the market value of West Carroll's
available-for-sale securities had declined approximately $282,000 from the
December 31,1995 market values due to increases in bond interest rates.
West Carroll's total assets at September 30, 1996, totaled approximately
$125,220,000, an increase of $8,149,000 compared to the total assets at
December 31, 1995 of $117,071,000. Loans increased approximately $10,145,000
to $80,619,000 from December 31, 1995 to September 30, 1996. Deposits
increased approximately $6,476,000 to $110,288,000 during the same period.
West Carroll's stockholders' equity of approximately $13,900,000 as of
September 30, 1996 remains at a level considered to be adequate by management.
The increase in undivided profits of approximately $1,572,000 from December 31,
1995 to September 30, 1996 resulted from the retention of net profits of West
Carroll. West Carroll paid dividends of $266,000 during the period ending
September 30, 1996. No dividends were paid in 1995.
Equity capital of West Carroll, excluding unrealized gains or losses on
securities available for sale, as a percentage of total assets was 11.1% at
September 30, 1996 compared to 10.5% at December 31, 1995. The risk-based Tier
I and total capital ratios and the leverage ratio of West Carroll amounted to
16.4%, 17.1%, and 11.1% respectively at September 30, 1996 compared to 17.2%,
18.0% and 10.7% respectively at December 31, 1995.
ALLOWANCE FOR LOAN LOSSES, NON-ACCRUAL AND PAST DUE LOANS
The allowance for loan losses at September 30, 1996 and September 30, 1995 was
.67% and .75% of outstanding loans, respectively. The following table
presents the changes in allowance for loan losses for the nine months ended
September 30, 1996 and 1995:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 1995
(in thousands)
<S> <C> <C>
ALLOWANCE FOR LOAN LOSSES
BALANCE AT BEGINNING OF YEAR $557 $443
RECOVERIES 145 48
LESS: CHARGE-OFFS (440) (124)
PROVISION FOR LOAN LOSSES 285 205
---- ----
BALANCE AT END OF PERIOD $547 $572
NET CHARGE-OFFS TO AVERAGE LOANS 0.52% 0.10%
==== ====
</TABLE>
As of September 30, 1996, West Carroll had $76,000 in nonaccrual loans compared
to $50,000 as of the same period in 1995. The total of accruing loans which
are contractually past due 90 days or more as to principal or interest at
September 30, 1996 is $726,000 compared to $897,000 as of September 30, 1995.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock based on employee compensation
plans including, stock purchase plans, stock options, restricted stock and
stock appreciation rights. The Company has elected to continue accounting for
stock based on compensation under Accounting Principles Board Opinion No. 25.
The disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996.
44
<PAGE> 49
BUSINESS OF WEST CARROLL
GENERAL
West Carroll is a bank holding company organized under the laws of the
state of Louisiana with its principal executive office located in Oak Grove,
Louisiana. West Carroll operates principally through the Bank, which is a
national bank and which provides a range of retail banking services in West
Carroll and Morehouse Parishes, Louisiana, through three full-service offices
and two additional drive-up offices. At September 30, 1996, West Carroll had
total consolidated assets of approximately $125 million, total consolidated
deposits of approximately $110 million, and total consolidated stockholders'
equity of approximately $14 million. West Carroll's principal executive office
is located at 100 North Horner Street, Oak Grove, Louisiana, 71263 and its
telephone number at such address is (318) 428-4221.
BUSINESS AND PROPERTIES
The Bank conducts all business activities through its five branch offices
located in Morehouse and West Carroll Parishes, Louisiana. The bank owns all
of the locations. The popular names and addresses of these banking offices are
as follows:
1. Main Office
100 North Horner Street
Oak Grove, La 71263
2. Drive-In
316 East Jefferson Street
Oak Grove, La 71263
3. Epps
4143 Hwy 134
Epps, La 71237
4. Bastrop Branch
2007 East Madison Avenue
Bastrop, La 71220
5. Bastrop Motor Bank
305 East Madison Avenue
Bastrop, La 71220
As of September 30, 1996, the Bank had approximately 46 full-time and 17
part-time employees. The parent company, West Carroll has no salaried
employees, although certain executive officers hold parallel positions with the
Bank. No employees are represented by unions or other bargaining units, and
management considers its relations with employees to be satisfactory.
COMPETITION
West Carroll encounters vigorous competition in its market areas from
a number of sources, including bank holding companies and commercial banks,
thrift institutions, other financial institutions and financial intermediaries.
Regional interstate banking laws and other recent federal and state laws have
resulted in increased competition from both conventional banking institutions
and other business offering financial services and products. The Bank also
competes for interest bearing funds with a number of other financial
intermediaries and investment alternatives, including brokerage firms "money
market" funds, government and financial institutions, some of which have
greater financial resources than West Carroll. At September 30, 1996, there
were approximately 14 commercial bank branches, and three credit union branches
competing in West Carroll and Morehouse Parishes.
LEGAL PROCEEDINGS
West Carroll and the Bank are not parties to any material legal
proceedings other than ordinary routine litigation incidental to their business.
45
<PAGE> 50
MANAGEMENT
The following table presents information about the directors and
executive officers of West Carroll and the Bank:
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
PRESENT OCCUPATION POSITION AND DIRECTOR OR OWNED AT , 1996
AND PRINCIPAL OFFICES HELD EXECUTIVE ------------------------------------
OCCUPATION FOR WITH WEST CARROLL OFFICER PERCENT OF
NAME AND AGE LAST FIVE YEARS AND BANK SINCE DIRECTLY INDIRECTLY CLASS(1)
- ------------------ ------------------ ----------------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. Elton Kennedy Businessman and Farmer Chairman and Vice 1981 54,125 21,425(2) 36.55%
51 President of West
Carroll, Chairman of
Bank
William E. Pratt Banker Vice Chairman and 1981 8,975(3) -(4) 5.63%
48 President of West
Carroll and Bank
Charles Crook Banker Director and 1984 1,250 - 0.82%
62 Executive Vice
President of Bank
T.D. Waters, Jr. Retired Merchant Director of Bank 1969 1,575 - 1.04%
73
A. P. Gunter Retired Farmer Director of West 1972 10,250 - 6.74%
73 Carroll and Director
of Bank
James Lingo Farmer Director of Bank 1982 1,250 - 0.82%
68
Charles Cox Owner of Cox Funeral Director of Bank 1982 1,250 - 0.82%
71 Homes
M. W. Kennedy Retired Minister Director of West 1982 50 - 0.03%
83 Carroll
Roger Smith Banker Chief Financial Officer, 1989 - - -
48 West Carroll and Bank
James Pichoff Banker Vice President and Cashier 1978 250 250(5) 0.33%
65 of Bank
</TABLE>
(1) Computed by treating the number of unexercised options exercisable within
60 days as outstanding, but only with respect to the holder of such
options.
(2) Includes 20,000 shares of West Carroll Common Stock in the name of Kennedy
Properties, LLC, a Louisiana limited liability company controlled by Mr.
Kennedy, and 1,425 shares of West Carroll Common Stock in the name of
Kennedy Childrens' Trust, an irrevocable inter vivos trust of which Mr.
Kennedy is a co-trustee and one of four principal beneficiaries.
(3) Includes options to acquire 7,350 shares of West Carroll Common Stock which
are exercisable presently or within 60 days. See, "Voting Securities and
Principal Stockholders of West Carroll".
(4) Excludes 4,337 shares of West Carroll Common Stock in the name of Dr.
Claude S. Pratt, Trustee, F/B/O Ashley H. Pratt, and 4,338 shares of West
Carroll Common Stock in the name of Dr. Claude S. Pratt, Trustee, F/B/O
Clara Lynne Pratt, the beneficial ownership of which is disclaimed by Mr.
Pratt. Ashley H. Pratt and Clara Lynne Pratt are the children of Mr.
Pratt.
(5) Registered in the name of Katherine G. Pichoff. Katherine G. Pichoff is
the spouse of Mr. Pichoff.
EMPLOYEE BENEFIT PLANS
The Bank has a 401(k) savings plan which covers substantially all full-time
employees with one year or more service. Full vesting in the plan occurs at
the time the employees become eligible under the plan. Contributions are at
the discretion of the Board of Directors. West Carroll expensed $44,000 and
$35,000 related to this plan for the years ended December 31, 1995 and 1994,
respectively.
Additionally, the Bank participates in a Money Purchase Pension Plan, which
covers substantially all full-time employees with one year or more service.
The Bank's contribution to the plan is set at 8% of each participant's total
compensation annually plus 4.3% of such compensation above $20,000. The
Company expensed $119,000 and $88,000 related to this plan for the years ended
December 31, 1995 and 1994, respectively.
TRANSACTIONS WITH MANAGEMENT
In the ordinary course of business, the Bank has loans, deposits and
other transactions with its executive officers, directors, and organizations
with which such persons are associated. Such transactions are on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with others and did not involve more than a
normal risk of collectibility or present other unfavorable features. The
aggregate amount of loans to the aforementioned person and company(s) in which
they have a 10% or more ownership interest as of September 30, 1996 were
approximately $392,000.
46
<PAGE> 51
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF WEST CARROLL
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of West Carroll Common Stock, as of the
Record Date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
NAME AND ADDRESS ----------------------- PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER DIRECT INDIRECT CLASS (1)
- -------------- ------------------- ------ ---------- -----------
<S> <C> <C> <C> <C>
Common Stock W. Elton Kennedy 54,125 21,425(2) 36.55%
P.O. Box 259
Mer Rouge, LA 71261
Common Stock William E. Pratt 8,975(3) ---(4) 5.63%
903 Apollo Drive
Bastrop, LA 71220
Common Stock A.P. Gunter 10,250 --- 6.74%
425 Boatman Crossing
Oak Grove, LA 71220
Common Stock James E. Yeldell 1,700 8,750(5) 6.88%
411 South Washington
Bastrop, LA 71220
Common Stock Rubye N. Levy -- 13,750(6) 9.05%
2209 Twitchell Street
Coushatta, LA 71019-8760
Common Stock Dr. Claude S. Pratt -- 8,675(7) 5.71%
422 Durham Street
Bastrop, LA 71220
Common Stock Lois Scott Thompson 12,150 -- 7.99%
P.O. Box 1002
Oak Grove, LA 71263-1002
</TABLE>
- --------------
(1) Computed by treating the number of unexercised options exercisable within
60 days as shares outstanding, but only with respect to the holder of such
options.
(2) Includes 20,000 shares of West Carroll Common Stock in the name of Kennedy
Properties, L.L.C., a Louisiana limited liability company controlled by
Mr. Kennedy, and 1,425 shares of West Carroll Common Stock in the name of
Kennedy Childrens' Trust, an irrevocable inter vivos trust of which Mr.
Kennedy is a co-trustee and one of four principal beneficiaries.
(3) Includes presently exercisable options to acquire 7,350 shares, and does
not include options to acquire 9,675 shares which are not exercisable
within 60 days.
(4) Excludes 4,337 shares of West Carroll Common Stock in the name of Dr. Claude
S. Pratt, Trustee, F/B/O Ashley H. Pratt, and 4,338 shares of West
Carroll Common Stock in the name of Dr. Claude S. Pratt, Trustee, F/B/O
Clara Lynne Pratt, the beneficial ownership of which is disclaimed by Mr.
Pratt. Ashley H. Pratt and Clara Lynne Pratt are the children of Mr.
Pratt.
(5) Registered in the name of Jack Yeldell Farms, Inc., a Louisiana business
corporation. Mr. James E. Yeldell serves as president and as a member of
the board of directors of Jack Yeldell Farms, Inc.
(6) Includes 6,875 shares of West Carroll Common Stock in the name of Rubye N.
Levy Pratnership B, and 6,875 shares of West Carroll Common Stock in the
name of Rubye N. Levy Partnership G. Rubye N. Levy Partnership B and Rubye
N. Levy Partnership G are Louisiana limited partnerships of which Ms. Rubye
N. Levy is general partner.
(7) Includes 4,337 shares of West Carroll Common Stock in the name of Dr. Claude
S. Pratt, Trustee, F/B/O Ashley H. Pratt, and 4,338 shares of West
Carroll Common Stock in the name of Dr. Claude S. Pratt, Trustee, F/B/O
Clara Lynne Pratt, the beneficial ownership of which is disclaimed by Dr.
Pratt.
47
<PAGE> 52
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 373 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of September 30, 1996. At that date,
Regions had total consolidated assets of approximately $18.7 billion, total
consolidated deposits of approximately $15.2 billion and total consolidated
stockholders' equity of approximately $1.6 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 September 30, 1996 information:
<TABLE>
<CAPTION>
NUMBER OF TOTAL TOTAL
BANKING OFFICES ASSETS DEPOSITS
--------------- ------ --------
(In thousands)
<S> <C> <C> <C>
Alabama ............................. 181 $ 11,557,055 $ 8,467,873
Florida ............................. 36 1,194,596 1,083,748
Georgia ............................. 75 3,529,206 3,039,924
Louisiana ........................... 57 2,209,689 1,819,863
Tennessee ........................... 24 482,520 431,734
</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."
RECENT DEVELOPMENTS
Recent Acquisitions. Since December 31, 1995, Regions has completed
the acquisitions of eight financial institutions (the "Recently Completed
Acquisitions"), certain aspects of which transactions are set forth in the
following table:
48
<PAGE> 53
<TABLE>
<CAPTION>
CONSIDERATION
-----------------
APPROXIMATE
--------------------------
ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ----------
(In millions)
<S> <C> <C> <C> <C>
The Enterprise National Bank of Atlanta, $ 54 $ 9 Cash Purchase
located in Atlanta, Georgia
Metro Financial Corporation, located in Atlanta, 210 31 Regions Purchase
Georgia Common
Stock
First National Bancorp, located in Gainesville, 3,199 728 Regions Pooling
Georgia Common of
Stock Interests
First Federal Bank of Northwest Georgia, Federal 94 17 Regions Pooling
Savings Bank, located in Cedartown, Georgia Common of
Stock Interests
First Gwinnett Bancshares, Inc., located in 68 15 Regions Purchase
Norcross, Georgia Common
Stock
Delta Bank & Trust Company, located in Belle 191 38 Regions Purchase
Chasse, Louisiana Common
Stock
American Bancshares of Houma, Inc., located in 89 18 Regions Purchase
Houma, Louisiana Common
Stock
Rockdale Community Bank, located in Conyers, 47 12 Regions Purchase
Georgia ------ ----- Common
Stock
Totals $3,952 $ 868
====== =====
</TABLE>
- ------------------------
(1) Calculated as of the date of consummation.
Other Pending Acquisitions. The following table sets forth certain
information concerning the Other Pending Acquisitions:
49
<PAGE> 54
<TABLE>
<CAPTION>
CONSIDERATION
-----------------
APPROXIMATE
--------------------------
ACCOUNTING
INSTITUTION ASSET SIZE VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ----------
(In millions)
<S> <C> <C> <C> <C>
Florida First Bancorp, Inc., located in Panama $ 297 $ 40 Cash Purchase
City, Florida (the "Florida First Acquisition")
Allied Bankshares, Inc., located in Thomson, 557 136 Regions Pooling
Georgia (the "Allied Acquisition") Common of
Stock Interests
Gulf South Bancshares, Inc., located in Gretna, 55 9 Regions Purchase
Louisiana (the "Gulf South Acquisition") Common
Stock
------ -----
Totals $ 909 $ 185
====== =====
</TABLE>
- ------------------------
(1) Calculated as of the date of announcement of the transaction.
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.
