<PAGE> 1
As filed with the Securities and
Exchange Commission on _________, 1996
Registration No. 33-________________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
TRUSTMARK CORPORATION
(Exact name of Registrant as specified in charter)
MISSISSIPPI 6712 64-0471500
(State or other jurisdiction of Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
248 East Capitol Street
Jackson, MS 39201
(601) 354-5111
(Address, including Zip Code,
and telephone, including area code, of
Registrant's principal executive offices)
GERARD R. HOST
TRUSTMARK CORPORATION
248 East Capitol Street
Jackson, Mississippi 39201
(601) 949-6651
(Name, address, including Zip Code, and telephone
number, including area code, of agent for service)
Copies of communications to:
ROBERT D. DRINKWATER
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
P. O. Drawer 119
Jackson, Mississippi 39205
and
CRAIG N. LANDRUM
WATKINS LUDLAM & STENNIS, P.A.
633 North State Street
Jackson, Mississippi 39205-0427
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
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE PROPOSED
OF EACH MAXIMUM PROPOSED
CLASS OF OFFERING MAXIMUM AMOUNT
SECURITIES AMOUNT PRICE AGGREGATE OF
TO BE TO BE PER OFFERING REGISTRATION
REGISTERED REGISTERED (1) UNIT (2) PRICE (2) FEE
---------- -------------- -------- --------- ---
<S> <C> <C> <C> <C>
Common Stock 1,717,370 $9.64 $16,563,929 $3,318
</TABLE>
(1) Maximum number of shares issuable in connection with the mergers.
(2) Based on book value of FCC shares and NBC minority shares (Rule
457(f)(2)).
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> 3
TRUSTMARK CORPORATION
Cross-Reference Sheet Showing Location in
Proxy Statement-Prospectus of Information
Required by Items of Form S-4
Form S-4
Item Heading Location in Proxy Statement-Prospectus
- ------------ --------------------------------------
Item 1 Facing Page of Registration Statement; Outside front cover
of Proxy Statement-Prospectus
Item 2 Available Information; Incorporation of Certain Information
by Reference; Table of Contents
Item 3 Summary
Item 4 Summary; General Information - The Merger Agreement;
- Background of and Reasons for the Mergers; - Accounting
Treatment; - Federal Income Tax Consequences; - Comparison
of Rights of Shareholders
Item 5 NA
Item 6 General Information - Background of and Reasons for the
Mergers
Item 7 NA
Item 8 General Information - Legal Opinion
Item 9 NA
Item 10 Available Information; Incorporation of Certain Information
by Reference; Summary; General Information - Trustmark
Corporation and Trustmark National Bank
Item 11 Incorporation of Certain Information by Reference
Item 12 NA
Item 13 NA
Item 14 NA
Item 15 NA
Item 16 NA
<PAGE> 4
Item 17 General Information - First Corinth Corp. and National Bank
of Commerce of Corinth; Summary - Markets and Market Prices;
- First Corinth Corp. and National Bank of Commerce of
Corinth Selected Financial Data; First Corinth Corp.
Management's Discussion and Analysis of Financial Condition
and Results of Operations; Financial Statements of First
Corinth Corp. and Subsidiary; Financial Statements of
National Bank of Commerce of Corinth
Item 18 Summary; General Information - First Corinth Corp. Special
Meeting; Voting; Proxies; Revocation; - National Bank of
Commerce of Corinth Special Meeting; Voting; - Voting
Securities and Principal Holders Thereof; - Rights of
Dissenting Shareholders; Incorporation of Certain
Information by Reference
Item 19 General Information - National Bank of Commerce of Corinth
Special Meeting; Voting; - Right of Dissenting Shareholders;
- Voting Securities and Principal Holders Thereof
<PAGE> 5
PROXY STATEMENT
OF
FIRST CORINTH CORP.
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _________, 199__
INFORMATION STATEMENT
OF
NATIONAL BANK OF COMMERCE OF CORINTH
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _________, 199__
PROSPECTUS
OF
TRUSTMARK CORPORATION
Relating to up to 1,717,370 shares of
COMMON STOCK
This Proxy Statement-Prospectus is being furnished to the holders of
shares of the common stock of First Corinth Corp., a Mississippi corporation
("FCC"), in connection with the solicitation of proxies by the Board of
Directors of FCC for use at a special meeting of shareholders and any
adjournment thereof (the "FCC Special Meeting") to be held on ___________,
199__, at 11:00 o'clock a.m., local time, at 501 Fillmore Street, Corinth,
Mississippi 38834. At the FCC Special Meeting, the shareholders of FCC will
be asked to vote upon the proposed merger (the "Merger") of FCC with and into
Trustmark Corporation, a Mississippi corporation ("Trustmark") in connection
with which, subject to certain adjustments based on the price of Trustmark's
common shares, each share of the outstanding common stock of FCC will be
converted into 12.9545 shares of the common stock of Trustmark.
This Proxy Statement-Prospectus is additionally being furnished as an
Information Statement to the holders of shares of the common stock of National
Bank of Commerce of Corinth, a national banking association ("NBC") in
connection with a special meeting of NBC's shareholders and any adjournment
thereof (the "NBC Special Meeting") to be held on ______ ______, 199__, at
11:30 o'clock a.m., local time, at 501 Fillmore Street, Corinth, Mississippi
38834. At the NBC Special Meeting, the shareholders of NBC will be asked to
vote upon the proposed merger of NBC with Trustmark National Bank ("Trustmark
Bank"), under the charter of Trustmark Bank (the "Bank Merger"), in connection
with which, subject to certain adjustments based on the market price of
Trustmark's common shares, each share of the outstanding common stock of NBC
will be converted into 13.4825 shares of the common stock of Trustmark. The
Merger and the Bank Merger are hereafter collectively referred to as the
"Mergers."
This Proxy Statement-Prospectus also constitutes the prospectus of
Trustmark relating to (i) up to 1,692,000 shares of
<PAGE> 6
Trustmark common stock to be issued to FCC's shareholders pursuant to the
Merger, and (ii) up to 25,370 shares of Trustmark common stock to be issued to
NBC's shareholders pursuant to the Bank Merger.
------------------------------------
THE SHARES OF TRUSTMARK TO BE ISSUED PURSUANT TO THE MERGERS HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------
The date of this Proxy Statement-Prospectus is ________, 1996.
ii
<PAGE> 7
AVAILABLE INFORMATION
Trustmark 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"). A Registration
Statement on Form S-4 under the Securities Act of 1933, as amended, including
this Proxy Statement-Prospectus, has been filed by Trustmark with the
Commission with respect to the Trustmark common shares to be issued upon
consummation of the Mergers. For further information pertaining to Trustmark
and the shares of Trustmark to which this Proxy Statement-Prospectus relates,
reference is made to such Registration Statement, including the Exhibits filed
as a part thereof. As permitted by the rules and regulations of the
Commission, certain information included in the Registration Statement is
omitted from this Proxy Statement-Prospectus. Copies of the Registration
Statement, as well as the reports, proxy statements and other information that
Trustmark has filed with the Commission can be obtained from the Commission at
prescribed rates by addressing a written request for such copies to the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.,
20549. In addition, the reports, proxy statements and other information filed
by Trustmark with the Commission can be inspected and copied at the public
reference facilities referred to above, the Commission's Web site
(http://www.sec. gov), and at the regional offices of the Commission at:
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois, 60661; and New York Regional Office, 7 World Trade Center, Suite
1300, New York, New York, 10048. Trustmark's common shares are included for
quotation on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ/NMS") and reports, proxy statements and other
information concerning Trustmark are available for inspection and copying at
the offices of the National Association of Securities Dealers, 1735 K Street,
N.W. Washington, D.C., 20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement-Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. Such documents relating
to Trustmark are available without charge upon written or oral request.
Requests for copies of documents related to Trustmark should be directed to
Trustmark Corporation, 248 East Capitol Street, Jackson, Mississippi, 39201,
ATTN: Gerard R. Host, Telephone Number (601) 949-6651. In order to ensure
timely delivery of the documents, any request should be made at least ten days
prior to the date of the Special Meetings.
The following documents filed by Trustmark with the Commission under
Section 13 of the Exchange Act are hereby incorporated by reference into this
Proxy Statement-Prospectus: (i) Trustmark's
iii
<PAGE> 8
Annual Report on Form 10-K for the year ended December 31, 1995; (ii)
Trustmark's Proxy Statement in connection with its 1996 Annual Shareholders'
Meeting; (iii) Trustmark's Quarterly Reports on Form 10-Q for the periods ended
March 31, June 30 and September 30, 1996; and (iv) the description of
Trustmark's common stock contained in the registration of Trustmark's common
stock pursuant to Section 12 of the Exchange Act, and all amendments thereto.
All documents filed by Trustmark pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
Special Meetings are hereby incorporated by reference into this Proxy
Statement- Prospectus and shall be deemed a part hereof from the date of filing
of such documents.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement-Prospectus and, if given
or made, such information or representation should not be relied upon as having
been authorized. This Proxy Statement-Prospectus does not constitute an offer
to sell, or a solicitation of an offer to purchase, the securities offered by
this Proxy Statement-Prospectus, or the solicitation of a proxy, in any
jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Proxy Statement-Prospectus nor any
distribution of the securities to which this Proxy Statement-Prospectus relates
shall, under any circumstances, create any implication that there has been no
change in the affairs of Trustmark since the date hereof.
This Proxy Statement-Prospectus does not relate to any resales of
Trustmark common stock received by any person upon consummation of the Merger,
and no person is authorized to make any use of this Proxy Statement-Prospectus
in connection with any such resale.
iv
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . iii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Votes Required . . . . . . . . . . . . . . . . . . . . . . . . . 3
Boards of Directors' Recommendations . . . . . . . . . . . . . . 3
Representations, Warranties, Covenants and Conditions . . . . . 4
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Federal Income Tax Consequences . . . . . . . . . . . . . . . . 5
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 6
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . 6
Resales of Trustmark Shares . . . . . . . . . . . . . . . . . . 6
Regulatory Authority Approvals . . . . . . . . . . . . . . . . . 6
Markets and Market Prices . . . . . . . . . . . . . . . . . . . 6
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . 7
Trustmark Corporation and Subsidiaries
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 11
First Corinth Corp. and Subsidiary Selected
Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . 12
National Bank of Commerce of Corinth Selected
Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . 13
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Trustmark Corporation and Trustmark National Bank . . . . . . . . 17
First Corinth Corp. and National Bank of Commerce
of Corinth . . . . . . . . . . . . . . . . . . . . . . . . 17
First Corinth Corp. Special Meeting; Voting; Proxies;
Revocation . . . . . . . . . . . . . . . . . . . . . . . 18
National Bank of Commerce of Corinth Special Meeting; Voting . . 19
Voting Securities and Principal Holders Thereof . . . . . . . . 19
Background of and Reasons for the Mergers . . . . . . . . . . . 20
The Merger Agreement . . . . . . . . . . . . . . . . . . . . . . 21
Procedure for Exchange of Certificates . . . . . . . . . . . . . 28
Rights of Dissenting Shareholders . . . . . . . . . . . . . . . 29
Federal Income Tax Consequences . . . . . . . . . . . . . . . . 33
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 35
Resales of Trustmark Common Shares . . . . . . . . . . . . . . . 35
Regulatory Authority Approvals . . . . . . . . . . . . . . . . . . 36
Management and Operations After the Mergers . . . . . . . . . . 36
Comparison of Rights of Shareholders . . . . . . . . . . . . . . 36
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
v
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<TABLE>
<S> <C>
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FIRST CORINTH
CORP.; NATIONAL BANK OF COMMERCE OF CORINTH . . . . . . . . . . . . . . . . 39
FIRST CORINTH CORP. AND SUBSIDIARY CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 1995, 1994 AND 1993 . . . . . . . . . . . . . . . . 62
FIRST CORINTH CORP. AND SUBSIDIARY CONSOLIDATED FINANCIAL
STATEMENTS SEPTEMBER 30, 1996 AND 1995 (UNAUDITED) . . . . . . . . . . . . 87
NATIONAL BANK OF COMMERCE OF CORINTH FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993 . . . . . . . . . . . . . . . . . . . . . 90
NATIONAL BANK OF COMMERCE OF CORINTH FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995 (UNAUDITED) . . . . . . . . . . . . . . . . . 110
EXHIBIT "A" DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . 119
</TABLE>
vi
<PAGE> 11
SUMMARY
The following summary is not intended to be complete and is qualified
in all respects by the more detailed information included in this Proxy
Statement-Prospectus or incorporated herein by reference. Shareholders are
urged to carefully review the entire Proxy Statement-Prospectus and other
documents to which this Proxy Statement-Prospectus refers. All information
concerning Trustmark and Trustmark Bank included in this Proxy
Statement-Prospectus has been furnished by Trustmark, and all information
concerning FCC and NBC has been furnished by FCC. Neither Trustmark nor FCC
warrants the accuracy or completeness of information relating to any other
party.
THE PARTIES
Trustmark Corporation and Trustmark National Bank
Trustmark, a Mississippi corporation, is a one-bank holding company
which owns 100 percent of the outstanding shares of Trustmark Bank. As of
September 30, 1996, Trustmark had total assets of $5,097,928,000, net loans of
$2,524,900,000, total deposits of $3,519,342,000 and total stockholders' equity
of $511,110,000. Through Trustmark Bank, Trustmark conducts a general
commercial banking and trust business. Trustmark's principal executive offices
are located at 248 East Capitol Street, Jackson, Mississippi, 39201, Telephone
Number (601) 354-5111. See the heading "General Information - Trustmark
Corporation and Trustmark National Bank."
First Corinth Corp. and National Bank of Commerce of Corinth
FCC, a Mississippi corporation, is a one-bank holding company which
owns approximately 98.5 percent of the outstanding shares of NBC. As of
September 30, 1996, FCC had total assets of $139,070,000, net loans of
$64,771,000, total deposits of $114,920,000 and total stockholders' equity of
$16,352,000. Through NBC, FCC conducts a general commercial banking business
through four banking facilities located in Corinth, Mississippi. FCC's
principal executive offices are located at 501 Fillmore Street, Corinth,
Mississippi, 38834, Telephone Number (601) 287-2471. See the heading "General
Information - First Corinth Corp. and National Bank of Commerce of Corinth."
THE MERGERS
The Merger
Pursuant to the Merger Agreement among Trustmark, Trustmark Bank, FCC
and NBC dated as of October 2, 1996 and the First Amendment dated December 11,
1996 (collectively, the "Merger Agreement") FCC will be merged with and into
Trustmark, with Trustmark as the surviving corporation. As a result of the
Merger,
1
<PAGE> 12
other than shares with respect to which holders have perfected their
dissenters' rights of appraisal, and subject to certain adjustments based on
the market price of Trustmark's common shares, each outstanding share of the
common stock of FCC issued and outstanding on the Effective Date of the Merger
(the date the Merger is consummated) shall be converted into 12.9545 shares of
Trustmark common stock, and shareholders of FCC on the Effective Date of the
Merger will become shareholders of Trustmark. Any fractional Trustmark shares
which would otherwise be issued as a result of the Merger will not be issued.
Instead, cash will be paid to FCC shareholders in lieu of fractional Trustmark
shares. See the heading, "General Information - The Merger Agreement."
The Bank Merger
Pursuant to the Merger Agreement, NBC will be merged with and into
Trustmark Bank, under the charter of Trustmark Bank. As a result of the Bank
Merger, other than shares with respect to which holders have perfected their
dissenters' rights of appraisal, and subject to certain adjustments based on
the market price of Trustmark's common shares, each outstanding share of the
common stock of NBC owned by shareholders other than FCC on the Effective Date
of the Bank Merger shall be converted into 13.4825 shares of the common stock
of Trustmark, and shareholders of NBC on the Effective Date of the Bank Merger
(other than FCC) will become shareholders of Trustmark. Any fractional
Trustmark shares which would otherwise be issued as a result of the Bank Merger
will not be issued. Instead, cash will be paid to NBC shareholders in lieu of
fractional Trustmark shares. See the headings "General Information - The Merger
Agreement and - Background of and Reasons for the Mergers."
THE SPECIAL MEETINGS
FCC
The FCC Special Meeting to consider and vote on the Merger will be
held on ___________, 199__, at 11:00 o'clock a.m., local time, at 501 Fillmore
Street, Corinth, Mississippi 38834. Only holders of record of FCC's common
shares at the close of business on ________, 199__ (the "FCC Record Date") will
be entitled to notice of and to vote at the FCC Special Meeting. See the
heading "General Information - First Corinth Corp. Special Meeting; Voting;
Proxies; Revocation."
National Bank of Commerce of Corinth
The NBC Special Meeting to consider and vote on the Bank Merger will
be held on ________________, 199__, at 11:30 o'clock a.m., local time, at 501
Fillmore Street, Corinth, Mississippi 38834. Only holders of record of NBC's
common shares at the close of business on _____________, 199__, (the "NBC
Record Date") will
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<PAGE> 13
be entitled to notice of and to vote at the NBC Special Meeting. See the
heading "General Information - National Bank of Commerce of Corinth Special
Meeting; Voting."
VOTES REQUIRED
The Merger
Approval of the Merger requires the affirmative vote of a majority
(56,101) of the 112,200 outstanding shares of FCC. A vote of Trustmark's
shareholders is not required to approve the Merger.
As of ________, 1996, FCC and NBC's directors and officers (vice
president and above) beneficially owned approximately 45,938 (40.72 percent) of
the outstanding shares of FCC common stock. FCC's and NBC's directors, which
own 43,238 (38.33 percent) shares, have agreed to vote their FCC shares in
favor of the Merger. The foregoing assumes that W. Hull Davis exercises options
to purchase 600 additional shares of the common stock of FCC. See the heading
"General Information - First Corinth Corp. Special Meeting; Voting; Proxies;
Revocation."
The Bank Merger
Approval of the Bank Merger requires the affirmative vote of
two-thirds of the outstanding shares of NBC and Trustmark Bank. Trustmark,
which owns 100 percent of the Trustmark Bank shares, intends to vote its shares
in favor of the Bank Merger and FCC, which owns 98.5 percent of the outstanding
NBC shares, intends to vote its shares in favor of the Bank Merger. NBC is not
soliciting proxies in connection with the NBC Special Meeting. See the heading
"General Information - National Bank of Commerce of Corinth Special Meeting;
Voting."
BOARDS OF DIRECTORS' RECOMMENDATIONS
The Merger
The Board of Directors of FCC, which is soliciting proxies in
connection with the Special Meeting, unanimously voted to approve the Merger
and recommends that FCC's shareholders vote FOR adoption of the Merger
Agreement. See the heading "General Information - Background of and Reasons
for the Mergers."
3
<PAGE> 14
The Bank Merger
The Board of Directors of NBC unanimously voted to approve the Bank
Merger and recommends that NBC's shareholders vote FOR adoption of the Merger
Agreement. See the heading "General Information -Background of and Reasons for
the Mergers."
REPRESENTATIONS, WARRANTIES, COVENANTS AND CONDITIONS
Pursuant to the Merger Agreement, both Trustmark and FCC made certain
representations and warranties to the other. The continued truth and accuracy
of those representations and warranties is a condition to consummation of the
Mergers.
Trustmark's and Trustmark Bank's obligations to consummate the Mergers
are subject to, among other things: (i) the approval of the Mergers by FCC and
NBC's Boards of Directors and shareholder(s); (ii) receipt of all required
approvals of regulatory authorities; (iii) Trustmark's receipt of the opinion
of Arthur Andersen LLP that the Mergers can be accounted for as a "pooling of
interests" for financial reporting purposes and the Securities and Exchange
Commission not having asserted or threatened to assert a contrary
determination; (iv) no material adverse change having occurred in the financial
condition, tangible properties or prospects of FCC or NBC since Trustmark's
completion of its review of FCC's books and records in November 1996; (v) the
reserve for loan losses then maintained by NBC being adequate to provide for
the anticipated loan losses of NBC as of such date in accordance with accepted
audit, bank examination and bank regulatory standards, and the tangible assets
of FCC, excluding NBC, having a fair market value equal to or greater than its
liabilities; (vi) Trustmark having received the legal opinion of counsel to FCC
in accordance with the Merger Agreement; and (vii) Trustmark's satisfaction
that the Mergers will qualify as tax-free reorganizations for federal income
tax purposes.
FCC and NBC's obligations to consummate the Mergers are subject to,
among other things: (i) the approval of the Mergers by the Board of Directors
of Trustmark and the Board of Directors and Shareholders of Trustmark Bank;
(ii) receipt of all required approvals of regulatory authorities; (iii) FCC's
satisfaction that the Merger will qualify as a tax-free reorganization for
federal income tax purposes; (iv) receipt of the opinion of counsel to
Trustmark in accordance with the Merger Agreement; and (v) no material adverse
change having occurred in the condition, financial or otherwise, of Trustmark
or Trustmark Bank since December 31, 1995. See the heading "General
Information - The Merger Agreement."
4
<PAGE> 15
TERMINATION
The Merger Agreement may be terminated and the Mergers abandoned under
certain circumstances. See the heading "General Information - The Merger
Agreement."
EFFECTIVE DATE
The Effective Date, which is currently targeted for _______, 1997,
will occur as soon as practicable following receipt of: (i) the approval of
the Comptroller of the Currency and passage of the required waiting period
following such approval, (ii) the approval of the Federal Reserve Board and
passage of any required waiting period following such approval, (iii) approval
of the Mergers by the shareholders of FCC and NBC, and (iv) the satisfaction of
all other conditions to consummation of the Mergers. See the heading "General
Information - Regulatory Authority Approvals."
DIVIDENDS
Depending upon NBC's 1996 earnings, FCC is permitted to pay cash
dividends of up to $9.00 per share prior to the Effective Date. If earnings
are at least $2.3 million, a $9.00 per share dividend can be declared and paid.
If earnings are less than $2.3 million, the dividend shall be reduced by $1.00
per share for each $110,000 by which earnings are less than $2.3 million. NBC
is allowed to pay a dividend, not to exceed $16.29 per share, sufficient to
allow FCC to pay the dividend described above, certain FCC indebtedness and
FCC's expenses. See the heading "General Information - The Merger Agreement."
FEDERAL INCOME TAX CONSEQUENCES
The Merger
In the opinion of Brunini, Grantham, Grower & Hewes, PLLC the Merger
will constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986 and that FCC's shareholders, except to the extent
receiving cash in connection with the Merger and except for shareholders
exercising dissenters' rights of appraisal, will not recognize gain or loss for
federal income tax purposes upon the conversion of FCC common shares into
Trustmark common shares. See the heading "General Information - Federal Income
Tax Consequences."
The Bank Merger
In the opinion of Brunini, Grantham, Grower & Hewes, PLLC, counsel to
Trustmark, the Bank Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986 and that NBC's
shareholders, except to the extent receiving cash in connection with the Bank
Merger and except
5
<PAGE> 16
for shareholders exercising dissenters' rights of appraisal, will not recognize
gain or loss for federal income tax purposes upon the conversion of their NBC
common shares into Trustmark common shares. See the heading "General
Information - Federal Income Tax Consequences."
ACCOUNTING TREATMENT
It is anticipated that the Mergers will be accounted for as a "pooling
of interests" for financial reporting purposes. See the heading "General
Information - Accounting Treatment."
DISSENTERS' RIGHTS OF APPRAISAL
Pursuant to Mississippi law, FCC's shareholders will have dissenters'
rights of appraisal as a result of the Merger and will, accordingly, be
entitled to be paid cash for the value of their FCC shares. See the heading
"General Information - Rights of Dissenting Shareholders."
Pursuant to federal law, NBC's shareholders will have dissenters'
rights of appraisal as a result of the Bank Merger and will, accordingly, be
entitled to be paid cash for the value of their NBC shares. See the heading
"General Information - Rights of Dissenting Shareholders."
RESALES OF TRUSTMARK SHARES
Except for Trustmark shares held by "affiliates" of FCC, NBC, or
Trustmark, the Trustmark shares received as a consequence of the Merger will be
freely transferrable. See the heading "General Information - Resales of
Trustmark Common Shares."
REGULATORY AUTHORITY APPROVALS
Applications relating to the Mergers have been filed with the Federal
Reserve Board and the Office of the Comptroller of the Currency. The Mergers
are also subject to antitrust review by the United States Department of
Justice. As of the date hereof, no required regulatory authority approvals
have been obtained. See the heading "General Information - Regulatory
Authority Approvals."
MARKETS AND MARKET PRICES
The Merger
Trustmark's common shares are included for quotation on the
NASDAQ/NMS.
There is no active trading market for FCC's common shares. The last
transaction about which FCC's management has any information occurred in July
1995 when Hull Davis purchased 800
6
<PAGE> 17
shares from FCC at $125.00 per share. The book value of FCC's shares was
approximately $129.00 in July 1995.
The following table sets forth the closing price per share of
Trustmark common stock and the equivalent per share value of FCC common stock
on September 5, 1996, which was the last trading date preceding public
announcement of the proposed Merger, and on _______, 1996.
<TABLE>
<CAPTION>
Price of Trustmark FCC's Equivalent
Date Common Stock Per Share Value
- ---- ------------ ---------------
<S> <C> <C>
September 5, 1996 $22.25 $288.24
_________, 1996 $_____ $______
</TABLE>
The equivalent per share value of a share of FCC common stock at the
specified date represents the closing price of a share of Trustmark common
stock on such date multiplied by the conversion ratio of 12.9545, which is the
conversion ratio applicable to the Merger based on Trustmark's shares having a
value not less than $22.00 nor more $25.00 per share. See the heading "General
Information - The Merger Agreement."
The Bank Merger
There is no active trading market for the outstanding common shares of
NBC, and neither FCC nor NBC's management has any information concerning recent
transactions in NBC's shares.
The following table sets forth certain equivalent per share data
concerning NBC's outstanding common shares. This data represents the closing
price of Trustmark's common shares on September 5, 1996 and on ____________,
1996, multiplied by the conversion ratio of 13.4825, which is the conversion
ratio applicable to the Bank Merger, based on Trustmark's shares having a value
not less than $22.00 nor more than $25.00 per share.
<TABLE>
<CAPTION>
Price of Trustmark NBC's Equivalent
Date Common Stock Per Share Value
- ---- ------------ ---------------
<S> <C> <C>
September 5, 1996 $ 22.25 $ 299.99
_______, 1996 $______ $_______
</TABLE>
7
<PAGE> 18
COMPARATIVE PER SHARE DATA
The Merger
The following presents certain data concerning net income per share,
cash dividends per share and book value per share for Trustmark and
subsidiaries and FCC and subsidiary on a historical and pro forma basis. This
information is presented to assist FCC's shareholders in evaluating the effect
of the Merger, in connection with which, subject to certain adjustments, FCC's
shareholders will receive 12.9545 Trustmark common shares for each FCC share
held by them on the Effective Date.
The pro forma data gives effect to (i) the Merger accounted for as a
pooling of interests using an exchange ratio of 12.9545 Trustmark common shares
for each FCC common share, and (ii) the Bank Merger accounted for as a pooling
of interests using an exchange ratio of 13.4825 Trustmark common shares for
each NBC common share owned by NBC's minority shareholders. Equivalent pro
forma per share amounts for FCC are calculated by multiplying the pro forma
income per share, pro forma book value per share and pro forma dividends per
share of Trustmark by an exchange ratio of 12.9545. This information is not
necessarily indicative of the results of operations or combined financial
condition that would have resulted if the Mergers had been consummated at the
beginning of the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------- ---------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
TRUSTMARK CORPORATION
AND SUBSIDIARIES:
Net Income Per Share:
Historical $1.41 $1.28 $1.71 $1.58 $1.55
Pro Forma 1.40 1.27 1.70 1.57 1.54
Cash Dividends Per Share:
Historical 0.36 0.32 0.44 0.41 0.37
Pro Forma 0.36 0.32 0.44 0.41 0.37
Book Value Per Share:
Historical 14.64 13.71
Pro Forma 14.42 13.49
FIRST CORINTH CORP.
AND SUBSIDIARY:
Net Income Per Share:
Historical $ 15.28 $14.77 $ 18.00 $ 19.01 $18.43
Equivalent Pro Forma 18.14 16.45 22.02 20.34 19.95
Cash Dividends Per Share:
Historical 0.00 0.00 8.00 7.00 6.00
Equivalent Pro Forma 4.66 4.15 5.70 5.31 4.79
Book Value Per Share:
</TABLE>
8
<PAGE> 19
<TABLE>
<S> <C> <C>
Historical 146.00 133.54
Equivalent Pro Forma 186.80 174.76
</TABLE>
The Bank Merger
The following presents certain data concerning net income per share,
cash dividends per share and book value per share for Trustmark and
subsidiaries and NBC on a historical and pro forma basis. This information is
presented to assist NBC's shareholders in evaluating the effect of the Bank
Merger, in connection with which NBC's minority shareholders will receive
13.4825 Trustmark common shares for each NBC share held by them on the
Effective Date of the Bank Merger.
The pro forma data gives effect to (i) the Bank Merger accounted for
as a pooling of interests using an exchange ratio of 13.4825 Trustmark shares
for each NBC common share owned by NBC's minority shareholders, and (ii) the
Merger accounted for as a pooling of interests using an exchange ratio of
12.9545 Trustmark common shares for each FCC share. Equivalent pro forma per
share amounts are calculated by multiplying the pro forma income per share, pro
forma book value per share and pro forma dividends per share by an exchange
ratio of 13.4825. This information is not necessarily indicative of the
results of operations or combined financial condition that would have resulted
if the Mergers had been consummated at the beginning of the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------- ---------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
TRUSTMARK CORPORATION
AND SUBSIDIARIES:
Net Income Per Share:
Historical $1.41 $1.28 $1.71 $1.58 $1.55
Pro Forma 1.40 1.27 1.70 1.57 1.54
Cash Dividends Per Share:
Historical 0.36 0.32 0.44 0.41 0.37
Pro Forma 0.36 0.32 0.44 0.41 0.37
Book Value Per Share:
Historical 14.64 13.71
Pro Forma 14.42 13.49
</TABLE>
9
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C> <C>
NATIONAL BANK OF COMMERCE OF CORINTH:
Net Income Per Share:
Historical $ 16.82 $16.43 $ 20.20 $ 21.11 $20.71
Equivalent Pro Forma 18.88 17.12 22.92 21.17 20.76
Cash Dividends Per Share:
Historical 0.00 0.00 15.50 13.00 13.00
Equivalent Pro Forma 4.85 4.31 5.93 5.53 4.99
Book Value Per Share:
Historical 130.25 116.34
Equivalent Pro Forma 194.42 181.88
</TABLE>
10
<PAGE> 21
TRUSTMARK CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA
The following table presents, on a historical basis, selected
consolidated financial data for Trustmark. This information is based upon the
consolidated financial statements for Trustmark incorporated herein by
reference. Results for the nine months ended September 30, 1996, are not
necessarily indicative of results to be expected for the entire year. All
adjustments necessary to arrive at a fair statement of results of interim
operations of Trustmark, in the opinion of management of Trustmark, have been
made. All information is in thousands except per share data.
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
(unaudited) Year Ended December 31,
------------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Income
Total interest income $268,841 $259,402 $348,341 $315,449 $310,607 $310,626 $333,668
Total interest expense 121,526 120,266 161,545 124,290 116,770 138,369 187,215
-------- -------- -------- -------- -------- -------- --------
Net interest income 147,315 139,136 186,796 191,159 193,837 172,257 146,453
Provision for loan losses 4,698 955 2,439 2,786 18,596 26,737 27,177
Noninterest income 49,616 43,644 59,467 48,670 47,898 45,583 40,269
Noninterest expense 117,529 113,749 152,484 152,801 150,781 132,844 120,226
-------- -------- -------- -------- -------- -------- --------
Income before income taxes 74,704 68,076 91,340 84,242 72,358 58,259 39,319
Income taxes 25,631 23,351 31,582 29,237 20,106 17,490 9,107
-------- -------- -------- -------- -------- -------- --------
Net income $ 49,073 $ 44,725 $ 59,758 $ 55,005 $ 52,252 $ 40,769 $ 30,212
======== ======== ======== ======== ======== ======== ========
Per Share Data
Net income per share $ 1.41 $ 1.28 $ 1.71 $ 1.58 $ 1.55 $ 1.23 $ 0.91
======== ======== ======== ======== ======== ======== ========
Cash dividends per share $ 0.36 $ 0.32 $ 0.44 $ 0.41 $ 0.37 $ 0.34 $ 0.33
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
September 30,
(unaudited) December 31,
----------------------- --------------------------------------------------------------
Consolidated Balance Sheets 1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $5,097,928 $4,905,134 $4,992,592 $4,763,365 $4,708,206 $4,346,985 $4,136,835
Securities - nontrading 1,987,940 1,836,995 1,842,325 1,862,351 1,980,566 1,718,635 1,436,086
Net loans 2,524,900 2,511,791 2,510,091 2,282,551 2,166,004 2,007,629 2,004,425
Deposits 3,519,342 3,482,789 3,530,045 3,449,229 3,428,781 3,431,383 3,389,989
</TABLE>
11
<PAGE> 22
FIRST CORINTH CORP. AND SUBSIDIARY SELECTED FINANCIAL DATA
The following table presents, on a historical basis, selected
consolidated financial data for FCC. This information is based upon the
consolidated financial statements of FCC. Results for the nine months ended
September 30, 1996, are not necessarily indicative of results to be expected
for the entire year. All adjustments necessary to arrive at a fair statement
of results of interim operations of FCC, in the opinion of management of FCC,
have been made. All information is in thousands except per share data.
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended
(unaudited) December 31,
--------------- ------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of income:
Total interest income $7,432 $7,169 $9,649 $9,087 $8,584 $9,283 $9,575
Total interest expense 3,451 3,258 4,405 3,880 3,538 4,434 5,900
------ ------ ------ ------ ------ ------ ------
Net interest income 3,981 3,911 5,244 5,207 5,046 4,849 3,675
Provision for possible
loan losses 135 120 380 120 180 191 140
------ ------ ------ ------ ------ ------ ------
Net interest income after
provision for possible
loan losses 3,846 3,791 4,864 5,087 4,866 4,658 3,535
Other operating income 577 549 750 684 657 730 592
Other operating expenses 2,098 2,098 2,924 2,964 2,805 2,825 2,494
------ ------ ------ ------ ------ ------ ------
Income before income taxes
and minority interest 2,325 2,242 2,690 2,807 2,718 2,563 1,633
Income taxes 586 572 651 664 650 645 358
Minority interest 27 27 33 34 34 32 24
------ ------ ------ ------ ------ ------ ------
Net income $1,712 $1,643 $2,006 $2,109 $2,034 $1,886 $1,251
====== ====== ====== ====== ====== ====== ======
Per share data:
Earnings per share $15.28 $14.77 $18.00 $19.01 $18.43 $17.14 $11.38
====== ====== ====== ====== ====== ====== ======
Dividends per share $ -- $ -- $ 8.00 $ 7.00 $ 6.00 $ 3.00 $ --
====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
September 30,
(unnaudited) December 31,
------------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Selected year end balances:
Total assets $139,070 $131,304 $132,618 $134,101 $132,821 $124,629 $119,345
Earning assets 128,144 121,250 123,703 123,074 122,310 113,629 108,840
Securities available for
sale 58,996 39,830 58,430 48,054 -- -- --
Investment securities -- 19,433 -- 18,864 73,355 64,597 60,004
Loans, net of unearned
income 65,562 60,967 64,256 54,232 46,810 45,683 43,489
Deposits 114,920 107,612 109,718 113,472 110,150 109,043 103,885
FHLB borrowings 4,737 4,822 4,801 4,833 5,944 -- --
Long-term debt 750 1,500 750 1,500 2,000 2,700 4,131
Stockholders' equity 16,352 14,927 14,956 11,733 11,895 10,476 8,920
</TABLE>
12
<PAGE> 23
NATIONAL BANK OF COMMERCE OF CORINTH SELECTED FINANCIAL DATA
The following table presents, on a historical basis, selected financial
data for NBC. This information is based upon the financial statements of NBC.
Results for the nine months ended September 30, 1996, are not necessarily
indicative of results to be expected for the entire year. All adjustments
necessary to arrive at a fair statement of results of interim operations of
NBC, in the opinion of management of NBC, have been made. All information is
in thousands except per share data.
13
<PAGE> 24
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended
(unaudited) December 31,
--------------- ------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of income:
Total interest income $7,432 $7,169 $9,649 $9,087 $8,584 $9,283 $9,575
Total interest expense 3,410 3,163 4,282 3,743 3,382 4,225 5,553
------ ------ ------ ------ ------ ------ ------
Net interest income 4,022 4,006 5,367 5,344 5,202 5,058 4,022
Provision for possible loan
losses 135 120 380 120 180 191 140
------ ------ ------ ------ ------ ------ ------
Net interest income after
provision for possible
loan losses 3,887 3,886 4,987 5,224 5,022 4,867 3,882
Other operating income 576 546 747 675 649 724 585
Other operating expenses 1,995 2,015 2,814 2,868 2,678 2,704 2,377
------ ------ ------ ------ ------ ------ ------
Income before income taxes 2,468 2,417 2,920 3,031 2,993 2,887 2,090
Income taxes 618 609 699 709 714 723 482
------ ------ ------ ------ ------ ------ ------
Net income $1,850 $1,808 $2,221 $2,322 $2,279 $2,164 $1,608
====== ====== ====== ====== ====== ====== ======
Per share data:
Earnings per share $16.82 $16.43 $20.20 $21.11 $20.71 $19.68 $14.62
====== ====== ====== ====== ====== ====== ======
Dividends per share $ -- $ -- $15.50 $13.00 $13.00 $12.00 $ 9.00
====== ====== ====== ====== ====== ====== ======
</TABLE>
14
<PAGE> 25
<TABLE>
<CAPTION>
September 30, Year Ended
(unaudited) December 31,
------------------- ----------------------------------------------------
Selected year end balances: 1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $136,297 $128,438 $132,618 $134,101 $129,828 $121,567 $116,196
Earning assets 128,144 121,250 123,703 123,074 122,310 113,629 108,840
Securities available for
sale 58,996 39,830 58,430 48,054 -- -- --
Investment securities -- 19,433 -- 18,864 74,200 64,597 60,004
Loans, net of unearned
income 65,562 60,967 64,256 54,232 46,810 45,683 43,489
Deposits 115,162 107,868 110,917 114,537 111,008 111,474 103,924
FHLB borrowings 4,737 4,822 4,801 4,833 5,944 -- --
Stockholders' equity 14,328 13,517 12,798 10,263 10,942 10,093 9,249
</TABLE>
15
<PAGE> 26
GENERAL INFORMATION
This Proxy Statement-Prospectus is being sent to the shareholders of
FCC in connection with the solicitation by the Board of Directors of FCC of
proxies for use at the FCC Special Meeting. At the FCC Special Meeting, FCC's
shareholders will be asked to consider and vote upon a proposed Merger of FCC
with and into Trustmark pursuant to the Merger Agreement. If the Merger is
approved, FCC will be merged into Trustmark. As a consequence of the Merger,
holders of FCC common shares not exercising their dissenters' rights of
appraisal will become shareholders of Trustmark and will receive shares of the
common stock of Trustmark for each share of FCC stock held by them.
Following the Merger, the separate corporate existence of FCC will
cease.
