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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)
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MISSISSIPPI 6712 64-0471500
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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
STEVEN M. HENDRIX
FORMAN, PERRY, WATKINS, KRUTZ, & TARDY, PLLC
188 E. Capitol Street, 12th Floor
Jackson, Mississippi 39201
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
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CALCULATION OF REGISTRATION FEE
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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 (2)
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Common Stock 383,674 $16.00 $6,140,115 $1,861.00
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(1) Maximum number of shares issuable in connection with the mergers.
(2) Based on book value of PCB 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.
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TRUSTMARK CORPORATION
Cross-Reference Sheet Showing Location in
Proxy Statement of Information
Required by Items of Form S-4
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Form S-4
Item Heading Location in Proxy Statement-Prospectus
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Item 1 Facing Page of Registration Statement; Outside front cover of
Proxy Statement
Item 2 Available Information; Incorporation of Certain Information by
Reference; Table of Contents
Item 3 Summary; Trustmark Corporation and Subsidiaries Selected
Financial Data; Perry County Bank Selected Financial Data;
Comparative Per Share Data
Item 4 Summary; The Merger; Accounting Treatment; Federal Income
Tax Consequences; Comparison of Rights of Shareholders;
Opinion of Trustmark's Financial Adviser
Item 5 NA
Item 6 The Merger
Item 7 NA
Item 8 Legal Opinions
Item 9 Indemnification
Item 10 Available Information; Incorporation of Certain Information by
Reference; Summary; 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
</TABLE>
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<TABLE>
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Item 17 Perry County Bank; Summary - Markets and Market Prices; Perry
County Bank Selected Financial Data; Perry County Bank -
Management's Discussion and Analysis of Financial Condition
and Results of Operations; Annex A - Financial Statements
of Perry County Bank
Item 18 Summary; Perry County Bank Special Meeting; Trustmark
Corporation and Trustmark National Bank; Perry County Bank;
Rights of Dissenting Shareholders; Incorporation of Certain
Information by Reference
Item 19 NA
</TABLE>
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PROXY STATEMENT
OF
PERRY COUNTY BANK
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [_____], 1997
PROSPECTUS
OF
TRUSTMARK CORPORATION
Relating to up to 383,674 shares of
COMMON STOCK
This Proxy Statement ("Proxy Statement") is being furnished to the
holders of shares of the common stock of Perry County Bank ("PCB"), a
Mississippi banking corporation, in connection with the solicitation of proxies
by the Board of Directors of PCB for use at a special meeting of shareholders
and any adjournment thereof (the "PCB Special Meeting") to be held on [_____],
1997, at[____] o'clock a.m., local time, at the main office of PCB located at
100 Main Street, New Augusta, MS 39462. At the PCB Special Meeting, the
shareholders of PCB will be asked to vote upon the proposed merger (the
"Merger") of PCB with Trustmark National Bank ("Trustmark Bank") under the
charter of Trustmark Bank, in connection with which, subject to certain
potential adjustments and limitations, each share of the outstanding common
stock of PCB will be converted into the right to receive cash and/or shares of
the common stock of Trustmark Corporation ("Trustmark") having a total value of
$752.00 as of the date the exchange ratio is determined.
This Proxy Statement also constitutes the prospectus of
Trustmark relating to up to 383,674 shares of Trustmark common stock to be
issued to PCB's shareholders pursuant to the Merger.
--------------------------
THE SHARES OF TRUSTMARK TO BE ISSUED PURSUANT TO THE MERGER 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.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The date of this Proxy Statement is July [___], 1997.
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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, has been filed by Trustmark with the Commission with
respect to the Trustmark common shares to be issued upon consummation of the
Merger. For further information pertaining to Trustmark and the shares of
Trustmark to which this Proxy Statement 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.
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 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 MEETING.
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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: (i) Trustmark's Annual Report on Form 10-K for the year ended
December 31, 1996; (ii) Trustmark's Proxy Statement in connection with its 1997
Annual Shareholders' Meeting; (iii) Trustmark's Quarterly Report on Form 10-Q
for the period ended March 31, 1997; 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 Meeting are hereby incorporated by reference into this Proxy Statement
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 and, if given or made,
such information or representation should not be relied upon as having been
authorized. This Proxy Statement does not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this Proxy
Statement, 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 nor any distribution of the securities to
which this Proxy Statement 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 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 in connection with
any such resale.
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TABLE OF CONTENTS
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Page
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . ii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . ii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The PCB Special Meeting . . . . . . . . . . . . . . . . . . . . 2
Votes Required; Common Ownership . . . . . . . . . . . . . . . . 2
Boards of Directors' Recommendations . . . . . . . . . . . . . . 3
Representations, Warranties, Covenants and Conditions . . . . . 3
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Federal Income Tax Consequences . . . . . . . . . . . . . . . . 5
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 5
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . 5
Resales of Trustmark Shares . . . . . . . . . . . . . . . . . . 5
Regulatory Authority Approvals . . . . . . . . . . . . . . . . . 6
Markets and Market Prices . . . . . . . . . . . . . . . . . . . 6
COMPARATIVE PER SHARE DATA . . . . . . . . . . . . . . . . . . . . . . . 7
TRUSTMARK CORPORATION AND SUBSIDIARIES SELECTED
FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PERRY COUNTY BANK SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . 9
THE PERRY COUNTY BANK SPECIAL MEETING . . . . . . . . . . . . . . . . . . 10
Perry County Bank Special Meeting; Voting; Proxies;
Revocation . . . . . . . . . . . . . . . . . . . . . . . 10
Voting Securities and Principal Holders Thereof . . . . . . . . 12
TRUSTMARK CORPORATION AND TRUSTMARK NATIONAL BANK . . . . . . . . . . . . 12
Recent Events . . . . . . . . . . . . . . . . . . . . . . . . . 13
PERRY COUNTY BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Market Prices of and Dividends Paid on PCB Stock . . . . . . . . 13
Management's Discussion and Analysis of Financial
Condition and Results of Operation . . . . . . . . . . . 14
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background of the Merger . . . . . . . . . . . . . . . . . . . . 18
PCB's Reasons for Effecting the Merger . . . . . . . . . . . . . 19
</TABLE>
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Trustmark's Reasons for Effecting the Merger . . . . . . . . . . 19
Opinion of Trustmark's Financial Advisor . . . . . . . . . . . . 20
The Merger Agreement . . . . . . . . . . . . . . . . . . . . . . 24
Conversion; Fractional Shares . . . . . . . . . . . . . . . . . 24
Representations, Warranties and Covenants . . . . . . . . . . . 25
Special Agreements . . . . . . . . . . . . . . . . . . . . . . . 26
Conditions to Consummation of the Merger . . . . . . . . . . . . 28
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 28
PROCEDURE FOR EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . 30
RIGHTS OF DISSENTING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 30
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . . . . . . . . . 31
ACCOUNTING TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 33
RESALES OF TRUSTMARK COMMON SHARES . . . . . . . . . . . . . . . . . . . 33
REGULATORY AUTHORITY APPROVALS . . . . . . . . . . . . . . . . . . . . . 33
COMPARISON OF RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . 34
Required Vote for Authorization of Certain Actions . . . . . . . 34
Amendment of Articles of Incorporation or Charter . . . . . . . 35
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 35
Loans Secured By Issuer's Stock; Other Transactions . . . . . . 35
Voluntary Dissolution . . . . . . . . . . . . . . . . . . . . . 36
Dividends and Other Distributions . . . . . . . . . . . . . . . 36
Issuance of Additional Shares . . . . . . . . . . . . . . . . . 36
Fiduciary Duties of Directors and Officers . . . . . . . . . . . 37
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ANNEX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
PERRY COUNTY BANK FINANCIAL
STATEMENTS DECEMBER 31, 1996, 1995 AND 1994 . . . . . . . . . . A-3
PERRY COUNTY BANK FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996 (UNAUDITED) . . . . . . . . . . . . . . A-18
ANNEX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
OPINION OF CHAFFE & ASSOCIATES . . . . . . . . . . . . . . . . B-2
</TABLE>
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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 or incorporated herein by reference. Shareholders are urged to
carefully review the entire Proxy Statement and other documents to which this
Proxy Statement refers. All information concerning Trustmark and Trustmark
Bank included in this Proxy Statement has been furnished by Trustmark, and all
information concerning PCB has been furnished by PCB. Neither Trustmark nor
PCB 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
March 31, 1997, Trustmark had total assets of $5.4 billion and total
stockholders' equity of $548 million. Through Trustmark Bank, Trustmark
conducts a general commercial banking and trust business. Trustmark Financial
Services, Inc., a subsidiary of Trustmark Bank, provides a broad range of
securities brokerage services, including the marketing of Trustmark's
proprietary market funds. Trustmark's principal executive offices are located
at 248 East Capitol Street, Jackson, Mississippi, 39201, Telephone Number (601)
354-5111. See the heading "Trustmark Corporation and Trustmark National Bank."
Perry County Bank
PCB is a Mississippi state chartered banking institution. As of
March 31, 1997, PCB had total assets of $43.7 million, net loans of $23.5
million, total deposits of $37.3 million and total stockholders' equity of $6.1
million. PCB conducts a general commercial banking business through four
banking facilities located in New Augusta, Beaumont, McLain and Runnelstown,
Mississippi. PCB's principal executive offices are located at 100 Main St.,
New Augusta, MS, 39462, Telephone Number (601) 964-3251. See the heading
"Perry County Bank."
THE MERGER
Pursuant to the Merger Agreement dated May 13, 1997 (the "Merger
Agreement"), PCB will be merged with and into Trustmark Bank, under the charter
of Trustmark Bank. As a result of the Merger, other than shares with respect
to which holders have perfected their dissenters' rights of appraisal, and
subject to
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certain potential adjustments and limitations set out in the Merger Agreement,
each outstanding share of the common stock of PCB issued and outstanding on the
Effective Date of the Merger (the date the Merger is consummated) shall be
converted into the right to receive cash and/or shares of Trustmark common
stock having a total value, as of the date the exchange ratio is determined,
equal to $752.00 per share. PCB's shareholders have the right to elect to
receive cash in connection with the Merger in lieu of Trustmark shares.
However, under the terms of the Merger Agreement, PCB's shareholders shall not
be entitled to receive cash in exchange for their PCB shares unless PCB
shareholders, as a whole, elect to receive at least twenty-five percent (25%)
of the total value of all consideration paid in connection with the Merger (the
"Merger Consideration") in cash. If PCB's shareholders elect to receive more
than forty percent (40%) of the total Merger Consideration in cash, the cash
otherwise payable to each PCB shareholder will be proportionately reduced so
that the total cash payable to PCB shareholders will not exceed forty percent
(40%) of the total Merger Consideration. 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 PCB shareholders in lieu of fractional Trustmark
shares. See the heading, "The Merger Agreement."
THE PCB SPECIAL MEETING
The PCB Special Meeting to consider and vote on the Merger will be
held on [______], 1997, at [____] o'clock [A.M.], local time, at the main
office of PCB located at 100 Main St., New Augusta, MS, 39462. Only holders of
record of PCB's common shares at the close of business on [_____], 1997 (the
"PCB Record Date") will be entitled to notice of and to vote at the PCB Special
Meeting. See the heading "The Perry County Bank Special Meeting."
VOTES REQUIRED; COMMON OWNERSHIP
Approval of the Merger requires the affirmative vote of two-thirds of
the outstanding shares of PCB and Trustmark Bank. Trustmark, which owns 100
percent of the Trustmark Bank shares, intends to votes its shares in favor of
the Merger.
As of June 30, 1997, PCB's directors and executive officers owned 611
shares and beneficially owned approximately 5,485 (43.88 percent) of the
outstanding shares of PCB common stock. This includes 1,247 shares owned by
Capitol Street Corporation and 3,627 shares owned by the Estate of Robert M.
Hearin which shares are deemed beneficially owned by director Matthew
Holleman,III. PCB's directors have agreed to vote the PCB shares owned by them
in favor of the Merger.
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Certain current and former affiliates and employees of Trustmark and
subsidiaries are substantial shareholders of PCB. Robert M. Hearin is the
former Chairman and Chief Executive Officer of Trustmark, and Capitol Street
Corporation is indirectly controlled by the Robert M. Hearin Support
Foundation. Matthew L. Holleman, III, one of the trustees of the Robert M.
Hearin Support Foundation, a director of Capitol Street Corporation and a
director of Trustmark, owns 39 shares. Frank R. Day, the Chairman of the Board
of Trustmark, owns 905 shares (7.24 percent). T. H. Kendall, III, Chairman of
the Executive Committee of Trustmark, is a trustee of a trust which owns 5
shares. Two former principal officers of Trustmark and their spouses own a
total of 582 shares (4.65 percent). Approximately 913 (7.3 percent) additional
shares are owned by former Trustmark employees and/or their spouses.
Since certain members of the Board of Directors of Trustmark have a
significant ownership interest in PCB, Trustmark's obligation to consummate the
Merger is conditioned upon Trustmark's receipt from Chaffe & Associates, Inc.,
Investment Bankers, of its opinion that the Merger is fair, from a financial
point of view, to the shareholders of Trustmark. See the heading "The Merger -
Opinion of Trustmark's Financial Advisor." THE OPINION OF CHAFFE & ASSOCIATES
SHOULD NOT BE RELIED UPON BY PCB'S SHAREHOLDERS AS ANY INDICATION OF THE
FAIRNESS OF THE MERGER TO THE SHAREHOLDERS OF PCB.
