<PAGE>
Filed with the Securities and Exchange Commission on January 31,1994
Registration No. 33-51681
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
F O R M S - 4/A
Amendment No. 1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
BANC ONE CORPORATION
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
- -------------------------------------------------------------------------------
Ohio
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
6711
- -------------------------------------------------------------------------------
(Primary Standard Industrial Classification Code Number)
31-0738296
- -------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
100 East Broad Street, Columbus, Ohio 43271, (614) 248-5944
- -------------------------------------------------------------------------------
(Address, including Zip Code, and telephone number, including area code
of Registrant's principal executive offices)
Roman J. Gerber, Esq., BANC ONE CORPORATION
100 East Broad Street, Columbus, Ohio 43271, (614) 248-5903
- -------------------------------------------------------------------------------
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
With Copies to:
Bruce Rigelman, Esq.
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
614/248-6045
Benny Hughes, Esq.
Orgain, Bell & Tucker, L.L.P.
470 Orleans Street
Beaumont, Texas 77701
409/838-6412
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement and all other conditions to the merger of Parkdale Bank with and into
a wholly owned subsidiary of the Registrant pursuant to the Merger Agreement
described in the enclosed Prospectus and Proxy Statement have been satisfied or
waived.
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 said Section 8(a),
may determine.
- -------------------------------------------------------------------------------
<PAGE>
BANC ONE CORPORATION
Cross Reference Sheet
<TABLE>
<CAPTION>
Caption in Prospectus
Item of Form S-4 and Proxy Statement
- ------------------------------------ -------------------------------------
<S> <C>
A. Information about the Transaction
---------------------------------
Item 1 - Forepart of Registration Outside Front Cover Page
Statement and Outside Front Cover Reference Sheet
Page of Prospectus
Item 2 - Inside Front and Outside Available Information; Incorpora-
Back Cover Pages of Prospectus tion by Reference; Table of
Contents
Item 3 - Risk Factors, Ratio of Information About the Transaction
Earnings to Fixed Charges and
Other Information
Item 4 - Terms of the Transaction Merger; Comparative Rights of
Shareholders
Item 5 - Pro Forma Financial Infor- Incorporation by Reference
mation
Item 6 - Material Contacts with Merger-Background of Transaction;
the Company Being Acquired -Operations After the Merger
Item 7 - Additional Information *
Required for Reoffering by
Persons and Parties Deemed To Be
Underwriters
Item 8 - Interests of Named Miscellaneous Information-Interests
Experts and Counsel of Named Experts and Counsel
Item 9 - Disclosure of Commission *
Position on Indemnification for
Securities Act Liabilities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Caption in Prospectus
Item of Form S-4 and Proxy Statement
- ----------------------------------- -------------------------------------
<S> <C>
B. Information about the Registrant
--------------------------------
Item 10 - Information with Respect Information about BANC ONE
to S-3 Registrants CORPORATION; Comparative Rights
of Shareholders
Item 11 - Incorporation of Certain Information about BANC ONE
Information by Reference CORPORATION-Incorporation of
Certain Information About
BANC ONE by Reference
Item 12 - Information with Respect *
to S-2 or S-3 Registrants
Item 13 - Incorporation of Certain *
Information by Reference
Item 14 - Information with Respect *
to Registrants Other Than S-2 or
S-3 Registrants
C. Information about the Company
Being Acquired
-----------------------------
Item 15 - Information with Respect *
to S-3 Companies
Item 16 - Information with Respect *
to S-2 or S-3 Companies
Item 17 - Information with Respect Information about PARKDALE BANK
to Companies Other Than S-2 or
S-3 Companies
D. Voting and Management Information
---------------------------------
Item 18 - Information if Proxies, The Special Meeting of Stockholders;
Consents or Authorizations Are To Voting and Management Information
Be Solicited
Item 19 - Information if Proxies, *
Consents or Authorizations Are
Not To Be Solicited or in an
Exchange Offer
</TABLE>
* Omitted because item is inapplicable or answer to item is negative
<PAGE>
PARKDALE BANK
________, 1993
Dear Fellow Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Parkdale Bank ("PARKDALE") to be held at __________________________________,
Beaumont, Texas, on________________, 1993, at __________, local time.
The purpose of the Special Meeting is to consider and vote upon a proposed plan
of merger (the "Plan of Merger") set forth in a Merger Agreement dated June 7,
1993, pursuant to which PARKDALE will be merged (the "Merger") into a wholly
owned subsidiary of BANC ONE CORPORATION. In the Merger, each outstanding share
of PARKDALE Common Stock will be converted into BANC ONE Common Stock, as more
fully described in the accompanying Prospectus and Proxy Statement.
Your Board of Directors believes that the terms of the Merger are in the best
interests of PARKDALE stockholders, will provide significant value to all
PARKDALE stockholders, and will enable holders of PARKDALE Common Stock to
participate in the expanded opportunities for growth that the merger will make
possible. Additional information is contained in the accompanying Prospectus
and Proxy Statements, which I urge you to read carefully.
Your Board of Directors recommends that you vote in favor of the approval of the
Plan of Merger.
The Merger is subject to certain conditions and rights of termination as
described in the Prospectus and Proxy Statement and in the Merger Agreement. If
all the conditions are satisfied and the transaction is to be consummated,
shareholders will be notified prior to closing regarding procedures for exchange
of stock certificates. Please do not send in your stock certificates at this
time.
The members of the Board of Directors and officers of PARKDALE may be deemed to
have interests in the proposed transaction in addition to their interests as
shareholders which are described in the Prospectus and Proxy Statement.
Please indicate your voting instructions, sign and date the enclosed Proxy and
mail it promptly in the return envelope provided. Whether or not you plan to
attend the meeting, it is important that you return the enclosed Proxy so that
your shares of PARKDALE Common Stock are voted.
Sincerely,
/s/ Ben J. Rogers
Ben J. Rogers
Chairman of the
Board of Directors
<PAGE>
PARKDALE BANK
6025 Eastex Freeway
Beaumont, Texas 77726
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1993
------------------------
To the shareholders of PARKDALE BANK:
A Special Meeting of the holders of Common Stock of Parkdale Bank ("PARKDALE")
will be held at , Beaumont, Texas, on ,
----------------------- ------------------
1993, at , local time, for the purpose of voting on the following
----------
matters:
1. To consider and vote upon a proposed plan of merger (the "Plan of
Merger") providing for the merger (the "Merger") of PARKDALE into Bank
One, Texas, N.A. ("BANK ONE TEXAS"), a wholly owned subsidiary of BANC
ONE CORPORATION ("BANC ONE"). In the Merger, each outstanding share of
PARKDALE Common Stock will be converted into BANC ONE Common Stock.
The Plan of Merger is set forth in a Merger Agreement dated June 7,
1993 (the "Merger Agreement") between PARKDALE and BANK ONE TEXAS,
joined in by BANC ONE and Banc One Texas Corporation. The Merger, Plan
of Merger and Merger Agreement are summarized in the accompanying
Prospectus and Proxy Statement.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof. Management currently knows of no
other business to be brought before the Special Meeting.
The PARKDALE Board of Directors has fixed , 1993 as the record date
-----------
for the determination of stockholders entitled to notice of and to vote at the
Special Meeting and any adjournment thereof. Only the holders of record of
PARKDALE Common Stock at the close of business on such date are entitled to
notice of and to vote at the Special Meeting or at any adjournments thereof.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF NOT LESS THAN TWO THIRDS OF THE
OUTSTANDING SHARES OF PARKDALE COMMON STOCK IS REQUIRED FOR APPROVAL OF THE PLAN
OF MERGER. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
Stockholders are invited to attend the Special Meeting in person. However,
whether or not you plan to attend the Special Meeting, you are urged to complete
and sign the enclosed form of proxy and mail it in the enclosed return envelope,
which requires no postage if mailed in the United States. If a proxy is
properly executed, returned to PARKDALE, and not revoked, the shares represented
by such proxy will be voted in accordance with the instructions contained
therein. If no instruction is given, the proxy will be voted for approval of
the Plan of Merger. In addition, a proxy will confer authority on PARKDALE's
management to adjourn the Special Meeting to another date (not more than 30 days
after the originally scheduled meeting date) and/or place for any purpose
(including, without limitation, for the purpose of soliciting additional
proxies). FAILURE TO RETURN THE ENCLOSED PROXY OR TO VOTE AT THE MEETING WILL
HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER. If you do attend the Special
Meeting and decide that you wish to vote in person, you may revoke your proxy at
any time prior to its use.
<PAGE>
As more fully described in the accompanying Prospectus and Proxy Statement under
"VOTING AND MANAGEMENT INFORMATION--Rights of Dissenting Shareholders," holders
of PARKDALE Common Stock who vote against the Plan of Merger at the Special
Meeting or who, at or before the Special Meeting, deliver to PARKDALE written
notice that they dissent from the Plan of Merger, and who comply with certain
other requirements of federal law may, as an alternative to receiving BANC ONE
Common Stock, dissent from the Plan of Merger and obtain payment in cash of the
fair value of their shares of PARKDALE Common Stock. The full text of Section
215a of the National Bank Act, which sets forth the procedures to be followed by
PARKDALE shareholders who choose to dissent under federal law, is included as
Exhibit A to the accompanying Prospectus and Proxy Statement and should be read
in its entirety.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. If the Plan of
Merger is approved, you will be sent instructions regarding the mechanics of
exchanging your existing PARKDALE Common Stock certificates for new certificates
representing shares of BANC ONE Common Stock.
BY ORDER OF THE BOARD OF DIRECTORS
/s/
----------------------
Secretary
, 1993
- ---------------
Beaumont, Texas
<PAGE>
PROSPECTUS
301,161 Shares
BANC ONE CORPORATION
Common Stock
------------------
PARKDALE BANK
PROXY STATEMENT
for
Special Meeting of Shareholders
__________, 1993
This Prospectus and Proxy Statement (this "Prospectus" or "Prospectus and Proxy
Statement") relates to the proposed merger (the "Merger") of Parkdale Bank
("PARKDALE") into Bank One, Texas, N.A. ("BANK ONE TEXAS"), a wholly owned
subsidiary of BANC ONE CORPORATION ("BANC ONE"). If the Merger is consummated,
each outstanding share of PARKDALE Common Stock, par value $1.50 per share
("PARKDALE Common Stock"), will be converted into BANC ONE Common Stock, no par
value ("BANC ONE Common Stock"), at a rate which will be determined prior to the
date on which the Merger becomes effective but which (assuming a total of
224,100 shares of PARKDALE Common Stock are outstanding immediately before the
Merger) will not be less than 1.0973 or more than 1.3439 shares of BANC ONE
Common Stock for each share of PARKDALE Common Stock. See "MERGER--Exchange
Rate." The Merger is subject to the affirmative vote of not less than two thirds
of the outstanding shares of PARKDALE Common Stock entitled to vote thereon and
to the satisfaction of certain other conditions, including obtaining regulatory
approval. This Prospectus and Proxy Statement does not cover any resales of
BANC ONE Common Stock received by affiliates of PARKDALE upon consummation of
the Merger, and no person is authorized to make use of this Prospectus and Proxy
Statement in connection with any such resale.
-----------------
BANC ONE Common Stock is traded on the New York Stock Exchange. The closing
price of BANC ONE Common Stock on the New York Stock Exchange on ______________,
1993 was $_________ per share.
-----------------
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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
A Special Meeting of Shareholders of PARKDALE will be held at _______________,
Beaumont, Texas, on ________________________________, 1993, to consider a
proposal to approve the Plan of Merger (as hereinafter defined).
-----------------
================================================================================
The date of this Prospectus and Proxy Statement is _____________, 1993.
<PAGE>
AVAILABLE INFORMATION
BANC ONE is subject to the informational 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 "Commission"). Reports, proxy and
information statements and other information filed by BANC ONE can be inspected
and copied, at prescribed rates, at the public reference facilities maintained
by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and 75 Park Place, New
York, New York 10007. Reports, proxy and information statements and other
information concerning BANC ONE also can be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005. This Prospectus
does not contain all information set forth in the Registration Statement and
exhibits thereto which BANC ONE has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made.
INCORPORATION BY REFERENCE
THIS PROSPECTUS AND PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY
PARKDALE SHAREHOLDER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON ORAL OR WRITTEN
REQUEST TO WILLIAM C. LEITER, SENIOR VICE PRESIDENT, BANC ONE CORPORATION, 100
EAST BROAD STREET, COLUMBUS, OHIO 43271-0251, TELEPHONE NUMBER 614/248-5905. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
____________________, 1993.
BANC ONE's Annual Report on Form 10-K for the year ended December 31, 1992,
BANC ONE's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993,
June 30, 1993, and September 30, 1993, and BANC ONE's Current Reports on Form
8-K dated February 4, 1993 (two reports), February 16, 1993, August 20, 1993,
November 9, 1993, November 16, 1993, and November 24, 1993, in each cased filed
with the Commission pursuant to Section 13 of the Exchange Act, and the
description of BANC ONE's Common Stock which is contained in its registration
statement filed with the Commission under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of updating such
description, are incorporated into this Prospectus and Proxy Statement by
reference.
All documents filed by BANC ONE pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the Special
Meeting of Shareholders of PARKDALE shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that such statement
is modified or superseded by a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
No person is authorized to give any information or to make any representations
other than those contained in this Prospectus and Proxy Statement and, if given
or made, such information or representation must not be relied upon as having
been authorized by BANC ONE or PARKDALE. This Prospectus and Proxy Statement
does not constitute an offering within any jurisdiction to any person to whom it
is unlawful to make such offer within such jurisdiction.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION................... 1
---------------------------------
INTRODUCTION........................................ 1
PARKDALE BANK..................................... 1
BANC ONE CORPORATION.............................. 1
SUMMARY OF THE TRANSACTION.......................... 2
Terms of Merger and Exchange Rate................. 2
Management After the Merger....................... 2
Tax Consequences.................................. 2
Vote Required..................................... 2
Rights of Dissenting Shareholders................. 3
Differences in Shareholder Rights................. 3
Regulatory Approvals.............................. 3
Conditions; Termination........................... 3
Selected Financial Data........................... 4
Comparative Per Share Data........................ 6
THE SPECIAL MEETING OF SHAREHOLDERS................. 10
Purpose of the Special Meeting of
Shareholders..................................... 10
Record Dates and Voting Rights.................... 10
Proxies........................................... 10
MERGER.............................................. 11
General........................................... 11
Exchange Rate..................................... 11
Fractional Shares................................. 13
Conversion of Shares and Exchange of
Certificates..................................... 13
Operations After the Merger....................... 13
Background of Transaction......................... 14
Merger Recommendation and Reasons
for Transaction.................................. 14
Conditions to the Merger; Termination............. 16
Federal Income Tax Consequences................... 18
Resales by Affiliates............................. 19
Accounting Treatment.............................. 19
COMPARATIVE RIGHTS OF SHAREHOLDERS.................. 20
Description of BANC ONE Stock..................... 20
Comparison of BANC ONE Common Stock and
PARKDALE Common Stock............................ 23
MISCELLANEOUS INFORMATION........................... 26
Transfer and Exchange Agents...................... 26
Interests of Named Experts and
Counsel.......................................... 26
Sources of Information............................ 27
Registration Statement............................ 27
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
B. INFORMATION ABOUT BANC ONE CORPORATION................... 27
-------------------------------------
General--Business........................................ 27
Recent Developments...................................... 28
Certain Regulatory Matters............................... 29
Market Prices of and Dividends Paid
on BANC ONE Common Stock................................ 31
Incorporation of Certain Information
About BANC ONE by Reference............................. 32
C. INFORMATION ABOUT PARKDALE BANK.......................... 32
-------------------------------
General.................................................. 32
Description of Business.................................. 32
Selected Quarterly Financial Data........................ 33
Management's Discussion and Analysis
of Results of Operations and
Financial Condition of PARKDALE......................... 35
Market Prices of and Dividends Paid on
PARKDALE Common Stock................................... 41
D. VOTING AND MANAGEMENT INFORMATION........................ 42
---------------------------------
VOTING................................................... 42
OTHER BUSINESS........................................... 42
RIGHTS OF DISSENTING SHAREHOLDERS........................ 42
MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF BANC ONE........ 43
MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF PARKDALE........ 44
Compensation of Directors and
Executive Officers.................................... 45
Options/Stock Appreciation Rights...................... 45
Long-Term Incentive Plans.............................. 46
Savings Plan........................................... 46
Retirement Benefits.................................... 46
Compensation of Directors.............................. 46
Employment Contracts................................... 46
Board Compensation Committee Report
on Executive Compensation............................. 46
Transactions with Management and Owners................ 47
Ownership of Shares.................................... 47
Proposed Merger with BANK ONE TEXAS.................... 48
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARKDALE BANK Unaudited Financial Statements
as of September 30, 1993 and 1992. and for the Nine
Months then Ended....................................... F-1
PARKDALE BANK Audited Financial Statements
as of December 31, 1992 and 1991
and for Each of the Three Years in the
Period Ended December 31, 1992.......................... F-13
</TABLE>
EXHIBITS
- --------
Exhibit A Section 215a of the National Bank Act
Exhibit B OCC Banking Bulletin 88-22 -- Stock Appraisals/OCC Valuation
Methods
- ------------------------------------------
<PAGE>
PROSPECTUS AND PROXY STATEMENT
- ------------------------------
PARKDALE BANK
Beaumont, Texas
------------------
SPECIAL MEETING OF Shareholders
-------------------------------
A. INFORMATION ABOUT THE TRANSACTION
INTRODUCTION
This Prospectus and Proxy Statement (this "Prospectus" or "Prospectus and
Proxy Statement") is furnished in connection with the solicitation of proxies by
the Board of Directors of Parkdale Bank ("PARKDALE"), a bank organized under the
laws of Texas with its main office in Beaumont, Texas, to be voted at the
Special Meeting of Shareholders of PARKDALE to be held on _____________________,
1993, for the purpose of considering and taking action upon a plan to merge
(the "Merger") PARKDALE into Bank One, Texas, N.A. ("BANK ONE TEXAS"), a
national banking association with its main office in Dallas, Texas that is a
wholly owned subsidiary of BANC ONE CORPORATION ("BANC ONE"), a registered
multi-bank holding company headquartered in Columbus, Ohio, and of BANC ONE's
wholly owned subsidiary Banc One Texas Corporation ("TEXAS CORPORATION"), a
registered bank holding company likewise headquartered in Columbus, Ohio. This
plan of merger (the "Plan of Merger"), which is more fully described below, is
set forth in the Merger Agreement dated June 7, 1993 between PARKDALE and BANK
ONE TEXAS, joined in by TEXAS CORPORATION and BANC ONE (the "Merger Agreement").
The principal office of BANC ONE is 100 East Broad Street, Columbus, Ohio
43271 and its telephone number is 614/248-5944. The principal office of
PARKDALE is 6025 Eastex Freeway, Beaumont, Texas 77706 and its telephone number
is 409/898-2171.
This Prospectus and the form of proxy are being mailed to PARKDALE's
Shareholders for the first time on or about _______________, 1993.
PARKDALE BANK
PARKDALE is a bank organized under the laws of the State of Texas in 1973 with
its main office located at 6025 Eastex Freeway, Beaumont, Texas, and with one
branch office located at 995 Washington Boulevard, Beaumont, Texas. PARKDALE
has no subsidiaries. As of September 30, 1993, PARKDALE had total assets of
approximately $61.1 million, total deposits of approximately $54.3 million, and
total capital accounts of approximately $6.6 million (or approximately 10.8% of
total assets). See "INFORMATION ABOUT PARKDALE BANK"
BANC ONE CORPORATION
BANC ONE is a multi-bank holding company incorporated under the laws of the
State of Ohio which as of September 30, 1993 had a total of one Arizona, two
Kentucky, six Illinois, one Texas, four Michigan, eight Indiana, fourteen
Wisconsin, one California, six Colorado, eighteen Ohio, one Utah and sixteen
West Virginia commercial bank subsidiaries. These 78 banks operate
approximately 1,320 offices in this twelve-state area and, at September 30,
1993, BANC ONE had consolidated total assets of approximately $76.5 billion,
consolidated total deposits of approximately $59.1 billion, and consolidated
total stockholders' equity of approximately $6.8 billion (or approximately 8.8%
of consolidated total assets). BANK ONE TEXAS is a wholly owned direct
subsidiary of TEXAS CORPORATION which, in turn, is a wholly owned direct
subsidiary of BANC ONE. See "INFORMATION ABOUT BANC ONE CORPORATION", which
includes information about pending acquisitions.
1
<PAGE>
SUMMARY OF THE TRANSACTION
Terms of Merger and Exchange Rate
Under the terms of the Plan of Merger, upon the Merger becoming effective,
each of the outstanding shares of PARKDALE Common Stock, par value $1.50 per
share ("PARKDALE Common Stock"), will be converted into BANC ONE Common Stock,
no par value ("BANC ONE Common Stock"), at a rate that will be determined prior
to the date on which the Merger becomes effective but which, after giving effect
to the 5 shares for 4 shares BANC ONE Common Stock split effective August 31,
1993, and the 10% stock dividend payable March 4, 1994 to BANC ONE Common
Stockholders of record as of February 16, 1994, and assuming a total of 224,100
shares of PARKDALE Common Stock are outstanding immediately before the Merger,
will not be less than 1.0973 or more than 1.3439 shares of BANC ONE Common Stock
for each share of PARKDALE Common Stock (the "Exchange Rate"). See
"MERGER--Exchange Rate."
Management After the Merger
Upon consummation of the Merger in accordance with the Plan of Merger,
PARKDALE will be merged into BANK ONE TEXAS and the separate corporate existence
of PARKDALE will cease. BANK ONE TEXAS, as the surviving corporation in the
Merger and a wholly owned subsidiary of TEXAS CORPORATION and BANC ONE, will
continue operations after the Merger under the name "Bank One, Texas, N.A.".
BANK ONE TEXAS will operate with BANK ONE TEXAS' current directors, officers and
employees, and with its main office in Dallas, Texas. PARKDALE's two offices
will become branch offices of BANK ONE TEXAS. See "Merger--Operations After the
Merger."
Under BANC ONE's operating philosophy, BANK ONE TEXAS, like BANC ONE's other
bank subsidiaries, has autonomy to match its products and services to the needs
of its local communities. BANC ONE bank affiliates have authority to make
decisions locally in "people-related" matters such as lending, personnel,
charitable contributions and other community and related matters, relying upon
BANC ONE and its state holding companies for "paper and computer related"
matters such as assistance in accounting, certain legal matters, investment
portfolio management, regulatory compliance, data processing and other matters
that are generally best performed by specialists on a centralized basis.
Tax Consequences
Consummation of the Merger is conditioned on receipt by PARKDALE and BANC ONE
of an opinion dated the effective date of the Merger from Coopers & Lybrand,
independent public accountants, to the effect that no gain or loss will be
recognized by PARKDALE's stockholders for Federal income tax purposes as a
result of the exchange of their PARKDALE Common Stock for BANC ONE Common Stock
in the Merger. The tax consequences of the proposed transaction to stockholders
of PARKDALE are summarized below under "MERGER--Federal Income Tax
Consequences."
Vote Required
Not less than two thirds of the outstanding shares of PARKDALE Common Stock
entitled to vote thereon must vote in favor the Plan of Merger for the Merger to
be approved. As of September 30, 1993, the directors and executive officers of
PARKDALE, and those persons who may be deemed to be their respective affiliates
and associates, as a group, were entitled to vote 82.9% of the outstanding
shares of PARKDALE Common Stock, and each such holder has indicated his or her
intent to vote such shares for approval of the Plan of Merger. No shares of
PARKDALE Common Stock are held by PARKDALE or its nominees in a fiduciary
capacity. It is not necessary for the shareholders of BANC ONE to approve the
Plan of Merger. However, TEXAS CORPORATION, as the sole shareholder of BANK ONE
TEXAS, has approved the Plan of Merger. For information concerning voting by
Shareholders of PARKDALE on the proposed Merger, see "MERGER--General" and
"VOTING AND MANAGEMENT INFORMATION--Voting."
2
<PAGE>
Rights of Dissenting Shareholders
Under the National Bank Act, certain rights are available to a stockholder of
PARKDALE who votes against the Merger or who, at or before the Special Meeting,
delivers to PARKDALE written notice that he dissents from the Plan of Merger,
and who complies with certain other legal requirements. See "VOTING AND
MANAGEMENT INFORMATION--Rights of Dissenting Shareholders."
Differences in Shareholder Rights
There are differences between the rights of BANC ONE stockholders and the
rights of PARKDALE stockholders. For example, BANC ONE's Articles of
Incorporation, unlike PARKDALE's Articles of Association, authorize the issuance
of preferred as well as common stock. Texas law gives PARKDALE's shareholders
preemptive rights to subscribe for proportionate amounts of any newly issued
shares of PARKDALE Common Stock. BANC ONE's stockholders have no such
preemptive rights. Ohio law permits directors of an Ohio corporation such as
BANC ONE, in determining whether any matter is in the best interests of the
corporation, to take account of a wide range of interests and considerations.
The Texas Banking Code contains no comparable provision. Ohio law and BANC
ONE's Articles of Incorporation also contain a variety of "anti-takeover"
provisions to which there are no counterparts in applicable Texas laws or
Parkdale's Articles of Association. These anti-takeover provisions include
restrictions both on transactions that would involve acquisition of control of
BANC ONE, and on transactions with persons or groups who hold more than a
certain specified percentage of the outstanding shares of BANC ONE stock.
Neither the Texas Banking Code nor PARKDALE's Articles of Association impose any
comparable restrictions. There are also a number of other differences between
the provisions of Texas and Ohio law, and between the provisions of BANC ONE's
Articles of Incorporation and PARKDALE's Articles of Association, governing
shareholder rights. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Comparison of BANC
ONE Common Stock and PARKDALE Common Stock."
Regulatory Approvals
For the Merger to be completed, it must be approved by the Office of the
Comptroller of the Currency (the "OCC"). Such approval already has been
obtained.
Conditions; Termination
Consummation of the Merger is subject to satisfaction or waiver of various
conditions, including compliance with the respective covenants and confirmation
of the respective representations and warranties of the parties in the Merger
Agreement, the absence of any material adverse change in the financial condition
or business of PARKDALE or BANC ONE, the fulfillment of certain earnings tests
and other matters. The Merger Agreement also provides that either party may
abandon the Merger if it is not consummated on or before April 5, 1994. See
"MERGER--Conditions to the Merger; Termination" for a more complete discussion
of the conditions to the Merger.
3
<PAGE>
Selected Financial Data
The following table presents on a historical basis (a) under the heading "BANC
ONE", selected unaudited financial data for BANC ONE which has been restated to
reflect BANC ONE's March 30, 1993 acquisition of Valley National Corporation of
Phoenix, Arizona ("Valley"), and its May 3, 1993 acquisitions of Key Centurion
Bancshares, Inc. of Charleston, West Virginia ("Key") and of First Community
Bancorp, Inc. of Rockford, Illinois ("First Community"); (b) under the heading
"total", selected unaudited financial data for BANC ONE which has been restated
to reflect BANC ONE's acquisitions of Valley, Key and First Community and its
pending acquisitions of FirsTier Financial, Inc. of Omaha, Nebraska
("FirsTier"), and of Liberty National Bancorp, Inc. of Louisville, Kentucky
("Liberty"); and (c) under the heading PARKDALE, selected unaudited financial
data for PARKDALE. BANC ONE's acquisitions of Valley, Key and First Community
were, and its acquisitions of FirsTier, Liberty and PARKDALE will be, accounted
for as poolings of interest. BANC ONE also has announced four other pending
acquisitions that are not material individually or in the aggregate and,
therefore, are not reflected in the following table.