If the Other Pending Acquisitions and the Merger had been consummated
on September 30, 1996, based on September 30, 1996 pro forma financial
information, Regions' total consolidated assets would have increased by
approximately $1.0 billion to approximately $19.7 billion; its total
consolidated deposits would have increased by approximately $845 million to
approximately $16.0 billion; and its total consolidated stockholders' equity
would have increased by approximately $82 million to approximately $1.6
billion. See "Documents Incorporated by Reference" and Summary Pro Forma
Financial Data" and the related pro forma financial information in Regions'
Current Report on Form 8-K dated November 20, 1996.
Regions has purchased in the open market approximately 260,000 shares
of Regions Common Stock to be issued in connection with the Allied Acquisition.
Recently Announced Acquisitions. Regions has entered into agreements
to acquire three additional financial institutions, (i) First Bankshares, Inc.
("First Bankshares") located in East Point, Georgia, with total consolidated
assets of approximately $106 million, deposits of $83 million, and
stockholders' equity of $8.7 million at September 30, 1996, (ii) First
Mercantile National Bank ("First Mercantile"), headquartered in Longwood,
Florida, with total consolidated assets of approximately $144.6 million,
deposits of $123.4 million, and stockholders' equity of $9.1 million at
November 30, 1996, and (iii) SB&T Corporation, located in Smyrna, Georgia, with
total consolidated assets of approximately $152 million, deposits of $139
million, and stockholders' equity of $10.4 million at September 30, 1996.
Consummation of these transactions would result in the issuance of shares of
Regions Common Stock valued at approximately $18.9 million in the case of First
Bankshares, payment of approximately $21 million cash in the case of First
Mercantile, and issuance of shares of Regions Common Stock valued at
approximately $26.3 million in the case of SB&T. The pro forma effects of
these transactions would not have a material effect on Regions consolidated
financial position or on the pro forma financial information set forth or
incorporated by reference in this Proxy Statement/Prospectus.
50
<PAGE> 55
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the Merger and the Other Pending Acquisitions as of the dates
and for the periods indicated and pursuant to the accounting bases described
below. The unaudited pro forma financial data are presented for informational
purposes only and are not necessarily indicative of the combined financial
position or results of operation which actually would have occurred if the
transactions had been consummated at the date and for the periods indicated or
which may be obtained in the future. The information should be read in
conjunction with the unaudited pro forma financial information included in
Regions' Current Report on Form 8-K dated November 20, 1996. For additional
information relating to specific transactions within the scope of the Other
Pending Acquisitions, see "Business of Regions--Recent Developments."
SELECTED PRO FORMA COMBINED DATA FOR REGIONS AND WEST CARROLL
The following unaudited pro forma combined data give effect to the
acquisition of West Carroll as of the date or at the beginning of the periods
indicated, assuming such acquisition is treated as a pooling of interests.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1996
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets ............................................................................. $18,856,644
Securities ............................................................................... 4,038,774
Loans, net of unearned income ........................................................... 13,113,404
Total deposits ........................................................................... 15,297,238
Other borrowed money ..................................................................... 470,924
Stockholders' equity ..................................................................... 1,568,640
Book value per common share ............................................................. 24.84
</TABLE>
51
<PAGE> 56
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------------
1996 1995 1994 1993
---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income ....................... $1,037,388 $1,270,031 $999,901 $753,491
Total interest expense ....................... 511,803 638,996 438,709 298,352
---------- ---------- -------- --------
Net interest income ......................... 525,585 631,035 561,192 455,139
Provision for loan losses ..................... 22,019 30,521 20,550 24,544
---------- ---------- -------- --------
Net interest income after loan loss
provision ................................... 503,566 600,514 540,642 430,595
Total noninterest income ..................... 163,856 188,331 172,854 171,006
Total noninterest expense ..................... 418,798 491,129 445,825 385,854
Income tax expense ........................... 81,901 97,384 84,862 67,072
---------- ---------- -------- --------
Net income ................................... $ 166,723 $ 200,332 $182,809 $148,675
========== ========== ======== ========
Net income per share ......................... $ 2.66 $ 3.22 $ 3.11 $ 2.82
========== ========== ======== ========
Average common shares outstanding ........... 62,588 62,278 58,814 52,761
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, WEST CARROLL, AND OTHER PENDING
ACQUISITIONS
The following unaudited pro forma combined data as of September 30, 1996, and
for the nine months ended September 30, 1996, and for each of the three years
in the period ended December 31, 1995, give effect to (i) the Florida First
Acquisition and the Gulf South Acquisition, assuming such acquisitions are
accounted for as purchases, and (ii) the Merger and the Allied Acquisition,
assuming such transactions are treated as poolings of interests for accounting
purposes, as if all such transactions had been consummated on September 30,
1996, in the case of the data included under "Balance Sheet Data," and at the
beginning of the indicated periods in the case of the data included under
"Income Statement Data," except that the income statement data for the
transactions accounted for as purchases are reflected as if such transactions
had been consummated on January 1, 1995, and are not included for the years
ended December 31, 1994 and 1993.
52
<PAGE> 57
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1996
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets ....................................................................... $19,739,998
Securities ......................................................................... 4,265,955
Loans, net of unearned income ....................................................... 13,619,290
Total deposits ..................................................................... 16,032,050
Other borrowed money ............................................................... 536,273
Stockholders' equity ............................................................... 1,636,724
Book value per common share ......................................................... 24.89
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ---------------------------------------
1996 1995 1994 1993
---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income ....................... $1,087,556 $1,335,811 $1,034,842 $785,994
Total interest expense ....................... 537,200 672,520 452,555 311,486
---------- ---------- ---------- --------
Net interest income ......................... 550,356 663,291 582,287 474,508
Provision for loan losses ..................... 22,981 31,090 21,039 25,064
---------- ---------- ---------- --------
Net interest income after loan loss
provision ................................... 527,375 632,201 561,248 449,444
Total noninterest income ..................... 170,468 197,335 177,904 176,077
Total noninterest expense ..................... 442,212 518,164 461,704 399,543
Income tax expense ........................... 84,483 102,047 87,608 69,993
---------- ---------- ---------- --------
Net income ................................... $ 171,148 $ 209,325 $ 189,840 $155,985
========== ========== ========== ========
Net income per share ......................... $ 2.63 $ 3.23 $ 3.10 $ 2.83
========== ========== ========== ========
Average common shares outstanding ........... 65,181 64,869 61,244 55,125
</TABLE>
53
<PAGE> 58
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 West Carroll.
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 and West Carroll are both bank holding companies registered
with the Federal Reserve under the BHC Act. As such, Regions and West Carroll
and their 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, as a savings and loan holding company, Regions is also
registered with the OTS and is subject to the 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, and consideration of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977.
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 in September 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, none
of the states in which the banking subsidiaries of Regions or West Carroll are
located has either moved up the date after which interstate branching will be
permissible 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.
The BHC Act generally prohibits Regions and West Carroll 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
54
<PAGE> 59
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity
is permissible, the Federal Reserve must consider whether the performance of
such an activity reasonably can be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act
does not place territorial limitations on permissible nonbanking activities of
bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a bank 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 and West
Carroll is a member of the Federal Deposit Insurance Corporation (the "FDIC"),
and as such, its deposits are insured by the FDIC to the 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 the
respective subsidiary institutions of Regions (the FDIC and the applicable
state authority in the case of state-chartered nonmember banks and the OTS in
the case of federally chartered thrift institutions) and West Carroll (the OCC
in the case of federally chartered 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.
The federal and state banking regulators 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 and West Carroll are legal entities separate and distinct from
their banking, thrift, and other subsidiaries. The principal sources of cash
flow of both Regions and West Carroll, including cash flow to pay dividends to
their respective stockholders, are dividends from their subsidiary depository
institutions. There are statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to Regions and West
Carroll, as well as by Regions and West Carroll to their stockholders.
As to the payment of dividends, the Bank 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.
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 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.
55
<PAGE> 60
At September 30, 1996, under dividend restrictions imposed under
federal and state laws, the subsidiary depository institutions of Regions and
West Carroll, without obtaining governmental approvals, could declare aggregate
dividends to Regions and West Carroll of approximately $219 million and $6.4
million respectively.
The payment of dividends by Regions and West Carroll and their
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
Regions, West Carroll, and their respective subsidiary depository
institutions are required to comply with the capital adequacy standards
established by the Federal Reserve in the case of Regions and West Carroll and
the appropriate federal banking regulator in the case of each of their
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 be composed of common equity, undivided profits,
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 September 30, 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
13.53% and 10.71%, respectively, and West Carroll's consolidated Total Capital
and Tier 1 Capital Ratios were 17.06% and 16.41%, respectively.
In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio of Tier 1 Capital to average assets, less goodwill and certain
other intangible assets (the "Leverage Ratio"), of 3.0% for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3.0%, plus an additional cushion of 100
to 200 basis points. Regions' and West Carroll's respective Leverage Ratios at
September 30, 1996, were 7.57% and 11.13%. The guidelines also provide that
bank holding companies experiencing internal growth or making acquisitions will
be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" (deducting all intangibles) and other
indicators of capital strength in evaluating proposals for expansion or new
activities.
Each of Regions' and West Carroll's 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. Each of the subsidiary depository institutions was in
compliance with applicable minimum capital requirements as of September 30,
1996. Neither Regions, West Carroll, nor any of their subsidiary depository
institutions has been advised by any federal banking agency of any specific
minimum capital ratio requirement applicable to it.
56
<PAGE> 61
Failure to meet capital guidelines could subject a bank or thrift
institution 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 to 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 and West Carroll are expected to
act as sources of financial strength for, and to commit resources to support,
each of their respective banking subsidiaries. This support may be required at
times when, absent such Federal Reserve policy, Regions or West Carroll 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' respective investments in such other subsidiary
depository institutions.
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.
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<PAGE> 62
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.
At September 30, 1996, all of the subsidiary depository institutions
of Regions and West Carroll had the requisite capital levels to qualify as well
capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a 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 risk-based assessment system, which went into effect on
January 1, 1994, 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, 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
58
<PAGE> 63
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 reduced the assessment rate applicable to BIF deposits in two stages, so
that, beginning in 1996, the deposit insurance premiums for 92% of all BIF
members in the highest capital and supervisory categories were set at $2,000
per year, regardless of deposit size. 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.
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, in July 1995, the FDIC,
the Treasury Department, and the OTS released statements outlining a proposed
plan to recapitalize the SAIF, the principal feature of which was a special
one-time assessment on depository institutions holding SAIF-insured deposits,
which was intended to recapitalize the SAIF at a reserve ratio of 1.25%. This
proposal contemplated elimination of the disparity between the assessment rates
on BIF and SAIF deposits following recapitalization of the SAIF.
A variation of this proposal designated the Deposit Insurance Funds
Act of 1996 (the "Funds Act") was enacted by Congress as part of the omnibus
budget legislation and signed into law on September 30, 1996. As directed by
the Funds Act, the FDIC has implemented a special one-time assessment of
approximately 65.7 basis points (0.657%) on a depository institution's
SAIF-insured deposits held as of March 31, 1995 (or approximately 52.6 basis
points on SAIF deposits acquired by banks in certain qualifying transactions).
Regions recorded a charge against earnings for the special assessment in the
quarter ended September 30, 1996 in the amount of approximately $21.0 million
pre-tax.
In addition, the FDIC has proposed a revision in the SAIF assessment
rate schedule which would effect, as of October 1, 1996 (i) a widening in the
assessment rate spread among institutions in the different capital and risk
assessment categories, (ii) an overall reduction of the assessment rate range
assessable on SAIF deposits of from 0 to 27 basis points, and (iii) a special
interim assessment rate range for the last quarter of 1996 of from 18 to 27
basis points on institutions subject to FICO assessments. Effective January 1,
1997, FICO assessments will be imposed on both BIF- and SAIF-insured deposits
in annual amounts presently estimated at 1.29 basis points and 6.44 basis
points, respectively. Regions anticipates that the net effect of the decrease
in the premium assessment rate on SAIF deposits will result in a reduction in
its total deposit insurance premium assessments for the years 1997 through
1999, assuming no further changes in announced premium assessment rates.
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.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common
Stock, of which 62,810,998 shares were issued, including 260,000 treasury
shares, at September 30, 1996. 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 ability of
its Subsidiary Institutions to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At September 30, 1996, under
such requirements and guidelines, Regions' subsidiary
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<PAGE> 64
institutions had $219 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 have been 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. Proposals with
respect to Regions' 1997 annual meeting of stockholders may be submitted until
the date specified in Regions' 1997 annual meeting proxy statement.
EXPERTS
The consolidated financial statements and the supplemental
consolidated financial statements of Regions incorporated by reference in or
appearing as an exhibit to Regions' 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 West Carroll, included in
this Registration Statement, have been audited by KPMG Peat Marwick LLP,
independent auditors, for the periods indicated in their report thereon which
is included herein. The financial statements audited by KPMG Peat Marwick LLP,
have been included herein in reliance on their report given on their authority
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP,
refers to a change in the method of accounting for income taxes in 1993 and to
a change in the method of accounting for investment securities in 1994.
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 January 3, 1997, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 118,745 shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird, Atlanta, Georgia.
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<PAGE> 65
INDEX TO WEST CARROLL 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-4
Consolidated Statements of Stockholders' Equity..................................... F-5
Consolidated Statements of Cash Flows............................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
Condensed Consolidated Balance Sheet
as of September 30, 1996 (Unaudited)............................................. F-18
Condensed Consolidated Statements of Income (Unaudited)............................. F-19
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)............... F-20
Condensed Consolidated Statements of Cash Flows (Unaudited)......................... F-21
Notes to Unaudited Condensed Consolidated Interim Financial Statements
(Unaudited)...................................................................... F-22
</TABLE>
F-1
<PAGE> 66
INDEPENDENT AUDITORS' REPORT
The Board of Directors
West Carroll Bancshares, Inc.:
We have audited the accompanying consolidated balance sheets of West
Carroll Bancshares, Inc. and subsidiary as of December 31, 1995 and 1994, and
the related consolidated statements of income, stockholders' equity, and cash
flows for the three years ended December 31, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of West Carroll
Bancshares, Inc. and subsidiary as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for the three years ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in notes 1 and 6 to the consolidated financial statements, the
Company changed its method of accounting for income taxes to adopt the
provisions of Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes, in 1993. As discussed in note 1 to the consolidated financial
statements, the Company changed its method of accounting for investment
securities in 1994 to adopt the provisions of Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities.
KPMG Peat Marwick LLP
April 26, 1996
F-2
<PAGE> 67
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks......................................... $ 4,652,842 $ 3,779,990
Interest-bearing deposits with other financial institutions..... 11,043,812 5,413,846
Securities:
Held-to-maturity.............................................. -- 16,993,588
Available-for-sale............................................ 28,674,144 9,742,610
Loans, net...................................................... 70,474,261 63,130,518
Bank premises and equipment, net................................ 674,074 745,779
Accrued interest receivable..................................... 1,300,212 976,407
Other assets.................................................... 251,862 405,600
------------ ------------
$117,071,207 $101,188,338
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand........................................................ $ 19,034,841 $ 19,295,605
Savings and interest-bearing transaction accounts............. 29,129,753 29,092,359
Time.......................................................... 55,647,087 42,547,617
------------ ------------
Total deposits........................................ 103,811,681 90,935,581
Accrued interest payable........................................ 534,183 392,758
Accrued expenses and other liabilities.......................... 211,438 331,277
------------ ------------
Total liabilities..................................... 104,557,302 91,659,616
------------ ------------
Stockholders' equity:
Common stock, par value $1 per share. Authorized 300,000
shares; issued and outstanding 152,000 shares.............. 152,000 152,000
Surplus....................................................... 735,744 735,744
Undivided profits............................................. 11,379,090 8,875,842
Net unrealized gains (losses) on available-for-sale
securities, net of income tax.............................. 247,071 (234,864)
------------ ------------
Total stockholders' equity............................ 12,513,905 9,528,722
Commitments and contingent liabilities..........................