BOARDS OF DIRECTORS' RECOMMENDATIONS
The Board of Directors of PCB, which is soliciting proxies in
connection with the PCB Special Meeting, unanimously voted to approve the
Merger and recommends that PCB's shareholders vote FOR adoption of the Merger
Agreement. Matthew L. Holleman, III, is a director of PCB but abstained in
voting on the proposed Merger. See the heading "The Merger - Background of the
Merger" and " PCB's Reasons for Effecting the Merger."
REPRESENTATIONS, WARRANTIES, COVENANTS AND CONDITIONS
Pursuant to the Merger Agreement, both Trustmark and PCB 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 Merger
are subject to, among other things: (i) the approval of the Merger by PCB's
Boards of Directors and shareholder(s); (ii) receipt of all required approvals
of regulatory authorities; (iii) no material adverse change having occurred in
the financial condition, tangible properties or prospects of PCB since December
31, 1996; (iv) the reserve for loan losses then maintained by PCB being
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adequate to provide for the anticipated loan losses of PCB as of such date in
accordance with accepted audit, bank examination and bank regulatory standards,
and the tangible assets of PCB having a fair market value equal to or greater
than its liabilities; (v) Trustmark having received the legal opinion of
counsel to PCB in accordance with the Merger Agreement; (vi) Trustmark's
satisfaction that the Merger will qualify as tax-free reorganizations for
federal income tax purposes; (vii) the continued truth and accuracy of PCB's
representations and warranties; and (viii) Trustmark shall have received the
fairness opinion contemplated by the Merger Agreement.
PCB's obligations to consummate the Merger are subject to, among other
things: (i) the approval of the Merger 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) PCB'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; (v) the continued truth and accuracy of Trustmark's
representations and warranties; and (vi) no material adverse change having
occurred in the condition, financial or otherwise, of Trustmark or Trustmark
Bank since December 31, 1996. See the heading "The Merger - The Merger
Agreement."
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned under
certain circumstances. See the heading "The Merger - The Merger Agreement."
EFFECTIVE DATE
The Effective Date, which is currently targeted for [AUGUST 29], 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, and (ii) the satisfaction of all other conditions to
consummation of the Mergers. See the heading "Regulatory Authority Approvals."
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DIVIDENDS
On June 30, 1997, PCB will be permitted to declare and pay a cash
dividend out of current operating profits earned since January 1, 1997 of up to
$10.00 per share; and if the Closing of the transaction has not occurred by the
end of each subsequent calendar quarter, a dividend out of current operating
profits earned during each full calendar quarter subsequent to June 30, 1997 or
prorated portion thereof of up to $5.00 per share until the Closing will have
occurred. Except as set forth above, PCB shall not declare any cash or other
dividends prior to closing.
FEDERAL INCOME TAX CONSEQUENCES
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. Accordingly, PCB'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 PCB common shares into
Trustmark common shares. See the heading "Federal Income Tax Consequences."
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a
"purchase" for financial reporting purposes. See the heading "Accounting
Treatment."
DISSENTERS' RIGHTS OF APPRAISAL
Pursuant to Federal law, PCB'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 PCB shares. See the heading "
Rights of Dissenting Shareholders."
RESALES OF TRUSTMARK SHARES
Except for Trustmark shares held by "affiliates" of PCB or Trustmark,
the Trustmark shares received as a consequence of the Merger will be freely
transferrable. Shares acquired by persons who are deemed affiliates of PCB can
freely transfer their Trustmark shares, but, for a period of one year following
the Merger, must do so in "brokerage" transactions. See the heading "The Merger
- - Resales of Trustmark Common Shares."
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REGULATORY AUTHORITY APPROVALS
An application relating to the Merger has been filed with the Office
of the Comptroller of the Currency. The Merger is 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
"The Merger - Regulatory Authority Approvals."
MARKETS AND MARKET PRICES
Trustmark's common shares are included for quotation on the
NASDAQ/NMS.
There is no active trading market for the outstanding common shares of
PCB. PCB's management is not aware of any arm's length transfers of PCB shares
in the last 18 months.
The following table sets forth certain equivalent per share data
concerning PCB's outstanding common shares. This data reflects the equivalent
per share value of PCB common stock at May 12, 1997 (the day prior to the
public announcement of the Merger) when Trustmark's shares closed at $26.50 and
at July__,1997 when Trustmark's shares closed at [__] multiplied by the
applicable conversion ratios if such prices were the average Trustmark share
prices for purposes of the Merger Agreement.
Pursuant to the Merger Agreement, if the average price of Trustmark's
shares is less than $24.50 or greater than $28.50 on the PCB Special Meeting
date and the Merger is approved by PCB's shareholders, PCB and Trustmark will
be required to renegotiate the exchange ratio. If Trustmark and PCB are unable
to negotiate a mutually acceptable exchange ratio, either Trustmark or PCB may
terminate the Merger Agreement upon written notice delivered personally to the
other party on or before ten (10) days prior to Closing Date. PCB SHAREHOLDERS
SHOULD BE AWARE THAT THIS PROVISION AUTHORIZES THE BOARD OF DIRECTORS OF PCB TO
APPROVE AN EXCHANGE RATIO THAT WILL RESULT IN EACH PCB SHARE BEING CONVERTED IN
THE RIGHT TO RECEIVE LESS MERGER CONSIDERATION THAN $752.00 IN CASH AND
TRUSTMARK SHARES. PCB shareholders should also be aware that they have the risk
of reductions in Trustmark's share price subsequent to the PCB Special Meeting
date. See the heading "The Merger Agreement."
6
<PAGE> 16
<TABLE>
<CAPTION>
Price of Trustmark PCB's Equivalent
Date Common Stock Per Share Value
- ---- ------------ ---------------
<S> <C> <C>
May 12, 1997 $ 26.50 $ 752.00
[JULY,__,1997] $ [__] $ 752.00
</TABLE>
COMPARATIVE PER SHARE DATA
The following table presents certain data concerning net income per share,
dividends per share and book value per share for Trustmark and PCB on a
historical and pro forma basis.
The pro forma data gives effect to the Merger accounted for as a purchase
using an exchange ratio of 28.9231 Trustmark common shares for the portion of
the total consideration which each PCB shareholder elects to be converted into
Trustmark common shares. Under the Merger Agreement, the exchange ratio can
vary between 26.38 and 30.69 depending on the average Trustmark share price as
of the date the exchange ratio is determined. Equivalent pro forma per share
amounts for PCB 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 the exchange ratio. This information is not necessarily indicative of the
results of operations or combined financial condition that would have resulted
if the Merger had been consummated at the beginning of the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
----------------------- -----------
1997 1996 1996
---------- ---------- -----------
<S> <C> <C> <C>
TRUSTMARK CORPORATION AND SUBSIDIARIES:
Net Income Per Share :
Historical $ 0.49 $ 0.44 $ 1.87
Pro Forma 0.49 0.44 1.88
Cash Dividends Per Share :
Historical 0.14 0.12 0.50
Pro Forma 0.14 0.12 0.50
Book Value Per Share :
Historical 15.05 13.92 15.01
Pro Forma 15.13 14.01 15.10
PERRY COUNTY BANK:
Net Income Per Share :
Historical 16.67 16.03 69.01
Equivalent Pro Forma 14.17 12.73 54.38
Cash Dividends Per Share :
Historical 0.00 0.00 8.00
Equivalent Pro Forma 4.05 3.47 14.46
Book Value Per Share :
Historical 491.20 429.52 474.56
Equivalent Pro Forma 437.61 405.21 436.74
</TABLE>
7
<PAGE> 17
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 of Trustmark incorporated herein by reference. Results for
the three months ended March 31, 1997, 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>
Three months ended
March 31,
(unaudited) Year Ended December 31,
------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF INCOME
Total interest income $ 91,806 $ 89,203 $358,063 $348,341 $315,449 $310,607 $310,626
Total interest expense 41,542 41,297 161,267 161,545 124,290 116,770 138,369
-------- -------- -------- -------- -------- -------- --------
Net interest income 50,264 47,906 196,796 186,796 191,159 193,837 172,257
Provision for loan losses 908 2,144 5,783 2,439 2,786 18,596 26,737
Noninterest income 17,962 15,800 66,974 59,467 48,670 47,898 45,583
Noninterest expense 40,332 37,916 160,557 152,484 152,801 150,781 132,844
-------- -------- -------- -------- -------- -------- --------
Income before income taxes 26,986 23,646 97,430 91,340 84,242 72,358 58,259
Income taxes 9,311 8,277 32,291 31,582 29,237 20,106 17,490
-------- -------- -------- -------- -------- -------- --------
Net income $ 17,675 $ 15,369 $ 65,139 $ 59,758 $ 55,005 $ 52,252 $ 40,769
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA
Net income per share $ 0.49 $ 0.44 $ 1.87 $ 1.71 $ 1.58 $ 1.55 $ 1.23
======== ======== ======== ======== ======== ======== ========
Cash dividends per share $ 0.14 $ 0.12 $ 0.50 $ 0.44 $ 0.41 $ 0.37 $ 0.34
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
March 31,
(unaudited) December 31,
----------------------- --------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS 1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $5,377,083 $5,194,655 $5,193,684 $4,992,592 $4,763,365 $4,708,206 $4,346,985
Securities - nontrading 1,987,479 2,094,050 1,953,202 1,842,325 1,862,351 1,980,566 1,718,635
Net loans 2,623,521 2,476,002 2,571,573 2,510,091 2,282,551 2,166,004 2,007,629
Deposits 3,778,820 3,629,648 3,597,436 3,530,045 3,449,229 3,428,781 3,431,383
</TABLE>
8
<PAGE> 18
PERRY COUNTY BANK SELECTED FINANCIAL DATA
The following table presents, on a historical basis, selected financial
data for Perry County Bank. This information is based upon the financial
statements for Perry County Bank. Results for the three months ended March 31,
1997, 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 Perry County Bank, in the opinion of management of Perry
County Bank, have been made. All information is in thousands except per share
data.
<TABLE>
<CAPTION>
Three months ended
March 31,
(unaudited) Year Ended December 31,
----------------------- --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF INCOME
Total interest income $ 801 $ 707 $ 3,045 $ 2,762 $ 2,363 $ 2,130 $ 2,090
Total interest expense 290 250 1,042 944 768 740 840
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income 511 457 2,003 1,818 1,595 1,390 1,250
Provision for loan losses 38 18 72 108 244 320 236
Noninterest income 96 90 421 367 323 300 318
Noninterest expense 263 234 1,072 977 934 953 893
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 306 295 1,280 1,100 740 417 439
Income taxes 98 95 417 353 229 95 115
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income $ 208 $ 200 $ 863 $ 747 $ 511 $ 322 $ 324
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA
Net income per share $ 16.67 $ 16.03 $ 69.01 $ 59.78 $ 40.87 $ 25.78 $ 25.93
========== ========== ========== ========== ========== ========== ==========
Cash dividends per share $ 0.00 $ 0.00 $ 8.00 $ 8.00 $ 8.00 $ 8.00 $ 8.00
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
March 31,
(unaudited) December 31,
------------------- ----------------------------------------------------
CONSOLIDATED BALANCE SHEETS 1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 43,672 $ 37,491 $ 39,141 $ 33,957 $ 32,678 $ 29,579 $ 28,082
Securities - nontrading 15,068 9,769 9,878 9,709 9,814 6,245 5,790
Net loans 23,453 20,779 23,493 19,499 17,273 15,496 14,971
Deposits 37,329 31,886 32,892 28,617 27,967 25,240 24,110
</TABLE>
9
<PAGE> 19
THE PERRY COUNTY BANK SPECIAL MEETING
This Proxy Statement is being sent to the shareholders of PCB in
connection with the solicitation by the Board of Directors of PCB of proxies
for use at the PCB Special Meeting. At the PCB Special Meeting, PCB's
shareholders will be asked to consider and vote upon a proposed Merger of PCB
with and into Trustmark Bank pursuant to the Merger Agreement. If the Merger
is approved, PCB will be merged with and into Trustmark Bank, under the charter
of Trustmark Bank. As a consequence of the Merger, other than shares with
respect to which holders have perfected their dissenters' rights of appraisal,
and subject to certain potential adjustments and limitations set out in the
Merger Agreement, each outstanding share of the common stock of PCB issued and
outstanding on the Effective Date of the Merger shall be converted into the
right to receive cash and/or shares of Trustmark common stock having a total
value, as of the date the exchange ratio is determined, equal to $752.00 per
share.
Other than considering and voting upon the Merger, the Board of
Directors of PCB is not aware of any other business which may come before the
PCB Special Meeting. If any other business should come before the shareholders
assembled at the PCB 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 PCB.
The Board of Directors of PCB believes that the Merger is in the best
interests of PCB's shareholders and recommends that PCB's shareholders vote FOR
approval of the Merger Agreement.
PERRY COUNTY BANK SPECIAL MEETING; VOTING; PROXIES; REVOCATION
The PCB Special Meeting has been called for [____] o'clock [A.M.],
local time, on [_______], 1997, at the main office of PCB located at 100 Main
Street, New Augusta, MS 39462. The Board of Directors of PCB has fixed the
close of business on [______], 1997, as the PCB Record Date for determining the
PCB shareholders entitled to notice of and to vote at the PCB Special Meeting
and any adjournment or adjournments thereof.