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (3)
$(thousands, except per share)
(UNAUDITED)
Nine months
ended
September 30, Year ended December 31,
------------- ------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Total interest income
and other income:
BANC ONE................ $ 5,398,958 $ 7,358,393 $ 6,828,327 $ 6,151,959 $ 5,473,099 $ 4,844,127
Total................... 5,876,141 8,003,953 7,516,942 6,821,108 6,105,046 5,369,549
PARKDALE................ 3,665 5,537 5,447 5,165 4,967 3,641
Income (loss) from
continuing operations:
BANC ONE................ $ 834,338 $ 876,588 $ 664,288 $ 536,066 $ 304,916 $ 485,533
Total................... 907,437 963,637 735,391 571,485 362,406 537,010
PARKDALE................ 752 921 630 567 542 390
Income (loss) from
continuing operations
per common share:
BANC ONE................ $ 2.18 $ 2.29 $ 1.82 $ 1.56 $ 0.97(2) $ 1.57
Total (1)............... 2.15 2.29 1.83 1.51 1.04 1.56
PARKDALE................ 3.41 4.17 2.95 2.67 2.55 1.84
Historical dividends declared
per common share:
BANC ONE................ $ 0.79 $ 0.89 $ 0.76 $ 0.69 $ 0.63 $ 0.55
PARKDALE................ 0.16 0.32 0.24 0.24 0.24 0.22
Total assets (end of period):
BANC ONE................ $76,461,592 $76,739,119 $73,840,498 $56,610,126 $48,111,384 $46,972,739
Total................... 84,345,610 84,319,757 81,151,090 63,399,922 54,527,953 52,676,720
PARKDALE................ 61,092 72,019 68,807 59,621 51,621 43,048
Long-term borrowings
(end of period):
BANC ONE................ $ 1,708,953 $ 1,357,462 $ 943,726 $ 810,197 $ 624,232 $ 798,177
Total................... 1,825,547 1,419,972 1,030,364 882,531 707,925 899,860
PARKDALE................
Total stockholders' equity
(end of period):
BANC ONE................ $ 6,759,920 $ 6,241,586 $ 5,559,370 $ 4,514,652 $ 3,633,542 $ 3,474,513
Total................... 7,441,530 6,858,573 6,112,293 4,995,566 4,093,256 3,887,676
PARKDALE................ 6,595 5,895 5,051 4,306 3,810 3,352
</TABLE>
(1) Assumes maximum exchange rate is used for Liberty.
(2) The decrease in 1989's income from continuing operations per common share
is due principally to a significant increase in Valley's provision for
loan losses.
(3) Gives effect to the 10% stock dividend on BANC ONE Common Stock payable
March 4, 1994 to BANC ONE Common Stockholders of record as of February
16, 1994.
5
<PAGE>
Comparative Per Share Data
Based upon Exchange Rates of 1.0973, 1.2206 and 1.3439 shares of BANC ONE
Common Stock for each outstanding share of PARKDALE Common Stock (these being
the minimum, midpoint and maximum exchange ratios, respectively, if a total of
224,100 shares of PARKDALE Common Stock are outstanding immediately before the
Merger), the following tables set forth per common share income from continuing
operations, dividends, book value, and market value of (i) BANC ONE, (ii) BANC
ONE, FIRSTIER, and LIBERTY, combined (Pro Forma); (iii) PARKDALE; and (iv) pro
forma equivalent of one share of PARKDALE Common Stock based on BANC ONE Common
Stock.
6
<PAGE>
<TABLE>
<CAPTION>
(iv) Per Share of PARKDALE common
stock assuming an exchange rate of one
share of PARKDALE common stock for
(i) (ii) (iii) 1.0973 shares of BANC ONE common stock
------------ ------------ ------------ -------------------------------------
BANC BANC
ONE Total (5) PARKDALE ONE Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from continuing
operations per common share:
December 31, 1988 $ 1.57 $ 1.56 $ 1.84 $ 1.72 $ 1.71
December 31, 1989 0.97 (6) 1.04 2.56 1.06 1.14
December 31, 1990 1.56 1.51 2.67 1.71 1.66
December 31, 1991 1.82 1.83 2.95 2.00 2.01
December 31, 1992 2.29 2.29 4.17 2.51 2.51
September 30, 1993 2.18 2.15 3.41 2.39 2.36
Dividends per common share:
December 31, 1988 0.55 0.55 0.22 0.60 0.60
December 31, 1989 0.63 0.63 0.24 0.69 0.69
December 31, 1990 0.69 0.69 0.24 0.76 0.76
December 31, 1991 0.76 0.76 0.24 0.83 0.83
December 31, 1992 0.89 0.89 0.32 0.98 0.98
September 30, 1993 0.79 0.79 0.16 0.87 0.87
Book value per common share
as of September 30, 1993 17.35 17.35 30.11 19.04 19.04
Market value per common share
as of June 8, 1993 (1) 37.36 (2) 37.36 (3) 41.00 41.00
Market value per common share
as of February __, 1994 (4) (2) (3)
</TABLE>
(1) The business day immediately preceding public announcement of the proposed
merger.
(2) Based on the closing price of BANC ONE common stock as reported on the
New York Stock Exchange, adjusted for the five shares for four shares
common stock split effective August 31, 1993.
(3) No active trading market exists for PARKDALE common stock.
(4) A recent business day preceding the date of this Prospectus.
(5) Assumes maximum exchange rate is used for Liberty.
(6) The decrease in 1989's income from continuing operations per common
share is due principally to a significant increase in Valley's provision
for loan losses.
7
<PAGE>
<TABLE>
<CAPTION>
(iv) Per Share of PARKDALE common
stock assuming an exchange rate of one
share of PARKDALE common stock for
(i) (ii) (iii) 1.2206 shares of BANC ONE common stock
------------ ------------ ------------ --------------------------------------
BANC BANC
ONE Total (5) PARKDALE ONE Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from continuing
operations per common share:
December 31, 1988 $ 1.57 $ 1.56 $ 1.84 $ 1.92 $ 1.90
December 31, 1989 0.97 (6) 1.04 2.56 1.18 1.27
December 31, 1990 1.56 1.51 2.67 1.90 1.84
December 31, 1991 1.82 1.83 2.95 2.22 2.23
December 31, 1992 2.29 2.29 4.17 2.80 2.80
September 30, 1993 2.18 2.15 3.41 2.66 2.62
Dividends per common share:
December 31, 1988 0.55 0.55 0.22 0.67 0.67
December 31, 1989 0.63 0.63 0.24 0.77 0.77
December 31, 1990 0.69 0.69 0.24 0.84 0.84
December 31, 1991 0.76 0.76 0.24 0.93 0.93
December 31, 1992 0.89 0.89 0.32 1.09 1.09
September 30, 1993 0.79 0.79 0.16 0.96 0.96
Book value per common share
as of September 30, 1993 17.35 17.35 30.11 21.18 21.18
Market value per common share
as of June 8, 1993 (1) 37.36 (2) 37.36 (3) 45.60 45.60
Market value per common share
as of February __, 1994 (4) (2) (3)
</TABLE>
(1) The business day immediately preceding public announcement of the
proposed merger.
(2) Based on the closing price of BANC ONE common stock as reported on the
New York Stock Exchange, adjusted for the five shares for four shares
common stock split effective August 31, 1993.
(3) No active trading market exists for PARKDALE common stock.
(4) A recent business day preceding the date of this Prospectus.
(5) Assumes maximum exchange rate is used for Liberty.
(6) The decrease in 1989's income from continuing operations per common
share is due principally to a significant increase in Valley's provision
for loan losses.
8
<PAGE>
<TABLE>
<CAPTION>
(iv) Per Share of PARKDALE common
stock assuming an exchange rate of one
share of PARKDALE common stock for
(i) (ii) (iii) 1.3439 shares of BANC ONE common stock
------------ ------------ ------------ --------------------------------------
BANC BANC
ONE Total (5) PARKDALE ONE Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from continuing
operations per common share:
December 31, 1988 $ 1.57 $ 1.56 $ 1.84 $ 2.11 $ 2.10
December 31, 1989 0.97 (6) 1.04 2.56 1.30 1.40
December 31, 1990 1.56 1.51 2.67 2.10 2.03
December 31, 1991 1.82 1.83 2.95 2.45 2.46
December 31, 1992 2.29 2.29 4.17 3.08 3.08
September 30, 1993 2.18 2.15 3.41 2.93 2.89
Dividends per common share:
December 31, 1988 0.55 0.55 0.22 0.74 0.74
December 31, 1989 0.63 0.63 0.24 0.85 0.85
December 31, 1990 0.69 0.69 0.24 0.93 0.93
December 31, 1991 0.76 0.76 0.24 1.02 1.02
December 31, 1992 0.89 0.89 0.32 1.20 1.20
September 30, 1993 0.79 0.79 0.16 1.06 1.06
Book value per common share
as of September 30, 1993 17.35 17.35 30.11 23.32 23.32
Market value per common share
as of June 8, 1993 (1) 37.36 (2) 37.36 (3) 50.21 50.21
Market value per common share
as of February __, 1994 (4) (2) (3)
</TABLE>
(1) The business day immediately preceding public announcement of the proposed
merger.
(2) Based on the closing price of BANC ONE common stock as reported on the
New York Stock Exchange, adjusted for the five shares for four shares
common stock split effective August 31, 1993.
(3) No active trading market exists for PARKDALE common stock.
(4) A recent business day preceding the date of this Prospectus.
(5) Assumes maximum exchange rate is used for Liberty.
(6) The decrease in 1989's income from continuing operations per common
share is due principally to a significant increase in Valley's provision
for loan losses.
9
<PAGE>
THE SPECIAL MEETING OF SHAREHOLDERS
This Prospectus and Proxy Statement is being furnished to PARKDALE's
Shareholders in connection with the solicitation of proxies by the PARKDALE
Board for use at PARKDALE's Special Meeting of Shareholders and at any
adjournment or adjournments thereof (the "Special Meeting"). The Special
Meeting of Shareholders of PARKDALE will be held on ____________________, 1993,
at ________________, local time at _________________________, Beaumont, Texas.
Purpose of the Special Meeting of Shareholders
At the Special Meeting, the holders of PARKDALE Common Stock will vote on the
approval of the Plan of Merger.
Record Dates and Voting Rights
The PARKDALE Board has fixed the close of business on _______________, 1993,
as the record date for determination of Shareholders entitled to notice of and
to vote at the Special Meeting. As of the record date, PARKDALE had outstanding
and entitled to vote 219,100 shares of PARKDALE Common Stock. Each share of
PARKDALE Common Stock is entitled to one vote. At least two thirds of the
outstanding shares of PARKDALE Common Stock must be voted in favor of the Plan
of Merger to approve the Merger.
Votes, whether in person or by proxy, will be counted and tabulated by
inspectors appointed by PARKDALE. Abstentions and broker non-votes will not be
counted as votes either "for" or "against" any matters coming before the Special
Meeting, nor will such abstentions and broker non-votes be counted toward
determining a quorum. However, in accordance with Texas law and PARKDALE's
Articles of Incorporation and Bylaws, such abstentions have the effect of a "no"
vote because applicable federal and state law requires the Plan of Merger to be
authorized and approved by the affirmative vote of not less than two thirds of
the PARKDALE Common Stock entitled to be voted, rather than by two thirds of
those shares actually voted.
Proxies
Proxies for use at the Special Meeting accompany this Proxy Statement. A
stockholder may use a proxy whether or not he or she plans to attend the Special
Meeting in person. The proxy may be revoked in writing by the person giving it
at any time before it is exercised by notice to the Secretary of PARKDALE, by
submitting a later dated proxy, or by attending and voting in person at the
Special Meeting. All proxies validly submitted and not revoked will be voted in
the manner specified therein. IF NO SPECIFICATION IS MADE, THE PROXIES WILL BE
VOTED IN FAVOR OF APPROVAL OF THE PLAN OF MERGER. The PARKDALE Board is not
aware of any other matters which may be presented for action at the Special
Meeting, but if other matters do properly come before the meeting it is intended
that the shares represented by the accompanying proxy will be voted by the
persons named in the proxy in accordance with their best judgment. The shares
represented by the accompanying proxy may be voted to adjourn the Special
Meeting of Shareholders for the purpose of soliciting additional votes to
approve the Merger.
Solicitation of proxies will be made in person, by mail, or by telephone or
telegraph, or by other communications media by present and former directors,
officers and employees of PARKDALE and the BANK for which no additional
compensation will be paid. PARKDALE will bear the cost of solicitation of
proxies from its Shareholders and may reimburse brokers and others for their
expenses in forwarding solicitation material to beneficial owners of its voting
stock.
PARKDALE held its 1993 Annual Meeting of Shareholders on March 9, 1993.
10
<PAGE>
MERGER
The information in this Prospectus and Proxy Statement concerning the terms of
the Merger is a summary only and is qualified in its entirety by reference to
the Merger Agreement which is an exhibit to the Registration Statement filed by
BANC ONE with the Commission in connection with the Merger and which is
incorporated herein by reference. See "INCORPORATION BY REFERENCE" for the
procedure for obtaining a copy of the Merger Agreement.
General
The Plan of Merger provides for the Merger of PARKDALE with and into BANK ONE
TEXAS, in accordance with the applicable provisions of the National Bank Act, as
amended (the "NBA") and the Texas Banking Code of 1943, as amended. BANK ONE
TEXAS will be the surviving corporation in the Merger (the "Surviving
Corporation"). Upon the effectiveness of the Merger (the "Effective Time"),
each outstanding share of PARKDALE Common Stock will be converted into BANC ONE
Common Stock at the Exchange Rate which, as adjusted to reflect the 5 shares for
4 shares BANC ONE Common Stock split effective August 31, 1993, and the 10%
stock dividend payable March 4, 1994 to BANC ONE Common Stockholders of record
as of February 16, 1994, assuming the exercise before the Merger of all 5,000
currently outstanding options to acquire shares of PARKDALE Common Stock, and
subject to further adjustment in certain circumstances, will not be less than
1.0973 or more than 1.3439 shares of BANC ONE Common Stock for each share of
PARKDALE Common Stock, which shares of BANC ONE Common Stock will be issued as a
result of the Merger. See "MERGER--Exchange Rate."
The affirmative vote of not less than two thirds of the outstanding shares of
PARKDALE Common Stock entitled to vote at the Special Meeting is required to
approve the Plan of Merger. See "VOTING AND MANAGEMENT INFORMATION--Voting."
However, it is a condition to BANC ONE's obligation to consummate the Merger
that the total number of shares of PARKDALE Common Stock outstanding immediately
before the Merger must not exceed 224,100, and that the total number of shares
of such stock that are to be settled in cash, including both fractional share
interests and shares whose holders have asserted rights as dissenting
shareholders, must not exceed 10% of the total number of shares of BANC ONE
Common Stock that BANC ONE would issue in the Merger if there were no such cash
settlements. See "VOTING AND MANAGEMENT INFORMATION--Rights of Dissenting
Shareholders."
Subject to such stockholder approval and the satisfaction of certain
conditions and receipt of all requisite regulatory approvals, in each case as
provided for in the Merger Agreement, the Merger will become effective on the
date specified by the OCC in the OCC's final certification of its approval of
the Merger.
The Boards of Directors of BANC ONE, TEXAS CORPORATION, BANK ONE TEXAS and
PARKDALE have approved the Plan of Merger. TEXAS CORPORATION, as the sole
shareholder of BANK ONE TEXAS, also has approved the Plan of Merger. Approval
of the Plan of Merger by BANC ONE as the sole shareholder of TEXAS CORPORATION
or by the shareholders of BANC ONE is not required for consummation of the
Merger.
Exchange Rate
Under the terms of the Plan of Merger, shares of BANC ONE Common Stock issued
by reason of the Merger will be allocated to PARKDALE's Common Shareholders of
record as of the Effective Time, with the total number of such shares of BANC
ONE Common Stock to be equal to the total number of shares of PARKDALE Common
Stock outstanding immediately prior to the Effective Time multiplied by the
Exchange Rate. However, it is a condition to BANC ONE's obligation to
consummate the Merger that the total number of shares of PARKDALE Common Stock
outstanding at the Effective Time must not exceed 224,100 shares.
11
<PAGE>
As adjusted to give effect to the 5 shares for 4 shares BANC ONE Common Stock
split effective August 31, 1993, and the 10% stock dividend payable March 4,
1994 to BANC ONE Common Stockholders of record as of February 16, 1994, and
subject to further adjustment in certain circumstances, the Exchange Rate will
be calculated by dividing (i) $9,500,000, by (ii) the total number of shares of
PARKDALE Common Stock outstanding immediately before the Merger (which under the
terms of the Merger Agreement may not be more than 224,100), and then further
dividing such quotient by (iii) the average of the daily means of the high and
low trade prices of BANC ONE Common Stock on the New York Stock Exchange (the
"NYSE") during the "Valuation Period" as reported in The Wall Street Journal for
NYSE Composite Transactions (the "Average Price") (which under the terms of the
Merger Agreement, and as adjusted to reflect the 5 shares for 4 shares BANC ONE
Common Stock split effective August 31, 1993, and the 10% stock dividend payable
March 4, 1994 to BANC ONE Common Stockholders of record as of February 16,
1994, and subject to further adjustment in certain will be deemed to be no
greater than $38.63 or less than $31.54 per share). Thus, assuming that a total
of 224,100 shares of PARKDALE Common Stock are outstanding immediately before
the Merger, the maximum exchange rate will be 1.3439 shares of BANC ONE Common
Stock per share of PARKDALE Common Stock, and the minimum exchange rate will be
1.0973 shares of BANC ONE Common Stock per share of PARKDALE Common Stock; and
(disregarding fractional share interests and shares whose holders exercise
dissenters' rights) the total number of shares of BANC ONE Common Stock issuable
in exchange for the outstanding shares of PARKDALE Common Stock will be no more
than 301,161 and no less than 245,540.
The term "Valuation Period" means those days of the calendar week immediately
preceeding the week during which the Effective Time occurs during which shares
of BANC ONE Common Stock are traded on the NYSE. The closing price of BANC ONE
Common Stock on _______________, 1993, was $_________ per share.
At September 30, 1993, a total of 219,100 shares of PARKDALE Common Stock were
outstanding. However, a total of 5,000 options to acquire additional shares of
such stock also were outstanding at that date. All of these options were held
by PARKDALE's former President Calvin H. Spindor, who has indicated that he
intends to exercise all of these options before the Merger. If Mr. Spindor
does in fact exercise all such options, then a total of 224,100 shares of
PARKDALE Common Stock will be outstanding immediately before the Merger. Under
the terms of the Merger Agreement, PARKDALE may not issue, sell, grant any
option for, or acquire for value any shares of its capital stock except that it
may reissue not more than 5,000 shares of PARKDALE Common Stock currently held
as treasury shares upon exercise of the outstanding option described above.
The formula used to compute the Exchange Rate stated above and certain
components of the formula are set forth below as mathematical equations,
assuming that a total of 224,100 shares of PARKDALE Common Stock are outstanding
immediately before the Merger.
IF: THEN:
Average Price less than or equal to $38.63 Exchange Rate = 1.0973
Average Price less than $38.63 and Exchange Rate = $42.3918 divided
greater than $31.54 by Average Price
Average Price less than or equal $31.54 Exchange Rate = 1.3439
Unless BANC ONE declares an additional stock dividend or distribution upon or
subdivides, splits up, reclassifies or combines its respective Common Stock or
declares a dividend, or makes a distribution, on its respective Common Stock in
any security convertible into such Common Stock prior to the Effective Time, no
further adjustments will be made to the Exchange Rate. However, in the event of
such a transaction, appropriate adjustment will be made to the Exchange Rate.
As noted above, the Exchange Rate, as described herein, already has been
adjusted to reflect the 5 shares for 4 shares BANC ONE Common Stock split
effective August 31, 1993, and the 10% stock dividend payable March 4, 1994 to
BANC ONE Common Stockholders of record as of February 16, 1994.
12
<PAGE>
Fractional Shares
Under the terms of the Plan of Merger, no fractional shares of BANC ONE Common
Stock will be exchanged for shares of PARKDALE Common Stock. In lieu thereof,
each stockholder of PARKDALE having a fractional interest resulting from the
exchange of PARKDALE Common Stock for BANC ONE Common Stock will be paid by BANC
ONE an amount in cash, without interest, equal to the value of such fractional
interest based upon the BANC ONE Average Price during the Valuation Period as
reported in The Wall Street Journal for NYSE Composite Transactions.
Conversion of Shares and Exchange of Certificates
Under the terms of the Plan of Merger, upon consummation of the Merger, the
outstanding shares of PARKDALE Common Stock will be converted into shares of
BANC ONE Common Stock at the Exchange Rate calculated as described under the
caption "--Exchange Rate." As soon as practicable after the Merger becomes
effective, instructions and forms will be furnished to PARKDALE's Shareholders
for use in exchanging their PARKDALE share certificates for certificates of BANC
ONE Common Stock. If any certificate for shares of BANC ONE Common Stock is to
be issued in a name other than that in which the certificate for shares of
PARKDALE Common Stock surrendered for exchange is registered, the certificate so
surrendered must be properly endorsed or otherwise be in proper form for
transfer and the person requesting such exchange must pay to BANC ONE or its
transfer agent any applicable transfer or other taxes required by reason of the
issuance of the certificate.
Until so surrendered, certificates formerly representing shares of PARKDALE
Common Stock (other than certificates representing treasury shares, or shares
subject to the rights of dissenting shareholders) will be deemed for all
purposes to evidence the ownership of the number of shares of BANC ONE Common
Stock and cash for fractional shares into which such shares have been converted.
Dividends and other distributions, if any, that become payable on BANC ONE
Common Stock pending exchange of certificates representing shares of PARKDALE
Common Stock will be retained by BANC ONE until surrender of such certificates,
at which time such dividends and distributions will be paid, without interest.
In addition, after the Effective Time the holders of certificates formerly
representing shares of PARKDALE Common Stock will cease to have rights with
respect to such shares (except such rights, if any, as such certificate holders
may have as dissenting Shareholders), and, except as aforesaid, their sole
rights will be to exchange such certificates for shares of BANC ONE Common Stock
in accordance with the Merger Agreement.
Operations After the Merger
Under the terms of the Plan of Merger, upon consummation of the Merger
PARKDALE will be merged into BANK ONE TEXAS and the separate corporate existence
of PARKDALE will cease. As a result of the Merger, all rights, franchises and
interests of PARKDALE and BANK ONE TEXAS, respectively, in and to every type of
property, real, personal and mixed, and chooses in action, will be transferred
to and vested in BANK ONE TEXAS as the Surviving Corporation, by virtue of the
Merger and without any deed or other transfer, as provided in the National Bank
Act. As the Surviving Corporation, BANK ONE TEXAS also will be responsible for
all liabilities of every kind and description of PARKDALE and BANK ONE TEXAS
existing as of the Effective Time, except as otherwise provided in the Merger
Agreement.
BANK ONE TEXAS, as the Surviving Corporation and a wholly owned subsidiary of
BANC ONE, will continue operations after the Merger under the name "Bank One,
Texas, N.A." and will operate with BANK ONE TEXAS' directors, officers and
employees immediately before the Effective Time, with BANK ONE TEXAS' Articles
of Incorporation and By-Laws as in effect immediately before the Effective Time,
with its business being that of a bank, and with its main office at 1717 Main
Street, Dallas, Texas. Those of PARKDALE's officers and employees who agree to
accept such positions will become officers and employees of BANK ONE TEXAS and,
to the extent possible, will continue to hold the same titles and to perform the
same duties and functions for BANK
13
<PAGE>
ONE TEXAS after the Merger as they did for PARKDALE before the Merger (subject
to such modification as may be necessary to avoid duplication of officer titles,
duties and functions). Upon consummation of the Merger, PARKDALE's two banking
offices will become branch offices of BANK ONE TEXAS.
Under BANC ONE's operating philosophy, BANK ONE TEXAS will continue after the
Merger, as it does at present, to have autonomy to match its products and
services to the needs of its local communities. Like other BANC ONE bank
affiliates, it will continue, as it does at present, to have authority to make
decisions locally in "people-related" matters such as lending, personnel,
charitable contributions and other community and related matters, relying upon
BANC ONE and its state holding companies for "paper and computer related"
matters such as assistance in accounting, certain legal matters, investment
portfolio management, regulatory compliance, data processing and other matters
which are generally best performed by specialists on a centralized basis.
Background of Transaction
In August 1992 PARKDALE Director Victor J. Rogers and another major PARKDALE
stockholder discussed with executives of another local bank the possibility of
it purchasing PARKDALE. Based on informal discussions in August and September,
it appeared that, although the price range might be acceptable, the
consideration would consist principally of illiquid stock, which Mr. Rogers and
the PARKDALE stockholder found unacceptable.
In 1992 Mr. Charles Ege of BANK ONE TEXAS told PARKDALE Director Ben Rogers
that BANC ONE was interested in purchasing PARKDALE. In late August 1992,
PARKDALE Director Victor J. Rogers telephoned Mr. Ege regarding this
possibility and, shortly thereafter, meetings took place regarding BANC ONE
purchasing PARKDALE.
After discussing this possible purchase, BANC ONE drafted a letter of
confidentiality which was executed by PARKDALE Director Victor J. Rogers on
September 1, 1992. BANC ONE then conducted a review of PARKDALE's books and
records.
Meetings ensued to discuss the terms of a possible transaction. On November
17, 1992 PARKDALE received from BANC ONE an "Outline of the Agreement in
Principle" signed by BANC ONE. Another meeting was held on November 24, 1992
between a BANC ONE representative, PARKDALE's Victor J. Rogers, and another
major PARKDALE stockholder.
At a December 8, 1992 meeting, PARKDALE's Board of Directors approved the
execution of an Agreement in Principle with BANC ONE providing for the
acquisition of PARKDALE by BANC ONE. On December 11, 1992, PARKDALE sent all
its shareholders a letter describing the proposed transaction with BANC ONE. At
the same time, information was exchanged and negotiations continued between
PARKDALE and BANC ONE representatives and their counsel.
On May 18, 1993, PARKDALE's Board of Directors, with Director Thomas W.
Harrison dissenting, resolved to enter into the proposed transaction with BANC
ONE. Director Harrison has advised PARKDALE that he does not wish to submit a
statement for inclusion herein. In June 1993, after further negotiations, the
parties signed the Merger Agreement.
Merger Recommendation and Reasons for Transaction
The terms of the Merger and the Merger Agreement, including the Exchange Rate,
were the result of arms length negotiations between PARKDALE and BANC ONE and
their respective representatives. In the course of reaching its decision to
approve the Merger Agreement, the Board of Directors of PARKDALE consulted with
its legal advisors as well as with management of PARKDALE, and, without
assigning any relative or specific weights, considered numerous factors,
including but not limited to the following:
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<PAGE>
(1) that the Merger would offer PARKDALE's shareholders the prospect for an
active trading market, a higher current trading value for their shares, and
better prospects for future growth than if PARKDALE were to remain
independent;
(2) economic conditions and prospects for the market in which PARKDALE
operates and competitive pressures with the presence of larger more diverse
competitors in the financial services industry and the banking industry in
particular;
(3) that a business combination with a larger bank holding company, such as
BANC ONE, would provide greater long-term value to PARKDALE's shareholders
than other alternatives available and would enhance PARKDALE's
competitiveness and its ability to serve its depositors, customers, and the
community in which it operates;
(4) the benefits to PARKDALE's shareholders in that the market position of
BANC ONE Common Stock presented significant possibilities for future
appreciation due to BANC ONE's diverse geographical locations which may not
be negatively impacted by one economic market;
(5) the bank regulatory environment in general, and the increasing burdens
of regulatory compliance especially upon relatively small independent
organizations; and
(6) the business, results of operations, asset quality and financial
condition of BANC ONE, the future growth prospects of BANC ONE and PARKDALE
following the Merger, and the potential synergies and cost savings expected
to be realized from the Merger.
PARKDALE's Board of Directors believes that the affiliation with BANC ONE will
result in a competitively stronger combined entity with increased financial and
human resources which will lead to enhanced financial performance and a larger
and more geographically diverse banking operation.
As of September 30, 1993, the directors and executive officers of PARKDALE,
together with their respective affiliates and associates, as a group, were
entitled to vote 82.9% of the total shares of PARKDALE Common Stock outstanding.
No shares of PARKDALE Common Stock are held by PARKDALE or its nominees in a
fiduciary capacity. PARKDALE believes that all of the directors' and executive
officers' shares will be voted in favor of the Merger. These persons will be
entitled to receive the same consideration for their shares as any other
PARKDALE stockholder upon approval of the Merger. As of September 30, 1993,
there were no outstanding unexercised options for shares of PARKDALE Common
Stock held by any director or officer of PARKDALE, other than the option to
acquire 5,000 shares of PARKDALE Common Stock held by PARKDALE's former
President that is described above. After the Merger, the individuals who now
serve as directors and/or executive officers of PARKDALE, as a group, will own
less than one tenth of 1% of the shares of BANC ONE Common Stock outstanding.