Other than considering and voting upon the Merger, the Board of
Directors of FCC is not aware of any other business which may come before the
FCC Special Meeting. If any other business should come before the shareholders
assembled at the FCC Special Meeting, it is the intention of the Board of
Directors that the persons named in the proxies will vote the shares
represented by the proxies in accordance with the direction of the Board of
Directors of FCC.
The Board of Directors of FCC believes that the Merger is in the best
interests of FCC's shareholders and recommends that FCC's shareholders vote FOR
approval of the Merger Agreement.
This Proxy Statement-Prospectus is also being sent to the shareholders
of NBC in connection with the proposed Bank Merger, pursuant to which NBC will
be merged with and into Trustmark Bank, under the charter of Trustmark Bank.
As a consequence of the Bank Merger, holders of NBC common shares (other than
FCC), not exercising their dissenters' rights of appraisal will become
shareholders of Trustmark and will receive shares of the common stock of
Trustmark for each share of NBC stock held by them.
Other than considering and voting upon the Bank Merger, the Board of
Directors of NBC is not aware of any other business which may come before the
NBC Special Meeting. The Board of Directors of NBC is not soliciting proxies
from the shareholders of NBC in connection with the NBC Special Meeting.
The Board of Directors of NBC believes that the Bank Merger is in the
best interests of NBC's shareholders and recommends that NBC's shareholders
vote FOR approval of the Bank Merger.
16
<PAGE> 27
TRUSTMARK CORPORATION AND TRUSTMARK NATIONAL BANK
Trustmark is a one-bank holding company which currently owns 100
percent of the outstanding common shares of Trustmark Bank. The principal
executive offices of Trustmark are located in the Trustmark National Bank
Building, 248 East Capitol Street, Jackson, Mississippi, 39201, Telephone No.
(601) 354-5111.
Trustmark, through its subsidiary, Trustmark Bank, conducts a full
range of commercial banking activities. For a more complete description of the
business of Trustmark, its historical financial condition and results of
operations, its summary of quarterly results of operations, and management's
discussion and analysis of financial condition and results of operations,
shareholders of FCC are referred to the information incorporated herein by
reference including (i) Trustmark's annual report on form 10-K for the year
ended December 31, 1995, (ii) Trustmark's quarterly reports on Form 10-Q for
the periods ended March 31, June 30, and September 30, 1996, (iii) Trustmark's
proxy statement in connection with its 1996 annual shareholders' meeting, and
(iv) the information contained in the registration of Trustmark's common shares
filed under Section 12 of the Exchange Act, including any amendments or reports
filed for the purpose of updating this information. Copies of any of these
documents can be obtained by request addressed to Trustmark Corporation, 248
East Capitol Street, Jackson, Mississippi, 39201, ATTN: Gerard R. Host.
FIRST CORINTH CORP. AND NATIONAL BANK OF COMMERCE OF CORINTH
FCC is a one-bank holding company owning 98.5% of the outstanding
common shares of NBC. The principal executive offices of FCC are located at 501
Fillmore Street, Corinth, Mississippi 38834. FCC was organized in 1985 as a
bank holding company to hold substantially all of the outstanding capital stock
of NBC. NBC is a national banking association, organized under the laws of the
United States of America with the primary purpose of serving the banking needs
of the residents of Alcorn County, Mississippi, and surrounding areas. Since
its organization, NBC has provided most traditional commercial banking
services, including interest and non-interest bearing checking and savings
accounts, commercial mortgage and installment loans and certificates of
deposit.
At September 30, 1996, NBC had total deposits of approximately $115.2
Million and net loans of approximately $64.8 Million.
There is no established trading market for the shares of FCC common
stock. Trading that occurs is effected in privately negotiated transactions.
The last sale of shares of FCC common stock of which FCC has knowledge occurred
in July 1995, when Hull Davis purchased 800 shares from FCC at $125.00 per
share. This
17
<PAGE> 28
price was negotiated between Mr. Davis and the board of directors of FCC.
There is no established trading market in the shares of NBC common
stock and there has been no trading in such shares since 1985.
FCC and NBC have paid the following cash dividends for the last five
calendar years:
<TABLE>
<CAPTION>
YEAR FCC NBC
<S> <C> <C>
1996 $ -- $ --
1995 8.00 15.50
1994 7.00 13.00
1993 6.00 13.00
1992 3.00 12.00
1991 -- 9.00
</TABLE>
FIRST CORINTH CORP. SPECIAL MEETING; VOTING; PROXIES; REVOCATION
The FCC Special Meeting has been called for 11:00 o'clock a.m., local
time, on ___________, 199__, at 501 Fillmore Street, Corinth, Mississippi
38834. The Board of Directors of FCC has fixed the close of business on
________, 199__, as the FCC Record Date for determining the FCC shareholders
entitled to notice of and to vote at the FCC Special Meeting and any
adjournment or adjournments thereof.
There are 112,200 shares of the common stock of FCC issued and
outstanding. Each share is entitled to cast one vote in connection with the
Merger. Adoption of the Merger Agreement will require the affirmative vote of
the holders of a majority of the outstanding FCC common shares, or 56,101
shares. For purposes of voting on the Merger, abstentions and nonvotes have
the same effect as "no" votes.
As of ________, 1996, the directors (43,238, 38.33%) and nondirector
officers (vice-president and above) (2,700, 2.4%) of FCC and NBC, as a group,
beneficially owned 45,938 shares of FCC, representing 40.72 percent of the
number of shares outstanding. The directors have agreed to vote their shares
in favor of the Merger, and FCC believes that the nondirector officers intend
to vote their shares in favor of the Merger. The forgoing totals and
percentages assume that Hull Davis exercises his options to purchase 600
additional shares, resulting in FCC having 112,800 shares outstanding.
EACH SHAREHOLDER IS REQUESTED TO PROMPTLY FILL OUT AND MAIL THE
ENCLOSED PROXY TO FCC. Shares represented by properly executed
18
<PAGE> 29
proxies received in time for the FCC Special Meeting will be voted in
accordance with the choice specified. Where no choice is specified, the shares
will be voted FOR the Merger.
A shareholder executing and returning a proxy has the power to revoke
it at any time before it is voted on the specific matter to be voted upon. A
proxy may be revoked by execution of a subsequently dated proxy, by filing a
written revocation with the secretary of FCC prior to the meeting or by
attendance at the FCC Special Meeting and revoking the proxy in person.
FCC will pay all of the expenses incurred in connection with the
preparation and distribution of this Proxy Statement-Prospectus. Proxies may
be solicited by mail, personal contact, telephone, telegram or other form of
communication by directors, officers and employees of FCC. Nominees,
fiduciaries and other custodians will be requested to forward soliciting
materials to the beneficial owners of shares held of record by them, and such
nominees, fiduciaries and other custodians will be reimbursed for their
reasonable out-of-pocket expenses.
NATIONAL BANK OF COMMERCE OF CORINTH SPECIAL MEETING; VOTING
A special meeting of the shareholders of NBC has been called for 11:30
o'clock a.m., local time, on _________, 199__, at 501 Fillmore Street,Corinth,
Mississippi 38834. The NBC Record Date for purposes of determining the
shareholders entitled to notice of and to vote at the NBC Special Meeting is
_____________, 199___. Two-thirds of the outstanding NBC shares must approve
the Bank Merger. FCC owns 98.5 percent of the outstanding NBC shares and
intends to vote those shares in favor of the Bank Merger. NBC is not
soliciting proxies in connection with the NBC Special Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On ______, 1996, FCC had outstanding 112,200 shares of common stock,
no par value, owned by approximately 61 shareholders. W. Hull Davis has
options to acquire 600 additional shares which are deemed outstanding for
purposes of the following totals and percentages. The following is certain
information about shareholders beneficially owning more than five percent of
the outstanding common stock of FCC.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------- -------------------- --------
W. Hull Davis 7,300 shares(1) 6.47%
3008 Lake Terrace Drive
Corinth, MS 38834
19
<PAGE> 30
W. E. Jones Trust II 5,720 shares 5.07%
H. C. McGehee, Trustee
Post Office Box 22662
Jackson, MS 39225
Paul F. O'Brien, Jr. 8,250 shares(2) 7.31%
Post Office Box 6655
Shreveport, LA 71136
Minna J. Winters 5,720 shares 5.07%
Testamentary Trust
H. C. McGehee, Trustee
Post Office Box 22662
Jackson, MS 39225
Minna J. Winters 5,720 shares 5.07%
Trust #3
H. C. McGehee, Trustee
Post Office Box 22662
Jackson, MS 39220
Jack B. Yates 6,590 shares(3) 5.84%
Post Office Drawer 608
Lexington, MS 39095-0608
First Holmes Corporation 6,590 shares(4) 5.84%
Post Office Drawer 608
Lexington, MS 39095-0608
(1) Includes 600 shares under option and 520 shares owned by children.
(2) Includes 3,300 shares owned by spouse.
(3) Includes 5,390 shares owned by First Holmes Corporation of which
Mr. Yates is Chairman, President and Chief Executive Officer.
(4) Includes 1,200 shares owned by Mr. Jack B. Yates, Chairman of the
Board, President and CEO of First Holmes Corporation.
BACKGROUND OF AND REASONS FOR THE MERGERS
In August 1996, representatives of FCC were approached by
representatives of Trustmark regarding a possible business combination of
Trustmark and Trustmark Bank with FCC and NBC. The Board of Directors of FCC
had previously determined that FCC should remain independent, and the initial
approach was refused. However, Trustmark again approached representatives of
FCC with an offer the Chairman of the FCC believed would be attractive to its
shareholders. Consequently, a Letter of Intent was executed
20
<PAGE> 31
September 6, 1996. Thereafter, representatives of FCC engaged in discussions
with Trustmark looking toward execution of a definitive agreement. At a
meeting of the Board of Directors of NBC held on October 2, 1996, the Board of
Directors of NBC met to review and consider the Merger Agreement. All of the
directors of NBC present at the meeting voted to approve the Bank Merger and
the Merger Agreement, subject to final review and approval of the Agreement by
FCC's Chairman and FCC's counsel and other advisors. The Board of Directors of
FCC unanimously approved the Merger and Merger Agreement as of October 2, 1996.
The number of shares of Trustmark common stock to be exchanged for
each share of FCC common stock was negotiated on an arm's length basis between
representatives of FCC and Trustmark. There was and is no affiliation between
FCC and its representatives, on the one hand, and Trustmark and its
representatives, on the other hand, prior to execution of the Merger Agreement.
The Board of Directors of FCC and NBC considered a variety of factors
in evaluating and approving the Mergers, including (a) the value of the
consideration to be received by FCC and NBC's shareholders relative to the
value in earnings of FCC and NBC common stock; (b) certain information
concerning the financial condition, results of operations and business
prospects of FCC and Trustmark; (c) the competitive and regulatory environment
for financial institutions generally; (d) the fact that the Mergers will enable
FCC and NBC shareholders to exchange their shares of FCC and NBC common stock
for shares of a larger entity, the stock of which is more widely and actively
traded and which historically has paid cash dividends; (e) Trustmark's ability
to provide comprehensive financial services in the Corinth market; and (f)
other pertinent information. The Boards of Directors of FCC and NBC did not
assign any relevant weights to the above factors, but considered all such
factors to be material. The Boards of Directors believe that they
appropriately addressed all of the relevant concerns of the proposed
transaction with Trustmark, and both Boards concluded that the terms of the
transaction with Trustmark are in the best interests of FCC's and NBC's
shareholders and are fair to these shareholders from a financial point of view.
For these reasons, the Board of Directors of FCC did not consider it necessary
to engage a financial advisor to issue an opinion that the transaction is fair,
from a financial point of view to the shareholders of FCC or NBC.
THE MERGER AGREEMENT
The following describes certain aspects of the Merger Agreement dated
as of October 2, 1996, and of the proposed Mergers. This description does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement which is
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incorporated herein by reference. A complete copy of the Merger Agreement can
be obtained on request from Trustmark, 248 East Capitol Street, Jackson,
Mississippi, 39201, ATTN: Gerard R. Host.
Conversion; Fractional Shares
The Merger
On the Effective Date of the Merger, subject to certain adjustments
based on the market price of Trustmark's common shares, each FCC common share
then outstanding, other than those owned by FCC's dissenting shareholders,
automatically will be converted into 12.9545 shares of the common stock of
Trustmark.
If, between the date of the Merger Agreement and the Effective Date of
the Merger, Trustmark's shares are changed into a different number of shares or
shares of a different class by reason of any reclassification,
recapitalization, stock split or stock dividend with a record date within such
period, the number of Trustmark common shares to be issued and delivered in
connection with the Merger shall be appropriately and proportionately adjusted
so that the number of Trustmark shares to be issued in connection with the
Merger will equal the number of Trustmark shares that FCC's shareholders would
have received had the record date for such reclassification, recapitalization,
stock split or stock dividend been immediately following the Effective Date of
the Merger.
No fractional shares of Trustmark will be issued. In lieu of the
issuance of fractional shares, each holder of FCC common shares who would
otherwise be entitled to a fractional share of Trustmark common stock will be
paid cash upon surrender of all of the shareholder's FCC share certificates in
an amount equal to the product of the fractional Trustmark share to which such
shareholder would otherwise have been entitled multiplied by $22.00.
The number of Trustmark shares to be received by FCC's shareholders in
connection with the Merger is subject to adjustment in certain circumstances.
Pursuant to Section 10.7 of the Merger Agreement, if the average
closing bid/asked price of Trustmark's shares as reported on the NASDAQ/NMS
system for the ten consecutive trading days preceding the 15th day prior to the
Effective Date of the Merger (the "Adjustment Date") is less than $22.00 per
share, then the number of shares of Trustmark stock into which each FCC common
share shall be converted will be increased so that the value of the Trustmark
shares into which each FCC share will be converted will not be less than
$285.00. If the average closing bid/asked price of Trustmark's shares is less
than $19.00 on the Adjustment Date, Trustmark may elect to terminate the Merger
Agreement. If Trustmark exercises its right to terminate the Merger Agreement
due
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to the price of Trustmark's shares falling below $19.00 per share, Trustmark
shall pay FCC's reasonable expenses, including attorney's fees, incurred in
connection with the Merger.
If the average closing bid/asked price of Trustmark's shares is in
excess of $25.00 on the Adjustment Date, the number of shares of Trustmark
stock into which each FCC common share shall be converted will be reduced so
that the conversion ratio shall equal $36,531,825 divided by such average
closing bid/asked price, with the foregoing quotient divided by 112,800
(the number of FCC shares outstanding on the Effective Date). The effect
of this calculation is that the value of the Trustmark shares into which
each FCC share will be converted will not exceed $323.86.
The Bank Merger
On the Effective Date of the Bank Merger, each NBC common share, other
than shares owned by FCC and other than shares owned by NBC's shareholders
exercising dissenters' rights of appraisal, automatically will be converted
into 13.4825 shares of the common stock of Trustmark.
The terms of the conversion of NBC shares into Trustmark shares were
fixed by the Boards of Directors of Trustmark and NBC. These Boards believe
that this exchange ratio is fair to the holders of the common shares of NBC.
If, between the date of the Merger Agreement and the Effective Date of
the Bank Merger, Trustmark's shares are changed into a different number of
shares or shares of a different class by reason of any reclassification,
recapitalization, stock split or stock dividend with a record date within such
period, the number of Trustmark common shares to be issued and delivered in
connection with the Bank Merger shall be appropriately and proportionately
adjusted so that the number of Trustmark shares to be issued to the
shareholders of NBC will equal the number of Trustmark shares that NBC's
shareholders would have received had the record date for such reclassification,
recapitalization, stock split or stock dividend been immediately following the
Effective Date of the Bank Merger.
If an adjustment is made to the number of Trustmark shares issuable in
connection with the Merger as a consequence of the market price of Trustmark's
shares as described above, then a similar adjustment will be made to the number
of Trustmark shares issuable in connection with the Bank Merger, with the
number of Trustmark shares issuable with respect to each NBC share following
the adjustment being 1.0408 times the number issuable with respect to each FCC
share in connection with the Merger.
No fractional shares of Trustmark will be issued. In lieu of the
issuance of fractional shares, each holder of NBC common shares
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who would otherwise be entitled to a fractional share of Trustmark common stock
will be paid cash upon surrender of all of the shareholder's NBC share
certificates in an amount equal to the product of the fractional Trustmark
share to which such shareholder would otherwise have been entitled multiplied
by $22.00.
Representations, Warranties and Covenants
Pursuant to the Merger Agreement, FCC and NBC made various
representations and warranties concerning FCC's and NBC's corporate and capital
structures, financial conditions, liabilities, legal and regulatory compliance,
litigation and related matters. Similar representations and warranties were
made by Trustmark and Trustmark Bank. The continued truth and accuracy of
these representations and warranties are conditions precedent to consummation
of the Mergers.
FCC and NBC undertook certain covenants in the Merger Agreement,
including agreements: to allow Trustmark access to their records and
properties; not to encourage or solicit other acquisition offers or to enter
into any acquisition negotiations or agreements; to operate their businesses in
substantially the same manner as such businesses are currently being operated
and to use their best efforts to maintain the good will of depositors,
customers and suppliers; to use their best efforts to retain the services of
their officers and employees; to notify Trustmark of any unusual or material
problems or developments with respect to their businesses; not to incur any
material obligation except in the ordinary course of business; not to increase
the compensation of any director and, except for normal increases as a result
of regular salary reviews of officers and employees in January 1997, increase
the compensation of any officer or employee or enter into or amend any contract
of employment or enter into or amend any insurance, profit- sharing, pension,
severance pay, bonus, incentive, deferred compensation or retirement plan or
arrangement; not to make, extend or renew any loan or other extension of credit
to any of their officers, directors or employees other than loans made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and that
do not involve more than the normal risks of collectibility or present other
unfavorable features; except as expressly permitted, not to pay any dividend or
make any distribution; and not to make any change in their capital structures.
Trustmark and Trustmark Bank's covenants include agreements: to
operate their businesses in substantially the same manner as currently being
operated and to use their best efforts to maintain the good will of their
depositors, customers and suppliers; to use their best efforts to retain the
services of their officers and employees; and to notify FCC of any unusual or
material problems or
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developments with respect to the business of either Trustmark or Trustmark
Bank.
FCC, NBC, Trustmark and Trustmark Bank are each obligated to use their
best efforts to bring about the transactions contemplated by the Merger
Agreement.
Special Agreements
Pursuant to Section 5.1 of the Merger Agreement, if NBC's net income
for the year 1996 is at least $2.3 million, FCC is permitted to pay a cash
dividend of up to $9.00 per share. If earnings are less than $2.3 million,
then the dividend per share shall be reduced by $1.00 per share for each
$110,000 by which earnings are less than $2.3 million. NBC is allowed to pay a
dividend, not to exceed $16.29 per share, sufficient to allow FCC to pay the
dividend described above, certain FCC indebtedness and FCC's expenses.
Pursuant to Section 5.2 of the Merger Agreement, Trustmark stated its
intention to continue the employment of the employees of NBC for a minimum of
one year after the Effective Date. However, as employees of Trustmark Bank,
such persons are subject to salary review, reassignment and termination in the
same manner as other employees of Trustmark Bank.
Pursuant to Section 5.5 of the Merger Agreement, all of FCC and NBC's
directors agreed that, for a period of one year from the Effective Date, they
will not become directly, indirectly or beneficially an employee, five percent
or more stockholder or director of any bank, savings bank, savings association,
trust company, financial institution or similar business enterprise which
competes with Trustmark Bank, as successor to NBC, within Alcorn County,
Mississippi. These directors further agreed not to initiate any action to
induce any employee of Trustmark Bank, as successor to NBC, to leave Trustmark
Bank's employment or directly or indirectly assist any other person or entity
in requesting or inducing any such other employee of Trustmark Bank to leave
such employment for a period of one year from the Effective Date.
Pursuant to Section 5.6 of the Merger Agreement, following the
Effective Date of the Merger, employees of NBC will be entitled to the same
employee benefits as are provided to Trustmark Bank's other employees and will
receive credit for years of service with NBC for purposes of participation in
Trustmark's retirement plan. Trustmark shall have the option to terminate
NBC's 401-K Plan and convert it to self-directed IRA, or, if allowed by
applicable law, transfer the employee portion of such plan to Trustmark Bank's
retirement plan and the employer portion to a newly created retirement plan
maintained by Trustmark Bank.
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Pursuant to Section 5.7 of the Merger Agreement, the directors of FCC
agreed to recommend that the shareholders of FCC approve the Merger and to vote
their FCC shares in favor of the Merger; provided, the directors are not
required to take any action which, in the opinion of FCC's counsel, would
constitute a breach of the directors' fiduciary duties.
Pursuant to Section 5.10 of the Merger Agreement, FCC and NBC agreed
to notify and consult with Trustmark before making, advancing, extending or
renewing any loans or credits above $350,000.
Pursuant to Section 5.12 of Merger Agreement, the members of the board
of directors of NBC who desire to do so may become advisory directors to the
Corinth branch of Trustmark and, as such, shall be entitled to comparable
benefits as are currently being provided to the advisory directors of
Trustmark's other community branches. One representative from the board of
directors of NBC shall be appointed to serve as an advisory director of
Trustmark Bank and, as such, will be entitled to the same benefits as are
presently being provided to the other advisory directors of Trustmark Bank.
Pursuant to Section 5.13 of the Merger Agreement, NBC shall be
entitled to continue the existing Officer Incentive Plan for the 1996 calendar
year; however, the benefits payable under this plan shall not exceed $200,000.
Pursuant to Section 5.14 of the Merger Agreement, NBC is authorized to
pay its regular management fee of $5,000 to Mr. B. Bryan Jones, III, for the
1996 year, and, on the Effective Date, to pay a management fee in the amount of
$10,000 each to Jack B. Yates and B. Bryan Jones, III.
Pursuant to Section 5.15 of the Merger Agreement, Hull Davis, NBC's
president, was authorized to exercise options to purchase and did purchase 200
shares of FCC's common stock pursuant to his non-qualified stock option. On
the Effective Date, Mr. Hull is authorized to exercise options to purchase an
additional 600 shares.
Pursuant to Section 5.17 of the Merger Agreement, FCC agrees to vote
all of its shares of NBC in favor of the Bank Merger; provided, nothing shall
require the board of directors of NBC to take any action which, in the opinion
of its counsel, would constitute a breach of the board's fiduciary duties.
Conditions to Consummation of the Mergers
Trustmark and Trustmark Bank's obligations to consummate the Mergers
are conditioned upon, among other things, the continued truth and accuracy of
the representations and warranties of FCC and
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NBC; the performance of FCC and NBC's covenants; receipt of all required
regulatory, director and shareholder approvals; the absence of any material
adverse change in the financial condition, tangible properties or prospects of
FCC or NBC subsequent to completion of Trustmark's review of FCC and NBC's
books and records in November 1996; Trustmark receiving the written opinion of
Arthur Andersen LLP that the Mergers can be accounted for as a "pooling of
interests" for financial reporting purposes and the accounting staff of the SEC
not having asserted or threatened to assert a contrary position; receipt of the
opinion of counsel to FCC and NBC required by the Merger Agreement; the
reserve for loan losses then maintained by NBC adequately providing for the
anticipated loan losses of NBC as of such date in accordance with the accepted
audit, bank examination and bank regulatory standards; and Trustmark being
satisfied that the Mergers will qualify as tax-free reorganizations for federal
income tax purposes.
The obligations of FCC and NBC to consummate the Mergers are
conditioned upon, among other things, the continued truth and accuracy of the
representations and warranties of Trustmark and Trustmark Bank; receipt of
required regulatory, director and shareholder approvals; the absence of any
material adverse change since December 31, 1995, in the condition, financial or
otherwise, of Trustmark or Trustmark Bank; FCC and NBC having received a
favorable revenue ruling or otherwise being satisfied that the Mergers will
qualify as tax-free reorganizations for federal income tax purposes; Trustmark
and Trustmark Bank's compliance with its covenants, agreements and undertakings
in the Merger Agreement; and receipt of the opinion of counsel to Trustmark and
Trustmark Bank required by the Merger Agreement.
Termination
The Merger Agreement may be terminated and the Mergers abandoned at
any time prior to the Effective Date without liability on the part of any party
as follows:
(a) By the mutual consents of the Boards of Directors of FCC and
Trustmark;
(b) By Trustmark, if a state or federal governmental agency or
authority shall, at any time, fail to approve the transactions contemplated by
the Merger Agreement or shall have instituted court proceedings to restrain or
prohibit such transactions and such court proceedings shall not have been
resolved within one year of the date of the Merger Agreement;
(c) By any party, if the Effective Date of the Mergers shall not
have occurred within one year of the date of the Merger Agreement, without the
fault of such party;
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(d) By Trustmark, if Trustmark's examination of FCC and NBC's
books and records reveals previously unknown, adverse information concerning
FCC or NBC;
(e) By Trustmark, if at the time of such termination there shall
have occurred a material adverse change in the financial condition or tangible
properties of FCC or NBC subsequent to the completion of Trustmark's
examination of FCC and NBC's books and records in November 1996;
(f) By FCC, if at the time of such termination there shall have
occurred a material adverse change in the financial condition or tangible
properties of Trustmark or Trustmark Bank subsequent to December 31, 1995;
(g) By Trustmark, if the average closing bid/asked price of
Trustmark's shares as reported on the NASDAQ/NMS for the ten consecutive
trading days preceding the 15th day prior to the Effective Date is less than
$19.00 per share;
(h) By either Trustmark or FCC, if the shareholders of FCC or NBC
fail to approve the Mergers;
(i) By Trustmark, if there has been a material breach by either of
FCC or NBC of any representation, warranty or obligation set forth in the
Merger Agreement; or
(j) By FCC, if there has been a material breach by either of
Trustmark or Trustmark Bank of any representation, warranty or obligation set
forth in the Merger Agreement.
PROCEDURE FOR EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Date of the Mergers, notice
will be given to FCC and NBC's shareholders of the procedure for surrendering
and exchanging their share certificates for share certificates representing
Trustmark common shares.
Any FCC or NBC shareholder whose stock certificates have been lost or
destroyed will be required to provide Trustmark with a statement certifying
such loss or destruction and an indemnity (such as a lost or stolen securities
bond) satisfactory to Trustmark sufficient to indemnify Trustmark against any
loss or expense which may result from such lost or destroyed certificates being
thereafter presented to Trustmark for exchange.
Until a former FCC or NBC shareholder has surrendered the certificates
representing his FCC or NBC shares or provided indemnity as provided above,
such shareholder shall not be issued the Trustmark share certificates to which
he is entitled, and no dividends or other distributions with respect to such
Trustmark
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shares shall be paid. However, when such certificates are surrendered or
indemnity provided, Trustmark shall pay, without interest, all unpaid dividends
and other distributions otherwise payable with respect to such Trustmark
shares.
RIGHTS OF DISSENTING SHAREHOLDERS
The Merger
Mississippi law provides dissenters' rights of appraisal in connection
with the merger of FCC with and into Trustmark. The following summarizes
Mississippi law in connection with such dissenters' rights. This summary is
qualified in its entirety by reference to Miss. Code Ann. Sections 79-4-13.01
to 79-4-13.31, a copy of which is attached as Exhibit "A" to this Proxy
Statement-Prospectus.
The availability of dissenters' rights is conditioned upon strict
compliance with applicable law. Accordingly, any FCC shareholder who wishes to
dissent from the proposed Merger and receive the value of his FCC shares in
cash should consult independent counsel.
Pursuant to Miss. Code Ann. Section 79-4-13.21(a), in order to be
eligible to exercise the right to dissent, a FCC shareholder must (i) give
notice in writing to Trustmark prior to the vote on the Merger that he intends
to demand payment for his shares if the Merger is effectuated, and (ii) not
vote his shares in favor of the Merger.
If the Merger is authorized at the FCC Special Meeting, pursuant to
Miss. Code Ann. Section 79-4-13.22, Trustmark, within ten days after the
Effective Date of the Merger, must deliver a written notice (the "Dissenters'
Notice") to all shareholders who satisfied the requirements of the preceding
paragraph. This notice must (i) state where the payment demand ("Payment
Demand") must be sent and where and when certificates for shares must be
deposited, (ii) supply a form for demanding payment that includes the date of
the first announcement to the news media or to shareholders of the terms of the
proposed Merger and requires that the shareholder asserting dissenters' rights
certify whether he acquired beneficial ownership of the shares before that
date, (iii) set a date by which Trustmark must receive the Payment Demand,
which date may not be fewer than 30 nor more than 60 days after the date the
Dissenters' Notice is delivered, and (iv) be accompanied by a copy of Miss.
Code Ann. Section 79-4-13.01 et. seq.
A shareholder sent a Dissenters' Notice must, pursuant to Miss. Code
Ann. Section 79-4-13.23, demand payment, certify whether he acquired
beneficial ownership of the shares before the date required to be set forth in
the Dissenters' Notice and deposit his
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certificates in accordance with the terms of the Dissenters' Notice.
A shareholder who demands payment and deposits his shares retains all
other rights of a shareholder until those rights are cancelled or modified by
the taking of the proposed corporate action.
A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set forth in the Dissenters'
Notice, is not entitled to payment for his shares.
Pursuant to Miss. Code Ann. Section 79-4-13.25, as soon as the Merger
is effective, or upon receipt of a Payment Demand, Trustmark is required to pay
each dissenter who has complied with his obligations under law the amount
Trustmark estimates to be the fair value of his shares, plus accrued interest.
This payment must be accompanied by (i) FCC's balance sheet as of the
end of a fiscal year ending not more than sixteen months before the date of
payment, an income statement for that year, a statement of changes in
shareholders' equity for the year, and the latest available interim financial
statements, if any; (ii) a statement of Trustmark's estimate of the fair value
of the FCC shares; (iii) an explanation of how the interest was calculated;
(iv) a statement of the dissenter's right to demand payment under Miss. Code
Ann. Section 79-4-13.28; and (v) a copy of Miss. Code Ann. Section
79-4-13.01 et. seq.
Pursuant to Miss. Code Ann. Section 79-4-13.27, Trustmark may elect
to withhold payment from a dissenter who was not the beneficial owner of the
shares on the date set forth in the Dissenters' Notice as the date of the first
announcement to news media or to FCC's shareholders of the terms of the
proposed Merger.
To the extent Trustmark elects to withhold payment as described in the
immediately preceding paragraph, after consummation of the Merger, Trustmark
shall estimate the fair value of the FCC shares, plus accrued interest, and
shall pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. Trustmark shall send with its offer a statement of
its estimate of the fair value of the FCC shares, an explanation of how the
interest was calculated and a statement of the dissenter's right to demand
payment pursuant to Miss. Code Ann. Section 79-4-13.28.
Pursuant to Miss. Code Ann. Section 79-4-13.28, a dissenter may
notify Trustmark in writing of his estimate of the fair value of his shares and
amount of interest due, and demand payment of his estimate (less any payments
previously made) or reject Trustmark's offer under Section 79-4-13.27 and
demand payment of the fair value of his shares and interest due, if: (i) the
dissenter believes that the amount paid under Section 79-4-13.25 or offered
under Section 79-4-13.27 is
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less than the fair value of his shares or that the interest due is incorrectly
calculated; (ii) Trustmark fails to make payment under Section 79-4-13.25
within 60 days after the date set forth demanding payment; or (iii) Trustmark,
having failed to take the proposed action, does not return the deposited
certificates within 60 days after the date set forth demanding payment.
A dissenter waives his right to demand payment under Section
79-4-13.28 unless he notifies Trustmark of his demand in writing under this
section within 30 days after Trustmark made or offered payment for his shares.
Pursuant to Miss. Code Ann. Section 79-4-13.30, if a demand for
payment under Miss. Code Ann. Section 79-4- 13.28 remains unsettled, Trustmark
must commence a proceeding within 60 days after receiving the Payment Demand
and petition the court to determine the fair value of the FCC shares and
accrued interest. If Trustmark does not commence this proceeding within this
60-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
Trustmark must commence this proceeding in the Chancery Court of Hinds
County. Trustmark must make all dissenters whose demands remained unsettled
parties to the proceeding. The Court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. The appraiser shall have the powers described in the order appointing
them, or in any amendment to it. Dissenters are entitled to the same discovery
rights as parties to other civil litigation.
Each dissenter made a party to the proceeding is entitled to judgment
(i) for the amount, if any, by which the Court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by Trustmark, or
(ii) for the fair value, plus accrued interest, of his after-acquired shares
for which Trustmark elected to withhold payment under Section 79-4-13.27.
Pursuant to Miss. Code Ann. Section 79-4-13.31, the Court, in an
appraisal proceeding, shall determine all costs of the proceeding, including
the reasonable compensation and expense of appraisers appointed by the Court.
The Court shall assess these costs against Trustmark, except that the Court
may assess costs against all or some of the dissenters, in amounts the Court
finds equitable, to the extent the Court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment.
The Court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the Court finds equitable: (i)
against Trustmark and in favor of any and all dissenters if the Court finds
that Trustmark did not substantially comply with the requirements of Section
79-4-13.20 through Section 79-4-13.28, or (ii) against either Trustmark or a
dissenter, in favor of any
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other party, if the Court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by Miss. Code Ann. Section 79-4-13.01 et. seq.
If the Court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated and that the fees
for those services shall not be assessed against Trustmark, the Court may
award to those counsel reasonable fees to be paid out of the amounts awarded
the dissenters who were benefited.
The Bank Merger
NBC is being merged with and into Trustmark Bank pursuant to 12 U.S.C.
Section 215a. Pursuant to this law, any shareholder of NBC Bank who has voted
against the Bank Merger at the NBC Special Meeting or who has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of merger, is entitled to receive the value of the shares so held
by him when the Bank Merger is approved by the Comptroller of the Currency upon
written request made to Trustmark Bank, as the surviving association, at any
time before 30 days after the date of consummation of the Bank Merger,
accompanied by the surrender of his NBC stock certificates.
The value of the NBC shares of any dissenting shareholder shall be
ascertained, as of the effective date of the Bank 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 Trustmark Bank; 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 of the Currency, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares.
If, within 90 days from the date of consummation of the Bank Merger,
for any reason one or more of the appraisers is not selected, or the appraisers
fail to determine the value of such shares, the Comptroller of the Currency
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 of the Currency in making the reappraisal or appraisal, as the case
may be, shall be paid by the surviving banking association. The value of the
shares ascertained shall be promptly paid to the dissenting shareholders by the
surviving banking association. Within 30 days after payment has been made to
all
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dissenting shareholders, the shares of stock which would have been delivered to
such dissenting shareholders had they not requested payment shall be sold at an
advertised public auction, unless some other method of sale is approved by the
Comptroller of the Currency, and the surviving banking 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 30
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 these shares are
sold at public auction at a price greater than the amount paid to the
dissenting shareholders the excess of such sales price shall be paid to such
shareholders.
FEDERAL INCOME TAX CONSEQUENCES
The following federal income tax discussion addresses certain of the
material federal income tax consequences of the Mergers. This discussion does
not necessarily address all aspects of federal income taxation that may be
applicable to each FCC and NBC shareholder and does not address the effect of
any applicable state, local or foreign tax laws. In view of the individual
nature of federal income tax consequences, FCC and NBC's shareholders should
consult their own tax advisers as to the particular tax consequences of the
Mergers to them. The discussion is based on the Internal Revenue Code of 1986,
regulations and rulings now in effect or proposed thereunder, current
administrative rulings and practices, and judicial precedent, all of which are
subject to change. Any such change, which may or may not be retroactive, could
alter the tax consequences discussed herein. The discussion is also based on
certain representations made by the parties. If any such representations are
inaccurate, the tax consequence of the Mergers could differ from those
described below.
The Merger Agreement provides that, as a condition to the parties'
obligations to consummate the Mergers, each party must be satisfied that the
Mergers will qualify as tax-free reorganizations for federal income tax
purposes. Brunini, Grantham, Grower & Hewes, PLLC, counsel to Trustmark, will
render its opinion that the Mergers will so qualify as tax-free reorganizations
within the meaning of Section 368(a) of the Internal Revenue Code. However, no
ruling on this issue will be obtained from the Internal Revenue Service.
The Merger
It is intended that, for federal income tax purposes, the Merger will
be treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and that, accordingly, (i) no gain or loss will be
recognized by FCC's shareholders upon the receipt of Trustmark common shares in
exchange for FCC common shares in connection with the Merger (except as
discussed below
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with respect to the cash received in lieu of fractional shares), (ii) the tax
basis of the Trustmark common shares to be received by FCC's shareholders in
connection with the Merger shall be the same as the basis in the FCC shares
surrendered in exchange therefor (reduced by the amount of cash received and
increased by the amount of cash received treated as a dividend), and (iii) the
holding period of the Trustmark shares to be received by FCC's shareholders in
connection with the Merger will include the holding period of the FCC common
shares surrendered in exchange therefor, provided that the FCC shares are held
as a capital asset as of the Effective Date of the Merger.
The payment of cash in lieu of fractional Trustmark shares in
connection with the Merger will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by Trustmark. These cash
payments will be treated as distributions in full payment in exchange for the
shares redeemed, subject to the provisions of Section 302 of the Internal
Revenue Code.
The cash received by FCC's shareholders exercising dissenters' rights
of appraisal will be treated as having been received by such shareholders as a
distribution in redemption of such shareholder's stock, subject to the
provisions and limitations of Section 302 of the Internal Revenue Code.
The Bank Merger
It is intended that, for federal income tax purposes, the Bank Merger
and the exchange of NBC common shares for Trustmark common shares will be
treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and that, accordingly, (i) no gain or loss will be
recognized by NBC's shareholders upon the receipt of Trustmark common shares in
exchange for NBC common shares in connection with the Bank Merger, (ii) the tax
basis of the Trustmark common shares to be received by the NBC shareholders in
connection with the Bank Merger shall be the same as the basis in the NBC
shares surrendered in exchange therefor, and (iii) the holding period of the
Trustmark shares to be received by NBC's shareholders in connection with the
Bank Merger will include the holding period of the NBC common shares
surrendered in exchange therefor, provided that the NBC shares are held as a
capital asset as of the Effective Date of the Bank Merger.
The payment of cash in lieu of fractional Trustmark shares in
connection with the Bank Merger will be treated as if the fractional shares
were distributed as part of the exchange and then redeemed by Trustmark. These
cash payments will be treated as distributions in full payment in exchange for
the shares redeemed, subject to the provisions of Section 302 of the Internal
Revenue Code.
34
<PAGE> 45
A NBC shareholder who exercises dissenters' rights of appraisal and
receives cash in lieu of Trustmark shares in connection with the Bank Merger
will be treated as having received a distribution in redemption of such
shareholder's stock in NBC, subject to the provisions of Section 302 of the
Internal Revenue Code.
ACCOUNTING TREATMENT
The combinations resulting from the Mergers will be treated as a
pooling of interests for financial reporting purposes.
As such, subject to certain adjustments, including adjustments for
inter-company transactions, the various asset, liability and capital accounts
of the constituent entities will be combined.