There are 12,500 shares of the common stock of PCB 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 two-thirds of the outstanding PCB common shares, or 8,334
shares. For purposes of voting on the Merger, abstentions and nonvotes have
the same effect as "no" votes.
10
<PAGE> 20
As of June 30, 1997, the directors and executive officers of PCB, as a
group, owned 611 shares and beneficially owned 5,485 shares of PCB,
representing 43.88 percent of the number of shares outstanding. The Directors
of PCB have agreed to vote the shares owned by them in favor of the Merger, and
to recommend that the shareholders of PCB, vote their shares in favor of the
Merger. Certain current and former affiliates of Trustmark are substantial
shareholders of PCB. The Robert M. Hearin Estate owns 3,627 shares (29
percent) and Capitol Street Corporation, which is indirectly controlled by the
Robert M. Hearin Support Foundation owns 1,247 shares (9.97 percent). Matthew
L. Holleman, III, one of the trustees of the Robert M. Hearin Support
Foundation, a director of Capitol Street Corporation and a director of
Trustmark, owns 39 shares and is deemed a beneficial owner of the shares owned
by the Robert M. Hearin Estate and Capitol Street Corporation. Frank R. Day,
the Chairman of the Board of Trustmark, owns 905 shares (7.24 percent). T. H.
Kendall, III, Chairman of the Executive Committee of Trustmark, is a trustee of
a trust which owns 5 shares. Two former principal officers of Trustmark and
their spouses own a total of 582 shares (4.65 percent). Approximately 913 (7.3
percent) additional shares are owned by former Trustmark employees and/or their
spouses.
EACH SHAREHOLDER IS REQUESTED TO PROMPTLY FILL OUT AND MAIL THE
ENCLOSED PROXY TO PCB. Shares represented by properly executed proxies
received in time for the PCB 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 PCB prior to the meeting or by
attendance at the PCB Special Meeting and revoking the proxy in person.
PCB will pay all of the expenses incurred in connection with the
preparation and distribution of this Proxy Statement. Proxies may be solicited
by mail, personal contact, telephone, telegram or other form of communication
by directors, officers and employees of PCB. 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.
11
<PAGE> 21
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
PCB has outstanding 12,500 shares of common stock, $10.00 par value,
owned by approximately 95 shareholders. The following is certain information
about shareholders beneficially owning more than five percent of the
outstanding common stock of PCB.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------- -------------------- --------
<S> <C> <C>
Capitol Street Corporation 1,247 10
P. O. Box 338
Jackson, MS 39205
Frank R. Day 905 7.24
c/o Trustmark National Bank
P. O. Box 291
Jackson, MS 39205
Katie H. Donavan 660 5.28
c/o George E. Donavan
3949 Eastwood Dr.
Jackson, MS 39211
Matthew L. Holleman, III 4,913(1) 39
PO Box 3348
Jackson, MS 39207
Robert M. Hearin Estate 3,627 29
P. O. Box 3348
Jackson, MS 39207
Katherine B. Lampton 680 5.44
P. O. Box 4426
Jackson, MS 39296
</TABLE>
(1) Includes shares owned by the Robert M. Hearin Estate and Capitol Street
Corporation.
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.
12
<PAGE> 22
Through Trustmark Bank, Trustmark conducts a full range of commercial
banking and trust 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 PCB
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, 1996,
(ii) Trustmark's quarterly report on Form 10-Q for the period ended March 31,
1997, (iii) Trustmark's proxy statement in connection with its 1997 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.
RECENT EVENTS
In May, 1997, Trustmark announced that Richard G. Hickson had been
appointed to serve as Trustmark's new Chief Executive Officer. Frank R. Day
will remain as Chairman of the Board.
PERRY COUNTY BANK
BUSINESS
PCB is a Mississippi chartered banking institution insured by the
Federal Deposit Insurance Corporation. The principal executive offices of PCB
are located in New Augusta, Mississippi. PCB operates two branches in Perry
County and one branch in Greene County, Mississippi. PCB's primary activities
are those associated with commercial banking, such as commercial business and
consumer lending. Funds for lending are obtained from deposits, repayments of
existing loans, investments, and other sources. At March 31, 1997, PCB had
total assets of $43.7 million, total deposits of $37.3 million, net outstanding
loans of $23.5 million and total equity capital of $6.1 million.
MARKET PRICES OF AND DIVIDENDS PAID ON PCB STOCK
PCB has issued and outstanding 12,500 shares of common stock held by
approximately 95 shareholders. There is no established trading market in the
shares of PCB common stock. PCB's management is not aware of any arm's length
transfers of PCB shares in the last 18 months.
13
<PAGE> 23
PCB has paid the following cash dividends for the last five calendar
years:
<TABLE>
<CAPTION>
YEAR DIVIDEND
<S> <C>
1996 $8.00
1995 $8.00
1994 $8.00
1993 $8.00
1992 $8.00
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
The following discusses and analyzes PCB's financial condition,
changes in financial condition and results of operations. Also included is
information regarding PCB's operations which may not be readily evident in the
financial statements. This discussion and analysis should be read in
conjunction with the financial statements and related notes thereto included
elsewhere herein.
FINANCIAL CONDITION
Total assets as of March 31, 1997 were $43,672,000, an increase of
$4,531,000 or 11.6% from December 31, 1996. Significant changes within PCB's
composition of assets and liabilities compared to the 1996 year end related
principally to the purchase of investment securities with funds received from
public deposits, primarily school district construction funds and county
property tax collections which were deposited into time certificates of
deposit.
Federal funds sold decreased $750,000 as compared to December 31, 1996
as PCB elected longer term investment strategies in order to generate higher
yield returns. Investment securities increased approximately $5,190,000 mainly
as a result of purchases funded through an increase in deposits as discussed in
the previous paragraph.
Accrued interest receivable increased $83,000 as of March 31, 1997.
The increase resulted from accrued interest on investments purchased and the
timing of collections on investments, many of which are on a semi-annual basis.
Other assets increased from $198,000 as of December 31, 1996 to
$248,000 as of March 31, 1997 or $50,000. This increase was
14
<PAGE> 24
principally the result of additions to real estate acquired by foreclosure
which increased $34,000. The remaining increase related to prepaid expenses
which are amortized over their contractual periods, which are typically on a
calendar-year basis.
Deposit liabilities increased from $32,892,000 as of December 31, 1996
to $37,329,000 as of March 31, 1997, an increase of $4,437,000 or 13.5%, due to
deposits of public funds collected by county taxing authorities and
construction funding received by the local school district.
Accrued expenses and other liabilities as of March 31, 1997 decreased
by $115,000 as compared to December 31, 1996 principally as a result of the
payment of year-end bonuses of $18,000 and discretionary contributions to the
profit sharing plan of $85,000, both of which were included in liabilities as
of December 31, 1996.
Total assets as of December 31, 1996 were $39,141,000, an increase of
$5,184,000 from December 31, 1995. Significant changes within the composition
of PCB's assets and liabilities compared to the 1995 year end related
principally to an increase in loans funded by an increase in interest-bearing
deposits.
Cash and cash equivalents increased $463,000 as compared to December
31, 1995. Included in this amount was an increase of $360,000 in cash provided
from operations as compared to 1995. Federal funds sold increased $550,000 as
compared to December 31, 1995 reflecting management's investment and liquidity
strategies.
Gross loans increased approximately $3,839,000 or 18.8% as of December
31, 1996 as compared to December 31, 1995. This increase was principally the
result of increased loan demand in all areas of commercial and consumer lending
due to general improvement in the economy of PCB's market area.
Deposit liabilities increased from $28,617,000 as of December 31, 1995
to $32,892,000 as of December 31, 1996, an increase of $4,275,000 or 14.9%.
PCB continues to maintain competitive pricing strategies in order to fund the
growth in loan demand. Included in this increase in deposits was approximately
$1,008,000 which represented an increase in certificates of deposit of $100,000
or more.
LIQUIDITY, CAPITAL RESOURCES AND INTEREST RATE SENSITIVITY
Liquidity represents PCB's ability to meet financial commitments
through the maturity and sale of existing assets or availability of additional
funds. The primary source of liquidity for PCB is regularly scheduled
maturities of assets. The liquidity of PCB is also enhanced by its activity in
the federal funds market
15
<PAGE> 25
and by its core deposits. Its cash requirements consist primarily of
interest-bearing liabilities repayments and dividends to shareholders. Due to
the nature of PCB's business, some degree of interest rate risk is inherent and
appropriate. Management's objective in this area is to limit the level of
earnings exposure arising from interest rate movements. This analysis is
related to liquidity due to the impact of maturing assets and liabilities.
Interest rate sensitivity is measured by "gaps", which is the difference
between interest earning assets and interest-bearing liabilities which reprice
or mature within specific time intervals. A positive gap indicates that
interest-earning assets exceed interest-bearing liabilities within a given
interval. A positive gap position results in increased net interest income
when rates increase and the opposite when rates decline. Management attempts
to structure the balance sheet to provide for the repricing of approximately
equal amounts of assets and liabilities within specific time intervals. PCB
had a negative gap to total assets for the one-year period as of December 31,
1996 of 4.6% which was within policy parameters set by its Board of directors
of plus/minus 10% for calculated time intervals.
STOCKHOLDERS' EQUITY
PCB is subject to minimum capital requirements which are administered
by various federal and state regulatory authorities. These capital
requirements, as defined by federal guidelines, involve quantitative and
qualitative measures of assets, liabilities and certain off-balance sheet
instruments. Quantitative measures established by regulation to ensure capital
adequacy require PCB to maintain minimum amounts and ratios of total and Tier I
capital (as defined in the regulations) to risk-weighted assets (as defined).
At December 31, 1996, PCB meets all capital adequacy requirements to which it
is subject. At December 31, 1996, the most recent notification from the
Federal Deposit Insurance Corporation categorized PCB as well capitalized.
Additional information related to capital requirements is included in Note 7 of
the notes to financial statements included elsewhere herein.
RESULTS OF OPERATIONS
Net interest income for the three months ended March 31, 1997 was
$511,000 compared to $457,000 for the three months ended March 31, 1996 or an
increase of $54,000. This represents an increase of 11.8%. For the first
quarter of 1997, average interest earning assets approximated $39,100,000 as
compared to average interest earning assets for the first quarter of 1996 of
$33,600,000. This increase in volume represents the primary reason for the
$94,000 increase in total interest income for the first three months of
16
<PAGE> 26
1997 when compared to the corresponding period of 1996. In addition, average
interest-bearing liabilities increased $4,461,000 in 1997 which accounted for
the increase in interest expense on deposits of $40,000.
The provision for possible loan losses reflected an increase of
$20,000 for the first quarter of 1997 indicative of management's continuing
evaluations and the growth in the loan portfolio.
Non-interest income in interim l997 reflected only a marginal increase
of $5,000 or 5.5% over interim 1996 as a result of miscellaneous sources of
revenue.
Non-interest expenses increased $29,000 or 12.4% in interim 1997 when
compared to interim 1996. This increase was mainly a result of certain
professional fees and costs related to PCB's electronic data processing
operations.
Net interest income for the years ended December 31, 1996 and 1995 was
$2,003,000 and $1,818,000, respectively, which represented increases of
$185,000 or 10.2% and $224,000 or 14.0%, respectively. For 1996, average
interest earning assets increased by $2,800,000 and the yield on average
interest earning assets increased from 8.5% in 1995 to 8.6% in 1996. While
interest-bearing liabilities increased $2,472,000 in 1996 the average rate paid
on these liabilities increased only marginally from 1995 to in 1996. These
increases were principally driven by the increased loan demand within PCB's
lending area. In 1995, average interest earning assets increased $3,529,000
with a significant component representing an increase in the average carrying
value of investment securities held to maturity and the remaining increase
related to improvements in loan demand and loan growth. The yield
on interest earning assets increased from 8.2% in 1994 to 8.5% in 1995. The
average carrying value of investments in U.S. Treasury securities increased
approximately $1,340,000 in 1995 with the average yield improving from 6.0% to
6.4%. The average volume of commercial, real estate and installment loans
outstanding increased by approximately $2,272,000 in 1995 with a weighted
average increase in yield of approximately .6%. The impact of these yield
improvements were somewhat offset by a corresponding increase in
interest-bearing liabilities. For 1995, the yield paid on interest-bearing
deposits increased from 3.3% to 3.9%.
The provision for possible loan losses reflected decreases of $36,000
and $136,000 for 1996 and 1995, respectively, when compared to the
corresponding prior year. The provisions are a result of ongoing evaluations
by management intended to maintain the adequacy of PCB's allowance for possible
loan losses in relation to its portfolio of loans outstanding. Net
charge-offs approximated $58,000 and $161,000 for 1996 and 1995, respectively.
17
<PAGE> 27
Non-interest income increased $54,000 in 1996 and $43,000 in 1995
principally as a result of the increase in core deposit base and the services
provided thereto. Additionally, other income included an increase in earned
recording fees in 1996 of $23,000 and gains related to the sale of premises and
equipment or other real estate owned in 1995 of $8,000.