The members of the Board of Directors and officers of PARKDALE may be deemed
to have interests in the proposed transaction in addition to their interests as
shareholders. See "Management and Principal Shareholders of Parkdale -
Transactions with Management and Owners." Also, the Merger Agreement provides
that BANK ONE shall indemnify the directors and officers of PARKDALE with
respect to various claims or suits which may be asserted against them, including
claims or suits based upon, arising out of, or pertaining to the Merger
Agreement or the transactions contemplated thereby, and that BANK ONE shall
insure that the protection provided to PARKDALE directors and officers under its
governing instruments and applicable law shall continue for a period of four
years.
15
<PAGE>
PARKDALE'S BOARD OF DIRECTORS RECOMMENDS THAT THE PLAN OF MERGER BE APPROVED
BY PARKDALE'S SHAREHOLDERS.
BANC ONE believes that the Merger will provide BANK ONE TEXAS with a more
meaningful presence in the Beaumont, Texas area and an expansion of BANK ONE
TEXAS' customer base and assets. Such expansion will provide BANC ONE with the
opportunity to realize increased economies of scale while serving new customers
with the expertise and assistance of the capable and experienced staff of BANK
ONE TEXAS.
Conditions to the Merger; Termination
Consummation of the Merger is subject to satisfaction of a number of
conditions, including, among others:
(1) the receipt of all necessary approvals of the acquisition by
governmental agencies and authorities, including the OCC, and each of such
approvals remaining in full force and effect at the Effective Time;
(2) there being no change in the consolidated financial condition,
aggregate net assets, shareholders' equity, business or operating results
of PARKDALE, or of BANC ONE and its subsidiaries, taken as a whole, from
December 31, 1992 to the Effective Time, that has had a material adverse
effect;
(3) compliance by PARKDALE, BANC ONE, TEXAS CORPORATION and BANK ONE TEXAS
with their respective covenants and confirmation of their respective
representations and warranties as set forth in the Merger Agreement,
including the agreement of PARKDALE that, except with the approval of BANC
ONE or as otherwise permitted by the Merger Agreement,
(a) beginning with the first calendar quarter of 1993 and for each
succeeding calendar quarter thereafter prior to the calendar quarter
in which the Effective Time occurs, PARKDALE will not declare or pay
any dividends or make any distributions on shares of PARKDALE Common
Stock, except that PARKDALE may, if it so elects, pay quarterly cash
dividends which shall not exceed, for the second, third and fourth
quarters of 1993, $17,334 per quarter in the aggregate for all
outstanding shares of PARKDALE Common Stock and, for the first quarter
of 1994, $17,500 in the aggregate for all outstanding shares of
PARKDALE Common Stock;
(b) PARKDALE will not declare or pay any dividends or make any
distributions in any amount on its Common Stock in the quarter in
which the Effective Time occurs and in which the holders of PARKDALE
Common Stock are entitled to receive regular quarterly dividends on
the shares of BANC ONE Common Stock into which the shares of PARKDALE
Common Stock have been converted;
(c) PARKDALE will not effect any changes in connection with its equity
capitalization; and
(d) PARKDALE will not conduct its banking operations other than in the
ordinary course of business;
(4) approval of the Plan of Merger by the requisite vote of Shareholders
of PARKDALE Common Stock (see "MERGER-General" and "VOTING AND MANAGEMENT
INFORMATION-Voting");
(5) receipt by PARKDALE and BANC ONE of the opinion relative to the
Federal income tax consequences referred to under the caption
"MERGER-Federal Income Tax Consequences";
(6) receipt by BANC ONE of an opinion from PARKDALE's counsel and receipt
by PARKDALE of an opinion from counsel for BANC ONE and BANK ONE TEXAS,
which opinions are to be in the general forms annexed to the Merger
Agreement;
16
<PAGE>
(7) satisfaction by BANC ONE and PARKDALE of the respective earnings tests
set forth in the Merger Agreement or as otherwise agreed between the
parties;
(8) the fractional share interests in BANC ONE Common Stock to be paid in
cash to former holders of PARKDALE Common Stock (see "MERGER-Fractional
Shares"), plus the shares of BANC ONE Common Stock that would have been
exchangeable for those PARKDALE shares for which dissenters' rights are
asserted, not exceeding 10% of the maximum aggregate number of shares of
BANC ONE Common Stock which could be issued as a result of the Merger;
(9) the shares of BANC ONE Common Stock to be issued in exchange for
PARKDALE Common Stock having been listed on the NYSE;
(10) receipt of the written opinion of Coopers & Lybrand, independent
certified public accountants for BANC ONE, that the transaction
contemplated by the Merger Agreement may be properly accounted for as a
pooling-of-interests;
(11) receipt by BANK ONE TEXAS of a Phase I Environmental Audit Report
with respect to two parcels of real estate securing a certain loan by
PARKDALE;
(12) PARKDALE's general ledger reflecting such additional provision for
loan and lease losses, not to exceed $1.1 million, as BANK ONE TEXAS may
request;
(13) the holders of all credit agreements on which PARKDALE or any of its
subsidiaries is the maker, issuer or guarantor and which contain
provisions which make the acquisition of PARKDALE by or merger into
another entity a condition of default or acceleration, having provided
BANC ONE with a written waiver of all such provisions; and
(14) the total number of shares of PARKDALE Common Stock issued and
outstanding not exceeding 224,100 shares.
The provisions of the Merger Agreement, including the foregoing conditions,
may be waived at any time by the party entitled to the benefits thereof.
However, after PARKDALE's Shareholders have approved the Plan of Merger,
PARKDALE may only amend the Merger Agreement if, in the opinion of PARKDALE's
Board of Directors, such amendment will not have a material adverse effect on
the benefits intended under the Merger Agreement for PARKDALE's Shareholders and
will not require resolicitation of proxies from such Shareholders.
The Merger Agreement may be terminated at any time prior to the Effective Time
of the Merger, whether before or after approval by PARKDALE's Shareholders, by
written notice from BANC ONE to PARKDALE, or from PARKDALE to BANC ONE, as the
case may be, upon the occurrence of any of the following: (i) if any material
condition to either party's obligations under the Merger Agreement is not
satisfied or waived at the time or times contemplated thereby (each party's
right to terminate under this clause (i) shall relate only to conditions to that
party's obligations); (ii) in the event of a material breach by a party of any
representation, warranty, condition or agreement contained in the Merger
Agreement that is not cured within 30 days of the giving of notice to such party
by the other party; or (iii) if the Merger shall not have been consummated on or
before April 5, 1994. The Merger Agreement also may be terminated, and the
Merger thereby abandoned, by the mutual consent of the Boards of Directors of
PARKDALE and BANC ONE at any time prior to the effective date of the Merger.
If the Merger is not consummated other than by reason of a willful breach of
any party to the Merger Agreement, PARKDALE, BANC ONE, BANK ONE TEXAS and TEXAS
CORPORATION each will pay all of its own expenses incurred incident to such
transaction, except for printing expenses, which will be paid by BANC ONE.
17
<PAGE>
Federal Income Tax Consequences
The following is a summary of certain material U.S. Federal income tax
consequences of the Merger, including certain consequences to holders of
PARKDALE Common Stock who are citizens or residents of the United States and who
hold their shares as capital assets. It does not discuss all tax consequences
that may be relevant to PARKDALE Shareholders subject to special Federal income
tax treatment (such as insurance companies, dealers in securities, certain
retirement plans, financial institutions, tax exempt organizations or foreign
persons), or to PARKDALE Shareholders who acquired their shares of PARKDALE
Common Stock pursuant to the exercise of employee stock options or otherwise as
compensation. The summary also does not address the state, local or foreign tax
consequences of the Merger, if any.
Pursuant to the terms of the Merger Agreement, PARKDALE and BANC ONE will
receive the opinion of Coopers & Lybrand, dated as of the Effective Time, to the
effect that, for Federal income tax purposes:
(1) The Merger will be viewed as an acquisition by TEXAS CORPORATION of
substantially all of the assets of PARKDALE solely in exchange for BANC
ONE Common Stock and the assumption of all of the liabilities of PARKDALE
by TEXAS CORPORATION followed by the transfer of the assets of PARKDALE to
BANK ONE TEXAS and the assumption by BANK ONE TEXAS of the liabilities of
PARKDALE;
(2) The acquisition by TEXAS CORPORATION of substantially all of the
assets of PARKDALE in exchange solely for shares of BANC ONE Common Stock
and the assumption by TEXAS CORPORATION of PARKDALE's liabilities will
constitute a reorganization within the meaning of (S)368(a)(1)(A) and
(a)(2)(D) of the Internal Revenue Code, and will not be disqualified under
(S)368(a)(2)(D) by reason of the fact that the assets of PARKDALE that
were acquired by TEXAS CORPORATION are transferred to BANK ONE TEXAS;
(3) No gain or loss will be recognized by BANC ONE, TEXAS CORPORATION,
BANK ONE TEXAS or PARKDALE as a consequence of the transactions
contemplated by the Merger Agreement;
(4) No gain or loss will be recognized by PARKDALE's Shareholders on the
exchange of their shares of PARKDALE Common Stock for shares of BANC ONE
Common Stock (disregarding for this purpose any cash received for
fractional share interests to which they may be entitled);
(5) The Federal income tax basis of the BANC ONE Common Stock (including
fractional share interests to which they may be entitled) received by
holders of PARKDALE Common Stock will be the same as the Federal income
tax basis of the PARKDALE Common Stock surrendered in exchange therefor;
(6) The holding period of the BANC ONE Common Stock received by a holder
of PARKDALE Common Stock will include the period for which the PARKDALE
Common Stock exchanged therefor was held, provided the exchanged PARKDALE
Common Stock was held as a capital asset by such holder on the date of the
exchange;
(7) Where cash is received by a shareholder of PARKDALE in exchange for
all of his PARKDALE Common pursuant to the exercise of his dissenter's
rights, the cash will be treated as having been received in redemption of
his PARKDALE Common Stock subject to the provisions and limitations of
(S)302 of the Internal Revenue Code; and
(8) The payment of cash in lieu of fractional share interests of BANC ONE
Common Stock will be treated
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<PAGE>
as if the fractional shares were distributed as part of the exchange and
then redeemed by BANC ONE, and will be treated as having been received as
distributions in full payment and in exchange for the PARKDALE Common
Stock redeemed as provided in (S)302(a) of the Internal Revenue Code.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY AND IS BASED ON THE INTERNAL REVENUE CODE (AND AUTHORITIES THEREUNDER) AS
IN EFFECT ON THE DATE OF THIS PROSPECTUS AND PROXY STATEMENT, WITHOUT
CONSIDERATION OF THE PARTICULAR FACTS OR CIRCUMSTANCES OF ANY SHAREHOLDER.
SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO
THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR
SITUATIONS, AS WELL AS CONSEQUENCES UNDER ANY APPLICABLE STATE, LOCAL OR FOREIGN
TAX LAWS.
Resales by Affiliates
The shares of BANC ONE Common Stock issuable to PARKDALE Shareholders upon
consummation of the Merger have been registered under the Securities Act, but
such registration does not cover resales by affiliates, within the meaning of
Rule 144 under the Securities Act ("Affiliates"), of PARKDALE. BANC ONE Common
Stock received and beneficially owned by those PARKDALE Shareholders who are
deemed to be Affiliates may be resold without registration as provided in Rule
145 under the Securities Act, or as otherwise permitted. PARKDALE Affiliates
would include all persons who, directly or indirectly, control, are controlled
by, or are under common control with PARKDALE at the time the Plan of Merger is
submitted for approval by a vote of PARKDALE's Shareholders. Each PARKDALE
Affiliate who desires to resell the BANC ONE Common Stock received in the Merger
must sell such BANC ONE Common Stock either (i) pursuant to an effective
registration statement under the Securities Act, (ii) in accordance with the
applicable provisions of Rule 145 under the Securities Act or (iii) in a
transaction that, in the opinion of counsel for such Affiliate or as described
in a "no-action" or interpretive letter from the Staff of the Commission (in
each case reasonably satisfactory in form and substance to BANC ONE), is exempt
from the registration requirements of the Securities Act.
Rule 145(d) requires that persons deemed to be Affiliates resell their BANC
ONE Common Stock pursuant to certain of the requirements of Rule 144 under the
Securities Act if such BANC ONE Common Stock is sold within the first two years
after it is acquired. After two years, if such person is not an Affiliate of
BANC ONE and BANC ONE is current in filing its periodic reports under the
Exchange Act, a former Affiliate of PARKDALE may freely resell the BANC ONE
Common Stock received in the Merger without limitation. After three years from
the issuance of the BANC ONE Common Stock, if such person is not an Affiliate of
BANC ONE at the time of sale or for at least three months prior to such sale,
such person may freely resell such BANC ONE Common Stock, without limitation,
regardless of the status of BANC ONE's periodic securities law reports.
PARKDALE has agreed to provide BANC ONE with a list of those persons who may
be deemed to be Affiliates at the time of the Special Meeting. PARKDALE will
use its best efforts to cause each such person to deliver to BANC ONE prior to
the Effective Time a written agreement to the effect that no sale will be made
of any shares of BANC ONE Common Stock received in the Merger by an Affiliate of
PARKDALE except (i) in accordance with the Securities Act and (ii) if, as it
expects to do, BANC ONE utilizes pooling-of-interests accounting in accounting
for the Merger, until such time as BANC ONE shall first publish the financial
results of at least 30 days of post-merger combined operations of PARKDALE and
BANC ONE, provided that BANC ONE shall publish such results not later than four
months after the Effective Time. The certificates of BANC ONE Common Stock
issued to Affiliates of PARKDALE in the Merger may contain an appropriate
restrictive legend, and appropriate stop transfer orders may be given to the
transfer agent for such certificates.
Accounting Treatment
BANC ONE expects to account for the acquisition of PARKDALE as a
pooling-of-interests.
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COMPARATIVE RIGHTS OF SHAREHOLDERS
Description of BANC ONE Stock
General. The authorized capital stock of BANC ONE consists of (i) 600,000,000
--------
shares of BANC ONE Common Stock, and (ii) 35,000,000 shares of Preferred Stock,
without par value ("Preferred Stock"), divided into 10,000,000 shares of Class A
Preferred Stock (the "Class A Preferred Stock"), 1,000,000 shares of Class B
Convertible Preferred Stock ("Class B Preferred Stock") and 24,000,000 shares of
Class C Preferred Stock of which the $3.50 Cumulative Convertible Preferred
Stock constitutes a series ("Series C Preferred Stock"). As of September 30,
1993, there were issued and outstanding 5,000,000 shares of Series C Preferred
Stock and, as adjusted to reflect the effect of the 5 for 4 BANC ONE Common
Stock split effective August 31, 1993, 341,046,391 shares of BANC ONE Common
Stock; and no shares of Class A or Class B Preferred Stock were issued or
outstanding.
The following summary of the terms of BANC ONE's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
applicable provisions of the Ohio General Corporation Law (the "OGCL") and BANC
ONE's Articles of Incorporation and Code of Regulations.
Common Stock. Holders of BANC ONE Common Stock are entitled to receive
-------------
dividends out of funds legally available therefor as and if declared by the
Board of Directors, provided that, so long as any shares of Preferred Stock are
outstanding, no dividends (other than dividends payable in BANC ONE Common
Stock) or other distributions (including redemptions and purchases) may be made
with respect to the BANC ONE Common Stock unless full cumulative dividends on
the shares of Preferred Stock have been paid.
Holders of shares of BANC ONE Common Stock are entitled to one vote for each
share for the election of directors and on all other matters. Holders of BANC
ONE Common Stock vote together as a class with holders of Class B Preferred
Stock (although no shares of Class B Preferred Stock currently are issued or
outstanding). With certain limited exceptions, holders of Series C Preferred
Stock have no voting rights.
The issued and outstanding shares of BANC ONE Common Stock are fully paid and
nonassessable. Holders of BANC ONE Common Stock are not entitled to preemptive
rights, to conversion or redemption rights, or to cumulative voting rights in
the election of directors.
In the event of the voluntary or involuntary dissolution, liquidation or
winding up of BANC ONE, holders of BANC ONE Common Stock would be entitled to
receive, pro rata, after satisfaction in full of the prior rights of creditors
(including holders of BANC ONE's indebtedness) and holders of Preferred Stock,
all the remaining assets of BANC ONE available for distribution.
Preferred Stock. BANC ONE's Board of Directors has the authority to issue
----------------
each class of Preferred Stock in one or more series and to fix the designations,
number of shares, dividends, redemption rights, sinking fund requirements,
liquidation prices, conversion rights and other rights, qualifications,
limitations or restrictions thereon (except voting rights) as the Board of
Directors may from time to time be permitted by law to fix or change.
Currently, no shares of Preferred Stock except shares of Series C Preferred
Stock are outstanding. Holders of Series C Preferred Stock are entitled to
receive out of funds legally available therefor cumulative cash dividends at the
annual rate of $3.50 per share payable quarterly on the last day of March, June,
September and December in each year. In the event that full cumulative
dividends on outstanding shares of Series C Preferred Stock have not been paid,
no dividends may be declared or paid on, and no amounts may be set aside or
applied to the redemption or purchase of, any shares of BANC ONE Common Stock or
any other shares of capital stock of
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BANC ONE ranking junior to shares of Series C Preferred Stock. Upon the
voluntary or involuntary dissolution, liquidation or winding up of BANC ONE,
holders of Series C Preferred Stock are entitled to receive a preferential
distribution of $50 per share plus accrued and unpaid dividends, if any.
Generally holders of shares of Series C Preferred Stock have no voting rights.
However, the approval of a majority of the outstanding shares of Series C
Preferred Stock voting together as a class is required in order to amend BANC
ONE's Articles to affect adversely the rights of the holders of the Series C
Preferred Stock or to take any action that would result in the creation of or an
increase in the number of authorized shares senior or superior with respect to
dividends or upon liquidation to the Series C Preferred Stock. Holders of
Series C Preferred Stock also have the right to elect two additional directors
during any period in which dividends on Series C Preferred Stock are
cumulatively in arrears in the amount of six or more full quarterly dividends.
At the option of the holder of any shares of Series C Preferred Stock, such
shares may be converted into shares of BANC ONE Common Stock at the conversion
rate then in effect. The present conversion rate, as adjusted to reflect the
effect of the 5 for 4 BANC ONE Common Stock split effective August 31, 1993, is
1.5942 shares of BANC ONE Common Stock for each share of Series C Preferred
Stock and is subject to adjustment for any additional stock dividends,
subdivisions, splits or combinations and for any distribution of rights or
warrants to purchase BANC ONE Common Stock at a price per share less than the
BANC ONE Common Stock's then-current market value.
The issued shares of Series C Preferred Stock may be redeemed, in whole or in
part, by BANC ONE at its election at any time after April 15, 1995, at a
redemption price of $52.10 per share during the period from April 15, 1995,
through but not including March 31, 1996, and thereafter at the redemption
prices during the 12-month periods beginning on March 31 of the years shown
below, plus accrued and unpaid dividends, if any.
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1996 . . . . . . . . . . . $51.75
1997 . . . . . . . . . . . $51.40
1998 . . . . . . . . . . . $51.05
1999 . . . . . . . . . . . $50.70
2000 . . . . . . . . . . . $50.35
2001 and thereafter. . . . . . . . $50.00
</TABLE>
Special Voting Requirements for Certain Transactions. Under the OGCL, a
-----------------------------------------------------
merger or consolidation by an Ohio corporation generally requires the
affirmative vote of shares representing at least two-thirds of the shareholder
voting power of the corporation, unless the corporation's articles of
incorporation provide for approval by a different proportion not less than a
majority. BANC ONE's Articles of Incorporation generally require only majority
shareholder approval for such transactions.
However, Article Eleventh of BANC ONE's Articles incorporates, to a large
extent, the provisions of the Ohio "control share acquisition" statute (the
"Ohio Control Share Statute"), as set forth in Section 1701.831 of the OGCL.
Article Eleventh sets forth procedures for obtaining shareholder consent of
"control share acquisitions" subject to the right of the Board of Directors to
screen out proposals that do not meet certain standards set forth in Article
Eleventh. Article Eleventh defines a "control share acquisition" as any
acquisition, directly or indirectly, of shares of BANC ONE which, when added to
all other shares of BANC ONE owned or controlled by the acquiror, would entitle
the acquiror, alone or with others, to exercise or direct the exercise of voting
power in BANC ONE in the election of directors within any of the following
ranges of voting power: (a) one-fifth or more but less than one-third; (b)
one-third or more but less than a majority; and (c) a majority or more. A
control share acquisition which meets certain criteria set forth in Article
Eleventh as determined by the Board of Directors must be presented to a meeting
of the shareholders of BANC ONE and approved by the affirmative vote of both (a)
a
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<PAGE>
majority of the voting power represented at the meeting and (b) a majority of
that portion of such voting power excluding any "interested shares" (that is,
those shares held by the acquiring person, executive officers of BANC ONE and
employees of BANC ONE who are also directors). Article Eleventh may be amended
by a vote of 85% of the votes entitled to be cast by all holders of voting
stock.
BANC ONE's Articles also include a "fair price" provision that is designed to
provide reasonable assurances to shareholders that in the event any shareholder
or group of shareholders acquires 20% or more of BANC ONE's voting stock (an
"acquiror") and then seeks to acquire all or part of the remaining voting stock
through a merger or other transaction that would force a change or termination
of the other shareholders' ownership interests (a "business combination"), such
other shareholders must receive consideration at least equivalent to that paid
by the acquiror in acquiring its 20% stock interest, unless the business
combination is approved either (i) by a majority of directors who are unrelated
to the acquiror or (ii) by the affirmative vote of 75% of all the votes entitled
to be cast by all holders of voting stock and 67% of the votes entitled to be
cast by all holders of voting stock held by shareholders other than the acquiror
(a "special shareholder vote").
This provision requires that after an acquiror emerges, any business
combination which has the effect of requiring shareholders to surrender their
shares must satisfy one of the following conditions:
(a) Fair Consideration to Shareholders. The terms of the business
-----------------------------------
combination must provide for payment of consideration which is at least
equivalent to the highest price paid to other shareholders by the
acquiror in acquiring its 20% stock position and must be approved by
shareholders as otherwise required by applicable law; or
(b) Unrelated Director Approval. The business combination must be
----------------------------
approved as fair to shareholders by a majority of the directors who are
not affiliated with the acquiror and who were directors before the
acquiror acquired its 20% stock position or who were nominated or
elected to succeed such directors by the other unaffiliated directors
("unrelated directors") and must be approved by shareholders as
otherwise required by applicable law; or
(c) Special Shareholder Vote. The business combination must be approved
-------------------------
by a special shareholder vote.
The Article containing this provision may be amended only by a vote of 85% of
the votes entitled to be cast by all holders of voting stock, unless the
amendment is approved unanimously by the unrelated directors, in which case only
majority shareholder approval would be required.
Chapter 1704 of the OGCL (the "Ohio Business Combination Statute") is similar
to the "fair price" provision contained in BANC ONE's Articles. The Ohio
Business Combination Statute prohibits an "issuing public corporation" from
engaging in a "Chapter 1704 Transaction" with an "interested shareholder" for a
period of three years following the date on which the person becomes an
interested shareholder unless, prior to such date, the directors of the issuing
public corporation approve either the Chapter 1704 Transaction or the
acquisition of shares pursuant to which such person became an interested
shareholder. After the initial three-year moratorium has expired, an issuing
public corporation may engage in a Chapter 1704 Transaction if (i) the
acquisition of shares pursuant to which the person became an interested
shareholder received the prior approval of the board of directors of the issuing
public corporation, (ii) the Chapter 1704 Transaction is approved by the
affirmative vote of the holders of shares representing at least two-thirds of
the voting power of the issuing public corporation and by the holders of at
least a majority of voting shares that are not beneficially owned by an
interested shareholder or an affiliate or associate of an interested
shareholder, or (iii) the Chapter 1704 Transaction meets certain statutory tests
designed to ensure that it be economically fair to all shareholders.
For this purpose, an "issuing public corporation" is any Ohio corporation with
50 or more shareholders that has its principal place of business, principal
executive offices or substantial assets within the State of Ohio.
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BANC ONE currently is an issuing public corporation. An "interested
shareholder" is any person who is the beneficial owner of a sufficient number of
shares to allow such person, directly or indirectly, alone or with others,
including affiliates and associates, to exercise or direct the exercise of 10%
of the voting power of the issuing public corporation. A "Chapter 1704
Transaction" includes any merger, consolidation, combination or majority share
acquisition between or involving an issuing public corporation and an interested
shareholder or an affiliate or associate of an interested shareholder. A
Chapter 1704 Transaction also includes certain transfers of property, dividends
and issuance or transfers of shares, from or by an issuing public corporation or
a subsidiary of an issuing public corporation to, with or for the benefit of an
interested shareholder or an affiliate or associate of an interested shareholder
unless such transaction is in the ordinary course of business of the issuing
public corporation on terms no more favorable to the interested shareholder than
those acceptable to third parties as demonstrated by contemporaneous
transactions. Finally, Chapter 1704 Transactions include certain transactions
which (i) increase the proportionate share ownership of an interested
shareholder, (ii) result in the adoption of a plan or proposal for the
dissolution, winding up of the affairs or liquidation of the issuing public
corporation if such plan is proposed by or on behalf of the interested
shareholder, or (iii) pledge or extend the credit or financial resources of the
issuing public corporation to or for the benefit of the interested shareholder.
Comparison of BANC ONE Common Stock and PARKDALE Common Stock
If the holders of PARKDALE Common Stock approve the Plan of Merger and the
Merger is subsequently consummated, holders of PARKDALE Common Stock will become
holders of BANC ONE Common Stock. As BANC ONE Common Stockholders, their rights
will be somewhat different than those that they currently have as PARKDALE
Common Stockholders.
The rights of BANC ONE shareholders are governed by BANC ONE's Articles of
Incorporation and Code of Regulations and by the applicable provisions of the
OGCL; the rights of PARKDALE shareholders are governed by PARKDALE's Articles of
Association and Bylaws and by the applicable provisions of the Texas Banking
Code of 1943, as amended (the "TBC"). The following comparison of PARKDALE and
BANC ONE Common Stockholders' rights is based upon the current terms of the
governing documents of the two companies, and on the current provisions of the
OGCL and the TBC.
The rights of BANC ONE and of PARKDALE Common Stockholders are similar in
several respects: Common Stockholders in both companies are entitled to one
vote for each share held on all matters submitted to a vote of Common
Stockholders, and also are entitled to receive pro rata any assets distributed
to Common Stockholders upon liquidation, dissolution or winding up of the
affairs of the company. Likewise, Common Stockholders have no right, in the
case of either company, to cumulative voting for the election of directors.
There are, however, some differences. Although it is impracticable to note
all the differences between the governing documents of PARKDALE and BANC ONE, or
between the applicable provisions of the OBCL and the TBC, the following
discussion summarizes certain significant differences between the rights of
PARKDALE Common Stockholders and those of BANC ONE Common Stockholders.
Preferred Stock. PARKDALE's Articles of Association, unlike BANC ONE's, do
----------------
not authorize the issuance of preferred stock. Instead, PARKDALE's authorized
capital stock consists entirely of the 230,055 authorized shares of its Common
Stock.
Preemptive Rights. Under the TBC, with certain limited exceptions, each
------------------
PARKDALE Common Stockholder has the preemptive right to subscribe for a
proportionate share of any issuance of additional shares of PARKDALE Common
Stock, including stock issuances effected from PARKDALE's own surplus funds or
undivided profits. BANC ONE Common Stockholders have no such preemptive rights.