RESALES OF TRUSTMARK COMMON SHARES
The Trustmark common shares to be issued in connection with the
Mergers have been registered under the Securities Act of 1933 and, if
necessary, applicable state securities laws. However, such registrations do
not cover resales by persons who are "affiliates" of FCC or NBC. Persons who
may be deemed affiliates of FCC or NBC generally include individuals or
entities that control, are controlled by or are under common control with such
entities and may include certain officers, directors and principal
shareholders. In general, for a period of two years following the Mergers,
persons who were affiliates of FCC or NBC at the time the Mergers were
submitted to a shareholder vote and who do not become affiliates of Trustmark
may resell the Trustmark shares acquired in the Mergers; however, during any
three-month period they cannot sell more than one percent of the number of
Trustmark shares outstanding and must make all sales pursuant to "brokerage"
transactions. After this two-year period, these persons may generally resell
the Trustmark shares acquired in the Mergers without limitation. Since one
percent of Trustmark's outstanding shares will be in excess of 360,000 shares
following the Mergers, the foregoing limitation should have no practical effect
on resales by FCC or NBC's affiliates. However, in order to ensure pooling of
interest accounting for the Mergers, FCC's directors have agreed not to resell
Trustmark shares received in connection with the Mergers for a limited period
of time. Trustmark common shares issued pursuant to the Mergers to persons who
are not affiliates of FCC or NBC should be freely transferrable without
restriction.
Persons who are affiliates of Trustmark following the Mergers may
resell Trustmark shares acquired in the Mergers subject to the limitations of
Rule 144 promulgated under the Securities Act of 1933.
35
<PAGE> 46
REGULATORY AUTHORITY APPROVALS
Consummation of the Mergers is subject to and conditioned upon the
receipt of the approval of the Federal Reserve Board and the Comptroller of the
Currency and the absence of objection by the United States Department of
Justice.
Trustmark and FCC have filed applications for approval of the Mergers
with the Federal Reserve Board and the Comptroller of the Currency. There can
be no assurance that the Mergers will be approved, that any such approvals will
occur in a timely manner or that any such approvals or acquiescences will not
be conditioned upon matters that would cause the parties to abandon the Merger.
MANAGEMENT AND OPERATIONS AFTER THE MERGERS
On the Effective Date of the Mergers: (i) FCC shall be merged into
Trustmark, (ii) NBC shall be merged with and into Trustmark Bank under the
charter of Trustmark Bank, and (iii) the separate corporate existences of FCC
and NBC shall cease. FCC's shareholders and NBC's shareholders not exercising
dissenters' rights of appraisal will become shareholders of Trustmark. NBC
will become a branch bank of Trustmark Bank. The present officers and
directors of Trustmark Bank will remain as officers and directors of the
surviving entity following the Bank Merger. The current officers of NBC will
become officers of Trustmark Bank, with titles and salaries the same as existed
while employed by NBC. The current directors of NBC will have the opportunity
to serve as advisory directors of the Corinth branch of Trustmark Bank. One
representative of NBC will be appointed to the advisory board of Trustmark.
Information concerning the current directors and executive officers of
Trustmark is contained in the proxy statement for Trustmark's 1996 annual
meeting of shareholders. Copies of Trustmark's 1996 proxy statement and annual
report on Form 10-K may be obtained on request from Trustmark, 248 E. Capitol
Street, Jackson, Mississippi, 39201, ATTN: Gerard R. Host.
COMPARISON OF RIGHTS OF SHAREHOLDERS
Trustmark and FCC
Both Trustmark and FCC are Mississippi business corporations, subject
to the provision of the Mississippi Business Corporation Act. The rights of
shareholders of Trustmark and FCC are governed by this Act and the articles of
incorporation and bylaws of each corporation. The rights of shareholders of
Trustmark are not materially different than the rights of shareholders of FCC.
36
<PAGE> 47
Trustmark Bank and NBC
Trustmark Bank and NBC are national banking associations. The rights
of shareholders of Trustmark National Bank and NBC are governed by various
federal banking laws as well as the articles of association and bylaws of
Trustmark Bank and NBC.
LEGAL OPINIONS
The validity of the Trustmark common shares to be issued in connection
with the Mergers will be passed upon by Brunini, Grantham, Grower & Hewes,
PLLC, counsel to Trustmark. Brunini, Grantham, Grower & Hewes, PLLC will also
issue the opinion on behalf of Trustmark required by the Merger Agreement and
an opinion on the tax aspects of the Mergers.
EXPERTS
The consolidated financial statements of Trustmark Corporation and
subsidiaries as of December 31, 1995 and 1994 and for each of the years in the
three-year period ended December 31, 1995, incorporated by reference in this
Proxy Statement-Prospectus and elsewhere in the related Registration Statement,
have been audited by Arthur Andersen LLP, Independent Public Accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The consolidated financial statements of First Corinth Corp. and
Subsidiary and the financial statements of National Bank of Commerce of Corinth
as of December 31, 1995 and 1994 and for each of the years in the three year
period ended December 31, 1995, included in this joint Proxy
Statement/Prospectus and Registration Statement have been included herein in
reliance on the reports of Shearer, Taylor & Co. P.A., independent certified
public accountants, appearing elsewhere herein and upon the authority of said
firm as experts in accounting and auditing.
INDEMNIFICATION
Pursuant to Mississippi law and the bylaws of Trustmark, the officers
and directors of Trustmark are entitled to indemnification against certain
liabilities, which may include liabilities under federal and state securities
laws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Trustmark pursuant to Trustmark's bylaws, or otherwise, Trustmark
has been advised that in the opinion of the
37
<PAGE> 48
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 Trustmark of expenses incurred or paid by a director, officer or
controlling person of Trustmark 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, Trustmark 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.
38
<PAGE> 49
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST CORINTH CORP.
NATIONAL BANK OF COMMERCE OF CORINTH
The following discussion and analysis of the financial condition and
results of operations of First Corinth Corp. (the Corporation) and National
Bank of Commerce of Corinth (the Bank) should be read in conjunction with the
financial statements, the accompanying notes, and other financial data
appearing elsewhere in this Proxy Statement/Prospectus. The Corporation is a
one bank holding company that owns approximately 98.5% of the common stock of
the Bank. As a result, the Corporation's consolidated financial statements
will be similar to the Bank's financial statements.
Results of Operations
The Corporation's consolidated net income for 1995 was $2,005,844, a
4.9% decrease from 1994 and was $ 2,109,003 for 1994, a 3.66% increase from
1993. The Bank's net income for 1995 was $2,221,795, a 4.3% decrease from 1994
and was $2,322,329 for 1994, a 1.9% increase from 1993. The primary reason for
the decrease in net income for 1994 to 1995 was an increase in the provision
for possible loan losses of $260,000. A more detailed discussion of items
affecting net income follows.
Net Interest Income
Net interest income is the largest component of net income and
represents the interest earned on interest earning assets less the cost of
interest bearing liabilities. This major source of income represents the
earnings from the Bank's primary business of gathering funds from deposit
sources and investing those funds in loans and securities.
Net interest income increased by 0.7% for the Corporation and by 0.4%
for the Bank from 1994 to 1995. Although net interest income was relatively
stable, total interest income increased by 6.2% for the Corporation and Bank
and total interest expense increased by 13.5% for the Corporation and by 14.4%
for the Bank. These increases reflect an increase in interest rates in 1995.
In addition, the Bank increased its loan volume in 1995 while decreasing the
amount of investment in securities. This helped to increase interest income,
due to the higher yield on loans.
Net interest income increased by 3.2% for the Corporation and by 2.7%
for the Bank from 1993 to 1994. Total interest income increased by 5.9% for
the Corporation and Bank and total interest expense increased by 9.6% for the
Corporation and by 10.7% for the
39
<PAGE> 50
Bank. These increases were due to an increase in total interest earning assets
and interest bearing liabilities.
For a further analysis of items affecting net interest income refer to
Table 1 - Comparative Average Balances - Yield and Rates and Table 2 - Taxable
Equivalent Rate/Volume Variance Analysis.
40
<PAGE> 51
Table 1
Comparative Average Balances - Yields and Rates
First Corinth Corp. and Subsidiary
The following table shows the major categories of interest earning assets and
interest bearing liabilities with their corresponding average balances, related
interest income or expense and the resulting yield or rate for 1995, 1994 and
1993.
1995 Average Consolidated Balance Sheets and Interest Data (In Thousands)
<TABLE>
<CAPTION>
Average Average
Balance Interest Yield or Rate
--------- --------- -------------
<S> <C> <C> <C>
Interest bearing bank balances $ 100 $ 5 4.95%
Federal funds sold 1,268 81 6.35
Taxable investments 43,419 2,713 6.25
Non-taxable investments 19,189 1,847 9.63
FRB and FHLB stock 898 56 6.30
Loans, net of unearned income 58,967 5,681 9.63
--------- --------- -------
Total interest earning assets 123,841 10,383 8.38%
--------- --------- -------
Cash and due from banks 4,372
Other assets 5,526
Reserve for loan losses (741)
Valuation allowance (733)
---------
$ 132,265
=========
Interest bearing demand and savings
deposits $ 42,661 1,254 2.94%
Time deposits 53,497 2,696 5.04
Short-term borrowings 707 33 4.65
FHLB advances 4,841 292 6.03
Other borrowings 1,475 130 8.83
--------- --------- -------
Total interest bearing liabilities 103,181 4,405 4.27%
--------- --------- -------
Non-interest bearing demand deposits 14,799
Other liabilities 680
---------
Total liabilities 118,660
---------
Stockholders' equity 14,338
Valuation allowance (733)
---------
Net stockholders' equity 13,605
---------
$ 132,265
=========
</TABLE>
41
<PAGE> 52
<TABLE>
<S> <C> <C>
Net interest income/margin 5,978 4.11%
====
Tax equivalent adjustment (734)
------
Net interest income per financial statements $5,244
======
</TABLE>
Yields and corresponding income amounts for non-taxable investments are
presented on a tax-equivalent basis using a 34% rate. Average balances are
computed on a monthly basis. Non-accrual loans, the amount of which is not
material, have been included in the average loan amounts outstanding.
42
<PAGE> 53
Table 1
Comparative Average Balances - Yields and Rates
First Corinth Corp. and Subsidiary
1994 Average Consolidated Balance Sheets and Interest Data (In Thousands)
<TABLE>
<CAPTION>
Average Average
Balance Interest Yield or Rate
--------- --------- -------------
<S> <C> <C> <C>
Interest bearing bank balances $ 100 $ 3 3.36%
Federal funds sold 3,125 118 3.78
Taxable investments 56,476 3,304 5.85
Non-taxable investments 17,855 1,733 9.71
FRB and FHLB stock 854 44 5.10
Loans, net of unearned income 50,139 4,574 9.12
--------- --------- --------
Total interest earning assets 128,549 9,776 7.61%
--------- --------- --------
Cash and due from banks 5,137
Other assets 5,801
Reserve for loan losses (688)
Valuation allowance (522)
---------
$ 138,277
=========
Interest bearing demand and savings
deposits $ 50,990 1,386 2.72%
Time deposits 52,539 2,087 3.97
Short-term borrowings 611 19 3.14
FHLB advances 5,143 246 4.78
Other borrowings 1,985 142 7.13
--------- --------- --------
Total interest bearing liabilities 111,268 3,880 3.49%
--------- --------- --------
Non-interest bearing demand deposits 13,848
Other liabilities 691
---------
Total liabilities 125,807
---------
Stockholders' equity 12,992
Valuation allowance (522)
---------
Net stockholders' equity 12,470
---------
$ 138,277
=========
Net interest income/margin 5,896 4.12%
=========
Tax equivalent adjustment (689)
---------
Net interest income per financial statements $ 5,207
=========
</TABLE>
43
<PAGE> 54
Yields and corresponding income amounts for non-taxable investments are
presented on a tax-equivalent basis using a 34% rate. Average balances are
computed on a monthly basis. Non-accrual loans, the amount of which is not
material, have been included in the average loan amounts outstanding.
44
<PAGE> 55
Table 1
Comparative Average Balances - Yields and Rates
First Corinth Corp. and Subsidiary
1993 Average Consolidated Balance Sheets and Interest Data (In Thousands)
<TABLE>
<CAPTION>
Average Average
Balance Interest Yield or Rate
----------- ----------- -------------
<S> <C> <C> <C>
Interest bearing bank balances $ 172 $ 10 5.54%
Federal funds sold 2,751 77 2.80
Taxable investments 52,429 3,205 6.11
Non-taxable investments 15,274 1,568 10.27
FRB and FHLB stock 480 23 4.72
Loans, net of unearned income 46,122 4,325 9.38
----------- ----------- -----------
Total interest earning assets 117,228 9,208 7.85%
----------- ----------- -----------
Cash and due from banks 5,244
Other assets 5,807
Reserve for loan losses (585)
Valuation allowance --
-----------
$ 127,694
===========
Interest bearing demand and savings
deposits $ 46,234 1,318 2.85%
Time deposits 51,913 1,983 3.82
Short-term borrowings 557 14 2.52
FHLB advances 1,779 62 3.51
Other borrowings 2,681 161 6.00
----------- ----------- -----------
Total interest bearing liabilities 103,164 3,538 3.43%
----------- ----------- -----------
Non-interest bearing demand deposits 12,172
Other liabilities 832
-----------
Total liabilities 116,168
-----------
Stockholders' equity 11,526
Valuation allowance --
-----------
Net stockholders' equity 11,526
-----------
$ 127,694
===========
Net interest income/margin 5,670 4.42%
===========
Tax equivalent adjustment (624)
-----------
Net interest income per financial statements $ 5,046
===========
</TABLE>
45
<PAGE> 56
Yields and corresponding income amounts for non-taxable investments are
presented on a tax-equivalent basis using a 34% rate. Average balances are
computed on a monthly basis. Non-accrual loans, the amount of which is not
material, have been included in the average loan amounts outstanding.
46
<PAGE> 57
Table 2
Taxable Equivalent Rate/Volume Variance Analysis
First Corinth Corp. and Subsidiary
The following table sets forth, for the periods indicated, a summary of the
changes in interest income and expense resulting from changes in volume and
changes in rates.
<TABLE>
<CAPTION>
1995 Compared to 1994
Increase (Decrease) Due to
-----------------------------------------
Volume Rate Net
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest bearing bank balances $ -- $ 1,597 $ 1,597
Federal funds sold (70,286) 32,560 (37,726)
Taxable investments (763,780) 173,111 (590,669)
Tax-exempt investments 129,520 (15,453) 114,067
FRB and FHLB stock 2,231 10,796 13,027
Loans, net of unearned income 805,411 301,258 1,106,669
----------- ----------- -----------
Total interest income 103,096 503,869 606,965
----------- ----------- -----------
Interest expense:
Interest bearing demand and savings
deposits (226,386) 94,057 (132,329)
Time deposits 38,037 570,674 608,711
Short-term borrowings 3,040 10,627 13,667
FHLB advances (14,432) 60,857 46,425
Other borrowings (36,353) 25,072 (11,281)
----------- ----------- -----------
Total interest expense (236,094) 761,287 525,193
----------- ----------- -----------
Change in net interest income,
tax equivalent basis $ 339,190 $ (257,418) $ 81,772
=========== =========== ===========
</TABLE>
47
<PAGE> 58
Table 2
Taxable Equivalent Rate/Volume Variance Analysis
First Corinth Corp. and Subsidiary
The following table sets forth, for the periods indicated, a summary of the
changes in interest income and expense resulting from changes in volume and
changes in rates.
<TABLE>
<CAPTION>
1994 Compared to 1993
Increase (Decrease) Due to
-----------------------------------
Volume Rate Net
--------- --------- ---------
<S> <C> <C> <C>
Interest income:
Interest bearing bank balances $ (3,985) $ (2,188) $ (6,173)
Federal funds sold 10,492 30,676 41,168
Taxable investments 247,368 (148,593) 98,775
Tax-exempt investments 264,935 (100,152) 164,783
FRB and FHLB stock 17,665 3,233 20,898
Loans, net of unearned income 376,719 (127,892) 248,827
--------- --------- ---------
Total interest income 913,194 (344,916) 568,278
--------- --------- ---------
Interest expense:
Interest bearing demand and
savings deposits 135,614 (68,008) 67,606
Time deposits 23,887 80,679 104,566
Short-term borrowings 1,355 3,827 5,182
FHLB advances 118,143 64,981 183,124
Other borrowings (41,783) 22,415 (19,368)
--------- --------- ---------
Total interest expense 237,216 103,894 341,110
--------- --------- ---------
Change in net interest income,
tax equivalent basis $ 675,978 $(448,810) $ 227,168
========= ========= =========
</TABLE>
48
<PAGE> 59
Provision and Reserve for Possible Loans Losses
The estimate of the reserve for possible loan losses and provision for
possible loan losses is determined by management after considering the
following factors: (1) analytical review of loan loss experience in relation
to outstanding loans; (2) independent reviews of problem loans and overall
portfolio quality; (3) examinations of the loan portfolio conducted by Federal
supervisory authorities; (4) management's judgment with respect to current and
expected economic conditions and their impact on the loan portfolio and
borrowers' ability to pay; and (5) the relationship of the reserve for possible
loan losses to outstanding loans.
The provision for possible loan losses was $380,000 in 1995 as
compared to $120,000 in 1994 and $180,000 in 1993. The increase in the 1995
provision was due to an increase in net charge offs from $61,254 in 1994 to
$391,287 in 1995. The Bank charged off $347,593 related to one borrower for
whom the Bank was providing accounts receivable financing. This loss was an
isolated occurrence and all losses related to this borrower were taken in 1995.
Exclusive of this one borrower, net charge offs were $43,694 in 1995.
Historically, the Bank's charge off totals have been low. The Bank
continues to monitor its lending activities through sound lending practices as
the loan portfolio has grown over the past several years. For a further
analysis of the Provision and Reserve for Possible Loan Losses refer to Table 3
- - Analysis of the Reserve for Possible Loan Losses.
49
<PAGE> 60
Table 3
Analysis of the Reserve for Possible Loan Losses
National Bank of Commerce of Corinth
A summary of the reserve for possible loan losses follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $ 703 $ 644 $ 524 $ 426 $ 386
Charge offs:
Commercial, financial and
agricultural 350 21 30 66 49
Real estate 3 2 4 2 15
Consumer loans 89 75 80 62 66
------- ------- ------- ------- -------
Total charge offs 442 98 114 130 130
------- ------- ------- ------- -------
Recoveries:
Commercial, financial and
agricultural 3 8 10 7 13
Real estate 6 2 1 3 5
Consumer loans 42 27 43 27 12
------- ------- ------- ------- -------
Total recoveries 51 37 54 37 30
------- ------- ------- ------- -------
Net charge offs 391 61 60 93 100
------- ------- ------- ------- -------
Provision for possible loan
losses 380 120 180 191 140
------- ------- ------- ------- -------
Balance at end of year $ 692 $ 703 $ 644 $ 524 $ 426
======= ======= ======= ======= =======
Loans, net of unearned income:
At year end $64,526 $54,232 $46,810 $45,683 $43,489
======= ======= ======= ======= =======
Average balance $58,967 $50,139 $46,122 $44,153 $45,164
======= ======= ======= ======= =======
Ratios:
Reserve for possible loan
losses to net year end
loans 1.08% 1.30% 1.38% 1.15% 0.98%
Net charge offs to average
net loans 0.66 0.12 0.13 0.21 0.22
Net charge offs to reserve
for possible loan losses 55.56 8.71 9.33 17.71 23.44
======= ======= ======= ======= =======
</TABLE>
50
<PAGE> 61
Non-interest Income
The Corporation's other operating income increased by 9.7% from 1994
to 1995 and increased by 4.1% from 1993 to 1994. Excluding the effect of
losses on sales of investments in 1993 of $30,311, the Corporation's other
operating income was relatively stable from 1993 to 1994 and decreased by 0.9%.
Service charges on deposit accounts is the primary source of other
operating income and represented 76.3%, 75.9% and 77.4% of the total amount in
1995, 1994 and 1993. This income reflects management's efforts to generate fee
income.
Non-interest Expense
The Corporation's other operating expenses decreased by $40,272 from
1994 to 1995, a decrease of 1.4%. This decrease was the result of a reduction
in the cost of FDIC insurance coverage which decreased by $129,583 from 1994 to
1995. Exclusive of regulatory fees and assessments, other operating expenses
increased by $89,311, an increase of 3.4%. The Corporation's other operating
expenses increased by $159,338 from 1993 to 1994, an increase of 5.7%. The
increase, exclusive of regulatory fees and assessments, was 4.6%. Management
continues to give close attention to expense control while meeting the need to
provide expanding services in the banking industry.
Income Taxes
The following is a summary of consolidated income taxes and effective
tax rates for the Corporation and subsidiary:
<TABLE>
<S> <C> <C> <C>
Income tax expense $ 651,586 $ 663,955 $ 650,000
Effective rate based on income
before income taxes and
minority interest 24.2% 23.6% 23.9%
</TABLE>
Although the Corporation was subject to state income tax for the first
time in 1995, the effective tax rate did not increase significantly from 1994
to 1995. The Bank has been increasing the amount of its tax exempt investments
which has reduced the effective tax rate.
51
<PAGE> 62
Financial Condition
Consolidated assets for the Corporation and subsidiary decreased by
$1,483,745 from December 31, 1994 to December 31, 1995, a decrease of 1.1%.
This was a reversal of a growth trend for a number of years. Deposits
decreased by $3,753,858 (3.3%) and investments decreased by $8,487,088 (12.7%).
However, loans net of unearned income, increased by $10,023,576, an increase of
18.5%, reflecting the Bank's efforts to meet local loan demand and increase its
share of the local loan market. Consolidated assets for the Corporation and
subsidiary increased by $1,280,342 from December 31, 1993 to 1994, an increase
of 1.0%. Deposits increased by $3,321,738 (3.0%), investments decreased by
$6,437,689 (8.8%) and loans, net of unearned income, increased by $7,422,581
(15.9%). For a further analysis of changes in average balances of assets and
liabilities for 1995, 1994 and 1993, refer to Table 1 - Comparative Average
Balances - Yields and Rates.
Investments
A summary of the market value (book value) of securities available for
sale, and the related percentage of total book value, at December 31, 1995 and
1994, follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------------------ ----------------
Market Per- Market Per-
Value cent Value cent
------- ------- ------- -----
<S> <C> <C> <C> <C>
U. S. Treasury $ 3,436 5.9% $ 7,138 14.9%
U. S. Government agencies 11,046 18.9 14,226 29.6
Mortgage-backed securities 23,389 40.1 26,437 55.0
Obligations of states and
political subdivisions 20,307 34.7 -- --
Other securities 252 0.4 253 0.5
------- ------- ------- -----
$58,430 100.0% $48,054 100.0%
======= ======= ======= =====
</TABLE>
52
<PAGE> 63
A summary of the amortized cost (book value) of investment securities
(held to maturity), and the related percentage of total book value, at December
31, 1994 and 1993 follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------------------ ----------------
Amortized Per- Amortized Per-
Cost cent Cost cent
--------- ----- ------- -----
<S> <C> <C> <C> <C>
U. S. Treasury $ -- - % $ 2,398 3.3%
U. S. Government agencies -- -- 15,239 20.8
Mortgage-backed securities -- -- 39,161 53.4
Obligations of states and
political subdivisions 18,864 100.0 16,307 22.2
Other securities -- -- 250 0.3
--------- ----- ------- -----
$ 18,864 100.0% $73,355 100.0%
========= ===== ======= =====
</TABLE>
A summary of the amortized cost of the Bank's combined investment in
securities available for sale and investment securities (held to maturity), and
the related percentage of total book value, at December 31, 1995, 1994 and
1993, follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ------------------- ------------------
Amortized Per- Amortized Per- Amortized Per-
Cost cent Cost cent Cost cent
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury $ 3,440 6.0% $ 7,407 10.7% $ 2,398 3.3%
U.S. Government agencies 11,106 19.2 14,845 21.4 15,239 20.8
Mortgage-backed securities 23,289 40.4 27,931 40.3 39,161 53.4
Obligations of states and
political subdivisions 19,632 34.0 18,864 27.2 16,307 22.2
Other securities 250 0.4 250 0.4 250 0.3
------- ------- ------- ------- ------- -------
$57,717 100.0% $69,297 100.0% $73,355 100.0%
======= ======= ======= ======= ======= =======
</TABLE>
The Bank's total investment in securities has decreased as the Bank
has used proceeds from investment maturities to fund loan growth. In addition,
the Bank has shifted the mix of its investment portfolio by increasing the
percentage of tax exempt investments.
53
<PAGE> 64
At December 31, 1995, the Bank did not have any investments classified
as held to maturity. In accordance with "A Guide to Implementation of
Statement 115 on Accounting for Certain investments in Debt and Equity
Securities" (the Guide), which was issued in November, 1995, by the Financial
Accounting Standards Board, the Bank transferred its remaining portfolio of
investments classified as held to maturity to securities available for sale in
December, 1995. The amortized cost of these investments was $19,541,137 and
the market value was $20,237,065 at the date of the reclassification. The net
unrealized gain on these investments was $695,928, which resulted in a
valuation allowance, net of applicable income taxes of $429,901, on a
consolidated basis.
The following table sets forth the market value (book value) of
maturities of securities available for sale at December 31, 1995 (in
thousands), and the weighted average yields of such securities. Tax equivalent
adjustments (using a 34% rate) have been made in calculating yields on
obligations of state and political subdivisions.
<TABLE>
<CAPTION>
Maturing
-------------------------------------------------------------------------------------
After One After Five
Within But Within But Within After
One Year Five Years Ten Years Ten Years
------------------- ------------------- ------------------- -------------------
Amount Yield Amount Yield Amount Yield Amount Yield
------- ------ ------- ------ ------- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury $ 991 4.41% $ 2,445 5.52% $ -- $ -- --
U.S. Government
Agencies 5,129 5.79 5,917 5.63 -- -- --
Mortgage-backed
securities 8,436 7.01 13,207 6.64 577 8.80 1,169 6.04
State and political
subdivisions 969 8.57 10,482 9.43 8,679 7.96 177 7.57
Other 252 8.53 -- -- -- -- -- --
------- ---- ------- ---- ------- ---- ------- ----
$15,777 6.57% $32,051 7.28% $ 9,256 8.01% $ 1,346 6.26%
======= ==== ======= ==== ======= ==== ======= ====
</TABLE>
Loans
The Bank has experienced strong loan demand in 1995 and 1994. Loans,
net of unearned income, increased by $10,023,576 (18.5%) from December 31, 1994
to December 31, 1995 and increased by $7,422,581 (15.9%) from December 31, 1993
to December 31, 1994. Average loans, net of unearned income increased by 17.6%
in 1995 and increased by 8.7% in 1994.
54
<PAGE> 65
A summary of the loan portfolio at December 31, follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Residential real estate $24,308 $20,595 $17,589 $17,492 $17,061
Non-residential real estate 7,795 6,820 4,795 4,941 5,249
Commercial, financial and
agricultural 13,477 10,835 10,217 9,704 7,965
Consumer loans 19,001 16,259 14,801 14,541 14,352
------- ------- ------- ------- -------
$64,581 $54,509 $47,402 $46,678 $44,627
======= ======= ======= ======= =======
</TABLE>
A schedule of loan maturities, net of unearned income, at December 31,
1995, follows (in thousands):
<TABLE>
<CAPTION>
One Year After One After
or but with- Five
Less in Five Years Total
------- ------- ------- -------
<S> <C> <C> <C> <C>
Commercial and real estate $18,206 $20,478 $ 7,483 $46,167
Installment loans to
individuals 6,689 11,232 168 18,089
------- ------- ------- -------
$24,895 $31,710 $ 7,651 $64,256
======= ======= ======= =======
</TABLE>
A summary of interest rate sensitivity for loans, net of unearned
income, at December 31, 1995, follows (in thousands):
<TABLE>
<CAPTION>
Fixed Variable
Rate Rate Total
------- ------- -------
<S> <C> <C> <C>
Due after one but within
five years $29,937 $ 1,773 $31,710
Due after five years 6,187 1,464 7,651
------- ------- -------
$36,124 $ 3,237 $39,361
======= ======= =======
</TABLE>
A summary of nonaccrual and past due loans at December 31, follows (in
thousands):
<TABLE>
<CAPTION>
Past Due Percentage of Loans,
Year Nonaccrual 90 Days or More Total Net of Unearned Income
- ---- ------------ --------------- ------------- ----------------------
<C> <C> <C> <C> <C>
1991 $ 16 $ 111 $ 127 .29%
1992 108 201 309 .68
1993 -- 138 138 .29
1994 -- 203 203 .37
1995 -- 170 170 .26%
============ ============ ============ ========
</TABLE>
55
<PAGE> 66
Deposits
Deposits are the primary source of funds for the Bank. Average total
deposits decreased by 5.5% in 1995 after increasing by 6.4% in 1994. The
decrease in deposits in 1995, was due to the loss of public funds which were
awarded to another financial institution on a bid basis.
A summary of the average daily balances of deposits, on a consolidated
basis for the Corporation and subsidiary, is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Non-interest bearing
demand deposits $ 14,799 $ 13,848 $ 12,172
Interest bearing demand
and savings deposits 42,661 50,990 46,234
Time deposits 53,497 52,539 51,913
-------- -------- --------
$110,957 $117,377 $110,319
======== ======== ========
</TABLE>
Time deposits in excess of $100,000 were 10.2% and 9.19% of total
deposits at December 31, 1995 and 1994. Maturities of fixed rate time deposits
of $100,000 or more at December 31, 1995, are as follows (in thousands):
<TABLE>
<S> <C>
Three months or less $ 4,310
Over three through twelve months 4,700
Over twelve months 1,363
-------
$10,373
=======
</TABLE>
Liquidity and Capital Resources
The Corporation and Bank rely largely on core deposits to fund loans
and long-term investments. Additional funding for the Bank is provided by U.
S. Treasury demand note borrowings and from borrowings through the Bank's
relationship with the Federal Home Loan Bank of Dallas. In addition, the Bank
has access to borrowings from Federal funds purchased through its relationship
with correspondent banks.
The Corporation's long-term debt relates to money borrowed to fund its
purchase of the stock of the Bank in 1985. The Corporation has retired this
debt significantly in advance of original projections.
56
<PAGE> 67
The Corporation's consolidated GAP position at December 31, 1995, is
set forth in the following table:
<TABLE>
<CAPTION>
0-3 4-12 1-5 Over
Months Months Years 5 Years
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest bearing
bank balances $ 100 $ -- $ -- $ --
Securities available
for sale 4,750 11,027 32,051 10,602
FRB and FHLB stock -- -- -- 917
Loans, net of unearned
income 15,249 9,646 31,710 7,651
-------- -------- -------- --------
Total interest
earning assets 20,099 20,673 63,761 19,170
-------- -------- -------- --------
Interest bearing
deposits 60,717 23,663 10,953 --
Short-term borrowings 393 -- -- --
FHLB advances 3,806 65 399 531
Other borrowings 750 -- -- --
-------- -------- -------- --------
Total interest
bearing
liabilities 65,666 23,728 11,352 531
-------- -------- -------- --------
Interest
sensitivity
gap $(45,567) $ (3,055) $ 52,409 $ 18,639
======== ======== ======== ========
</TABLE>
Variable rate instruments are presented based on repricing frequency.
Interest earning assets, excluding FRB and FHLB stock, and interest bearing
liabilities that do not have contractual maturity dates are included in the 0-3
months category.
On a long-term basis, the ability of the Corporation to pay its
expenses and retire its debt is dependent upon dividends and income tax
benefits paid to the Corporation by the Bank. The Bank is subject to capital
maintenance requirements imposed by regulatory authorities. At December 31,
1995, the Bank was in compliance with such requirements and management
anticipates that such requirements will continue to be met while funding the
Corporation through the payment of dividends and income tax benefits.
57
<PAGE> 68
Under banking regulations, and subject to additional requirements at
the discretion of regulators, banks and bank holding companies are required to
maintain minimum levels of total capital and maintain levels of capital based
on risk adjusted assets. The standards classify capital into two tiers. Tier
one capital generally consists of common stockholders' equity less goodwill.
Tier two capital consists generally of the reserve for loan losses and
subordinated debt. The capital ratios for the Bank have been far in excess of
the minimum required regulatory levels. Due to its size, the Corporation is
not subject to these capital regulations on a consolidated basis. However, the
Corporation continues to maintain a strong capital position.
The following table illustrates the Bank's regulatory capital ratios
at December 31, 1995, 1994 and 1993, (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Tier one capital $ 12,351 $ 11,831 $ 10,942
Tier two capital adjustment 692 703 645
---------- ---------- ----------
Total qualifying capital $ 13,043 $ 12,534 $ 11,587
========== ========== ==========
Tier one risk based capital ratio 18.00% 18.75% 18.39%
Total risk based capital ratio 19.01 19.57 19.48
Leverage ratio 9.50 8.71 8.43
========== ========== ==========
</TABLE>
The Bank has not been informed by any regulatory agencies that it is
to comply with any standards other than the minimum standards required in the
regulations.
58
<PAGE> 69
Comparison of Nine Months Ended September 30, 1996 and 1995
Results of Operations
The Corporation's consolidated net income for the nine months ended
September 30, 1996 was $1,711,443, an increase of 4.1% over the same period in
1995. The Bank's net income for the nine months ended September 30, 1996 was
$1,849,760, an increase of 2.3% over the same period in 1995. The following is
a summary of the changes in various categories of income and expense for the
nine months ended September 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995 Change Percent
----------------------------------
<S> <C> <C> <C> <C>
Corporation consolidated:
Interest income $7,432 $7,169 $ 263 3.66%
Interest expense 3,451 3,258 193 5.93
Net interest income 3,981 3,911 70 1.77
Provision for possible
loan losses 135 120 15 12.50
Other operating income 577 549 28 4.99
Other operating expenses 2,098 2,098 -- 0.00
Net income before tax and
minority interest 2,325 2,242 83 3.65
====== ====== ====== =====
Bank:
Interest income $7,432 $7,169 $ 263 3.66%
Interest expense 3,410 3,163 247 7.80
Net interest income 4,022 4,006 16 0.40
Provision for possible
loan losses 135 120 15 12.50
Other operating income 576 546 30 5.56
Other operating expenses 1,995 2,015 (20) (1.00)
Net income before tax 2,468 2,417 51 2.12
====== ====== ====== =====
</TABLE>
Net interest income for the Bank was relatively stable from 1995 to
1996, reflecting increased interest income from loan growth and increased
interest expense from deposit growth. Net interest income for the Corporation
increased by 1.77%, reflecting the reduction in interest expense due to the pay
down of the Corporation's long-term debt.
The provision for possible loan losses increased by 12.5% for 1995 to
1996, reflecting the growth of the loan portfolio.
Other operating income increased from 1995 to 1996, primarily due to
increases in deposit income. Other operating expenses were virtually the same
in 1995 and 1996. The Bank's costs for regulatory insurance and assessments
were down by $121,536 from 1995 to 1996, which offset increases in other
expenses of 6.3% on a consolidated basis for the Corporation and 5.5% for the
Bank.
59
<PAGE> 70
Financial Condition
The following is a summary of net changes in selected assets and
liabilities on a consolidated basis for the Corporation and subsidiary (in
thousands):
<TABLE>
<CAPTION>
September 30,
-------------------
1996 1995 Change Percent
------------------------------------------
<S> <C> <C> <C> <C>
Cash and due from banks $ 5,616 $ 4,798 $ 818 17.05%
Federal funds sold 2,550 -- 2,550 --
Total investments 58,996 59,263 (267) (0.45)
Loans, net of unearned
income 65,562 60,967 4,595 7.54
Total assets 139,070 131,304 7,766 5.91
Total deposits 114,920 107,612 7,308 6.79
Stockholders' equity 16,352 14,927 1,425 9.55
======== ======== ======== =====
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995 Change Percent
---------- --------- --------- -------
<S> <C> <C> <C> <C>
Cash and due from banks $ 5,616 $ 3,859 $ 1,757 45.55%
Federal funds sold 2,550 -- 2,550 --
Total investments 58,996 58,430 566 0.97
Loans, net of unearned
income 65,562 64,256 1,306 2.03
Total assets 139,070 132,618 6,452 4.87
Total deposits 114,920 109,718 5,202 4.74
Stockholders' equity 16,352 14,956 1,396 9.34
======== ======== ======== =====
</TABLE>
The Corporation's total consolidated assets increased by $7,766,246
from September 30, 1995 to September 30, 1996, an increase of 5.91%, and
increased by $6,452,887 from December 31, 1995 to September 30, 1996, an
increase of 4.87%. The increase in assets was funded by deposit growth and was
used to increase the loan portfolio as the Bank continued to meet local loan
demand. However, the trend in loan growth slowed in 1996, as net loans
increased by only 2.03% from December 31, 1995 to September 30, 1996. Cash and
due from banks and Federal funds sold have increased at September 30, 1996,
indicating liquidity to fund additional loans if necessary.
The Corporation's and Bank's capital condition continued to be strong,
as reflected by the increase in stockholders' equity.
60
<PAGE> 71
FIRST CORINTH CORP. AND SUBSIDIARY
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants . . . . . . . . . . . . 63
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . 64
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . 66
Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . 68
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 70
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 71
</TABLE>
61
<PAGE> 72
Report of Independent Certified Public Accountants
Board of Directors
First Corinth Corp.
Corinth, Mississippi
We have audited the accompanying consolidated balance sheets of First Corinth
Corp. and subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the years in the three year period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an 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 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 consolidated financial position of First Corinth
Corp. and subsidiary as of December 31, 1995 and 1994, the results of their
consolidated operations and their consolidated cash flows for each of the years
in the three year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company's subsidiary
changed its method of accounting for investment securities in 1994, to adopt
the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting For Certain Investments in Debt and Equity Securities."
/s/ Shearer, Taylor & Co. P.A.