Non-interest expenses increased $95,000 or 9.7% in 1996 and $43,000 or
4.6% in 1995. In 1996, this increase included additional bonuses of $18,000
and an increase in the discretionary contribution to the employee profit
sharing plan of $55,000, both reflected in salaries and employee benefits
expense. The remaining increase in salaries and employee benefits expense
resulted from the effects of an increase in the number of employees and normal
wage increases. Additionally, in 1996, other expenses decreased by $57,000
principally as a result of the reduction in FDIC assessments and cost
containment measures. In 1995, the increase in non-interest expense
principally related to an increase in the average number of employees and
normal wage increases.
THE MERGER
BACKGROUND OF THE MERGER
In previous years, Trustmark and PCB have engaged in informal
discussions concerning expanded banking opportunities. Approximately two years
ago, representatives of PCB approached Trustmark to determine if Trustmark had
any interest in expanding its market within the southeast portion of
Mississippi. Trustmark indicated that it did have such an interest.
On February 18, 1997, Trustmark submitted a proposal to the Board of
Directors of PCB. The Trustmark proposal offered each shareholder of PCB an
opportunity to elect to receive cash, shares of Trustmark stock, or a
combination of both in exchange for each shareholder's shares of PCB stock. On
February 18, 1997, an individual also submitted a separate offer to the Board
of Directors to purchase the outstanding shares of PCB for cash. This proposal
contemplated a cash payment for each share of PCB Stock (the "Cash Proposal").
A meeting of the Board of Directors of PCB was held on February 21,
1997 to consider both proposals. The Board unanimously determined that
Trustmark's proposal was superior to the Cash Proposal and directed the
Executive Committee to pursue negotiation of a definitive merger agreement with
Trustmark. Some of the primary factors the Board of Directors of PCB
considered were: (i) the Trustmark offer was economically higher per share;
(ii) the Trustmark offer contemplated a tax-free merger; (iii) the
shareholder's right to elect either cash and/or stock available
18
<PAGE> 28
under the Trustmark offer; (iv) the existing relationships with and reputation
of Trustmark, combined with the benefits and additional services that Trustmark
would provide to PCB's customers and the local banking market; and (v) the
dividend histories of PCB and Trustmark. Matthew L. Holleman, III, did not
attend the meeting or participate in the decision on which offer PCB should
pursue due to his potential conflict of interest.
A letter of intent was executed by PCB on February 21, 1997, and
negotiations with respect to the Merger Agreement occurred during the following
months. On May 13, 1997, the Board of Directors of PCB met and unanimously
approved the Merger Agreement subject to shareholder and regulatory approval
and voted to recommend to its shareholders that they approve the Merger.
Matthew L. Holleman, III attended the meeting but abstained from voting.
PCB'S REASONS FOR EFFECTING THE MERGER
The Board of Directors of PCB is of the opinion that the Merger is in
the best interests of PCB, its shareholders, its customers and the community
which it serves. Currently there is no market for PCB's stock, and PCB's
business market is limited to a relatively small geographic area. Therefore,
PCB is subject to certain market risks inherent in conducting business in a
single market area. The banking industry is very competitive and with
technology changes and market demands it has become more apparent that, due to
its size, PCB would have difficulty meeting the demands of the changing
industry and higher market expectations. The Merger will enable PCB, as a
branch of Trustmark Bank, to provide additional services which could not be
provided by a smaller, independent institution.
After the Merger, former PCB shareholders will own shares of stock
which are publicly traded. This will provide PCB shareholders with greater
flexibility in making market or investment decisions. Management of PCB also
believes that the Merger will result in PCB's shareholders owning an equity
interest in a more viable entity than PCB and enable PCB's shareholders to
participate in the ownership of a larger and more diversified banking operation
which can conduct operations in more markets and offer more services than PCB.
TRUSTMARK'S REASONS FOR EFFECTING THE MERGER
From Trustmark's perspective, the Merger is advantageous to Trustmark
since it allows Trustmark to enter a new banking market by establishing a
banking presence in Perry and Greene Counties, Mississippi, further enhancing
Trustmark's statewide banking system. Trustmark considered the financial
condition, current
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<PAGE> 29
business and future prospects of PCB and believes that the future performance
of the banking operations currently conducted by PCB will be enhanced by PCB
being part of Trustmark.
OPINION OF TRUSTMARK'S FINANCIAL ADVISOR
Chaffe & Associates, Inc. ("Chaffe") was retained as financial advisor
by Trustmark in connection with the Merger. Trustmark selected Chaffe because
of its experience in advising on mergers and acquisitions of and by financial
institutions. As part of its assignment, Chaffe was requested to provide an
opinion as to the fairness of the Merger from a financial point of view to the
stockholders of Trustmark. No limitations were imposed by Trustmark upon
Chaffe with respect to the investigations made or procedures followed by it in
rendering its opinion.
Neither Chaffe nor any of its officers or employees has any interest
in the shares of PCB or Trustmark.
Trustmark paid Chaffe approximately $7,500 in fees plus out-of-pocket
expenses for rendering its opinion. For any other services requested of Chaffe
by Trustmark, Trustmark agreed to pay Chaffe on an hourly basis. The fees
received by Chaffe in connection with its services to Trustmark were not
dependent or contingent upon the occurrence or lack thereof of any transaction.
Trustmark has agreed to indemnify and hold harmless Chaffe, its
subsidiaries and affiliates, and its officers, directors, stockholders,
employees, attorneys, agents and representatives, and the successor and assigns
of each of the foregoing parties from and against any person claiming to have
relied on Chaffe's advice or services, or the performance or nonperformance
thereof, or claiming to have been entitled to some benefit therefrom, or
claiming that such services were not adequately performed, and all related
damages, claims, demands, expenses or costs of any kind or nature, including
reasonable attorney fees and expenses, arising directly or indirectly, from or
in any way related to, the opinions or any other services performed by Chaffe,
provided that Chaffe has not been negligent or guilty of reckless or willful
misconduct in connection with the opinions, or any other services.
The Merger Consideration to be received by PCB's stockholders was
determined as the result of arm's length negotiations between representatives
of Trustmark and PCB. Chaffe did not participate in those negotiations or
recommend the amount or nature of the Merger Consideration.
A complete text of the opinion of Chaffe is attached as Annex B to
this Proxy Statement. The following discussion is a brief summary of Chaffe's
fairness opinion, the procedures it followed
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<PAGE> 30
and its findings. SHAREHOLDERS OF PCB SHOULD NOT RELY ON THE OPINION OF CHAFFE
AS ANY INDICATION OF THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
MERGER TO THE SHAREHOLDERS OF PCB.
ANALYSIS OF SELECTED FINANCIAL DATA
Chaffe reviewed the financial performance of PCB and utilized several
valuation models to examine fairness. These valuation models are based on a
public peer group, the discounted cash flow model ("DCF"), and three merger
peer groups with various pricing multiples. In the process of valuation, Chaffe
has given more weight to the values derived from the merger peer group model.
Chaffe believes that the PCB situation was more similar to these specific
valuation models than the public peer group models, which indicate marketable,
minority value and must be adjusted for a control value. The emphasis of
valuation is placed upon earnings, as it is more indicative of value than other
pricing parameters.
PCB's 1996 net income of $863,000 was up from $747,000 in 1995 and
$511,000 in 1994. Net income for the three months ended March 31, 1997 was
$208,000. Return on average assets ("ROAA") for the three months ended March
31, 1997 was 2.02%, compared to 1.14% for the Uniform Bank Performance Report
("UBPR") peer group. These figures were down from 2.16% and 1.17% for the same
period in 1996. PCB's Return on Average Equity ("ROAE") also decreased from
14.66% in March 1996 to 13.92% in March 1997. PCB's UBPR peer group's ROAE
also fell from 12.31% in March 1996 to 11.93% in March 1997. In addition, both
non-interest income and net interest income have historically been strong.
Each has significantly outperformed PCB's UBPR peer group over the past three
years. Also, PCB's personnel expense is 1.39% of average assets compared with
1.64% for its peer group, and PCB's average annual personnel expense per
employee is $29,000, compared with $32,200 for its peer group.
PCB's asset quality improved with a Non-Performing Asset-to-total
assets ratio of 1.55% as of March 31, 1997, compared with 1.59% as of March
31,1996. Average interest-bearing funds were 72.85% of average assets, which
continued to be a competitive strength for PCB as the UBPR peer group's ratio
was 77.95%. Tier 1 leverage capital ratio was 14.76% on March 31, 1997. PCB's
March 1997 loan loss reserve to total loans was 2.76% versus 1.37% for its UBPR
peer group. PCB's net loss to average total loans was 0.65% versus 0.05% for
the peer group. However, PCB's margins are comparable to those of the peer
group, which implies that PCB is not being adequately compensated for its
current level of risk.
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STOCK PRICE AND DIVIDEND REVIEW
Chaffe reviewed certain historical market information for PCB common
stock and noted that no independent market exists for these shares. Chaffe
noted that management of PCB knew of no transactions in PCB stock during the
last 18 months.
Chaffe reviewed the dividend histories and current dividend levels of
PCB and Trustmark, and noted that PCB's and Trustmark's annual dividends per
share were $8.00 and $.50, respectively.
ANALYSIS OF SELECTED MERGER TRANSACTIONS
In order to obtain a valuation range for PCB, Chaffe performed an
analysis of prices paid for selected banks with characteristics comparable to
PCB, although Chaffe noted that no transaction was identical to the proposed
Merger. Comparable transactions were considered to be transactions announced
in the United States for the period April 1, 1996 to March 31, 1997, in which
the sellers had total assets of between $25 million and $100 million, a
tangible equity ratio between 10% and 20%, a return on average assets of less
than or equal to 2%, and non-performing assets between 0.50% and 2.00%. In
addition, Chaffe performed an analysis of prices paid for a similar group of
selected banks, limited in geographic area to sixteen states in the southern
United States. Finally, Chaffe performed an analysis of prices paid for
substantially all Mississippi banks sold during the period April 1, 1996 to
March 31, 1997. With respect to each of these groups of transactions and the
proposed Merger, Chaffe compared the prices to be received by the peer groups
as a multiple of their tangible equity, their earnings per share for the four
quarters prior to the announcement of the transaction, their premium over
tangible equity to core deposits, and their total assets. The following table
summarizes certain results of this analysis:
<TABLE>
<CAPTION>
PERRY/ U.S. PEER SOUTHERN MISSISSIPPI
TRUSTMARK GROUP PEER GROUP PEER GROUP
<S> <C> <C> <C> <C>
Seller Total Assets (000's)
Mean $76,317 $89,129 $367,926
Median $43,692 $76,391 $81,820 $137,601
Seller Tangible Equity/ Assets 14.06% 11.09% 10.86% 9.63%
Seller YTD ROAA 2.02% 1.36% 1.37% 1.20%
Seller YTD ROAE 13.92% 11.82% 13.06% 10.89%
Seller NPA/ Assets 1.55% 1.02% 1.02% 0.37%
Price/ Tangible Equity 1.53x 1.77x 2.04x 2.53x
Price/ 4-Quarter EPS 10.68x 12.67x 14.30x 23.54x
Price-Tangible Equity/ Core Deposits 10.02% 12.22% 15.45% 22.24%
Price/ Assets 21.51% 20.59% 22.26% 26.17%
</TABLE>
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DISCOUNTED CASH FLOW ANALYSIS
Using the DCF analysis of PCB, Chaffe determined a range of net
present values for the PCB common stock based on the stream of after-tax cash
flows of PCB, which included forecasts of net income for the years 1997-2003
and assumptions relating to earnings and growth thereafter. Chaffe reviewed
these forecasts and assessed the likelihood of PCB achieving such forecasts.
Chaffe then discounted these cash flow streams assuming an estimated required
rate of return for PCB of 13.40% determined by using established capital asset
pricing methods. Chaffe also analyzed the estimated future dividend stream of
PCB through the year 2003 plus a terminal value for PCB common stock as part of
its determination of a range of net present values for shares of PCB common
stock.
The DCF model resulted in a lower value, based on 1997-2003
projections from PCB's strategic plan, than most other values derived from
public and merger peer groups. This is understandable because the DCF value
represented the total value of PCB on an independent basis, without any benefit
from cost savings/revenue enhancements that an acquiror may otherwise realize.
Chaffe gave substantial weight to the value derived from merger peer groups to
reach its conclusion.
In arriving at its fairness opinion, Chaffe did not rely on any single
analysis, but relied on a combination of factors derived from all of the
analytical procedures employed. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Conclusions base on these analyses are not necessarily
mathematical. Chaffe believes that the summary set forth above and Chaffe's
analysis must be considered as a whole and that selecting portions of the
analyses performed by Chaffe are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the value of
businesses do not purport to be appraisals or necessarily reflect the prices at
which businesses actually may be sold. The fact that any specific analysis has
been referred to in the summary above is not meant to indicate that such
analysis was given greater weight than any other analysis.
The proposed transaction carries a value of $9,400,000, or $752 per
PCB share. This value is on the lower end of the range of control value Chaffe
determined for PCB. Based on the financial information as of March 31,1997, the
Merger Consideration represents a P/E ratio of 10.68, P/TB ratio of 1.53x,
price to deposits ratio of 25.18%, price to core deposits ratio of 28.90%, a
tangible book premium/core deposits of 10.02%, and price-to-assets ratio of
21.51%.
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<PAGE> 33
In summary, based on the information reviewed, Chaffe's opinion is
that the proposed price of $9,400,000 is fair to the shareholders of Trustmark,
from a financial point of view.