Directors. BANC ONE's thirteen directors, like PARKDALE's twelve directors,
----------
are elected annually to one-year terms. Directors of the two companies,
however, must meet somewhat different qualification
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requirements. To qualify for election to BANC ONE's Board of Directors, an
individual must own a "substantial" number of shares of BANC ONE's capital stock
(although no specific number or amount of such shares is prescribed), and must
not also serve as a director or officer of or in any other management
relationship for any financial institution that is in competition with BANC ONE
or any of its subsidiaries. Under the TBC, an individual cannot qualify for
election to PARKDALE's Board of Directors unless he owns unencumbered and
unpledged shares of PARKDALE stock with an aggregate par value of at least
$1,000. Also, an individual cannot qualify for election to PARKDALE's Board if
the bank holds a judgment or charged off note against him, or if he has been
convicted of a felony. Finally, under PARKDALE's Articles of Association, a
majority of PARKDALE's directors must be bona fide residents of the State of
Texas.
Director Discretion. The OGCL permits the directors (but not the officers) of
--------------------
an Ohio corporation such as BANC ONE, in determining whether any matter
(including a proposed tender offer or business combination) is in the best
interests of the corporation, to take into consideration the interests of the
corporation's employees, suppliers, creditors and customers, the economy of the
state and the nation, community and societal considerations and the long-term
and short-term interests of the corporation and its shareholders, including the
possibility that such interests may be best served by the continued independence
of the corporation. Neither the TBC nor PARKDALE's governing documents include
any comparable provision.
Dividends. Under the OGCL, BANC ONE is authorized to pay dividends out of
----------
retained earnings and surplus, including both earned surplus and capital
surplus, in cash, property or shares of the corporation, provided that such
dividend payments are not in violation of the rights of any other class of
securities and are not made when the corporation is insolvent or there is
reasonable ground to believe that by such payment it will be rendered insolvent.
Under the TBC, PARKDALE is authorized to pay dividends out of retained earnings
and surplus. However, PARKDALE is required to set aside a portion of its
surplus as "certified surplus", and is required to transfer to "certified
surplus", before payment of any dividend, not less than 10% of its net profits
earned since its last dividend was declared until its "certified surplus" at
least equals its capital. PARKDALE is prohibited by the TBC from paying any
dividend out of its "certified surplus".
Of course, neither BANC ONE nor PARKDALE could pay a dividend that would
reduce its capital below the minimum required by bank regulatory authorities.
Special Requirements for Certain Transactions. Unlike the OGCL and BANC ONE's
----------------------------------------------
Articles of Incorporation, neither the TBC nor PARKDALE's Articles of
Association or Bylaws impose any restrictions on "control share acquisitions",
transactions with "interested shareholders" or the like. There is no analogue
in the TBC to the Ohio Control Share or Business Combination Statutes, and no
analogue in PARKDALE's governing documents to the "control share acquisition" or
"fair price" provisions in BANC ONE's Articles of Incorporation.
As noted above, see "--Description of BANC ONE Stock--Special Voting
Requirements for Certain Transactions", under BANC ONE's Articles of
Incorporation, only approval by a majority of the outstanding shares of BANC ONE
Common Stock generally is required for a merger, consolidation or similar
transaction to which BANC ONE is a party. Under the TBC, in contrast, approval
by at least two-thirds of the outstanding shares of PARKDALE Common Stock
generally is required for a merger, consolidation or similar transaction,
including the proposed Merger, to which PARKDALE is a party.
Amendment of Governing Documents. BANC ONE's Articles of Incorporation can be
---------------------------------
amended by the affirmative vote of the holders of a majority of the voting power
of BANC ONE, except that amendments to the "control share acquisition" and "fair
price" provisions require a supermajority vote, and the amendment of certain
provisions requires that holders of shares of a class vote and approve the
amendment as a class. See "--Description of BANC ONE Stock--Special Voting
Requirements for Certain Transactions." BANC ONE's Code of Regulations can be
amended only by the affirmative vote of a majority of the voting power
represented by the outstanding voting stock of BANC ONE present in person or by
proxy at an annual or special meeting called for such purpose.
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Under the TBC, PARKDALE's Articles of Association can be amended only with the
affirmative vote of at least two-thirds of the outstanding shares of PARKDALE
Common Stock, either at a regular meeting or at a special meeting called for the
purpose, and only with the approval of the Texas Banking Commissioner. Under
the TBC, since the shareholders have not delegated to the Board of Directors
authority to do so, PARKDALE's Bylaws can be amended only with the affirmative
vote of at least a majority of the outstanding shares of PARKDALE Common Stock
at any regular shareholders meeting or at any special meeting called for the
purpose.
Dissenters' Appraisal Rights. Under both the OGCL and the TBC, a shareholder
-----------------------------
who dissents from certain transactions is entitled to receive payment of the
fair value of his or her shares. However, where, as in the case of the proposed
Merger, a Texas-chartered bank is to be merged into a national banking
association, the dissenters' appraisal rights of the shareholders of the
Texas-chartered bank are governed, not by the TBC, but instead by the National
Bank Act. The National Bank Act's provisions governing dissenters' appraisal
rights are described below. See "VOTING AND MANAGEMENT INFORMATION--Rights of
Dissenting Shareholders."
Under the OGCL, dissenting shareholders are entitled to appraisal rights in
connection with the lease, sale, exchange, transfer or other disposition of all
or substantially all of the assets of a corporation and in connection with
certain amendments to its articles of incorporation. In addition, shareholders
of an Ohio corporation being merged into a new corporation are entitled to
appraisal rights, and shareholders of an acquiring corporation are entitled to
appraisal rights in a merger, combination or majority share acquisition in which
such shareholders are entitled to voting rights.
Indemnification; Limitation of Liability. Under the TBC, directors and
-----------------------------------------
officers of a Texas-chartered bank such as PARKDALE are liable for financial
losses sustained by the bank to the extent that directors and officers of other
corporations are now responsible for such losses in equity and common law.
However, the TBC permits any director or officer who does not approve an act or
omission of the bank's board of directors to relieve himself from any personal
liability for such act or omission by promptly announcing his opposition thereto
and causing such opposition to be noted in the minutes of the appropriate board
meeting.
The TBC permits, but does not require, a Texas-chartered bank to indemnify any
person for reasonable expenses in connection with any action, suit, or
proceeding to which the person is a party by reason of his being, or having
been, a director, officer or employee of the bank, or having served as a
director, officer, partner, proprietor, trustee or in any similar capacity for
any corporation, partnership, joint venture, sole proprietorship, trust or other
enterprise at the request of the bank. However, under the TBC no person may be
indemnified who is finally adjudged to have been guilty of, or liable for,
willful misconduct, gross neglect of duty or a criminal act. Also, if there is
a compromise in any such action or proceeding, indemnification is allowed under
the TBC only with the affirmative vote of a majority of the outstanding shares
of the bank's capital stock.
PARKDALE's Bylaws authorize indemnification, by majority vote of the bank's
board of directors or, in case of a settlement or compromise, by majority vote
of the outstanding shares of PARKDALE Common Stock, to the extent permitted by
the TBC, except that PARKDALE's Bylaws do not authorize indemnification for
employees, as opposed to directors and officers, or for persons serving at the
bank's request as directors, trustees, partners, officers or the like of
enterprises other than the bank.
Under the OGCL, Ohio corporations are authorized to indemnify directors,
officers and agents within prescribed limits and must indemnify them under
certain circumstances. Ohio law does not provide statutory authorization for a
corporation to indemnify directors and officers for settlements, fines or
judgments in the context of derivative suits. However, it provides that
directors (but not officers) are entitled to mandatory advancement of expenses,
including attorneys' fees, incurred in defending any action, including
derivative actions, brought against the director, provided the director agrees
to cooperate with the corporation concerning the matter and to repay the amount
advanced if it is proved by clear and convincing evidence that his act or
failure to act was done with deliberate intent to cause injury to the
corporation or with reckless disregard for the corporation's best interests.
Ohio law does not authorize payment of expenses or judgments to an officer or
other agent after a
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finding of negligence or misconduct in a derivative suit absent a court order.
Indemnification is required, however, to the extent such person succeeds on the
merits. In all other cases, if a director or officer acted in good faith and in
a manner he reasonably believed to be in (or not opposed to) the best interests
of the corporation, indemnification is discretionary except as otherwise
provided by a corporation's articles, code of regulations or by contract except
with respect to the advancement of expenses of directors. The statutory right
to indemnity is not exclusive in Ohio. Ohio law provides express authority for
Ohio corporations to procure not only insurance policies, but also to furnish
protection similar to insurance, including trust funds, letters of credit and
self-insurance, or to provide similar protection such as indemnity against loss
of insurance.
BANC ONE's Code of Regulations authorizes BANC ONE to indemnify any director
or officer (or former director or officer) of the corporation, and any person
who is or has served at BANC ONE's request as a director, officer or trustee of
another enterprise, against any expenses, judgments, fines or amounts paid in
settlement actually and reasonably incurred by him by reason of the fact that he
is or was such a director, officer or trustee, to the full extent and according
to the procedures and requirements set forth in the OGCL. BANC ONE's Code of
Regulations also authorizes BANC ONE, for such purpose, to obtain insurance and
to enter into indemnity agreements, and also to indemnify employees, agents and
others.
Ohio law has codified the traditional business judgment rule. Ohio law
provides that the business judgment presumption of good faith may only be
overcome by clear and convincing evidence, rather than the preponderance of the
evidence standard applicable in most states. There is no counterpart to this
provision in the TBC.
MISCELLANEOUS INFORMATION
Transfer and Exchange Agents
Bank One, Indianapolis, N.A., Indianapolis, Indiana, serves as Transfer Agent
and as Registrar for BANC ONE Common Stock, and will act as Exchange Agent in
connection with the Merger. PARKDALE acts as its own Transfer Agent and
Registrar for PARKDALE Common Stock.
Interests of Named Experts and Counsel
The consolidated financial statements of BANC ONE incorporated by reference in
this Prospectus have been audited by Coopers & Lybrand, independent public
accountants, to the extent and for the years included in their reports, which
reports are included or are incorporated herein, and have been so included or
incorporated in reliance upon their reports given on the authority of that firm
as experts in accounting and auditing. The financial statements of PARKDALE as
of December 31, 1992 and 1991 included in this Prospectus and Proxy Statement
have been audited by McClelland Samuel & Fehnel, L.L.P., independent public
accountants, to the extent and for the years included in their reports, which
reports are included herein, and have been so included in reliance upon their
reports given on the authority of that firm as experts in accounting and
auditing.
Certain legal matters will be passed upon for PARKDALE by counsel for
PARKDALE, Orgain, Bell & Tucker, L.L.P., Beaumont, Texas. Partners of such law
firm own an aggregate of 980 shares of PARKDALE Common Stock and partner Hoke
Peacock is a Director of PARKDALE. An opinion on the validity of the BANC ONE
Common Stock offered hereby has been passed upon by Roman J. Gerber, General
Counsel and Executive Vice President of BANC ONE. Mr. Gerber owns shares of
BANC ONE Common Stock and holds options to purchase additional shares of such
stock.
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Sources of Information
The information concerning BANC ONE and PARKDALE has been supplied by the
management of the respective companies.
Registration Statement
This Prospectus and Proxy Statement does not include all of the information
set forth or incorporated by reference in the Registration Statement on Form S-4
and the exhibits thereto filed by BANC ONE with the Commission under the
Securities Act with respect to the Merger. The Registration Statement may be
inspected at the principal office of the Commission in Washington, D.C., or at
its regional offices, and copies may be obtained upon payment of prescribed
fees. See "AVAILABLE INFORMATION" for addresses of the Commission's offices.
Reference is hereby made to the Registration Statement and exhibits thereto for
further information pertaining to BANC ONE and PARKDALE.
B. INFORMATION ABOUT BANC ONE CORPORATION
General -- Business
BANC ONE is a multi-bank holding company with bank subsidiaries in Arizona,
California, Colorado, Ohio, Illinois, Indiana, Kentucky, Michigan, Wisconsin,
Utah, West Virginia and Texas. In addition, BANC ONE has entered into
definitive agreements to acquire banks located in Nebraska and Oklahoma. At
September 30, 1993, BANC ONE had consolidated total assets of approximately
$76.5 billion, consolidated total deposits of approximately $59.1 billion and
consolidated total Shareholders' equity of approximately $6.8 billion (or
approximately 8.8% of consolidated total assets). At September 30, 1993, BANC
ONE ranked eighth among the nation's publicly-owned bank holding companies in
terms of period-end assets and ranked sixth among the nation's publicly owned
bank holding companies in terms of period-end common equity. For the nine
months ended September 30, 1993, BANC ONE's return on average assets was 1.54%.
At September 30, 1993 BANC ONE owned a total of 78 commercial banks (the
"affiliate banks") and, at that date, held through its affiliate banks the
largest statewide share of total bank deposits in Arizona and Indiana, the
second largest share of such deposits in Ohio, and third largest share of such
deposits in Colorado, Wisconsin and Texas. BANC ONE has smaller statewide
market shares in the other states in which BANC ONE operates banks. At
September 30, 1993, except for Bank One, Texas, N.A., no single BANC ONE
affiliate bank accounted for more than 20% of BANC ONE's consolidated total
assets. BANC ONE also owns subsidiaries that offer financial services in the
areas of mortgage banking, credit card processing, consumer finance, equipment
leasing, fiduciary and trust services, credit life insurance, discount
brokerage, venture capital and investment and merchant banking.
Since its formation in 1968, BANC ONE has acquired over 100 banking
institutions and the number of banking offices of its affiliate banks has
increased from 24 to over 1,300. BANC ONE anticipates that it will continue to
expand by acquisition in the future. BANC ONE is frequently in discussions
regarding possible acquisitions. See "--Recent Developments" for information
with respect to pending and potential acquisitions.
BANC ONE is a legal entity separate and distinct from its affiliate banks and
its nonbanking subsidiaries. Accordingly, the right of BANC ONE, and thus the
right of BANC ONE's creditors and shareholders, to participate in any
distribution of the assets or earnings of any affiliate bank or other subsidiary
is necessarily subject to the prior claims of creditors of the affiliate bank or
subsidiary, except to the extent that claims of BANC ONE in its capacity as a
creditor may be recognized. The principal source of BANC ONE's revenues is
dividends and fees from its affiliates. See "--Certain Regulatory Matters" for
a discussion of regulatory restrictions on the ability of the affiliate banks to
pay dividends to BANC ONE.
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Recent Developments
In recent years, BANC ONE has pursued an active acquisition program. During
1993, BANC ONE already has completed the acquisition of Valley, Key and First
Community, along with several smaller acquisitions. On April 19, 1993 BANC ONE
entered into a definitive agreement to acquire all of the outstanding shares of
FirsTier Financial, Inc. of Omaha, Nebraska ("FirsTier"), in exchange for
approximately 14.4 million shares of BANC ONE Common Stock. FirsTier owns all
the outstanding capital stock of four banks located, respectively, in Omaha,
Lincoln, Scottsbluff and Norfolk, Nebraska, and all the outstanding stock of a
savings bank located in Omaha, Nebraska. As of June 30, 1993 FirsTier had
consolidated total assets of approximately $3.0 billion, consolidated total
deposits of approximately $2.4 billion, and consolidated total shareholders'
equity of approximately $283 million. For the year ended December 31, 1992
FirsTier had consolidated net income of approximately $41 million. The
transaction is subject to regulatory and shareholder approval and is presently
anticipated to be completed during the first quarter of 1994. The transaction
will be accounted for as a pooling-of-interests.
On May 20, 1993 BANC ONE entered into a definitive agreement to acquire all of
the outstanding shares of Central Banking Group, Inc. of Oklahoma City,
Oklahoma ("Central"), in exchange for approximately 2.4 million shares of BANC
ONE Common Stock. Central owns all the outstanding capital stock of two banks,
both located in the Oklahoma City area, and as of June 30, 1993 had consolidated
total assets of approximately $537 million, consolidated total deposits of
approximately $481 million, and consolidated total shareholders' equity of
approximately $54 million. For the year ended December 31, 1992 Central had
consolidated net income of approximately $7 million. The transaction is subject
to regulatory and shareholder approval and is presently anticipated to be
completed during the fourth quarter of 1993. The transaction will be accounted
for as a pooling-of-interests.
On November 3, 1993 BANC ONE entered into a definitive agreement to acquire
all of the outstanding shares of Liberty National Bancorp, Inc. of Louisville,
Kentucky ("Liberty"), in exchange for approximately 21,837,000 shares of BANC
ONE Common Stock. Liberty owns nine banks, eight located in Kentucky and one
located in Indiana, as well as several additional corporations that engage in
leasing, brokerage, consumer finance and insurance. As of September 30, 1993
Liberty had consolidated total assets of approximately $4.8 billion,
consolidated total deposits of approximately $3.9 billion, and consolidated
total shareholders' equity of approximately $388 million. For the year ended
December 31, 1992 Liberty had consolidated net income of approximately $46
million. The transaction is subject to regulatory and shareholder approval and
is presently anticipated to be completed during the second quarter of 1994. The
transaction will be accounted for as a pooling-of-interests.
BANC ONE also has announced three other acquisitions, which are not
financially material to BANC ONE either individually or in aggregate. At
September 30, 1993, none of the entities being acquired in these three
transactions had total assets exceeding $500 million, and the aggregate total
assets of all three entities did not exceed $1 billion.
BANC ONE continues to explore opportunities to acquire banks and nonbank
companies permitted by the Bank Holding Company Act of 1956. Discussions are
continually being carried on relating to the acquisition of bank-related
companies and other banks. It is not presently known whether, or on what terms,
such discussions will result in further acquisitions. BANC ONE's acquisition
strategy is flexible in that it does not require BANC ONE to effect specific
acquisitions so as to enter certain markets or to attain specified growth
levels. Rather than being market driven or size motivated, BANC ONE's
acquisition strategy reflects BANC ONE's willingness to consider potential
acquisitions wherever and whenever such opportunities arise based on the
then-existing market conditions and other circumstances. Banks to be acquired
must be of sufficient size to support and justify having management of a caliber
capable of making lending and other management decisions at the local level
under BANC ONE's operating philosophy. BANC ONE also is willing from time to
time to acquire a smaller bank when it can be acquired through a reorganization
into an existing affiliate. BANC ONE's interest in the acquisition of
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non-bank companies has been limited to bank-related services with which BANC
ONE already has familiarity. BANC ONE's acquisitions may be made by the
exchange of stock, through cash purchases, and with other consideration.
Other than as described above, BANC ONE does not currently have any definite
understandings or agreements for any acquisitions material to BANC ONE.
However, BANC ONE anticipates that it will continue to expand by acquisition in
the future.
Certain Regulatory Matters
General. BANC ONE is subject to the supervision of, and to regular inspection
--------
by, the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). BANC ONE's principal bank affiliates are organized as national
banking associations, which are subject to regulation by the OCC. In addition,
various state authorities regulate BANC ONE's state bank affiliates, and all of
BANC ONE's bank affiliates are subject to regulation in some degree by the
Federal Reserve and the Federal Deposit Insurance Corporation (the "FDIC"). In
addition to banking laws, regulations and regulatory agencies, BANC ONE and its
affiliates are subject to various other laws, regulations and regulatory
agencies, all of which directly or indirectly affect BANC ONE's operations,
management and ability to make distributions. The following discussion
summarizes certain aspects of those laws and regulations that affect BANC ONE.
Proposals to change the laws and regulations governing the banking industry
are frequently raised in Congress, in the state legislatures and before the
various bank regulatory agencies. The likelihood and timing of any changes and
the impact such changes might have on BANC ONE and its subsidiaries are
difficult to determine.
According to Federal Reserve policy, bank holding companies are expected to
act as a source of financial strength to each subsidiary bank and to commit
resources to support each such subsidiary. This support may be required at
times when a bank holding company may not be able to provide such support.
Furthermore, in the event of a loss suffered or anticipated by the FDIC --
either as a result of default of a banking or thrift subsidiary of BANC ONE or
related to FDIC assistance provided to a subsidiary in danger of default -- the
other banking subsidiaries of BANC ONE may be assessed for the FDIC's loss,
subject to certain exceptions.
BANC ONE's banks are affected by various state and federal laws and by the
fiscal and monetary policies of the federal government and its agencies,
including the Federal Reserve. An important purpose of these policies is to
curb inflation and control recessions through control of the supply of money and
credit. The Federal Reserve uses its powers to regulate reserve requirements of
its member banks, the discount rate on its member bank borrowings, interest
rates on time and savings deposits of its member banks, and to conduct open
market operations in United States government securities so as to exercise
control over the supply of money and credit. These policies have a direct
effect on the amount of bank loans and deposits and on the interest rates
charged on loans and paid on deposits, with the result that such policies have a
material effect on bank earnings. Future policies of the Federal Reserve and
other authorities cannot be predicted, nor can their effect on future bank
earnings be predicted. Similarly, future changes in state and federal laws and
wage, price and other economic restraints of the federal government cannot be
predicted nor can their effect on future bank earnings be predicted.
Capital Requirements. BANC ONE is subject to capital ratios, requirements and
---------------------
guidelines imposed by the Federal Reserve, which are substantially similar to
the ratios, requirements and guidelines imposed by the OCC and the FDIC on the
banks within their respective jurisdictions.
These capital requirements are designed to require more capital of banks and
bank holding companies that are subject to greater risks. For this purpose, a
bank's or holding company's assets and certain specified off-balance sheet
commitments are assigned to four risk categories, each weighted differently
based on the level of risk that such assets or commitments are thought to carry.
A bank's or holding company's capital, in turn, is divided into two tiers: core
("Tier 1") capital, which includes common equity, non-cumulative perpetual
preferred
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stock and related surplus (excluding auction rate issues), and minority
interests in equity accounts of consolidated subsidiaries, less goodwill and
certain other intangible assets; and supplementary ("Tier 2") capital, which
includes, among other items, cumulative and limited-life preferred stock,
mandatory convertible securities, subordinated debt and allowances for loan and
lease losses, subject to certain limitations, less certain required deductions.
BANC ONE, like most other bank holding companies, currently is required to
maintain total capital equal to at least 8% and Tier 1 capital equal to at least
4% of its total risk-weighted assets. At September 30, 1993 BANC ONE met both
requirements, with total capital equal to 14.22% and Tier 1 capital equal to
10.42% of its total risk-weighted assets.
The Federal Reserve also requires bank holding companies to maintain a minimum
"leverage ratio" (Tier 1 capital to adjusted total assets) of 3%, if the holding
company has the highest regulatory rating and meets certain other requirements,
or of 3% plus an additional cushion of at least 100 to 200 basis points if the
holding company does not meet these requirements. To date the Federal Reserve
has not notified BANC ONE of any minimum leverage ratio (other than the standard
3% ratio) that BANC ONE is required to meet. At September 30, 1993 BANC ONE met
this requirement with a leverage ratio of 8.61%..
The Federal Reserve may set capital requirements higher than the minimums
noted above for holding companies whose circumstances warrant it. For example,
holding companies experiencing or anticipating significant growth may be
expected to maintain capital ratios including tangible capital positions well
above the minimum levels. The Federal Reserve has not, however, imposed any
such special capital requirement on BANC ONE.
Dividend Restrictions. Various federal and state statutory provisions limit
----------------------
the amount of dividends BANC ONE's affiliate banks can pay to BANC ONE without
regulatory approval. The approval of the appropriate bank regulator is required
for any dividend by a national bank or state member bank if the total of all
dividends declared by the bank in any calendar year would exceed the total of
its net profits, as defined by regulatory agencies, for such year combined with
its retained net profits for the preceding two years. In addition, a national
bank or a state member bank may not pay a dividend in an amount greater than its
net profits then on hand. Under these provisions and various state law
restrictions, BANC ONE's affiliate banks could have declared, as of December 31,
1992, without obtaining prior regulatory approval, aggregate dividends of
approximately $814 million. In addition, federal bank regulatory authorities
have authority to prohibit the affiliate banks from engaging in an unsafe or
unsound practice in conducting their business. The payment of dividends,
depending upon the financial condition of the bank in question, could be deemed
to constitute such an unsafe or unsound practice. The ability of BANC ONE's
affiliate banks to pay dividends in the future is presently, and could be
further, influenced by bank regulatory policies and capital guidelines.
FDICIA. The Federal Deposit Insurance Corporation Improvement Act of 1991
-------
(the "FDICIA"), which became law on December 19, 1991, revises several banking
statutes, including the Federal Deposit Insurance Act, affecting bank
regulation, deposit insurance and provisions for funding of the Bank Insurance
Fund (the "BIF") administered by the FDIC. Under FDICIA the bank regulators'
authority to intervene is linked to the deterioration of a bank's capital level.
In addition, FDICIA places limits on real estate lending and brokered deposit
activities, expands audit and reporting requirements, and imposes limitations
and requirements on various banking functions. BANC ONE believes that the
deposit insurance and brokered deposit limitations under FDICIA will not have
any material impact on the liquidity or funding of BANC ONE or its affiliate
banks.
Deposit Insurance Assessments. The deposits of each of BANC ONE's banks are
------------------------------
insured up to regulatory limits by the FDIC. Accordingly, BANC ONE's banks are
subject to deposit insurance assessments to maintain the BIF of the FDIC.
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FDICIA requires the FDIC to establish a schedule to increase the reserve ratio
of the BIF to 1.25% of insured deposits over a 15 year period, and to increase
the assessment rate on banks, if necessary, to achieve that ratio.
As also required by FDICIA, the FDIC has adopted regulations establishing a
permanent risk-related deposit insurance assessment system. Under this system,
the FDIC places each insured bank in one of nine risk categories based (i) on
the bank's capitalization and (b) on supervisory risk factors based on the
FDIC's consideration of supervisory evaluations provided by the institution's
primary federal regulator. Each insured bank's insurance assessment rate is
then determined by the risk category in which it has been classified by the
FDIC. There is an eight basis point spread between the highest and lowest
assessment rates, so that banks classified as strongest by the FDIC are subject
to a rate of $0.23 per $100 of deposits and banks classified as weakest by the
FDIC are subject to a rate of $0.31 per $100 of deposits.
It is possible that BIF assessments will be further increased and it is
possible that there may be special additional assessments in the future.
Market Prices of and Dividends Paid on BANC ONE Common Stock
BANC ONE Common Stock is, and the shares offered hereby will be, listed on the
New York Stock Exchange. The following table sets forth, for the periods
indicated, the high and low reported closing sale prices per share of BANC ONE
Common Stock on the NYSE Composite Tape and cash dividends per share of BANC ONE
Common Stock. The dividend and stock price information for 1991 has not been
adjusted to reflect the 10% stock dividend on BANC ONE Common Stock effective
February 14, 1992, and none of the dividend and stock price information set
forth below has been adjusted to reflect the 10% stock dividend payable March 4,
1994 to BANC ONE Common Stockholders of record as of Feburary 16, 1994.
However, the dividend and stock price information for 1991, 1992 and the first
two quarters of 1993 has been adjusted to reflect the 5 for 4 BANC ONE Common
Stock split effective August 31, 1993.
<TABLE>
<CAPTION>
Price Range of Common Stock
---------------------------
High Low Dividends
---- --- ---------
<S> <C> <C> <C>
1991
- ----
First Quarter . . . . . $26.54 $18.10 $0.21
Second Quarter . . . . 29.46 25.09 0.21
Third Quarter . . . . . 35.27 28.00 0.21
Fourth Quarter . . . . 38.36 30.54 0.21
1992
- ----
First Quarter . . . . . $40.00 $33.82 0.23
Second Quarter . . . . 38.00 33.80 0.23
Third Quarter . . . . . 37.70 33.70 0.26
Fourth Quarter . . . . 42.80 35.00 0.26
1993
- ----
First Quarter . . . . . $46.50 $40.00 0.28
Second Quarter. . . . . 49.20 40.40 0.28
Third Quarter . . . . . 46.41 38.00 0.31
Fourth Quarter. . . . . 49.20 35.50 0.31
</TABLE>
31
<PAGE>
BANC ONE intends to continue its present policy of paying quarterly cash
dividends to its shareholders so that dividends as a percentage of income will
average between 35 and 45 percent of net income. The timing and amount of
future dividends will depend upon earnings, cash requirements, the financial
condition of BANC ONE and its subsidiaries, applicable government regulations
and other factors deemed relevant by the Board of Directors. Certain debt
instruments to which BANC ONE is a party limit its ability to pay dividends on
BANC ONE Common Stock. Under the most restrictive of these limitations, BANC
ONE would have been permitted to pay cash dividends on BANC ONE Common Stock in
excess of its $814 million of retained earnings as of December 31, 1992. As
described under "--Certain Regulatory Matters," various state and federal laws
limit the ability of affiliate banks to pay dividends to BANC ONE.