------------ ------------
$117,071,207 $101,188,338
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 68
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Interest income:
Loans......................................................... $ 8,392,297 $6,332,547 $4,588,464
Investment securities:
Taxable..................................................... 1,693,443 1,700,033 2,352,167
Tax-exempt.................................................. 130,440 110,378 80,442
Interest-bearing deposits with other financial institutions... 214,144 64,920 67,437
Federal funds sold............................................ 392 25 8,022
----------- ---------- ----------
Total interest income.................................. 10,430,716 8,207,903 7,096,532
----------- ---------- ----------
Interest expense:
Savings and interest-bearing transaction accounts............. 901,992 845,402 743,390
Time deposits................................................. 2,740,795 1,536,878 1,294,030
Federal funds purchased....................................... 16,990 162,038 102,932
Other borrowings.............................................. -- 8,107 17,424
----------- ---------- ----------
Total interest expense................................. 3,659,777 2,552,425 2,157,776
----------- ---------- ----------
Net interest income.................................... 6,770,939 5,655,478 4,938,756
Provision (reduction of allowance) for loan losses.............. 250,000 (30,000) (150,830)
----------- ---------- ----------
Net interest income after provision (reduction of
allowance) for loan losses........................... 6,520,939 5,685,478 5,089,586
----------- ---------- ----------
Other operating income:
Service charges, fees, and commissions........................ 868,530 746,749 668,166
Securities loss, net.......................................... (7,447) -- (108,538)
Other......................................................... 64,084 58,269 90,766
----------- ---------- ----------
Total other operating income........................... 925,167 805,018 650,394
----------- ---------- ----------
Other operating expenses:
Salaries and employee benefits................................ 1,982,404 1,580,694 1,401,176
Occupancy and equipment....................................... 562,089 515,734 392,383
Other......................................................... 1,123,151 1,352,269 930,523
----------- ---------- ----------
Total other operating expenses......................... 3,667,644 3,448,697 2,724,082
----------- ---------- ----------
Income before income tax expense....................... 3,778,462 3,041,799 3,015,898
Income tax expense.............................................. 1,275,214 752,500 1,001,668
----------- ---------- ----------
Income before cumulative effect of change in accounting
principle..................................................... 2,503,248 2,289,299 2,014,230
Cumulative effect at January 1, 1993, of change in method of
accounting for income taxes................................... -- -- 156,563
----------- ---------- ----------
Net income............................................. $ 2,503,248 $2,289,299 $2,170,793
=========== ========== ==========
Net income per share:
Primary Earnings Per Share:
Income per share before cumulative effect of change in
accounting principle...................................... 15.77 15.06 13.25
Cumulative effect of change in accounting for income
taxes..................................................... -- -- 1.03
----------- ---------- ----------
Primary net income per share................................ 15.77 15.06 14.28
=========== ========== ==========
Fully Diluted Earnings Per Share:
Income per share before cumulative effect of change in
accounting principle........................................ 15.54 15.06 13.25
Cumulative effect of change in accounting for income taxes.... -- -- 1.03
----------- ---------- ----------
Fully diluted net income per share............................ 15.54 15.06 14.28
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 69
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
NET UNREALIZED
GAINS (LOSSES)
ON AVAILABLE- TOTAL
COMMON UNDIVIDED FOR-SALE STOCKHOLDERS'
STOCK SURPLUS PROFITS SECURITIES EQUITY
-------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1993......... $122,600 $765,144 $ 4,415,750 $ -- $ 5,303,494
Net income........................ -- -- 2,170,793 -- 2,170,793
-------- -------- ----------- -------- -----------
Balances at December 31, 1993....... 122,600 765,144 6,586,543 -- 7,474,287
Net income........................ -- -- 2,289,299 -- 2,289,299
Stock split and decrease in par
value per share of common
stock.......................... 29,400 (29,400) -- -- --
Net unrealized losses on
available-for-sale securities,
net of related income taxes.... -- -- -- (234,864) (234,864)
-------- -------- ----------- -------- -----------
Balances at December 31, 1994....... 152,000 735,744 8,875,842 (234,864) 9,528,722
Net income........................ -- -- 2,503,248 -- 2,503,248
Net unrealized gain on
available-for-sale securities,
net of related income taxes.... -- -- -- 481,935 481,935
-------- -------- ----------- -------- -----------
Balances at December 31, 1995....... $152,000 $735,744 $11,379,090 $247,071 $ 12,513,905
======== ======== =========== ======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 70
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Operating activities:
Net income......................................... $ 2,503,248 $ 2,289,299 $ 2,170,793
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision (reduction of allowance) for loan
losses........................................ 250,000 (30,000) (150,830)
Securities loss, net............................ 7,447 -- 108,538
Losses on sales and writedowns of other real
estate and repossessed assets................. -- -- 3,971
Provision for depreciation and amortization..... 200,107 161,992 121,102
Deferred income tax benefit (expense)........... (40,000) (59,500) 98,882
Net amortization of security discounts and
premiums...................................... 75,921 153,774 250,458
Increase in accrued interest receivable and
other assets.................................. (343,566) (264,976) (166,822)
Increase (decrease) in accrued interest payable,
accrued expenses, and other liabilities....... 21,586 66,533 (106,568)
------------ ------------ ------------
Net cash provided by operating
activities............................... 2,674,743 2,317,122 2,329,524
------------ ------------ ------------
Investing activities:
Net decrease (increase) in interest-bearing
deposits with other financial institutions...... (5,629,966) (104,386) 3,891,381
Proceeds from sale of other real estate............ -- -- 27,000
Proceeds from sale of held-to-maturity
securities...................................... -- -- 625,722
Proceeds from maturities and paydowns of held-to-
maturity securities............................. 2,933,222 7,761,720 16,395,251
Purchases of held-to-maturity securities........... (4,170,991) (5,254,739) (9,728,712)
Proceeds from maturities and paydowns of
available-for-sale securities................... 1,707,879 2,605,099 --
Proceeds from sales of available-for-sale
securities...................................... 387,675 -- --
Purchases of available-for-sale securities......... (2,161,381) (3,858,875) --
Net increase in loans.............................. (7,616,026) (17,298,258) (16,387,293)
Purchases of bank premises and equipment........... (128,403) (376,864) (145,731)
------------ ------------ ------------
Net cash used by investing activities...... (14,677,991) (16,526,303) (5,322,382)
------------ ------------ ------------
Financing activities:
Net increase in deposits........................... 12,876,100 15,306,026 3,192,296
Payments on debentures............................. -- (122,750) (122,750)
------------ ------------ ------------
Net cash provided by financing
activities............................... 12,876,100 15,183,276 3,069,546
------------ ------------ ------------
Increase in cash and cash equivalents................ 872,852 974,095 76,688
Cash and cash equivalents at beginning of year....... 3,779,990 2,805,895 2,729,207
------------ ------------ ------------
Cash and cash equivalents at end of year............. $ 4,652,842 $ 3,779,990 $ 2,805,895
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 71
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994, AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
West Carroll Bancshares, Inc. (the "Company") through its subsidiary bank,
West Carroll National Bank (the "Bank") provides a full range of banking
services to individual and corporate customers in north Louisiana. The Company
and the Bank are subject to regulations of certain federal agencies and undergo
periodic examinations by those regulatory authorities.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and the Bank. All significant intercompany balances have been eliminated in
consolidation.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
balance sheet and income and expenses for the period. Actual results could
differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses and the valuation
of other real estate acquired in connection with foreclosures or in satisfaction
of loans. In connection with the determination of the allowances for loan losses
and the valuation of other real estate, management obtains independent
appraisals for significant properties.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and federal funds sold. Generally, federal
funds are sold for one-day periods.
SECURITIES
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 115 (Statement 115), Accounting for
Certain Investments in Debt and Equity Securities. Under Statement 115, the
Company classifies its debt and marketable equity securities in one of three
categories: trading, available-for-sale, or held-to-maturity. Trading securities
are bought and held principally for the purpose of selling them in the near
term. Held-to-maturity securities are those securities in which the Company has
the ability and intent to hold until maturity. All other securities not included
in trading or held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains and
losses on trading securities are included in earnings. Unrealized holding gains
and losses, net of the related income tax effect, on available-for-sale
securities are excluded from earnings and are reported as a separate component
of stockholders' equity until realized. Transfers of securities between
categories are recorded at fair value at the date of transfer.
A decline in the market value of any available-for-sale or held-to-maturity
security below cost that is deemed other than temporary is charged to
operations, resulting in the establishment of a new cost basis for the security.
Premiums and discounts are amortized or accreted either over the life of
the related security as an adjustment to yield using the effective interest
method, or are periodically adjusted to reflect the actual
F-7
<PAGE> 72
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
payment experience on the underlying mortgage loans, which does not materially
differ from the interest method. Dividend and interest income are recognized
when earned. Realized gains and losses for securities classified as
available-for-sale and held-to-maturity are included in earnings and are derived
using the specific identification method for determining the cost of securities
sold.
LOANS
Loans are stated at the principal amount outstanding with appropriate
reduction for unearned discounts and the allowance for loan losses.
Interest income on certain installment loans is deferred and recognized
under the sum-of-the-digits method which approximates the interest method, while
interest income on the remaining installment loans is recognized under the
simple interest method. Interest income on other loans, including impaired
loans, is accrued as earned based upon the principal balance outstanding, except
that accrual of interest on loans is discontinued where a reasonable doubt
exists as to the collectibility of principal or interest. Under such conditions,
previously accrued but uncollected interest is reversed and interest income is
recognized only when collected unless the collateral for the loan is sufficient
to cover the accrued interest or a guarantor assures payment of the interest.
Discounts on loans purchased are credited to income by a method which does
not differ materially from the level-yield method over the remaining terms of
the loans to maturity.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level believed adequate by
management to absorb potential loan losses. Management's determination of the
adequacy of the allowance is based on an evaluation of the relative risks
inherent in the loan portfolio, taking into consideration the nature, volume,
and quality of the portfolio, specific problem loans, past credit loss
experience, current and future economic conditions, results of internal and
regulatory review procedures, and other relevant factors. The provision for loan
losses is charged to expense and loans charged off, net of recoveries, are
charged directly to the allowance.
While management uses available information to recognize losses on loans,
future additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Bank's allowance for loan
losses. Such agencies may require the Bank to recognize additions to the
allowance based on their judgments about information available to them at the
time of their examination.
Effective January 1, 1995, the Company adopted Financial Accounting
Standards Board Statement No. 114 (Statement 114), Accounting by Creditors for
Impairment of a Loan, as amended by Statement 118, Accounting by Creditors for
Impairment of a Loan -- Income Recognition and Disclosures. Statements 114 and
118 address recognition criteria for loan impairment and the measurement methods
for certain impaired and restructured loans. A loan within the scope of
Statement 114 is considered impaired when, based on current information and
events, it is probable that the Company will be unable to collect all amounts
due according to the contractual terms of the loan agreement, including
scheduled interest payments. Under these standards, the 1995 reserve for credit
losses related to loans that are identified as impaired is based on discounted
cash flows using the loan's effective interest rate, or the fair value of the
collateral for collateral-dependent loans. The effect of the adoption of
Statements 114 and 118 was not material to the Company.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are carried at cost, less accumulated
depreciation. Depreciation of bank premises and equipment is provided over the
estimated useful lives of the respective assets on the straight-line basis.
Maintenance and repairs are charged to expense as incurred and renewals and
betterments are
F-8
<PAGE> 73
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
capitalized. When property and equipment is retired or otherwise disposed of,
the cost of the asset and the related accumulated depreciation are removed from
the accounts and the resulting gains or losses are recognized.
INCOME TAXES
The Company and the Bank file a consolidated federal tax return. Income
taxes and benefits are generally allocated based on each company's contribution
to the total federal tax liability.
Effective January 1, 1993, the Company and the Bank adopted the provisions
of Statement of Financial Accounting Standards No. 109 (Statement 109),
Accounting for Income Taxes. Under the asset and liability method of Statement
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
NET INCOME PER SHARE
Primary and fully diluted net income per share amounts are determined on
the basis of the weighted average number of common and common equivalent shares
outstanding during the year. The Company's stock options are common stock
equivalents. The number of shares used in computing primary net income per share
was 159,000 in 1995, 152,000 in 1994, and 152,000 in 1993. The number of shares
used in computing fully diluted net income per share was 161,000 in 1995,
152,000 in 1994, and 152,00 in 1993. The Company's common stock is not actively
traded and a fair market value is not readily attainable. For purposes of
computing the dilutive effect of the Company's outstanding options, the Company
has used fair value estimates obtained through an appraisal.
RECLASSIFICATIONS
Certain 1994 and 1993 amounts have been reclassified to conform to the 1995
presentation.
(2) SECURITIES
The amortized cost and approximate fair value (carrying value) of
securities available-for-sale at December 31, 1995, were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Obligations of state and political
subdivisions........................... $ 2,563,344 $ 30,637 $ (1,838) $ 2,592,143
Mortgage-backed securities,
collateralized mortgage obligations,
and REMICs............................. 24,756,236 394,173 (42,020) 25,108,389
FHLB of Dallas stock..................... 921,000 -- -- 921,000
Other.................................... 59,213 -- (6,601) 52,612
----------- -------- -------- -----------
$28,299,793 $ 424,810 $ (50,459) $28,674,144
=========== ======== ======== ===========
</TABLE>
F-9
<PAGE> 74
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The amortized cost and approximate market values of held-to-maturity
securities and available-for-sale securities at December 31, 1994, were as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Held-to-Maturity:
Obligations of state and political
subdivisions....................... $ 2,200,031 $ 3,678 $ (69,292) $ 2,134,417
Mortgage-backed securities,
collateralized mortgage
obligations, and REMICs............ 14,793,557 124,997 (447,132) 14,471,422
----------- -------- --------- -----------
$16,993,588 $ 128,675 $ (516,424) $16,605,839
=========== ======== ========= ===========
Available-for-Sale Obligations of state
and political subdivisions............ $ 150,000 $ -- $ (6,755) $ 143,245
Mortgage-backed securities,
collateralized mortgage
obligations, and REMICs............ 9,034,051 5,909 (355,008) 8,684,952
FHLB of Dallas stock.................. 865,200 -- -- 865,200
Other................................. 49,213 -- -- 49,213
----------- -------- --------- -----------
$10,098,464 $ 5,909 $ (361,763) $ 9,742,610
=========== ======== ========= ===========
</TABLE>
Other securities have been written down by $469,000 at both December 31,
1995 and 1994.
The amortized costs and estimated market values of securities at December
31, 1995, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less........................................... $ 374,366 $ 376,251
Due after one year through five years............................. 1,848,649 1,868,173
Due after five years through ten years............................ 340,329 347,719
FHLB of Dallas stock.............................................. 921,000 921,000
Mortgage-backed securities, collateralized mortgage obligations,
REMICs, and other............................................... 24,815,449 25,161,001
----------- -----------
$28,299,793 $28,674,144
=========== ===========
</TABLE>
Proceeds from sales of securities for the year ended December 31, 1995,
were $388,000. Gross losses of $8,000 were realized on those sales during 1995.
There were no sales of securities in 1994. Proceeds from the sale of securities
for the year ended December 31, 1993, were $625,722. Gross losses of $1,000 were
realized on those sales during 1993. Also during 1993, other securities were
written down by $108,000.