THE MERGER AGREEMENT
The following describes certain aspects of the Merger Agreement dated
as of May 13, 1997, and of the proposed Merger. This description does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement which is 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
On the Effective Date of the Merger, other than shares with respect to
which holders have perfected their dissenters' rights of appraisal, and subject
to certain adjustments and limitations set out in the Merger Agreement, each
outstanding share of the common stock of PCB issued and outstanding on the
Effective Date of the Merger shall be converted into the right to receive cash
and/or shares of Trustmark common stock having a total value, as of the date
the exchange ratio is determined, equal to $752.00 per share. PCB's
shareholders have the right to elect to receive cash in connection with the
Merger in lieu of Trustmark shares. However, under the terms of the Merger
Agreement, PCB's shareholders shall not receive cash in exchange for their PCB
shares unless PCB shareholders, as a whole, elect to receive at least
twenty-five percent (25%) of the total value of the Merger Consideration in
cash. If PCB's shareholders elect to receive more than forty percent (40%) of
the total Merger Consideration in cash, the cash otherwise payable to each PCB
shareholder will be proportionately reduced so that the total cash payable to
PCB shareholders will not exceed forty percent (40%) of the total Merger
Consideration.
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
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<PAGE> 34
Merger will equal the number of Trustmark shares that PCB'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 PCB 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 PCB 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 the average
Trustmark share price used to determine the exchange ratio.
The number of Trustmark shares to be received by PCB's shareholders in
connection with the Merger is subject to adjustment in certain circumstances.
Pursuant to Section 2.3 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 3rd day prior to the
PCB Special Meeting date is less than $24.50 per share or greater than $28.50
per share and the Merger is approved by PCB's shareholders, then PCB and
Trustmark will promptly meet to consider the implications of the Average
Trustmark Price on the proposed transaction. The Boards of Directors of
Trustmark and PCB shall be fully authorized, under the circumstance and in the
best interests of each organization, to renegotiate the Exchange Ratio for the
number of shares of Trustmark stock in to which PCB common shares shall be
converted. If Trustmark and PCB are unable to negotiate a mutually acceptable
exchange ratio for the number of shares of Trustmark stock in to which PCB
common shares shall be converted, either Trustmark or PCB may terminate Merger
Agreement upon written notice delivered personally to the other party on or
before ten (10) days prior to Closing Date.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Pursuant to the Merger Agreement, PCB made various representations and
warranties concerning PCB'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 Merger.
PCB undertook certain covenants in the Merger Agreement, including
agreements: to cause to be convened a meeting of PCB's
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shareholders for the purpose of approving the Merger and completing the forms
of election, as promptly as practical after the effective date of the
Registration Statement for Trustmark shares to be issued in connection with the
Merger; 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 business in substantially the same
manner as such business is currently being operated and to use their best
efforts to maintain the goodwill 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 business; not to incur any material obligation except current
contracts entered into 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 1998 if the merger
had not been consummated by such a 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; 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 collectability or present other unfavorable
features; except as expressly permitted, not to pay any dividend or make any
distribution; and not to 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.
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 goodwill of their
depositors, customers and suppliers; to use their best efforts to retain the
services of their officers and employees; and to notify PCB of any unusual or
material problems or developments with respect to the business of either
Trustmark or Trustmark Bank.
PCB, 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, On June 30, 1997, PCB
will be permitted to declare and pay a cash dividend out of current operating
profits earned since January 1, 1997 of up to
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<PAGE> 36
$10.00 per share; and if the Closing of the transaction has not occurred by the
end of each subsequent calendar quarter, a dividend out of current operating
profits earned during each full calendar quarter subsequent to June 30, 1997 or
prorated portion thereof of up to $5.00 per share until the Closing will have
occurred. Except as set forth above, PCB shall not declare any cash or other
dividends prior to closing.
Pursuant to Section 5.2 of the Merger Agreement, Trustmark stated its
intention to continue the employment of the employees of PCB 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 5.4 of the Merger Agreement, all of PCB'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 within Perry County, Mississippi. Other than in
the capacity of an officer of Trustmark subsequent to the Effective Date, these
directors further agreed not to initiate any action to induce any officer of
Trustmark Bank, as successor to PCB, 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 PCB will be entitled to the same
employee benefits as are presently being provided to employees of Trustmark
Bank. At Trustmark's option, PCB's existing retirement plan will either be (i)
terminated on the Effective Date, and, with Trustmark's assistance, converted
to self-directed individual retirement accounts for the employees or (ii)if
permissible under applicable laws, rules and regulations and with the consent
of PCB, PCB's existing plan will be merged with Trustmark's existing retirement
plan. All employees of PCB will receive credit for years of service at PCB
for purposes of vesting in Trustmark's retirement plan.
Pursuant to Section 5.7 of the Merger Agreement, the directors of PCB
agreed to recommend that the shareholders of PCB approve the Merger and to vote
their PCB shares in favor of the Merger; provided, the directors are not
required to take any action which, in the opinion of PCB's counsel, would
constitute a breach of the directors' fiduciary duties.
Pursuant to Section 5.9 of the Merger Agreement, Trustmark conducted a
due diligence examination of the books, records,
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<PAGE> 37
assets, and liabilities of PCB. If such inquiry or examination had revealed
any previously unknown financial information which Trustmark or Trustmark Bank,
in its sole discretion, deemed adverse, then Trustmark or Trustmark Bank could
have exercised its right of termination set forth in the Merger Agreement.
Pursuant to Section 5.12 of the Merger Agreement, Trustmark shall
obtain, at its own expense, an opinion that the Merger is fair, from a
financial point of view, to the shareholders of Trustmark and Trustmark Bank.
CONDITIONS TO CONSUMMATION OF THE MERGER
Trustmark and Trustmark Bank's obligations to consummate the Merger
are conditioned upon, among other things, the continued truth and accuracy of
the representations and warranties of PCB; PCB's compliance with its covenants,
agreements and undertakings in the Merger Agreement; receipt of all required
regulatory and governmental approvals; approval of the Merger by the Board of
Directors and shareholders of PCB; the absence of any material adverse change
in the financial condition, tangible properties or prospects of PCB subsequent
to December 31, 1996; receipt of the opinion of counsel to PCB required by the
Merger Agreement; receipt of the fairness opinion contemplated by the Merger
Agreement; the reserve for loan losses then maintained by PCB adequately
providing for the anticipated loan losses of PCB as of such date in accordance
with the accepted audit, bank examination and bank regulatory standards; the
tangible assets of PCB having a fair market value equal to or greater than its
liabilities; and Trustmark being satisfied that the Merger will qualify as
tax-free reorganization for federal income tax purposes.
The obligations of PCB 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 all required regulatory
and governmental approvals; approval of the Merger by the Board of Directors
and shareholders of Trustmark and Trustmark Bank; the absence of any material
adverse change since December 31, 1996, in the condition, financial or
otherwise, of Trustmark or Trustmark Bank; PCB being satisfied that the Merger
will qualify as a tax-free reorganization 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.
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TERMINATION
The Merger Agreement may be terminated and the Merger 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 Board of Directors of PCB and
Trustmark;
(b) By either party, 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 and not dismissed 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 either party, if the Effective Date of the Merger shall not
have occurred within one year of the date of the Merger Agreement, without the
fault of such party;
(d) By Trustmark or Trustmark Bank at any time during the due
diligence examination period as provided for in the Merger Agreement, if such
examination, in Trustmark or Trustmark Bank's opinion, reveals previously
unknown, adverse information concerning PCB;
(e) By Trustmark, if at the time of such a termination there shall
have occurred a material adverse change in the financial condition or tangible
properties of PCB subsequent to December 31, 1996;
(f) By PCB, if at the time of such a 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, 1996;
(g) By either party, if the Average Trustmark Price is less than
$24.50 or greater than $28.50 on the PCB Special Meeting date, and PCB and
Trustmark are unable to negotiate a mutually acceptable Exchange Ratio for the
number of shares of Trustmark stock into which each PCB common share will be
converted;
(h) By either Trustmark or PCB, if the shareholders of PCB fail to
approve the Merger at the meeting of stockholders called for such purposes
(including any adjournment or postponement thereof);
(i) By Trustmark if there has been a material breach by PCB of (A) any
representation, warranty or obligation set forth in the Merger Agreement, or
(B) of any of its obligations set forth in the Merger Agreement which has not
been promptly cured after notice thereof from Trustmark; or
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<PAGE> 39
(j) By PCB if there has been a material breach by either of Trustmark
or Trustmark Bank of (A) any representation, warranty or obligation set forth in
the Merger Agreement, or (B) of any of its obligations set forth in the Merger
Agreement which has not been promptly cured after notice thereof from PCB.
PROCEDURE FOR EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Date of the Merger,
Trustmark shall send to PCB's shareholders of record as of the Meeting Date
transmittal materials for use in exchanging their PCB common shares for cash
and Trustmark shares in accordance with the Election.
Any PCB 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 such a former PCB shareholder has surrendered the certificates
representing his PCB shares or provided indemnity as provided above, such
shareholder shall not receive the cash or be issued the Trustmark share
certificates to which he is entitled, and no dividends or other distributions
with respect to such Trustmark shares shall be paid. However, when such
certificates are surrendered or indemnity provided, the former PCB shareholder
shall be issued the Trustmark shares and paid the cash and dividends, without
interest, to which such a shareholder is entitled.
RIGHTS OF DISSENTING SHAREHOLDERS
PCB is being merged with and into Trustmark Bank pursuant to 12 U.S.C.
Section 215a. Pursuant to this law, any shareholder of PCB who has voted
against the Merger at the PCB Special Meeting or who has given notice in
writing at or prior to such a 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 Merger is approved by the Comptroller of the Currency upon
written request made to Trustmark Bank, as the surviving association, at any
time before the 30 days after the date of consummation of the Merger,
accompanied by the surrender of his PCB stock certificates.
The value of the PCB shares of any dissenting shareholder shall be
ascertained, as of the effective date of the Merger, by an appraisal made by a
committee of three persons composed of (1) one
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selected by a 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; (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 Merger, for
any reason one or more of the appraisers fails 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 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 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 any such price no 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 Merger. This discussion does
not necessarily address all aspects of federal income taxation that may be
applicable to each PCB 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, PCB's shareholders should consult their own
tax advisers as to the particular tax consequences of the Merger 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
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<PAGE> 41
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
consequences of the Merger could differ from those described below.
The Merger Agreement provides that, as a condition to the parties'
obligations to consummate the Merger, each party must be satisfied that the
Merger will qualify as a tax-free reorganization for federal income tax
purposes. Brunini, Grantham, Grower & Hewes, PLLC, counsel to Trustmark, will
render its opinion that the Merger will so qualify as a tax-free reorganization
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.
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 PCB's shareholders upon the receipt of Trustmark common shares in
exchange for PCB common shares in connection with the Merger (except as
discussed below with respect to the cash received as a result of a cash
election and in lieu of fractional shares), (ii) the tax basis of the Trustmark
common shares to be received by PCB's shareholders in connection with the
Merger shall be the same as the basis in the PCB 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 PCB's shareholders in connection with
the Merger will include the holding period of the PCB common shares surrendered
in exchange therefor, provided that the PCB 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 or 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 PCB's shareholders exercising dissenters' rights
of appraisal and as a result of a cash election will be treated as having been
received by such shareholders as a distribution in redemption of such
shareholder's stock (or portion thereof as to which a cash election is
exercised), subject to the provisions and limitations of Section 302 of the
Internal Revenue Code.
32
<PAGE> 42
ACCOUNTING TREATMENT
The Merger will be accounted for by Trustmark under the purchase
method of accounting. Under this method, the aggregate Merger Consideration
will be allocated to PCB's assets and liabilities based upon their estimated
fair values, and the results of operations of PCB will be included in the
results of operations of Trustmark only for periods subsequent to the Merger.
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 PCB. Persons who may be
deemed affiliates of PCB 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 one year following the Merger, persons who were
affiliates of PCB at the time the Merger was submitted to a shareholder vote
and who do not become affiliates of Trustmark may resell the Trustmark shares
acquired in the Merger; 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 one-year
period, these persons may generally resell the Trustmark shares acquired in the
Merger without limitation. Since one percent of Trustmark's outstanding shares
will be in excess of 350,000 shares following the Merger, the foregoing
limitation should have no practical effect on resales by PCB affiliates.
Trustmark common shares issued pursuant to the Merger to persons who are not
affiliates of PCB should be freely transferrable without restriction.
Persons who are affiliates of Trustmark following the Merger may
resell Trustmark shares acquired in the Merger subject to the limitations of
Rule 144 promulgated under the Securities Act of 1933.
REGULATORY AUTHORITY APPROVALS
Consummation of the Merger is subject to and conditioned upon the
receipt of the approval of the Comptroller of the Currency and the absence of
objection by the United States Department of Justice.
Trustmark and PCB have filed applications for approval of the Merger
with the Comptroller of the Currency. There can be no assurance that the
Merger will be approved, that any such approvals
33
<PAGE> 43
will occur in a timely manner or that any such approvals or acquiescence will
not be conditioned upon matters that would cause the parties to abandon the
Merger.