Jackson, Mississippi
January 12, 1996
62
<PAGE> 73
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------------- -------------
<S> <C> <C>
Cash and due from banks $ 3,858,598 $ 5,064,491
Interest bearing bank balances 100,000 100,000
Federal funds sold -- 950,000
Securities available for sale 58,430,173 48,053,527
Investment securities, market value of
$18,556,198 in 1994 -- 18,863,734
Federal Reserve Bank and Federal Home
Loan Bank stock 916,700 874,300
Loans 64,581,043 54,509,559
Unearned income (325,007) (277,099)
Reserve for possible loan losses (691,831) (703,118)
------------- -------------
Net loans 63,564,205 53,529,342
------------- -------------
Bank premises and equipment 1,331,240 1,374,943
Accrued interest receivable 1,497,812 1,389,911
Goodwill, less accumulated amortization
of $956,673 and $863,532 2,768,946 2,862,087
Deferred income taxes -- 906,143
Other assets 149,887 132,828
------------- -------------
$ 132,617,561 $ 134,101,306
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 109,717,933 $ 113,471,791
U. S. Treasury demand note 392,929 823,020
Advances from Federal Home Loan Bank 4,801,252 4,882,888
Long-term debt 750,000 1,500,000
Accrued interest payable 512,977 463,630
Dividends payable 896,000 777,000
Deferred income taxes 172,884 --
Other liabilities 228,521 298,026
------------- -------------
Total liabilities 117,472,496 122,216,355
------------- -------------
Minority interest in subsidiary 189,029 151,585
Stockholders' equity:
Common stock of $5 par value. Authorized
200,000 shares; issued and outstanding
112,000 and 111,000 shares 560,000 555,000
Additional paid-in capital 2,883,945 2,763,945
Retained earnings 11,071,751 9,961,907
Net unrealized gain (loss) on securities
available for sale, net of income taxes 440,340 (1,547,486)
Total stockholders' equity 14,956,036 11,733,366
------------- -------------
$ 132,617,561 $ 134,101,306
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
63
<PAGE> 74
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Statements of Income
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 5,680,817 $ 4,574,148 $ 4,325,321
Taxable investments 2,712,854 3,303,523 3,204,748
Tax exempt investments 1,112,774 1,044,059 944,792
Federal funds sold 80,544 118,270 77,102
Other 61,529 46,905 32,180
----------- ----------- -----------
Total interest income 9,648,518 9,086,905 8,584,143
----------- ----------- -----------
Interest expense:
Time deposits of $100,000
or more 378,794 280,436 323,462
Other deposits 3,570,644 3,192,620 2,977,422
Long-term debt 130,315 141,596 160,964
Other interest expense 324,881 264,789 76,483
----------- ----------- -----------
Total interest expense 4,404,634 3,879,441 3,538,331
----------- ----------- -----------
Net interest income 5,243,884 5,207,464 5,045,812
Provision for possible loan losses 380,000 120,000 180,000
----------- ----------- -----------
Net interest income after
provision for possible
loan losses 4,863,884 5,087,464 4,865,812
----------- ----------- -----------
Other operating income:
Service charges on deposit
accounts 572,663 519,523 509,019
Insurance commissions 56,365 77,017 94,869
Loss on sale of investment
securities -- -- (30,311)
Other income 121,354 87,544 83,779
----------- ----------- -----------
Total other
operating income 750,382 684,084 657,356
----------- ----------- -----------
Other operating expenses:
Salaries and employee benefits 1,537,791 1,551,120 1,490,494
Net occupancy expenses 181,112 178,898 160,137
Equipment and data processing
expenses 230,247 214,084 225,553
Regulatory insurance and
assessments 179,583 309,347 267,794
Supplies 108,462 85,774 87,934
Other expenses 686,815 625,059 573,032
----------- ----------- -----------
Total other operating
expenses 2,924,010 2,964,282 2,804,944
----------- ----------- -----------
Income before income
taxes and
minority interest 2,690,256 2,807,266 2,718,224
Income taxes 651,586 663,955 650,000
Minority interest in net income
of subsidiary 32,826 34,308 33,617
----------- ----------- -----------
Net income $ 2,005,844 $ 2,109,003 $ 2,034,607
=========== =========== ===========
Earnings per share $ 18.00 $ 19.01 $ 18.43
=========== =========== ===========
</TABLE>
The accompanying notes are in integral part of these financial statements.
64
<PAGE> 75
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained Unrealized
Stock Capital Earnings Gain (Loss) Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
January 1, 1993 $ 550,000 $ 2,667,500 $ 7,258,297 $ -- $ 10,475,797
Sale of 500 shares of
common stock 2,500 45,120 -- -- 47,620
Net income -- -- 2,034,607 -- 2,034,607
Cash dividends declared
($6.00 per share) -- -- (663,000) -- (663,000)
------------ ------------ ------------ ------------ ------------
December 31, 1993 552,500 2,712,620 8,629,904 -- 11,895,024
------------ ------------ ------------ ------------ ------------
Net adjustment to
beginning balance for
change in accounting
method -- -- -- 503,309 503,309
Sale of 500 shares of
common stock 2,500 51,325 -- -- 53,825
Net income -- -- 2,109,003 -- 2,109,003
Cash dividends declared
($7.00 per share) -- -- (777,000) -- (777,000)
Net change in unrealized
gain (loss) -- -- -- (2,050,795) (2,050,795)
------------ ------------ ------------ ------------ ------------
December 31, 1994 555,000 2,763,945 9,961,907 (1,547,486) 11,733,366
------------ ------------ ------------ ------------ ------------
Sale of 1,000 shares
of common stock 5,000 120,000 -- -- 125,000
Net income -- -- 2,005,844 -- 2,005,844
Cash dividend declared
($8.00 per share) -- -- (896,000) -- (896,000)
Net unrealized gain
on investments
reclassified as
securities available
for sale -- -- -- 429,901 429,901
Net change in unrealized
gain (loss) -- -- -- 1,557,925 1,557,925
------------ ------------ ------------ ------------ ------------
December 31, 1995 $ 560,000 $ 2,883,945 $ 11,071,751 $ 440,340 $ 14,956,036
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
65
<PAGE> 76
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,005,844 $ 2,109,003 $ 2,034,607
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 239,141 228,141 234,605
Provision for possible
loan losses 380,000 120,000 180,000
Loss on sale of
investment securities -- -- 30,311
Deferred income taxes 4,000 (25,000) (43,000)
Minority interest in net
income of subsidiary 32,826 34,308 33,617
(Increase) decrease in
accrued interest receivable (107,901) (103,702) 155,075
Increase (decrease) in:
Accrued interest payable 49,347 98,961 (61,681)
Current income taxes 9,942 (20,914) (442,946)
Accrued compensation (68,000) 103,000 (35,000)
Other, net (13,843) 23,271 (61,153)
------------ ------------ ------------
Net cash provided by
operating activities 2,531,356 2,567,068 2,024,435
------------ ------------ ------------
Cash flows from investing activities:
Purchases of securities
available for sale (1,388,215) (12,500,463) --
Maturities of securities
available for sale 13,635,510 19,115,018 --
Purchases of investment
securities (1,087,206) (3,298,874) (35,095,417)
Sale of investment securities -- -- 7,363,004
Maturities of investment securities 404,995 743,888 18,711,787
Net (increase) decrease in:
Interest bearing bank balances -- -- 99,500
Federal funds sold 950,000 250,000 1,950,000
Loans (10,414,863) (7,483,835) (1,187,214)
Federal Home Loan Bank stock (42,400) (29,400) (612,400)
Additions to bank premises
and equipment (102,297) (95,034) (85,952)
------------ ------------ ------------
Net cash provided by
(used in) investing
activities 1,955,524 (3,298,700) (8,856,692)
------------ ------------ ------------
</TABLE>
(Continued)
66
<PAGE> 77
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities:
Increase (decrease) in:
Non-interest bearing deposits $ (504,547) $ 2,437,926 $ 136,080
Money market, NOW and savings
accounts (6,064,056) (157,067) 2,396,646
Time deposit 2,814,745 1,040,879 (1,425,761)
U. S. Treasury demand note (430,091) (645,536) 284,750
Advances from Federal Home Loan Bank (81,636) (1,060,853) 5,943,741
Dividends payable 119,000 114,000 663,000
Repayments of long-term debt (750,000) (500,000) (700,000)
Sale of common stock 125,000 53,825 47,620
Cash dividends declared (896,000) (777,000) (663,000)
Dividends paid to minority interest (25,188) (21,125) (21,125)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (5,692,773) 485,049 6,661,951
----------- ----------- -----------
Net decrease in cash and due
from banks (1,205,893) (246,583) (170,306)
Cash and due from banks January 1 5,064,491 5,311,074 5,481,380
----------- ----------- -----------
Cash and due from banks December 31 $ 3,858,598 $ 5,064,491 $ 5,311,074
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
67
<PAGE> 78
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting and Reporting Policies
The accounting and reporting policies of First Corinth Corp. (the
Corporation) and subsidiary which materially affect the determination of
financial position and results of operations conform to generally accepted
accounting principles and general practices within the banking industry. A
summary of these significant accounting and reporting policies is presented
below.
Principles of Consolidation
The consolidated financial statements of First Corinth Corp. include
the accounts of the Corporation and its 98.5% owned subsidiary, National Bank
of Commerce of Corinth (the Bank). All significant intercompany balances and
transactions have been eliminated in consolidation.
Business
The Corporation is a one-bank holding company whose only activity is
the ownership of the Bank. The Bank is a commercial bank and provides a full
range of banking services to individual and corporate customers through its
offices in Corinth, Mississippi. The Bank is subject to the regulations of
certain Federal agencies and undergoes periodic examinations by one of these
regulatory authorities.
Investments
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting For Certain Investments
in Debt and Equity Securities." SFAS 115 is effective for fiscal years
beginning after December 15, 1993, and requires that debt and equity securities
be classified into one of three categories; held to maturity, available for
sale, or trading. The Bank adopted SFAS 115 effective January 1, 1994.
Securities held, which are available to be sold prior to maturity, are
classified as securities available for sale. These securities are carried at
market value. Unrealized holding gains and losses are reported, net of tax, as
a separate component of stockholders' equity. Gains and losses on the sale of
securities available for sale are determined using the specific identification
method.
Investment securities (held to maturity) are those securities which
the Bank has the ability and intent to hold until maturity. These securities
are carried at cost, adjusted for amortization of premiums and accretion of
discounts. The Bank had no investments classified as held to maturity at
December 31, 1995.
(Continued)
68
<PAGE> 79
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: (Continued)
Loans
Loans are stated at the principal amount outstanding. The Bank
recognizes unearned income on installment loans as income over the terms of
the loans using a method that approximates the interest method. Interest on
all other loans is calculated by using the simple interest method on daily
balances of the principal amount outstanding. The Bank's policy regarding
recognition of loan fee income and origination costs is materially in
compliance with Statement of Financial Accounting Standards No. 91, which
requires that fees be deferred and that costs be capitalized and amortized over
the lives of the respective loans.
The Bank discontinues the accrual of interest and recognizes income
only as received when, in the judgment of management, the collection of
interest, but not necessarily principal, is doubtful. The Bank did not have
any such loans at December 31, 1995 and 1994.
Reserve for Possible Loan Losses
The Bank provides for possible loan losses using the reserve method.
Accordingly, all loan losses are charged to the reserve for possible loan
losses and all recoveries are credited to it. The reserve for possible loan
losses is based on the evaluation of the collectibility of loans and past loan
loss experience and other factors which, in management's judgment, deserve
current recognition in estimating possible loan losses. Such other factors
considered by management include changes in the nature and volume of the loan
portfolio, current economic conditions that may affect a borrower's ability to
pay, review of specific problem loans, and the relationship of the reserve for
possible loan losses to outstanding loans.
The Bank did not have any loans, at December 31, 1995, that were
considered to be impaired under Statement of Financial Accounting Standards No.
114. As a result, no portion of the Bank's reserve for possible loan losses is
related to such loans.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Provisions for depreciation are computed principally on the
straight-line method and charged to operating expenses over the estimated
useful lives of the assets. Costs of major additions and improvements are
capitalized. Expenditures for maintenance and repairs are charged to expense
as incurred.
Amortization
The Corporation's cost in excess of net Bank assets acquired
(goodwill) is being amortized using the straight- line method over forty years.
(Continued)
69
<PAGE> 80
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: (Continued)
Income Taxes
The Corporation and the Bank file consolidated Federal and state
income tax returns. In accordance with the liability method specified by
Statement of Financial Accounting Standards No. 109, deferred tax assets and
liabilities are determined based on the differences between the financial
statement basis and income tax basis of assets and liabilities as measured
using the enacted rates which are expected to be in effect when these
differences reverse. Deferred income tax expense (benefit) is the result of
changes in deferred tax assets and liabilities.
Earnings Per Share
Earnings per share calculations are based on the weighted average
number of shares outstanding during the year of 111,450 in 1995, 110,919 in
1994 and 110,370 in 1993.
Statements of Cash Flows
In the accompanying consolidated statements of cash flows, the
Corporation and the Bank have defined cash equivalents as those amounts
included in the balance sheet caption "Cash and Due from Banks". For the years
ended December 31, 1995, 1994 and 1993 the Corporation and Bank paid interest
of approximately $4,355,000, $3,780,000 and $3,427,000. Income tax payments of
approximately $638,000, $710,000 and $1,136,000 were made during the years
ended December 31, 1995, 1994 and 1993.
Reclassifications
Certain reclassifications have been made to the 1994 and 1993
financial statements to be consistent with the 1995 presentation.
70
<PAGE> 81
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2: Investments
The following is a summary of the amortized cost and market value
(book value) of securities available for sale at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Gross Unrealized
Amortized ------------------------- Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1995:
U. S. Treasury $ 3,440,400 $ 9,728 $ 14,699 $ 3,435,429
Obligations of U. S
Government agencies 11,106,280 37,020 97,073 11,046,227
Mortgage-backed
securities 23,288,672 265,526 165,065 23,389,133
Obligations of state
and political
subdivisions 19,631,994 741,252 66,359 20,306,887
Other securities 250,000 2,497 -- 252,497
----------- ----------- ----------- -----------
$57,717,346 $ 1,056,023 $ 343,196 $58,430,173
=========== =========== =========== ===========
December 31, 1994:
U. S. Treasury $ 7,407,174 $ -- $ 269,232 $ 7,137,942
Obligations of U. S
Government agencies 14,845,507 10,488 629,834 14,226,161
Mortgage-backed
securities 27,930,678 45,211 1,539,310 26,436,579
Other securities 250,000 2,845 -- 252,845
----------- ----------- ----------- -----------
$50,433,359 $ 58,544 $ 2,438,376 $48,053,527
=========== =========== =========== ===========
</TABLE>
The following is a summary of the amortized cost (book value) and
market value of investment securities at December 31, 1994:
<TABLE>
<CAPTION>
Gross Unrealized
Amortized ------------------------- Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Obligations of state
and political
subdivisions $18,863,734 $ 284,957 $ 592,493 $18,556,198
=========== =========== =========== ===========
</TABLE>
(Continued)
71
<PAGE> 82
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2: (Continued)
The amortized cost and market value (book value of securities
available for sale at December 31, 1995, by contractual maturity are shown
below. Expected maturities may differ from contractual maturities because
borrowers have the right to call or prepay certain obligations with, or
without, call of prepayment penalties.
<TABLE>
<CAPTION>
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
One year or less $15,714,926 $15,777,356
Over one through five years 31,580,763 32,050,992
Over five through ten years 9,050,088 9,255,706
After ten years 1,371,569 1,346,119
----------- -----------
$57,717,346 $58,430,173
=========== ===========
</TABLE>
The following is a summary of the amortized cost and market value of
investments which were pledged to secure public deposits and for other purposes
required or permitted by law.
<TABLE>
<CAPTION>
Available for Sale Investment Securities
------------------------- -------------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1995 $30,763,000 $31,061,000 $ -- $ --
=========== =========== =========== ===========
December 31, 1994 $27,841,000 $26,595,000 $ 9,021,000 $ 8,873,000
=========== =========== =========== ===========
</TABLE>
The following is a summary of gains (losses) on sales of investment
securities for the year ended December 31, 1993:
<TABLE>
<S> <C>
Gross realized gains on investment securities $ 7,502
Gross realized losses on investment securities (37,813)
--------
$(30,311)
========
</TABLE>
In accordance with "A Guide to Implementation of Statement 115 on
Accounting for Certain Investments in Debt and Equity Securities" (the Guide),
which was issued in November, 1995, by the Financial Accounting Standards
Board, the Bank transferred its remaining portfolio of investments classified
as held to maturity to securities available for sale in December, 1995. The
amortized cost of these investments was $19,541,137 and the market value was
$20,237,065 at the date of the reclassification. The net unrealized gain on
these investments was $695,928, which resulted in a net unrealized gain of
$429,901, net of applicable income taxes, on a consolidated basis.
72
<PAGE> 83
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3: Loans
The Bank grants commercial, consumer and residential loans to
borrowers primarily in the Bank's market area in and around Alcorn County,
Mississippi. A summary of loans included in the consolidated balance sheets
follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Residential real estate loans $24,308,311 $20,595,277
Non-residential real estate loans 7,794,646 6,820,029
Commercial and other loans 13,476,952 10,835,057
Consumer 19,001,134 16,259,196
----------- -----------
$64,581,043 $54,509,559
=========== ===========
</TABLE>
Note 4: Reserve for Possible Loan Losses
Transactions in the reserve for possible loan losses are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 703,118 $ 644,372 $ 524,522
Loans charged-off (442,486) (98,450) (114,480)
Recoveries of loans previously
charged-off 51,199 37,196 54,330
--------- --------- ---------
Net loans charged-off (391,287) (61,254) (60,150)
--------- --------- ---------
Provision for possible loan losses 380,000 120,000 180,000
--------- --------- ---------
Balance at end of year $ 691,831 $ 703,118 $ 644,372
========= ========= =========
</TABLE>
Note 5: Bank Premises and Equipment
A summary of bank premises and equipment follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Land $ 135,000 $ 135,000
Buildings 1,610,683 1,570,683
Furniture, fixtures and equipment 1,551,753 1,489,456
---------- ----------
3,297,436 3,195,139
Less accumulated depreciation
and amortization 1,966,196 1,820,196
---------- ----------
$1,331,240 $1,374,943
========== ==========
</TABLE>
Depreciation expense for bank premises and equipment amounted to
$146,000 in 1995, $135,000 in 1994 and $141,000 in 1993.
73
<PAGE> 84
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 6: Deposits
The following is a summary of deposits at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Non interest bearing $ 14,384,675 $ 14,889,222
Interest bearing:
Money market accounts 5,941,997 6,125,073
NOW accounts 24,510,808 28,801,156
Savings accounts 9,342,643 10,933,275
Time deposits of $100,000 or more 11,223,437 10,425,717
Other time deposits 44,314,373 42,297,348
------------ ------------
Total interest bearing 95,333,258 98,582,569
------------ ------------
Total deposits $109,717,933 $113,471,791
============ ============
</TABLE>
Note 7: Advances From Federal Home Loan Bank
The following is a summary of advances to the Bank from the Federal
Home Loan Bank of Dallas at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Advances under a $5,000,000 guaranteed
rate commitment with a final
maturity of August 25, 2005;
interest is payable monthly at the
"1 month LIBOR FLAT" rate and is
reset on the 25th of each calendar
month; principal prepayments are
allowed at the reset date each
month; the interest rate was 5.75%
at December 31, 1995 $3,785,000 $3,785,000
$800,000 advance dated November 22,
1993, bearing interest at 5.6%;
principal and interest are payable
monthly in installments of
approximately $8,700, with a final
principal payment of $203,354 due
on December 1, 2001 673,626 738,578
</TABLE>
(Continued)
74
<PAGE> 85
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 7: (Continued)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
$375,000 advance dated November 23,
1993, bearing interest at 6.17%;
principal and interest are payable
monthly in installments of
approximately $3,200, with a final
principal payment of $167,135 due
on December 1, 2003 342,626 359,310
---------- ----------
$4,801,252 $4,882,888
========== ==========
</TABLE>
The advances are secured by first mortgage loans and Federal Home Loan
Bank stock under a Collateral Pledge and Security Agreement dated July 20, 1993:
Required principal payments on these advances are as follows:
<TABLE>
<S> <C>
1996 $ 86,428
1997 91,501
1998 96,873
1999 102,559
2000 108,580
After 2000 4,315,311
----------
$4,801,252
==========
</TABLE>
Note 8: Long-term Debt
Long-term debt is payable to First Tennessee Bank, N.A. The loan is
collateralized by the Corporation's ownership of stock of the Bank. Interest on
the debt is payable semi-annually at the lesser of First Tennessee's "maximum
rate" and "base rate".
As of December 31, 1995, required principal payments on this debt are
as follows:
<TABLE>
<S> <C>
February 1, 1997 $400,000
1998 350,000
--------
$750,000
========
</TABLE>
(Continued)
75
<PAGE> 86
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 8: (Continued)
There are various debt covenants relating to this loan which require
the Corporation and the Bank to maintain certain capital to asset and debt to
equity ratios. In addition, the Corporation and Bank must obtain the lender's
approval for certain activities, including major asset acquisitions, merger or
acquisition activity, stock redemptions and dividend payments by the
Corporation. At December 31, 1995, the Corporation and the Bank were in
compliance with all material debt covenants.
Note 9: Employee Benefit Plans
The Bank has an employee benefit plan which is a 401(k) Profit Sharing
Plan and Trust. Full-time employees and part-time employees with 1,000 or more
hours of service per year become eligible for participation in the plan after
one year of service. Employees may contribute up to 6% of their gross
compensation, and the Bank matches from 25% to 100% of employee contributions
based on an employee's length of service.
Total expense under this employee benefit plan was $38,607 in 1995,
$37,331 in 1994 and $33,472 in 1993.
On March 21, 1995, the Corporation's Board of Directors adopted a
non-qualified option plan which authorized the Corporation to grant key
employees and directors options to purchase up to a combined total of 1,000
shares of the Corporation's common stock. Each option price is to be
determined by the Board of Directors.
On March 21, 1995, the Corporation entered into a non-qualified stock
option agreement with an officer of the Corporation. The agreement, which is
effective for a five year period, grants the officer the option to purchase up
to 1,000 shares of the Corporation's common stock at a price of $125.00 per
share. The shares can be purchased in five annual installments of 200 shares
each, commencing on September 21, 1995. Such shares can be purchased at any
anniversary date or any time thereafter until the expiration of the agreement.
The option also specifies a cash bonus on each date the option is exercised,
based on a preestablished formula. Since the Corporation's common stock is not
actively traded and since limited stock sales in recent periods indicated that
the "fair market value" of the Corporation's common stock was not in excess of
the option price as of the date of the option agreement, the Corporation did
not recognize any expense in 1995 related to this agreement.
On September 21, 1995, the officer purchased 200 shares of the
Corporation's common stock under this agreement. No cash bonus was due to the
officer under the terms of the agreement as related to purchase of these
shares.
76
<PAGE> 87
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 10: Income Taxes
The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
Federal State Total
--------- --------- ---------
<S> <C> <C> <C>
1995:
Current $ 575,800 $ 71,786 $ 647,586
Deferred 12,000 (8,000) 4,000
--------- --------- ---------
$ 587,800 $ 63,786 $ 651,586
========= ========= =========
1994:
Current $ 688,955 $ -- $ 688,955
Deferred (25,000) -- (25,000)
--------- --------- ---------
$ 663,955 $ -- $ 663,955
========= ========= =========
1993:
Current $ 693,000 $ -- $ 693,000
Deferred (43,000) -- (43,000)
--------- --------- ---------
$ 650,000 $ -- $ 650,000
========= ========= =========
</TABLE>
The differences between actual income tax expense and expected income
tax expense are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Amount computed using the
statutory rates on income
before income taxes and
minority interest in net
income of subsidiary $ 914,700 $ 954,500 $ 924,200
Increase (decrease)
resulting from:
Tax exempt income, net of
disallowed interest
deduction (350,800) (338,800) (311,000)
Amortization of goodwill 31,700 31,700 31,700
State income tax, net of
Federal benefit 42,086 -- --
Expense as a result of
Internal Revenue Service
examination -- 10,900 --
Other, net 13,900 5,655 5,100
--------- --------- ---------
$ 651,586 $ 663,955 $ 650,000
========= ========= =========
</TABLE>
(Continued)
77
<PAGE> 88
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 10: (Continued)
Components of deferred income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Provision for possible $ 2,700 $(20,000) $(40,700)
loan losses
Depreciation (5,200) (1,000) (4,000)
Fee income 5,700 (13,500) --
Federal Home Loan Bank
stock dividends 10,200 10,000 --
Tax effect on state net
operating loss carry
forward for financial
statement purposes (10,000) -- --
Other, net 600 (500) 1,700
-------- -------- --------
$ 4,000 $(25,000) $(43,000)
======== ======== ========
</TABLE>
The components of the Corporation's consolidated net deferred tax
asset (liability), at December 31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Reserve for possible loan losses $ 144,900 $ 136,600
Depreciation (28,200) (33,200)
Fee income 5,900 13,500
Federal Home Loan Bank stock dividends (26,600) (10,000)
Valuation allowance for securities
available for sale (265,884) 809,143
Other (3,000) (9,900)
--------- ---------
$(172,884) $ 906,143
========= =========
</TABLE>
Other assets include income taxes receivable of approximately $44,000
at December 31, 1995 and $54,000 at December 31, 1994.
78
<PAGE> 89
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 11: Related Parties
In the ordinary course of business, the Bank makes loans to its
executive officers and directors of the Corporation and the Bank and to
companies in which these officers and directors are principal owners. In the
opinion of management, these loans are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons. An analysis of changes in these
loans follows:
<TABLE>
<S> <C>
Balance at December 31, 1994 $ 2,193,256
New loans 991,433
Repayments (391,301)
-----------
Balance at December 31, 1995 $ 2,793,388
===========
</TABLE>
Note 12: Commitments and Contingencies
The consolidated financial statements do not reflect various
commitments and contingent liabilities which arise in the normal course of
business and which involve elements of credit risk, interest rate risk and
liquidity risk. The Bank makes commitments to extend credit and issues standby
and commercial letters of credit in the normal course of business to fulfill
the financing needs of its customers.
Commitments to extend credit are agreements to lend money to customers
pursuant to certain specified conditions and generally have fixed expiration
dates or other termination clauses. Since many of these commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. When making these
commitments, the Bank applies the same credit policies and standards as it does
in the normal lending process. Collateral is obtained based upon the Bank's
assessment of a customer's credit worthiness.
Standby and commercial letters of credit are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
When issuing letters of credit, the Bank applies the same credit policies and
standards as it does in the normal lending process. Collateral is obtained
based upon the Bank's assessment of a customer's credit worthiness.
The Bank's maximum credit exposure in the event of nonperformance for
loan commitments and standby and commercial letters of credit is represented by
the contract amount of the instruments.
A summary of the Bank's commitments and contingent liabilities at
December 31, 1995, is as follows:
<TABLE>
<S> <C>
Commitments to extend credit $ 2,727,480
Letters of credit 196,267
===========
</TABLE>
79
<PAGE> 90
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13: Regulatory Matters
Federal banking regulations require that the Bank maintain certain
cash reserves based on a percentage of deposits. This requirement was
approximately $967,000 at December 31, 1995.
The ability of the Corporation to service its debt and pay dividends
to its stockholders is primarily dependent upon future income tax benefits and
dividends to be paid to the Corporation by the Bank. As a national bank, the
Bank must receive the approval of the Comptroller of the Currency if the total
of all dividends declared in any calendar year exceeds the total net profits
for that year combined with the Bank's retained net profits of the two
preceding years.
The Bank is also required to maintain minimum amounts of capital to
total "risk weighted" assets, as defined and determined by banking regulators
in order to pay dividends. The Bank's regulatory capital was in excess of
minimum capital levels required by regulatory authorities at December 31, 1995.
Note 14: Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 (SFAS 107),
"Disclosures about Fair Value of Financial Instruments", requires that a
company disclose estimated fair value for its financial instruments. However,
such disclosures may be deemed not to be practicable for certain classes of
financial instruments. A summary of financial instruments and related
disclosures follows:
Cash and due from banks and interest bearing deposits with banks - The
net book value of these financial instruments approximates fair value due to
the immediate availability or short maturity of these investments.
Investments - Fair value of these financial instruments is considered
to be their market value as disclosed in Note 2.
Loans - The Bank's loan portfolio represents a group of
non-homogeneous instruments which include different types of borrowers,
collateral requirements, credit risks, maturity dates, payment terms, interest
rates and frequency of repricing of interest rates. Due to the effort and
difficulty in implementing a valuation model necessary to estimate the fair
value of loans, the Bank does not consider this disclosure to be practicable
for loans. However, in the opinion of management, the estimated fair value of
loans would not be materially different from the net recorded book value.
(Continued)
80
<PAGE> 91
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 14: (Continued)
The following is a summary of pertinent information related to loans,
net of unearned income:
<TABLE>
<CAPTION>
Effective
Balance yield
----------- -------
<S> <C> <C>
Variable rate loans $ 7,094,703 9.16%
Fixed rate loans (by maturity):
0 - 3 months 8,616,842 9.47
4 - 12 months 12,420,207 9.04
1 - 3 years 19,290,170 9.66
4 - 5 years 10,646,713 9.81
After 5 years 6,187,401 9.03
</TABLE>
Deposits - Under SFAS 107, the fair value of deposits with no stated
maturity, such as non-interest bearing demand deposits, savings accounts, NOW
accounts and money market demand accounts, is equal to the amount payable on
demand at December 31, 1995, as represented by the book value of these
deposits. The fair value of certificates of deposit is based on the discounted
value of contractual cash flows, using current rates for discounting purposes.
Due to the effort and difficulty in implementing a valuation model necessary to
estimate the fair value of certificates of deposit, the Bank does not consider
this disclosure to be practicable. However, in the opinion of management, the
estimated fair value of certificates of deposit would not be materially
different from the book value of these deposits.
The total balances of non-interest bearing demand, money market, NOW
and savings accounts are disclosed in Note 6. The following is a summary of
pertinent information related to certificates of deposit:
<TABLE>
<CAPTION>
Effective
Maturity Amount rate
------------- ----------- ---------
<S> <C> <C> <C>
0 - 3 months $15,381,803 5.05%
4 - 12 months 24,298,261 5.13
1 - 3 years 11,198,736 5.53
4 - 5 years 4,641,225 5.97
After 5 years 17,785 5.60
</TABLE>
Federal funds purchased, advances from Federal Home Loan Bank, and
long-term debt - The net book value of these financial instruments approximates
fair value due to variable rate pricing of the majority of these borrowings or
due to current rates for fixed rate borrowings.
(Continued)
81
<PAGE> 92
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 14: (Continued)
Commitments to extend credit - As disclosed in Note 12, the Bank has
certain commitments to extend credit at December 31, 1995. Due to the similar
factors related to estimating the fair value of loans, the Bank does not
consider the disclosure to be practicable for these items. However, due to the
pricing, terms and conditions for the outstanding commitments to extend credit,
in the opinion of management, the estimated fair value of commitments to extend
credit is not materially different from the stated amounts as disclosed in Note
12.
Note 15: Summarized Financial Information of First Corinth Corp.
Summarized financial information of First Corinth Corp. (parent
company only) is as follows:
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets 1995 1994
----------- -----------
<S> <C> <C>
Cash $ 1,199,013 $ 1,065,001
Investment in subsidiary 15,377,693 12,973,851
Other assets 84,486 43,085
----------- -----------
$16,661,192 $14,081,937
=========== ===========
Liabilities and Stockholders' Equity
Accrued interest payable $ 59,156 $ 71,571
Dividends payable 896,000 777,000
Long-term debt 750,000 1,500,000
Stockholders' equity 14,956,036 11,733,366
----------- -----------
$16,661,192 $14,081,937
=========== ===========
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Income:
Dividends declared by
subsidiary $1,679,812 $1,408,875 $1,408,875
Equity in undistributed
earnings of subsidiary 509,157 879,146 836,015
Other income 10,645 13,526 13,311
---------- ---------- ----------
Total income 2,199,614 2,301,547 2,258,201
---------- ---------- ----------
</TABLE>
(Continued)
82
<PAGE> 93
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 15: (Continued)
STATEMENTS OF INCOME - (CONTINUED)
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Expenses:
Interest expense $ 130,315 $ 141,596 $ 160,964
Amortization of goodwill 93,141 93,141 93,141
Other expenses 17,314 2,807 33,489
---------- ---------- ----------
Total expenses 240,770 237,544 287,594
---------- ---------- ----------
Income before income
taxes 1,958,844 2,064,003 1,970,607
Income tax benefit 47,000 45,000 64,000
---------- ---------- ----------
Net income $2,005,844 $2,109,003 $2,034,607
========== ========== ==========
</TABLE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income $ 2,005,844 $ 2,109,003 $ 2,034,607
Adjustments to reconcile net
income to cash flows from
operating activities:
Equity in undistributed
earnings of subsidiary (509,157) (879,146) (836,015)
Amortization of goodwill 93,141 93,141 93,141
Increase in cash value of
life insurance (3,401) (8,488) (8,477)
Decrease in income tax
benefit receivable from
subsidiary 2,000 3,000 --
Decrease in accrued interest
payable (12,415) (1,543) (16,916)
----------- ----------- -----------
Net cash provided by
operating activities 1,576,012 1,315,967 1,266,340
----------- ----------- -----------
Cash flows from investing
activities - additions to bank
premises and equipment (40,000) -- --
----------- ----------- -----------
</TABLE>
(Continued)
83
<PAGE> 94
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 15: (Continued)
STATEMENTS OF CASH FLOWS - (CONTINUED)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing
activities:
Repayments of long-term debt $ (750,000) $ (500,000) $ (700,000)
Sale of common stock 125,000 53,825 47,620
Increase in dividends payable 119,000 114,000 663,000
Cash dividends declared (896,000) (777,000) (663,000)
----------- ----------- -----------
Net cash used in
financing activities (1,402,000) (1,109,175) (652,380)
----------- ----------- -----------
Net increase in cash 134,012 206,792 613,960
Cash at January 1 1,065,001 858,209 244,249
----------- ----------- -----------
Cash at December 31 $ 1,199,013 $ 1,065,001 $ 858,209
=========== =========== ===========
</TABLE>
84
<PAGE> 95
FIRST CORINTH CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
Assets 1996 1995 (1)
------------- -------------
<S> <C> <C>
Cash and due from banks $ 5,616,011 $ 3,858,598
Interest bearing bank balances 100,000 100,000
Federal funds sold 2,550,000 --
Securities available for sale 58,995,571 58,430,173
Federal Reserve Bank and Federal Home
Loan Bank stock 936,900 916,700
Loans 65,907,108 64,581,043
Unearned income (345,331) (325,007)
Reserve for possible loan losses (790,544) (691,831)
------------- -------------
Net loans 64,771,233 63,564,205
------------- -------------
Bank premises and equipment 1,613,392 1,331,240
Accrued interest receivable 1,594,403 1,497,812
Goodwill 2,699,090 2,768,946
Other assets 193,848 149,887
------------- -------------
$ 139,070,448 $ 132,617,561
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 114,919,736 $ 109,717,933
U. S. Treasury demand note 1,284,071 392,929
Advances from Federal Home
Loan Bank 4,736,895 4,801,252
Long-term debt 750,000 750,000
Accrued interest payable 578,690 512,977
Other liabilities 237,088 1,297,405
------------- -------------
Total liabilities 122,506,480 117,472,496
------------- -------------
Minority interest in subsidiary 211,658 189,029
Stockholders' equity:
Common stock of $5 par value
Authorized 200,000 shares;
issued and outstanding
112,000 shares 560,000 560,000
Additional paid-in capital 2,883,945 2,883,945
Retained earnings 12,783,194 11,071,751
Net unrealized gain on
securities available for sale,
net of income taxes 125,171 440,340
------------- -------------
Total stockholders' equity 16,352,310 14,956,036
------------- -------------
$ 139,070,448 $ 132,617,561
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
(1) Derived from audited financial statements.
85
<PAGE> 96
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Statements of Income
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $4,678,007 $4,143,571
Taxable investments 1,731,039 2,084,095
Tax exempt investments 857,195 830,922
Federal funds sold 134,193 78,581
Other 30,936 31,561
---------- ----------
Total interest income 7,431,370 7,168,730
---------- ----------
Interest expense:
Time deposits of $100,000 or more 493,272 228,068
Other deposits 2,673,085 2,697,511
Long-term debt 46,608 99,452
Other interest expense 237,742 232,457
---------- ----------
Total interest expense 3,450,707 3,257,488
---------- ----------
Net interest income 3,980,663 3,911,242
Provision for possible loan losses 135,000 120,000
---------- ----------
Net interest income after
provision for possible
loan losses 3,845,663 3,791,242
---------- ----------
Other operating income:
Service charges on deposit
accounts 462,401 431,966
Insurance commissions 29,449 45,565
Other income 84,795 71,694
---------- ----------
Total other
operating income 576,645 549,225
---------- ----------
Other operating expenses:
Salaries and employee benefits 1,101,060 1,051,501
Net occupancy expenses 152,323 133,704
Equipment and data processing
expenses 202,557 159,280
Regulatory insurance and
assessments 35,293 156,829
Other expenses 606,517 596,428
---------- ----------
Total other operating
expenses 2,097,750 2,097,742
---------- ----------
Income before income taxes
and minority interest 2,324,558 2,242,725
Income taxes 585,789 572,683
Minority interest in net income
of subsidiary 27,326 26,704
---------- ----------
Net income $1,711,443 $1,643,338
========== ==========
Earnings per share $ 15.28 $ 14.77
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
86
<PAGE> 97
FIRST CORINTH CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,711,443 $ 1,643,338
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 154,800 117,000
Provision for possible loan losses 135,000 120,000
Increase in accrued interest
receivable (96,591) (76,630)
Increase (decrease) in:
Accrued interest payable 65,713 68,285
Current income taxes 150,994 82,039
Accrued compensation (95,010) (165,189)
Other, net 8,953 61,355
------------ ------------
Net cash provided by
operating activities 2,035,302 1,850,198
------------ ------------
Cash flows from investing activities:
Purchases of securities
available for sale (10,373,769) --
Maturities of securities
Available for sale 9,312,472 10,388,499
Purchases of investment securities -- (762,639)
Maturities of investment securities -- 189,724
Net (increase) decrease in:
Federal funds sold (2,550,000) 950,000
Loans (1,342,028) (6,900,888)
Federal Home Loan Bank stock (20,200) (45,592)
Additions to bank premises and
equipment (436,952) (98,375)
------------ ------------
Net cash provided by (used in)
investing activities (5,410,477) 3,720,729
------------ ------------
Cash flows from financing activities:
Increase (decrease) in:
Non-interest bearing deposits 2,714,466 (704,437)
Money market, NOW and savings
accounts (1,589,687) (8,292,343)
Time deposits 4,077,024 3,136,775
U. S. Treasury demand note 891,142 735,327
Advances from Federal Home
Loan Bank (64,357) (60,789)
Dividends payable (896,000) (777,000)
Sale of common stock -- 125,000
------------ ------------
Net cash provided by (used
in) financing activities 5,132,588 (5,837,467)
------------ ------------
Net increase (decrease) in
cash and due from banks 1,757,413 (266,540)
Cash and due from banks January 1 3,858,598 5,064,491
------------ ------------
Cash and due from banks September 30 $ 5,616,011 $ 4,797,951
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
87
<PAGE> 98
FIRST CORINTH CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
Note 1: Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for interim
periods are not necessarily indicative of the results that may be expected for
the entire year. For further information refer to the annual audited
consolidated financial statements and notes thereto included elsewhere herein.
The Corporation's banking subsidiary has an incentive bonus plan for
certain officers. Under this plan, an incentive bonus is paid if income
exceeds a specified base level. The amount of this bonus, if any, is dependent
on earnings and is subject to the approval of the subsidiary's board of
directors at its December board meeting. No accrual has been made related to
this incentive bonus in the interim financial statements for 1996 and 1995.
This incentive bonus amounted to $150,000 in 1995 and was charged to expense in
December, 1995.
Note 2: Earnings Per Share
Earnings per share calculations are based on the weighted average
number of shares outstanding during the period. The following is a
presentation of weighted average shares outstanding.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Nine months ended September 30 112,000 111,265
</TABLE>
88
<PAGE> 99
NATIONAL BANK OF COMMERCE OF CORINTH
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants . . . . . . . . . . . . 94
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . 97
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 98
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
89
<PAGE> 100
Report of Independent Certified Public Accountants
Board of Directors
National Bank of Commerce of Corinth
Corinth, Mississippi
We have audited the accompanying balance sheets of National Bank of Commerce of
Corinth as of December 31, 1995 and 1994, and the related statements of income,
stockholders' equity and cash flows for each of the years in the three year
period ended December 31, 1995. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an 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 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 National Bank of Commerce of
Corinth as of December 31, 1995 and 1994, the results of its operations and its
cash flows for each of the years in the three year period ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Bank changed its method
of accounting for investment securities in 1994, to adopt the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting For Certain
Investments in Debt and Equity Securities."