Investment securities having a carrying value of $6,456,000 and $7,531,000
at December 31, 1995 and 1994, respectively, were pledged to secure public funds
on deposit and for other purposes as required or permitted by law.
During 1995, the Bank transferred securities having an amortized cost of
$18,189,000 from its held-to-maturity portfolio to its available-for-sale
portfolio. At the time of the transfer, these securities had net unrealized
gains of $339,000. This transfer was made during the one time reassessment
allowed by the Financial Accounting Standards Board for the reclassification of
securities among investment categories.
The Company's investment in Federal Home Loan Bank of Dallas stock is
pledged as collateral to secure the Bank's advances from the FHLB of Dallas. The
Bank had no FHLB advances outstanding at December 31, 1995.
F-10
<PAGE> 75
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of the Bank's loan portfolio at December 31, 1995 and 1994,
is as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Commercial.............................................. $15,664,524 $13,479,224
Mortgage loans.......................................... 8,370,019 10,350,856
Real estate............................................. 21,594,180 18,657,645
Agricultural............................................ 7,879,018 5,468,823
Installment............................................. 21,053,655 19,785,039
----------- -----------
74,561,396 67,741,587
Less:
Discounts on purchased loans, net..................... (2,419,983) (3,078,524)
Unearned discounts on installment loans............... (1,109,820) (1,090,086)
Allowance for loan losses............................. (557,332) (442,459)
----------- -----------
Net loans..................................... $70,474,261 $63,130,518
=========== ===========
</TABLE>
At December 31, 1995 and 1994, the aggregate amount of indebtedness from
directors, executive officers, and entities in which these individuals are
principals amounted to $969,000 and $499,000, respectively. The change during
1995 reflects $529,000 in new loans and $59,000 of repayments. In management's
opinion, all of the transactions entered into between the Bank and these parties
were made on substantially the same terms as those prevailing at the time for
comparable transactions with other parties.
At December 31, 1995 and 1994, $160,000 and $218,000 in loans were
classified as non-accrual, respectively. Net interest income for 1995 and 1994
would have been higher by $17,000 and $21,000, respectively, had interest been
accrued at contractual rates on these loans.
A summary of changes in the allowance for loan losses is summarized as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance, January 1.................................. $ 442,459 $ 568,266 $ 790,926
Provision (reduction of allowance) for loan
losses......................................... 250,000 (30,000) (150,830)
Loans charged off................................. (217,295) (114,578) (74,707)
Recoveries on loans............................... 82,168 18,771 2,877
--------- --------- ---------
Balance, December 31................................ $ 557,332 $ 442,459 $ 568,266
========= ========= =========
</TABLE>
During 1995, the Bank reduced loans through the repossession of other real
estate and assets in the amount of $22,000. No such repossessions occurred in
1994. During 1993, the Bank reduced loans through the repossession of other real
estate and assets in the amount of $10,637.
F-11
<PAGE> 76
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) BANK PREMISES AND EQUIPMENT
Bank premises and equipment at December 31, 1995 and 1994, are summarized
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
ESTIMATED -------------------------
USEFUL LIVES 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Land............................................. -- $ 340,466 $ 301,466
Banking house.................................... 5-20 years 817,542 791,099
Furniture, fixtures, and equipment............... 3-10 years 1,203,930 1,140,972
Automobiles...................................... 3 years 120,097 120,096
----------- -----------
2,482,035 2,353,633
Less accumulated depreciation.................... (1,807,961) (1,607,854)
----------- -----------
$ 674,074 $ 745,779
=========== ===========
</TABLE>
Depreciation expense was $200,000, $162,000 and $121,000 for 1995, 1994 and
1993, respectively.
(5) TIME DEPOSITS
Included in time deposits at December 31, 1995 and 1994, were $12,506,000
and $9,767,000, respectively, of certificates of deposit in denominations of
$100,000 or more. Interest expense on time deposits of $100,000 or more amounted
to $631,000, $329,000 and $187,000 for the years ended December 31, 1995, 1994
and 1993, respectively.
During 1995, 1994 and 1993, respectively, the Bank made interest payments
of $3,518,000, $2,445,000 and $2,175,000 to depositors and creditors.
(6) INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, as of January 1, 1993. The cumulative effect of
$156,563 resulting from this change in accounting for income taxes is reflected
in the consolidated statement of income for the year ended December 31, 1993.
Income tax expense (benefit) included in the consolidated statements of
income for the years ended December 31, 1995, 1994 and 1993 consisted of the
following:
<TABLE>
<CAPTION>
1995 1994 1993
---------- -------- ----------
<S> <C> <C> <C>
Federal -- current.................................. $1,315,214 $812,000 $ 902,786
Federal -- deferred................................. (40,000) (59,500) 98,882
---------- -------- ----------
$1,275,214 $752,500 $1,001,668
========== ======== ==========
</TABLE>
The significant components of deferred income tax expense (benefit) for the
year ended December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Deferred tax (exclusive of the effects of other
components listed below).......................... $(40,000) $ 53,529 $115,853
Change in beginning-of-the-year balance of the
valuation allowance for deferred tax assets....... -- (113,029) (16,971)
-------- --------- --------
$(40,000) $ (59,500) $ 98,882
======== ========= ========
</TABLE>
F-12
<PAGE> 77
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The actual income tax expense differs from the expected tax expense
(computed by applying the U.S. federal corporate rate of 34% to income before
taxes) as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Expected federal income tax expense.............. $1,284,677 $1,034,212 $1,025,405
Tax-exempt income................................ (64,403) (63,671) (26,301)
Change in beginning-of-the-year balance of the
valuation allowance for deferred tax assets.... -- (113,029) (16,971)
Other, net....................................... 54,940 (105,012) 19,535
---------- ---------- ----------
Income tax expense............................... $1,275,214 $ 752,500 $1,001,668
========== ========== ==========
Effective tax rate............................... 33.7% 24.7% 33.2%
========== ========== ==========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1995 and 1994, are presented below:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses.................................... $133,039 $ 93,982
Bank premises and equipment -- depreciation and
amortization.............................................. 161,753 169,948
Unrealized losses on securities available-for-sale........... -- 120,990
Other........................................................ 18,292 25,501
-------- --------
Total gross deferred tax assets...................... 313,084 410,421
Less valuation allowance............................. -- --
-------- --------
Net deferred tax assets.............................. 313,084 410,421
-------- --------
Deferred tax liabilities:
Securities -- discount accretion............................. 63,676 80,023
Unrealized gain on securities available-for-sale............. 127,280 --
-------- --------
Total gross deferred tax liabilities................. 190,956 80,023
-------- --------
Net deferred tax asset............................... $122,128 $330,398
======== ========
</TABLE>
As of January 1, 1995, the Company had no valuation allowance for deferred
tax assets, and for the year ended December 31, 1995, there was no change in the
total valuation allowance. As of January 1, 1994, the Company had a valuation
allowance for deferred tax assets of $113,000, and for the year ended December
31, 1994, there was a decrease in the total valuation allowance of $113,000. In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of temporary differences and projected future taxable income
in making this assessment.
Net deferred tax assets of $122,000 and $330,000 are included in other
assets at December 31, 1995 and 1994, respectively. During 1995, 1994 and 1993
the Company paid Federal income taxes of $1,275,000, $850,000 and $850,000
respectively.
(7) BENEFIT PLANS
The Bank has a 401(k) savings plan which covers substantially all full-time
employees with one year or more of service. Full vesting in the plan occurs at
the time the employees become eligible under the plan.
F-13
<PAGE> 78
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Contributions are at the discretion of the Board of Directors. The Company
expensed $44,000, $35,000 and $61,000 related to this plan for the years ended
December 31, 1995, 1994 and 1993, respectively.
Additionally, the Bank participates in a Money Purchase Pension Plan, which
covers substantially all full-time employees with one year or more of service.
The Bank's contribution to the plan is set at 8% of each participant's total
compensation annually plus 4.3% of such compensation above $20,000. The Company
expensed $119,000, $88,000 and $83,000 related to this plan for the years ended
December 31, 1995, 1994 and 1993, respectively.
(8) OPTION AGREEMENT
In October 1994, the Board of Directors of the Company approved an option
agreement with the President of the Company and the Bank whereby the President
may purchase 17,025 shares of Company stock at $27.12, which was the estimated
fair market value at date of issuance. The term of the option is ten years, and
the option may be exercised 3,675 shares per year for the first four years and
2,325 shares after four years. Upon exercise of the option, the President is
entitled to receive any dividends paid by the Company since the date of issuance
of the options as if the President had exercised his options as of the date of
issuance.
The Company will adopt Statement of Financial Accounting Standards No. 123
(Statement 123), Accounting for Stock-Based Compensation, in 1996. The Company
currently plans to continue to measure compensation cost for employee stock
compensation plans using the method prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees.
(9) STOCK TRANSACTIONS
In November 1994, the Company declared a 25 to 1 stock split effective as a
stock dividend. All share amounts have been restated to retroactively reflect
the stock split. Prior to the stock split, fifty shares owned by a director as
directors' qualifying shares were returned to the Company. Concurrent with the
stock split, the Company also increased the number of authorized shares to
300,000 shares and decreased the par value per share to $1.
(10) REGULATORY MATTERS
Applicable federal regulations impose restrictions on the amounts of
dividends that may be declared by the Company and the Bank. In addition to the
formal statutes and regulations, regulatory authorities also consider the
adequacy of the Bank's total capital in relation to its assets, deposits, and
other such items.
National banks are required to obtain approval of the Office of the
Comptroller of the Currency (OCC) if dividends declared in any year exceed the
profits of that year combined with the net retained profits of the preceding two
years. In 1996, the Bank will have available for the payment of dividends to the
Company, without approval of the OCC, its net retained profits of 1995 and 1994,
totaling $4,739,000 adjusted for 1996 operations.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
was signed into law on December 19, 1991. The prompt corrective actions of
FDICIA place restrictions on any insured depository institution that does not
meet certain requirements, including minimum capital ratios. The restrictions
are based on an institution's FDICIA defined capital category and become
increasingly more severe as an institution's capital category declines. In
addition to the prompt corrective action requirements, FDICIA includes
significant changes to the legal and regulatory environment for insured
depository institutions, including reductions in insurance coverage for certain
kinds of deposits, increased supervision by the federal regulatory agencies,
increased reporting requirements for insured institutions, and new regulations
concerning internal controls, accounting, and operations.
F-14
<PAGE> 79
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The prompt corrective action regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in declining
order, are "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." To be
considered "well capitalized," an institution is required to have at least a 5%
leverage ratio, a 6% Tier I risk-based capital ratio, and a 10% total risk-based
capital ratio. However, the regulatory agencies may impose higher minimum
standards on individual institutions or may downgrade an institution from one
category because of safety and soundness concerns.
At December 31, 1995, the Bank's leverage ratio was 10.71%, Tier I
risk-based ratio was 17.25%, and total risk-based ratio was 18.03%.
(11) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit and financial guarantees. Those instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the consolidated balance sheet. The contractual or notional
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 and financial guarantees written is represented by the
contractual or notional amount of those instruments. The Bank uses the same
credit policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
<TABLE>
<CAPTION>
CONTRACTUAL OR
NOTIONAL AMOUNT
AT DECEMBER 31, 1995
--------------------
<S> <C>
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit............................................. $3,249,000
Standby letters of credit and financial guarantees written............... 448,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counterparty. Collateral held varies but may include
accounts receivable; inventory; property, plant, and equipment; crop liens; real
estate; and income-producing commercial properties.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the Bank to guarantee the performance of a customer to a
third party. Those guarantees are primarily issued to support public and private
short-term borrowing arrangements. The credit risk involved in issuing letters
of credit is essentially the same as that involved in extending loan facilities
to customers. The Bank holds collateral supporting those commitments for which
collateral is deemed necessary.
(12) CONCENTRATION OF CREDIT RISK
The Bank grants real estate, commercial, and agricultural loans to
customers primarily in north Louisiana. Although the Bank has a diversified loan
portfolio, a substantial portion (approximately 40%) of its loans, although not
necessarily originated for the purposes of real estate acquisition, are secured
by real estate, including first mortgages on one- to four-family residences. In
addition, a large portion of the Bank's portfolio
F-15
<PAGE> 80
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
is secured by agricultural crops and equipment (approximately 10%). The Bank's
ability to fully collect its loans could depend upon the real estate market and
agricultural industry in north Louisiana. The Bank typically requires collateral
sufficient in value to cover the principal amount of the loan. Such collateral
is evidenced by mortgages on property held and liens on crops and equipment and
is readily accessible to the Bank.
(13) FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of the
Company's financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance-sheet
financial instruments without attempting to estimate the value of assets and
liabilities that are not considered financial instruments. The following methods
and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate that value:
CASH AND DUE FROM BANKS AND INTEREST-BEARING DEPOSITS WITH OTHER FINANCIAL
INSTITUTIONS
For those short-term investments, the carrying amount is a reasonable
estimate of fair value.
SECURITIES
The fair value, which approximates the estimated market values, of longer
term securities and mortgage-backed securities, except certain state and
municipal securities, is estimated based on bid prices published in financial
newspapers or bid quotations received from securities dealers. The fair value,
which approximates the estimated market values, of certain state and municipal
securities is not readily available through market sources other than dealer
quotations, so fair value estimates are based on quoted market prices of similar
instruments, adjusted for differences between the quoted instruments and the
instruments being valued.
LOANS
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial and consumer.
The carrying amount of performing loans that were funded and will mature within
twelve months of the balance sheet date approximate the fair value of those
loans. Additionally, the carrying amount of adjustable rate loans that reprice
within ninety days also approximate the fair value of those loans. The fair
value of the remaining performing and nonperforming loans is calculated by
discounting scheduled cash flows through the estimated maturity using estimated
market discount rates that reflect the credit and interest rate risk inherent in
the loan. The estimate of maturity is based on the Company's historical
experience with repayments for each loan classification, modified, as required,
by an estimate of the effect of current economic and lending conditions.
ACCRUED INTEREST
The fair value of the Company's accrued interest receivable and accrued
interest payable amounts approximate their carrying value due to the short
maturity of these financial instruments.
F-16
<PAGE> 81
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DEPOSIT LIABILITIES
The fair value of deposits with no stated maturity, such as noninterest
bearing demand deposits, savings, and interest-bearing transaction accounts is
equal to the amount payable as of December 31, 1995. The fair value of
certificates of deposit is based on the discounted value of contractual cash
flows. The discount rate is estimated using the rates currently offered for
deposits of similar remaining maturities.
The estimated fair values of the Company's financial instruments at
December 31, 1995, is as follows:
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
AMOUNT VALUE
-------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Financial assets:
Cash and due from banks............................................... $ 4,653 $ 4,653
Interest bearing deposits with banks.................................. 11,044 11,044
Securities available-for-sale......................................... 28,674 28,674
Loans, net receivable................................................. 70,474 69,853
Accrued interest receivable........................................... 1,300 1,300
Financial liabilities:
Deposits:
Demand............................................................. 19,035 19,035
Savings and interest-bearing transaction accounts.................. 29,130 29,130
Certificates of deposits and other time............................ 55,647 55,750
Accrued interest payable.............................................. 534 534
</TABLE>
(14) CONTINGENCIES
Various suits and claims arise in the ordinary course of business involving
the Company and the Bank. In the opinion of management of the Company and the
Bank, the ultimate disposition of unsettled claims will not have a material
adverse effect on the Company's or the Bank's financial condition.