COMPARISON OF RIGHTS OF SHAREHOLDERS
PCB is a Mississippi state chartered banking institution, subject to
the provisions of various Mississippi and federal banking laws, rules and
regulations ("Applicable Banking Laws or "ABL"). The rights of shareholders of
PCB are governed by these laws and the articles of incorporation and bylaws of
PCB.
Trustmark is a Mississippi business corporation. The rights of
shareholders of Trustmark are governed by the Mississippi Business Corporation
Act ("MBCA") and the articles of incorporation and bylaws of Trustmark.
The following is a summary of certain material differences in the
rights of shareholders of PCB and Trustmark and is qualified in its entirety
by reference to the laws governing each and the articles of incorporation and
bylaws of each of Trustmark and PCB.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
ABL's provide that the approval of two-thirds of the outstanding
shares of PCB entitled to vote thereon is required to effect a merger or
consolidation.
The MBCA provides that the approval of the Trustmark Board of
directors and of a majority of the outstanding shares of Trustmark entitled to
vote thereon is generally required to approve a merger, consolidation or share
exchange or to sell, lease, exchange or otherwise dispose of substantially all
of its assets. In accordance with the MBCA, submission by the Trustmark Board
of any such action may be conditioned on any basis.
With respect to a merger, no vote of the shareholders of Trustmark is
needed if Trustmark is the surviving corporation and (i) Trustmark's charter
remains unchanged after the merger, subject to certain exceptions; (ii) each
shareholder of Trustmark whose shares were outstanding immediately before the
effective date of the merger will hold the same number of shares, with
identical designations, preferences, limitations, and relative rights,
immediately after the merger; (iii) the number of voting shares outstanding
immediately after the merger, plus the number of voting shares issuable as a
result of the merger (either by the conversion of securities issued pursuant to
the merger or the exercise of rights and warrants issued pursuant to the
merger), will not exceed by more than twenty percent (20%) the total number of
voting shares of the surviving corporation outstanding
34
<PAGE> 44
immediately before the merger; and (iv) the number of participating shares
outstanding immediately after the merger, plus the number of participating
shares issuable as a result of the merger (either by the conversion of
securities issued pursuant to the merger or the exercise of rights and warrants
issued pursuant to the merger), will not exceed by more than twenty percent
(20%) the total number of participating shares of the surviving corporation
outstanding immediately before the merger.
With respect to a sale, lease, exchange or other disposition of
substantially all the assets of Trustmark, no vote of the shareholders of
Trustmark would be required if such transfer was conducted in the regular
course of business or if such transfer was made to a wholly-owned subsidiary of
Trustmark.
AMENDMENT OF ARTICLES OF INCORPORATION OR CHARTER
ABL's provide that the Commissioner of Banking and Consumer Finance,
the Attorney General and the Governor must approve any amendment to the
articles of a state chartered banking organization after the amendment is first
authorized by the vote of a majority of all the outstanding voting shares.
Pursuant to the MBCA, the articles of incorporation of Trustmark must
only be approved by a majority of Trustmark's Directors and holders of a
majority of Trustmark's outstanding shares.
INDEMNIFICATION
Subject to certain limitations, the articles of incorporation of PCB
provides for the indemnification of directors or officers.
The MBCA and the bylaws of Trustmark provide, in certain situations,
for mandatory and permissive indemnification of directors and officers. See
the heading "Indemnification."
LOANS SECURED BY ISSUER'S STOCK; OTHER TRANSACTIONS
Under ABL's, PCB may not make any loan on the security of PCB common
stock or purchase any such shares unless such security or purchase is necessary
to prevent loss upon a debt previously contracted in good faith. Unless full
payment of such debt is made, stock so purchased or acquired must be disposed
of within twelve months of its acquisition. ABL's contain various additional
restrictions and conditions on the ability of a bank to make loans to its
directors and officers.
35
<PAGE> 45
The MBCA does not prohibit Trustmark from securing loans with
Trustmark stock and expressly provides that a corporation may acquire its own
shares and shares so acquired constitute authorized but unissued shares. The
MBCA imposes certain procedural and substantive conditions on the ability of a
business corporation to engage in transactions with its directors.
VOLUNTARY DISSOLUTION
ABL's provide that PCB may be dissolved upon approval by the vote of
two-thirds of the outstanding voting stock and written notice to the
Commissioner.
The MBCA provides that Trustmark may be dissolved if the Trustmark
Board of Directors proposes dissolution and a majority of the shares of
Trustmark entitled to vote thereon approve the dissolution. In accordance with
the MBCA, the Trustmark Board may condition its submission of a proposal for
dissolution on any basis.
DIVIDENDS AND OTHER DISTRIBUTIONS
Under ABL's, PCB may not declare any dividend upon its common stock
unless it is approved by the Commissioner.
The MBCA provides that Trustmark may make dividends or other
distributions to its shareholders, unless after the distribution either (i)
Trustmark would not be able to pay its debts as they become due in the usual
course of business, or (ii) Trustmark's total assets would be less than the sum
of its total liabilities plus the amount that would be needed, if Trustmark
were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution.
ISSUANCE OF ADDITIONAL SHARES
ABL's require that the Commissioner and a majority of the outstanding
shares approve the issuance of preferred shares by PCB.
Subject to certain limitations, the board of directors of a
Mississippi business corporation can, without shareholder vote, authorize
issuance of any shares provided for pursuant to the articles of incorporation.
If the maximum number and class of shares is not authorized in the articles of
incorporation, board of directors and shareholders action is required as
described above.
36
<PAGE> 46
FIDUCIARY DUTIES OF DIRECTORS AND OFFICERS
Pursuant to ABL's, a director or officer of a state chartered bank is
not held personally liable to the bank or its shareholders for monetary damages
unless the director or officer acted in a grossly negligent manner, or engaged
in conduct which demonstrates a greater disregard of the duty of care than
gross negligence, such as intentional, tortious conduct or intentional breach
of the duty of loyalty or intentional commission of corporate waste.
For purposes of these statutes, the term "gross negligence" is defined
to mean a reckless disregard of, or a carelessness amounting to gross
indifference to, the best interests of the bank or the shareholders thereof,
and involves a substantial deviation below the standard of care expected to be
maintained by a reasonably careful person under like circumstances.
Under the MBCA, directors and officers of Trustmark are required to
act in good faith, with the care an ordinary prudent person in a like position
would exercise under similar circumstances and in a manner the director or
officer reasonably believes to be in the best interests of the corporation.
LEGAL OPINIONS
The validity of the Trustmark common shares to be issued in connection
with the Merger 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 Merger. Brunini, Grantham, Grower & Hewes,
PLLC, its pension plan and its members have a substantial direct and indirect
stock ownership interest in Trustmark.
EXPERTS
The consolidated statements of Trustmark Corporation and subsidiaries
as of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, incorporated by reference in this Proxy
Statement and elsewhere in the Registration Statement, have been audited by
Arthur Andersen LLP, Independent Public Accountants, as indicated in their
report 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 financial statements of Perry County Bank as of December 31, 1996
and 1995, and for each of the three years in the period ended December 31,
1996, included in this Prospectus have been
37
<PAGE> 47
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
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 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> 48
Annex A
A-1
<PAGE> 49
ANNEX A
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Perry County Bank:
Independent Auditors' Report ........................... A-3
Balance Sheets as of December 31, 1996 and 1995 ........ A-4
Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994 .................... A-6
Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1996,
1995 and 1994 ....................................... A-8
Statements of Cash Flows for the Years Ended
December 31, 1996, 1995
and 1994 ............................................ A-9
Notes to Financial Statements Years Ended
December 31, 1996, 1995 and 1994 .................... A-10
Balance Sheet as of March 31, 1997 (Unaudited) ......... A-18
Statements of Income for the Three Months Ended
March 31, 1997 and 1996 (Unaudited) ................. A-19
Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (Unaudited) ........... A-20
Note to Financial Statements for the Three Months
Ended March 31, 1997 and 1996 (Unaudited) ........... A-21
</TABLE>
A-2
<PAGE> 50
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Perry County Bank
We have audited the accompanying balance sheets of Perry County Bank as of
December 31, 1996 and 1995, and the related statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1996. 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 the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Perry County Bank as of December 31, 1996
and 1995, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
January 17, 1997
A-3
<PAGE> 51
PERRY COUNTY BANK
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Cash and cash equivalents $ 2,574,841 $ 2,111,439
Federal funds sold 2,300,000 1,750,000
Investment securities held to maturity (approximate
fair value of $9,915,000 in 1996 and $9,841,000 in 1995) 9,877,725 9,709,370
Loans 24,230,474 20,391,655
Less: Unearned income (71,474) (241,123)
Allowance for possible loan losses (666,313) (651,931)
------------ ------------
Loans, net 23,492,687 19,498,601
Accrued interest receivable 380,676 358,574
Premises and equipment, net 316,562 347,447
Other assets 198,154 181,910
------------ ------------
TOTAL ASSETS $ 39,140,645 $ 33,957,341
============ ============
</TABLE>
See notes to financial statements.
A-4
<PAGE> 52
- --------------------------------------------------------------------------------
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
<S> <C> <C>
LIABILITIES:
Deposits:
Non-interest bearing $ 4,998,415 $ 4,715,932
Interest bearing 27,893,186 23,901,022
------------ ------------
Total deposits 32,891,601 28,616,954
Accrued expenses and other liabilities 317,331 171,239
------------ ------------
Total liabilities 33,208,932 28,788,193
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY:
Common Stock, $10 par value;
Authorized, issued and outstanding 12,500 shares 125,000 125,000
Surplus 5,650,000 4,900,000
Retained earnings 156,713 144,148
------------ ------------
Total Stockholders' Equity 5,931,713 5,169,148
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,140,645 $ 33,957,341
============ ============
</TABLE>
See notes to financial statements.
A-5
<PAGE> 53
PERRY COUNTY BANK
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $2,292,801 $2,010,601 $1,705,474
Interest and dividends on investment securities:
Taxable 500,853 497,752 434,737
Non-taxable 104,555 100,554 95,761
Interest on federal funds sold 146,389 153,445 126,730
---------- ---------- ----------
Total interest income 3,044,598 2,762,352 2,362,702
INTEREST EXPENSE -
Interest on deposits 1,041,609 944,084 768,377
---------- ---------- ----------
NET INTEREST INCOME 2,002,989 1,818,268 1,594,325
PROVISION FOR POSSIBLE LOAN LOSSES 72,000 108,000 244,000
---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 1,930,989 1,710,268 1,350,325
NON-INTEREST INCOME:
Service charges on deposits 277,456 256,522 246,811
Other account charges, fees and commissions 101,708 84,464 63,070
Other 41,349 25,801 13,597
---------- ---------- ----------
Total non-interest income 420,513 366,787 323,478
---------- ---------- ----------
</TABLE>
(Continued)
A-6
<PAGE> 54
PERRY COUNTY BANK
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 667,567 $ 531,215 $ 492,279
Net occupancy expense 67,412 69,083 76,158
Equipment expense 84,918 72,006 67,326
Service and fees 48,094 43,499 40,606
Other 203,547 260,666 257,594
---------- ---------- ----------
Total non-interest expense 1,071,538 976,469 933,963
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,279,964 1,100,586 739,840
PROVISION FOR INCOME TAXES 417,399 353,368 229,000
---------- ---------- ----------
NET INCOME $ 862,565 $ 747,218 $ 510,840
========== ========== ==========
INCOME PER SHARE $ 69.01 $ 59.78 $ 40.87
========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 12,500 12,500 12,500
========== ========== ==========
</TABLE>
(Concluded)
See notes to financial statements.
A-7
<PAGE> 55
PERRY COUNTY BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON RETAINED
TOTAL STOCK SURPLUS EARNINGS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 4,111,090 $ 125,000 $ 3,750,000 $ 236,090
NET INCOME FOR YEAR 510,840 510,840
CASH DIVIDENDS PAID ($8 per share) (100,000) (100,000)
TRANSFER TO SURPLUS 400,000 (400,000)
----------- ----------- ----------- -----------
BALANCE, JANUARY 1, 1995 4,521,930 125,000 4,150,000 246,930
NET INCOME FOR YEAR 747,218 747,218
CASH DIVIDENDS PAID ($8 per share) (100,000) (100,000)
TRANSFER TO SURPLUS 750,000 (750,000)
----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 5,169,148 125,000 4,900,000 144,148
NET INCOME FOR YEAR 862,565 862,565
CASH DIVIDENDS PAID ($8 per share) (100,000) (100,000)
TRANSFER TO SURPLUS 750,000 (750,000)
----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 $ 5,931,713 $ 125,000 $ 5,650,000 $ 156,713
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
A-8
<PAGE> 56
PERRY COUNTY BANK
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 862,565 $ 747,218 $ 510,840
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 72,000 108,000 244,000
Provision for depreciation 64,158 61,639 71,670
Amortization of premiums and discounts
on investment securities 29,025 (71,047) (48,238)
Increase in accrued interest receivable (22,102) (82,436) (45,749)
Gain on sale of equipment (5,999) (3,000)
Deferred income taxes (6,917) 23,210 (45,000)
Write-down of real estate acquired by foreclosure 1,260
(Increase) decrease in other assets (9,329) 12,570 (15,625)
Increase (decrease) in accrued expenses
and other liabilities 146,092 (18,025) (37,758)
------------ ------------ ------------
Net cash provided by operating activities 1,135,492 775,130 632,400
------------ ------------ ------------
INVESTING ACTIVITIES:
Proceeds from maturities of investment securities 8,780,691 8,117,429 8,946,180
Purchase of investment securities (8,978,071) (7,941,954) (12,466,601)
(Increase) decrease in federal funds sold (550,000) (450,000) 3,000,000
Net increase in loans (4,066,084) (2,333,714) (2,020,473)
Proceeds from sale of equipment 14,000 3,000
Purchases of premises and equipment (33,270) (46,221) (27,013)
Proceeds from sale of real estate acquired by
foreclosure 47,622
------------ ------------ ------------
Net cash used in investing activities (4,846,734) (2,640,460) (2,517,285)
------------ ------------ ------------
FINANCING ACTIVITIES:
Net increase in deposits 4,274,644 650,089 2,726,370
Cash dividends paid (100,000) (100,000) (100,000)
------------ ------------ ------------
Net cash provided by financing activities 4,174,644 550,089 2,626,370
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS 463,402 (1,315,241) 741,485
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 2,111,439 3,426,680 268,195
------------ ------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 2,574,841 $ 2,111,439 $ 3,426,680
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES -
Interest paid $ 1,032,000 $ 910,000 $ 763,000
============ ============ ============
Income taxes paid $ 376,000 $ 271,000 $ 213,000
============ ============ ============
</TABLE>
See notes to financial statements.