/s/ Shearer, Taylor & Co. P.A.
Jackson, Mississippi
January 12, 1996
90
<PAGE> 101
NATIONAL BANK OF COMMERCE OF CORINTH
Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------------- -------------
<S> <C> <C>
Cash and due from banks $ 3,858,598 $ 5,064,491
Interest bearing bank balances 100,000 100,000
Federal funds sold -- 950,000
Securities available for sale 58,430,173 48,053,527
Investment securities, market value of
$18,556,198 in 1994 -- 18,863,734
Federal Reserve Bank and Federal Home
Loan Bank stock 916,700 874,300
Loans 64,581,043 54,509,559
Unearned income (325,007) (277,099)
Reserve for possible loan losses (691,831) (703,118)
------------- -------------
Net loans 63,564,205 53,529,342
------------- -------------
Bank premises and equipment 1,291,240 1,374,943
Accrued interest receivable 1,497,812 1,389,911
Deferred income taxes -- 906,143
Other assets 105,401 89,743
------------- -------------
$ 129,764,129 $ 131,196,134
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 110,916,946 $ 114,536,792
U. S. Treasury demand note 392,929 823,020
Advances from Federal Home Loan Bank 4,801,252 4,882,888
Accrued interest payable 453,821 392,059
Deferred income taxes 172,884 --
Other liabilities 228,521 298,026
------------- -------------
Total liabilities 116,966,353 120,932,785
------------- -------------
Stockholders' equity:
Common stock of $5 par value
Authorized and issued 110,000 shares 550,000 550,000
Surplus 7,200,000 7,200,000
Undivided profits 4,600,833 4,084,038
Net unrealized gain (loss) on securities
available for sale, net of income taxes 446,943 (1,570,689)
------------- -------------
Total stockholders' equity 12,797,776 10,263,349
------------- -------------
$ 129,764,129 $ 131,196,134
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
91
<PAGE> 102
NATIONAL BANK OF COMMERCE OF CORINTH
Statements of Income
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 5,680,817 $ 4,574,148 $ 4,325,321
Taxable investments 2,712,854 3,303,523 3,204,748
Tax exempt investments 1,112,774 1,044,059 944,792
Federal funds sold 80,544 118,270 77,102
Other 61,529 46,905 32,180
----------- ----------- -----------
Total interest income 9,648,518 9,086,905 8,584,143
----------- ----------- -----------
Interest expense:
Time deposits of $100,000 or more 378,794 280,436 323,462
Other deposits 3,577,887 3,197,658 2,982,256
Other interest expense 324,881 264,789 76,483
----------- ----------- -----------
Total interest expense 4,281,562 3,742,883 3,382,201
----------- ----------- -----------
Net interest income 5,366,956 5,344,022 5,201,942
Provision for possible loan losses 380,000 120,000 180,000
----------- ----------- -----------
Net interest income after
provision for possible loan
losses 4,986,956 5,224,022 5,021,942
----------- ----------- -----------
Other operating income:
Service charges on deposit accounts 572,663 519,523 509,019
Insurance commissions 56,365 77,017 94,869
Loss on sale of investment securities -- -- (30,311)
Other income 117,952 79,056 75,302
----------- ----------- -----------
Total other operating income 746,980 675,596 648,879
----------- ----------- -----------
Other operating expenses:
Salaries and employee benefits 1,537,791 1,551,120 1,490,494
Occupancy expenses 181,112 178,898 160,137
Equipment and data processing expenses 230,247 214,084 225,553
Regulatory insurance and assessments 179,583 309,347 267,794
Supplies 108,462 85,774 87,934
Other expenses 576,360 529,111 446,402
----------- ----------- -----------
Total other operating expenses 2,813,555 2,868,334 2,678,314
----------- ----------- -----------
Income before income taxes 2,920,381 3,031,284 2,992,507
Income taxes 698,586 708,955 714,000
----------- ----------- -----------
Net income $ 2,221,795 $ 2,322,329 $ 2,278,507
=========== =========== ===========
Earnings per share $ 20.20 $ 21.11 $ 20.71
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
92
<PAGE> 103
NATIONAL BANK OF COMMERCE OF CORINTH
Statements of Stockholders' Equity
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Common Undivided Unrealized
Stock Surplus Profits Gain (Loss) Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
January 1, 1993 $ 550,000 $ 7,200,000 $ 2,343,202 $ -- $ 10,093,202
Net income -- -- 2,278,507 -- 2,278,507
Cash dividends
declared ($13.00
per share) -- -- (1,430,000) -- (1,430,000)
------------ ------------ ------------ ------------ ------------
December 31, 1993 550,000 7,200,000 3,191,709 -- 10,941,709
------------ ------------ ------------ ------------ ------------
Net adjustment to
beginning balance
for change in
accounting method -- -- -- 510,974 510,974
Net income -- -- 2,322,329 -- 2,322,329
Cash dividends declared
($13.00 per share) -- -- (1,430,000) -- (1,430,000)
Net change in unrealized
gain (loss) -- -- -- (2,081,663) (2,081,663)
------------ ------------ ------------ ------------ ------------
December 31, 1994 550,000 7,200,000 4,084,038 (1,570,689) 10,263,349
------------ ------------ ------------ ------------ ------------
Net income -- -- 2,221,795 -- 2,221,795
Cash dividends declared
($15.50 per share) -- -- (1,705,000) -- (1,705,000)
Net unrealized gain
on investments
reclassified as
securities available
for sale -- -- -- 436,341 436,341
Net change in unrealized
gain (loss) -- -- -- 1,581,291 1,581,291
------------ ------------ ------------ ------------ ------------
December 31, 1995 $ 550,000 $ 7,200,000 $ 4,600,833 $ 446,943 $ 12,797,776
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
93
<PAGE> 104
NATIONAL BANK OF COMMERCE OF CORINTH
Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,221,795 $ 2,322,329 $ 2,278,507
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 146,000 135,000 141,464
Provision for possible loan losses 380,000 120,000 180,000
Loss on sale of investment securities -- -- 30,311
Deferred income taxes 4,000 (25,000) (43,000)
(Increase) decrease in accrued
interest receivable (107,901) (103,702) 155,075
Increase (decrease) in:
Accrued interest payable 61,762 100,504 (44,765)
Current income taxes 7,942 (23,914) (442,946)
Accrued compensation (68,000) 103,000 (35,000)
Other, net (10,442) 31,759 (52,676)
------------ ------------ ------------
Net cash provided by operating
activities 2,635,156 2,659,976 2,166,970
------------ ------------ ------------
Cash flows from investing activities:
Purchases of securities available for
sale (1,388,215) (12,500,463) --
Maturities of securities available for
sale 13,635,510 19,115,018 --
Purchases of investment securities (1,087,206) (3,298,874) (35,095,417)
Sales of investment securities -- -- 3,993,647
Maturities of investment securities 404,995 743,888 22,081,144
Net (increase) decrease in:
Interest bearing bank balances -- -- 99,500
Federal funds sold 950,000 250,000 1,950,000
Federal Home Loan Bank stock (42,400) (29,400) (612,400)
Loans (10,414,863) (7,483,835) (1,187,214)
Additions to bank premises and equipment (62,297) (95,034) (85,952)
------------ ------------ ------------
Net cash provided by (used in)
investing activities 1,995,524 (3,298,700) (8,856,692)
------------ ------------ ------------
</TABLE>
(Continued)
94
<PAGE> 105
NATIONAL BANK OF COMMERCE OF CORINTH
Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities:
Increase (decrease) in:
Non-interest bearing deposits $ (504,547) $ 2,437,926 $ 136,080
Money market, NOW and savings accounts (5,930,044) 49,725 3,010,606
Time deposits 2,814,745 1,040,879 (1,425,761)
U. S. Treasury demand note (430,091) (645,536) 284,750
Advances from Federal Home Loan Bank (81,636) (1,060,853) 5,943,741
Cash dividends (1,705,000) (1,430,000) (1,430,000)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (5,836,573) 392,141 6,519,416
----------- ----------- -----------
Net decrease in cash and due
from banks (1,205,893) (246,583) (170,306)
Cash and due from banks at January 1 5,064,491 5,311,074 5,481,380
----------- ----------- -----------
Cash and due from banks at December 31 $ 3,858,598 $ 5,064,491 $ 5,311,074
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
95
<PAGE> 106
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 1: Summary of Significant Accounting and Reporting Policies
The accounting and reporting policies of National Bank of Commerce of
Corinth (the Bank) which materially affect the determination of financial
position and results of operations conform to generally accepted accounting
principles and general practices within the banking industry. A summary of
these significant accounting and reporting policies follows.
Business
National Bank of Commerce of Corinth is a commercial bank and provides
a full range of banking services to individual and corporate customers through
its offices in Corinth, Mississippi. The Bank is subject to the regulations of
certain Federal agencies and undergoes periodic examinations by one of those
regulatory authorities.
Parent Company
The Bank is a majority owned (98.5%) subsidiary of First Corinth Corp.
(the Corporation), a one-bank holding company.
Investments
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting For Certain Investments
in Debt and Equity Securities." SFAS 115 is effective for fiscal years
beginning after December 15, 1993, and requires that debt and equity securities
be classified into one of three categories; held to maturity, available for
sale, or trading. The Bank adopted SFAS 115 effective January 1, 1994.
Securities held, which are available to be sold prior to maturity, are
classified as securities available for sale. These securities are carried at
market value. Unrealized holding gains and losses are reported, net of tax, as
a separate component of stockholders' equity. Gains and losses on the sale of
securities available for sale are determined using the specific identification
method.
Investment securities (held to maturity) are those securities which the
Bank has the ability and intent to hold until maturity. These securities are
carried at cost, adjusted for amortization of premiums and accretion of
discounts. The Bank had no investments classified as held to maturity at
December 31, 1995.
(Continued)
96
<PAGE> 107
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 1: (Continued)
Loans
Loans are stated at the principal amount outstanding. The Bank
recognizes unearned income on installment loans as income over the terms of
the loans using a method that approximates the interest method. Interest on
all other loans is calculated using the simple interest method on daily
balances of the principal amount outstanding. The Bank's policy regarding
recognition of loan fee income and origination costs is materially in
compliance with Statement of Financial Accounting Standards No. 91, which
requires that fees be deferred and that costs be capitalized and amortized over
the lives of the respective loans.
The Bank discontinues the accrual of interest and recognizes income
only as received when, in the judgment of management, the collection of
interest, but not necessarily principal, is doubtful. The Bank did not have
any such loans at December 31, 1995 and 1994.
Reserve for Possible Loan Losses
The Bank provides for possible loan losses using the reserve method.
Accordingly, all loan losses are charged to the reserve for possible loan
losses and all recoveries are credited to it. The reserve for possible loan
losses is based on the evaluation of the collectibility of loans and past loan
loss experience and other factors which, in management's judgment, deserve
current recognition in estimating possible loan losses. Such other factors
considered by management include changes in the nature and volume of the loan
portfolio, current economic conditions that may affect a borrower's ability to
pay, review of specific problem loans, and the relationship of the reserve for
possible loan losses to outstanding loans.
The Bank did not have any loans, at December 31, 1995, that were
considered to be impaired under Statement of Financial Accounting Standards No.
114. As a result, no portion of the Bank's reserve for possible loan losses is
related to such loans.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Provisions for depreciation are computed principally on the
straight-line method and charged to operating expenses over the useful lives of
the assets. Costs of major additions and improvements are capitalized.
Expenditures for maintenance and repairs are charged to expense as incurred.
(Continued)
97
<PAGE> 108
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 1: (Continued)
Income Taxes
The Corporation and the Bank file consolidated Federal and state income
tax returns. In accordance with the liability method specified by Statement of
Financial Accounting Standards No. 109, deferred tax assets and liabilities are
determined based on the differences between the financial statement basis and
income tax basis of assets and liabilities as measured using the enacted rates
which are expected to be in effect when these differences reverse. Deferred
income tax expense (benefit) is the result of changes in deferred tax assets
and liabilities.
Earnings Per Share
Earnings per share calculations are based on the weighted average
number of shares outstanding during the year.
Statements of Cash Flows
In the accompanying statements of cash flows, the Bank has defined cash
equivalents as those amounts included in the balance sheet caption "Cash and
Due from Banks". The following supplemental disclosures are made related to
the statements of cash flows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Interest paid $4,219,800 $3,645,379 $3,426,966
Income tax benefits
paid to parent
company 49,000 48,000 64,000
Other income tax
payments 637,644 709,869 1,135,946
</TABLE>
Reclassifications
Certain reclassifications have been made to the 1994 and 1993 financial
statements to be consistent with the 1995 presentation.
98
<PAGE> 109
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 2: Investments
The following is a summary of the amortized cost and market value
(book value) of securities available for sale at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Gross Unrealized
Amortized ------------------------ Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1995:
U. S. Treasury $ 3,440,400 $ 9,728 $ 14,699 $ 3,435,429
Obligations of U. S
Government agencies 11,106,280 37,020 97,073 11,046,227
Mortgage-backed
securities 23,288,672 265,526 165,065 23,389,133
Obligations of state
and political
subdivisions 19,631,994 741,252 66,359 20,306,887
Other securities 250,000 2,497 -- 252,497
----------- ----------- ----------- -----------
$57,717,346 $ 1,056,023 $ 343,196 $58,430,173
=========== =========== =========== ===========
December 31, 1994:
U. S. Treasury $ 7,407,174 $ -- $ 269,232 $ 7,137,942
Obligations of U. S
Government agencies 14,845,507 10,488 629,834 14,226,161
Mortgage-backed
securities 27,930,678 45,211 1,539,310 26,436,579
Other securities 250,000 2,845 -- 252,845
----------- ----------- ----------- -----------
$50,433,359 $ 58,544 $ 2,438,376 $48,053,527
=========== =========== =========== ===========
</TABLE>
The following is a summary of the amortized cost (book value) and
market value of investment securities at December 31, 1994:
<TABLE>
<CAPTION>
Gross Unrealized
Amortized ------------------------ Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Obligations of state
and political
subdivisions $18,863,734 $ 284,957 $ 592,493 $18,556,198
=========== =========== =========== ===========
</TABLE>
(Continued)
99
<PAGE> 110
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 2: (Continued)
The amortized cost and market value (book value) of securities available
for sale at December 31, 1995, by contractual maturity are shown below.
Expected maturities may differ from contractual maturities because borrowers
have the right to call or prepay certain obligations with, or without, call or
prepayment penalties.
<TABLE>
<CAPTION>
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
One year or less $15,714,926 $15,777,356
Over one through five years 31,580,763 32,050,992
Over five through ten years 9,050,088 9,255,706
After ten years 1,371,569 1,346,119
----------- -----------
$57,717,346 $58,430,173
=========== ===========
</TABLE>
The following is a summary of the amortized cost and market value of
investments which were pledged to secure public deposits and for other purposes
required or permitted by law.
<TABLE>
<CAPTION>
Available for Sale Investment Securities
------------------------- -------------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1995 $30,763,000 $31,061,000 $ -- $ --
=========== =========== =========== ===========
December 31, 1994 $27,841,000 $26,595,000 $ 9,021,000 $ 8,873,000
=========== =========== =========== ===========
</TABLE>
The following is a summary of gains (losses) on sales of investment
securities for the year ended December 31, 1993:
<TABLE>
<S> <C>
Gross realized gains on investment securities $ 7,502
Gross realized losses on investment securities (37,813)
--------
$(30,311)
========
</TABLE>
In accordance with "A Guide to Implementation of Statement 115 on
Accounting for Certain Investments in Debt and Equity Securities" (the Guide),
which was issued in November, 1995, by the Financial Accounting Standards
Board, the Bank reclassified its remaining portfolio of investments classified
as held to maturity as securities available for sale in December, 1995. The
amortized cost of these investments was $19,541,137 and the market value was
$20,237,065 at the date of the reclassification. The net unrealized gain on
these investments was $695,928, which resulted in a net unrealized gain of
$436,341, net of applicable income taxes.
100
<PAGE> 111
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 3: Loans
The Bank grants commercial, consumer and residential loans to borrowers
primarily in the Bank's market area in and around Alcorn County, Mississippi. A
summary of loans included in the balance sheets follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Residential real estate loans $24,308,311 $20,595,277
Non-residential real estate loans 7,794,646 6,820,029
Commercial and other loans 13,476,952 10,835,057
Consumer loans 19,001,134 16,259,196
----------- -----------
$64,581,043 $54,509,559
=========== ===========
</TABLE>
Note 4: Reserve for Possible Loan Losses
Transactions in the reserve for possible loan losses are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning
of year $ 703,118 $ 644,372 $ 524,522
Loans charged-off (442,486) (98,450) (114,480)
Recoveries of loans
previously charged off 51,199 37,196 54,330
--------- --------- ---------
Net loans charged-off (391,287) (61,254) (60,150)
--------- --------- ---------
Provision for possible
loan losses 380,000 120,000 180,000
--------- --------- ---------
Balance at end of year $ 691,831 $ 703,118 $ 644,372
========= ========= =========
</TABLE>
Note 5: Bank Premises and Equipment
A summary of bank premises and equipment follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Land $ 135,000 $ 135,000
Buildings 1,570,683 1,570,683
Furniture, fixtures and equipment 1,551,753 1,489,456
---------- ----------
3,257,436 3,195,139
Less accumulated depreciation 1,966,196 1,820,196
---------- ----------
$1,291,240 $1,374,943
========== ==========
</TABLE>
(Continued)
101
<PAGE> 112
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 5: (Continued)
Depreciation expense for bank premises and equipment amounted to $146,000
in 1995, $135,000 in 1994 and $141,000 in 1993.
Note 6: Deposits
The following is a summary of deposits at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Non interest bearing $ 14,384,675 $ 14,889,222
Interest bearing:
Money market accounts 7,141,010 7,190,074
NOW accounts 24,510,808 28,801,156
Savings accounts 9,342,643 10,933,275
Time deposits of $100,000 or more 11,223,437 10,425,717
Other time deposits 44,314,373 42,297,348
------------ ------------
Total interest bearing 96,532,271 99,647,570
------------ ------------
Total deposits $110,916,946 $114,536,792
============ ============
</TABLE>
Note 7: Advances From Federal Home Loan Bank
The following is a summary of advances from the Federal Home Loan Bank of
Dallas at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Advances under a $5,000,000 guaranteed
rate commitment with a final
maturity of August 25, 2005;
interest is payable monthly at the
"1 month LIBOR FLAT" rate and is
reset on the 25th of each calendar
month; principal prepayments are
allowed at the reset date each
month; the interest rate was 5.75%
at December 31, 1995 $3,785,000 $3,785,000
$800,000 advance dated November 22,
1993, bearing interest at 5.6%;
principal and interest are payable
monthly in installments of
approximately $8,700, with a final
principal payment of $203,354 due
on December 1, 2001 673,626 738,578
</TABLE>
(Continued)
102
<PAGE> 113
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 7: (Continued)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
$375,000 advance dated November 23,
1993, bearing interest at 6.17%;
principal and interest are payable
monthly in installments of
approximately $3,200, with a final
principal payment of $167,135 due
on December 1, 2003 342,626 359,310
---------- ----------
$4,801,252 $4,882,888
========== ==========
</TABLE>
The advances are secured by first mortgage loans and Federal Home Loan
Bank stock under a Collateral Pledge and Security Agreement dated July 20,
1993.
Required principal payments on these advances are as follows:
<TABLE>
<S> <C> <C>
1996 $ 86,428
1997 91,501
1998 96,873
1999 102,559
2000 108,580
After 2000 4,315,311
----------
$4,801,252
==========
</TABLE>
Note 8: Employee Benefit Plan
The Bank has an employee benefit plan which is a 401(k) Profit Sharing
Plan and Trust. Full-time employees and part-time employees with 1,000 or more
hours service per year become eligible for participation in the plan after one
year of service. Employees may contribute up to 6% of their gross compensation,
and the Bank matches from 25% to 100% of employee contributions based on an
employee's length of service.
Total expense under this employee benefit plan was $38,607 in 1995,
$37,331 in 1994 and $33,472 in 1993.
103
<PAGE> 114
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 9: Income Taxes
The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
Federal State Total
--------- --------- ---------
<S> <C> <C> <C>
1995:
Current $ 615,800 $ 78,786 $ 694,586
Deferred 12,000 (8,000) 4,000
--------- --------- ---------
Total $ 627,800 $ 70,786 $ 698,586
========= ========= =========
1994:
Current $ 733,955 $ -- $ 733,955
Deferred (25,000) -- (25,000)
--------- --------- ---------
Total $ 708,955 $ -- $ 708,955
========= ========= =========
1993:
Current $ 757,000 $ -- $ 757,000
Deferred (43,000) -- (43,000)
--------- --------- ---------
Total $ 714,000 $ -- $ 714,000
========= ========= =========
</TABLE>
The differences between actual income tax expense and expected income tax
expense are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Amount computed using the
statutory rates on
income before income
taxes $ 992,900 $ 1,030,600 $ 1,018,000
Increase (decrease)
resulting from:
Tax exempt income, net
of disallowed
interest deduction (350,800) (338,800) (311,000)
State income tax, net
of Federal benefit 46,686 -- --
Expense as a result of
Internal Revenue
Service examination -- 10,900 --
Other, net 9,800 6,255 7,000
----------- ----------- -----------
$ 698,586 $ 708,955 $ 714,000
=========== =========== ===========
</TABLE>
(Continued)
104
<PAGE> 115
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 9: (Continued)
Components of deferred income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Provision for possible
loan losses $ 2,700 $(20,000) $(40,700)
Depreciation (5,200) (1,000) (4,000)
Fee income 5,700 (13,500) --
Federal Home Loan Bank
stock dividends 10,200 10,000 --
Tax effect of state net
operating loss
carryforward on
deferred income taxes (10,000) -- --
Other, net 600 (500) 1,700
-------- -------- --------
$ 4,000 $(25,000) $(43,000)
======== ======== ========
</TABLE>
The components of the Bank's net deferred tax asset (liability) at December
31, 1995 and 1994, consist of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Reserve for possible loan losses $ 144,900 $ 136,600
Depreciation (28,200) (33,200)
Fee income 5,900 13,500
Federal Home Loan Bank stock
dividends (26,600) (10,000)
Valuation allowance for securities
available for sale (265,884) 809,143
Other (3,000) (9,900)
--------- ---------
$(172,884) $ 906,143
========= =========
</TABLE>
Other assets include income taxes receivable of approximately $33,000 at
December 31, 1995 and $41,000 at December 31, 1994.
105
<PAGE> 116
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 10: Related Parties
In the ordinary course of business, the Bank makes loans to its executive
officers and directors of the Corporation and the Bank and to companies in which
these officers and directors are principal owners. In the opinion of
management, these loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons. An analysis of changes in these loans follows:
<TABLE>
<S> <C>
Balance at December 31, 1994 $ 2,193,256
New loans 991,433
Repayments (391,301)
-----------
Balance at December 31, 1995 $ 2,793,388
===========
</TABLE>
Note 11: Commitments and Contingencies
The Bank's financial statements do not reflect various commitments and
contingent liabilities which arise in the normal course of business and which
involve elements of credit risk, interest rate risk and liquidity risk. The
Bank makes commitments to extend credit and issues standby and commercial
letters of credit in the normal course of business to fulfill the financing
needs of its customers.
Commitments to extend credit are agreements to lend money to customers
pursuant to certain specified conditions and generally have fixed expiration
dates or other termination clauses. Since many of these commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. When making these
commitments, the Bank applies the same credit policies and standards as it does
in the normal lending process. Collateral is obtained based upon the Bank's
assessment of a customer's credit worthiness.
Standby and commercial letters of credit are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
When issuing letters of credit, the Bank applies the same credit policies and
standards as it does in the normal lending process. Collateral is obtained
based upon the Bank's assessment of a customer's credit worthiness.
The Bank's maximum credit exposure in the event of nonperformance for
loan commitments and standby and commercial letters of credit is represented by
the contract amount of the instruments.
A summary of the Bank's commitments and contingent liabilities at
December 31, 1995, is as follows:
<TABLE>
<S> <C>
Commitments to extend credit $ 2,727,480
Letters of credit 196,267
===========
</TABLE>
106
<PAGE> 117
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 12: Regulatory Matters
Federal banking regulations require that the Bank maintain certain cash
reserves based on a percentage of deposits. This requirement was approximately
$967,000 at December 31, 1995.
The ability of the Bank's parent company to service its debt and pay
dividends to its stockholders is primarily dependent upon future income tax
benefits and dividends to be paid to the parent company by the Bank. As a
national bank, the Bank must receive the approval of the Comptroller of the
Currency if the total of all dividends declared in any calendar year exceeds
the total net profits for that year combined with the Bank's retained net
profits of the two preceding years.
The Bank is also required to maintain minimum amounts of capital to
total "risk weighted" assets, as defined and determined by banking regulators
in order to pay dividends. The Bank's regulatory capital was in excess of
minimum capital levels required by regulatory authorities at December 31, 1995.
Note 13: Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 (SFAS 107),
"Disclosures about Fair Value of Financial Instruments", requires that the Bank
disclose estimated fair value for its financial instruments. However, such
disclosures may be deemed not to be practicable for certain classes of
financial instruments. A summary of financial instruments and related
disclosures follows:
Cash and due from banks and interest bearing deposits with banks - The
net book value of these financial instruments approximates fair value due to
the immediate availability or short maturity of these investments.
Investments - Fair value of these financial instruments is considered
to be their market value as disclosed in Note 2.
Loans - The Bank's loan portfolio represents a group of non-homogeneous
instruments which include different types of borrowers, collateral
requirements, credit risks, maturity dates, payment terms, interest rates and
frequency of repricing of interest rates. Due to the effort and difficulty in
implementing a valuation model necessary to estimate the fair value of loans,
the Bank does not consider this disclosure to be practicable for loans.
However, in the opinion of management, the estimated fair value of loans would
not be materially different from the net recorded book value.
(Continued)
107
<PAGE> 118
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 13: (Continued)
The following is a summary of pertinent information related to loans,
net of unearned income:
<TABLE>
<CAPTION>
Effective
Balance yield
----------- --------
<S> <C> <C>
Variable rate loans $ 7,094,703 9.16%
Fixed rate loans (by maturity):
0 - 3 months 8,616,842 9.47
4 - 12 months 12,420,207 9.04
1 - 3 years 19,290,170 9.66
4 - 5 years 10,646,713 9.81
After 5 years 6,187,401 9.03
=========== =======
</TABLE>
Deposits - Under SFAS 107, the fair value of deposits with no stated
maturity, such as non-interest bearing demand deposits, savings accounts, NOW
accounts and money market demand accounts, is equal to the amount payable on
demand at December 31, 1995, as represented by the book value of these
deposits. The fair value of certificates of deposit is based on the discounted
value of contractual cash flows, using current rates for discounting purposes.
Due to the effort and difficulty in implementing a valuation model necessary to
estimate the fair value of certificates of deposit, the Bank does not consider
this disclosure to be practicable. However, in the opinion of management, the
estimated fair value of certificates of deposit would not be materially
different from the book value of these deposits.
The total balances of non-interest bearing demand, money market, NOW
and savings accounts are disclosed in Note 6. The following is a summary of
pertinent information related to certificates of deposit:
<TABLE>
<CAPTION>
Effective
Maturity Amount rate
-------- ------ ------------
<S> <C> <C>
0 - 3 months $ 15,381,803 5.05%
4 - 12 months 24,298,261 5.13
1 - 3 years 11,198,736 5.53
4 - 5 years 4,641,225 5.97
After 5 years 17,785 5.60
============ ====
</TABLE>
Federal funds purchased and advances from Federal Home Loan Bank - The
net book value of these financial instruments approximates fair value due to
variable rate pricing of the majority of these borrowings or due to current
rates for fixed rate borrowings.
108
<PAGE> 119
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
Note 13: (Continued)
Commitments to extend credit - As disclosed in Note 11, the Bank has
certain commitments to extend credit at December 31, 1995. Due to the similar
factors related to estimating the fair value of loans, the Bank does not
consider the disclosure to be practicable for these items. However, due to the
pricing, terms and conditions for the outstanding commitments to extend credit,
in the opinion of management, the estimated fair value of commitments to extend
credit is not materially different from the stated amounts as disclosed in Note
11.
109
<PAGE> 120
NATIONAL BANK OF COMMERCE OF CORINTH
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
Assets 1996 1995 (1)
------------- -------------
<S> <C> <C>
Cash and due from banks $ 5,616,011 $ 3,858,598
Interest bearing bank balances 100,000 100,000
Federal funds sold 2,550,000 --
Securities available for sale 58,995,571 58,430,173
Federal Reserve Bank and Federal Home
Loan Bank stock 936,900 916,700
Loans 65,907,108 64,581,043
Unearned income (345,331) (325,007)
Reserve for possible loan losses (790,544) (691,831)
------------- -------------
Net loans 64,771,233 63,564,205
------------- -------------
Bank premises and equipment 1,573,392 1,291,240
Accrued interest receivable 1,594,403 1,497,812
Other assets 159,844 105,401
------------- -------------
$ 136,297,354 $ 129,764,129
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 115,161,670 $ 110,916,946
U. S. Treasury demand note 1,284,071 392,929
Advances from Federal Home Loan Bank 4,736,895 4,801,252
Accrued interest payable 561,991 453,821
Other liabilities 225,088 401,405
------------- -------------
Total liabilities 121,969,715 116,966,353
------------- -------------
Stockholders' equity:
Common stock of $5 par value
Authorized and issued 110,000 shares 550,000 550,000
Surplus 7,200,000 7,200,000
Undivided profits 6,450,591 4,600,833
Net unrealized gain on securities
available for sale, net of income taxes 127,048 446,943
------------- -------------
Total stockholders' equity 14,327,639 12,797,776
------------- -------------
$ 136,297,354 $ 129,764,129
============= =============
</TABLE>
The accompanying note is an integral part of these financial statements.
(1) Derived from audited financial statements.
110
<PAGE> 121
NATIONAL BANK OF COMMERCE OF CORINTH
Statements of Income
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $4,678,007 $4,143,571
Taxable investments 1,731,039 2,084,095
Tax exempt investments 857,195 830,922
Federal funds sold 134,193 78,581
Other 30,936 31,561
---------- ----------
Total interest income 7,431,370 7,168,730
---------- ----------
Interest expense:
Time deposits of $100,000 or more 493,272 228,068
Other deposits 2,678,611 2,702,344
Other interest expense 237,742 232,457
---------- ----------
Total interest expense 3,409,625 3,162,869
---------- ----------
Net interest income 4,021,745 4,005,861
Provision for possible loan losses 135,000 120,000
---------- ----------
Net interest income after provision
for possible loan losses 3,886,745 3,885,861
---------- ----------
Other operating income:
Service charges on deposit accounts 462,401 431,966
Insurance commissions 29,449 45,565
Other income 84,309 68,292
---------- ----------
Total other operating income 576,159 545,823
---------- ----------
Other operating expenses:
Salaries and employee benefits 1,101,060 1,051,501
Occupancy expenses 133,238 133,704
Equipment and data processing expenses 202,557 159,280
Regulatory insurance and assessments 35,293 156,829
Other expenses 523,207 514,118
---------- ----------
Total other operating expenses 1,995,355 2,015,432
---------- ----------
Income before income taxes 2,467,549 2,416,252
Income taxes 617,789 608,683
---------- ----------
Net income $1,849,760 $1,807,569
========== ==========
Earnings per share $ 16.82 $ 16.43
========== ==========
</TABLE>
The accompanying note is an integral part of these financial statements.
111
<PAGE> 122
NATIONAL BANK OF COMMERCE OF CORINTH
Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,849,760 $ 1,807,569
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 154,800 117,000
Provision for possible loan losses 135,000 120,000
Increase in accrued interest receivable (96,591) (76,630)
Increase (decrease) in:
Accrued interest payable 108,170 111,563
Current income taxes 127,994 84,039
Accrued compensation (95,010) (165,189)
Other, net (87,742) (31,804)
------------ ------------
Net cash provided by operating
activities 2,096,381 1,966,548
------------ ------------
Cash flows from investing activities:
Purchases of securities available for sale (10,373,769) --
Maturities of securities available for sale 9,312,472 10,388,499
Purchases of investment securities -- (762,639)
Maturities of investment securities -- 189,724
Net (increase) decrease in:
Federal funds sold (2,550,000) 950,000
Federal Home Loan Bank stock (20,200) (45,592)
Loans (1,342,028) (6,900,888)
Additions to bank premises and equipment (436,952) (58,375)
------------ ------------
Net cash provided by (used in)
investing activities (5,410,477) 3,760,729
------------ ------------
Cash flows from financing activities:
Increase (decrease) in:
Non-interest bearing deposits 2,956,400 (447,786)
Money market, NOW and savings accounts (2,788,700) (9,357,344)
Time deposits 4,077,024 3,136,775
U. S. Treasury demand note 891,142 735,327
Advances from Federal Home Loan Bank (64,357) (60,789)
------------ ------------
Net cash provided by (used in)
financing activities 5,071,509 (5,993,817)
------------ ------------
Net increase (decrease) in cash
and due from banks 1,757,413 (266,540)
Cash and due from banks at January 1 3,858,598 5,064,491
------------ ------------
Cash and due from banks at September 30 $ 5,616,011 $ 4,797,951
============ ============
</TABLE>
The accompanying note is an integral part of these financial statements.
112
<PAGE> 123
NATIONAL BANK OF COMMERCE OF CORINTH
Notes to Financial Statements
(Unaudited)
Note 1: Summary of Significant Accounting and Reporting Policies
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for interim periods are not
necessarily indicative of the results that may be expected for the entire year.
For further information refer to the annual audited financial statements and
notes thereto included elsewhere herein.
The Bank has an incentive bonus plan for certain officers. Under this
plan, an incentive bonus is paid if income exceeds a specified base level. The
amount of this bonus, if any, is dependent on earnings and is subject to the
approval of the Bank's board of directors at its December board meeting. No
accrual has been made related to this incentive bonus in the interim financial
statements for 1996 and 1995. This incentive bonus amounted to $150,000 in
1995 and was charged to expense in December, 1995.
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EXHIBIT "A"
DISSENTERS' RIGHTS
Section 79-4-13.01. Definitions.
In this article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation
by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 79-4-13.02 and who exercises that right
when and in the manner required by Sections 79-4-13.20 through
79-4-13.28.
(3) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion
would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at a rate
that is fair and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on
file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
Section 79-4-13.02. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following
corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party (i) if shareholder approval is
required for the merger by Section 79-4-11.03 or the
articles of incorporation and the shareholder
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is entitled to vote on the merger, or (ii) if the
corporation is a subsidiary that is merged with its
parent under Section 79-4-11.04;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose
shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation
other than in the usual and regular course of
business, if the shareholder is entitled to vote on
the sale or exchange, including a sale in
dissolution, but not including a sale pursuant to
court order or a sale for cash pursuant to a plan by
which all or substantially all of the net proceeds of
the sale will be distributed to the shareholders
within one (1) year after the date of sale;
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of
a dissenter's shares because it:
(i) Alters or abolishes a preferential
right of the shares;
(ii) Creates, alters or abolishes a right
in respect of redemption, including
a provision respecting a sinking
fund for the redemption or
repurchase, of the shares;
(iii) Alters or abolishes a preemptive
right of the holder of the shares to
acquire shares or other securities;
(iv) Excludes or limits the right of the
shares to vote on any matter, or to
cumulate votes, other than a
limitation by dilution through
issuance of shares or other
securities with similar voting
rights; or
(v) Reduces the number of shares owned
by the shareholder to a fraction of
a share if the fractional share so
created is to be acquired for cash
under Section 79-4-6.04; or
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(5) Any corporate action taken pursuant to a shareholder
vote to the extent the articles of incorporation,
bylaws or a resolution of the board of directors
provides that voting or nonvoting shareholders are
entitled to dissent and obtain payment for their
shares.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result
of an amendment of the articles of incorporation exclusively for the
purpose of either (i) making such corporation subject to application
of the Mississippi Control Share Act, or (ii) making such act
inapplicable to a control share acquisition of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect
to the shareholder or the corporation.
Section 79-4-13.03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose
behalf he asserts dissenters' rights. The rights of a partial
dissenter under this subsection are determined as if the shares as to
which he dissents and his other shares were registered in the names of
different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record
shareholder's written consent to the dissent not
later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is
the beneficial shareholder or over which he has power
to direct the vote.
Section 79-4-13.20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a shareholders' meeting, the
meeting notice must state that shareholders are or may be entitled to
assert dissenters' rights under this article and be accompanied by a
copy of this article.
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(b) If corporate action creating dissenters' rights under Section
79-4-13.02 is taken without a vote of shareholders, the corporation
shall notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the
dissenters' notice described in Section 79-4-13.22.
Section 79-4-13.21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights (1) must deliver
to the corporation before the vote is taken written notice of his
intent to demand payment for his shares if the proposed action is
effectuated, and (2) must not vote his shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirement of subsection (a)
is not entitled to payment for his shares under this article.
Section 79-4-13.22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who
satisfied the requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was taken, and must:
(1) State where the payment demand must be sent and where
and when certificates for certificated shares must be
deposited;
(2) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted
after the payment demand is received;
(3) Supply a form for demanding payment that includes the
date of the first announcement to news media or to
shareholders of the terms of the proposed corporate
action and requires that the person asserting
dissenters' rights certify whether or not he acquired
beneficial ownership of the shares before that date;
(4) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than
thirty (30) nor more than sixty (60) days
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after the date the subsection (a) notice is
delivered; and
(5) Be accompanied by a copy of this article.
Section 79-4-13.23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in Section
79-4-13.22 must demand payment, certify whether he acquired beneficial
ownership of the shares before the date required to be set forth in
the dissenter's notice pursuant to Section 79-4-13.22(b)(3), and
deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under this article.
Section 79-4-13.24. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under
Section 79-4-13.26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until
these rights are cancelled or modified by the taking of the proposed
corporate action.
Section 79-4-13.25. PAYMENT.
(a) Except as provided in Section 79-4-13.27, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with Section
79-4-13.23 the amount the corporation estimates to be the fair value
of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen (16) months
before the date of payment, an income statement for
that year, a statement of changes in
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shareholders' equity for that year, and the latest
available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' right to demand
payment under Section 79-4-13.28; and
(5) A copy of this article.
Section 79-4-13.26. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates
and release the transfer restrictions imposed on uncertificated
shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send
a new dissenters' notice under Section 79-4-13.22 and repeat the
payment demand procedure.
Section 79-4-13.27. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by Section
79-4-13.25 from a dissenter unless he was the beneficial owner of the
shares before the date set forth in the dissenters' notice as the
date of the first announcement to news media or to shareholders of the
terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and
shall pay this amount to each dissenter who agrees to accept it in
full satisfaction of his demand. The corporation shall send with its
offer a statement of its estimate of the fair value of the shares, an
explanation of how the interest was calculated and a statement of the
dissenter's right to demand payment under Section 79-4-13.28.