F-17
<PAGE> 82
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
-------------
<S> <C>
ASSETS
Cash and due from banks......................................................... $ 6,444
Interest-bearing deposits....................................................... 2,459
Securities available-for-sale................................................... 33,099
Loans, net of allowance for loan losses of $547................................. 80,619
Bank premises and equipment, net................................................ 867
Accrued interest receivable..................................................... 1,483
Other assets.................................................................... 249
---------
$ 125,220
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing........................................................... $ 18,730
Interest-bearing.............................................................. 91,558
---------
Total Deposits........................................................ 110,288
Other liabilities............................................................... 1,032
---------
Total Liabilities..................................................... 111,320
Stockholders' equity:
Common Stock, par value $1 per share. Authorized 300,000 shares; issued and
outstanding 152,000 shares................................................. 152
Surplus....................................................................... 736
Undivided profits............................................................. 12,951
Net unrealized gains on available-for-sale securities, net of income tax...... 61
---------
Total stockholders' equity............................................ 13,900
Commitments and contingent liabilities..........................................
---------
$ 125,220
=========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-18
<PAGE> 83
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995, AND
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
NINE MONTHS ENDED ENDED SEPTEMBER
SEPTEMBER 30, 30,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Interest Income:
Loans................................................. $6,333 $6,184 $2,270 $2,217
Interest-bearing deposits with other financial
institutions....................................... 230 113 16 10
Securities............................................ 1,674 1,374 576 454
------ ------ ------ ------
Total interest income......................... 8,237 7,671 2,862 2,681
------ ------ ------ ------
Interest expense:
Deposits.............................................. 3,225 2,628 1,082 942
Funds purchased....................................... 5 14 5 12
------ ------ ------ ------
Total interest expense........................ 3,230 2,642 1,087 954
------ ------ ------ ------
Net interest income........................... 5,007 5,029 1,775 1,727
Provision for loan losses............................... 285 205 105 45
------ ------ ------ ------
Net interest income after provision for loan
losses...................................... 4,722 4,824 1,670 1,682
------ ------ ------ ------
Other operating income:
Service charges, fees, and commissions................ 602 503 212 173
Other income.......................................... 236 239 65 89
------ ------ ------ ------
Total other operating income.................. 838 742 277 262
------ ------ ------ ------
Other operating expenses:
Salaries and employee benefits........................ 1,522 1,507 523 460
Occupancy and equipment............................... 409 397 124 124
Other................................................. 912 824 319 229
------ ------ ------ ------
Total other operating expenses................ 2,843 2,728 966 813
------ ------ ------ ------
Income before income tax expense.............. 2,717 2,838 981 1,131
Income tax expense...................................... 879 956 324 381
------ ------ ------ ------
Net income.................................... $1,838 $1,882 $ 657 $ 750
====== ====== ====== ======
Net income per share:
Primary earnings per share............................ $11.14 $11.91 $ 3.93 $ 4.72
====== ====== ====== ======
Fully diluted earnings per share...................... $11.00 $11.76 $ 3.93 $ 4.69
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-19
<PAGE> 84
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NET UNREALIZED
GAINS (LOSSES)
ON AVAILABLE- TOTAL
COMMON UNDIVIDED FOR-SALE STOCKHOLDERS'
STOCK SURPLUS PROFITS SECURITIES EQUITY
------ ------- --------- -------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995................. $152 $ 736 $ 8,876 $ (235) $ 9,529
Net Income............................... -- -- 1,882 -- 1,882
Net unrealized gain on available-for-sale
securities, net of related income
taxes................................. -- -- -- 260 260
---- ----- ------- ------ -------
Balance at September 30, 1995.............. $152 $ 736 $10,758 $ 25 $11,671
==== ===== ======= ====== =======
Balance at January 1, 1996................. $152 $ 736 $11,379 $ 247 $12,514
Net Income............................... -- -- 1,838 -- 1,838
Dividends Paid ($1.75 per share)......... -- -- (266) -- (266)
Net unrealized loss on available-for-sale
securities, net of related income
taxes................................. -- -- -- (186) (186)
---- ----- ------- ------ -------
Balance at September 30, 1996.............. $152 $ 736 $12,951 $ 61 $13,900
==== ===== ======= ====== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-20
<PAGE> 85
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-------- --------
(UNAUDITED)
<S> <C> <C>
Operating activities:
Net income........................................................... $ 1,838 $ 1,882
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan loss........................................... 285 205
Provision for depreciation and amortization....................... 177 149
Net amortization of security discounts and premiums............... 39 54
Increase in other assets.......................................... (180) (501)
Increase in other liabilities..................................... 383 340
-------- --------
Net cash provided by operating activities.................... 2,542 2,129
Investing activities:
Net decrease in interest-bearing deposits with other financial
institutions...................................................... 8,585 3,957
Proceeds from maturities and paydowns on securities held to
maturity.......................................................... 0 1,202
Proceeds from maturities and paydowns on securities available for
sale.............................................................. 4,990 1,868
Proceeds from sales of available-for-sale securities................. 0 60
Purchases of securities available for sale........................... (9,736) (853)
Net increase in loans................................................ (10,430) (12,546)
Purchase of equipment................................................ (370) (78)
-------- --------
Net cash used by investing activities........................ (6,961) (6,390)
Financing activities:
Net increase in deposits............................................. 6,476 2,980
Increase in federal funds purchased.................................. 0 1,100
Dividend payment..................................................... (266) 0
-------- --------
Net cash provided by financing activities.................... 6,210 4,080
Increase (decrease) in cash and cash equivalents....................... 1,791 (181)
Cash and cash equivalents at beginning of year......................... 4,653 3,780
-------- --------
Cash and cash equivalents at end of period............................. $ 6,444 $ 3,599
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-21
<PAGE> 86
WEST CARROLL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements are unaudited, but
include all adjustments, consisting of normal recurring accruals, which
management considers necessary for a fair presentation of the financial
position, results of operations, and cash flows.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to Securities and Exchange Commission
rules and regulations. The consolidated financial statements and footnotes
included herein should be read in conjunction with West Carroll's annual
consolidated financial statements as of December 31, 1995 and 1994, and for each
of the three years in the period ended December 31, 1995 included elsewhere
herein.
(2) SECURITIES
The amortized cost and approximate market values (carrying value) of
securities available-for-sale at September 30, 1996, are summarized as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
State and Municipal............................ $ 2,622 $ 22 $ -- $ 2,644
Mortgage-backed Securities and Collateralized
Mortgage Obligations......................... 29,361 230 (158) 29,433
Stocks......................................... 1,016 -- -- 1,016
Other Securities............................... 8 -- (2) 6
------- ---- ------ -------
$33,007 $252 $ (160) $33,099
======= ==== ====== =======
</TABLE>
(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of West Carroll's loan portfolio is as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
-------------
<S> <C>
Commercial.............................................................. $18,189
Mortgage Loans.......................................................... 9,178
Real Estate............................................................. 22,136
Agriculture............................................................. 17,798
Installment............................................................. 16,923
-------
84,224
Less:
Discounts on purchased loans.......................................... (2,137)
Unearned discount..................................................... (921)
Allowance for loan losses............................................. (547)
-------
Net loans..................................................... $80,619
=======
</TABLE>
F-22
<PAGE> 87
Changes in the allowance for loan losses for the nine months ended
September 30, 1996 and 1995 are summarized as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance, January 1,........................................................... $557 $443
Provision charged to operating expenses..................................... 285 205
Loans charged off........................................................... (440) (124)
Recoveries on loans......................................................... 145 48
---- ----
Balance, September 30......................................................... $547 $572
==== ====
</TABLE>
NET INCOME PER SHARE
The number of shares used in computing primary net income per share was
165,000 and 158,000 for the nine month periods ended September 30, 1996 and 1995
and 167,000 and 159,000 for the three month periods then ended. The number of
shares used in computing fully diluted net income per share was 167,000 and
160,000 for the nine month periods ended September 30, 1996 and 1995 and 167,000
and 160,000 for the three month periods then ended.
F-23
<PAGE> 88
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WEST CARROLL BANCSHARES, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF JUNE 25, 1996
A-1
<PAGE> 89
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties.................................................................................
Preamble................................................................................
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER...........................................
1.1 Merger......................................................................
1.2 Time and Place of Closing...................................................
1.3 Effective Time..............................................................
ARTICLE 2 -- TERMS OF MERGER............................................................
2.1 Certificate of Incorporation................................................
2.2 Bylaws......................................................................
2.3 Directors and Officers......................................................
ARTICLE 3 -- MANNER OF CONVERTING SHARES................................................
3.1 Conversion of Shares........................................................
3.2 Anti-Dilution Provisions....................................................
3.3 Shares Held by WCB or Regions...............................................
3.4 Dissenting Stockholders.....................................................
3.5 Fractional Shares...........................................................
3.6 Conversion of Stock Rights..................................................
ARTICLE 4 -- EXCHANGE OF SHARES.........................................................
4.1 Exchange Procedures.........................................................
4.2 Rights of Former WCB Stockholders...........................................
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF WCB......................................
5.1 Organization, Standing, and Power...........................................
5.2 Authority; No Breach By Agreement...........................................
5.3 Capital Stock...............................................................
5.4 WCB Subsidiaries............................................................
5.5 Financial Statements........................................................
5.6 Absence of Undisclosed Liabilities..........................................
5.7 Absence of Certain Changes or Events........................................
5.8 Tax Matters.................................................................
5.9 Assets......................................................................
5.10 Environmental Matters.......................................................
5.11 Compliance With Laws........................................................
5.12 Employee Benefit Plans......................................................
5.13 Material Contracts..........................................................
5.14 Legal Proceedings...........................................................
5.15 Statements True and Correct.................................................
5.16 Accounting, Tax, and Regulatory Matters.....................................
5.17 State Takeover Laws.........................................................
5.18 Directors' Agreements.......................................................
5.19 Charter Provisions..........................................................
5.20 Derivatives Contracts.......................................................
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS..................................
6.1 Organization, Standing, and Power...........................................
6.2 Authority; No Breach By Agreement...........................................
6.3 Capital Stock...............................................................
6.4 SEC Filings; Financial Statements...........................................
6.5 Absence of Undisclosed Liabilities..........................................
6.6 Absence of Certain Changes or Events........................................
6.7 Compliance With Laws........................................................
6.8 Legal Proceedings...........................................................
</TABLE>
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6.9 Statements True and Correct.................................................
6.10 Accounting, Tax, and Regulatory Matters.....................................
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION...................................
7.1 Affirmative Covenants of WCB................................................
7.2 Negative Covenants of WCB...................................................
7.3 Covenants of Regions........................................................
7.4 Adverse Changes in Condition................................................
7.5 Reports.....................................................................
ARTICLE 8 -- ADDITIONAL AGREEMENTS......................................................
8.1 Registration Statement; Proxy Statement; Stockholder Approval...............
8.2 Exchange Listing............................................................
8.3 Applications................................................................
8.4 Filings with State Offices..................................................
8.5 Agreement as to Efforts to Consummate.......................................
8.6 Investigation and Confidentiality...........................................
8.7 Press Releases..............................................................
8.8 Certain Actions.............................................................
8.9 Accounting and Tax Treatment................................................
8.10 State Takeover Laws.........................................................
8.11 Charter Provisions..........................................................
8.12 Agreement of Affiliates.....................................................
8.13 Employee Benefits and Contracts.............................................
8.14 Indemnification.............................................................
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE..........................
9.1 Conditions to Obligations of Each Party.....................................
9.2 Conditions to Obligations of Regions........................................
9.3 Conditions to Obligations of WCB............................................
ARTICLE 10 -- TERMINATION...............................................................
10.1 Termination.................................................................
10.2 Effect of Termination.......................................................
10.3 Non-Survival of Representations and Covenants...............................
ARTICLE 11 -- MISCELLANEOUS.............................................................
11.1 Definitions.................................................................
11.2 Expenses....................................................................
11.3 Brokers and Finders.........................................................
11.4 Entire Agreement............................................................
11.5 Amendments..................................................................
11.6 Waivers.....................................................................
11.7 Assignment..................................................................
11.8 Notices.....................................................................
11.9 Governing Law...............................................................
11.10 Counterparts................................................................
11.11 Captions....................................................................
11.12 Interpretations.............................................................
11.13 Enforcement of Agreement....................................................
11.14 Severability................................................................
Signatures..............................................................................
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LIST OF EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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1. -- Form of Directors' Agreement. (sec. 5.18).
2. -- Form of agreement of affiliates of WCB. (sec.sec. 8.12 , 9.2(e)).
3. -- Matters as to which Pickering, Cotogno & Dunn will opine. (sec. 9.2(d)).
4. -- Form of Claims Letter. (sec. 9.2(f)).
5. -- Matters as to which Lange, Simpson, Robinson & Somerville will opine.
(sec. 9.3(d)).
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of June 25, 1996, by and between WEST CARROLL BANCSHARES, INC. ("WCB"),
a corporation organized and existing under the laws of the State of Louisiana,
with its principal office located in Bastrop, 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 WCB 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 WCB by
Regions pursuant to the merger of WCB into and with Regions. At the effective
time of such merger, the outstanding shares of the capital stock of WCB shall be
converted into shares of the common stock of Regions (except as provided
herein). As a result, stockholders of WCB shall become stockholders of Regions
and each of the subsidiaries of WCB 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 WCB, the
Board of Governors of the Federal Reserve System, and the appropriate state
regulatory authorities and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the merger (i) for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code and (ii) for accounting purposes shall be accounted for as a "pooling of
interests." Simultaneously with the execution and delivery of this Agreement, as
a condition and inducement to Regions' willingness to consummate the
transactions contemplated by this Agreement, each of WCB's directors and
executive officers will execute and deliver to Regions an agreement (a "Support
Agreement"), in substantially the form of Exhibit 1.
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, WCB shall be merged into and with Regions in accordance with the
provisions of Sections 12:115 of the LBCL and of Section 258 of the DGCL and
with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation resulting from the Merger and shall continue
to be governed by the Laws of the State of Delaware. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the Boards of Directors of WCB and Regions.
1.2 Time and Place of Closing. The Closing will take place at 9:00 A.M.,
Central Daylight Time, on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than 9:00 A.M.,
Central Daylight Time), or at such other time as the Parties, acting through
their duly authorized officers, may mutually agree. The place of Closing shall
be at the offices of Regions, in Birmingham, Alabama, or such other place as may
be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Louisiana
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Louisiana and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the duly
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the last business day of the
month in which occurs the last to occur of (i) the
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effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the stockholders
of WCB approve this Agreement to the extent such approval is required by
applicable Law; or such later date within 30 days thereof as may be specified by
Regions.