A-9
<PAGE> 57
PERRY COUNTY BANK
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
a. BUSINESS - Perry County Bank is engaged only in the general banking
business and provides these services to customers located primarily
within Perry County, Mississippi. The Bank is subject to the
regulations of certain federal and state agencies and undergoes
periodic examinations by those regulatory authorities.
b. INVESTMENT SECURITIES - In May 1993, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 115 "Accounting for Certain Investments in
Debt and Equity Securities". This statement requires that only debt
securities that the Bank has the positive intent and ability to hold
to maturity be classified as held to maturity and reported at
amortized cost; all other debt securities are reported at fair value.
SFAS 115 further requires that realized and unrealized gains and
losses on securities classified as trading account assets are defined
above, shall be recognized in current operations. Securities not
classified as held to maturity or trading are classified as available
for sale, with the related unrealized gains and losses excluded from
earnings and reported net of tax as a separate component of
stockholders' equity until realized. This pronouncement is effective
for fiscal years beginning after December 15, 1993. The Bank adopted
SFAS No. 115 effective January 1, 1994. In accordance with the
provisions of this pronouncement, prior years' financial statements
were not restated. At January 1, 1994, adopting SFAS No. 115 did not
result in any change to stockholders' equity.
Securities held to maturity are carried at cost, adjusted for the
amortization of premiums and the accretion of discounts. Premiums and
discounts are amortized and accreted to operations using the level
yield method, adjusted for prepayments as applicable. Management has
the intent and the Bank has the ability to hold these assets as
long-term investments until their estimated maturities. Under certain
circumstances (including the deterioration of the issuer's credit
worthiness or a change in tax law or statutory or regulatory
requirements), securities held to maturity may be sold or transferred
to another portfolio.
The Bank has no investment securities classified as trading or
available for sale.
c. LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES - Loans, all of which
are held for investment, are stated at the amount of unpaid
principal, reduced by unearned income and the allowance for possible
loan losses. Unearned income on installment loans is recognized as
income over the terms of the loans by a method which approximates the
interest method. Interest on other loans is calculated by the simple
interest method on daily balances of the principal amount
outstanding. The allowance for possible loan losses is established
through a provision for loan losses charged to expenses. Loans are
charged against the allowance
A-10
<PAGE> 58
for possible loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an
amount management believes will be adequate to absorb possible losses
on existing loans that may become uncollectible, based on evaluations
of the collectibility of loans and prior loan loss experience. The
evaluations take into consideration such factors as changes in the
nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans, and current economic conditions
that may affect the borrower's ability to pay. Accrual of interest is
discontinued on a loan when management believes, after considering
economic and business conditions and collection efforts, that the
borrower's financial condition is such that collection of interest is
doubtful.
d. PREMISES AND EQUIPMENT - Bank premises and equipment are carried at
cost less accumulated depreciation. Depreciation expense is computed
mainly using accelerated methods over the estimated useful lives of
the assets.
e. REAL ESTATE ACQUIRED BY FORECLOSURE - Real estate acquired by
foreclosure or by deed in lieu of foreclosure is recorded at the
lower of the outstanding loan amount (including accrued interest, if
any) or fair value, less estimated costs to sell, at the time of
foreclosure. Any resulting loss on foreclosure is charged to the
valuation allowance for possible loan losses and a new basis is
established in the property. A valuation allowance is established to
reflect declines in value subsequent to acquisition, if any, below
the new basis. Operating expenses of such properties, net of related
income, and gains and losses on their disposition, are included in
other non-interest expense.
f. INCOME TAXES - Deferred income tax assets and liabilities are
determined based on the differences between the financial statement
and tax bases of assets and liabilities using enacted rates in effect
in the years in which the differences are expected to reverse.
g. EMPLOYEE BENEFIT PLAN - The Bank has a non-contributory profit
sharing plan covering substantially all of its full-time employees.
Contributions to the plan are made at the discretion of the Bank's
Board of Directors. Contributions were $85,000 in 1996, $35,000 in
1995 and $30,000 in 1994.
h. INCOME PER SHARE - Income per share is computed on the basis of the
weighted average number of common shares outstanding during the year.
i. STATEMENTS OF CASH FLOWS - For purposes of reporting cash flows,
amounts due from banks are considered equivalent to cash.
j. USE OF ESTIMATES - The financial statements have been prepared in
conformity with generally accepted accounting principles. In
preparing the financial statements, the Bank is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from these estimates.
A-11
<PAGE> 59
k. FAIR VALUE OF FINANCIAL INSTRUMENTS - Effective December 31, 1996,
the Bank implemented Statement of Financial Accounting Standards
(SFAS) No. 126, "Exemption from Certain Required Disclosures about
Financial Instruments for Certain Nonpublic Entities." Accordingly,
the Bank has excluded from its financial statements the fair value
disclosures previously required by SFAS No. 107.
2. INVESTMENT SECURITIES
The amortized cost and approximate fair value of investment securities
held to maturity were as follows:
<TABLE>
<CAPTION>
GROSS GROSS APPROXIMATE
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
U. S. Treasury securities $6,528,340 $ 21,849 $ (9,189) $6,541,000
Mortgage-backed securities 1,170,492 1,278 (8,770) 1,163,000
Obligations of states, counties,
and political subdivisions 1,578,893 44,165 (12,058) 1,611,000
Money market accounts 600,000 600,000
---------- -------- -------- ----------
$9,877,725 $ 67,292 $(30,017) $9,915,000
========== ======== ======== ==========
DECEMBER 31, 1995
U. S. Treasury securities $6,056,181 $ 88,453 $ (1,634) $6,143,000
Mortgage-backed securities 1,292,233 1,083 (4,316) 1,289,000
Obligations of states, counties,
and political subdivisions 1,560,956 59,523 (11,479) 1,609,000
Money market accounts 800,000 800,000
---------- -------- -------- ----------
$9,709,370 $149,059 $(17,429) $9,841,000
========== ======== ======== ==========
</TABLE>
There were no sales of investment securities during 1996, 1995 and 1994.
The amortized cost and approximate fair value of investment securities at
December 31, 1996, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
A-12
<PAGE> 60
<TABLE>
<CAPTION>
APPROXIMATE
AMORTIZED FAIR
COST VALUE
<S> <C> <C>
Due in one year or less $3,237,274 $3,250,000
Due after one year through five years 4,911,792 4,926,000
Due after five years through ten years 470,707 490,000
Due after ten years 87,460 86,000
---------- -----------
8,707,233 8,752,000
Mortgage-backed securities 1,170,492 1,163,000
---------- -----------
$9,877,725 $9,915,000
========== ===========
</TABLE>
Investment securities with a carrying value of approximately $8,201,000
and $8,822,000 at December 31, 1996 and 1995, respectively, were pledged
to secure public and other deposits and for other purposes.
3. LOANS
At December 31, 1996 and 1995, loans held for investment were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Commercial, financial and agricultural $ 5,751,907 $ 3,853,008
Real estate - mortgage 10,184,011 8,823,013
Consumer 8,294,556 7,715,634
----------- -----------
$24,230,474 $20,391,655
=========== ===========
</TABLE>
At December 31, 1996 and 1995, the recorded investment in commercial loans
that are considered impaired under Statement of Financial Accounting
Standards No. 114 was approximately $453,000 and $278,000, respectively
(all of which were on a nonaccrual basis). The specific allowance related
to such impaired loans is not material. The average recorded investment in
impaired loans during the year ended December 31, 1996 and 1995 was
approximately $471,000 and $191,000, respectively. For the years ended
December 31, 1996, 1995 and 1994, the amount of interest income recognized
on impaired loans was not material.
Loans on which the accrual of interest had been discontinued approximated
$490,000 in 1996, $334,000 in 1995 and $228,000 in 1994. The effect on
interest income of not accruing interest on these loans was not material.
In the ordinary course of business, the Bank makes loans to its officers
and directors and to companies in which directors are principal owners.
Loans made to such borrowers (including companies in which they are
principal owners) approximated $231,000 in 1996 and $198,000 in 1995.
These loans were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal risk
of collectibility or present other unfavorable features.
A-13
<PAGE> 61
An analysis of activity with respect to these related party loans was as
follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Beginning balance $ 198,000 $ 118,000
New loans 294,000 172,000
Repayments (261,000) (92,000)
--------- ---------
Ending balance $ 231,000 $ 198,000
========= =========
</TABLE>
4. ALLOWANCE FOR POSSIBLE LOAN LOSSES
Activity in the allowance for possible loan losses was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $ 651,931 $ 704,996 $ 573,046
Provision for loan losses 72,000 108,000 244,000
Loans charged off (154,341) (181,739) (165,459)
Loan recoveries 96,723 20,674 53,409
--------- --------- ---------
Balance at end of year $ 666,313 $ 651,931 $ 704,996
========= ========= =========
</TABLE>
5. PREMISES AND EQUIPMENT
Premises and equipment were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Land $ 36,674 $ 36,674
Buildings 437,698 437,698
Furniture, fixtures and equipment 706,875 673,602
---------- ----------
1,181,247 1,147,974
Less accumulated depreciation (864,685) (800,527)
---------- ----------
$ 316,562 $ 347,447
========== ==========
</TABLE>
6. DEPOSITS
Included in interest bearing deposits were certificates of deposit in
amounts of $100,000 or more. These certificates approximated $3,942,000 in
1996 and $2,934,000 in 1995. Interest expense for certificates of deposit
in excess of $100,000 approximated $185,000 in 1996, $152,000 in 1995 and
$110,000 in 1994.
A-14
<PAGE> 62
7. DIVIDEND RESTRICTIONS AND CAPITAL REQUIREMENTS
The Bank is restricted under applicable banking regulations in the payment
of dividends without prior approval of the Bank's regulatory agency.
The Bank is subject to minimum capital requirements which are administered
by various federal and state regulatory authorities. These capital
requirements, as defined by federal guidelines, involve quantitative and
qualitative measures of assets, liabilities and certain off-balance sheet
instruments. Failure to meet minimum capital requirements can initiate
certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
financial statements.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined in the regulations)
to risk-weighted assets (as defined). Management believes, as of December
31, 1996 and 1995, that the Bank meets all capital adequacy requirements
to which it is subject.
At December 31, 1996 and 1995, the most recent notification from the
Federal Deposit Insurance Corporation categorized the Bank as well
capitalized. To be categorized as well capitalized, the Bank must maintain
total risk-based, Tier 1 risk-based and Tier 1 leverage ratios (as defined
in applicable regulations) as set forth in the following table. There are
no conditions or events since the notification at December 31, 1996, that
management believes has changed the Bank's category.
The Bank's actual regulatory capital amounts and ratios as of December 31,
1996 and 1995 are presented below:
<TABLE>
<CAPTION>
MINIMUM REGULATORY
PROVISION TO BE
ACTUAL MINIMUM REGULATORY CATEGORIZED AS
REGULATORY CAPITAL CAPITAL REQUIRED WELL CAPITALIZED
------------------ ------------------ ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
<S> <C> <C> <C> <C> <C> <C>
At December 31, 1996:
Total capital to risk weighted assets $6,580,026 19.90% $2,645,237 8.00% $3,306,546 10.00%
Tier 1 capital to risk weighted assets 5,931,713 18.63% 1,273,583 4.00% 1,910,375 6.00%
Tier 1 capital to average assets 5,931,713 15.22% 1,558,926 4.00% 1,948,657 5.00%
At December 31, 1995:
Total capital to risk weighted assets 5,821,079 26.08% 1,785,607 8.00% 2,232,009 10.00%
Tier 1 capital to risk weighted assets 5,169,148 24.80% 833,398 4.00% 1,250,096 6.00%
Tier 1 capital to average assets 5,169,148 15.08% 1,371,127 4.00% 1,713,908 5.00%
</TABLE>
A-15
<PAGE> 63
8. INCOME TAXES
The components of the provision for income taxes were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current $424,316 $330,158 $274,000
Deferred (6,917) 23,210 (45,000)
-------- -------- --------
Provision for income taxes $417,399 $353,368 $229,000
======== ======== ========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The tax
effects of significant items comprising the Bank's net deferred tax asset,
which is included in other assets, were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax asset - allowance for
possible loan losses $168,829 $163,464
Deferred tax liability - premises and equipment (1,705) (3,257)
-------- --------
167,124 160,207
Valuation allowance -- --
-------- --------
Net deferred tax asset $167,124 $160,207
======== ========
</TABLE>
The provision for income taxes differs from the amount computed by
applying the federal income tax statutory rate to earnings before income
taxes as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Taxes calculated at statutory rate $432,681 $374,199 $251,546
Increase (decrease) resulting from:
Tax-exempt interest (32,449) (31,125) (33,907)
State income tax, net of federal benefit 19,800 18,480 15,840
Other, net (2,633) (8,186) (4,479)
-------- -------- --------
$417,399 $353,368 $229,000
======== ======== ========
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
INTEREST RATE RISK - The Bank is principally engaged in providing
short-term and medium-term commercial and consumer loans with interest
rates that are fixed or fluctuate with the prime lending rate. These
assets are primarily funded through short-term demand deposits and
long-term certificates of deposit with variable and fixed rates.