Section 79-4-13.28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR
OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under Section 79-4-13.25),
or reject the corporation's
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offer under Section 79-4-13.27 and demand payment of the fair value of
his shares and interest due, if:
(1) The dissenter believes that the amount paid under
Section 79-4-13.25 or offered under Section
79-4-13.27 is less than the fair value of his shares
or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section
79-4-13.25 within sixty (60) days after the date set
for demanding payment; or
(3) The corporation, having failed to take the proposed
action, does not return the deposited certificates or
release the transfer restrictions imposed on
uncertificated shares within sixty (60) days after
the date set for demanding payment.
(b) A dissenter waives his right to demand payment under this
section unless he notifies the corporation of his demand in
writing under subsection (a) within thirty (30) days after the
corporation made or offered payment for his shares.
Section 79-4-13.30. COURT ACTION.
(a) If a demand for payment under Section 79-4-13.28 remains unsettled,
the corporation shall commence a proceeding within sixty (60) days
after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60-day period, it shall
pay each dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the chancery court of
the county where a corporation's principal office (or, if none in this
state, its registered office) is located. If the corporation is a
foreign corporation without a registered office in this state, it
shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose
shares were acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding
as in an action against their shares and all parties must be served
with a copy of the petition. Nonresidents may be served by registered
or certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The
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court may appoint one or more persons as appraisers to receive
evidence and recommend decision on the question of fair value. The
appraisers have the powers described in the order appointing them, or
in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation,
or (2) for the fair value, plus accrued interest, of his
after-acquired shares for which the corporation elected to withhold
payment under Section 79-4-13.27.
Section 79-4-13.31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Section
79-4-13.30 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the
court. The court shall assess the costs against the corporation,
except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters
if the court finds the corporation did not substantially
comply with the requirements of Sections 79-4-13.20 through
79-4-13.28; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom
the fees and expenses are assessed acted arbitrarily,
vexatiously or not in good faith with respect to the rights
provided by this article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and
that the fees for those services should not be assessed against the
corporation, the court may award to these counsel reasonable fees to
be paid out of the amounts awarded the dissenters who were benefited.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Article VI, Section 2 of the bylaws of Trustmark
Corporation, the corporation may indemnify or reimburse the expenses of any
person against all reasonable expenses incurred in connection with any
litigation or proceeding in which such person may have been involved because he
is or was a director (including honorary or advisory directors) officer or
employee of the corporation or of any other firm, corporation or organization
which he served in any such capacity at the request of the corporation.
Provided, such person shall have no right to indemnification or reimbursement
in relation to any matters in which he is finally adjudged to have been guilty
of or liable for negligence or willful misconduct in the performance of his
duties; and, provided further, that no person shall be so indemnified or
reimbursed in relation to any administrative proceeding or action instituted by
any appropriate bank regulatory agency which proceeding or action results in a
final order assessing civil monetary penalties or requiring affirmative action
by an individual or individuals in the form of payments to the corporation.
In addition, pursuant to the Mississippi Business Corporation Act,
directors and officers are entitled to indemnification in certain events as
summarized below:
Section 79-4-8.50. SUBARTICLE DEFINITIONS.
In this subarticle:
(1) "Corporation" includes any domestic or foreign
predecessor entity of a corporation in a merger or
other transaction in which the predecessor's
existence ceased upon consummation of the
transaction.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while
a director of a corporation, is or was serving at the
corporation's request as a director, officer,
partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other
enterprise. A director is considered to be serving
an employee benefit plan at the corporation's request
if his duties to the corporation also impose duties
on, or otherwise involve services by, him to the plan
or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires
<PAGE> 133
otherwise, the estate or personal representative of a
director.
(3) "Expenses" include counsel fees.
(4) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan),
or reasonable expenses incurred with respect to a
proceeding.
(5) "Official capacity" means: (i) when used with
respect to a director, the office of director in a
corporation; and (ii) when used with respect to an
individual other than a director as contemplated in
Section 79-4-8.56, the office in a corporation held
by the officer or the employment or agency
relationship undertaken by the employee or agent on
behalf of the corporation. "Official capacity" does
not include service for any other foreign or domestic
corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise.
(6) "Party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent
in a proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether
formal or informal.
Section 79-4-8.51. AUTHORITY TO INDEMNIFY.
(a) Except as provided in subsection (d), a corporation may
indemnify an individual made a party to a proceeding because
he is or was a director against liability incurred in the
proceeding if:
(1) He conducted himself in good faith; and
(2) He reasonably believed:
(i) In the case of conduct in his official
capacity with the corporation, that his
conduct was in its best interests; and
(ii) In all other cases, that his conduct was at
least not opposed to its best interests; and
(3) In the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
<PAGE> 134
(b) A director's conduct with respect to an employee benefit plan
for a purpose he reasonably believed to be in the interest of
the participants in and beneficiaries of the plan is conduct
that satisfies the requirement of subsection (a)(2)(ii).
(c) The termination of a proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or
its equivalent is not, of itself, determinative that the
director did not meet the standard of conduct described in
this section.
(d) A corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of
the corporation in which the director was adjudged
liable to the corporation; or
(2) In connection with any other proceeding charging
improper personal benefit to him, whether or not
involving action in his official capacity, in which
he was adjudged liable on the basis that personal
benefit was improperly received by him.
(e) Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
Section 79-4-8.52. MANDATORY INDEMNIFICATION.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
Section 79-4-8.53. ADVANCE FOR EXPENSES.
(a) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding if:
(1) The director furnishes the corporation a written
affirmation of his good faith belief that he has met
the standard of conduct described in Section
79-4-8.51;
(2) The director furnishes the corporation a written
undertaking, executed personally or on his behalf,
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to repay the advance if it is ultimately determined
that he did not meet the standard of conduct; and
(3) A determination is made that the facts then known to
those making the determination would not preclude
indemnification under this subarticle.
(b) The undertaking required by subsection (a)(2) must be an
unlimited general obligation of the director but need not be
secured and may be accepted without reference to financial
ability to make repayment.
(c) Determinations and authorizations of payments under this
section shall be made in the manner specified in Section
79-4-8.55.
Section 79-4-8.54. COURT ORDERED INDEMNIFICATION.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving
any notice the court considers necessary may order indemnification if it
determines:
(1) The director is entitled to mandatory indemnification
under Section 79-4-8.52, in which case the court
shall also order the corporation to pay the
director's reasonable expenses incurred to obtain
court-ordered indemnification; or
(2) The director is fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not he met the standard of
conduct set forth in Section 79-4-8.51 or was
adjudged liable as described in Section
79-4-8.51(d), but if he was adjudged so liable his
indemnification is limited to reasonable expenses
incurred.
Section 79-4-8.55. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) A corporation may not indemnify a director under Section
79-4-8.51 unless authorized in the specific case after a
determination has been made that indemnification of the
director is permissible in the circumstances because he has
met the standard of conduct set forth in Section 79-4-8.51.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a
quorum consisting of directors not at the time
parties to the proceeding;
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(2) If a quorum cannot be obtained under subdivision (1),
by majority vote of a committee duly designated by
the board of directors (in which designation
directors who are parties may participate),
consisting solely of two (2) or more directors not at
the time parties to the proceeding;
(3) By special legal counsel:
(i) Selected by the board of directors or its
committee in the manner prescribed in
subdivision (1) or (2); or
(ii) If a quorum of the board of directors cannot
be obtained under subdivision (1) and a
committee cannot be designated under
subdivision (2), selected by a majority vote
of the full board of directors (in which
selection directors who are parties may
participate); or
(4) By the shareholders, but shares owned by or voted
under the control of directors who are at the time
parties to the proceeding may not be voted on the
determination.
(c) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible, except
that if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled
under subsection (b)(3) to select counsel.
Section 79-4-8.56. INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation who is not a director is
entitled to mandatory indemnification under Section
79-4-8.52, and is entitled to apply for court-ordered
indemnification under Section 79-4- 8.54, in each case to the
same extent as a director;
(2) The corporation may indemnify and advance expenses under this
subarticle to an officer, employee or agent of the corporation
who is not a director to the same extent as to a director; and
(3) A corporation may also indemnify and advance expenses to an
officer, employee or agent who is not a director to
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the extent, consistent with public policy, that may be provided
by its articles of incorporation, bylaws, general or specific
action of its board of directors or contract.
Section 79-4-8.57. INSURANCE.
A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee or agent of the
corporation, or who, while a director, officer, employee or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer, employee or agent,
whether or not the corporation would have power to indemnify him against the
same liability under Section 79-4- 8.51 or 79-4-8.52.
Section 79-4-8.58. APPLICATION OF ARTICLE.
(a) Unless the articles of incorporation or bylaws provide
otherwise, any authorization of indemnification in the
articles of incorporation or bylaws shall not be deemed to
prevent the corporation from providing the indemnification
permitted or mandated by this subarticle.
(b) Any corporation shall have power to make any further
indemnity, including advance of expenses, to and to enter
contracts of indemnity with any director, officer, employee or
agent that may be authorized by the articles of incorporation
or any bylaw made by the shareholders or any resolution
adopted, before or after the event, by the shareholders,
except an indemnity against his gross negligence or willful
misconduct. Unless the articles of incorporation, or any such
bylaws or resolution provide otherwise, any determination as
to any further indemnity shall be made in accordance with
subsection (b) of Section 79-4-8.55. Each such indemnity may
continue as to a person who has ceased to have the capacity
referred to above and may inure to the benefit of the heirs,
executors and administrators of such person.
(c) This subarticle does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with
his appearance as a witness in a proceeding at a time when he
has not been made a named defendant or respondent to the
proceeding.
<PAGE> 138
ITEM 21.(a) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
- --------
No. Description
- --- -----------
<S> <C> <C>
2. Merger Agreement Exhibit 2
3. Articles of Incorporation
of Trustmark Corporation (1)
3.1 Bylaws of Trustmark (1)
5. Proposed Opinion of Brunini, Grantham,
Grower & Hewes, PLLC Exhibit 5
8. Proposed Tax Opinion of Brunini, Grantham,
Grower & Hewes, PLLC Exhibit 8
10. Material Contracts (1)
13. Annual Report to security holders (1)
13.2 Quarterly report to security holders (1)
22. Subsidiaries of the registrant (1)
23.1 Consent of Arthur Andersen LLP Exhibit 23.1
23.2 Consent of Shearer, Taylor, & Co. P.A. Exhibit 23.2
23.3 Consent of Brunini, Grantham,
Grower & Hewes, PLLC Exhibit 23.3
99.1 Form of Notice of Special Meeting
and Proxy to be used in
connection with Special
Meeting of Shareholders of FCC Exhibit 99.1
99.2 Form of Notice of Special Meeting
to be used in connection with
Special Meeting of Shareholders of
NBC Exhibit 99.2
</TABLE>
(1) Included in documents incorporated by reference.
ITEM 22. UNDERTAKINGS
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
<PAGE> 139
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15 (d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the Proxy Statement
pursuant to Items 4, 10(b), 11 or 13 of the Form S-4, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or 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.
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 becomes effective.
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.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415 (Section 230.415 of this
chapter), will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE> 140
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
- --------
No. Description
- --- -----------
<S> <C> <C>
2. Merger Agreement Exhibit 2
3. Articles of Incorporation
of Trustmark Corporation (1)
3.1 Bylaws of Trustmark (1)
5. Proposed Opinion of Brunini, Grantham,
Grower & Hewes, PLLC Exhibit 5
8. Proposed Tax Opinion of Brunini, Grantham,
Grower & Hewes, PLLC Exhibit 8
10. Material Contracts (1)
13. Annual Report to security holders (1)
13.2 Quarterly report to security holders (1)
22. Subsidiaries of the registrant (1)
23.1 Consent of Arthur Andersen LLP Exhibit 23.1
23.2 Consent of Shearer, Taylor, & Co. P.A. Exhibit 23.2
23.3 Consent of Brunini, Grantham,
Grower & Hewes, PLLC Exhibit 23.3
99.1 Form of Notice of Special Meeting
and Proxy to be used in
connection with Special
Meeting of Shareholders of FCC Exhibit 99.1
99.2 Form of Notice of Special Meeting
to be used in connection with
Special Meeting of Shareholders of
NBC Exhibit 99.2
</TABLE>
(1) Included in documents incorporated by reference.
<PAGE> 1
EXHIBIT 2
MERGER AGREEMENT
This Merger Agreement ("Agreement") is executed as of the 2nd day of
October, 1996, between and among TRUSTMARK CORPORATION, a Mississippi
corporation ("Trustmark"), TRUSTMARK NATIONAL BANK, a national banking
association ("Trustmark Bank") (Trustmark and Trustmark Bank hereinafter
sometimes collectively referred to as "Buyers") and First Corinth Corp., a
Mississippi corporation ("Company"), and NATIONAL BANK OF COMMERCE OF CORINTH,
a national banking association ("NBC") (Company and NBC hereinafter sometimes
collectively referred to as "Sellers").
The parties desire to merge the Company with and into Trustmark, with
Trustmark as the surviving corporation, and to merge NBC with Trustmark Bank,
with Trustmark Bank as the surviving corporation.
NOW, THEREFORE, for the considerations and mutual covenants and
conditions contained in this Agreement, Buyers and Sellers do hereby agree as
follows:
1. THE MERGERS.
Pursuant to this Agreement and the Plan and Agreement of
Merger attached as Exhibit "A", Company shall be merged with and into Trustmark
(the "Holding Company Merger"). As a result of the Holding Company Merger, the
112,000 issued and outstanding shares of common stock of the Company, together
with the 800 additional shares described in Section 5.15 of this Agreement,
shall, subject to the adjustments provided for in Sections 10.5 and 10.7 of
this Agreement, be converted into 1,461,273 newly issued shares of the common
stock of Trustmark.
<PAGE> 2
As a consequence of the Holding Company Merger, all assets of
Company as they exist at the Effective Time of the Holding Company Merger (as
described in Section 10), shall pass to and vest in Trustmark without any
conveyance or other transfer, and Trustmark shall be responsible for all the
liabilities of every kind and description of Company as of the Effective Time
of the Holding Company Merger.
Immediately following the Holding Company Merger, NBC shall be
merged with and into Trustmark Bank under the charter of Trustmark Bank (the
"Bank Merger") (and, together with the Holding Company Merger the "Mergers")
pursuant to the Plan and Agreement of Merger attached as Exhibit "B" hereto. As
a result of the Bank Merger, each of the 110,000 issued and outstanding shares
of the common stock of NBC which are not owned by Company shall, subject to the
adjustments provided for in Sections 10.5 and 10.7 of this Agreement, be
converted into 13.4825 shares of the common stock of Trustmark.
As a consequence of the Bank Merger, all assets of NBC, as
they exist at the Effective Time of the Bank Merger (as described in Section
10), shall pass to and vest in Trustmark Bank without any conveyance or other
transfer, and Trustmark Bank shall be responsible for all of the liabilities of
every kind and description of NBC as of the Effective Time of the Bank Merger.
2. CAPITALIZATION OF BUYERS.
The authorized capital stock of Trustmark consists of
100,000,000 shares of common stock, no par value, of which 34,910,683 shares
are presently issued and outstanding.
The authorized capital stock of Trustmark Bank consists of
2,677,955 shares of common stock, $5.00 par value, of which 2,677,955 shares
are presently issued and outstanding.
<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers, jointly and severally, make the following
representations and warranties, each of which is being relied upon by Buyers,
which representations and warranties shall, individually and in the aggregate,
be true in all material respects upon the date of this Agreement and on the
Closing Date, (except that all representations and warranties made as of a
specific date shall be true and correct as of such date).
3.1 Organization. Company is a Mississippi corporation,
duly organized, validly existing and in good standing under the laws of the
State of Mississippi and has all requisite corporate power and authority to
carry on its business as now being conducted and to own and lease its
properties. The business activities of the Company do not require it to be
qualified to do business in any other state.
NBC is a national banking association, duly
organized, validly existing and in good standing under the laws of the United
States and has all requisite corporate power and authority to carry on its
business as now being conducted and to own and lease its properties.
3.2 Authority. This Agreement has been duly and validly
approved by the Boards of Directors of Company and NBC. Upon approval by the
shareholders of Company and NBC and upon obtaining the approval of all
governmental and regulatory agencies or authorities whose approval is required
(and such approvals are no longer subject to judicial or administrative review,
and all waiting periods required by law have expired):
(a) This Agreement will be a valid and binding
obligation of Sellers, enforceable in accordance with its terms, and
<PAGE> 4
(b) Consummation of the transactions contemplated
by this Agreement will not: (1) result in a breach of or default under any
material agreement to which either of the Sellers is a party, (2) conflict with
or result in the breach of any law, rule or regulation, or any writ, injunction
or decree of any court or governmental agency, or (3) conflict with, or result
in the breach of, the charter or bylaws of Company or NBC.
3.3 Capitalization. The authorized capital stock of
Company consists of 200,000 shares of common stock, $5.00 par value, of which
112,000 shares are issued and outstanding.
The authorized capital stock of NBC consists of
110,000 shares of common stock, $5.00 par value, of which 110,000 shares are
issued and outstanding, 108,375 shares of which are owned by Company and 1,625
shares of which are owned in the aggregate by four shareholders.
Each share of Company and NBC stock outstanding as of
the date hereof is duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. Except for Company's grant to the
President of NBC of the option to purchase 800 shares of the capital stock of
Company, neither Company nor NBC has outstanding any other equity securities or
any subscriptions, options, warrants, rights, calls or other commitments to
issue any securities or to convert any presently outstanding equity securities
into securities of a different kind or class. Except for Company's promissory
note in the approximate principal balance of $750,000 issued to First Tennessee
Bank National Association (the "Holding Company Debt"), neither Company nor NBC
has any other debt securities outstanding.
3.4 Financial Statements. Sellers have delivered to
Buyers the audited financial statements of Company and its consolidated
subsidiary for the years ended December 31, 1993,
<PAGE> 5
December 31, 1994 and December 31, 1995. As promptly as the same are
available, Sellers shall deliver to Buyers copies of all quarterly and annual
financial statements of Company and the quarterly call reports of NBC filed
subsequent to the date hereof and prior to the Closing Date. The financial
statements delivered pursuant to this Section 3.4 (subject to audit adjustments
to any unaudited financial statements) do and will fairly present the financial
conditions of Company and NBC, as the case may be, as of the dates thereof and
have been or will be prepared in conformity with generally accepted accounting
principles, consistently applied, for the periods involved. The call reports
delivered pursuant to this Section 3.4 do and will fairly, as of the date
thereof, present the financial information required to be shown therein. The
$692,000 reserve for loan losses reflected in the audited financial statements
for the period ending December 31, 1995 adequately provides for the anticipated
loan losses of NBC as of such date.
3.5 Absence of Undisclosed Liabilities. Neither
Company nor NBC has any known liabilities of any nature whatsoever, whether
absolute, accrued, contingent or otherwise, due or to become due, as principal
or guarantor, not recorded or disclosed in the audited financial statements for
the period ending December 31, 1995, or otherwise disclosed in this Agreement
or the documents, statements, lists, and exhibits referred to herein and
delivered pursuant to and prior to completion of the due diligence examination
set forth in Section 5.9 which could have a material adverse effect on the
financial condition, properties or prospects of Company and NBC, taken as a
whole.
3.6 Compliance with Laws. Neither Company nor NBC has,
in its best judgment, any uncorrected deficiencies noted in any examination
report by federal or state regulatory authorities or is
<PAGE> 6
in violation of any material federal, state or local law, rule, ordinance or
regulation.
3.7 Assets Employed. All of Company and NBC's
significant tangible assets are reflected in the financial statements delivered
pursuant to Section 3.4 hereof, and such assets constitute all of the
significant tangible assets used or employed in the business and operations of
Company and NBC as currently conducted. Company and NBC have good marketable
title to all of their significant tangible assets free of significant liens,
encumbrances and claims, except as required by law for the deposit of public
funds and to secure repurchase agreements. Leases covering material tangible
assets in which Company or NBC have a leasehold interest only are valid and
enforceable in accordance with their terms and the Mergers will not result in a
default thereunder.
3.8 Contracts and Commitments. As of the date of this
Agreement, Sellers have supplied Buyers with copies of all contracts, leases,
licenses and all pension or profit sharing agreements ("Plans") and other
agreements to which Company or NBC is a party or is bound, such agreements
being listed in Exhibit "C" hereto. There have been no material breaches or
defaults under any of the provisions of any such contracts, leases, licenses or
Plans that have not been cured, waived or released. No prohibited transaction
(as defined in Section 406 of ERISA and Section 4975 of the Internal Revenue
Code (the "Code"), accumulated funding deficiency (as defined in Section 412
of the Code) or reportable event (as defined in Section 4043 of ERISA) that is
required to be reported to the Pension Benefit Guaranty Corporation has
occurred with respect to any Plan. The present value of all benefits vested
under all Plans does not exceed the value of the assets of such Plans allocable
to such vested benefits.
<PAGE> 7
3.9 Litigation. Except as set forth in Exhibit D-1
("Pending Litigation"), neither Company or NBC, nor to the knowledge of the
Company or NBC any of their respective officers or directors is (i) a party to
any action, suit, or proceeding or (ii) subject to any pending or threatened
administrative, judicial or other action, suit, proceeding, inquiry or
investigation, nor is there any basis known to the Company or NBC therefor in
which in the case of either clause (i) or (ii) above an unfavorable decision,
ruling or finding could have a material adverse effect on the financial
condition or operations of Company and NBC taken as a whole or on the
consummation of the transactions contemplated by this Agreement.
3.10 Brokers, Finders or Advisers. Neither Company nor
NBC has employed or incurred any liability to any broker, finder or adviser in
connection with the transactions contemplated by this Agreement.
3.11 Taxes. Company and NBC have filed all federal,
state, county, municipal and other tax returns and all other material reports
which are required to be filed in respect of all such taxes and, to the extent
their liabilities for taxes have not been fully discharged, adequate reserves
have been established in the financial statements therefor in accordance with
generally accepted accounting principles. The federal income tax returns of
Company and NBC have been audited by the Internal Revenue Service through the
year ending December 31, 1994. Neither Company nor NBC is in default in the
payment of any taxes due or payable or of any assessments of any kind, and
neither has received any notice of assessment or proposed assessment of any
tax.
3.12 Insurance. True and correct copies of all insurance
policies presently in force covering Company, NBC and their officers,
directors, employees and properties have been
<PAGE> 8
provided to Buyers, such policies being described in Exhibit "E" hereto.
3.13 Subsidiaries. NBC is a subsidiary of Company.
Company owns 108,375 shares or 98.52% of the outstanding capital stock of NBC.
Four shareholders own 1,625 shares or 1.48% in the aggregate of the outstanding
capital stock of NBC. Company and NBC have no other subsidiaries.
3.14 Other Regulatory Filings. Sellers have delivered to
Buyers true and correct copies of all reports filed by Company or NBC with the
Board of Governors of the Federal Reserve System, the Comptroller of the
Currency and all other state and federal financial regulatory agencies since
January 1, 1993, such reports being described in Exhibit "F" hereto. Each of
such reports is true and correct in all material respects.
3.15 Full Disclosure. To the best of Sellers knowledge,
this Agreement and all information provided to Buyers in writing pursuant to
this Agreement do not contain any untrue statements of material fact and
Sellers have not omitted to disclose to Buyer any material fact known to
Sellers concerning the financial condition, properties or prospects of Company
or NBC.
3.16 Disclosure Documents. With respect to information
supplied or to be supplied by Sellers for inclusion in the proxy statement
relating to the meeting of Company's stockholders for the approval of the
Mergers (the "Proxy Statement") and the registration statement on Form S-4 (or
other appropriate registration form) to be filed with the Securities and
Exchange Commission by Trustmark for the registration of the shares of
Trustmark common stock to be offered and sold in the Mergers (the "Registration
Statement"), (i) the Proxy Statement, at the time of the mailing thereof to
stockholders of Company and at the time of the meeting of Company's
stockholders will not contain any untrue
<PAGE> 9
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading and (ii) the
Registration Statement, at the time it becomes effective under the Securities
Act, will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS.
In order to induce Sellers to enter into this Agreement and to
consummate the transactions contemplated herein, Buyers jointly and severally,
make the following representations and warranties to Sellers, each of which is
being relied on by Sellers, which representations and warranties shall,
individually and in the aggregate, be true in all material respects upon the
date of this Agreement and on the Closing Date, (except that all
representations and warranties made as of a specific date shall be true and
correct as of such date).
4.1 Organization, Power and Authorization. Trustmark is
a Mississippi corporation, duly organized, validly existing and in good
standing under the laws of the state of Mississippi and has all requisite
corporate power and authority to carry on its business as it is now being
conducted and to own and lease its properties. The business activities of
Trustmark do not require it to be qualified to do business in any other state.
The execution and performance of this Agreement and the Holding Company Merger
and Bank Merger have been duly authorized by the Board of Directors of
Trustmark and upon obtaining the approval of all governmental and regulatory
agencies or authorities whose approval is required as identified in Section
4.11 (and such approvals are no longer
<PAGE> 10
subject to judicial or administrative review, and all waiting periods required
by law have expired), this Agreement will be a valid, binding obligation of
Trustmark, enforceable in accordance with its terms.
Trustmark Bank is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States and has all requisite corporate power and authority to carry on its
business as it is now being conducted and to own and lease its properties. The
business activities of Trustmark Bank do not require it to be qualified to do
business in any other state. The execution and performance of this Agreement
and the Bank Merger have been duly authorized by the Board of Directors of
Trustmark Bank and upon obtaining the approval of all governmental and
regulatory agencies or authorities whose approval is required as identified in
Section 4.11 (and such approvals are no longer subject to judicial or
administrative review, and all waiting periods required by law have expired),
this Agreement will be a valid, binding obligation of Trustmark Bank,
enforceable in accordance with its terms.
4.2 Absence of Conflict. The execution and delivery of
this agreement and the performance and compliance with the terms hereof by
Buyers will not: (1) conflict with, or result in the breach of, the charter or
bylaws of any of the Buyers, (2) result in a breach of or default under any
agreement which any of the Buyers is presently a party, or (3) conflict with or
result in a violation or breach of any law, rule or regulation, or any writ,
injunction or decree of any court or governmental agency.
4.3 Capitalization. The capitalization of Buyers is as
set out in Section 2 hereof. Each share of Trustmark and Trustmark Bank stock
outstanding as of the date hereof is duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights. Neither Trustmark nor
Trustmark Bank
<PAGE> 11
presently has outstanding any other securities or any options, warrants,
rights, calls or other commitments to issue any securities or to convert
any presently outstanding securities into securities of a different kind or
class. Sellers and Buyers understand and agree that Trustmark Bank intends to
authorize and issue additional shares of its common stock to Trustmark as a
result of the transactions contemplated by this Agreement, and Trustmark may
issue additional shares of its common stock or other securities at any time for
the purpose of making acquisitions or for other business purposes of Trustmark.
4.4 Financial Statements. Buyers have delivered to
Sellers the audited financial statements of Trustmark and its consolidated
subsidiaries for the years ended December 31, 1993, December 31, 1994 and
December 31, 1995, and the unaudited financial statements for the quarter ended
June 30, 1996. As promptly as same are available, Buyers shall deliver to
Sellers a copy of any subsequent quarterly and annual financial statements of
Trustmark and consolidated subsidiaries issued, and quarterly call reports of
Trustmark Bank filed with the appropriate bank regulatory agencies, together
with any reports filed with the Securities and Exchange Commission. The
financial statements delivered pursuant to this Section 4.4 (subject to audit
adjustments to any unaudited financial statements) do and will fairly present
the financial condition of Trustmark and consolidated subsidiaries and have
been or will be prepared in conformity with generally accepted accounting
principles, consistently applied, for the periods involved. The call
reports delivered pursuant to this Section 4.4 are and will be complete and
correct in all material respects and fairly present or will present the
financial information required to be shown therein.
<PAGE> 12
4.5 Absence of Undisclosed Liabilities. Neither
Trustmark nor Trustmark Bank has any known liabilities or obligations of any
nature whatsoever, whether absolute, accrued, contingent or otherwise, due or
to become due, as principal or guarantor, not recorded or disclosed in the
unaudited financial statements for the period ending June 30, 1996, or
otherwise disclosed in this Agreement or the documents, statements, lists and
schedules referred to herein and delivered on the date hereof which could have
a material adverse effect on the financial condition, properties or prospects
of Trustmark or Trustmark Bank.
4.6 Assets Employed. All of Trustmark and Trustmark
Bank's significant tangible assets are reflected in the financial statements
delivered pursuant to Section 4.4 thereof in accordance with generally accepted
accounting principles, and such assets constitute all of the significant
tangible assets necessary to or used or employed in the business and operations
of Trustmark and Trustmark Bank as currently conducted. Trustmark and
Trustmark Bank have good, marketable title to all of their significant tangible
assets free of all significant liens, encumbrances and claims, except as
required by law for deposit of public funds. Leases covering material tangible
assets in which Trustmark or Trustmark Bank have a leasehold interest only are
valid and enforceable in accordance with their terms and the Mergers will not
result in a default thereunder.
4.7 Taxes. The amounts provided for taxes on the
audited financial statements for the period ending December 31, 1995, are
sufficient in all material respects for the payment of all accrued and unpaid
federal, state, county and municipal taxes and all levies, licenses, franchise
and registration fees, charges or withholdings of any nature whatsoever of
Trustmark and Trustmark Bank for the period ending on the date of such
financial statements and for all prior periods. Trustmark and Trustmark Bank
have filed
<PAGE> 13
all material federal, state, county, municipal and other tax returns and all
other material reports which are required to be filed in respect of all such
taxes and, to the extent that their liabilities for taxes have not been fully
discharged, full and adequate reserves have been established in the financial
statement therefor. Neither Trustmark nor Trustmark Bank is in default in the
payment of any taxes due or payable or of any assessments of any kind, and
neither has received any notice of material assessment or proposed material
assessment of any tax.
4.8 Exchange Act Filings. Trustmark has filed with or
furnished to the Securities and Exchange Commission, as applicable, all annual,
quarterly and other reports, all proxy statements and all annual reports to
stockholders required by the Exchange Act to be so filed or furnished. Such
reports and proxy statements are true and correct in all material respects and
do not omit to state a material fact required to be stated therein or necessary
to make the statement contained therein, in light of the circumstances under
which they were made, not misleading. The financial statements and schedules
included in such reports and proxy statements, together with the notes
thereto, represent fairly, in all material respects, the financial position of
Trustmark and its consolidated subsidiaries, as of their respective dates and
the results of operations and changes in financial position for the periods
indicated therein, in each case in conformity with generally accepted
accounting principles, consistently applied.
4.9 Full Disclosure. To the best of Buyers' knowledge,
this Agreement, including all information provided to Sellers pursuant to this
Agreement, does not contain any untrue statement of material fact and Buyers
have not omitted to disclose to Sellers any material fact concerning the
financial condition, properties or prospects of Trustmark or Trustmark Bank.
<PAGE> 14
4.10 Brokers, Finders or Advisers. None of the Buyers
has employed, or incurred any liability to, any broker, finder or adviser in
connection with the transactions contemplated by this Agreement.
4.11 Governmental and Judicial Consents and Approvals.
The execution, delivery and performance by Buyers of this Agreement, and the
consummation of the transactions contemplated by this Agreement, require no
action by or in respect of, or filing with, any governmental or judicial body,
agency, official or authority other than:
(a) the filing of Articles of Merger in accordance with
Mississippi Law;
(b) compliance with the applicable requirements, if any,
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
(c) compliance with the applicable requirements of the
Securities Exchange Act of 1934 ("Exchange Act") and the rules and regulations
promulgated thereunder;
(d) compliance with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder;
(e) compliance with applicable foreign or state
securities or "blue sky" laws;
(f) compliance with the applicable requirements of the
Bank Holding Company Act of 1956 and the National Bank Act, both as amended;
and
(g) such other filings or registrations with, or
authorizations, consents or approvals of, governmental bodies, agencies,
officials or authorities, the failure of which to make or obtain would not
materially and adversely affect the ability of Buyers to consummate the Merger.
<PAGE> 15
4.12 Litigation. Except as disclosed in the reports
referred to in Section 4.8 or as set forth in Exhibit D-2, none of Buyers is a
party to any action, suit or proceeding, or is subject to any pending or
threatened administrative, judicial or other action, suit, proceeding, inquiry
or investigation, in which an unfavorable decision, ruling or finding could
have a material adverse effect on the financial condition or operations of
Trustmark and its consolidated subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this Agreement, and to the
knowledge of Buyers there is no basis for any such action, suit, proceeding,
inquiry or investigation.
4.13 Disclosure Documents. With respect to information
supplied or to be supplied by Buyers for inclusion in the proxy statement
relating to the meeting of Company's stockholders for the approval of the
Holding Company Merger (the "Proxy Statement") and the registration statement
on Form S-4 (or other appropriate registration form) to be filed with the
Securities and Exchange Commission by Trustmark for the registration of the
shares of Trustmark common stock to be offered and sold in the Mergers (the
"Registration Statement"), (i) the Proxy Statement, at the time of the mailing
thereof to stockholders of Company and NBC and at the time of the meeting of
Company and NBC's stockholders to be held in connection with the Mergers, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading and (ii) the Registration Statement, at the time it becomes
effective under the Securities Act, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Registration
Statement will comply as to form in all material respects with the provisions
of
<PAGE> 16
the Securities Act and Exchange Act, respectively, and the rules and
regulations thereunder.
4.14 Absence of Certain Changes. Since December 31,
1995, Trustmark and its subsidiaries have in all material respects conducted
their businesses in the ordinary course and there has not been:
(a) any material adverse change with respect to the
business, financial condition or prospects of Trustmark and its subsidiaries:
(b) except for regular dividends declared in the ordinary
course of business, any declaration, setting aside or payments of any dividend
or other distribution in respect of any shares of capital stock of Trustmark,
or any repurchase, redemption or other acquisition by Trustmark of any
outstanding shares of capital stock;
(c) any amendment of any material term of any outstanding
Trustmark capital stock;
(d) any material damage, destruction or other casualty
loss (whether or not covered by insurance) affecting the business or assets of
Trustmark or any of its subsidiaries; or
(e) any material change in any method of accounting or
accounting practice by Trustmark or any of its subsidiaries, except for any
such change that is required by reason of a concurrent change in generally
accepted accounting principles.
4.15 Compliance with Laws. Neither Trustmark nor Trustmark
Bank has, in its best judgment, any material uncorrected deficiencies noted in
any examination report by federal or state regulatory authorities or is in
violation of any material federal, state or local law, rule, ordinance or
regulation.
<PAGE> 17
5. SPECIAL AGREEMENTS.
5.1 Dividends. Notwithstanding any provision of this
Agreement to the contrary, provided NBC's net income for 1996 is not less than
$2,300,000, Company is permitted to declare and pay to its shareholders an
annual cash dividend in an amount not to exceed Nine Dollars ($9.00) per share.
In the event NBC does not earn $2,300,000 in net income, there shall be a pro
rata reduction in the Nine Dollar ($9.00) dividend in an amount equal to One
Dollar ($1.00) for every One Hundred Ten Thousand Dollar ($110,000) shortfall
below $2,300,000. For purposes of this Section 5.1, the term "net income"
shall have the meaning associated with it in the Uniform Bank Performance
Report, Section RI. NBC shall be permitted to declare and pay to its
shareholders an annual cash dividend in an amount sufficient to (A) enable
Company to pay (i) its shareholders the cash dividend described in this Section
5.1, and (ii) the Holding Company Debt, plus accrued interest, pursuant to
Section 5.16 and (B) to pay the shareholders of NBC, other than Company,
subject to the same adjustment if NBC does not earn $2,300,000 in net income, a
pro rata dividend sufficient to fund the Company dividend, extinguish the
Holding Company Debt and extinguish any holding company operating expenses,
which dividend shall not exceed $16.29 per share. If the Closing does not
occur prior to March 1, 1997, the shareholders of Company and NBC shall,
subject to Section 10.3, be entitled to receive quarterly dividends from
Trustmark equal to the amount of the dividends such shareholder would have
received if the Closing had occurred prior to March 1, 1997. No other
dividends shall be paid by Company or NBC.
5.2 Employment. Trustmark Bank shall continue the
employment of the employees of NBC for a minimum of one (1) year after the
Closing Date. However, as employees of Trustmark Bank, such persons are
subject to salary review, reassignment and
<PAGE> 18
termination in the same manner as other employees of Trustmark Bank.
5.3 Confidentiality. Buyers and Sellers represent and
agree that any confidential information received concerning the other in
connection with the transactions contemplated by this Agreement shall be
maintained as confidential, and in the event the Closing does not occur without
the default of either party, Buyers and Sellers agree to return all materials
concerning the other to the party from which obtained. Such party will return
to the other party all confidential materials, including any copies made by
such party without retaining any copies thereof and shall further destroy any
hand notes such party or any of its agents may have prepared and shall use such
confidential information solely for consideration of this transaction and for
no other purpose. Notwithstanding this Section 5.3, either party may disclose
any such information to the extent required by federal securities laws or
otherwise required by any governmental agency or authority.
5.4 Payment of Expenses. Except as provided in Section
5.9, each party shall bear its own expenses incurred in connection with the
negotiation and consummation of the transactions contemplated by this
Agreement.
5.5 Covenant Not to Compete. The Directors of Company
and NBC each agree that for the period from the date hereof until one year
after the Closing Date, they will not become directly, indirectly or
beneficially an employee, five percent or more stockholder or director of any
bank, savings bank, savings association, trust company, financial
institution or other similar business enterprise which competes with Trustmark
Bank (as successor to NBC) within Alcorn County, Mississippi. The Directors of
Company and NBC further agree not to initiate any action to induce any
employee of Trustmark Bank (as successor to NBC) to leave Trustmark Bank's
employment or directly or indirectly assist
<PAGE> 19
any other person or entity in requesting or inducing any such other employee of
Trustmark Bank to leave such employment for the period from the date hereof
until one year after the Closing Date.
5.6 Employee Benefit Plans. Following the Closing Date,
the employees of NBC will be entitled to the same employee benefits as are
presently being provided to employees of Trustmark Bank. At Buyer's option,
Company's existing 401-K retirement plan shall either be (i) terminated on the
Closing Date and, with Buyer's assistance, converted to self-directed
individual retirement accounts for the employees or (ii) if permissible under
applicable laws, rules and regulations, transfer the employee portion of
Company's existing plan to Buyer's existing retirement plan and the employer
portion of Company's existing plan to a separate newly created retirement plan
maintained by Buyer. All employees of Company and NBC will receive credit for
years of service at Company and NBC for purposes of participation in Buyer's
retirement plan.
5.7 Recommendation of Directors; Voting of Shares. The
Board of Directors of Company hereby agrees to recommend that the shareholders
of Company approve the Holding Company Merger, provided, nothing herein shall
require the Board of Directors of Company to take any action which, in the
legal opinion of Watkins, Ludlam & Stennis, P.A., would constitute a breach of
any fiduciary duties that are owed to the shareholders of Company under
applicable law.. Each of the Directors of the Company agree to vote his
Company shares in favor of the Holding Company Merger.
5.8 Public Announcements. The parties will consult with
each other as to the timing, form and content of all public announcements
regarding any aspect of this Agreement or the Mergers, provided that no party
hereto shall be prohibited from making any press release or other public
statement which its legal counsel deems necessary.