Incorporation of Certain Information About BANC ONE By Reference
BANC ONE's Annual Report on Form 10-K for the year ended December 31, 1992,
BANC ONE's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993,
June 30, 1993, and September 30, 1993, and BANC ONE's Current Reports on Form
8-K filed February 4, 1993 (two reports), February 16, 1993, August 20, 1993,
November 9, 1993, November 16, 1993, and November 24, 1993, in each case filed
with the Commission pursuant to Section 13 of the Exchange Act, and the
description of BANC ONE Common Stock which is contained in BANC ONE's
registration statement filed under Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such description, are
incorporated into this Prospectus and Proxy Statement by reference.
C. INFORMATION ABOUT PARKDALE BANK
General
PARKDALE is a bank organized under the laws of the State of Texas with its
main office located at 6025 Eastex Freeway, Beaumont, Texas, and with one branch
office located at 995 Washington Boulevard, Beaumont, Texas. As of September
30, 1993, PARKDALE had total assets of approximately $61.1 million, total
deposits of approximately $54.3 million, and total capital accounts of
approximately $6.6 million (or approximately 10.8% of total assets). As of this
same date PARKDALE held 2.25% of the total deposits of banks competing in the
Beaumont banking market and 2.10% of the total deposits of banks and thrifts
competing in the Beaumont banking market.
Description of Business
PARKDALE is an independent bank organized under the laws of Texas with its
main office at 6025 Eastex Freeway, Beaumont, Jefferson County, Texas, and one
branch office located at 995 Washington Boulevard, Beaumont, Jefferson County,
Texas. PARKDALE was chartered on September 4, 1973. PARKDALE serves the local
community generally defined as Beaumont, Texas, with secondary markets defined
as parts of Jefferson, Orange and Hardin Counties. PARKDALE offers a wide
variety of services to its commercial and consumer customers in its trade area.
Deposit services include traditional commercial and consumer checking
accounts, commercial and consumer NOW and Money Market checking accounts, club
checking accounts with packaged services and one monthly fee, special checking
accounts for senior citizens, commercial and consumer savings accounts,
commercial and consumer time deposits, and low cost "basic checking" accounts.
Deposit and withdrawal services are provided off-site through a PULSE ATM
network affiliation and after-hours depositories at each location. PARKDALE is
an authorized depository for public funds, both time and demand, and federal tax
deposits. PARKDALE also sells and redeems U.S. Savings Bonds and sells
cashier's checks, money orders and traveler's checks; provides merchant credit
card services for VISA and Mastercard and is an authorized depository for
American Express charge sales; provides safekeeping services and safe deposit
boxes; acts as agent for collection services for drafts, notes and related
items; and provides both domestic and international wire transfer services.
32
<PAGE>
Consumer lending services include personal loans -- both secured and unsecured
- -- VISA and Mastercard lines of credit, real estate and home loans, and student
loans. Commercial lending services include working capital loans, Small
Business Administration loans, letters of credit, revolving lines of credit,
real estate loans, accounts receivable financing, and other secured and
unsecured loans.
Loans outstanding at September 30, 1993, before deduction of unearned discount
and allowances for loan and lease losses, totalled approximately $19.2 million,
and included approximately $5.0 million of commercial, $9.7 million of real
estate mortgage, $4.1 million of consumer installment and $427,000 of credit
card loans. Approximately 11.42% of its loans (including loans to related
entities) and 17.39% of its deposits (including indirectly controlled deposits)
were to directors and principal shareholders, the loss of which could have a
material adverse effect.
Selected Quarterly Financial Data
The following tables contain selected unaudited financial data for PARKDALE
for the quarterly periods indicated. The summaries below should be read in
conjunction with the financial statements of PARKDALE and related notes thereto
and the management's discussion and analysis that are set forth below.
33
<PAGE>
PARKDALE BANK
SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
Quarters
1993 1992
$(thousands) Third Second First Fourth Third Second First Fourth
- ------------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Condensed income statement:
Interest income:
Taxable securities 347 427 415 427 446 472 518 545
Tax exempt securities 17 16 16 20 20 27 35 38
---------------------------------------------------------------------------
364 443 435 447 473 507 556 587
Securities income
Commercial loans 103 108 120 126 126 124 157 160
Real estate loans 231 234 327 264 279 291 248 225
Installment loans 82 83 89 92 90 83 85 86
Credit card loans 15 15 14 12 15 15 16 17
---------------------------------------------------------------------------
431 440 550 494 510 513 506 488
Loan income
Income from deposits with
other financial
institutions 10 14 14 19 22 33 49 53
Income from federal funds
sold 52 39 84 102 104 125 110 113
Total interest income 857 936 1,083 1,062 1,109 1,178 1,221 1,241
Demand deposits 120 131 157 164 188 203 235 273
Savings deposits 28 31 31 31 35 44 45 54
Time deposits:
CD's under $100,000 67 74 77 89 104 112 128 155
CD's $100,000 and over 40 53 65 66 78 93 103 127
---------------------------------------------------------------------------
Total interest expense 255 289 330 350 405 452 511 609
---------------------------------------------------------------------------
Net interest income 602 647 753 712 704 726 710 632
Provision for loan losses 8 7 8 7 8 7 8
---------------------------------------------------------------------------
Net funds function 594 647 753 705 696 719 702 625
Other income:
Service charges on deposit
accounts 225 234 240 211 209 213 194 183
Other service charges and
fees 12 12 15 13 14 12 14 10
Securities gains(losses) 1 21 5 (66)
Other non-interest income 17 18 15 13 18 16 15 14
---------------------------------------------------------------------------
Total other income 254 264 271 258 241 241 228 141
Other expense:
Salaries and benefits 283 294 289 346 269 272 258 297
Other non-interest expense 252 248 317 323 307 354 327 314
---------------------------------------------------------------------------
Total other expense 535 542 606 669 576 626 585 611
Income before income taxes 313 369 418 294 361 334 345 155
Income tax (provision) benefit (104) (120) (132) (93) (115) (89) (116) (46)
---------------------------------------------------------------------------
Income before extraordinary
items and other
adjustments 209 249 286 201 246 245 229 109
Extraordinary items and other 7
---------------------------------------------------------------------------
adjustments
Net income 209 249 286 208 246 245 229 109
===========================================================================
<CAPTION>
1991
$(thousands) Third Second First
- ------------ ------ ------ -----
<S> <C> <C> <C>
Condensed income statement:
Interest income:
Taxable securities 532 519 454
Tax exempt securities 42 39 38
------------------
571 557 492
Securities income
Commercial loans 186 198 203
Real estate loans 202 203 210
Installment loans 82 77 66
Credit card loans 15 15 16
------------------
485 493 495
Loan income
Income from deposits with
other financial
institutions 51 48 13
Income from federal funds
sold 106 90 176
Total interest income 1,213 1,188 1,176
Demand deposits 268 226 223
Savings deposits 50 48 50
Time deposits:
CD's under $100,000 169 181 194
CD's $100,000 and over 116 176 220
------------------
Total interest expense 603 631 687
------------------
Net interest income 610 557 489
Provision for loan losses 7 8
------------------
Net funds function 602 550 481
Other income:
Service charges on deposit
accounts 175 150 140
Other service charges and
fees 11 13 10
Securities gains(losses) (29) (10) 0
Other non-interest income 8 8 12
------------------
Total other income 165 161 162
Other expense:
Salaries and benefits 230 227 233
Other non-interest expense 219 244 235
------------------
Total other expense 449 471 468
Income before income taxes 318 240 175
Income tax (provision) benefit (95) (69) (48)
------------------
Income before extraordinary
items and other
adjustments 223 171 127
Extraordinary items and other
------------------
adjustments
Net income 223 171 127
==================
</TABLE>
34
<PAGE>
Management's Discussion and Analysis of Results of Operations
and Financial Condition of PARKDALE
Introduction
Included in this review are the following sections:
I. Overview of Operations
II. Net Interest Income
III. Other Income, Other Expense and Income Taxes
IV. Asset Quality
V. Liquidity and Interest Rate Sensitivity
VI. Capital
This discussion should be read together with the financial statements, notes
and tables included elsewhere in this Prospectus and Proxy Statement.
Definitions of terms used in this discussion include:
Average Balances: All average balances are calculated based on daily
-----------------
averages. Interim period annualizations are based on actual days in the
relevant period.
Fully Taxable Equivalent Basis (FTE): Income on earning assets that is
-------------------------------------
subject to either a reduced rate or zero rate of income tax, adjusted to give
effect to the incremental federal income tax rate of 34% and adjusted for
nondeductible carrying costs. Where appropriate, yield calculations include
these adjustments.
Net Interest Income: Interest and related fee income on earning assets (FTE
--------------------
basis where appropriate) reduced by total interest expense on interest-bearing
liabilities.
Net Interest Margin: Net interest income on a FTE basis expressed as a
--------------------
percent of average earning assets.
Total Shareholder Return: The increase in book value of a share of PARKDALE
-------------------------
stock from one year end to the next, plus dividends per share paid during the
year.
Liquidity Ratio: The total of (a) the book value of marketable securities,
----------------
(b) fed funds sold, (c) deposits in other banks, and (d) cash; less (i) required
reserves, and (ii) secured liabilities; divided by total unsecured deposits.
I. Overview of Operations
-------------------------
Net income for 1992 was $927,874, or $4.21 per share, increasing from
$629,914, or $2.95 per share during 1991 and $567,124, or $2.67 per share in
1990. Factors which contributed to the 1992 earnings increase included a strong
net interest margin of 4.29% compared to 4.21% in 1991, increased earning
assets, improved credit quality, and a 28% increase in non-interest income
(excluding net investment securities gains and losses). Details of changes in
earnings per common share for 1991 and 1992 are presented in Table 1.
35
<PAGE>
Table 1 Analysis of Net Income Per Common Share
<TABLE>
<CAPTION>
1991-92 1990-91
------- -------
<S> <C> <C>
Net income per common share,
prior year $2.95 $2.67
Increase (decrease) from
changes in:
Earning asset volume 3.02 3.91
Net interest margin, other (0.42) (2.74)
Provision for loan and lease
losses 0.42
Other income 0.98 0.47
Securities transactions 0.61 (0.30)
Other expense (2.14) (1.26)
Provision for federal income
taxes (0.73) (0.18)
Extraordinary item-utilization
of capital loss carry
forward 0.03
------------------
$4.30 $2.99
Change in average common shares (0.09) (0.04)
Net income per common share 4.21 $2.95
==================
</TABLE>
Key performance measures increased during the year. Return on average assets
increased to 1.34% from 1.02% in 1991 which was down from 1.11% in 1990. Return
on average equity also increased to 16.85% in 1992 from 13.54% in 1991 which was
also down from 13.95% in 1990. The ending ratio of tangible capital to net
assets increased to 8.19% in 1992 from 7.34% in 1991 and 7.22% in 1990. These
results were due to strong earnings and limited dividend payments during these
years.
II. Net Interest Income
-----------------------
Interest-earning assets at year-end increased to $67.5 million in 1992 from
$65.6 million in 1991 and $51.5 million in 1990. Investment securities
increased to $32.5 million from $30.6 million in 1991 and $23.7 million in 1990.
Loans increased to $21.2 million from $18.6 million in 1991 and $17.4 million in
1990. The loan growth was due, in part, to the addition of a commercial loan
officer to PARKDALE's staff in early 1991.
Table 2 Analysis of Changes in Net Interest Income
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1992 Over 1991 1991 Over 1990
-------------- --------------
Volume Rate Total Volume Rate Total
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
interest income:
Short term investments 160,321 (247,543) (87,222) 4,391 (315,980) (311,589)
Securities 248,221 (482,705) (234,484) 748,389 (154,928) 593,461
Loans 234,786 (171,772) 63,014 78,771 (107,489) (28,718)
-------------------------------------------------------------------------
Total 643,328 (902,020) (258,692) 831,551 (578,397) 253,154
-------------------------------------------------------------------------
Increase (decrease) in
interest expense:
Deposits 133,084 (945,555) (812,471) 383,317 (378,603) 4,714
-------------------------------------------------------------------------
Total 133,084 (945,555) (812,471) 383,317 (378,603) 4,714
-------------------------------------------------------------------------
Increase (decrease) in net
interest income 510,244 43,535 553,779 448,234 (199,794) 248,440
=========================================================================
</TABLE>
Lower interest rates in 1992, compared to 1991, resulted in a reduction in
interest earned on assets of $258,692 after an increase of $253,154 in 1991.
Despite lower rates, loan interest income increased by $63,014 due to a $2.6
million growth in loans outstanding. The decline in total interest income for
1992 was more than offset by an even larger decline in PARKDALE's interest
expense which fell $812,471 compared to a modest increase of $4,714 in 1991.
The resulting effect in 1992 was an increase in net interest income of $553,779
over 1991,
36
<PAGE>
although earning assets grew only $1.9 million. This compares to an increase
of only $248,440 in 1991 over 1990, although earning assets grew by $14.1
million during that period.
Table 3 Rate Yield Analysis
<TABLE>
<CAPTION>
1992 1991 1990
- --------------------------------------------------
<S> <C> <C> <C>
Earning Assets Yield 7.03% 8.68% 9.97%
Deposit Cost 2.74% 4.47% 5.42%
</TABLE>
PARKDALE has historically enjoyed a high non-interest bearing to total deposit
ratio. This coupled with the aggressive management of PARKDALE's interest rate
sensitivity during 1991 and 1992 resulted in a net interest margin that
benefited from the falling rate environment. PARKDALE was positioned at the end
of 1991 to take full advantage of falling interest rates. From 1990 to 1992 the
Earning Asset Yield dropped from 9.89% to 6.96%, a decrease of 293 basis points
or 29.6%. However, during this same period Deposit Cost dropped from 5.42% to
2.74%, a decrease of 268 basis points or 49.4%.
Securities and Short-term Investments. PARKDALE's securities portfolio grew
--------------------------------------
from $23.7 million at year-end 1990 to $32.5 million at year-end 1992, a two
year increase of $8.8 million or 37.1%. This was due in part to weak loan
demand and the investment of excess funds generated as a result of deposit
growth. This increase represented 54.0% of the total earning asset growth
during the period. Most of this growth occurred in U.S. Government and
Government Agency obligations. These classes of securities represented 60.3% of
the portfolio at year-end 1991 and 79.7% at year-end 1992. The securities
portfolio accounted for $2.0 million of PARKDALE's $4.6 million in interest
income in 1992, or 43.4%. This compares to $1.6 million or 35.4% in 1990 and
$2.2 million or 45.8% in 1991. Short-term investments totaled $13.9 million at
year-end 1992 compared to $16.4 million in 1991 and $10.4 million in 1990.
Short-term investments accounted for 12.3% of total interest income in 1992
compared to 13.5% in 1991 and 21.1% in 1990. Short-term investments represented
20.6% of earning assets at year-end 1992 compared to 25.2% in 1991 and 20.4% in
1990.
Loan Portfolio. Interest income on loans increased by $63,014 in 1992 after a
---------------
decrease of $28,718 in 1991. A growth of $2.2 million in net outstanding loans
helped maintain loan interest income despite falling rates in 1992.
Table 4 Loan Concentrations
<TABLE>
<CAPTION>
1992 1991
--------------------------------------------------
Balance at Percent of Balance at Percent of
$(thousands) Year End Loans Year End Loans
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial 6,199 29.27% 5,764 30.92
Real estate 10,685 50.45% 9,341 50.11%
Installment loans, net of 3,797 17.93% 3,034 16.28%
unearned discount
Credit card loans 497 2.35% 503 2.70%
</TABLE>
Loan concentrations remained virtually unchanged from year-end 1991 to 1992.
PARKDALE's real estate loans grew by $1.3 million, commercial loans by $435
thousand, and installment loans by $763 thousand. Credit card loans decreased
by $6 thousand. PARKDALE's loan to deposit ratio was 31.8% at year end 1990,
fell to 29.7% in 1991 and was back up to 32.3% in 1992.
37
<PAGE>
Table 5 Maturity Schedule of Loans at December 31, 1992
<TABLE>
<CAPTION>
$(thousands) Fixed Variable
- --------------------------------------------------
<S> <C> <C>
1993 3,594 10,150
1994 through 1997 6,128
After 1997 1,723
-------------------
11,445 10,150
===================
</TABLE>
Table 5 represents the maturities of certain loans at December 31, 1992.
Excluded are credit card loans and overdrafts. Variable rate loans are slotted
at the earlier of repricing or maturity date.
Deposits. PARKDALE has historically enjoyed a non-interest bearing to total
---------
deposit ratio that was higher than its peer group. At year end 1992,
non-interest bearing deposits were 25.0 % of total deposits, 24.8% in 1991 and
26.9% in 1990. Certificates of Deposits declined as a percent of total deposits
from 37.7% at year-end 1990, to 31.4% at year-end 1991, and to a low of 24.8% at
year-end 1992. As interest rates declined in 1992, depositors moved funds into
more liquid deposit products. As a result, Money Market and NOW accounts were
32.1% of total deposits at year-end 1990, but grew to 39.3% at year-end 1991 and
44.2% at year-end 1992. Savings accounts grew from 3.3% of total deposits at
year end 1990 to 4.6% at year-end 1991 and 5.9% at year-end 1992. This shift in
funds between deposit products helped produce an overall lower cost of funds
which increased PARKDALE's net interest margin and net interest income.
III. Other Income, Other Expense and Income Taxes
--------------------------------------------
Non-interest income (excluding securities gains and losses) has increased over
the last three years from $633,569 in 1990 to $733,361 in 1991 and $941,970 in
1992. This represents an increase of 16.3% in 1991 and a 28.4% increase in
1992. PARKDALE has a high volume of commercial checking account business. By
regularly reviewing service charges for commercial accounts and the local market
for these charges, PARKDALE has been able to maximize service charge revenue
from these accounts. Other service charges and fees account for only a small
portion of the annual increases. As a percentage of average assets,
non-interest income was 1.13% in 1990, 1.16% in 1991, and 1.39% in 1992.
Table 6 Analysis of Changes in Other Income and Other Expenses
<TABLE>
<CAPTION>
$Change $Change
1992-1991 1991-1990
--------- ---------
<S> <C> <C>
Other income:
Service charges on deposit accounts $178,975 $104,291
Other service charges and fees 9,384 5,090
Other 20,250 (9,589)
------------------------
Total other income 208,609 99,792
------------------------
Other expenses:
Salaries and employee benefits 157,747 128,041
Net occupancy expense, exclusive
of depreciation 13,622 16,029
Depreciation and amortization 16,187 15,071
Outside services and processing 177,348 42,651
Marketing and development 29,397 (16,216)
Communication and transportation 8,964 6,804
Other 53,406 74,868
------------------------
Total other expense 456,671 267,248
------------------------
Net non-interest expense $248,062 $167,456
========================
</TABLE>
38
<PAGE>
As a percentage of average assets, non-interest expense was 3.18% in 1990,
3.25% in 1991, and 3.54% in 1992. Salary expense increased $128,041 in 1991 and
$157,747 in 1992. This category accounted for 47.9% of the total increase in
1991, but only 34.5% in 1992. The increase was a result in staff additions to
maintain service quality as PARKDALE's deposits grew.
The year 1992 showed a $177,348 increase in outside services and processing.
This amount includes an extraordinary increase in "due from bank service
charges" resulting from an arrangement with a correspondent bank that served as
PARKDALE's cash letter end-point. Because of the deteriorating condition of the
correspondent bank, PARKDALE endeavored to maintained a zero or negative ledger
balance in its checking account with the correspondent bank. This was to
protect PARKDALE in the event of the failure of the correspondent bank and
allowed PARKDALE to continue its check clearing arrangement. PARKDALE was
charged for any overdraft and the use of "uncollected funds" at a rate
substantially equal to the fed fund rate. However, because of this arrangement
PARKDALE was able to sell additional fed funds daily, the interest income from
which offset the charge from the correspondent bank. This arrangement did,
however, inflate non-interest expense for the year.
Pre-tax income for 1990 was $787,539. After taxes of $220,415, or 28.0%, net
income was $567,124. In 1991, pre-tax income before securities transactions was
$992,413. Securities losses of $104,713 reduced this amount to $887,700. Taxes
for 1991 were $257,786, or 29.0%, which resulted in after tax income of
$629,914, 11.1% more than 1990. The 1991 securities loss was the result of a
loss provision on a block of municipal securities and the partial sale of a
mutual fund owned by PARKDALE. 1992 pre-tax income before securities
transactions was $1,308,246 or $315,833 ahead of 1991. Securities gains of
$25,500, also from the sale of mutual funds, resulted in total pre-tax income of
$1,333,746, $446,046 ahead of 1991. Taxes of $412,842 or 31%, resulted in after
tax income of $920,904. Utilization in 1992 of a capital loss carry-forward
generated by the 1991 sale of mutual funds resulted in extraordinary income of
$6,970 and increased net income for 1992 to $927,874, 47% greater than 1991.
The increase in the effective tax rate for PARKDALE during these years was the
result of a decrease in non-taxable investment income due to the maturity of
tax-exempt municipal bonds in the investment portfolio.
IV. Asset Quality
At year-end 1990, loans past due over 90 days totaled only $2 thousand with
non-accrual loans of $128 thousand. Combined, these totaled less than 1% of
outstanding loans. Charge-offs for 1990 were $93 thousand with recoveries of
$27 thousand and an ending loan loss reserve of $542 thousand, 3.11% of
outstanding loans. By year-end 1991, past dues had grown to $451 thousand and
non-accrual totaled $95 thousand. Combined, these loans had risen to almost 3%
of outstanding loans. Charge-offs for the year were $64 thousand with
recoveries of $7 thousand. With a provision of $30 thousand for the year, the
year-end balance of the loan loss reserve was $516 thousand or 2.77% of loans.
Loan quality improved in 1992 with year-end past-dues of only $28 thousand and
non-accruals of $33 thousand. Combined, these totaled only .28% of outstanding
loans. Recoveries of $39 thousand exceeded charge-offs of $32 thousand. With a
1992 provision of $30 thousand, the year-end loan loss reserve balance of $552
thousand was 2.61% of outstanding loans. PARKDALE's Board of Directors
certified that the balance of the Loan Loss Reserve was adequate considering the
relative risk in the loan portfolio as of year-end. However, reserve
calculation methodologies are subject to change, from time to time, at the
discretion of the Board. Such a change could result in an increase or decrease
in the level of reserves considered to be adequate in relation to the risk of
loss in the loan portfolio.
At year-end 1990, PARKDALE had $1,398 thousand in internally identified
classified loans, of which $1,120 thousand were classified substandard and $13
thousand were classified doubtful. By year-end 1991, classified loans totaled
$1,493 thousand, of which $873 thousand were identified as substandard with no
loans classified as doubtful. By year-end 1992, classified loans were down to
$1,233 thousand with $924 thousand in substandard and $33 thousand as doubtful.
PARKDALE has one sub-standard investment security, a block of Southeast Texas
Housing Finance Corporation Bonds with an original cost of $98 thousand.
PARKDALE established a specific reserve of $77
39
<PAGE>
thousand in 1990. The bond is currently carried at a net book value of $21
thousand. As of year-end 1992, this bond was on non-accrual and had a market
value of $49 thousand. No other securities in PARKDALE's investment portfolio
are classified and at year-end the portfolio had an appreciated value in excess
of book of $290 thousand.
V. Liquidity and Interest Rate Sensitivity
---------------------------------------
PARKDALE's Investment, Liquidity and Funds Management Policy state that
PARKDALE will endeavor to maintain a liquidity ratio in excess of 20%. PARKDALE
has historically maintained a high liquidity ratio. This is due in part to the
commercial nature of our deposit base. PARKDALE also has deposit relationships
with individuals who control large blocks of PARKDALE's deposits. Liquidity
management at PARKDALE has always required a ready source of funds sufficient to
liquidate these relationships on demand if called upon to do so. PARKDALE has
generally maintained a net fed funds sold position equal to the total balances
of these relationships. PARKDALE's liquidity ratio was 70.1% at year-end 1990,
73.7% at year-end 1991, and 75.1% at year-end 1992.
Table 7 Asset and Liability Repricing Schedule
<TABLE>
<CAPTION>
Within Four Seven One to Over
Three to Six to Twelve Five Five
$(thousands) Months Months Months Years Years Total
- ------------ ------ ------ --------- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Federal funds sold $ 12,300 $ 12,300
Deposits with other financial
institutions 288 $ 1,260 $ 100 1,648
Securities:
Variable rate 10,013 $ 500 5,027 $ 419 15,959
Fixed 2,866 1,012 6,989 5,522 128 16,517
Total securities 12,879 1,512 12,016 5,522 547 32,476
Loans:
Variable rate 10,613 10,613
Fixed 1,203 683 1,231 6,322 1,073 10,512
Total loans 11,816 683 1,231 6,322 1,073 21,125
----------------------------------------------------------------------------
Total earning assets 37,283 2,195 14,507 11,944 1,620 67,549
----------------------------------------------------------------------------
Interest bearing liabilities:
Demand-interest bearing 9,265 9,265
Regular and money market savings 19,907 3,889 23,796
CD's 8,263 4,771 3,075 61 16,170
Total interest bearing
liabilities 37,435 8,660 3,075 49,231
----------------------------------------------------------------------------
Gap (152) (6,465) 11,432 11,883 1,620 18,318
============================================================================
Cumulative gap (152) (6,617) 4,815 16,698 18,318
============================================================================
Cumulative gap as a percent
of earning assets (.23)% ( 9.80)% 7.13% 24.72% 27.12%
============================================================================
</TABLE>
40
<PAGE>
PARKDALE's Investment, Liquidity and Funds Management Policy states that it
shall be PARKDALE's goal to not allow the cumulative Gap at any maturity to
exceed ten percent of all interest sensitive assets until substantially all
interest sensitive liabilities have been matched. At year-end 1992, PARKDALE
was almost evenly matched in the three month time frame. Rate sensitive assets
being only $152 thousand less than rate sensitive liabilities. This negative
"Gap" was .23% rate sensitive assets. However, at six months, the cumulative
gap was a negative $6.6 million, or 9.80% of rate sensitive assets. With
interest rates falling at year-end 1992, Bank management felt the negative gap
would enhance PARKDALE's net interest margin in the upcoming months. The twelve
month cumulative gap was positive at $4.8 million or 7.13% of interest sensitive
assets. Rate sensitive liabilities, except $61 thousand maturing after one
year, were covered, as required by the policy, within the twelve month period.
VI. Capital
PARKDALE strives to maintain a strong equity position. At year-end 1992,
PARKDALE's equity capital ratio was 8.19% of total assets, up .85% from year-end
1991. This was due to strong earnings in 1992 of $928 thousand and modest
dividend payments of $70 thousand. PARKDALE's Total Capital to Total Risked
Weighted Assets was 19.3% at year-end 1992, two and a half times greater than
regulatory requirements.
Market Prices of and Dividends Paid on PARKDALE Common Stock
As of June 30, 1993, there were approximately 87 holders of record of PARKDALE
Common Stock.
There is no established public trading market for PARKDALE Common Stock.
PARKDALE Common Stock is not traded on a registered national stock exchange and
there are no published bid and asked quotations on PARKDALE Common Stock. The
most recent price at which shares changed hands between a willing buyer and a
willing seller was approximately $16 per share involving a total of 100 shares
in a transaction that took place on March 19, 1991.