ARTICLE 2
TERMS OF MERGER
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 Directors and Officers. The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of WCB Common Stock (excluding shares held by WCB 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) issued and outstanding at the Effective Time shall be converted
into 4.0 shares of Regions Common Stock (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event Regions changes the number of
shares of Regions Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by WCB or Regions. Each of the shares of WCB Common Stock
held by any WCB 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 WCB Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Part XIII of the LBCL shall be entitled to receive the value of
such shares in cash as determined pursuant to such provision of Law; provided,
that no such payment shall be made to any dissenting stockholder unless and
until such dissenting stockholder has complied with the applicable provisions of
the LBCL, including the provisions of Section 131 thereof relating to the
deposit in escrow, endorsement, and transfer of the certificate or certificates
representing the shares for which payment is being made. In the event that a
dissenting stockholder of WCB fails to perfect, or
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effectively withdraws or loses, his right to appraisal and of payment for his
shares, such Person shall not have the right to receive payment in cash for his
shares and, instead, as of the Effective Time the shares of WCB Common Stock
held by such Person shall be converted into and exchanged for that number of
shares of Regions Common Stock determined under Section 3.1 of this Agreement
and the delivery of certificates representing such Regions Common Stock and any
dividends or other distributions in respect thereof to which such holder may be
entitled shall be governed by Section 4.1 of this Agreement. WCB will establish
an escrow account with an amount sufficient to satisfy the maximum aggregate
payment that may be required to be paid to dissenting stockholders. Upon
satisfaction of all claims of dissenting stockholders, the remaining escrowed
amount, reduced by payment of the fees and expenses of the escrow agent, will be
returned to WCB.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of WCB 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 WCB Common Stock pursuant to stock options, stock
appreciation rights, or stock awards ("WCB Rights") granted by WCB under the WCB
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 WCB Right, in accordance with the
terms of the WCB 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 WCB and the Committee of WCB's Board of
Directors (including, if applicable, the entire Board of Directors of WCB)
administering such WCB Stock Plan, (ii) each WCB Right assumed by Regions may be
exercised solely for shares of Regions Common Stock (or cash in the case of
stock appreciation rights), (iii) the number of shares of Regions Common Stock
subject to such WCB Right shall be equal to the number of shares of WCB Common
Stock subject to such WCB Right immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iv) the per share exercise price (or
similar threshold price, in the case of stock awards) under each such WCB Right
shall be adjusted by dividing the per share exercise (or threshold) price under
each such WCB 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 WCB Rights and any fraction of a share of Regions
Common Stock that otherwise would be subject to a converted WCB 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
last trading day preceding the Effective Time. In addition, notwithstanding the
provisions of clauses (iii) and (iv) of the first sentence of this Section 3.6,
each WCB 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 WCB Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants pursuant
to such WCB 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 WCB Stock Plan to ensure, to the
extent required by, and subject to the provisions of, such WCB Stock Plan, that
WCB 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 WCB 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 WCB 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 WCB Stock Plan complied with such rule prior to the Merger.
(c) All restrictions or limitations on transfer with respect to WCB Common
Stock awarded under the WCB Stock Plans or any other plan, program, or
arrangement of any WCB 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.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, Regions and
the Surviving Corporation shall cause the exchange agent selected by Regions
(the "Exchange Agent") to mail to the former stockholders of WCB appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
WCB Common Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent). After the Effective Time, each holder of shares of WCB
Common Stock (other than shares to be canceled pursuant to Section of this
Agreement or as to which dissenters' rights of appraisal have been perfected and
not withdrawn or forfeited under Section 131 of the LBCL and as contemplated by
Section 3.4 of this Agreement) 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 WCB
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 WCB 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 WCB 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 WCB Common Stock
for exchange as provided in this Section ., or otherwise complies with the
procedures of the Exchange Agent with respect to lost, stolen, or destroyed
certificates. The certificate or certificates of WCB Common Stock so surrendered
shall be duly endorsed as the Exchange Agent may require. Any other provision of
this Agreement notwithstanding, neither Regions, WCB, nor the Exchange Agent
shall be liable to a holder of WCB 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 WCB Stockholders. At the Effective Time, the stock
transfer books of WCB shall be closed as to holders of WCB Common Stock
immediately prior to the Effective Time and no transfer of WCB Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section of this Agreement, each
certificate theretofore representing shares of WCB Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement or as to which
dissenters' rights of appraisal have been perfected and not withdrawn or
forfeited under Section 131 of the LBCL as to which the holder thereof has
perfected dissenters' rights of appraisal as contemplated by Section 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 3.5 of
this Agreement in exchange therefor, subject, however, to the Surviving
Corporation'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 WCB in respect of such shares of WCB 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 WCB 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 WCB Common Stock are converted, regardless of whether such holders
have exchanged their certificates representing WCB 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 WCB Common Stock issued and outstanding at
the Effective Time until such holder surrenders such certificate for exchange as
provided in Section of this Agreement. However, upon surrender of such WCB
Common Stock certificate, both the Regions Common Stock certificate (together
with all such undelivered dividends or other distributions without interest),
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 WCB
Except as set forth in the WCB Disclosure Memorandum, WCB hereby represents
and warrants to Regions that:
5.1 Organization, Standing, and Power. WCB is a corporation duly organized
and validly existing, and in good standing under the Laws of the State of
Louisiana, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. WCB 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 WCB.
5.2 Authority; No Breach By Agreement.
(a) WCB 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 WCB, subject to the approval
of this Agreement by the required vote of the outstanding shares of WCB Common
Stock, which is the only stockholder vote required for approval of this
Agreement and consummation of the Merger by WCB. Subject to such requisite
stockholder approval, this Agreement represents a legal, valid, and binding
obligation of WCB, enforceable against WCB in accordance with its terms (except
in all cases as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and (ii) application of,
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and limitations on the application of, equitable principles and remedies,
including limitations on the availability of the equitable remedy of specific
performance or injunctive relief).
(b) Neither the execution and delivery of this Agreement by WCB, nor the
consummation by WCB of the transactions contemplated hereby, nor compliance by
WCB with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of WCB's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any WCB Company under, any
Contract or Permit of any WCB 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 WCB, or (iii) subject to receipt of
the requisite approvals referred to in Section (b) of this Agreement, violate
any Law or Order applicable to any WCB 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 WCB, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by WCB of the Merger and the other transactions contemplated in
this Agreement.
5.3 Capital Stock. The authorized capital stock of WCB consists of 300,000
shares of WCB Common Stock, of which 152,000 shares are issued and outstanding
as of the date of this Agreement and not more than 169,025 shares will be issued
and outstanding at the Effective Time. All of the issued and outstanding shares
of capital stock of WCB are duly and validly issued and outstanding and are
fully paid and nonassessable under the LBCL. To the Knowledge of WCB, none of
the outstanding shares of capital stock of WCB has been issued in violation of
any preemptive rights of the current or past stockholders of WCB. Except as set
forth above, there are no shares of capital stock or other equity securities of
WCB outstanding and no outstanding Rights relating to the capital stock of WCB.
WCB has reserved 17,500 shares of WCB Common Stock for issuance under the Stock
Plans, pursuant to which options to purchase not more than 17,025 shares of WCB
Common Stock are outstanding.
5.4 WCB Subsidiaries. WCB has disclosed in Section 5.4 of the WCB
Disclosure Memorandum all of the WCB Subsidiaries as of the date of this
Agreement. WCB or one of its Subsidiaries owns all of the issued and outstanding
shares of capital stock of each WCB Subsidiary. No equity securities of any WCB
Subsidiary are or may become required to be issued (other than to another WCB
Company) by reason of any Rights, and there are no Contracts by which any WCB
Subsidiary is bound to issue (other than to another WCB Company) additional
shares of its capital stock or Rights or by which any WCB Company is or may be
bound to transfer any shares of the capital stock of any WCB Subsidiary (other
than to another WCB Company). There are no Contracts relating to the rights of
any WCB Company to vote or to dispose of any shares of the capital stock of any
WCB Subsidiary. All of the shares of capital stock of each WCB Subsidiary held
by a WCB Company are authorized, validly issued, fully paid, and nonassessable
(except pursuant to 12 U.S.C. Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) under the applicable corporation or banking Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the WCB Company free and clear of any Lien. Each WCB Subsidiary is either a
bank, 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 WCB 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 WCB. Each WCB Subsidiary that is a
depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and
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applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund, as appropriate.
5.5 Financial Statements. WCB has included in Section . of the WCB
Disclosure Memorandum copies of all WCB Financial Statements for periods ended
prior to the date hereof and will deliver to Regions copies of all WCB Financial
Statements prepared subsequent to the date hereof. The WCB 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
WCB Companies as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows of the WCB 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 WCB Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on WCB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of WCB as of March 31, 1996 included in the
WCB Financial Statements or reflected in the notes thereto. No WCB Company has
incurred or paid any Liability since March 31, 1996, 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 WCB.
5.7 Absence of Certain Changes or Events. Since March 31, 1996, except as
disclosed in the WCB Financial Statements delivered prior to the date of this
Agreement, to the Knowledge of WCB, (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 WCB, and (ii) the WCB 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 WCB provided in Article of this Agreement, other
than conducting the process that has led 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 WCB
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,
1995, 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 WCB and all returns filed are
complete and accurate in all material respects. 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 likely to
result in a determination that would have a Material Adverse Effect on WCB,
except as reserved against in the WCB 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 WCB 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) Adequate provision for any Taxes due or to become due for any of the
WCB Companies for the period or periods through and including the date of the
respective WCB Financial Statements has been made and is reflected on such WCB
Financial Statements.
(d) Deferred Taxes of the WCB Companies have been adequately provided for
in the WCB Financial Statements.
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(e) Each of the WCB 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.
(f) None of the WCB 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.
(g) There are no Liens with respect to Taxes upon any of the assets of the
WCB Companies.
(h) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the WCB Companies that occurred during or after any
Taxable Period in which the WCB Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1994.
(i) No WCB Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(j) All material elections with respect to Taxes affecting the WCB
Companies as of the date of this Agreement have been or will be timely made as
set forth in Section 5.8 of the WCB 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.
(k) No WCB 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 WCB Companies have good and marketable title, free and
clear of all Liens, to all of their respective owned Assets. All material
tangible properties used in the businesses of the WCB Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with WCB's past practices. All Assets which are
material to WCB's business on a consolidated basis, held under leases or
subleases by any of the WCB Companies, are held under valid 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 WCB Companies currently maintain insurance similar in amounts, scope, and
coverage to that maintained by other peer banking organizations. None of the WCB
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 WCB Company under
such policies. The Assets of the WCB Companies include all Assets required to
operate the business of the WCB Companies as presently conducted.
5.10 Environmental Matters.
(a) To the Knowledge of WCB, each WCB 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 WCB.
(b) There is no Litigation pending or threatened before any court,
governmental agency, or authority or other forum in which any WCB Company or any
of its Loan Properties or Participation Facilities (or any WCB 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 WCB Company or any of its Loan
Properties or Participation Facilities, except for
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such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on WCB, and to the
Knowledge of WCB, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of WCB, 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 WCB.
5.11 Compliance with Laws. Each WCB 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 WCB. None of the WCB
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 WCB; 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 WCB 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 WCB, (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 WCB, or (iii) requiring any WCB 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) WCB has disclosed in Section 5.12 of the WCB Disclosure Memorandum, and
has delivered or made available to Regions prior to the execution of this
Agreement, copies in each case of all written pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other written health plans, all life insurance plans, and all other written
employee benefit plans or fringe benefit plans, including written "employee
benefit plans" as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed to, by
any WCB 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 "WCB Benefit Plans"). Any of the WCB 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 "WCB ERISA Plan." Each WCB 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 "WCB Pension Plan." No WCB Pension Plan is or
has been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) To the Knowledge of WCB, all WCB 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 WCB. Each WCB
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 WCB is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No WCB Company
has engaged in a transaction with respect to any WCB Benefit Plan that, assuming
the taxable period of such transaction expired as of the date hereof, would
subject any WCB Company to a tax or penalty imposed by
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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 WCB.
(c) No WCB 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 WCB Pension Plan, (ii) no change in the actuarial assumptions with respect
to any WCB Pension Plan, and (iii) no increase in benefits under any WCB 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 WCB or materially adversely affect the funding status of any such
plan. Neither any WCB Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
WCB Company, or the single-employer plan of any entity which is considered one
employer with WCB 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 WCB Company
has provided, or is required to provide, security to an WCB 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 WCB Company with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. No WCB 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 WCB Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) No WCB Company has any Liability for retiree health and life benefits
under any of the WCB Benefit Plans and there are no restrictions on the rights
of such WCB 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 WCB Company from
any WCB Company under any WCB Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any WCB 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 WCB 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 WCB Financial Statements to the extent required
by and in accordance with GAAP.
5.13 Material Contracts. Except as reflected in the WCB Financial
Statements, none of the WCB 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 WCB Company or the guarantee by any WCB 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),
and (iii) any other Contract or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by WCB with the SEC if WCB were
required to file a Form 10-K with the SEC as of the date of this
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Agreement (together with all Contracts referred to in Section 5.8 and this
Section 5.13 of this Agreement, the "WCB Contracts"). With respect to each WCB
Contract: (i) the Contract is in full force and effect; (ii) no WCB 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 WCB; (iii)
no WCB 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
WCB, 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
WCB, or has repudiated or waived any material provision thereunder. Except for
Federal Home Loan Bank advances, all of the indebtedness of any WCB Company for
money borrowed is prepayable at any time by such WCB Company without penalty or
premium.
5.14 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of WCB, 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 WCB 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 WCB, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any WCB Company that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on WCB. Section 5.14
of the WCB Disclosure Memorandum includes a summary report of all Litigation as
of the date of this Agreement to which any WCB Company is a party as a defendant
or cross-defendant and where the maximum exposure is estimated to be $50,000 or
more.
5.15 Statements True and Correct. Since January 1, 1992, or the date of
organization if later, each WCB 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 WCB). 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 an WCB 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 WCB 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 WCB 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 WCB Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to WCB stockholders in
connection with the Stockholders' Meeting, and any other documents to be filed
by an WCB 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 WCB, 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
WCB 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.
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5.16 Accounting, Tax, and Regulatory Matters. Except as specifically
contemplated by this Agreement, no WCB 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 WCB 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).
5.17 State Takeover Laws. To the extent applicable, each WCB Company has
taken all necessary action to exempt the transactions contemplated by this
Agreement from Sections 132 et. seq. and 135 et. seq. of the LBCL and any
comparable provisions of the Articles of Incorporation of WCB.
5.18. Directors' Agreements. Each of the directors of WCB has executed and
delivered to Regions a Support Agreement.
5.19 Charter Provisions. Each WCB Company has taken all action so that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement 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 WCB 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 WCB Company that may
be directly or indirectly acquired or controlled by it.
5.20 Derivatives Contracts. Neither WCB 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 WCB.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to WCB 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).
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(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 (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 62,182,540 shares were
issued and outstanding as of March 18, 1996. 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 WCB 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 WCB 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. SEC Filings; Financial Statements.
(a) Regions has filed and made available to WCB all forms, reports, and
documents required to be filed by Regions with the SEC since December 31, 1992,
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.
6.5 Absence of Undisclosed Liabilities. Except as disclosed in Section 6.5
of the Regions Disclosure Memorandum, and to the Knowledge of Regions, no
Regions Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Regions as of March 31, 1996, included
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in the Regions Financial Statements or reflected in the notes thereto. Except as
disclosed in Section 6.5 of the Regions Disclosure Memorandum, no Regions
Company has incurred or paid any Liability since March 31, 1996, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Regions.
6.6 Absence of Certain Changes or Events. Since March 31, 1996, except as
disclosed in the Regions Financial Statements delivered prior to the date of
this Agreement, or in Section 6.6 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.
6.7 Compliance with Laws. Regions is duly registered as a bank holding
company under the BHC Act. Each Regions Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions. No
Regions Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any Regions Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions, (ii) threatening to revoke any Permits, 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.
6.8 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of Regions, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Regions Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Regions Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions.
6.9 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 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 WCB
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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 WCB
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
WCB, 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.
6.10 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).