<PAGE> 20
5.9 Due Diligence. Buyers shall promptly conduct their
due diligence examination of the books, records, assets, and liabilities of
Sellers, which shall be completed no later than thirty (30) days after the date
hereof. If such inquiry or examination should reveal any previously unknown
financial information which Buyers, in their sole discretion, deem to be
adverse, then Buyers may promptly notify Sellers of such finding and may
exercise their right of termination set forth in Section 11(d) of this
Agreement.
5.10 Credit Extensions. Sellers agree to notify and
consult with Buyers before making, advancing, extending or renewing any loans
or credits above $350,000 before the Closing Date.
5.11 Indemnification. Buyers agree to indemnify, defend
and hold harmless Sellers for all losses, costs, claims, damages and expenses,
including, but not limited to, attorney's fees, arising out of any claim or
cause of action asserted by a minority shareholder of NBC in connection with
the Bank Merger.
5.12 Board of Directors. Following the consummation of the
Holding Company Merger, the existing Board of Directors of NBC who so desire
shall become advisory directors to the Corinth community bank office of
Trustmark Bank and shall be entitled to the comparable benefits as are
presently being provided to the other advisory directors of Trustmark Bank's
community banks offices. Messrs. L. R. Norman and C. G. Worsham shall be
permitted to remain as advisory directors to the Corinth community bank office
of Trustmark Bank for two years following the consummation of the Mergers.
Following the consummation of the Holding Company Merger, one representative
from the Board of NBC shall be appointed to serve as an Advisory Director of
Trustmark and will be entitled to the same benefits as are presently being
provided to the other Advisory Directors of Trustmark.
<PAGE> 21
5.13 Officer Incentive Plans. Sellers shall be authorized
to continue NBC's existing officer incentive plan for the 1996 calendar year;
provided, however, the payment of benefits pursuant to the officer incentive
plan shall not exceed $200,000.
5.14 Management Fees. Sellers shall be authorized to pay
the regular management fee for 1996 in the amount of $5,000 to Mr. B. Bryan
Jones, III. On the Closing Date, Sellers shall be permitted to pay a management
fee in the amount of $10,000 each to Messrs. Jack B. Yates and B. Bryan Jones,
III.
5.15 Stock Options. On or before December 31, 1996, the
President of NBC shall be authorized to exercise and purchase, and the Company
shall be authorized to issue, 200 shares of the Company's outstanding common
stock that are currently subject to that certain Non-Qualified Stock Option
Agreement dated the 21st day of March 1995, by and between Company and Hull
Davis, a copy of which has been provided to Buyers. On the Closing Date, the
President of NBC shall be authorized to exercise and purchase, and the Company
shall be authorized to issue, the remaining 600 shares of the Company's
outstanding common stock that will be subject to such agreement.
5.16 Holding Company Debt. On or before the Closing Date,
Sellers shall pay and discharge the Holding Company Debt in full, together with
all accrued interest thereon.
5.17 Bank Merger Vote. Company agrees to vote all of the
shares of NBC owned by it in favor of the Bank Merger at the NBC special
shareholders meeting called to consider and vote upon the Bank Merger, provided
nothing herein shall require the Board of Directors of Company to take any
action which, in the legal opinion of Watkins, Ludlam & Stennis, P.A., would
constitute a breach of any fiduciary duties that are owed to the shareholders
of NBC under applicable law.
<PAGE> 22
6. COVENANTS OF SELLERS PENDING CLOSING.
6.1 Shareholder's Meeting. As promptly as practical
after the effective date of the Registration Statement for the Trustmark shares
to be issued in connection with the Mergers, the Company and NBC shall cause to
be convened a special meeting of their shareholders for the purpose of
considering and voting on the Mergers. Such meetings shall be properly called
and held in accordance with applicable law and the articles of incorporation
and bylaws of the Company and NBC.
6.2 Documents of Title. Sellers agree to allow Buyers to
examine all documents relating to any real or personal property owned by
Sellers.
6.3 Access to Properties and Records. Sellers will
provide Buyers and their authorized representatives full access during normal
business hours and under reasonable circumstances to any and all of their
premises, properties, contracts, commitments, books, records and other
information and will cause their officers to furnish any and all financial,
technical and operating data and other information pertaining to their
businesses as Buyers shall from time to time reasonably request.
6.4 Solicitation of Further Offers. From the date
hereof until the termination of this Agreement, Sellers and their Boards of
Directors will not, directly or indirectly, take any action to solicit,
initiate or encourage the making of any Acquisition Proposal (as hereinafter
defined); nor will they enter into any negotiations concerning, furnish any
non-public information relating to Sellers in connection with, or agree to any
Acquisition Proposal. The term "Acquisition Proposal" as used herein means any
offer or proposal for, or any indication of interest in, a merger or other
business combination involving Sellers, or either of them, or the acquisition
of a majority of the outstanding shares of Company's or NBC's common stock or a
majority
<PAGE> 23
of the assets of Sellers, or either of them, other than the transactions
contemplated by this Agreement.
6.5 Other Affirmative Covenants. Sellers covenant with
Buyers that at all times prior to the Closing Date, Sellers will and will cause
NBC and Company to:
(a) Operate their businesses in substantially the
manner in which such businesses are now being operated and use their best
efforts to maintain the goodwill of the depositors, customers and suppliers of
Company and NBC;
(b) Use their best efforts to retain the
services of the officers and employees of Company and NBC; provided, however,
that Sellers shall have the right to terminate the employment of any officer or
employee of either of them in accordance with established procedures;
(c) Maintain their properties in good repair and
working order, reasonable wear and tear excepted;
(d) Duly and timely file all reports, tax returns
and other documents required to be filed with federal, state and local tax and
regulatory authorities;
(e) Unless contesting same in good faith by
appropriate proceedings and having established reasonable reserves therefor,
pay, when required to be paid, all taxes indicated by tax returns as filed or
otherwise levied or assessed upon them or any of their properties and to
withhold or collect and pay to the proper governmental authorities or hold in
separate bank accounts for such payments all taxes and other assessments either
of them is required by law to withhold or collect;
(f) Notify Buyers of any unusual or material
problems or developments with respect to the business of Company or NBC; and
(g) Use their best efforts to bring about the
transactions contemplated by this Agreement.
<PAGE> 24
6.6 Negative Covenants of Sellers. From the date hereof
until the Closing Date, without the prior written consent of Trustmark, neither
Company nor NBC will:
(a) Incur any material obligation except in the
ordinary course of business;
(b) Increase the compensation of any director,
and, except for normal increases as a result of regular salary reviews for
officers and employees that will be conducted in January of 1997 if the Mergers
have not been consummated by such date, increase the compensation of any
officer or employee or enter into or amend any contract of employment or enter
into or amend any insurance, profit-sharing, pension, severance pay, bonus,
incentive, deferred compensation or retirement plan or arrangement;
(c) Amend its articles of incorporation; or
(d) Sell, transfer or convey any of its
investment securities;
(e) Sell, assign or transfer any of its assets
other than in the ordinary course of business;
(f) Mortgage, pledge or subject to any lien,
charge or encumbrance any of its assets, except in the ordinary course of
business;
(g) Intentionally waive any material right,
contractual or otherwise, or cancel or release any material debts or claims
whether or not in the ordinary course of business;
(h) Intentionally suffer any material uninsured
damage, destruction or loss to its tangible properties;
(i) Declare or pay any dividend or make any other
distribution with respect to its stock, except as otherwise permitted by
Section 5.1;
(j) Make, extend or renew any loan or other
extension of credit to any of its officers, directors, or employees other than
loans made on substantially the same terms, including
<PAGE> 25
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and that do not involve more than normal risk
of collectability or present other unfavorable features;
(k) Issue or sell any of its capital stock, or
any of its debt securities, authorize a stock split or dividend, or otherwise
affect its capital structure except as otherwise permitted by Section 5.15;
(l) Fail to comply with any representation,
warranty or covenant contained herein;
(m) Make, advance, extend or renew any loan or
credit above $500,000; or
(n) Enter into any agreement to do any of the
foregoing matters.
7. COVENANTS OF BUYERS PENDING CLOSING.
7.1 Corporate Action. As promptly as practical after the
execution of this Agreement, Buyers shall cause the Holding Company Merger and
the Bank Merger to be approved by the directors of Trustmark and the directors
and shareholder of Trustmark Bank.
7.2 Other Affirmative Covenants. Buyers covenant with
Sellers that at all times prior to the Closing Date, Buyers will and will cause
Trustmark and Trustmark Bank to:
(a) Operate their businesses in substantially the
manner in which such businesses are now being operated and use their best
efforts to maintain the goodwill of the depositors, customers and suppliers of
Trustmark and Trustmark Bank;
(b) Use their best efforts to retain the
services of the officers and employees of Trustmark and Trustmark Bank;
provided, however, that Buyers shall have the right to terminate the employment
of any officer or employee of either of them in accordance with established
procedures;
<PAGE> 26
(c) Maintain their properties in good repair and
working order, reasonable wear and tear excepted;
(d) Duly and timely file all reports, tax returns
and other documents required to be filed with federal, state and local tax and
regulatory authorities;
(e) Unless contesting same in good faith by
appropriate proceedings and having established reasonable reserves therefor,
pay, when required to be paid, all taxes indicated by tax returns as filed or
otherwise levied or assessed upon them or any of their properties and to
withhold or collect and pay to the proper governmental authorities or hold in
separate bank accounts for such payments all taxes and other assessments either
of them is required by law to withhold or collect;
(f) Use their best efforts to bring about the
transactions contemplated by this Agreement; and
(g) Notify Sellers of any unusual or material
problems or developments with respect to the business of either Trustmark or
Trustmark Bank.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyers obligations to consummate the transactions contemplated
by this Agreement are subject to each of the following conditions precedent,
any of which may be waived by Buyers in writing.
8.1 Warranties and Representations at Closing. All
warranties and representations contained in this Agreement by or concerning
Sellers shall be true and correct on the Closing Date in all material respects.
8.2 Governmental Authority Approval. The consummation of
the Holding Company Merger and the Bank Merger shall have been approved by all
governmental and regulatory agencies or authorities whose approval is required,
such approvals shall be in full force
<PAGE> 27
and effect and no longer subject to judicial or administrative review and all
waiting periods required by law shall have expired.
8.3 Corporate Approval. The Holding Company Merger and
the Bank Merger shall have been authorized by the Boards of Directors and
shareholders of Company and NBC, respectively, in accordance with the
provisions of applicable law and the articles and bylaws of Company and NBC,
and Sellers shall have furnished Buyers with certified copies of resolutions
duly adopted by the Boards of Directors and shareholders, respectively, of
Company and NBC approving this Agreement and authorizing the Holding Company
Merger and the Bank Merger.
8.4 Compliance with Undertakings. Each of the acts,
covenants, agreements and undertakings of Sellers to be performed or caused to
be complied with on or before the Closing Date pursuant to the terms hereof
shall have been duly performed and caused to be complied with in all material
respects.
8.5 No Material Adverse Change. There shall have been no
material adverse change in the financial condition, tangible properties or
prospects of Company or NBC since the completion of due diligence under Section
5.9, other than as a result of the transactions contemplated hereby.
8.6 Pooling of Interests. Buyers shall have received the
written opinion of Arthur Andersen, LLP to the effect that the transactions
contemplated by this Agreement qualify for pooling-of-interests accounting
treatment in accordance with Accounting Principles Board Opinion No. 16 and the
accounting staff of the SEC shall not have asserted or threatened to assert a
determination to the contrary.
8.7 Federal Income Taxation. Buyers shall be satisfied
that the Mergers will qualify as tax-free reorganizations pursuant to Section
368 of the Code.
<PAGE> 28
8.8 Opinion of Counsel. Sellers shall cause to be
delivered to Buyers the legal opinion of Watkins Ludlam & Stennis, P.A. to the
effect that:
(a) NBC is duly organized, validly existing and
in good standing as a national banking association under the laws of the United
States. The 110,000 issued and outstanding shares of its common stock are
duly authorized, validly issued, fully paid and nonassessable. Such stock
represents all of the issued and outstanding securities of NBC.
(b) Company is a duly organized, validly existing
corporation in good standing under the laws of the State of Mississippi. The
112,000 issued and outstanding shares of Company's common stock, together with
the additional 800 shares described in Section 5.16 of this Agreement, are duly
authorized, validly issued, fully paid and nonassessable. Such stock represents
all of the issued and outstanding equity securities of Company.
(c) This Agreement is valid, binding and
enforceable against Sellers in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally.
(d) The Holding Company Merger and the Bank
Merger have been duly authorized by all requisite corporate and shareholder
action of Company and NBC.
(e) To the best of such counsel's knowledge,
following diligent inquiry, but without independent verification of facts
presented or represented by NBC and/or Company to such counsel and with the
ability to rely upon certificates of officers and other legal opinions, Sellers
have not made any material misrepresentation, breached any material warranty or
breached any material covenant or condition in this Agreement or in any
document, statement, list or schedule referred to herein.
<PAGE> 29
8.9 Special Financial Covenants. On the Closing Date,
the reserve for loan losses then maintained by NBC shall adequately provide for
the anticipated loan losses of NBC as of such date in accordance with accepted
audit, bank examination and bank regulatory standards. Further, the tangible
assets of Company, excluding NBC, shall have a fair market value equal to or
greater than its liabilities.
8.10 Closing Certificate. At the Closing, the Chairman of
the Board and Chief Executive Officer of Company and NBC shall execute and
deliver a closing certificate to the effect that all representations and
warranties by or concerning Company and NBC are true and correct in all
material respects as of the Closing Date and that all other conditions
precedent to Buyers' obligation to Close have been performed and complied with
in all material respects.
<PAGE> 30
9. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Sellers obligations to consummate the transactions
contemplated by this Agreement are subject to each of the following conditions
precedent, any of which may be waived by Sellers in writing.
9.1 Warranties and Representations at Closing. All
warranties and representations contained in this Agreement by or concerning
Buyers shall be materially true and correct on the Closing Date; provided,
subject to Section 4.3 hereof, nothing in this Agreement shall prohibit or
impair the ability of Trustmark and Trustmark Bank to make further acquisitions
using cash or through the issuance of additional securities or to issue
additional securities for other business purposes.
9.2 Governmental Authority Approval. The consummation
of the Holding Company Merger and the Bank Merger shall have been approved by
all governmental and regulatory agencies or authorities whose approval is
required, such approvals shall be in full force and effect and no longer
subject to judicial or administrative review and all waiting periods required
by law shall have expired.
9.3 Corporate Approval. The Holding Company Merger and
the Bank Merger shall have been authorized by the Board of Directors of
Trustmark and the Board of Directors and shareholder of Trustmark Bank in
accordance with the provisions of applicable law and the charters and bylaws of
Trustmark and Trustmark Bank.
9.4 Federal Income Taxation. Sellers shall have
received a favorable revenue ruling or otherwise be satisfied that the Holding
Company Merger will qualify as a tax-free reorganization pursuant to section
368 of the Code.
9.5 Compliance with Undertakings. Each of the acts,
covenants, agreements and undertakings of Buyers to be performed or caused to
be complied with on or before the Closing Date pursuant
<PAGE> 31
to the terms hereof shall have been duly performed and caused to be complied
with in all material respects.
9.6 No Material Adverse Change. There shall have been no
material adverse change in the condition, financial or otherwise, of Trustmark
or Trustmark Bank since December 31, 1995, other than as a result of the
transactions contemplated hereby.
9.7 Opinion of Counsel. Buyers shall cause to be
delivered to Sellers the legal opinion of Brunini, Grantham, Grower & Hewes,
PLLC to the effect that:
(a) Trustmark Bank is duly organized, validly
existing and in good standing as a national banking association.
(b) Trustmark is a duly organized, validly
existing corporation in good standing under the laws of the State of
Mississippi. The outstanding shares of Trustmark's common stock are, and the
shares of Trustmark common stock to be issued as a result of the Holding
Company Merger, upon execution and delivery, will be, in each case duly
authorized, validly issued, fully paid, and nonassessable. The shares of
Trustmark common stock are validly registered under the Securities Act of 1933.
(c) This Agreement is valid, binding and
enforceable against Buyers in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally.
(d) The Holding Company Merger and the Bank
Merger have been duly authorized by all requisite corporate and shareholder
action of Trustmark and Trustmark Bank.
(e) To the best of such counsel's knowledge,
following diligent inquiry, but without independent verification of facts
certified by appropriate officials of Trustmark and/or Trustmark Bank and
relied upon by such counsel, Buyers have not made any material
misrepresentation, materially breached any
<PAGE> 32
warranty or materially breached any covenant or condition in this Agreement or
in any document, statement, list or schedule referred to herein.
9.8 Closing Certificate. At the Closing, the Chairman of
the Board and President of Trustmark shall execute and deliver a closing
certificate to the effect that all representations and warranties by or
concerning Trustmark and Trustmark Bank are true and correct in all material
respects as of the Closing Date and that all other conditions precedent to
Sellers' obligation to Close have been performed and complied with in all
material respects.
10. CLOSING.
On the Closing Date, subject to the terms and conditions set
forth in this Agreement, Company shall merge with and into Trustmark pursuant
to the Plan and Agreement of Merger attached as Exhibit "A", NBC will
consolidate with and into Trustmark Bank pursuant to the Plan and Agreement of
Merger attached as Exhibit "B". The Holding Company Merger will be effective
(the "Effective Time of the Holding Company Merger") upon the filing of
articles of merger with the Secretary of State of the State of Mississippi.
The Bank Merger will be effective (the "Effective Time of the Bank Merger") at
the time established by the United States Comptroller of the Currency.
At the Effective Time of the Mergers, the separate corporate
existence of Company and NBC, respectively, shall cease. Trustmark shall be
the surviving corporation of the Holding Company Merger and Trustmark Bank
shall be the surviving association of the Bank Merger.
Closing will take place at the main office of NBC on a date
selected by Buyers within 30 days after all conditions to Closing have been
satisfied or waived (the "Closing Date"). At the Closing, the certificates,
letters and opinions required by
<PAGE> 33
Articles 8 and 9 hereof shall be delivered and the appropriate officers of
Company, NBC, Trustmark and Trustmark Bank shall execute, deliver, acknowledge
and file such documents, instruments and certificates required by this
Agreement or otherwise necessary to accomplish the Holding Company Merger and
the Bank Merger.
10.1 Conversion of Shares. As of the Effective Time of
the Holding Company Merger, by virtue of the merger and without any further
action on the part of the holders of any Company shares, each share of Company
common stock issued and outstanding immediately prior to the Effective Time of
the Holding Company Merger (other than such shares as to which dissenter's
rights of appraisal have been perfected and not withdrawn) shall, subject to
Sections 10.5 and 10.7, be converted into 12.9545 Trustmark shares.
As of the Effective Time of the Bank Merger, by
virtue of the merger and without any further action on the part of the holders
of the NBC shares, each share of NBC common stock issued and outstanding
immediately prior to the Effective Time of the Bank Merger which are not owned
by Company shall, subject to Sections 10.5 and 10.7, be converted into 13.4825
shares of common stock of Trustmark.
As soon as practical after the Effective Time of the
Holding Company Merger, notice will be given to all shareholders of Company and
NBC as of the Effective Date of the Mergers, of the procedure for surrendering
and exchanging their share certificates representing Company and NBC common
shares for share certificates representing Trustmark shares. The notice will
include instructions with respect to the surrender of certificates representing
the Company and NBC common shares and the distribution of Trustmark shares in
exchange therefor and a letter of transmittal for use in surrendering Company
and NBC common share certificates.
<PAGE> 34
10.2 Lost or Destroyed Certificates. Any person whose
certificates representing Company or NBC common shares shall have been lost or
destroyed may nevertheless obtain the Trustmark shares to which such Company
and NBC common shareholder is entitled as a result of the Mergers, provided
such Company and NBC common shareholder provides Trustmark with a statement
certifying such loss or destruction and an indemnity satisfactory to Trustmark
sufficient to indemnify Trustmark against any loss or expense that may occur as
a result of such lost or destroyed certificates being thereafter presented to
Trustmark for exchange.
10.3 Rights Prior to Exchange. Until a former Company and
NBC common shareholder has surrendered the certificates representing his
Company or NBC common shares or provided indemnity as permitted in Section
10.2, such former Company or NBC common shareholder shall not be entitled to
receive cash or certificates representing the Trustmark shares to which such
shareholder is entitled by virtue of the Mergers and no dividend or other
distribution with respect of Trustmark shares will be paid to such persons;
provided, however, that when such certificates shall have been surrendered or
indemnity provided, there shall be paid to such persons, without interest, all
dividends and other distributions payable in respect of a record date after the
Effective Time of the Mergers on the Trustmark shares for which such Company or
NBC common shares shall have been exchanged.
10.4 Fractional Shares. No fractional Trustmark shares
will be issued upon the surrender for exchange of certificates representing
Company and NBC common shares. In lieu of any such fractional share, each
holder of Company common shares who would otherwise be entitled to a fractional
share of Trustmark common stock will be paid in cash upon surrender of all the
stock certificates representing Company common shares held by such holder
<PAGE> 35
in the amount equal to the product of such fraction multiplied by $22.00.
10.5 Adjustment of Merger Consideration. If, between the
date of this Agreement and the Effective Time of the Mergers, Trustmark's
shares shall be changed into a different number of shares or shares of a
different class by reason of any reclassification, recapitalization, split up
or stock dividend with a record date within said period, the number of
Trustmark shares to be issued and delivered upon the Mergers as provided in
this Agreement will be appropriately and proportionately adjusted so that the
number of such shares that will be issued and delivered upon the Mergers will
equal the number of Trustmark shares that holders of Company and NBC common
shares would have received had the record date of such reclassification,
recapitalization, split up or stock dividend been immediately following the
Effective Time of the Mergers.
10.6 Further Assurance. If, at any time after the
Effective Times of the Mergers, Trustmark or Trustmark Bank shall consider or
be advised that any deeds, bills of sale, assignments, assurances or any other
actions or things that are necessary or desirable to vest, perfect or confirm,
of record or otherwise, in the surviving corporation its right, title or
interest in, to or under any of the rights, properties or assets of Company or
NBC acquired or to be acquired as a result of the Holding Company Merger or the
Bank Merger or to otherwise carry out this Agreement, the officers and
directors of Trustmark and Trustmark Bank shall, and will be authorized to,
execute and deliver, in the name and on behalf of Company and NBC all such
deeds, bills of sale, assignments and assurances and take and do, in the name
of and on behalf of Company and NBC, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties
<PAGE> 36
or assets in Trustmark and Trustmark Bank or to otherwise carry out this
Agreement.
10.7 Market Price Fluctuations.
(a) Holding Company Merger. The exchange ratio will be
adjusted if the 2-week average of the bid/asked prices of Trustmark shares is
greater than $25.00 or less than $22.00 on the Adjustment Date. For purposes
of this Agreement, the Adjustment Date shall be the fifteenth day prior to the
Closing Date. The 2-week average of the bid/asked prices of the Trustmark
shares shall be the average of the closing bid/asked prices of Trustmark shares
as reported in the National Association of Securities Dealers Automated System
for National Market Issues for the 10 business days preceding the Adjustment
Date (the "Average Trustmark Price"). If, on the Adjustment Date, the Average
Trustmark Price is more than $25.00, the adjustment will decrease the number of
Trustmark shares in to which each Holding Company common share will be
converted so that the exchange ratio of the Trustmark shares in to which each
Company common share shall be converted will be equal to the quotient of (i)
the amount of the increase in the Average Trustmark Price that is greater than
$25.00 plus $22.00 (ii) divided into $32,148,000. If, on the Adjustment Date,
the Average Trustmark Price is less than $22.00, the adjustment will increase
the number of Trustmark shares in to which each Company common share will be
converted so that the value of the Trustmark shares in to which each Company
common share shall be converted will not be less than $285.00. Notwithstanding
the foregoing sentence, if, on the Adjustment Date, the Average Trustmark Price
is less than $19.00, Trustmark shall have the option to (i) adjust the exchange
ratio so that the value of the Trustmark shares in to which each Company common
share shall be converted will not be less than $285.00, (ii) to renegotiate the
exchange ratio, or (iii) to terminate this Agreement upon written notice to the
Company. In the event Buyers exercise their right of
<PAGE> 37
termination under and in accordance with this Section 10.7, Buyers shall
reimburse and pay to Sellers all of Seller's reasonable expenses, including but
not limited to, attorneys fees which Sellers shall have incurred under this
Agreement and in pursuance of the transactions covered by this Agreement.
(b) Bank Merger. If the exchange ratio is adjusted for the
Holding Company Merger pursuant to Section 10.7(a), then the exchange ratio for
the Bank Merger shall be adjusted to equal the product of the exchange ratio
for the Holding Company Merger multiplied by 1.0408.
11. TERMINATION.
This Agreement may be terminated and the Mergers may be
abandoned without liability on the part of Sellers or Buyers, as follows:
(a) By the mutual consents of the boards of
directors of Company and Trustmark;
(b) By Trustmark if a state or federal
governmental agency or authority shall at any time fail to approve the
transactions contemplated by this Agreement or shall have instituted and not
dismissed court proceedings to restrain or prohibit such transactions and such
court proceedings have not been resolved prior to one year after the date of
this Agreement.
(c) By any party if the Closing Date shall not
have occurred on or prior to the day that is one year after the date of this
Agreement without the fault of such party;
(d) By Trustmark or Trustmark Bank at any time
during the due diligence examination period as provided in Section 5.9 if such
examination, in Buyers opinion, reveals previously unknown, adverse
information concerning Company or NBC; or
(e) By Buyers, if at the time of such termination
there shall be a material adverse change in the financial condition
<PAGE> 38
or tangible properties of Sellers arising subsequent to the completion of due
diligence as referred to in Section 5.9 hereof.
(f) By Sellers, if at the time of such
termination there shall be a material adverse change in the financial
condition or tangible properties of Buyers arising subsequent to December 31,
1995.
(g) By Buyers in accordance with and subject to
the provisions of Section 10.7 hereof.
(h) By either Buyers or Sellers, if the
stockholders of the Company or NBC fail to approve the Holding Company Merger
or Bank Merger at the meeting of stockholders called for such purposes
(including any adjournment or postponement thereof);
(i) By Buyers if there has been a material breach
by either of the Sellers (A) of any of its representations and warranties set
forth herein, or (B) of any of its obligations herein which has not been
promptly cured after notice thereof from Buyers;
(j) By Sellers if there has been a material
breach by either of the Buyers (A) of any of its representations and warranties
set forth herein or (B) of any of its obligations hereunder which has not been
promptly cured after notice thereof by Sellers.
12. MISCELLANEOUS.
12.1 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Mississippi, except to the extent that
federal law is applicable.
12.2 Notices and Communications. Any and all notices or
other communications required or permitted under this Agreement shall be in
writing and shall be deemed given when delivered in person or upon receipt when
delivered by an overnight courier
<PAGE> 39
delivery service that maintains proof of delivery or three days after being
mailed by United States Certified or Registered Mail, Return Receipt Requested,
postage prepaid and addressed:
TO COMPANY: Mr. Jack B. Yates
First Corinth Corp.
Post Office BOX 608
Lexington, MS 39095-0608
WITH A COPY TO: Mr. Craig N. Landrum
Watkins Ludlam & Stennis, P.A.
Post Office Box 427
Jackson, MS 39205-0427
TO TRUSTMARK: Mr. Frank R. Day
Trustmark Corporation
Post Office Box 291
Jackson, MS 39205
WITH A COPY TO: Mr. Granville Tate, Jr.
Brunini, Grantham, Grower & Hewes, PLLC
Post Office Drawer 119
Jackson, MS 39205
Any party may change the address to which notice or other
communication to him or it is sent by delivery of written notice of the change
to the other parties to this Agreement.
12.3 Headings and Exhibits. Any section headings in this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect any provisions hereof. All documents, statements, lists and
schedules referred to herein shall be initialed for identification or may be
physically annexed hereto, but in either event such documents, statements,
lists and schedules shall be deemed a part hereof.
12.4 Benefit. This Agreement shall be binding upon and
shall inure to the exclusive benefit of the parties hereto, their heirs,
successors or assigns. This Agreement is not intended to nor shall it create
any rights in any other party.
12.5 Partial Invalidity. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.
<PAGE> 40
12.6 Waiver. Neither the failure nor any delay on the
part of any party hereto in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, or of any other right, power or remedy nor
shall any single or partial exercise of any right, power or remedy preclude any
further or other exercise thereof or the exercise of any other right, power or
remedy.
12.7 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
12.8 Interpretation. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular
or plural as the identity of the person or entity or the context may require.
Further, it is acknowledged by the parties that this Agreement has been drafted
and negotiated by both parties hereto and, therefore, no presumptions shall
arise favoring either party by virtue of the authorship of any of its
provisions.
12.9 Entire Agreement. This Agreement and the
documents, statements, lists and schedules referred to herein constitute the
entire Agreement between the parties hereto, and it is understood and agreed
that all undertakings, negotiations and agreements heretofore had between the
parties are merged herein and therein. This Agreement may not be modified
orally, but only by an agreement in writing signed by either Trustmark or
Trustmark Bank, on the one hand, and Company or NBC, on the other.
12.10 Time of the Essence. With respect to any act called
for by any party to this Agreement, including regulatory authority approvals
and registration of the Trustmark shares with appropriate state and federal
agencies, time is of the essence.
12.11 Definition of Material. With reference to the
representations, warranties and covenants of Sellers contained in this
Agreement, such representations, warranties and covenants shall be strictly
satisfied and complied with. Accordingly, when used with reference to Sellers
"material" and "materially" shall be understood to mean a breach of any
representation, warranty or covenant contained in this Agreement which,
separately or in the
<PAGE> 41
aggregate with any other such breach, does or could result in a cost, loss,
detriment or obligation in excess of $325,000. Provided, however, with
reference to the representations, warranties and covenants of Buyers contained
in this Agreement, "material" and materially" shall have the meaning normally
accorded such terms considering the relative importance of such representation,
warranty or covenant in the context of a business of the type and size of
Buyers. Any reduction in the book value of Company or Trustmark which may
result by virtue of the adoption of SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" shall not constitute a material
adverse change in the condition, financial or otherwise, of Company or
Trustmark.
12.12 Nonsurvival of Representations and Warranties. All
representations and warranties set forth in Sections 3 and 4 of this Agreement
shall be deemed conditions to the Merger and shall not survive the Merger.
<PAGE> 42
WITNESS the signatures of the undersigned parties as of the
date first above written.
TRUSTMARK CORPORATION
By:
---------------------------------
Frank R. Day, Chairman of the
Board and Chief Executive
(SEAL) Officer
TRUSTMARK BANK NATIONAL BANK
By:
---------------------------------
Frank R. Day, Chairman of the
Board and Chief Executive
(SEAL) Officer
First Corinth Corp.
By:
---------------------------------
Jack B. Yates, Chairman of the
(SEAL) Board
NATIONAL BANK OF COMMERCE OF CORINTH
By:
---------------------------------
Hull Davis, President and Chief
(SEAL) Executive Officer
Board of Directors of First Corinth
Corp.
-------------------------------------
Hull Davis
-------------------------------------
Harold P. Hammett, Jr.
-------------------------------------
B. Bryan Jones, III
-------------------------------------
Paul F. O'Brien, Jr.
-------------------------------------
Jack B. Yates
Board of Directors of National Bank
of Commerce of Corinth
<PAGE> 43
-------------------------------------
Hull Davis
-------------------------------------
Bryan B. Jones
-------------------------------------
Dr. R. H. Kay
-------------------------------------
L. R. Norman
-------------------------------------
David M. Palmer
-------------------------------------
J. C. Stanley, IV
-------------------------------------
Joe Vann
-------------------------------------
Kenneth Williams
-------------------------------------
C. G. Worsham
-------------------------------------
Jack B. Yates
<PAGE> 44
FIRST AMENDMENT TO MERGER AGREEMENT
This First Amendment to Merger Agreement is entered into this the 11th
day of December, 1996, between and among TRUSTMARK CORPORATION, a Mississippi
corporation ("Trustmark"), TRUSTMARK NATIONAL BANK, a national banking
association ("Trustmark Bank") (Trustmark and Trustmark Bank are sometimes
collectively referred to as "Buyers") and FIRST CORINTH CORP. ("Company") and
NATIONAL BANK OF COMMERCE OF CORINTH, a national banking association ("NBC")
(Company and NBC are sometimes collectively referred to as "Sellers").
WITNESSETH
On October 2, 1996, Sellers and Buyers entered into a Merger Agreement
pursuant to which Company will be merged with and into Trustmark and NBC will
be merged with and into Trustmark Bank.
The Merger Agreement provides that the ratio in to which each Company
or NBC common share will be exchanged for shares of Trustmark may be adjusted
based on the Average Market Price of Trustmark shares.
Sellers and Buyers desire to amend the Merger Agreement to clarify the
manner in which the exchange ratio will be adjusted, if applicable.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the Sellers and Buyers do hereby agree to amend the
Merger Agreement on the following terms and conditions.
1. The third sentence of Paragraph 10.7(a) of the Merger Agreement is
hereby amended to read as follows:
If, on the Adjustment Date, the Average Trustmark Price is more than
$25.00, the adjustment will decrease the number of Trustmark shares in
to which each Company common share will be converted so that the
exchange ratio of the Trustmark shares in to which each Company common
share shall be converted will be equal to the quotient of (i)
$36,531,825 divided by the Average Trustmark Price divided by (ii)
112,800.
2. The third sentence of Paragraph D of Exhibit A to the Merger
Agreement is hereby amended to read as follows:
If, on the Adjustment Date, the Average Trustmark Price is more than
$25.00, the adjustment will decrease the number of Trustmark shares in
to which each Company common share will be converted so that the
exchange ratio of the Trustmark shares in to which each
<PAGE> 45
Company common share shall be converted will be equal to the
quotient of (i) $36,531,825 divided by the Average Trustmark
Price divided by (ii) 112,800.
3. Except as modified or amended herein, the Merger Agreement is
ratified and shall remain unchanged and in full force and effect.
WITNESS the signature of the undersigned parties as of the date first
above written.
TRUSTMARK CORPORATION
(Seal) By: /s/ FRANK R. DAY
-----------------------------------
Frank R. Day, Chairman of the Board
and Chief Executive Officer
TRUSTMARK NATIONAL BANK
(Seal) By: /s/ FRANK R. DAY
-----------------------------------
Frank R. Day, Chairman of the Board
and Chief Executive Officer
FIRST CORINTH CORP.
(Seal) By: /s/ JACK B. YATES
-----------------------------------
Jack B. Yates, Chairman of the
Board
NATIONAL BANK OF COMMERCE OF CORINTH
(Seal) By: /s/ HULL DAVIS
-----------------------------------
Hull Davis, President and Chief
Executive Officer
<PAGE> 46
EXHIBIT INDEX
Exhibit A: Plan and Agreement of Merger - The Holding Company
Merger.
Exhibit B: Plan and Agreement of Merger - The Bank Merger.
Exhibit C: Schedule of Contracts.
Exhibit D-1: Schedule of Pending Litigation -- Sellers.
Exhibit D-2: Schedule of Pending Litigation -- Buyers.
Exhibit E: Schedule of Insurance Policies.
Exhibit F: Schedule of Reports filed with Regulatory Authorities.
<PAGE> 47
EXHIBIT A
TO
MERGER AGREEMENT
<PAGE> 48
PLAN AND AGREEMENT OF MERGER BETWEEN
FIRST CORINTH CORP., A MISSISSIPPI CORPORATION,
AND TRUSTMARK CORPORATION, A MISSISSIPPI CORPORATION
Pursuant to the Mississippi Business Corporation Act (the "Act"), the
merger of First Corinth Corp., a Mississippi corporation ("Company"), with and
into Trustmark Corporation, a Mississippi corporation ("Trustmark"), with
Trustmark as the surviving corporation shall be effected as follows:
A. Effective Date. The merger shall become effective (the
"Effective Date") immediately upon filing of Articles of Merger with the
Secretary of State of the State of Mississippi in accordance with the laws of
the State of Mississippi.
B. Surviving Corporation. The Company shall be merged (the
"Merger") with and into Trustmark. Trustmark shall be the surviving
corporation pursuant to the provisions of, and with the effect provided in, the
Act.
C. Terms and Conditions of the Merger. As of the Effective Date
of the Merger, by virtue of the Merger and without any further action on the
part of the holders of any Company shares, subject to the adjustments provided
herein, each common share of the Company issued and outstanding immediately
prior to the Effective Date of the Merger (other than such shares as to which
dissenter's rights of appraisal have been perfected and not withdrawn), shall
be converted into 12.9545 shares of the common stock of Trustmark.
No fractional Trustmark shares will be issued upon the
surrender for exchange of certificates representing common shares of the
Company. In lieu of any such fractional share, each holder of common shares
of the Company who would otherwise be entitled to a fraction of a Trustmark
share will be paid in cash upon the
<PAGE> 49
surrender of all the stock certificates representing the common shares of the
Company by such holder in the amount equal to the product of such fraction
multiplied by $22.00 per share.
If, between the date hereof and the Effective Date of the
Merger, Trustmark shares shall be changed into a different number of shares or
shares of a different class by reason of any reclassification,
recapitalization, split up or stock dividend with a record date within said
period, the number of Trustmark shares to be issued and delivered upon the
Merger shall be appropriately and proportionately adjusted so that the number
of such shares that will be issued and delivered upon the Merger will equal the
number of Trustmark shares that holders of common shares of the Company would
have received had the record date of such reclassification, recapitalization,
split up or stock dividend been immediately following the Effective Date of the
Merger.
Any person whose certificates representing Company common
shares shall have been lost or destroyed may nevertheless obtain the Trustmark
shares to which such Company common shareholder is entitled as a result of the
Merger, provided such Company common shareholder provides Trustmark with a
statement certifying such loss or destruction and an indemnity satisfactory to
Trustmark sufficient to indemnify Trustmark against any loss or expense that
may occur as a result of such lost or destroyed certificates being thereafter
presented to Trustmark for exchange. Until a former Company common shareholder
has surrendered the certificates representing his Company common shares or
provided indemnity as provided above, such former Company common shareholder
shall not be entitled to receive certificates representing the Trustmark shares
to which such shareholder is entitled by virtue of the Merger and
<PAGE> 50
no dividend or other distribution with respect of Trustmark shares will be paid
to such persons; provided, however, that when such certificates shall have been
surrendered or indemnity provided, there shall be paid to such persons, without
interest, all dividends and other distributions payable in respect of a record
date after the Effective Date of the Merger on the Trustmark shares for which
such Company common shares shall have been exchanged.