Quarterly dividends paid with respect to PARKDALE Common Stock from the first
quarter of 1990 through the third quarter of 1993 are shown below:
<TABLE>
<CAPTION>
Quarter 1990 1991 1992 1993
------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
First $0.05 $0.05 $0.05 $0.08
Second 0.05 0.05 0.05 0.08
Third 0.05 0.05 0.05 --
Fourth 0.09 0.09 0.17 --
TOTAL $0.24 $0.24 $0.32 $0.16
</TABLE>
The Merger Agreement provides that, beginning with the first calendar quarter
of 1993 and for each succeeding calendar quarter before the quarter in which the
Merger occurs, PARKDALE may not declare or pay any dividends or make any
distributions on shares of PARKDALE Common Stock, except that PARKDALE may, if
it so elects, pay quarterly cash dividends in the second, third and fourth
quarters of 1993 in an aggregate amount not to exceed $17,334 per quarter for
all outstanding shares of PARKDALE Common Stock and, for the first quarter of
1994, in an aggregate amount not to exceed $17,500 for all outstanding shares of
PARKDALE Common Stock. The Merger Agreement further provides, however, that
PARKDALE may not declare or pay any dividend or make any distributions on shares
of PARKDALE Common Stock in the quarter in which the Merger occurs and in which
PARKDALE shareholders are entitled to receive regular quarterly dividends on the
shares of BANC ONE Common Stock into which the shares of PARKDALE Common Stock
have been converted.
41
<PAGE>
D. VOTING AND MANAGEMENT INFORMATION
BANC ONE will pay the costs of preparing and printing this Prospectus and
Proxy Statement and PARKDALE will bear the cost of soliciting proxies for the
Special Meeting. Solicitation of proxies will be made in person, by mail, or by
telephone, telegraph or other electronic medium by present and former directors,
officers and employees of PARKDALE for which no additional compensation will be
paid. PARKDALE will bear the cost of solicitation of proxies from its
Shareholders. Copies of the form of proxy and Notice and this Prospectus will
be mailed to Shareholders on or about , 1993.
-------------------
VOTING
The proxy accompanying this Prospectus is solicited by the Board of Directors
of PARKDALE and, if properly executed and returned, will be voted in accordance
with the instructions given therein. IF NO INSTRUCTIONS ARE GIVEN, THE PROXY
WILL BE VOTED IN FAVOR OF THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. In
addition, a proxy will confer authority on PARKDALE's management to adjourn the
Special Meeting to another date (not more than 30 days after the originally
scheduled meeting date) and/or place for any purpose including, without
limitation, for the purpose of soliciting additional proxies. Any proxy may be
revoked at any time before it is voted by furnishing PARKDALE with either
written notice of revocation or a subsequently dated proxy or appearing at the
Special Meeting and electing to vote in person.
The PARKDALE Board has fixed the close of business on ,
----------------------
1993, as the record date for the determination of Shareholders entitled to
notice of and to vote at the Special Meeting. As of the record date,
-----------
shares of PARKDALE Common Stock were outstanding, each of which entitled its
holder to one vote at the Special Meeting. The affirmative vote of two thirds
of the outstanding shares of PARKDALE Common Stock entitled to vote thereon is
required for approval of the Merger Agreement.
The Directors of PARKDALE have approved the Merger Agreement, with one
Director dissenting, and each director has indicated an intention to vote all of
his shares in favor of the Merger Agreement.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors and management
of PARKDALE are not aware of any matter which will come before the Special
Meeting other than the Plan of Merger. Should any other matter requiring a vote
of the shareholders arise, the proxy in the enclosed form confers upon the
person or persons entitled to vote the shares represented by such proxy
discretionary authority to vote the same with regard to any other matter in
accordance with their best judgment in the interest of PARKDALE.
RIGHTS OF DISSENTING SHAREHOLDERS
The following summary does not purport to be a complete statement of the
procedures to be followed by PARKDALE shareholders desiring to exercise
dissenters' rights and is qualified in its entirety by reference to the
provisions of Section 215A of the National Bank Act, 12 U.S.C. (S)215a, the
full text of which is attached hereto as Exhibit A. Because the preservation
and exercise of dissenters' rights requires strict adherence to these
provisions, PARKDALE shareholders who might desire to exercise such rights
should review these provisions carefully, timely consult their own legal
advisors and strictly adhere to the provisions' requirements.
Under the provisions of Section 215a of the National Bank Act, each PARKDALE
shareholder who objects to the Merger has the right to demand that he be paid in
cash the value of his shares (as of the time the Merger becomes effective), if
and when the Merger is consummated, subject to the following conditions:
42
<PAGE>
(1) A shareholder will have the right to such payment only if he either
votes against the Plan of Merger at the Special Meeting or gives written
notice to PARKDALE at or before the Special Meeting that he dissents
from the Plan of Merger, which notice may be addressed to _____________;
(2) Any shareholder seeking to exercise dissenters' rights must, within
30 days after the effective date of the Merger, make a written request
for payment to BANK ONE TEXAS, the surviving entity in the Merger, which
request may be addressed to _________________________ (PARKDALE's
shareholders will be notified of the effective date of the Merger); and
(3) The written request for payment must be accompanied by surrender of
the certificate(s) representing the PARKDALE shares in question.
Thus a PARKDALE shareholder who does not either (a) vote against the Plan of
Merger at the Special Meeting or (b) give PARKDALE written notice at or before
the Special Meeting that he dissents from the Merger, or who does not within 30
days after the effective date of the Merger send BANK ONE TEXAS a written
request for payment accompanied by the certificate(s) for the PARKDALE shares in
question, will be deemed to have waived his right to demand payment in cash for
his PARKDALE shares.
The value of dissenting shares will be determined by three appraisers, one to
be selected by majority vote of the owners of the shares involved, one to be
selected by the Board of Directors of BANK ONE TEXAS, and the third to be chosen
by the other two. The evaluation agreed upon by any two appraisers will govern.
If the appraisal is not completed within 90 days after the Merger becomes
effective, the OCC will, upon request, cause an appraisal to be made. If the
value fixed by the appraisers is not satisfactory to any dissenting shareholder
who has requested payment, the shareholder may, within five days after being
notified of such value, appeal to the OCC which will cause a reappraisal to be
made. Such reappraisal will be final and binding as to the value of the shares
of the person so appealing. The OCC's expenses in making any such appraisal or
reappraisal, as the case may be, will be borne by BANK ONE TEXAS. Failure to
comply with any of the foregoing conditions will result in the loss of the
rights described above.
The shares of BANC ONE Common Stock which would have been delivered to any
dissenting shareholders had they not requested payment will be sold at an
advertised public auction and, if such shares are sold at a price greater than
the amount paid to such dissenting shareholders, based on the appraisal, the
excess in such sale price will be paid to such dissenting shareholders. The OCC
has issued a Bulletin describing its appraisal methods, a copy of which is
attached hereto as Exhibit B.
The full text of Section 215a of the National Bank Act is set forth as Exhibit
A to this Prospectus and Proxy Statement. Since the foregoing description is
not a complete summary of its provisions, any shareholder who may be considering
exercising his rights as a dissenter is urged to refer to such text. The
provisions of Section 215a of the National Bank Act require strict compliance,
and any PARKDALE shareholder who wishes to object to the Merger and demand
payment for his shares should consider consulting his own advisor.
If a shareholder fails to perfect his dissenter's rights by failing strictly
to comply with the applicable statutory requirements, he will be bound by the
terms of the Merger Agreement. An executed proxy on which no voting direction
is made will be voted FOR approval of the Merger, so a dissenting shareholder
who wishes to have his shares represented by a proxy at the Special Meeting but
preserve his dissenters' rights must mark his proxy card either to vote against
the Merger or to abstain from voting thereon, in addition to complying with the
other requirements as described herein.
MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF BANC ONE
Information concerning the directors and executive officers of BANC ONE,
compensation of directors and executive officers of BANC ONE and any related
transactions in which they have an interest, together with
43
<PAGE>
information related to principal shareholders of BANC ONE, is set forth in
BANC ONE's Proxy Statement, dated March 11, 1993, incorporated herein by
reference to BANC ONE's Annual Report on Form 10-K for the year ended December
31, 1992. See "Incorporation by Reference."
MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF PARKDALE
The names and ages of the directors and executive officers of PARKDALE, their
current positions and offices, if any, held with PARKDALE, their past business
experience and certain other information, together with their ownership of
PARKDALE Common Stock as of September 30, 1993, are as follows:
<TABLE>
<CAPTION>
Shares of
Name, Age, Positions PARKDALE
and Offices with PARKDALE Common Stock Principal Occupations for
and Year Became Director Beneficially Owned Past Five Years and Other Information
- ------------------------- ------------------ -------------------------------------
<S> <C> <C>
Ronnie Anderson--46 900 President, Anderson Co. (real estate)
Director--1980
Charles B. Childress--46 800 President, Market Place of Texas (convenience store
Director--1991 operator, petroleum distribution)
Thomas W. Harrison--40 1,000 Executive Vice President, ALLCO, Inc.
Director--1989 (commercial construction)
George O. Hudspeth--61 1,067 Sales Representative, New York Life Insurance Co.
Director--1977
Victor J. Patrizi--76 1,200 Patrizi Investments (restaurants)
Director--1977
J. Hoke Peacock II--52 667 Senior Partner, Orgain, Bell & Tucker, L.L.P. (law firm)
Director--1974
Ben J. Rogers--80 20,771 Partner, Rogers Brothers Investments (real estate,
Director--1974 banking investments)
Chairman of the Board
J.W. Rogers--41 9,240 Self-employed, investments, attorney
Director--1991
Victor J. Rogers--72 17,825 Partner, Rogers Brothers Investments (real estate, banking
Director--1974 investments)
Bentley P. Stansbury--76 3,900 Self-employed, real estate, insurance, investments
Director--1976
Secretary to the Board
Tommy G. Warren--52 1,567 President, T. Warren, Inc. (commercial construction)
Director--1982
</TABLE>
44
<PAGE>
<TABLE>
<S> <C>
Travis C. Riley--43 50
Senior Vice President and Cashier
Ben D. Orgain, Jr.--37 400
President and Chief
Executive Officer
</TABLE>
Compensation of Directors and Executive Officers
The following table sets forth the individual compensation paid to PARKDALE's
Chief Executive Officer and to PARKDALE's only other executive officer for
services rendered in all capacities during the fiscal years ended December 31,
1992, 1991 and 1990.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------ ---------------------------------
Awards
-----------------------------------------------------
Long Term All
Other Restricted Stock Incentive Other
Annual Stock Options Pay- Comp
Name and Principal Position Year Salary($) Bonus($) Comp($) Awards($) (#) outs ($) ($)
---- --------- -------- ------- ---------- ------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calvin H. Spindor Pres. & CEO 1992 $110,000 $47,000 $3,000 5,000 -0- -0- -0-
Pres. & CEO 1991 104,000 44,600 3,000 9,000 -0- -0- -0-
Pres. & CEO 1990 97,600 42,400 2,850 -0- -0- -0- -0-
Travis C. Riley Sr.V.P. & Cashier 1992 55,000 5,000 -0- -0- -0- -0- -0-
Sr.V.P. & Cashier 1991 52,500 5,000 -0- -0- -0- -0- -0-
Sr.V.P. & Cashier 1990 48,000 3,000 -0- -0- -0- -0- -0-
</TABLE>
Options/Stock Appreciation Rights
PARKDALE has no formal stock option or stock appreciation right plan.
However, on March 10, 1992, PARKDALE and its then-President Calvin H. Spindor
entered into an agreement which granted Mr. Spindor the option to acquire and
purchase 5,000 shares of PARKDALE Common. The option was vested immediately and
irrevocable until the earlier of (a) thirty days following the termination, for
any reason, of Mr. Spindor's employment with PARKDALE, or (b) December 31,
1996. The option is exercisable at the sole discretion of Mr. Spindor any time
before termination. The exercise price payable for the shares is $21.43 per
share, an amount equal to the book value per share of PARKDALE Common on the
date the option was granted.
On August 10, 1993, PARKDALE and Mr. Spindor each agreed to an amendment to
this stock option agreement which extended the termination date of the option
until "240 days following the termination, for any reason, of Spindor's
employment with Parkdale." Mr. Spindor's employment with PARKDALE terminated on
August 10, 1993, and Mr. Spindor has indicated that he will exercise his option
rights prior to consummation of the Merger.
Other than the options granted to Mr. Spindor, PARKDALE currently has no
unexercised options to acquire shares of PARKDALE Common outstanding, did not
issue or grant any such options during fiscal year 1992 and has not issued or
granted any such options during the current fiscal year. Other than Mr.
Spindor's options, no such options were exercised during fiscal year 1992 and no
such options have been exercised during the current fiscal year.
45
<PAGE>
Long-Term Incentive Plans
PARKDALE did not during fiscal year 1992 have in place any long-term incentive
compensation plan, has not adopted any such plan during the current fiscal year
and, apart from the options described above that were awarded to Mr. Spindor in
March 1992, has not made any long-term incentive awards since the end of fiscal
year 1991.
Savings Plan
PARKDALE has established a 401(k) Profit Sharing Plan and Trust for the
purpose of rewarding eligible employees for long and loyal service by providing
them with retirement benefits. Employees are eligible to participate in the
plan on the first day of the plan year after completing six months of service
and attaining the age of 21-1/2 years. Participants may elect to defer a
percentage of their compensation, up to the maximum amount allowed by law,
instead of receiving that amount in cash. Each year, PARKDALE contributes to
the plan (a) the entire amount of the salary reduction elected by each
participant; (b) a discretionary matching contribution, determined by PARKDALE,
equal to a percentage of the amount of the salary reduction each participant
elected to defer; and (c) a discretionary amount determined each year by
PARKDALE. PARKDALE's discretionary contribution to the plan was $27,878 in 1991
and $47,604 in 1992. Participants are immediately vested for the full amount of
their plans funded by elected salary deferral. There is no vesting in the
employer-contributed portion of participants' plans until the participant
completes three full years of service with PARKDALE, at which time participants
become 100% vested. As of December 31, 1992, the plan had total net assets
available for plan benefits of $298,267.
Retirement Benefits
Apart from the 401(k) plan described above, PARKDALE currently provides no
retirement benefits to its officers or employees.
Compensation of Directors
Each PARKDALE Director (including inside Directors) receives $400 for each
regularly scheduled, and $50 for each specially called, meeting of the Board of
Directors. Travis C. Riley, as secretary to the Board, receives $400 for each
regularly scheduled meeting of the Board. Outside Directors who are members of
the Board's Audit and/or Loan & Discount Committees also receive $50 for each
Committee meeting they attend.
Employment Contracts
PARKDALE has no employment contracts currently in effect. However, at its
July 13, 1993 meeting PARKDALE's Board of Directors voted to pay President and
Chief Executive Officer Ben D. Orgain a one-time retention bonus of $17,000
upon the closing of the Merger. And at its August 10, 1993 meeting PARKDALE's
Board granted a similar one-time retention bonus of $2,500 to Travis C. Riley,
Senior Vice President and Cashier of PARKDALE.
Board Compensation Committee Report on Executive Compensation
The Executive Committee of PARKDALE's Board of Directors meets annually to
review the performance of the bank's President and Chief Executive Officer, set
his salary for the upcoming year, and determine the amount of bonus to be paid
for the current year. In making their decision, the Committee considers the
performance of the bank for the current year compared to previous years, the
performance of the bank in terms of Return on Assets and Return on Equity, and
the performance of the Bank relative to its peers.
46
<PAGE>
Transactions with Management and Owners
PARKDALE leases land on which a portion of the bank building is located under
a long term lease with Director Ben J. Rogers, as trustee for certain other
related Directors and major shareholders of PARKDALE. The lease expires
December 31, 2003, although PARKDALE has an option to extend the lease for an
additional ten years. In addition to minimum rental payments, the lease
requires PARKDALE to pay property taxes, insurance, and maintenance costs
relating to the property. Total rental expense was $14,600 per annum for the
years 1990-92.
PARKDALE Director Victor J. Rogers and affiliates own BANC ONE Common Stock
which represents less than one one-hundredth of 1% of the total shares of such
stock outstanding. Mr. Rogers also has a minor borrowing relationship with
Bank One Texas.
PARKDALE has entered into transactions with its executive officers, directors
and significant shareholders, and their affiliates ("Related Parties"). Such
transactions include direct and indirect loans that were made in the ordinary
course of business on substantially the same terms and conditions, including
interest rates and collateral, as those prevailing at the same time for
comparable transactions with other customers, and did not, in the opinion of
management, involve more than normal risk of collectability or present other
unfavorable features. Indirect loans aggregating approximately $213,059 as of
September 30, 1993, to Director Hoke Peacock, have been reported as problem
loans. Relationships with Related Parties also include transactions in which
PARKDALE provides services as a bank depository of funds.
Ownership of Shares
No person is known to PARKDALE to be the beneficial owner of more than 5% of
any class of PARKDALE shares at June 30, 1993, except as follows:
<TABLE>
<CAPTION>
Name and Address of % of Total
Beneficial Owner No. of Shares Outstanding Shares
- ---------------------- ------------- ------------------
<S> <C> <C>
Ben J. Rogers 20,171 9.0%
P.O. Box 1310
Beaumont, Texas 17704
Dr. N. J. Rogers 23,815 10.6%
P.O. Box 1310
Beaumont, Texas 17704
Regina J. Rogers 54,901 24.5%
121 North Post Oak Lane
Apt. 2401
Beaumont, Texas 17704
Dr. S. J. Rogers 16,500 7.4%
P.O. Box 1310
Beaumont, Texas 17704
Victor J. Rogers 17,925 8.0%
P.O. Box 1310
Beaumont, Texas 17704
Rogers Family Members
who own less than 5% * 40,815 18.2%
</TABLE>
47
<PAGE>
* Identification of this ownership is not to be construed as an admission of
beneficial ownership or action as a group by the Rogers family or any individual
family members named in the table.
Proposed Merger with BANK ONE TEXAS
On June 7, 1993 PARKDALE entered into the Merger Agreement providing for the
Merger of PARKDALE into BANK ONE TEXAS on the terms, and subject to the
conditions, described above. The Merger is subject, among other things, to
shareholder and regulatory approval. It is anticipated that the Merger will be
consummated in the quarter of 199 .
----- --
48
<PAGE>
November 11, 1993
To the Stockholders and the Board of Directors
Parkdale Bank
Beaumont, Texas
We have compiled the accompanying balance sheets of Parkdale Bank as of
September 30, 1993 and 1992, and the related statements of income, changes in
stockholders' equity and cash flows for the nine months then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of Bank management. We have not audited
or reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
/s/ McClelland Samuel S. Fehnel, L.L.P.
PARKDALE BANK
BALANCE SHEETS
(UNAUDITED)
SEPTEMBER 30
<TABLE>
<CAPTION>
1993 1992
------------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,789,891 $ 1,028,501
Interest bearing deposits with other
financial institutions 195,000 1,553,000
Federal funds sold 12,800,000 13,700,000
Investment securities (approximate
market value of $23,997,773
and $30,268,943 at September 30,
1993 and 1992) (Note 3) 23,660,592 29,776,195
Loans, less allowance for loan
losses of $548,214 and $520,925 at
September 30, 1993 and 1992
(Note 4) 18,325,303 20,268,733
Bank premises and equipment, net
(Note 5) 1,882,369 1,942,014
Interest earned not collected 275,281 294,315
Other assets 163,227 214,157
----------- ------------
Total assets $61,091,663 $68,776,915
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $13,000,943 $14,528,399
Interest bearing 41,292,649 47,986,713
----------- -----------
Total deposits 54,293,592 62,515,112
Short-term borrowings 66,925
Accrued interest payable 50,878 87,121
</TABLE>
F-1
<PAGE>
<TABLE>
<S> <C> <C>
Other liabilities 151,862 362,048
----------- -----------
Total liabilities 54,496,332 63,031,206
----------- -----------
Commitments and contingencies (Notes 11
and 12)
STOCKHOLDERS' EQUITY
Common stock 345,083 345,083
Additional paid in capital 58,604 58,604
Surplus 2,569,250 2,569,250
Retained earnings 3,704,828 2,857,706
----------- -----------
6,677,765 5,830,643
Less treasury stock, 10,955 shares
(Note 14) ( 16,433) ( 16,433)
Less net unrealized depreciation on equity
securities ( 66,001) ( 68,501)
----------- -----------
Total stockholders' equity 6,595,331 5,745,709
----------- -----------
Total liabilities and stockholders'
equity $61,091,663 $68,776,915
=========== ===========
</TABLE>
PARKDALE BANK
STATEMENTS OF INCOME
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $1,422,026 $1,528,042
Investment securities:
Taxable 1,189,434 1,435,952
Tax exempt 53,453 100,368
Other interest income 217,503 445,446
---------- ----------
Total interest income 2,882,416 3,509,808
---------- ----------
INTEREST EXPENSE ON DEPOSITS 874,146 1,366,967
---------- ----------
Net interest income 2,008,270 2,142,841
PROVISION FOR LOAN LOSSES 22,500
----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,008,270 2,120,341
---------- ----------
OTHER INCOME
Service charges and fees 737,884 655,896
Securities gains (losses) ( 600) 5,000
Other income 45,651 47,030
---------- ----------
Total other income 782,935 707,926
---------- ----------
OTHER EXPENSES
Salaries and related costs 866,407 799,028
Occupancy expenses, exclusive of
depreciation 107,743 110,408
Depreciation 81,567 78,826
Outside services and processing 177,944 327,044
Other 449,713 471,816
---------- ----------
Total other expenses 1,683,374 1,787,122
---------- ----------
INCOME BEFORE INCOME TAXES 1,107,831 1,041,145
INCOME TAX (PROVISION) BENEFIT
Income excluding securities transactions ( 356,516) ( 318,232)
Securities transactions 204 ( 1,700)
---------- ----------
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 751,519 721,213
Cumulative effect of accounting change on
periods prior to 1993 ( 27,800)
----------
NET INCOME $ 723,719 $ 721,213
========== ==========
Net income per common share $3.28 $3.27
========== ==========
Weighted average common shares outstanding 220,340 220,473
========== ==========
</TABLE>
PARKDALE BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993 AND 1992
<TABLE>
<CAPTION>
Par
Shares Value Unrealized
Authorized $1.50 Additional Depreciation Total
and Per Paid-in Retained Treasury on Equity Stockholders'
Issued Share Capital Surplus Earnings Stock Securities Equity
--------- -------- ---------- ----------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 220,500 $330,750 $ 58,604 $1,869,250 $2,858,403 $( 2,100) $( 64,001) $5,050,906
Net income 721,213 721,213
Cash dividends, $.10 per
share ( 21,910) ( 21,910)
Net change in unrealized
depreciation on equity
securities ( 4,500) ( 4,500)
Additional shares
authorized and issued as
treasury stock 9,555 14,333 ( 14,333)
Transfer to surplus 700,000 ( 700,000)
------- -------- -------- ---------- ---------- -------- -------- ----------
Balance, September 30,
1992 230,055 $345,083 $ 58,604 $2,569,250 $3,016,165 $(16,433) $(68,501) $5,745,709
======= ======== ======== ========== ========== ======== ======== ==========
Balance, December 31, 1992 230,055 $345,083 $ 58,604 $2,569,250 $3,016,165 $(16,433) $(77,501) $5,895,168
Net income 723,719 723,719
Cash dividends, $.16 per
share ( 35,056) ( 35,056)
Net change in unrealized
depreciation on equity
securities 11,500 11,500
------- -------- -------- ---------- ---------- -------- -------- ----------
Balance, September 30,
1993 230,055 $345,083 $ 58,604 $2,569,250 $3,704,828 $(16,433) $(66,001) $6,595,331
======= ======== ======== ========== ========== ======== ======== ==========
</TABLE>
See accountants' compilation report.
The accompanying notes are an integral part of the financial statements.
PARKDALE BANK
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1993 1992
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 723,719 $ 721,213
Adjustments to reconcile net income
to net cash provided by operating activities:
</TABLE>
F-3
<PAGE>
<TABLE>
<S> <C> <C>
Depreciation 105,928 110,729
Provision for loan losses 22,500
Net investment securities (gains) losses 600 ( 5,000)
Net decrease in deferred income taxes 23,719
Net decrease in accrued income and other
assets 242,070 311,605
Net increase (decrease) in accrued expenses
and other liabilities ( 264,756) 70,742
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 831,280 1,231,789
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing deposits
with other financial institutions 1,453,000 1,819,100
Net increase in federal funds sold ( 500,000) ( 700,000)
Proceeds from maturities of investment
securities 14,749,775 16,386,469
Purchases of investment securities ( 5,925,778) (15,613,159)
Net (increase) decrease in loans 2,300,157 ( 2,164,506)
Additions to bank premises and equipment ( 30,225) ( 105,172)
------------ ------------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES 12,046,929 ( 377,268)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in demand deposit and savings
accounts ( 3,957,616) ( 217,012)
Net increase (decrease) in money market
accounts ( 5,387,815) 2,918,458
Net decrease in time deposits ( 2,017,263) ( 3,017,474)
Net decrease in other borrowed funds ( 479,177)
Cash dividends paid ( 35,056) ( 21,910)
------------ ------------
NET CASH USED BY FINANCING ACTIVITIES (11,397,750) ( 817,115)
------------ ------------
Net increase in cash and cash equivalents 1,480,459 37,406
Cash and cash equivalents January 1, 2,309,432 991,095
------------ ------------
Cash and cash equivalents at September 30, $ 3,789,891 $ 1,028,501
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
Interest paid $ 887,161 $ 1,424,352
============ ============
Income taxes paid $ 555,346 $ 126,534
============ ============
</TABLE>
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Parkdale Bank ("the Bank") conform to
generally accepted accounting principles and to general practice within the
bank industry. The accompanying unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods. A summary of the more
significant accounting policies follows.
Investment Securities:
Investment debt securities are those securities which the Bank has the ability
and intent to hold to maturity. However, in the future management may
determine that certain investments should be sold prior to maturity in response
to changes in interest rates, changes in prepayment risk, the
F-4
<PAGE>
need to increase regulatory capital or other similar factors. These securities
are stated at cost adjusted for amortization of premiums and accretion of
discounts, which are recognized as adjustments to interest income. Gains or
losses on disposition are based on net proceeds and the adjusted carrying
amount of the securities sold, using the specific identification method.
Marketable equity securities are valued at the lower of cost or market.
Allowance for Loan Losses:
The allowance is maintained at a level adequate to absorb probable losses.
Management determines the adequacy of the allowance based upon review of
individual loans, recent loss experience, current economic conditions, the risk
characteristics of the various categories of loans and other pertinent factors.
Loans deemed uncollectible are charged to the allowance. Provisions for loan
losses are charged to expense.
Bank Premises and Equipment:
Bank premises and equipment are stated at cost, less accumulated depreciation.
The provision for depreciation is computed principally on the straight-line
method over the estimated useful lives of the assets. Upon the sale or other
disposal of the assets, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss is recognized.
Maintenance and repairs are charged to expense as incurred, while renewals and
betterments are capitalized.
Income Recognition:
Income earned is recognized principally on the accrual basis of accounting.
Interest income on installment loans is recognized under the sum-of-the-months-
digits method. Under this method, the finance charge is reported in decreasing
amounts each month which provides an approximately level rate of return on the
outstanding principal balance. Discounts on loans purchased are recognized as
interest income over the term of the loans computed by the effective interest
method. Certain fees, principally service, are recognized as income when
billed. The accrual of interest on loans is discontinued when, in the opinion
of management, there is an indication that the borrower may be unable to meet
payments as they become due. Upon such discontinuance, all unpaid accrued
interest is charged against income. In future periods, interest will be
included in income to the extent received only if principal recovery is
reasonably assured.
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Income Taxes:
Provisions for income taxes are based on amounts reported in the statements of
income (after exclusion of non-taxable income such as interest on state and
municipal securities) and include deferred taxes on temporary differences in
the recognition of income and expense for tax and financial statement purposes.
Off Balance Sheet Financial Instruments:
In the ordinary course of business the Bank has entered into off balance sheet
financial instruments consisting of commitments to extend credit, commitments
under credit card arrangements, and standby letters of credit. Such financial
instruments are recorded in the financial statements when they become payable.
F-5
<PAGE>
Statement of Cash Flows:
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks.
Net Income Per Common Share:
Net income per common share is calculated by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
for the period.
Note 2 - PENDING MERGER
On June 7, 1993, the Bank entered into an Agreement and Plan of Merger, a
wholly-owned subsidiary of Banc One Texas Corporation ("BOTNA") which Bank One,
Texas, n.a. ("Bank One Texas") is a wholly-owned subsidiary of Banc One
Corporation. Upon the effective date of the merger, Bank One Texas will be the
surviving corporation, and the Bank will become a branch of Bank One Texas.