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of WCB. 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, WCB 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 (b) and (c) of this Agreement, or (y) materially adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of WCB. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, WCB
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
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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 WCB Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of an WCB Company to another WCB
Company) in excess of an aggregate amount outstanding at any time of
$150,000 (for the WCB Companies on a consolidated basis) except in the
ordinary course of the business of WCB, or such Subsidiary, consistent with
past practices (which shall include, for WCB, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve
Bank or Federal Home Loan Bank, whether or not WCB 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
WCB 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 WCB 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 WCB Company, or declare or pay any dividend or
make any other distribution in respect of WCB's capital stock, provided
that WCB may (to the extent legally and contractually permitted to do so),
but shall not be obligated to, declare and pay annual cash dividends on the
shares of WCB Common Stock at a rate, and with usual and regular record and
payment dates, in accordance with past practice disclosed in Section 7.2(c)
of the WCB Disclosure Memorandum and such dates may not be changed without
the prior written consent of Regions; 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, 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 WCB Common Stock or any other capital stock of any
WCB Company, or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any WCB
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of WCB Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any WCB Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another WCB Company) or any Asset having a
book value in excess of $50,000 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 WCB
Company; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, 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 WCB 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 WCB Company, except in accordance with past practice or
previously approved by the Board of Directors of WCB, in each case as
disclosed in Section 7.2(g) of the WCB Disclosure Memorandum or as required
by Law; except as disclosed in Section 7.2(g) of the WCB Disclosure
Memorandum, pay any severance or
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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 WCB Disclosure Memorandum; and enter into or amend
any severance agreements with officers of any WCB Company; grant any
increase in fees or other increases in compensation or other benefits to
directors of any WCB Company except in accordance with past practice
disclosed in Section 7.2(g) of the WCB 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 WCB
Company and any Person (unless such amendment is required by Law) that the
WCB 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 WCB Company or make any
material change in or to any existing employee benefit plans of any WCB
Company other than any such change that is required by Law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any material Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any WCB
Company for money damages in excess of $100,000 or imposing material
restrictions upon the operations of any WCB Company; or
(l) modify, amend, or terminate any material Contract or waive,
release, compromise, or assign any material rights or claims.
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 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) 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) not 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 WCB Common Stock.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
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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. As of the
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Stockholder Approval. 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. WCB shall furnish all
information concerning it and the holders of its capital stock as Regions may
reasonably request in connection with such action. WCB shall call a
Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, 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) WCB 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 WCB 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 WCB shall (subject to compliance with their
fiduciary duties as advised by counsel) use their reasonable efforts to obtain
such stockholders' approval.
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 WCB
Common Stock pursuant to the Merger.
8.3 Applications. Regions shall promptly prepare and file, and WCB 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 shall execute and file the Louisiana
Certificate of Merger with the Secretary of State of the State of Louisiana and
Regions shall execute and file the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
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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, after the 30th day after
execution of this Agreement, shall not interfere unreasonably with normal
operations. WCB shall cooperate with Regions in obtaining, at Regions' election
and expense, environmental audits of any or all of the properties owned or
occupied by WCB. 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 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, WCB 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 to the extent necessary to comply with the
fiduciary duties or other legal obligations as advised by counsel of WCB's Board
of Directors, no WCB Company nor any Affiliate thereof nor any Representative
retained by any WCB Company shall: (i) directly or indirectly solicit any
Acquisition Proposal from any Person;. (ii) furnish any non-public information
that it is not legally obligated to furnish to any person; or (iii) negotiate
with respect to, or enter into any Contract with respect to, any Acquisition
Proposal, but WCB 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 legal obligations as advised by
counsel. WCB shall promptly notify Regions orally and in writing in the event
that it receives any inquiry or proposal relating to any such transaction. WCB
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
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Representatives not to engage in any of the foregoing subject to legal
obligations and 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 as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code for federal income tax purposes.
8.10 State Takeover Laws. Each WCB 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 WCB Company shall take all necessary action
to ensure that the entering into of this Agreement 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 WCB 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
WCB Company that may be directly or indirectly acquired or controlled by it.
8.12. Agreement of Affiliates. WCB has disclosed in Section 8.12 of the
WCB Disclosure Memorandum each Person whom it reasonably believes is an
"affiliate" of WCB for purposes of Rule 145 under the 1933 Act. WCB 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, providing that such Person will not sell, pledge, transfer,
or otherwise dispose of the shares of WCB 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 WCB 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 WCB in exchange for shares
of WCB Common Stock shall not be transferable until such time as financial
results covering at least 30 days of combined operations of Regions and WCB 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 of WCB 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 WCB 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 WCB
should be treated as service under Regions' qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of WCB shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of WCB shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause WCB and its Subsidiaries to honor on terms reasonably agreed
upon by the Parties all employment, severance, consulting, and other
compensation Contracts disclosed in Section 8.13 of the WCB Disclosure
Memorandum to Regions between any WCB 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
WCB Benefit Plans.
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8.14. Indemnification.
(a) For a period of six years after the Effective Time, Regions shall, and
shall cause the Surviving Corporation to, indemnify, defend, and hold harmless
the present and former directors, officers, employees, and agents of each of the
WCB 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 WCB'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 WCB 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 WCB 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 WCB 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
WCB and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Regions or WCB shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that (i) Regions shall be obligated pursuant to
this paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate (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.
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 WCB shall have approved
this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law or by
the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the raising of additional capital or the disposition of Assets) which in
the reasonable judgment of the Board of Directors of Regions would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, Regions would not, in its reasonable judgment, have
entered into this Agreement.
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(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 that, had such condition or
requirement been known, Regions would not, in its reasonable judgment, have
entered into this Agreement.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of Regions Common Stock issuable
pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of Regions Common Stock issuable
pursuant to the Merger shall have been approved for listing on the Nasdaq,
NMS 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 (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, and (ii) the exchange in the Merger of WCB Common
Stock for Regions Common Stock will not give rise to gain or loss to the
stockholders of WCB with respect to such exchange (except to the extent of
any cash received). In rendering such Tax Opinion, such special counsel for
Regions shall be entitled to rely upon representations of officers of WCB
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 WCB 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 WCB 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 WCB 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
WCB 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 WCB; 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 WCB or to a matter being "known" by WCB shall be deemed not to include
such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of WCB to be performed and complied with pursuant
to this Agreement and the other agreements
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contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(c) Certificates. WCB shall have delivered to Regions (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized 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
WCB'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
Pickering, Cotogno & Dunn, counsel to WCB, dated as of the Effective Time,
in form reasonably satisfactory to Regions, as to the matters set forth in
Exhibit 3.
(e) Affiliates Agreements. Regions shall have received from each
affiliate of WCB the affiliate letter referred to in Section 8.12 of this
Agreement.
(f) Claims Letters. Each of the directors and officers of WCB shall
have executed and delivered to Regions letters in substantially the form of
Exhibit 4.
(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.
9.3 Conditions to Obligations of WCB. The obligations of WCB to consummate
the Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by WCB 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 6.10 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 6.10) 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 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 WCB (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 WCB and
its counsel shall request.
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(d) Opinion of Counsel. WCB shall have received an opinion of Lange,
Simpson, Robinson & Somerville, counsel to Regions, dated as of the
Effective Time, in form reasonably acceptable to WCB, as to the matters set
forth in Exhibit 5.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of WCB,
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 WCB; 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 WCB 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 WCB and
Section 9.3(a) of this Agreement in the case of Regions; or
(c) 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 WCB and Section 9.3(a) in
the case of Regions or in material breach of any covenant or other
agreement contained in this Agreement) 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 WCB fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the LBCL at the
Stockholders' Meeting 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 April 30, 1997, 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 WCB 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.
(g) By the Board of Directors of Regions, at any time prior to 5:00
p.m. Central Daylight Time, the 45th day after the date of this Agreement
without any Liability in the event that the review of the Assets, business,
financial condition, results of operations, and prospects of WCB undertaken
by Regions during such time period or any of the disclosures contained in
the WCB 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.
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10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, and neither Party shall have any
claim or legal right to redress, whether for breach of contract or otherwise, as
a result of a breach of any representation, warranty, covenant, or condition of
this Agreement, except that (i) the provisions of this Section 10.2 and Article
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), (c), or (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 8.12 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.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, 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.
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"DGCL" shall mean the General Corporation Law of Delaware.
"Effective Time" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws 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 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (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.
"Indemnified Party" shall have the meaning set forth in Section 8.14
of this Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the actual
knowledge of the chairman, president, chief financial officer, chief
accounting officer, chief credit officer, general counsel, any assistant or
deputy general counsel, or any senior or executive vice president of such
Person.
"LBCL" shall mean the Louisiana Business Corporation Law.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any of the Regulatory Authorities.
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"Liability" shall mean any direct or indirect, primary or secondary
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute, or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property 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 WCB into and with Regions referred
to in Section 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 WCB or Regions, and "Parties" shall mean
both WCB 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 WCB 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 WCB Common Stock.
"Regions Common Stock" shall mean the $0.625 par value common stock of
Regions.
"Regions Companies" shall mean, collectively, Regions and all Regions
Subsidiaries.
"Regions Disclosure Memorandum" shall mean the written information
entitled "Regions Financial Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to WCB describing in reasonable detail
the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"Regions Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of March 31, 1996, and the restated consolidated statements of
condition (including related notes and schedules, if any) of Regions as of
December 31, 1995 and 1994, the related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) for the three months ended March 31, 1996 and the
related restated statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for each of the
three years ended December 31, 1995, 1994, and 1993, as filed by Regions in
SEC Documents and reflecting the acquisition of First National Bancorp
accounted for as a pooling of interests 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 March 31,
1996.
"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 the stockholders of WCB in connection with the
transactions contemplated by this Agreement and which shall include the
Proxy Statement.
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"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
WCB to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments or postponements 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.
"Support Agreement" shall mean the various support agreements, each in
substantially the form of Exhibit 1.
"Surviving Corporation" shall mean Regions as the Surviving
Corporation 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.
"WCB Benefit Plans" shall have the meaning set forth in Section 5.12
of this Agreement.
"WCB Common Stock" shall mean the $1.00 par value common stock of WCB.
"WCB Companies" shall mean, collectively, WCB and all WCB
Subsidiaries.
"WCB Contracts" shall have the meaning set forth in Section 5.13.
"WCB Disclosure Memorandum" shall mean the written information
entitled "West Carroll Bancshares, Inc. Disclosure Memorandum" delivered
with 14 days of the date of this Agreement to Regions describing in
reasonable detail the matters contained therein and, with respect to each
disclosure
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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.
"WCB ERISA Plan" shall have the meaning set forth in Section 5.12(a)
of this Agreement.
"WCB Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of WCB as of March
31, 1996, and as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the three
months ended March 31, 1996, and for each of the three years ended December
31, 1995, 1994, and 1993, included in the WCB Disclosure Memorandum, and
(ii) the consolidated balance sheets of WCB (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 March 31,
1996.
"WCB Pension Plan" shall have the meaning set forth in Section 5.12(a)
of this Agreement.
"WCB Rights" shall have the meaning set forth in Section 3.6(a) of
this Agreement.
"WCB Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of WCB disclosed in Section 3.5(b) of the
WCB Disclosure Memorandum.
"WCB Subsidiaries" shall mean the Subsidiaries of WCB, which shall
include the WCB Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of WCB in the future and owned by WCB at the Effective
Time.
Any singular term in this Agreement shall be deemed to include the plural,
and any plural term the singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration, and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel, except that Regions shall bear and pay the filing fees payable in
connection with the Registration Statement and the Proxy Statement and printing
costs incurred in connection with the printing of the Registration Statement and
the Proxy Statement.
(b) Nothing contained in this Section 11.2. shall constitute or shall be
deemed to constitute liquidated damages for the willful and knowing breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 Brokers and Finders. Each of the Parties represents and warrants
that, except as set forth in its Disclosure Memorandum, neither it nor any of
its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by WCB or Regions, each of WCB 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 8.12
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.
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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 WCB Common Stock, there shall be made no amendment
that pursuant to the LBCL 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 WCB, to waive or extend the time for the compliance or fulfillment
by WCB 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, WCB, 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 WCB 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 WCB 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 address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
WCB: West Carroll Bancshares, Inc.
2007 East Madison Street
Bastrop, Louisiana 71220
Telecopy Number: (318) 283-6447
Attention: William E. Pratt
President
Copy to Counsel: Pickering, Cotogno & Dunn
301 Magazine Street
New Orleans, Louisiana 70130
Telecopy Number: (504) 581-3912
Attention: Gary A. Cotogno
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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 without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: WEST CARROLL BANCSHARES, INC.
By: /s/ W. Elton Kennedy By: /s/ William E. Pratt
-------------------------------------- ------------------------------------------
W. Elton Kennedy William E. Pratt
Secretary President
[CORPORATE SEAL]
REGIONS FINANCIAL CORPORATION
By: /s/ Samuel E. Upchurch, Jr. By: /s/ Carl E. Jones, Jr.
-------------------------------------- ------------------------------------------
Samuel E. Upchurch, Jr. Carl E. Jones, Jr.
General Counsel and Corporate Regional President
Secretary
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
LOUISIANA STATUTES ANNOTATED-REVISED STATUTES 12:131
SEC. 131. RIGHTS OF A SHAREHOLDER DISSENTING FROM CERTAIN CORPORATE ACTIONS
A. Except as provided in subsection B of this section, if a corporation
has, by vote of its shareholders, authorized a sale, lease or exchange of all of
its assets, or has, by vote of its shareholders, become a party to a merger or
consolidation, then, unless such authorization or action shall have been given
or approved by at least eighty per cent of the total voting power, a shareholder
who voted against such corporate action shall have the right to dissent. If a
corporation has become a party to a merger pursuant to R.S. 12:112(H), the
shareholders of any subsidiaries party to the merger shall have the right to
dissent without regard to the proportion of the voting power which approved the
merger and despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist in the
case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance
with their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at the
record date fixed to determine shareholders entitled to receive notice of
and to vote at the meeting of shareholders at which a merger or
consolidation was acted on, were listed on a national securities exchange,
unless the articles of the corporation issuing such stock provide otherwise
or the shares of such shareholders were not converted by the merger or
consolidation solely into shares of the surviving or new corporation.
C. Except as provided in the last sentence of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than eighty
per cent of the total voting power, and the merger, consolidation or sale, lease
or exchange of assets authorized thereby be effected, the corporation shall
promptly thereafter give written notice thereof, by registered mail, to each
shareholder who filed such written objection to, and voted his shares against,
such action, at such shareholder's last address on the corporation's records.
Each such shareholder may, within twenty days after the mailing of such notice
to him, but not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole condition
that said certificates shall be delivered to the corporation upon payment of the
value of the shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company that it so holds his
certificates of stock. Unless the objection, demand and acknowledgment aforesaid
be made and delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the corporate action
proposed or taken. In the case of a merger pursuant to R.S. 12:112(H), the
dissenting shareholder need not file an objection with the corporation nor vote
against the merger, but need only file with the corporation, within twenty days
after a copy of the merger certificate was mailed to him, a demand in writing
for the cash value of his shares as of the day before the certificate was filed
with the secretary of state, state in such demand the value demanded and a post
office address to which the corporation's reply may be sent, deposit the
certificates representing his shares in escrow as hereinabove provided, and
deliver to the corporation with his demand the acknowledgment of the escrow bank
or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder, at
the designated post office address, of its disagreement, and shall state in such
notice
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the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied shareholder,
the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit filed
by another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the court
staying the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of the shareholder
to bring suit, or to intervene in such a suit, within sixty days after receipt
of notice of disagreement by the corporation shall conclusively bind the
shareholder (1) by the corporation's statement that no payment is due, or (2) if
the corporation does not contend that no payment is due, to accept the value of
his shares as fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay to the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as the
case may be; otherwise the costs of the proceeding shall be taxed against such
shareholder.