D. Market Price Fluctuations. The exchange ratio will be
adjusted if the 2-week average of the bid/asked prices of Trustmark shares is
greater than $25.00 or less than $22.00 on the Adjustment Date. For purposes
of this Agreement, the Adjustment Date shall be the fifteenth day prior to the
Closing Date. The 2-week average of the bid/asked prices of the Trustmark
shares shall be the average of the closing bid/asked prices of Trustmark shares
as reported in the National Association of Securities Dealers Automated System
for National Market Issues for the 10 business days preceding the Adjustment
Date (the "Average Trustmark Price"). If, on the Adjustment Date, the Average
Trustmark Price is more than $25.00, the adjustment will decrease the number of
Trustmark shares in to which each Company common share will be converted so
that the exchange ratio of the Trustmark shares in to which each Company
common share shall be converted will be equal to the quotient of (i) the amount
of the increase in the Average Trustmark Price that is greater than $25.00 plus
$22.00 (ii) divided into $32,148.00. If, on the Adjustment Date, the Average
Trustmark Price is less than $22.00, the adjustment will increase the number of
Trustmark shares in to which each Company common share will be converted so
that the value of the Trustmark shares in to which each Company common share
shall be converted will not be less than $285.00.
<PAGE> 51
Notwithstanding the foregoing sentence, if, on the Adjustment Date, the Average
Trustmark Price is less than $19.00, Trustmark shall have the option to (i)
adjust the exchange ratio so that the value of the Trustmark shares in to which
each Company common share shall be converted will not be less than $285.00,
(ii) to renegotiate the exchange ratio, or (iii) to terminate this Agreement
upon written notice to the Company.
E. Governance of the Surviving Corporation. The Charter of
Incorporation and Bylaws of Trustmark shall be the Charter of Incorporation and
Bylaws of the merged corporations following the Effective Date of the Merger,
unless and until the same shall be amended in accordance with the provisions
thereof and the Act.
F. Board of Directors and Officers. The members of the Board of
Directors and the officers of Trustmark shall be the Board of Directors and
officers of the merged corporation until their respective successors are
elected and qualified.
G. Stock of Surviving Corporation. The shares of common stock of
Trustmark as the surviving corporation outstanding immediately prior to the
Effective Date of the Merger shall remain outstanding.
H. Authorized Capital. The authorized capital stock of Trustmark
as the surviving corporation following the Effective Date of the Merger shall
be 100 million shares of common stock, no par value, unless and until the same
shall be changed in accordance with the Act.
I. Dissenter's Rights of Appraisal. Shareholders of the Company
shall be entitled to exercise dissenter's rights of appraisal as provided
pursuant to the provisions of the Act, or otherwise provided by law.
<PAGE> 52
J. Termination. Prior to the Effective Date of the Merger, this
Plan and Agreement of Merger may be terminated as follows:
(a) By the mutual consent of the Boards of Directors of
the Company and Trustmark;
(b) By Trustmark if a state or federal governmental
agency or authority shall at any time fail to approve the transactions
contemplated by this Agreement or shall have instituted and not dismissed court
proceedings to restrain or prohibit such transactions and such court
proceedings have not been resolved prior to one year after the date of this
Agreement;
(c) By any party if the Closing Date shall not have
occurred on or prior to the day that is one year after the date of this
Agreement without the fault of such party;
(d) By Trustmark at any time during the due diligence
examination period as provided in Section 5.9 of the Merger Agreement if such
examination, in Trustmark's opinion, reveals previously unknown, adverse
information concerning Company; or
(e) By Trustmark, if at the time of such termination
there shall be a material adverse change in the financial condition or tangible
properties of Company arising subsequent to the completion of due diligence as
referred to in Section 5.9 of the Merger Agreement;
(f) By Company, if at the time of such termination there
shall be a material adverse change in the financial condition or tangible
properties of Trustmark arising subsequent to December 31, 1995;
(g) By Trustmark in accordance with and subject to the
provisions of Section 10.7 of the Merger Agreement;
<PAGE> 53
(h) By either Trustmark or Company, if the stockholders
of the Company or NBC fail to approve the Holding Company Merger or Bank Merger
at the meeting of stockholders called for such purpose (including any
adjournment or postponement thereof);
(i) By Trustmark if there has been a material breach by
Company (A) of any of its representations and warranties in the Merger
Agreement or (B) of any obligations therein which have not been promptly cured
after notice thereof from Trustmark;
(j) By Company if there has been a material breach by
Trustmark (A) of any of its representations and warranties set forth in the
Merger Agreement or (B) of any obligations thereunder which have not been
promptly cured after notice thereof by Company.
K. Trustmark and Company intend that the transaction contemplated
by this Plan and Agreement of Merger shall be a tax-free reorganization within
the meaning of Internal Revenue Code Section 368(a)(1)(A).
<PAGE> 54
IN WITNESS WHEREOF, the Company and Trustmark have caused this Plan
and Agreement of Merger to be executed, each by its Chief Executive Officer and
attested by its President, Secretary or Assistant Secretary this the _____ day
of October, 1996.
First Corinth Corp.
By:
-----------------------------
Jack B. Yates, Chairman
Attested:
By:
-------------------------------
Hull Davis, Its Secretary
TRUSTMARK CORPORATION
By:
-----------------------------
Frank R. Day, Its President
and Chief Executive Officer
Attested:
By:
-------------------------------
Harry M. Walker, Its Secretary
<PAGE> 55
STATE OF MISSISSIPPI
COUNTY OF ALCORN
Personally appeared before me, the undersigned authority in and for
the said county and state, on this _____ day of October, 1996, within my
jurisdiction, the within named Jack B. Yates and Hull Davis, who acknowledged
that they are Chairman and Secretary, respectively, of First Corinth Corp., a
Mississippi corporation, and that for and on behalf of the said corporation,
and as its act and deed they executed the above and foregoing instrument, after
first having been duly authorized by said corporation so to do.
------------------------------
Notary Public
My Commission Expires:
- -----------------------
STATE OF MISSISSIPPI
COUNTY OF HINDS
Personally appeared before me, the undersigned authority in and for
the said county and state, on this _____ day of October, 1996, within my
jurisdiction, the within named Frank R. Day and Harry M. Walker, who
acknowledged that they are President and Chief Executive Officer and Secretary,
respectively, of Trustmark Corporation, a Mississippi corporation, and that for
and on behalf of the said corporation, and as its act and deed they executed
the above and foregoing instrument, after first having been duly authorized by
said corporation so to do.
------------------------------
Notary Public
My Commission Expires:
- -----------------------
<PAGE> 56
EXHIBIT B
TO
MERGER AGREEMENT
<PAGE> 57
PLAN AND AGREEMENT OF MERGER
OF
NATIONAL BANK OF COMMERCE OF CORINTH,
A NATIONAL BANKING ASSOCIATION
WITH AND INTO
TRUSTMARK NATIONAL BANK, A NATIONAL BANKING ASSOCIATION
UNDER THE CHARTER OF TRUSTMARK NATIONAL BANK
UNDER THE TITLE OF TRUSTMARK NATIONAL BANK
This Plan and Agreement of Merger is made and entered into between
National Bank of Commerce of Corinth (hereinafter referred to as "NBC"), a
national banking association organized under the laws of the United States,
being located in Corinth, County of Alcorn, State of Mississippi with a capital
of $550,000 divided into 110,000 shares of common stock, each of $5.00 par
value, surplus of $7,200,000 and undivided profits, including capital reserves,
of $5,829,790 and net unrealized gains on securities available for sale of
$163,802 as of June 30, 1996, and Trustmark National Bank (hereinafter referred
to as "Trustmark Bank"), a national banking association organized under the
laws of the United States, being located in Jackson, County of Hinds, State of
Mississippi, with a capital of $13,389,775 divided into 2,677,955 shares of
common stock, each of $5.00 par value, surplus of $237,713,736 and undivided
profits, including capital reserves, of $237,945,735 and net unrealized holding
losses on available for sale securities of ($3,926,855) as of June 30, 1996.
NBC and Trustmark Bank are each acting pursuant to a resolution of its board of
directors, adopted by a vote of a majority of its directors, pursuant to the
authority given by and in accordance with the provisions of Article 12, Section
215a of the United States Code, and joined in by Trustmark Corporation, a
Mississippi
<PAGE> 58
corporation, ("Trustmark") the parent of Trustmark Bank, for the purpose of its
agreement to issue shares of its common stock upon the merger of NBC with and
into Trustmark Bank.
NBC and Trustmark Bank hereby adopt this Plan and Agreement of Merger
for the purpose of merging NBC with and into Trustmark Bank.
Section 1. NBC shall be merged with and into Trustmark Bank under the
Charter of Trustmark Bank (the "Merger").
Section 2. The name of the merged association (hereinafter referred
to as the "Association") shall be Trustmark National Bank.
Section 3. The business of the Association shall be that of a
national banking association. This business shall be conducted by the
Association at its main office which shall be located at Jackson, Mississippi,
and at its legally established branches.
Section 4. The amount of capital stock of the Association shall be
$13,389,775 divided into 2,677,955 shares of common stock, each of a $5.00 par
value and at the time the Merger shall become effective, the Association shall
have a surplus of $245,463,736, and undivided profits, including capital
reserves, which when combined with the capital and surplus will be equal to the
combined capital structures of the merging banks as stated in the preamble of
this agreement, adjusted however, for normal earnings and expenses between June
30, 1996, and the effective time of the Merger.
Section 5. All assets of each of the merging banks, as they exist at
the effective time of the Merger shall pass to and vest in the Association
without any conveyance or other transfer; and the Association shall be
responsible for all of the liabilities of
<PAGE> 59
every kind and description, including liabilities arising out of the operation
of a trust department, of each of the merging banks existing as of the
effective time of the Merger.
As its contribution to the capital structure of the Association, NBC
shall contribute to the Association acceptable assets having a book value, over
and above its liability to its creditors, of at least $13,743,592, and having
an estimated fair value, over and above its liability to its creditors, of at
least $13,743,592, adjusted, however, for normal earnings and expenses between
June 30, 1996, and the effective time of the Merger, and for allowance of cash
payments, if any, permitted under this agreement.
As its contribution to the capital structure of the Association,
Trustmark Bank shall contribute acceptable assets having a book value, over and
above its liability of its creditors, of at least $485,122,391 and having an
estimated fair value, over and above its liability to is creditors, of at least
$485,122,391, adjusted, however, for normal earnings and expenses between June
30, 1996, and the effective time of the Merger, and for allowance of cash
payments, if any, permitted under this agreement.
Section 6. At the effective time of the Merger Trustmark shall retain
its present rights in and to each of the 2,677,955 issued and outstanding
shares of common stock, $5.00 par value of Trustmark Bank, which are owned by
Trustmark and each of the 110,000 issued and outstanding shares of NBC which
will not at that time be owned by Trustmark shall, subject to the adjustments
provided in Sections 10.5 and 10.7 of the Merger Agreement dated as of October
2, 1996 to which this Plan and Agreement of Merger is in
<PAGE> 60
furtherance (the "Merger Agreement"), be converted into 13.4825 shares of
common stock of Trustmark.
Section 7. NBC shall be permitted to declare and pay an annual cash
dividend out of current operating profits in the manner and to the extent
provided in the Merger Agreement. Except as set forth herein, NBC shall not
declare any other cash or other dividends prior to closing.
From the date hereof until the effective time of the Merger, Trustmark
Bank shall be entitled to declare and pay such dividends as may, from time to
time, be declared by the Board of Directors of Trustmark Bank.
Section 8. The present Board of Directors of Trustmark Bank shall
continue to serve as the Board of Directors of the Association until the next
annual meeting of shareholders or until such time as their successors have been
elected and have qualified.
Section 9. Effective as of the time the Merger shall become effective
as specified in the Merger approval to be issued by the Comptroller of the
Currency, the Articles of Association of the merged bank shall read in their
entirety as follows:
FIRST. The title of this Association shall be "Trustmark National
Bank."
SECOND. The main office of the Association shall be in Jackson,
County of Hinds, State of Mississippi. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of
not less than five nor more than twenty-five members,
<PAGE> 61
the exact number of Directors within such minimum and maximum limits to be
fixed and determined from time to time by resolution of a majority of the full
Board of Directors or by resolution of the shareholders at any annual or
special meeting thereof. Each Director shall own common or preferred stock of
the Association or of a company which has control over the Association within
the meaning of 12 U.S.C. Section 1841 ("The Bank Holding Company Act"), with
an aggregate par, fair market or equity value of not less than $1,000, as of
either (i) the date of purchase, (ii) the date the person became a director, or
(iii) the date of that person's most recent election to the Board of Directors,
whichever is more recent. Any combination of common or preferred stock of the
Association or holding company may be used. Unless otherwise provided by the
laws of the United States, any vacancy in the Board of Directors for any
reason, including an increase in the number thereof, shall be filled through
appointment by a majority of the remaining Directors then in office, and any
director so appointed shall hold his place until the next election, and until
his successor shall have been elected and qualified.
FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office or such other place as the Board
of Directors may designate, on the day of each year specified therefor in the
Bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all
<PAGE> 62
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
Nominations for election to the Board of Directors may be made by the
Board of Directors or by any stockholder of any outstanding class of capital
stock of the bank entitled to vote for election of directors. Nominations,
other than those made by or on behalf of the existing management of the bank,
shall be made in writing and shall be delivered or mailed to the Chairman of
the Board of the bank not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors; provided however,
that if less than 21 days' notice of the meeting is given to shareholders, such
nominations shall be mailed or delivered to the Chairman of the Board of the
bank not later than the close of business on the seventh day following the day
on which the notice of the meeting was mailed. Such notification shall
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of shares
of capital stock of the bank that will be voted for each proposed nominee; (d)
the name and residence address of the notifying shareholder; and (e) the number
of shares of capital stock of the bank owned by the notifying shareholder.
Nominations not made in accordance herewith may, in his discretion, be
disregarded by the chairman of the meeting, and upon his instructions the vote
tellers may disregard all votes cast for each such nominee.
<PAGE> 63
FIFTH. The authorized amount of capital stock of this Association
shall be 2,677,955 shares of common stock of the par value of Five Dollars
($5.00) each; but said capital stock may be increased or decreased from time to
time, in accordance with the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares
thereof, each shareholder shall be entitled to subscribe for such additional
shares in proportion to the number of shares of said capital stock owned by him
at the time the increase is authorized by the shareholders unless another time
subsequent to the date of the shareholders' meeting is specified in a
resolution adopted by the shareholders at the time the increase is authorized,
except when they are (1) issued to effect or to raise the necessary capital to
effect a merger or consolidation, (2) issued to effect or to raise the
necessary capital to effect an acquisition of assets, (3) issued for
consideration other than cash, (4) issued to satisfy conversion rights, or
other rights or options, or (5) issued pursuant to any employee stock option or
stock purchase plan. The Board of Directors shall have the power to prescribe
a reasonable period of time within which the preemptive rights to subscribe to
the new shares of capital stock must be exercised.
The Association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of
the shareholders.
SIXTH. The Board of Directors shall appoint one of its members
President of the Association, who shall be Chairman of the Board, unless the
Board appoints another director to be the
<PAGE> 64
Chairman. The Board of Directors shall have the power to appoint one or more
Vice Presidents; and to appoint a Secretary and such officers and employees as
may be required to transact the business of the Association.
The Board of Directors shall have the power to define the duties of
the officers and employees of the Association; to fix the salaries to be paid
to them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage the affairs of the Association; to make
all Bylaws that it may be lawful for them to make; and generally to do and
perform all acts that it may be legal for a Board of Directors to do and
perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of Jackson,
Mississippi, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or
more shareholders owning, in the aggregate, not less than 25 percent of the
stock of this Association, may call a special
<PAGE> 65
meeting of the shareholders at any time. Unless otherwise provided by the laws
of the United States, a notice of the time, place, and purpose of every annual
or special meeting of the shareholders shall be given by First Class Mail,
postage prepaid, mailed at least ten days prior to the date of such meeting to
each shareholder of record at his address as shown upon the books of this
Association.
TENTH. Any person, his heirs, executors, or administrators, may be
indemnified or reimbursed by the Association for reasonable expenses actually
incurred in connection with any action, suit, or proceeding, civil or criminal,
to which he or they shall be made a party or potential party by reason of his
being or having been a director, or honorary or advisory director, officer, or
employee of the Association or of any firm, corporation, or organization which
he served in any such capacity at the request of the Association; provided,
however, that no person shall be so indemnified or reimbursed in relation to
any matter in such action, suit, or proceeding as to which he shall finally be
adjudged to have been guilty of or liable for negligence or willful misconduct
in the performance of his duties to the Association; and provided further, that
no person shall be so indemnified or reimbursed in relation to any
administrative proceeding or action instituted by an appropriate bank
regulatory agency which proceeding or action results in a final order assessing
civil money penalties or requiring affirmative action by an individual or
individuals in the form of payments to the Association. The foregoing right of
indemnification or reimbursement shall not be exclusive of other rights to
which such
<PAGE> 66
person, his heirs, executors, or administrators, may be entitled as a matter of
law. The Association may, upon affirmative vote of a majority of its Board of
Directors, purchase insurance to indemnify its directors, honorary or advisory
directors, officers and employees to the extent that such indemnification is
allowed in these Articles of Association. Such insurance may, but need not, be
for the benefit of all directors, honorary or advisory directors, officers or
employees.
ELEVENTH. These Articles of Association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the holders
of a majority of the stock of this Association, unless the vote of the holders
of a greater amount of stock is required by law, and in that case by the vote
of the holders of such greater amount.
Section 10. This Agreement may be terminated in the manner and to the
extent provided in the Merger Agreement.
Section 11. This Agreement shall be ratified and confirmed by the
affirmative vote of shareholders of each of the merging banks owning at least
sixty-seven percent (67%) of its capital stock outstanding, at a meeting to be
held on the call of the directors; and the Merger shall become effective at the
time specified in the approval of merger to be issued by the Comptroller of the
Currency of the United States.
Section 12. Trustmark Bank and NBC intend that the transactions
contemplated by this Plan and Agreement of Merger shall be tax-free
reorganizations under Internal Revenue Code
<PAGE> 67
Section 368(a)(1)(A) with respect to the merger of NBC with and into Trustmark
Bank.
WITNESS, the signatures and seals of said merging banks this _____ day
of October, 1996 each hereunto set by its Chief Executive Officer and attested
by its President, Executive Vice President, Secretary or Assistant Secretary
pursuant to a resolution of its Board of Directors, acting by a majority
thereof, and witness the signature hereto of the majority of each of said
Boards of Directors.
TRUSTMARK NATIONAL BANK
By:
------------------------------------
Frank R. Day, Its Chairman of the
Board and Chief Executive Officer
Attest:
By:
--------------------------
Gerard R. Host, Its
Executive Vice President
and Chief Financial Officer
(SEAL)
Ratified by the Board of Directors of
Trustmark National Bank
----------------------------------------
J. Kelly Allgood
----------------------------------------
Reuben V. Anderson
----------------------------------------
John L. Black, Jr.
----------------------------------------
Harry H. Bush
<PAGE> 68
----------------------------------------
Robert P. Cooke III
----------------------------------------
Frank R. Day
----------------------------------------
William C. Deviney, Jr.
----------------------------------------
D.G. Fountain, Jr.
----------------------------------------
C. Gerald Garnett
----------------------------------------
Matthew L. Holleman III
----------------------------------------
Fred A. Jones
----------------------------------------
T.H. Kendall III
----------------------------------------
Larry L. Lambiotte
----------------------------------------
Robert V. Massengill
----------------------------------------
Donald E. Meiners
----------------------------------------
William Neville III
----------------------------------------
Richard H. Puckett
----------------------------------------
Charles W. Renfrow
<PAGE> 69
---------------------------------------
Clyda S. Rent
---------------------------------------
William Thomas Shows
---------------------------------------
Harry M. Walker
---------------------------------------
LeRoy G. Walker, Jr.
---------------------------------------
Paul H. Watson, Jr.
---------------------------------------
John C. Wheeless, Jr.
---------------------------------------
Allen Wood, Jr.
TRUSTMARK CORPORATION
By:
-----------------------------------
Frank R. Day, Its Chairman of the
Board and Chief Executive Officer
Attest:
By:
--------------------------
Harry M. Walker, Its
Secretary
(SEAL)
<PAGE> 70
NATIONAL BANK OF COMMERCE OF CORINTH
BY:
----------------------------------
Jack B. Yates, Its Chairman
Attest:
By:
-----------------------------------
Hull Davis, Its President and
Chief Executive Officer
(SEAL)
Ratified by the Board of Directors of
National Bank of Commerce of Corinth
----------------------------------------
Hull Davis
----------------------------------------
Bryan B. Jones
----------------------------------------
Dr. R. H. Kay
----------------------------------------
L. R. Norman
----------------------------------------
David M. Palmer
----------------------------------------
J. C. Stanley, IV
----------------------------------------
Joe Vann
----------------------------------------
Kenneth Williams
----------------------------------------
C. G. Worsham
----------------------------------------
Jack B. Yates
STATE OF MISSISSIPPI
COUNTY OF HINDS
Personally appeared before me, the undersigned authority in and for
the said county and state, on this _____ day of October, 1996, within my
jurisdiction, the within named Frank R. Day, who acknowledged that he is
Chairman of the Board and Chief Executive Officer of Trustmark National Bank, a
national banking association, and that for and on behalf of the said
association, and as its act
<PAGE> 71
and deed he executed the above and foregoing instrument, after first having
been duly authorized by said association so to do.
------------------------------
Notary Public
My Commission expires:
- ----------------------
STATE OF MISSISSIPPI
COUNTY OF ___________
Personally appeared before me, the undersigned authority in and for
the said county and state, on this _____ day of October, 1996, within my
jurisdiction, the within named Jack B. Yates, who acknowledged that he is
Chairman of the Board of National Bank of Commerce of Corinth, a national bank
association, and that for and on behalf of the said association, and as its act
and deed he executed the above and foregoing instrument, after first having
been duly authorized by said association so to do.
------------------------------
Notary Public
My Commission expires:
- ----------------------
<PAGE> 1
EXHIBIT 5
__________________, 1996
Board of Directors and Shareholders
First Corinth Corp. and
National Bank of Commerce of Corinth
P.O. Box 608
Corinth, Mississippi 38834
We have acted as counsel to Trustmark Corporation, a Mississippi
corporation ("Trustmark") and Trustmark National Bank, a national banking
association ("Trustmark Bank") in connection with a Merger Agreement dated as
of October 2, 1996 (the "Merger Agreement") by and among Trustmark, Trustmark
Bank, First Corinth Corp., a Mississippi corporation ("FCC") and National Bank
of Commerce of Corinth, a national banking association ("NBC"). In connection
with this representation, we have examined the charter and bylaws of Trustmark
Bank, the articles of incorporation and bylaws of Trustmark, the corporate
proceedings of Trustmark and Trustmark Bank in connection with the transactions
contemplated by the Merger Agreement and such other documents and instruments
as we deemed necessary to render the following opinions.
Based upon the foregoing, we are of the opinion that:
1. Trustmark Bank is duly organized, validly existing and in good
standing as a national banking association.
2. Trustmark is a duly organized, validly existing corporation in
good standing under the laws of the State of Mississippi. The
shares of Trustmark's common stock to be issued as a result of
the Mergers (as defined in the Merger Agreement) will be, upon
execution and delivery, duly authorized, validly issued, fully
paid and nonassessable shares of the common stock of Trustmark
and are registered on Form S-4 pursuant to the Securities Act
of 1933.
3. The Merger Agreement is valid, binding and enforceable against
Trustmark and Trustmark Bank in accordance with
<PAGE> 2
Trustmark Corporation
_____________,1997
Page 2
its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization and other laws of general
application relating to or affecting the enforcement of
creditors' rights generally.
4. The Mergers have been duly authorized by all requisite
corporate and shareholder action of Trustmark and Trustmark
Bank.
5. To the best of our knowledge, following diligent inquiry, but
without independent verification of facts certified by
appropriate officials of Trustmark and/or Trustmark Bank and
relied upon by us, neither Trustmark nor Trustmark Bank has
made any material misrepresentation, materially breached any
warranty or materially breached any covenant or condition in
the Merger Agreement or in any document, statement, list or
schedule referred to therein.
Very truly yours,
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
<PAGE> 1
EXHIBIT 8
___________, 1997
Board of Directors
Trustmark Corporation
248 East Capitol, Suite 300
Jackson, Mississippi 39201
Board of Directors and Shareholders
First Corinth Corp.
National Bank of Commerce of Corinth
501 Fillmore Street
Corinth, Mississippi 38834
Re: Merger Agreement by and among Trustmark Corporation, Trustmark
National Bank, First Corinth Corp. and National Bank of
Commerce of Corinth
Gentlemen:
We have acted as counsel to Trustmark Corporation, a Mississippi
corporation and registered bank holding company ("Trustmark") and its
subsidiary, Trustmark National Bank, a national banking association ("Trustmark
Bank"), in connection with the proposed merger (the "Merger") of First Corinth
Corp., a Mississippi corporation and registered bank holding company ("FCC")
with and into Trustmark and the proposed merger (the "Bank Merger") of National
Bank of Commerce of Corinth, a national banking association ("NBC"), with
Trustmark Bank under the existing charter of Trustmark Bank pursuant to the
terms of the Merger Agreement dated as of October 2, 1996 (the "Merger
Agreement"), by and among Trustmark, FCC, Trustmark Bank and NBC, each as
described in the Registration Statement on Form S-4 to be filed by Trustmark
with the Securities and Exchange Commission (the "Registration Statement").
All capitalized terms, unless otherwise specified, have the meanings assigned
to them in the Registration Statement.
In connection with this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Merger Agreement, (ii) the
<PAGE> 2
Registration Statement and (iii) such other documents as we have deemed
necessary or appropriate in order to enable us to render the opinions below.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. In rendering the opinions set
forth below, we have relied upon certain written representations and covenants
of Trustmark, Trustmark Bank, FCC and NBC, which are annexed hereto.
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury Regulations, pertinent judicial authorities, interpretive
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant. The following opinion is based upon the foregoing
authorities as existing on the date of this opinion, any of which could be
changed at any time. Any such changes may be retroactive and could
significantly modify the statements and opinions expressed herein. Similarly,
any change in the facts and assumptions upon which this opinion is based could
modify the conclusions reached herein. In rendering this opinion we assume no
obligation to advise you of any such changes or to update this opinion as a
result of any such changes.
Our opinion covers only the matters expressly set forth herein, and no
opinions should be inferred as to any other matters or as to any other tax
aspects of the above-described transactions that are not specifically
addressed.
This opinion represents our best judgment as to the probable outcome
of the tax issues discussed and is not binding on the Internal Revenue Service.
We can give no assurance that the Service will not challenge our conclusions
and prevail in the courts in such a manner as to cause adverse tax consequences
to Trustmark, Trustmark Bank, FCC, NBC or their respective shareholders.
Based upon and subject to the foregoing, we are of the opinion that
the Merger and the Bank Merger will, under current law, constitute tax-free
reorganizations under Section 368(a) of the Code. It is further our opinion
that Trustmark and FCC will each be a party to the Merger and that Trustmark
Bank and NBC will each be a party to the Bank Merger.
As tax-free reorganizations, the Mergers will have the following
Federal income tax consequences for FCC, NBC and their shareholders and
Trustmark and Trustmark Bank:
1. No gain or loss will be recognized by the holders of the
common stock of FCC and NBC as a result of the exchange of such shares for
shares of Trustmark common stock ("Trustmark Common
<PAGE> 3
Stock") pursuant to the Mergers. Cash received by any FCC or NBC shareholders
who perfect dissenters' rights of appraisal with respect to their FCC or NBC
shares will be treated as having been received by such shareholders as a
distribution in redemption of his or her stock, subject to the provisions and
limitations of Code Section 302. The payment of cash in lieu of fractional
share interests will be treated as if the shares were distributed as part of
the exchange and then were redeemed by Trustmark. These cash payments will be
treated as distributions in full payment in exchange for the stock redeemed,
subject to the provisions and limitations of Code Section 302.
2. The tax basis of the shares of Trustmark Common Stock received
by each shareholder of FCC and NBC will equal the tax basis of such
shareholder's shares of FCC or NBC (reduced by any amount allocable to
fractional share interests for which cash is received) exchanged in the
Mergers, decreased by the amount of cash received by the shareholder and
increased by the amount which was treated as a dividend and the amount of any
gain recognized on the exchange and not treated as a dividend.
3. The holding period for the shares of Trustmark Common Stock
received by each shareholder of FCC and NBC will include the holding period for
the shares of FCC and NBC exchanged in the Mergers.
4. Trustmark and Trustmark Bank will not recognize gain or loss
as a result of the Mergers.
5. FCC and NBC will not recognize gain or loss as a result of the
Mergers.
Except as set forth above, we express no opinion as to the tax
consequences to any party, whether Federal, state, local or foreign, of the
Mergers, or of any transactions related to the Mergers, or contemplated by the
Merger Agreement. This opinion is being furnished only to you in connection
with the Mergers and solely for your benefit in connection therewith and may
not be used or relied upon for any other purpose and may not be circulated,
quoted or otherwise referred to for any other purpose without our express
written consent.
Very truly yours,
Brunini, Grantham, Grower & Hewes, PLLC
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 17, 1996 on the consolidated financial statements of Trustmark
Corporation and to all references to our Firm included in or made a part of
this Registration Statement on Form S-4.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Jackson, Mississippi,
December 11, 1996.
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We have issued our reports dated January 12, 1996, accompanying the
consolidated financial statements of First Corinth Corp. and Subsidiary and
accompanying the financial statements of National Bank of Commerce of Corinth
contained in the Proxy Statement/Prospectus on Form S-4 of Trustmark
Corporation. We consent to the use of the aforementioned reports in the Proxy
Statement/Prospectus and to the use of our name as it appears under the caption
"Experts".
/s/ Shearer, Taylor & Co. P.A.
------------------------------
SHEARER, TAYLOR & CO. P.A.
Jackson, Mississippi
December 12, 1996
<PAGE> 1
EXHIBIT 23.3
We hereby consent to the references to this firm under the heading
"Legal Opinions" in the Registration Statement on Form S-4 of Trustmark
Corporation filed in connection with the proposed merger of First Corinth Corp.
into Trustmark Corporation and the proposed merger of National Bank of Commerce
of Corinth into Trustmark National Bank.
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
/s/ Robert D. Drinkwater
------------------------
Robert D. Drinkwater
Jackson, Mississippi
December 11, 1996
<PAGE> 1
EXHIBIT 99.1
First Corinth Corp.
CORINTH, MISSISSIPPI
-------------------------------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On __________, 199__
TO THE STOCKHOLDERS:
Notice is hereby given that a Special Meeting of the stockholders of
First Corinth Corp., Corinth, Mississippi ("FCC") will be held at 501 Fillmore
Street, Corinth, Mississippi 38834 on ______________, 199__, at 11:00 o'clock
a.m., local time, for the purpose of considering and voting on the following
matters, all as more fully described in the accompanying Proxy Statement-
Prospectus:
(1) Approval of the Merger Agreement, dated as of October 2, 1996,
which provides for the merger of FCC with and into Trustmark
Corporation and the merger of National Bank of Commerce of
Corinth with and into Trustmark National Bank.
(2) Transaction of such other business as may properly come before
the Special Meeting or any adjournments thereof.
Only those stockholders of record at the close of business on
___________, 199___, shall be entitled to notice of and to vote at the Special
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Corinth, Mississippi
________________, 1996
IMPORTANT NOTICE
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING, THE BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND RETURN AS SOON AS
POSSIBLE THE ENCLOSED PROXY (IN THE STAMPED AND SELF-ADDRESSED ENCLOSED
ENVELOPE).
<PAGE> 2
PROXY
First Corinth Corp.
CORINTH, MISSISSIPPI
SPECIAL MEETING OF STOCKHOLDERS
__________, 199__
The undersigned hereby appoint(s) __________________,
__________________, and __________________, or any one of them, the true and
lawful attorneys-in-fact for the undersigned, with full power of substitution,
to vote as proxies for the undersigned at a Special Meeting of Stockholders of
First Corinth Corp. ("FCC") to be held at 501 Fillmore Street, Corinth,
Mississippi 38834, at 11:00 o'clock a.m., local time, on __________, 1997, and
at any and all adjournments thereof, the number of shares which the undersigned
would be entitled to vote if then personally present, for the following
purposes:
1. Approval of the Merger Agreement, dated as of October 2,1996,
which provides for the merger of FCC with and into Trustmark Corporation and
the merger of National Bank of Commerce of Corinth with and into Trustmark
National Bank.
Approve _____ Disapprove _____ Abstain _____
2. Transaction of such other business as may properly come before
the Special Meeting or any adjournments thereof.
Approve _____ Disapprove _____ Abstain _____
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FCC, WILL BE VOTED FOR THE ABOVE PROPOSALS UNLESS A CONTRARY DIRECTION IS
INDICATED, IN WHICH CASE IT WILL BE VOTED AS DIRECTED. IF AUTHORITY IS GRANTED
PURSUANT TO PROPOSAL 2 ABOVE, THE PROXIES INTEND TO VOTE ON ANY OTHER BUSINESS
COMING BEFORE THE SPECIAL MEETING IN ACCORDANCE WITH THE DIRECTION OF A
MAJORITY OF THE BOARD OF DIRECTORS OF FNFC.
Please date the Proxy and sign your name exactly as it appears on the
stock records of FCC. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If signed as a corporation, please sign full
corporate name by authorized officer.
----------------------------------
Signature
----------------------------------
Date
----------------------------------
Signature if held jointly
----------------------------------
Date
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE
ENCLOSED ENVELOPE.
<PAGE> 1
EXHIBIT 99.2
NATIONAL BANK OF COMMERCE OF CORINTH
NOTICE OF SHAREHOLDERS'S MEETING
AND INFORMATION STATEMENT
National Bank of Commerce of Corinth
Special Meeting of Shareholders
__________, 199__
THIS IS NOT A SOLICITATION OF
PROXIES FOR THE SPECIAL MEETING
Dear Shareholder:
Notice is hereby given that, pursuant to call of its directors, a
special meeting of the shareholders of National Bank of Commerce of Corinth
("NBC")(the "NBC Special Meeting") will be held at 501 Fillmore Street,
Corinth, Mississippi 38834 on ____________, 199__, at 11:30 a.m. local time, to
consider and vote upon the proposed merger of NBC with and into Trustmark
Bank, under the charter of Trustmark Bank (the "Bank Merger") and to vote upon
any other matters incidental to the Bank Merger. A copy of the Merger
Agreement, executed by a majority of the directors of each Bank, providing for
the Bank Merger, is on file at NBC and may be inspected during business hours.
As a consequence of the Bank Merger, subject to certain adjustments based on
the market price of Trustmark's common shares, each share of the common stock
of NBC, other than shares held by First Corinth Corp., will be converted into
13.4825 shares of the common stock of Trustmark Corporation, a Mississippi
Corporation.
The close of business on _______________, 199__, has been established
as the record date for determining the shareholders entitled to notice of and
to vote at the NBC Special Meeting.
Included with this notice is a Proxy Statement-Prospectus prepared
principally for use in connection with the solicitation of proxies for use at
the special meeting of the shareholders of NBC's parent, First Corinth Corp.
("FCC"). At the FCC special meeting, FCC's shareholders will be asked to vote
upon the proposed merger of FCC with and into Trustmark Corporation. The Proxy
Statement-Prospectus describes the proposed merger of FCC and Trustmark and the
proposed Merger and gives relevant information about Trustmark Bank, FCC and
NBC.
This notice and the enclosed Proxy Statement-Prospectus are for
information purposes only. NBC is not soliciting the proxies of its
shareholders in connection with the NBC Special Meeting.
Approval of the Bank Merger requires the affirmative vote of
two-thirds of the outstanding shares of NBC. On the record date,
<PAGE> 2
there were 110,000 shares of NBC common stock issued and outstanding. FCC owns
108,375 (98.5%) of such shares. FCC intends to vote in favor of the proposed
Bank Merger. The remaining shares of NBC (1,625 shares) are held by four
shareholders.
Federal law provides dissenters' rights of appraisal to the
shareholders of NBC voting against the proposed Bank Merger. A more detailed
explanation of those rights is included in the Proxy Statement-Prospectus.
NBC believes that the Bank Merger with Trustmark Bank will be
beneficial to NBC and its shareholders.
By Order of the Board of Directors.
<PAGE> 3
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Jackson, State of
Mississippi on December 10, 1996.
TRUSTMARK CORPORATION
BY: /s/ Frank R. Day
--------------------------------
Frank R. Day, Its Chairman of
the Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Gerard R. Host 12/10/96
- ----------------------------------- ---------------------------
Gerard R. Host, Principal Financial Date
and Accounting Officer of Trustmark
Corporation
/s/ Frank R. Day 12/10/96
- ----------------------------------- ---------------------------
Frank R. Day, Director Date
/s/ J. Kelly Allgood 12/10/96
- ----------------------------------- --------------------------
J. Kelly Allgood, Director Date
/s/ Reuben V. Anderson 12/10/96
- ----------------------------------- --------------------------
Reuben V. Anderson, Director Date
/s/ John L. Black, Jr. 12/10/96
- ----------------------------------- --------------------------
John L. Black, Jr., Director Date
/s/ Harry H. Bush 12/10/96
- ----------------------------------- --------------------------
Harry H. Bush, Director Date
/s/ Robert P. Cooke, III 12/10/96
- ----------------------------------- --------------------------
Robert P. Cooke, III, Director Date
/s/ William C. Deviney, Jr. 12/10/96
- ----------------------------------- --------------------------
William C. Deviney, Jr., Director Date
/s/ D. G. Fountain, Jr. 12/10/96
- ----------------------------------- --------------------------
D. G. Fountain, Jr., Director Date
/s/ C. Gerald Garnett 12/10/96
- ----------------------------------- --------------------------
C. Gerald Garnett, Director Date
/s/ Matthew L. Holleman, III 12/10/96
- ----------------------------------- --------------------------
Matthew L. Holleman, III, Director Date
<PAGE> 4
/s/ Fred A. Jones 12/10/96
- ----------------------------------- ---------------------------
Fred A. Jones, Director Date
/s/ T. H. Kendall, III 12/10/96
- ----------------------------------- --------------------------
T. H. Kendall, III, Director Date
/s/ Larry L. Lambiotte 12/10/96
- ----------------------------------- --------------------------
Larry L. Lambiotte, Director Date
/s/ Robert V. Massengill 12/10/96
- ----------------------------------- ---------------------------
Robert V. Massengill, Director Date
/s/ Donald E. Meiners 12/10/96
- ----------------------------------- --------------------------
Donald E. Meiners, Director Date
/s/ William Neville, III 12/10/96
- ----------------------------------- --------------------------
William Neville, III, Director Date
/s/ Richard H. Puckett 12/10/96
- ----------------------------------- --------------------------
Richard H. Puckett, Director Date
/s/ Charles W. Renfrow 12/10/96
- ----------------------------------- --------------------------
Charles W. Renfrow, Director Date
/s/ Clyda S. Rent 12/10/96
- ----------------------------------- --------------------------
Clyda S. Rent, Director Date
/s/ William Thomas Shows 12/10/96
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William Thomas Shows, Director Date
/s/ Harry M. Walker 12/10/96
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Harry M. Walker, Director Date
/s/ LeRoy G. Walker, Jr. 12/10/96
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LeRoy G. Walker, Jr., Director Date
/s/ Paul H. Watson, Jr. 12/10/96
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Paul H. Watson, Jr., Director Date
/s/ John C. Wheeless, Jr. 12/10/96
- ----------------------------------- --------------------------
John C. Wheeless, Jr., Director Date
/s/ Allen Wood, Jr. 12/10/96
- ----------------------------------- --------------------------
Allen Wood, Jr., Director Date