Under the merger agreement, all common stockholders of the Bank will receive
common stock of Banc One Corporation. The merger will be accounted for as a
pooling of interests and is subject to stockholder and regulatory approval.
Note 3 - INVESTMENT SECURITIES
The carrying amounts and approximate market values of investment securities are
as follows:
<TABLE>
<CAPTION>
September 30, 1993
--------------------------------------------------------
Gross Gross Approximate
Carrying Unrealized Unrealized Market
Amount Gains Losses Value
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury and government
agency securities $20,081,360 $165,832 $ 8,055 $20,239,137
Mortgage-backed securities 2,035,593 31,122 6,426 2,060,289
Tax-exempt securities 986,941 154,708 1,141,649
Foreign government securities 25,000 25,000
Other 531,698 531,698
----------- -------- ------- ------------
$23,660,592 $351,662 $14,481 $23,997,773
=========== ======== ======= ============
</TABLE>
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
September 30, 1992
------------------------------------------------------
Gross Gross Approximate
Carrying Unrealized Unrealized Market
Amount Gains Losses Value
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and government
agency securities $21,243,747 $ 346,319 $34,327 $21,555,739
Mortgage-backed securities 6,274,313 121,012 18,942 6,376,383
Tax-exempt securities 1,203,937 75,608 1,279,545
Foreign government securities 25,000 3,078 28,078
Other 1,029,198 1,029,198
----------- ---------- ------- -----------
$29,776,195 $ 546,017 $53,269 $30,268,943
=========== ========== ======= ===========
</TABLE>
F-6
<PAGE>
Securities carried at approximately $3,515,525 and market value of $3,552,407
at September 30, 1993, were pledged to secure public deposits. Included in
other securities is one marketable equity security, carried at the lower of
cost or market, with an original cost of $496,509 at September 30, 1993, and
approximate market value of $430,508.
Gross realized gains and (losses) on sales and maturities of securities were:
<TABLE>
<CAPTION>
September 30,
---------------------------------
1993 1992
--------------- ---------------
<S> <C> <C>
Mortgage backed securities $( 600) $
State and municipal securities $ $ 5,000
</TABLE>
The contractual maturities of investment securities held at September 30, 1993,
are shown below. Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Approximate
Carrying Market
Amount Value
----------- ------------
<S> <C> <C>
Due in one year or less $ 2,094,591 $ 2,134,303
Due from one to five years 7,460,893 7,631,125
Due from five to ten years 1,510,161 1,596,274
Due after ten years 330,842 344,992
----------- -----------
11,396,487 11,706,694
Variable rate securities 11,732,407 11,759,381
Marketable equity and other securities 531,698 531,698
----------- -----------
$23,660,592 $23,997,773
=========== ===========
</TABLE>
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Note 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
An analysis of loans follows:
<TABLE>
<CAPTION>
September 30,
-------------------------------
1993 1992
----------- -----------
<S> <C> <C>
Commercial $ 4,968,255 $ 6,348,615
Real estate - mortgage 9,720,936 10,463,942
Installment 4,132,501 3,887,129
Credit card loans 427,024 492,414
----------- -----------
19,248,716 21,192,100
Unearned discount ( 375,199) ( 402,442)
----------- -----------
18,873,517 20,789,658
Allowance for loan losses ( 548,214) ( 520,925)
----------- -----------
$18,325,303 $20,268,733
=========== ===========
</TABLE>
The maturities of fixed rate loans at September 30, 1993, were as follows:
F-7
<PAGE>
<TABLE>
<S> <C>
Due in one year or less $ 2,364,302
Due from one to five years 5,455,914
Due from five to ten years 757,981
Due after ten years 308,713
-----------
8,886,910
Variable rate loans 9,986,607
-----------
$18,873,517
===========
</TABLE>
Loans on which the accrual of interest has been discontinued amounted to $4,965
at September 30, 1993.
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1993 1992
----------- -----------
<S> <C> <C>
Balance at January 1, $ 552,292 $ 515,513
Loans charged off ( 14,498) ( 21,643)
Recoveries 10,420 4,555
Provision for loan losses 22,500
----------- -----------
Balance at September 30, $ 548,214 $ 520,925
=========== ===========
</TABLE>
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Note 5 - BANK PREMISES AND EQUIPMENT
Bank premises and equipment, at cost, and related accumulated depreciation are
as follows:
<TABLE>
<CAPTION>
September 30,
--------------------------
1993 1992
---------- ----------
<S> <C> <C>
Land $ 586,668 $ 586,668
Buildings and improvement 1,408,171 1,361,748
Furniture and equipment 745,430 705,544
Automobile 24,952 24,952
---------- ----------
2,765,221 2,678,912
Less accumulated depreciation ( 882,852) ( 768,748)
---------- ----------
1,882,369 1,910,164
Construction in progress 31,850
---------- ----------
$1,882,369 $1,942,014
========== ==========
</TABLE>
Note 6 - DEPOSITS
The major categories of deposits are as follows:
<TABLE>
<CAPTION>
September 30,
----------------------------
1993 1992
------------- -------------
<S> <C> <C>
Non-interest bearing $13,000,943 $14,528,399
----------- -----------
Interest bearing:
Demand 8,975,292 8,090,581
</TABLE>
F-8
<PAGE>
<TABLE>
<S> <C> <C>
Savings 3,646,382 3,585,521
Money market accounts 14,398,672 19,621,993
Time 14,272,303 16,688,618
----------- -----------
Total interest bearing
deposits 41,292,649 47,986,713
----------- -----------
Total deposits $54,293,592 $62,515,112
=========== ===========
</TABLE>
Note 7 - INCOME TAXES
The FASB has issued Statement 109, "Accounting for Income Taxes". Prior to
January 1, 1993, the Bank accounted for income taxes under APB 11, having
elected not to adopt Statement 109 before its effective date. Statement 109
changed the Bank's method of accounting for income taxes from the deferred
method required under APB 11 to the asset and liability method. Under the
deferred method, annual income tax expense is matched with pretax accounting
income by providing deferred taxes at current rates for timing difference
between the determination of net income for financial reporting and tax
purposes. The objective of the asset and liability method is to establish
deferred tax assets and liabilities for the temporary differences between the
financial reporting basis and the tax basis of the Bank's assets and
liabilities at enacted tax rates expected to be in effect when such amounts are
realized or settled.
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Statement 109 is effective for fiscal years beginning after December 15, 1992.
The Bank has elected not to retroactively restate financial statements for
years before the effective date. The effect of initially applying this new
pronouncement is reported as a cumulative effect of a change in accounting
principle in the 1993 results of operations. The cumulative effect of the
change in accounting principle results in a charge against operations of
$27,800 for 1993.
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------------
1993 1992
----------------- -----------------
<S> <C> <C>
Federal amount currently payable $344,680 $319,932
Deferred federal tax 11,632
----------------- -----------------
$356,312 $319,932
================= =================
</TABLE>
The provision for federal income taxes is less than that computed by applying
the federal statutory rate of 34 percent due to the following:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------
1993 1992
-------------------- ------------------
<S> <C> <C>
Tax based on statutory rate $ 376,663 $ 353,989
Effect of tax-exempt income ( 21,081) ( 37,474)
Loan loss provision ( 7,650)
Depreciation ( 3,697)
Expense accruals ( 10,139) 13,050
Interest and other nondeductible
expenses 1,206 2,738
</TABLE>
F-9
<PAGE>
<TABLE>
<S> <C> <C>
Other (net) ( 1,969) ( 1,024)
--------- ---------
$ 344,680 $ 319,932
========= =========
</TABLE>
The components of deferred income taxes were principally related to the
allowance for loan losses and depreciation.
The Bank has available at September 30, 1993, an unused capital loss
carryforward of $45,415 which may be applied against future capital gains
through December 31, 1996.
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Note 8 - PROFIT SHARING PLAN
The Bank has a profit sharing plan that covers the employees of the Bank.
Contributions to the plan are at the discretion of the Board of Directors.
Accruals for expected contributions to the plan, charged to operations, were
$38,111 and $35,015 for the nine months ended September 30, 1993 and 1992.
Note 9 - LEASE
The Bank leases land on which a portion of the bank building is located under a
long term lease which expires December 31, 2003, with an option to extend the
lease for an additional ten years. In addition to minimum rental payments, the
lease requires the Bank to pay property taxes, insurance, and maintenance costs
relating to the property.
The future minimum rental commitment at September 30, 1993, under the lease are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Due in the three months ending December 31, 1993 $ 3,306
Due in the year ending December 31, 1994 19,000
1995 19,000
1996 19,000
1997 19,000
1998 19,000
Due in the remaining term of the lease 95,000
--------
$193,306
========
</TABLE>
The total rental expense was $11,294 and $10,950 for the nine months ended
September 30, 1993 and 1992, respectively.
Note 10 - RELATED PARTY TRANSACTIONS
The Bank has entered into transactions with its executive officers, directors,
significant shareholders, and their affiliates (Related Parties). Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management, involve more than normal credit risk
or present other
F-10
<PAGE>
unfavorable features. The aggregate amount of loans to such related parties at
September 30, 1993, was $2,092,793 and $2,705,017 at September 30, 1992.
The Bank leases land under a long-term agreement as described in Note 8 from
principal shareholders and directors of the Bank.
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Note 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Bank enters into various transactions
which, in accordance with generally accepted accounting principles, are not
included on the balance sheets. These transactions are referred to as "off-
balance sheet commitments". The Bank enters into these transactions to meet
the financing needs of its customers. These transactions include commitments
to extend credit and standby letters of credit which involve elements of credit
risk in excess of the amounts recognized in the balance sheets. The Bank
minimizes its exposure to loss under these commitments by subjecting them to
credit approval monitoring procedures.
The Bank enters into contractual commitments to extend credit, normally with
fixed expiration dates or termination clauses, at specified rates and for
specific purposes. Customers use credit commitments to ensure that funds will
be available for working capital purposes, for capital expenditures and to
ensure access to funds at specified terms and conditions. Substantially, all
of the Bank's commitments to extend credit are contingent upon customers
meeting specific credit standards at the time of loan funding. Management
assesses the credit risk associated with certain commitments to extend credit
in determining the level of the allowance for possible loan losses. Because
these commitments have fixed maturity dates, and because many of them expire
without being drawn upon, they do not generally present any significant
liquidity risk to the Bank.
Outstanding commitments and standby letters of credit at September 30, 1993,
are as follows:
<TABLE>
<S> <C>
Commitments to extend credit secured by real estate $ -0-
Credit card arrangements $1,365,302
Other commitments to extend credit $1,226,474
Standby letters of credit $ 43,520
</TABLE>
Note 12 - CONTINGENT LIABILITIES
Employees of the Bank are entitled to paid vacation, paid sick days, and
personal days off, depending on job classification, length of service, and
other factors. It is impracticable to estimate the amount of compensation for
future absences, and accordingly, no liability has been recorded in the
accompanying financial statements. The Bank's policy is to recognize the cost
of compensated absences when actually paid to employees.
F-11
<PAGE>
Note 13 - CONCENTRATION OF CREDIT
Substantially all of the Bank's loans, commitments, and standby letters of
credit have been granted to customers in the Bank's market area, which is
Beaumont, Texas, and the surrounding counties. Most customers are depositors
of the Bank. Investments in state and municipal securities involve
governmental entities within Texas. The concentrations of credit by type of
loan are set forth in Note 4. The Bank, as a matter of policy, does not extend
credit to any single borrower or group of related borrowers in excess of
$725,000.
PARKDALE BANK
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
Note 14 - STOCK OPTION PLAN
In 1992 the Bank established a stock option plan for an officer of the Bank
with an option to purchase 5,000 shares of the Bank's common stock at $21.43
per share through December 31, 1996. As of September 30, 1993, the option had
not been exercised, but is expected to be exercised prior to the merger
described in Note 2.
Outstanding stock options have been considered as common stock equivalents in
the computation of earnings per share.
See accountants' compilation report.
F-12
<PAGE>
January 29, 1993
Independent Auditor's Report
- ----------------------------
To the Stockholders and the Board of Directors
Parkdale Bank
Beaumont, Texas
We have audited the accompanying balance sheets of Parkdale Bank as of December
31, 1992 and 1991, and the related statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1992. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parkdale Bank at December 31,
1992 and 1991, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1992, in conformity with
generally accepted accounting principles.
/s/ McClelland Samuel & Fehnel, L.L.P.
PARKDALE BANK
BALANCE SHEETS
DECEMBER 31
<TABLE>
<CAPTION>
1992 1991
------------------ ------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,309,432 $ 991,095
Interest bearing deposits with other
financial institutions 1,648,000 3,372,000
Federal funds sold 12,300,000 13,000,000
Investment securities (approximate
market value of $32,788,821 and
$31,311,032 at December 31, 1992 and
1991) (Note 3) 32,498,050 30,581,008
Loans, less allowance for loan losses
of $552,292 and $515,513 at December
31, 1992 and 1991 (Note 4) 20,625,460 18,126,727
Bank premises and equipment, net (Note
5) 1,933,639 1,915,668
Interest earned not collected 485,866 582,446
Other assets 218,431 237,631
----------- --------------
Total assets $72,018,878 $68,806,575
=========== ==============
</TABLE>
F-13
<PAGE>
<TABLE>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $16,426,229 $15,576,396
Interest bearing 49,230,057 47,254,744
----------- -----------
Total deposits 65,656,286 62,831,140
Short-term borrowings 546,102
Accrued interest payable 63,893 144,506
Other liabilities 403,531 233,921
----------- -----------
Total liabilities 66,123,710 63,755,669
----------- -----------
Commitments and contingencies (Notes 11
and 12)
STOCKHOLDERS' EQUITY
Common stock 345,083 330,750
Additional paid in capital 58,604 58,604
Surplus 2,569,250 1,869,250
Retained earnings 3,016,165 2,858,403
----------- -----------
5,989,102 5,117,007
Less treasury stock, 10,955 shares at
December 31, 1992, and 1,400 shares at
December 31, 1991 (Note 14) ( 16,433) ( 2,100)
Less net unrealized depreciation on
equity securities ( 77,501) ( 64,001)
----------- -----------
Total stockholders' equity 5,895,168 5,050,906
----------- -----------
Total liabilities and stockholders'
equity $72,018,878 $68,806,575
=========== ===========
</TABLE>
PARKDALE BANK
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1992 1991 1990
---------------- ---------------- ----------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,023,538 $1,960,524 $1,989,242
Interest and dividends on:
Mortgage-backed, asset backed and other securities 1,862,832 2,049,783 1,467,958
Tax exempt securities 119,672 157,089 151,563
Interest on federal funds sold 440,779 485,879 805,818
Interest on deposits with other financial institutions 122,916 165,038 156,688
---------- ---------- ----------
Total interest income 4,569,737 4,818,313 4,571,269
---------- ---------- ----------
INTEREST EXPENSE
Demand and savings deposits 1,014,691 1,237,141 1,056,291
Time deposits 703,222 1,293,243 1,469,379
---------- ---------- ----------
Total interest expense 1,717,913 2,530,384 2,525,670
---------- ---------- ----------
Net interest income 2,851,824 2,287,929 2,045,599
PROVISION FOR LOAN LOSSES 30,000 30,000 120,000
---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,821,824 2,257,929 1,925,599
---------- ---------- ----------
OTHER INCOME
Service charges on deposit accounts 826,314 647,339 543,048
</TABLE>
F-14
<PAGE>
<TABLE>
<S> <C> <C> <C>
Other service charges and fees 53,493 44,109 39,019
Securities gains (losses) 25,500 ( 104,713) ( 40,000)
Other income 62,163 41,913 51,502
---------- ---------- ----------
Total other income 967,470 628,648 593,569
---------- ---------- ----------
OTHER EXPENSES
Salaries and related costs 1,144,700 986,953 858,912
Occupancy expenses, exclusive of depreciation 145,078 131,456 115,427
Depreciation 112,132 95,945 80,874
Outside services and processing 405,352 228,004 185,353
Marketing and development 109,448 80,051 96,267
Communication and transportation 51,426 42,462 35,658
Other 487,412 434,006 359,138
---------- ---------- ----------
Total other expenses 2,455,548 1,998,877 1,731,629
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,333,746 887,700 787,539
INCOME TAX (PROVISION) BENEFIT
Income excluding securities transactions ( 404,172) ( 293,388) ( 234,015)
Securities transactions ( 8,670) 35,602 13,600
---------- ---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM 920,904 629,914 567,124
Extraordinary item - utilization of capital loss carryforward 6,970
----------
NET INCOME $ 927,874 $ 629,914 $ 567,124
========== ========== ==========
Net income per common share $4.21 $2.95 $2.67
========== ========== ==========
Weighted average common shares outstanding 220,621 213,366 212,762
========== ========== ==========
</TABLE>
PARKDALE BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1992, 1991, AND 1990
<TABLE>
<CAPTION>
Par
Shares Value Unrealized
Authorized $1.50 Additional Depreciation Total
and Per Paid-in Retained Treasury on Equity Stockholders'
Issued Share Capital Surplus Earnings Stock Securities Equity
-------- --------- -------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1989 220,500 $ 330,750 $ $1,869,250 $ 1,762,165 $ (15,570) $( 135,951) $ 3,810,464
Net income for 1990 567,124 567,124
Cash dividends declared,
$.24 per share ( 50,400) ( 50,400)
Net change in unrealized
depreciation on equity
securities ( 21,149) ( 21,149)
-------- --------- -------- ---------- ----------- --------- ---------- -----------
Balance, December 31, 1990 220,500 330,750 1,869,250 2,278,889 (15,570) ( 157,100) 4,306,039
Net income for 1991 629,914 629,914
Cash dividends declared,
$.24 per share ( 50,400) ( 50,400)
Net change in unrealized
depreciation on equity
securities 93,099 93,099
Issuance of 9,100
treasury shares under
exercise of a stock
option 58,604 13,650 72,254
-------- --------- -------- ---------- ----------- --------- ---------- -----------
Balance, December 31, 1991 220,500 330,750 58,604 1,869,250 2,858,403 ( 2,100) ( 64,001) 5,050,906
Net income for 1992 927,874 927,874
Cash dividends declared,
$.32 per share ( 70,112) ( 70,112)
Net change in unrealized
depreciation on equity
securities ( 13,500) ( 13,500)
Additional shares authorized
and issued as treasury
stock 9,555 14,333 ( 14,333)
Transfer to surplus 700,000 ( 700,000)
-------- --------- -------- ---------- ----------- --------- ---------- -----------
Balance, December 31, 1992 230,055 $ 345,083 $ 58,604 $2,569,250 $ 3,016,165 $( 16,433) $( 77,501) $ 5,895,168
======== ========= ======== ========== =========== ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash dividends declared,
$.32 per share ( 70,112) ( 70,112)
Net change in unrealized
depreciation on equity
securities ( 13,500) ( 13,500)
Additional shares
authorized and issued
as treasury stock 9,555 14,333 (14,333)
Transfer to surplus 700,000 (700,000)
-------- --------- -------- ---------- ---------- ------------ --------- --------------
Balance, December 31,
1992 230,055 $ 345,083 $ 58,604 $2,569,250 $3,016,165 $ (16,433) $( 77,501) ( $5,895,168)
======== ========= ======== ========== ============ ============ ======== ==============
</TABLE>
PARKDALE BANK
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1992 1991 1990
--------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 927,874 $ 629,914 $ 567,124
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 112,132 95,945 80,874
Provision for loan losses 30,000 30,000 120,000
Charge off of unrealized
depreciation on investment
debt security 38,798 40,000
Net investment securities
(gains) losses ( 25,500) 65,915
Net (increase) decrease in
deferred income taxes ( 15,713) 11,796 ( 40,733)
Net (increase) decrease in
accrued income and other
assets 131,493 ( 80,283) ( 170,615)
Net increase (decrease) in
accrued expenses and other
liabilities 88,997 ( 28,583) ( 78,330)
Other, net 30,846 ( 21,840) ( 94,793)
------------ ------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,280,129 741,662 423,527
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Net (increase) decrease in
interest bearing deposits
with other financial
institutions 1,724,000 ( 2,872,000) 3,872,000
Net (increase) decrease in
federal funds sold 700,000 ( 3,100,000) ( 80,000)
Proceeds from sales of
investment securities 1,020,392 437,576
Proceeds from maturities of
investment securities 19,175,048 9,475,271 5,858,887
Purchases of investment
securities (22,130,228) (16,819,108) (14,816,531)
Net (increase) decrease in
loans ( 2,528,733) ( 1,265,412) 653,188
Additions to bank premises
and equipment ( 131,203) ( 132,287) ( 567,092)
Proceeds from sales of other
real estate 3,338
------------ ------------ ------------
NET CASH USED BY INVESTING
ACTIVITIES ( 2,170,724) (14,275,960) ( 5,076,210)
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Net increase in demand
deposit and savings accounts 3,158,720 4,122,001 8,435,578
Net increase (decrease) in
money market accounts 3,082,952 4,801,851 (2,273,324)
Net increase (decrease) in
time deposits ( 3,416,526) ( 1,000,179) 1,401,560
Net increase (decrease) in
other borrowed funds ( 546,102) 546,102
Cash dividends paid ( 70,112) ( 50,400) ( 31,500)
Exercise of stock option 72,254
------------ ------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,208,932 8,491,629 7,532,314
------------ ------------ ------------
Net increase (decrease) in
cash and cash equivalents 1,318,337 (5,042,669) 2,879,631
Cash and cash equivalents
January 1, 991,095 6,033,764 3,154,133
------------ ------------ ------------
</TABLE>
F-16
<PAGE>
<TABLE>
<S> <C> <C> <C>
Cash and cash equivalents at
December 31, $ 2,309,432 $ 991,095 $ 6,033,764
============ ============ ============
CASH PAID DURING THE YEAR FOR:
Interest $ 1,798,525 $ 2,581,536 $ 2,497,885
============ ============ ============
Income taxes $ 180,294 $ 284,521 $ 318,185
============ ============ ============
</TABLE>
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities:
Investment debt securities are those securities which the Bank has the ability
and intent to hold to maturity. However, in the future management may
determine that certain investments should be sold prior to maturity in response
to changes in interest rates, changes in prepayment risk, the need to increase
regulatory capital or other similar factors. These securities are stated at
cost adjusted for amortization of premiums and accretion of discounts, which
are recognized as adjustments to interest income. Gains or losses on
disposition are based on net proceeds and the adjusted carrying amount of the
securities sold, using the specific identification method. Marketable equity
securities are valued at the lower of cost or market.
Allowance for Loan Losses:
The allowance is maintained at a level adequate to absorb probable losses.
Management determines the adequacy of the allowance based upon review of
individual loans, recent loss experience, current economic conditions, the risk
characteristics of the various categories of loans and other pertinent factors.
Loans deemed uncollectible are charged to the allowance. Provisions for loan
losses are charged to expense.
Bank Premises and Equipment:
Bank premises and equipment are stated at cost, less accumulated depreciation.
The provision for depreciation is computed principally on the straight-line
method over the estimated useful lives of the assets. Upon the sale or other
disposal of the assets, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss is recognized.
Maintenance and repairs are charged to expense as incurred, while renewals and
betterments are capitalized.
Income Recognition:
Income earned is recognized principally on the accrual basis of accounting.
Interest income on installment loans is recognized under the sum-of-the-months-
digits method. Under this method, the finance charge is reported in decreasing
amounts each month which provides an approximately level rate of return on the
outstanding principal balance. Discounts on loans purchased are recognized as
interest income over the term of the loans computed by the effective interest
method. Certain fees, principally service, are recognized as income when
billed. The accrual of interest on loans is discontinued when, in the opinion
of management, there is an indication that the borrower may be unable to meet
payments as they become due. Upon such discontinuance, all unpaid accrued
interest is charged
F-17
<PAGE>
against income. In future periods, interest will be included in income to the
extent received only if principal recovery is reasonably assured.
Income Taxes:
Provisions for income taxes are based on amounts reported in the statements of
income (after exclusion of non-taxable income such as interest on state and
municipal securities) and include deferred taxes on temporary differences in
the recognition of income and expense for tax and financial statement purposes.
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Off Balance Sheet Financial Instruments:
In the ordinary course of business the Bank has entered into off balance sheet
financial instruments consisting of commitments to extend credit, commitments
under credit card arrangements, and standby letters of credit. Such financial
instruments are recorded in the financial statements when they become payable.
Statement of Cash Flows:
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks.
Net Income Per Common Share:
Net income per common share is calculated by dividing net income available to
common stockholders by the average number of common shares outstanding for the
period.
Note 2 - PENDING MERGER
On December 9, 1992, the Bank signed a letter of intent with Bank One, Texas,
N.A., whereby both parties agreed to enter into negotiations for the merger of
the Bank with Bank One, Texas, N.A. Under the terms of the letter, Parkdale
Bank would exchange all its issued and outstanding common stock for shares of
Banc One, the parent company of Bank One, Texas, N.A. The merger will be
accounted for as a pooling of interest and is subject to stockholder and
regulatory approval.
Note 3 - INVESTMENT SECURITIES
The carrying amounts and approximate market values of investment securities at
December 31, 1992 and 1991, are as follows:
<TABLE>
<CAPTION>
Gross Gross Approximate
Carrying Unrealized Unrealized Market
Amount Gains Losses Value
------------ ------------- ------------- -----------
<S> <C> <C> <C> <C>
1992
-----------
U.S. Treasury and government
agency securities $25,889,729 $246,655 $131,710 $26,004,674
Mortgage-backed securities 4,909,866 77,628 21,572 4,965,922
Tax-exempt securities 1,153,257 117,092 1,270,349
</TABLE>
F-18
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Foreign government securities 25,000 2,678 27,678
Other 520,198 520,198
----------- -------- -------- -----------
$32,498,050 $444,053 $153,282 $32,788,821
=========== ======== ======== ===========
</TABLE>
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Gross Gross Approximate
Carrying Unrealized Unrealized Market
Amount Gains Losses Value
----------- ------------- -------------- ----------
1991
-----------
<S> <C> <C> <C> <C>
U.S. Treasury and government
agency securities $18,435,699 $408,101 $ 3,724 $18,840,076
Mortgage-backed securities 9,308,468 212,281 12,177 9,508,572
Tax-exempt securities 2,310,243 122,723 413 2,432,553
Foreign government securities 25,000 3,233 28,233
Other 501,598 501,598
----------- -------- ------- -----------
$30,581,008 $746,338 $16,314 $31,311,032
=========== ======== ======= ===========
</TABLE>
Securities carried at approximately $1,808,000 and market value of $1,868,000
at December 31, 1992, were pledged to secure public deposits. Included in
other securities is one marketable equity security, carried at the lower of
cost or market, with an original cost of $496,509 at December 31, 1992, and
approximate market value of $419,008.
Gross realized gains and (losses) on sales of securities were:
<TABLE>
<CAPTION>
1992 1991
--------------- ---------------
<S> <C> <C>
State and municipal securities $ 5,000 $
Marketable equity security $20,500 ( 65,915)
</TABLE>
The contractual maturities of investment securities held at December 31, 1992,
are shown below. Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
<S> <C> <C>
Approximate
Carrying Market
Amount Value
----------- -------------
Due in one year or less $ 2,971,118 $ 3,023,833
Due from one to five years 14,786,212 14,952,252
Due from five to ten years 1,761,352 1,847,447
Due after ten years 2,539,198 2,570,281
----------- -----------
22,057,880 22,393,813
Mortgage-backed securities 9,919,972 9,874,810
Marketable equity and other securities 520,198 520,198
----------- -----------
$32,498,050 $32,788,821
=========== ===========
</TABLE>
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
F-19
<PAGE>
Note 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans at December 31, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
1992 1991
--------------- --------------
<S> <C> <C>
Commercial $ 6,199,171 $ 5,763,575
Real estate - mortgage 10,684,732 9,341,263
Installment 4,213,392 3,433,563
Credit card loans 497,183 503,114
----------- -----------
21,594,478 19,041,515
Unearned discount ( 416,726) ( 399,275)
----------- -----------
21,177,752 18,642,240
Allowance for loan losses ( 552,292) ( 515,513)
----------- -----------
$20,625,460 $18,126,727
=========== ===========
</TABLE>
The maturities of fixed rate loans at December 31, 1992, were as follows:
<TABLE>
<S> <C>
Due in one year or less $ 3,594,047
Due from one to five years 6,128,057
Due from five to ten years 1,722,727
-----------
11,444,831
Variable rate loans 10,149,647
-----------
$21,594,478
===========
</TABLE>
Loans on which the accrual of interest has been discontinued amounted to
$32,585 at December 31, 1992. If interest on those loans had been accrued,
such income would have approximated $1,192 for 1992.