H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights accorded by
this section. Such a demand may be withdrawn by the shareholder at any time
before the corporation gives notice of disagreement, as provided in subsection D
of this section. After such notice of disagreement is given, withdrawal of a
notice of election shall require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed corporate action is abandoned
or rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him (and, on his request,
new certificates shall be issued to him in exchange for the old ones endorsed to
the corporation), and he shall be reinstated to all his rights as a shareholder
as of the filing of his demand for value, including any intervening preemptive
rights, and the right to payment of any intervening dividend or other
distribution, or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim.
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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
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any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
"(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
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interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
"(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>
2.1 -- Agreement and Plan of Merger, dated as of June 25, 1996 by and between West Carroll Bankshares, Inc. and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 33-54231.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP. -- Previously filed.
23.2 -- Consent of KPMG Peat Marwick LLP -- Previously filed.
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
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thereof.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
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> 131
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Birmingham, State of Alabama on this the 6th day of January, 1997.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
/s/ Richard D. Horsley
BY: --------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ------------------------------ ------------------
<S> <C> <C>
* J. Stanley Mackin
- -------------------------- Chairman of the Board and January 6, 1997
J. Stanley Mackin Chief Executive Officer and
Director
/s/ Richard D. Horsley
- -------------------------- Vice Chairman of the Board and January 6, 1997
Richard D. Horsley Executive Financial Officer
and Director
* Robert P. Houston
- -------------------------- Executive Vice President and January 6, 1997
Robert P. Houston Comptroller
- -------------------------- Director January 6, 1997
Sheila S. Blair
* William B. Boles, Sr.
- -------------------------- Director January 6, 1997
William B. Boles, Sr.
* James B. Boone, Jr.
- -------------------------- Director January 6, 1997
James B. Boone, Jr.
* Albert P. Brewer
- -------------------------- Director January 6, 1997
Albert P. Brewer
</TABLE>
II-5
<PAGE> 132
<TABLE>
<S> <C> <C>
* James S.M. French
- -------------------------- Director January 6, 1997
James S.M. French
* Catesby ap C. Jones
- -------------------------- Director January 6, 1997
Catesby ap C. Jones
* Olin B. King
- -------------------------- Director January 6, 1997
Olin B. King
* Henry E. Simpson
- -------------------------- Director January 6, 1997
Henry E. Simpson
* Lee J. Styslinger, Jr.
- -------------------------- Director January 6, 1997
Lee J. Styslinger, Jr.
* Robert J. Williams
- -------------------------- Director January 6, 1997
Robert J. Williams
* By /s/ Richard D. Horsley as January 6, 1997
attorney-in-fact pursuant to
power of attorney
</TABLE>
II-6
<PAGE> 133
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------ ------------
<S> <C>
2.1 -- Agreement and Plan of Merger, dated as of June 25, 1996, by and between West Carroll Bancshares, Inc. and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 33-54231.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP. -- previously filed.
23.2 -- Consent of KPMG Peat Marwick LLP. -- previously filed.
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
[Letterhead of Lange, Simpson, Robinson & Somerville]
January 6, 1997
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation
S-4 Registration Statement
Acquisition of West Carroll Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the acquisition of West Carroll
Bancshares, Inc. ("West Carroll") and Regions (the "Merger") and in connection
with the registration of shares of common stock of Regions, par value $.625 per
share ("Regions Common Stock"), on Form S-4 under the Securities Act of 1933.
The Merger provides for issuance of shares of common stock of Regions, par
value $.625 per share, to the stockholders of West Carroll upon consummation of
the Merger. The maximum number of shares of Regions to be issued in the Merger
is 676,100.
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
documents and records as we have deemed relevant for purposes of rendering this
opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of Regions Common Stock issued pursuant to the Merger will be duly
authorized, validly issued and outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
/s/ Lange, Simpson, Robinson & Somerville
<PAGE> 1
EXHIBIT 8
ALSTON&BIRD
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777 Telex: 54-2996
Philip C. Cook Direct Dial (404) 881-7000
January 6, 1997
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
West Carroll Bancshares, Inc.
2007 East Madison Street
Bastrop, Louisiana 71220
Re: Proposed Merger of West Carroll Bancshares, Inc. with and
into Regions Financial Corporation
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State
of Delaware, in connection with the proposed merger of West Carroll Bancshares,
Inc. ("WCB"), a corporation organized and existing under the laws of the State
of Louisiana, with and into Regions. The Merger will be effected pursuant to
the Agreement and Plan of Merger, dated as of June 25, 1996, by and between WCB
and Regions (the "Agreement"). In our capacity as counsel to Regions, our
opinion has been requested with respect to certain of the federal income tax
consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue Code
of 1986, as amended (the "Code") and Treasury Regulations, and (ii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all
section references herein are to the Code.
<PAGE> 2
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 2
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 Registration Statement on Form S-4 filed by Regions with
the Securities and Exchange Commission under the Securities Act of
1933, on December __, 1996, including the Proxy Statement/Prospectus
for the Special Meeting of the stockholders of WCB.
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your consent,
that all documents submitted to us as photocopies faithfully reproduce the
originals thereof, that such originals are authentic, that all such documents
have been or will be duly executed to the extent required, and that all
statements set forth in such documents are accurate.
We have also obtained such additional information and representations as
we have deemed relevant and necessary through consultation with various
officers and representatives of Regions and WCB and through certificates
provided by the management of Regions and the management of WCB.
You have advised us that the Merger is in the best interest of WCB and its
stockholders, the Bank, its employees and the communities which the Bank
serves. Therefor, the following will occur pursuant to the Agreement:
(1) Subject to the terms and conditions of the Agreement, at the Effective
Time, WCB shall be merged into and with Regions in accordance with the
provisions of Sections 12:115Reference to code provision authorizing
transaction (e.g., for merger of two domestic corporations, Section 251 of the
Delaware General Corporation Law, Section 14-2-1101 (for mergers) or -1102 (for
share exchanges) of the Georgia Business Corporation Code, and Section
10-2A-140 of the Alabama Business Corporation Act; for merger of domestic
corporation with foreign corporation, Section 252 of the Delaware General
Corporation Law, 14-2-1107 of the Georgia Business Corporation Code, and
Section ____ of the Alabama Business Corporation Act). of the LBCL and of
Section 258 of the DGCL and with the effect provided in Section 259 of the DGCL
(the "Merger"). Regions shall be the Surviving Corporation resulting from the
Merger and shall continue to be governed by the Laws of the State of Delaware.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the Boards of Directors of WCB and Regions.
(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
the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Regions Common Stock issued and
outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
<PAGE> 3
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 3
(b) Each share of WCB Common Stock (excluding shares held
by WCB 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) issued and
outstanding at the Effective Time shall be converted into 4.0
shares of Regions Common Stock (the "Exchange Ratio").
(3) In the event Regions changes the number of shares of Regions Common
Stock issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with respect to such stock
and the record date therefor (in the case of a stock dividend) or the effective
date thereof (in the case of a stock split or similar recapitalization for
which a record date is not established) shall be prior to the Effective Time,
the Exchange Ratio shall be proportionately adjusted.
(4) Each of the shares of WCB Common Stock held by any WCB 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 WCB Common Stock who perfects such holder's
dissenters' rights of appraisal in accordance with and as contemplated by Part
XIII of the LBCL shall be entitled to receive the value of such shares in cash
as determined pursuant to such provision of Law; provided, that no such payment
shall be made to any dissenting stockholder unless and until such dissenting
stockholder has complied with the applicable provisions of the LBCL, including
the provisions of Section 131 thereof relating to the deposit in escrow,
endorsement, and transfer of the certificate or certificates representing the
shares for which payment is being made. In the event that a dissenting
stockholder of WCB 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 WCB Common Stock held by such Person shall be
converted into and exchanged for that number of shares of Regions Common Stock
determined under Section 3.1 of the 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. WCB will establish an escrow account with an
amount sufficient to satisfy the maximum aggregate payment that may be required
to be paid to dissenting stockholders. Upon satisfaction of all claims of
dissenting stockholders, the remaining escrowed amount, reduced by payment of
the fees and expenses of the escrow agent, will be returned to WCB.
(6) Notwithstanding any other provision of this Agreement, each holder of
shares of WCB 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
<PAGE> 4
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 4
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 WCB Common Stock pursuant to stock options, stock
appreciation rights, or stock awards ("WCB Rights") granted by WCB under the
WCB 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 WCB Right, in accordance with the
terms of the WCB Stock Plan and stock option agreement by which it is evidenced
on substantially the same terms and conditions.
(8) All restrictions or limitations on transfer with respect to WCB Common
Stock awarded under the WCB Stock Plans or any other plan, program, or
arrangement of any WCB 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.
With your consent, we have also assumed that the following statements are
true on the date hereof and will be true on the date the proposed transaction
is consummated:
(1) The fair market value of the Regions Common Stock and other
consideration, if any, received in the aggregate by the stockholders of WCB
will be approximately equal to the fair market value of the WCB Common Stock
surrendered in exchange therefor.
(2) There is no plan or intention on the part of the stockholders of WCB
who own five percent (5%) or more of WCB Common Stock, and to the best of the
knowledge of the management of WCB, there is no plan or intention on the part
of the remaining stockholders of WCB to sell, exchange, or otherwise dispose of
a number of shares of Regions Common Stock to be received in the proposed
transaction that would reduce their holdings in Regions Common Stock received
to a number of shares having, in the aggregate, a value as of the Effective
Time of less than fifty percent (50%) of the total value of all of the stock of
WCB outstanding immediately prior to the Effective Time. For purposes of this
assumption, shares of WCB Common Stock exchanged for cash or
<PAGE> 5
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 5
other property, surrendered by dissenters or exchanged for cash in lieu of
fractional shares of Regions Common Stock will be treated as outstanding WCB
Common Stock as of the Effective Time. Moreover, shares of WCB Common Stock
and shares of Regions Common Stock held by WCB stockholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the transaction will be
considered in making this assumption.
(3) Regions has no plan or intention to redeem or otherwise reacquire any
shares of Regions Common Stock issued in the Merger, except for purchases of
stock in the open market in the normal course of business executed through an
independent broker in which Regions is not aware of the identity of any seller
or in private placement transactions in which the sellers are not former WCB
stockholders.
(4) Regions will not dispose of any of the assets of WCB acquired in the
transaction, except for dispositions made in the ordinary course of business or
transfers to a corporation controlled by Regions.
(5) The liabilities of WCB assumed by Regions and the liabilities to which
the transferred assets of WCB are subject were incurred by WCB in the ordinary
course of its business.
(6) Following the transaction, Regions will continue the historic business
of WCB or use a significant portion of WCB's historic business assets in a
business.
(7) Regions, WCB, and the stockholders of WCB will pay their respective
expenses, if any, incurred in connection with the transaction, except that
Regions shall bear and pay the filing fees payable in connection with the
Registration Statement and the Proxy Statement and printing costs incurred in
connection with the printing of the Registration Statement and the Proxy
Statement.
(8) There is no intercorporate indebtedness existing between WCB and
Regions that was issued, acquired, or will be settled at a discount.
(9) WCB is not under the jurisdiction of a court in a case under Title 11
of the United States Code or a receivership, foreclosure, or similar proceeding
in a federal or state court.
(10) Both the fair market value and the total adjusted basis of the assets
of WCB transferred to Regions will equal or exceed the sum of the liabilities
assumed by Regions plus the amount of the liabilities, if any, to which the
transferred assets are subject.
(11) The payment of cash in lieu of fractional shares of Regions Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Regions of issuing fractional shares and does not represent separately
bargained for consideration. The total cash consideration that will be paid in
the transaction to the WCB stockholders instead of issuing fractional shares of
Regions Common Stock will not exceed one
<PAGE> 6
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 6
percent (1%) of the total consideration that will be issued in the transaction
to the WCB stockholders in exchange for their shares of WCB Common Sock. The
fractional share interests of each WCB stockholder will be aggregated, and no
WCB stockholder will receive cash in an amount equal to or greater than the
value of one full share of Regions Common Stock.
(12) None of the compensation received by any stockholder-employees of WCB
will be separate consideration for, or allocable to, any of their shares of WCB
Common Stock; none of the shares of Regions Common Stock received by any
stockholder-employees will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any stockholder-employees
will be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's length for similar services.
(13) At all times during the five-year period ending on the Effective Date
of the Merger, the fair market value of all of WCB's United States real
property interests was and will have been less than fifty percent (50%) of the
fair market value of the total of (a) its United States real property
interests, (b) its interests in real property located outside the United
States, and (c) its other assets used or held for use in a trade or business.
For purposes of the preceding sentence, (i) United States real property
interests include all interests (other than an interest solely as a creditor)
in real property and associated personal property (such as movable walls and
furnishings) located in the United States or the Virgin Islands and interests
in any corporation (other than a controlled corporation) owning any United
States real property interest, (ii) WCB is treated as owning its proportionate
share (based on the relative fair market value of its ownership interest to all
ownership interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which WCB is a partner or beneficiary, and
(iii) any such entity in turn is treated as owning its proportionate share of
the assets owned by any controlled corporation or any partnership, trust, or
estate in which the entity is a partner or beneficiary. As used in this
paragraph, "controlled corporation" means any corporation at least fifty
percent (50%) of the fair market value of the stock of which is owned by WCB,
in the case of a first-tier subsidiary of WCB or by a controlled corporation,
in the case of a lower-tier subsidiary.
(14) Neither Regions or WCB is an investment company as defined in Section
368(a)(2)(F).
(15) The Agreement represents the entire understanding of WCB and Regions
with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Agreement and that the representations made by Regions and WCB (including the
representation that WCB
<PAGE> 7
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 7
stockholders will maintain sufficient equity ownership interests in Regions
after the Merger) are true and correct at the time of the consummation of the
Merger, we are of the opinion that:
(1) Provided the Merger qualifies as a statutory merger under applicable
state law, the Merger will be a reorganization within the meaning of Section
368(a). WCB and Regions will each be "a party to a reorganization" within the
meaning of Section 368(b).
(2) The stockholders of WCB will recognize no gain or loss upon the
exchange of their WCB Common Stock solely for shares of Regions Common Stock.
(3) The basis of the Regions Common Stock received by the WCB stockholders
in the Merger will, in each instance, be the same as the basis of the WCB
Common Stock surrendered in exchange therefor less the basis of any fractional
share of Regions Common Stock settled by cash payment.
(4) The holding period of the Regions Common Stock received by the WCB
stockholders will, in each instance, include the period during which the WCB
Common Stock surrendered in exchange therefor was held, provided that the WCB
Common Stock was held as a capital asset on the date of the exchange.
(5) The payment of cash to WCB stockholders in lieu of fractional share
interests of Regions Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the stock
redeemed. 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.
(6) Where solely cash is received by a WCB stockholders in exchange for
his WCB Common Stock pursuant to the exercise of dissenters' rights, such cash
will be treated as having been received in redemption of his WCB Common Stock,
subject to the provisions and limitations of Section 302.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinions are based solely on the
documents that we have examined, the additional information that we have
obtained, and the statements set out herein, which we have assumed and you have
confirmed to be true on the date hereof and will be true on the date on which
the proposed transaction is consummated. Our opinions cannot be relied upon if
any of the facts contained in such documents or if such additional information
is, or later becomes, inaccurate, or if any of the statements set out herein
is, or later becomes, inaccurate. Finally, our opinions are limited to the tax
matters specifically covered thereby, and we have not been asked to address,
nor have we addressed, any other tax consequences of the proposed transaction,
including for example
<PAGE> 8
Regions Financial Corporation
West Carroll Bancshares, Inc.
January 6, 1997
Page 8
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, WCB and
its stockholders. No other person or party shall be entitled to rely on this
opinion.
We consent to the use of this opinion and to the references made to the
firm under the caption "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