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
1992 1991
---------------- ---------------
<S> <C> <C>
Balance at January 1, $ 515,513 $ 542,247
Loans charged off ( 31,860) ( 63,791)
Recoveries 38,639 7,057
Provision for loan losses 30,000 30,000
--------- ---------
Balance at December 31, $ 552,292 $ 515,513
========= =========
</TABLE>
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Note 5 - BANK PREMISES AND EQUIPMENT
Bank premises and equipment, at cost, and related accumulated depreciation at
December 31, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
1992 1991
---------------- --------------
<S> <C> <C>
Land $ 586,668 $ 586,668
Buildings and improvement 1,390,002 1,361,748
Furniture and equipment 733,374 631,844
Automobile 24,952 24,952
---------- ----------
2,734,996 2,605,212
Less accumulated depreciation ( 801,357) ( 689,922)
---------- ----------
1,933,639 1,915,290
</TABLE>
F-20
<PAGE>
<TABLE>
<S> <C> <C>
Construction in progress 378
---------- ----------
$1,933,639 $1,915,668
========== ==========
</TABLE>
Note 6 - DEPOSITS
The major categories of deposits at December 31, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
1992 1991
------------- ------------
<S> <C> <C>
Non-interest bearing $16,426,229 $15,576,396
----------- -----------
Interest bearing:
Demand 9,264,530 7,981,720
Savings 3,889,474 2,863,397
Money market accounts 19,786,487 16,703,535
Time 16,289,566 19,706,092
----------- -----------
Total interest bearing
deposits 49,230,057 47,254,744
----------- -----------
Total deposits $65,656,286 $62,831,140
=========== ===========
</TABLE>
Note 7 - INCOME TAXES
The FASB has issued Statement 109, "Accounting for Income Taxes". The Bank
currently accounts for income taxes under APB 11, having elected not to adopt
Statement 109 before its effective date. Statement 109 will change the Bank's
method of accounting for income taxes from the deferred method required under
APB 11 to the asset and liability method. Under the deferred method, annual
income tax expense is matched with pretax accounting income by providing
deferred taxes at current rates for timing difference between the determination
of net income for financial reporting and tax purposes. The objective of the
asset and liability method is to establish deferred tax assets and liabilities
for the temporary differences between the financial reporting basis and the tax
basis of the Bank's assets and liabilities at enacted tax rates expected to be
in effect when such amounts are realized or settled.
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Statement 109 is effective for fiscal years beginning after December 15, 1992.
The Bank has elected not to retroactively restate financial statements for
years before the effective date. The effect of initially applying this new
pronouncement will be reported as a cumulative effect of a change in accounting
principle in the 1993 results of operations. The cumulative effect of the
change in accounting principle will result in a charge against operations of
$27,800 for 1993.
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1992 1991
---------------- -------------
<S> <C> <C>
Federal amount currently payable $ 421,585 $216,150
Deferred federal tax ( 15,713) 1,636
State amount currently payable 40,000
--------------- -------------
$ 405,872 $257,786
=============== =============
</TABLE>
F-21
<PAGE>
The provision for federal income taxes is less than that computed by applying
the federal statutory rate of 34 percent in 1992 and 1991, due to the
following:
<TABLE>
<CAPTION>
1992 1991
------------------ ----------------
<S> <C> <C>
Tax based on statutory rate $ 453,474 $ 301,818
Effect of tax-exempt income ( 43,724) ( 56,054)
Recognition of tax benefits from
exercise of stock option ( 41,738)
Loan loss provision 10,200 ( 2,802)
Depreciation ( 4,929) ( 3,790)
Expense accruals 5,407 7,035
Accretion on investment securities ( 1,365) ( 2,078)
Interest and other nondeductible expenses 3,650 5,561
Nondeductible capital loss 22,411
Utilization of capital loss carryforward ( 6,970)
Gain on maturities of security
investments 6,400
State income tax ( 13,600)
Other (net) ( 558) ( 613)
--------- ---------
$ 421,585 $ 216,150
========= =========
</TABLE>
The components of deferred income taxes were principally related to the
allowance for loan losses and depreciation.
The Bank has available at December 31, 1992, an unused capital loss
carryforward of $45,415 which may be applied against future capital gains
through December 31, 1996.
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Note 8 - PROFIT SHARING PLAN
The Bank has a profit sharing plan that covers the employees of the Bank.
Contributions to the plan are at the discretion of the Board of Directors.
Contributions to the plan charged to operations were $47,604 in 1992, $27,878
in 1991, and $25,000 in 1990.
Note 9 - LEASE
The Bank leases land on which a portion of the bank building is located under a
long term lease which expires December 31, 2003, with an option to extend the
lease for an additional ten years. In addition to minimum rental payments, the
lease requires the Bank to pay property taxes, insurance, and maintenance costs
relating to the property.
The future minimum rental commitment at December 31, 1992, under the lease are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Due in the year ending December 31, 1993 $ 14,600
1994 19,000
1995 19,000
1996 19,000
</TABLE>
F-22
<PAGE>
<TABLE>
<S> <C> <C>
1997 19,000
Due in the remaining term of the lease 114,000
---------
$204,600
=========
</TABLE>
The total rental expense was $14,600 annually in 1992, 1991, and 1990.
Note 10 - RELATED PARTY TRANSACTIONS
The Bank has entered into transactions with its executive officers, directors,
significant shareholders, and their affiliates (Related Parties). Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management, involve more than normal credit risk
or present other unfavorable features. The aggregate amount of loans to such
related parties at December 31, 1992, was $2,727,349 and $1,993,488 at December
31, 1991.
The Bank leases land under a long-term agreement as described in Note 8 from
principal shareholders of the Bank.
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Note 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Bank enters into various transactions
which, in accordance with generally accepted accounting principles, are not
included on the balance sheets. These transactions are referred to as "off-
balance sheet commitments". The Bank enters into these transactions to meet
the financing needs of its customers. These transactions include commitments
to extend credit and standby letters of credit which involve elements of credit
risk in excess of the amounts recognized in the balance sheets. The Bank
minimizes its exposure to loss under these commitments by subjecting them to
credit approval monitoring procedures.
The Bank enters into contractual commitments to extend credit, normally with
fixed expiration dates or termination clauses, at specified rates and for
specific purposes. Customers use credit commitments to ensure that funds will
be available for working capital purposes, for capital expenditures and to
ensure access to funds at specified terms and conditions. Substantially, all
of the Bank's commitments to extend credit are contingent upon customers
meeting specific credit standards at the time of loan funding. Management
assesses the credit risk associated with certain commitments to extend credit
in determining the level of the allowance for possible loan losses. Because
these commitments have fixed maturity dates, and because many of them expire
without being drawn upon, they do not generally present any significant
liquidity risk to the Bank.
Outstanding commitments and standby letters of credit at December 31, 1992, are
as follows:
F-23
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Commitments to extend credit secured by real estate $ 356,951
Credit card arrangements $1,367,358
Other commitments to extend credit $1,539,015
Standby letters of credit $ 439,900
</TABLE>
Note 12 - CONTINGENT LIABILITIES
Employees of the Bank are entitled to paid vacation, paid sick days, and
personal days off, depending on job classification, length of service, and
other factors. It is impracticable to estimate the amount of compensation for
future absences, and accordingly, no liability has been recorded in the
accompanying financial statements. The Bank's policy is to recognize the cost
of compensated absences when actually paid to employees.
Note 13 - CONCENTRATION OF CREDIT
Substantially all of the Bank's loans, commitments, and standby letters of
credit have been granted to customers in the Bank's market area, which is
Beaumont, Texas, and the surrounding counties. Most customers are depositors
of the Bank. Investments in state and municipal securities involve
governmental entities within Texas. The concentrations of credit by type of
loan are set forth in Note 4. The Bank, as a matter of policy, does not extend
credit to any single borrower or group of related borrowers in excess of
$725,000.
PARKDALE BANK
NOTES TO FINANCIAL STATEMENTS
Note 14 - STOCK OPTION PLAN
In 1991 the Bank modified its stock option plan. Under the modified plan an
officer of the Bank had an option to purchase 9,100 shares of the Bank's common
stock at $7.94 per share. The officer exercised the option on December 31,
1991, and 9,100 shares of stock previously held in treasury were issued.
In 1992 the Bank entered into another stock option plan. Under the plan, an
officer of the Bank has an option to purchase 5,000 shares of the Bank's common
stock at $21.43 per share through December 31, 1996. As of December 31, 1992,
this option had not been exercised.
Outstanding stock options have been considered as common stock equivalents in
the computation of earnings per share.
F-24
<PAGE>
EXHIBIT A
---------
Section 215a of Title 12, United States Code
- --------------------------------------------
(a) One or more national banking associations or one or more State banks, with
the approval of the Comptroller, under an agreement not inconsistent with
sections 215-2150 of this title, may merge into a national banking
association located within the same State, under the charter of the
receiving association. The merger agreement shall --
(1) be agreed upon in writing by a majority of the board of directors of
each association or State bank participation in the plan of merger;
(2) be ratified and confirmed by the affirmative vote of the shareholders
of each such association or State bank owning at least two-thirds of
its capital stock outstanding, or by a greater proportion of such
capital stock in the case of a State bank if the laws of the State
where it is organized so require, at a meeting to be held on the call
of the directors, after publishing notice of the time, place, and
object of the meeting for four consecutive weeks in a newspaper of
general circulation published in the place where the association or
State bank is located, or, if there is no such newspaper, then in the
newspaper of general circulation published nearest thereto, and after
sending such notice to each shareholder of record by certified or
registered mail at least ten days prior to the meeting, except to
those shareholders who specifically waive notice, but any additional
notice shall be given to the shareholders of such State bank which may
be required by the laws of the State where it is organized.
Publication of notice may be waived, in cases where the Comptroller
determines that an emergency exists justifying such waiver, by
unanimous action of the shareholders of the association or State bank;
(3) specify the amount of the capital stock of the receiving association,
which shall not be less than that required under existing law for the
organization of a national bank in the place in which it is located
and which will be outstanding upon completion of the merger, the
amount of stock (if any) to be allocated, and cash (if any) to be
paid, to the shareholders of the association or State bank being
merged into the deceiving association; and
(4) provide that the receiving association shall be liable for all
liabilities of the association or State bank being merged into the
receiving association.
(b) If a merger shall be voted for at the called meetings by the necessary
majorities of the shareholders of each association or State bank
participating in the plan of merger, and thereafter the merger shall be
approved by the Comptroller, any shareholder of any association or State
bank to be merged into the receiving association who has voted against such
merger at the meeting of the association or bank of which he is a
stockholder, or has given notice in writing at or prior to such meeting to
A-1
<PAGE>
the presiding officer that he dissents from the plan of merger, shall be
entitled to receive the value of the shares so held by him which such
merger shall be approved by the Comptroller upon written request made to
the receiving association at any time before thirty days after the date of
consummation of the merger, accompanied by the surrender of his stock
certificates.
(c) The value of the shares of any dissenting shareholders shall be
ascertained, as of the effective date of the merger, by an appraisal made
by a committee of three persons, composed of (1) one selected by the vote
of the holders of the majority of the stock, the owners of which are
entitled to payment in cash; (2) one selected by the directors of the
receiving association; and (3) one selected by the two so selected. The
valuation agreed upon by any two of the three appraisers shall govern. If
the value so fixed shall not be satisfactory to any dissenting shareholder
who has requested payment, that shareholder may, within five days after
being notified of the appraised value of his shares, appeal to the
Comptroller, who shall cause a reappraisal to be made which shall be final
and binding as to the value of the shares of the appellant.
(d) If, within ninety days from the date of consummation of the merger, for any
reason one or more of the appraisers is not selected as herein provided, or
the appraisers fail to determine the value of such shares, the Comptroller
shall upon written request of any interested party cause an appraisal to be
made which shall be final and binding on all parties. The expenses of the
Comptroller in making the reappraisal or the appraisal, as the case may be,
shall be paid by the receiving association. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by the
receiving association. The shares of stock of the receiving association
which would have been delivered to such dissenting shareholders had they
not requested payment shall be sold by the receiving association at an
advertised public auction, and the receiving association shall have the
right to purchase any of such shares at such public auction, if it is the
highest bidder therefor, for the purpose of reselling such shares within
thirty days thereafter to such person or persons and at such price not less
than par as its board of directors by resolution may determine. If the
shares are sold at public auction at a price greater than the amount paid
to the dissenting shareholders, the excess in such sale price shall be paid
to such dissenting shareholders. The appraisal of such shares of stock in
any f State bank shall be determined in the manner prescribed by the law of
the State in such cases, rather than as provided in this section, if such
provision is made in the State law; and no such merger shall be in
contravention of the law of the State under which such bank is
incorporated. The provisions of this subsection shall apply only to
shareholders of (and stock owned by them in) a bank or association being
merged into the receiving association.
(e) The corporate existence of each of the merging banks or banking
associations participating in such merger shall be merged into and
continued in the receiving association and such receiving association shall
be deemed to be the same corporation as each bank or banking association
participating in the merger. All rights, franchises, and
A-2
<PAGE>
interests of the individual merging banks or banking associations in and to
every type of property (real, personal, and mixed) and choses in action
shall be transferred to and vested in the receiving association by virtue
of such merger without any deed or other transfer. The receiving
association, upon the merger and without any order or other action on the
part of the court or otherwise, shall hold and enjoy all rights of
property, franchises, and interests, including appointments, designations,
and nominations, and all other rights and interest as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates,
assignee, receiver, and committee of estates of lunatics, and in every
other fiduciary capacity, in the same manner and to the same extent as such
rights, franchises, and interests were held or enjoyed by any one of the
merging banks or banking associations at the time of the merger, subject to
the conditions hereinafter provided.
(f) Where any merging bank or banking association, at the time of the merger,
was acting under appointment of any court as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates,
assignee, receiver, or committee of estates of lunatics, or in any other
fiduciary capacity, the receiving association shall be subject to removal
by a court of competent jurisdiction in the same manner and to the same
extent as was such merging bank or banking association prior to the
merger. Nothing contained in this section shall be considered to impair in
any manner the right of any court to remove the receiving association and
to appoint in lieu thereof a substitute trustee, executor, or other
fiduciary, except that such right shall not be exercised in such a manner
as to discriminate against national banking associations, nor shall any
receiving association be removed solely because of the fact that it is a
national banking association.
(g) Stock of the receiving association may be issued as provided by the terms
of the merger agreement, free from any preemptive rights of the
shareholders of the respective merging banks.
A-3
<PAGE>
EXHIBIT B
Stock Appraisals
OCC Valuation Methods
Comptroller of the Currency. Administrator of National Banks. Banking
Bulletin 88-22. August 22, 1988.
TO: Chief Executive Officers of National Banks,
Deputy Comptrollers (District), Department and
Division Heads, and Examining Personnel
Purpose
- -------
This banking bulletin is to inform all national banks of the valuation methods
used by the Office of the Comptroller of the Currency to estimate the value of
a bank's shares when it is involved in a conversion, merger, or consolidation.
The results of appraisals performed for transactions that were consummated in
1985 and 1986 are also summarized.
References: 12 U.S.C. 214a, 215 and 215a; 12 CFR 11.590 (Item 2)
Background
- ----------
Under 12 U.S.C. Sections 214a, 215 and 215a, any shareholder dissenting to a
conversion, consolidation, or merger involving a national bank may request from
the resulting bank a valuation of the shares held by the dissenting
shareholder. A committee of three appraisers (a representative of the
dissenting shareholder, a representative of the resulting bank, and a third
appraiser selected by the other two) is then to be formed to appraise the value
of the shares. If the committee is formed and renders an appraisal that is
acceptable to the dissenting shareholder, the process is complete and the
appraised value of the shares is paid to the dissenting shareholder by the
resulting bank. If, for any reason, the committee is not formed or if it
renders an appraisal that is not acceptable to the dissenting shareholder, an
interested party may request an appraisal by the Office of the Comptroller of
the Currency (OCC).
The above provides only a general overview of the appraisal process. The
specific requirements of the process are set forth in the statutes themselves.
Methods of Valuation Used
- -------------------------
Through its appraisal process, the OCC attempts to arrive at a fair estimate of
the value of a bank's shares. After reviewing the particular facts in each
case and the available information on a bank's shares, the OCC selects an
appropriate valuation method, or combination of methods, to determine a
reasonable estimate of the shares' value.
B-1
<PAGE>
Market Value
- ------------
The OCC uses various methods to establish the market value of shares being
appraised. If sufficient trading in the shares exists and the prices are
available from direct quotes from The Wall Street Journal or a market-maker,
-----------------------
those quotes are considered in determining the market value. If no market
value is readily available, or if the market value available is not well
established, other methods of estimating market value can be used, such as the
investment value and adjusted book value methods.
Investment Value
- ----------------
Investment value requires an assessment of the value to investors of a share in
the future earnings of the target bank. Investment value is estimated by
applying an average price/earnings ratio of banks with similar earnings
potential to the earnings capacity of the target bank.
The peer group selection is based on location, size, and earnings patterns. If
the state in which the subject bank is located provides a sufficient number of
comparable banks using locations, size and earnings patterns as the criteria
for selection, the price/earnings ratios assigned to the banks are applied to
the earnings per share estimated for the subject bank. In order to select a
reasonable peer group when there are too few comparable independent banks in a
location that is comparable to that of the subject bank, the pool of banks from
which a peer group is selected is broadened by including one-bank holding
company banks in a comparable location, and/or by selecting banks in less
comparable locations, including adjacent states, that have earnings patterns
similar to the subject bank.
Adjusted Book Value
- -------------------
As a rule, the OCC does not place any weight on "unadjusted book value." While
book value is a type of value, it is based on historical acquisition costs of
the bank's assets, and does not reflect investors' perceptions of the value of
the bank as a going concern. The OCC does consider "adjusted book value."
Adjusted book value is calculated by multiplying the book value of the target
bank's assets per share times the average market price to book value ratio of
comparable banking organizations. The average market price to book value ratio
measures the premium or discount to book value which investors attribute to
shares of similarly situated banking organizations.
Both the investment value method and the adjusted book value method present
appraised values which are based on the target bank's value as a going
concern. These techniques provide estimates of the market value of the shares
of the subject bank.
Overall Valuation
- -----------------
The OCC may use more than one of the above-described methods in deriving the
value of shares of stock. If more than one method is used, varying weights may
be applied in reaching an overall valuation. The weight given to the value by
a particular valuation method is based on how accurately the given method is
believed to represent market value. For example, more weight may be
B-2
<PAGE>
given to a market value representing infrequent trading by shareholders than to
the value derived from the investment value method when the subject bank's
earnings trend is so irregular that it is considered to be a poor predictor of
future earnings.
Purchase Premiums
- -----------------
For mergers and consolidations, the OCC recognizes that purchase premiums do
exist and may, in some instances, be paid in the purchase of small blocks of
shares. However, the payment of purchase premiums depends entirely on the
acquisition or control plans of the purchaser, and such payments are not
regular or predictable elements of market value. Consequently, the OCC's
valuation methods do not include consideration of purchase premiums in arriving
at the value of shares.
Statistical Data
- ----------------
The chart below lists the results of appraisals performed by the OCC for
transactions that were consummated in 1985 and 1986. The statistical data on
book value and price/earnings ratios are provided for comparative purposes and
are not necessarily relied on by the OCC in determining the value of the bank's
shares. These historical data are provided to inform banks and investors about
the results of past appraisals and should not be viewed as determinative for
future appraisals.
In connection with disclosures given to shareholders under 12 CFR 11.590 (Item
2), banks may provide shareholders a copy of this banking bulletin or disclose
the information contained herein, including the past results of OCC
appraisals. If the bank discloses the past results of the OCC appraisals, it
should advise shareholders that (1) the OCC did not rely on all the information
set forth in the chart in performing each appraisal and (2) that the OCC's past
appraisals are not necessarily determinative of its future appraisals of a
particular bank's shares.
B-3
<PAGE>
Appraisal Results
OCC Average Price/
Appraisal Appraisal Price Book Earnings Ratio
Date Value Offered Value of Peer Group
1/1/85 107.05 110.00 178.29 5.3
1/2/85 73.16 NA 66.35 6.8
1/15/85 53.41 60.00 83.95 4.8
1/31/85 22.72 20.00 38.49 5.4
2/1/85 30.63 24.00 34.08 5.7
2/25/85 27.74 27.55 41.62 5.9
4/30/85 25.98 35.00 42.21 4.5
7/30/85 3,153.10 2,640.00 6,063.66 NC
9/1/85 17.23 21.00 21.84 4.7
11/22/85 316.74 338.75 519.89 5.0
11/22/85 30.28 NA 34.42 5.9
12/16/85 66.29 77.00 89.64 5.6
12/27/85 60.85 57.00 119.36 5.3
12/31/85 61.77 NA 73.56 5.9
12/31/85 75.79 40.00 58.74 12.1
1/12/86 19.93 NA 26.37 7.0
3/14/86 59.02 200.00 132.20 3.1
4/21/86 40.44 35.00 43.54 6.4
5/2/86 15.50 16.50 23.69 5.0
7/3/86 405.74 NA 612.82 3.9
7/31/86 297.34 600.00 650.63 4.4
8/2/86 103.53 106.67 136.23 NC
The "Appraisal Date" is the consummation date for the conversion,
consolidation, or merger.
NA--Not Available
NC--Not Computed
B-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Section 1701.13(E) of the OGCL sets forth provisions which define the extent
to which a corporation may indemnify directors, officers, and employees. Those
provisions have been adopted by the Registrant in Article V of Registrant's Code
of Regulations. Article V provides for the indemnification or the purchase of
insurance for the benefit of the directors, officers, employees and agents of
the Registrant in the event such persons are subject to legal action as a result
of actions in their capacities as directors, officers, employees or agents of
the Registrant. Registrant has entered into indemnification agreements with its
directors and executive officers that provide for indemnification unless the
indemnitee's conduct is finally adjudged by a court to be knowingly fraudulent,
deliberately dishonest or willful misconduct. Registrant indemnifies other
officers, employees or agents provided such persons acted in good faith and in a
manner which they reasonably believed to be in or not opposed to the best
interest of the Registrant or, with respect to criminal actions, had no reason
to believe was unlawful.
Item 21. Exhibits and Financial Statement Schedules.
The following exhibits are filed herewith except those indicated which have
been filed previously as shown below and which are incorporated herein by
reference.
2.1* Merger Agreement dated June 7, 1993, between PARKDALE BANK and Bank
One, Texas, N.A., joined in by BANC ONE CORPORATION.
2.3* Form of Proxy to be used by PARKDALE BANK
3.1 Amended Articles of Incorporation of the Registrant (incorporated by
reference from Exhibit 3-1 of the Annual Report of the Registrant on Form
10-K for the year ended December 31, 1991.)
3.2 Code of Regulations of the Registrant (incorporated by reference from
Exhibit 3-2 of the Annual Report of the Registrant on Form 10-K for the
year ended December 31, 1991).
3.3* Amended Articles of Incorporation of PARKDALE BANK
3.4* Amended By-Laws of PARKDALE BANK
4.1 Form of Common Stock Certificate of the Registrant (incorporated by
reference from Exhibit 4.1 to the Annual Report of the Registrant on Form
10-K for the year ended December 31, 1989).
5* Opinion of Roman J. Gerber, General Counsel and Executive Vice President
of BANC ONE CORPORATION, regarding the legality of securities being
offered, including consent.
8* Opinion of Coopers & Lybrand regarding the Federal income tax
consequences of the Merger, including consent.
10.1* Indenture of Lease dated July 20, 1973 between Ben J. Rogers,
Trustee, and Rosedale Bank
10.2* Bank Contract for Electronic Data Processing Services and
Customerfile System dated November 24, 1992 between Fiserv Financial
Systems, Inc. and Parkdale Bank
II-1
<PAGE>
24 Consents of Coopers & Lybrand and Roman J. Gerber are included
elsewhere in Part II of this Registration Statement.
24.1* Consent of Coopers & Lybrand
24.2* Consent of McClelland Samuel & Fehnel, L.L.P.
25 Power of attorney is included elsewhere in Part II of this Registration
Statement.
- --------
* Previously filed.
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 that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(b) 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.
(c) The Registrant hereby undertakes that every prospectus (i) that is
filed pursuant to paragraph (a) above, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933 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 has become effective, and that for the
purpose of determining liabilities under the Act, 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) 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.
(e) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated documents by
first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
II-2
<PAGE>
(f) 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.
(g) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement:
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Columbus,
State of Ohio, on January 28, 1994.
BANC ONE CORPORATION
By: /s/ William C. Leiter
-------------------------------
William C. Leiter
Senior Vice President
POWER OF ATTORNEY
We, the undersigned officers and directors of BANC ONE CORPORATION, hereby
severally constitute and appoint Roman J. Gerber, George R. L. Meiling and
William C. Leiter, our true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for us and in our stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents relating thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
WITNESS our hands and common seal on the dates set forth below.
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
John B. McCoy* Chairman of the Board January 28, 1994
- ---------------------- (Principal Executive Officer
John B. McCoy & Director)
Donald L. McWhorter* President and Director January 28, 1994
- ----------------------
Donald L. McWhorter
Frederick L. Cullen* Chief Financial Officer January 28, 1994
- ---------------------- (Principal Financial Officer)
Frederick L. Cullen
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William C. Leiter Senior Vice President January 28, 1994
- ------------------------------ (Principal Accounting
William C. Leiter Officer)
Charles E. Exley* Director January 28, 1994
- ------------------------------
Charles E. Exley
E. Gordon Gee* Director January 28, 1994
- ------------------------------
E. Gordon Gee
John R. Hall* Director January 28, 1994
- ------------------------------
John R. Hall
Laban P. Jackson, Jr.* Director January 28, 1994
- ------------------------------
Laban P. Jackson, Jr.
John G. McCoy* Director January 28, 1994
- ------------------------------
John G. McCoy
Rene C. McPherson* Director January 28, 1994
- ------------------------------
Rene C. McPherson
Thekla R. Shackelford* Director January 28, 1994
- ------------------------------
Thekla R. Shackelford
Frederick P. Stratton, Jr.* Director January 28, 1994
- ------------------------------
Frederick P. Stratton, Jr.
Romeo J. Ventres* Director January 28, 1994
- ------------------------------
Romeo J. Ventres
Robert D. Walter* Director January 28, 1994
- ------------------------------
Robert D. Walter
Director
- ------------------------------
Leslie H. Wexner
Alex Schumate* Director January 28, 1994
- ------------------------------
Alex Schumate, Esq.
</TABLE>
* By /s/ William C. Leiter
---------------------
William C. Leiter, Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. EXHIBIT TITLE Page
- ----------- -------------------------------------------- ---------
<S> <C> <C>
2.1* Merger Agreement dated June 7, 1993 between
Parkdale Bank and Bank One, Texas, N.A., joined
in by BANC ONE CORPORATION and Banc One Texas
Corporation
2.3* Form of Proxy to be used by Parkdale Bank
3.3* Amended Articles of Incorporation of Parkdale
Bank
3.4* Amended By-Laws of Parkdale Bank
5* Opinion of Roman J. Gerber, General Counsel for
BANC ONE CORPORATION regarding legality of
securities being offered, including consent
8* Opinion of Coopers & Lybrand regarding federal
income tax consequences, including consent
10.1* Indenture of Lease dated as of July 20, 1973
between Ben J. Rogers, Trustee, and Rosedale
Bank
10.2* Contract for On-Line Electronic Data Processing
Services dated November 24, 1992 between Fiserv
Financial Systems, Inc. and Parkdale Bank
24.1* Consent of Coopers & Lybrand
24.2* Consent of McClelland, Samuel & Fehnel, L.L.P.
</TABLE>
- --------
*Previously filed.