Accordingly, the Bank is exposed to interest rate risk because in changing
interest rate environments, interest rate adjustments on
A-16
<PAGE> 64
assets and liabilities may not occur at the same time or in the same
amount. The Bank manages the overall rate sensitivity and mix of its asset
and liability portfolio and attempts to minimize the effects that interest
rate fluctuations will have on its net interest margin. The following
represents average interest-earning assets and average interest-bearing
liabilities along with weighted average yields and interest rates:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Average interest-earnings assets $35,227,000 $32,428,000
=========== ===========
Weighted average yield on interest-earnings assets 8.64% 8.52%
==== ====
Average interest-bearing liabilities $26,937,000 $24,465,000
=========== ===========
Weighted average rate on interest-bearing liabilities 3.87% 3.86%
==== ====
</TABLE>
CONCENTRATION OF CREDIT RISK - Most of the Bank's loan activity is with
customers located within Perry County, Mississippi, the economy of which
is heavily dependent on agriculture and the forest products industry.
COMMITMENTS TO EXTEND CREDIT - The Bank makes commitments to extend credit
in the normal course of business to fulfill the financing needs of its
customers. These commitments approximated $905,000 at December 31, 1996
and $836,000 at December 31, 1995. Since some of these commitments are
expected to expire without being drawn upon, the total commitment amount
does not necessarily represent future cash requirements. The Bank applies
the same credit policies and standards as it does in the lending process
when making these commitments. The collateral obtained is based upon the
assessed credit worthiness of the borrower.
LITIGATION - The Bank is defendant in litigation arising during normal
business activities. Management, with the advice of legal counsel, is of
the opinion that the ultimate resolution of these matters will not have a
material adverse effect on the financial statements.
* * * *
A-17
<PAGE> 65
PERRY COUNTY BANK
BALANCE SHEET (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, 1997
ASSETS:
<S> <C>
Cash and cash equivalents $ 2,580,061
Federal funds sold 1,550,000
Investment securities held to maturity 15,067,802
Loans, net 23,453,513
Accrued interest receivable 464,187
Property and equipment - net 308,458
Other assets 247,855
-----------
TOTAL ASSETS $43,671,876
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Non-interest bearing deposits $ 5,649,291
Interest bearing deposits 31,679,760
-----------
Total deposits 37,329,051
Accrued expenses and other liabilities 202,710
-----------
Total liabilities 37,531,761
STOCKHOLDERS' EQUITY:
Common Stock, $10 par value; authorized,
issued and outstanding 12,500 shares 125,000
Surplus 5,650,000
Retained earnings 365,115
-----------
Total stockholders' equity 6,140,115
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $43,671,876
===========
</TABLE>
See note to financial statements.
A-18
<PAGE> 66
PERRY COUNTY BANK
STATEMENTS OF INCOME (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1997 1996
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $584,389 $519,539
Interest and dividends on investment securities:
Taxable 146,512 121,990
Non-taxable 25,577 27,516
Interest on federal funds sold 45,001 38,209
-------- --------
801,479 707,254
INTEREST EXPENSE -
Interest on deposits 290,270 250,460
-------- --------
NET INTEREST INCOME 511,209 456,794
PROVISION FOR POSSIBLE LOAN LOSSES 38,000 18,000
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 473,209 438,794
NON-INTEREST INCOME:
Service charges on deposits 66,595 65,247
Other account charges, fees and commissions 23,669 24,216
Other 5,622 1,403
-------- --------
Total non-interest income 95,886 90,866
-------- --------
NON-INTEREST EXPENSE:
Salaries and employee benefits 145,258 140,328
Net occupancy expense 14,276 14,304
Equipment expense 22,183 23,550
Service and fees 13,554 11,400
Other 67,422 44,734
-------- --------
Total non-interest expense 262,693 234,316
-------- --------
INCOME BEFORE INCOME TAXES 306,402 295,344
PROVISION FOR INCOME TAXES 98,000 95,000
-------- --------
NET INCOME $208,402 $200,344
======== ========
NET INCOME PER COMMON SHARE $ 16.67 $ 16.03
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,500 12,500
======== ========
</TABLE>
See note to financial statements.
A-19
<PAGE> 67
PERRY COUNTY BANK
STATEMENTS OF CASH FLOWS (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 208,402 $ 200,344
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 38,000 18,000
Provision for depreciation 13,500 16,500
Amortization of premiums and discounts on investment
securities 6,080 11,258
Increase in accrued interest receivable (83,511) (43,852)
Deferred income taxes 1,500 (7,500)
Increase in other assets (51,201) (15,967)
(Decrease) increase in accrued expenses and other liabilities (114,621) 64,387
----------- -----------
Net cash provided by operating activities 18,149 243,170
INVESTING ACTIVITIES:
Proceeds from maturities of investment securities 1,966,558 1,693,864
Purchase of investment securities (7,162,715) (1,765,000)
Decrease (increase) in federal funds sold 750,000 (2,151,644)
Net decrease (increase) in loans 1,174 (1,298,082)
Purchases of premises and equipment (5,396) (25,482)
----------- -----------
Net cash used in investing activities (4,450,379) (3,546,344)
FINANCING ACTIVITIES -
Net increase in deposits 4,437,450 3,268,744
----------- -----------
Net cash provided by financing activities 4,437,450 3,268,744
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,220 (34,430)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 2,574,841 2,111,439
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 2,580,061 $ 2,077,009
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES -
Interest paid $ 272,000 $ 249,000
=========== ===========
Income taxes paid $ 134,000 $ 53,350
=========== ===========
</TABLE>
See note to financial statements.
A-20
<PAGE> 68
PERRY COUNTY BANK
NOTE TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
- -------------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION
The unaudited interim financial statements of Perry County Bank
("PCB") have been prepared in accordance with generally accepted
accounting principles. PCB's significant accounting policies are set
forth in the annual financial statements for the year ended December
31, 1996.
In the opinion of management, the unaudited financial statements
reflect all adjustment (all of which are normal and recurring in
nature) necessary for a fair presentation of the financial position,
results of operations, and cash flows of PCB. The results of
operations for the interim periods are not necessarily indicative of
results to be expected for the full year.
The interim financial statements should be read in conjunction with
the audited financial statements for the year ended December 31, 1996,
and the notes related thereto.
A-21
<PAGE> 69
Annex B
B-1
<PAGE> 70
[CHAFFE & ASSOCIATES, INC. LETTERHEAD]
June 24, 1997
Trustmark Corporation
P.O. Box 291
Jackson, MS 39205-0291
Gentlemen:
We understand that Perry County Bank ("PCB"), Trustmark Corporation
("Trustmark") and Trustmark National Bank ("Trustmark Bank") have entered into
a Merger Agreement, dated as of May 13, 1997 (the "Agreement") which provides,
among other things, for the merger of PCB with and into Trustmark Bank (the
"Merger"). Pursuant to the Merger, each issued and outstanding share of PCB
common stock, par value $10.00 per share (the "PCB Common Stock"), excluding
shares held by PCB or by Trustmark or by any of their affiliates, (in each case
in other than a fiduciary capacity or as a result of debts previously
contracted), and excluding shares held by stockholders who perfect their
dissenters' rights of appraisal, shall cease to be outstanding and shall be
converted into and exchanged for either cash or shares of Trustmark no par
value common stock as more fully described in Section 2 of the Agreement.
You have asked our opinion as to whether the purchase price is fair, from a
financial point of view, to the stockholders of Trustmark.
Chaffe & Associates, Inc. ("Chaffe"), through its experience in the securities
industry, investment analysis and appraisal, and in related corporate finance
and investment banking activities, including mergers and acquisitions,
corporate recapitalization, and valuations for estate, corporate and other
purposes, states that it is competent to provide an opinion as to the fairness
of the purchase price contemplated herein. Neither Chaffe nor any of its
officers or employees has an interest in PCB's or Trustmark's Common Stock. The
fee received for the preparation and delivery of this opinion is not dependent
or contingent upon any transaction.
In connection with rendering its opinion, Chaffe, among other things: (i)
reviewed the Agreement; (ii) reviewed and analyzed certain publicly-available
financial statements and other information of PCB and Trustmark, respectively;
(iii) reviewed and analyzed certain internal financial statements and other
financial and operating data concerning PCB, prepared by the management of PCB,
including financial projections; (iv) directed such questions as it deemed
necessary to the President and Chief Executive Officer of PCB, and the
management of Trustmark, respectively; (v) compared
B-2
<PAGE> 71
Trustmark Corporation
June 24, 1997
Page 2
the financial performance of PCB with that of certain comparable
publicly-traded companies and their securities; (vi) reviewed the financial
terms of business combinations in the commercial banking industry specifically
and other industries generally, which Chaffe deemed generally comparable to the
Merger; (vii) considered a number of valuation methodologies, including among
others, those that incorporate book value, deposit base premium and
capitalization of earnings; and (viii) performed such other studies and
analyses as we deemed appropriate to this opinion.
In its review, Chaffe relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial
information, and all other information reviewed by it for purposes of its
opinions. Chaffe did not make or obtain an independent review of PCB's or
Trustmark's assets or liabilities, nor was Chaffe furnished with any such
appraisals. Chaffe relied solely on PCB and Trustmark for information as to the
adequacy of their respective loan loss reserves and values of other real estate
owned. With respect to PCB's projected financial results, Chaffe has assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgements of the management of PCB of future financial
performances of PCB. This opinion was necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
hereof. Chaffe expressed no opinion on the tax consequences of the proposed
transaction or the effect of any tax consequences on the value to be received
by the shareholders of PCB Common Stock.
Based upon and subject to the foregoing and based upon such other matters as we
considered relevant, it is our opinion on the date hereof that the purchase
price is fair, from a financial point of view, to the holders of Trustmark
common stock.
Very truly yours,
CHAFFE & ASSOCIATES, INC.
B-3
<PAGE> 72
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.
(2) "Director" or "officer" means an individual who is or was a
director or officer, respectively, of a corporation or who, while a director or
officer of a corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee benefit plan,
or other entity. A director or officer 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" and "officer"
includes, unless the context requires otherwise, the estate or personal
representative of a director or officer.
(3) "Disinterested director" means a director who, at the time of a
vote referred to in Section 79-4-8.53(c) or a vote or selection referred to in
Section 79-4-8.55(b) or (c) is not:
<PAGE> 73
(i) a party to the proceeding; or
(ii)an individual having a familial, financial, professional,
or employment relationship with the director whose indemnification or advance
for expenses is the subject of the decision being made, which relationship
would, in the circumstances, reasonably be expected to exert an influence on
the director's judgment when voting on the decision being made.
(4) "Expenses" include counsel fees.
(5) "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.
(6) "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 officer, as contemplated in
Section 79-4-8.56, the office in a corporation held by the officer. "Official
capacity" does not include service for any other domestic or foreign
corporation or any partnership, joint venture, trust, employee benefit plan or
other entity.
(7) "Party" means an individual who was, is or is threatened to be
made a defendant or respondent in a proceeding.
(8) "Proceeding" means a threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative and whether formal or informal.
Section 79-4-8.51 AUTHORITY TO INDEMNIFY
(a) Except as provided in subsection (d) of this section, a
corporation may indemnify an individual who is a party to a proceeding because
he is a director against liability incurred in the proceeding if:
(1) (i) He conducted himself in good faith; and
(ii) He reasonably believed:
(A) In the case conduct in his official capacity,
that his conduct was in the best interests of the corporation; and
(B) In all other cases, that his conduct was at least
not opposed to the best interests of the corporation; and
<PAGE> 74
(iii) In the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful; or
(2) He engaged in conduct which broader indemnification has been made
permissible or obligatory under a provision of the articles of incorporation as
authorized by Section 79-4-2.02(b)(5).
(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)(1)(ii)(B).
(c) The termination of a proceeding by judgment, order,
settlement, conviction, or upon plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the relevant
standard of conduct described in this section.
(d) Unless ordered by the court under Section 79-4-8.54(a)(3),
a corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of the
corporation, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the relevant standard
of conduct under subsection (a); or
(2) In connection with any proceeding with respect to conduct for
which he was adjudged liable on the basis that he received a financial benefit
to which he was not entitled, whether or not involving action in his official
capacity.
Section 79-4-8.52 MANDATORY INDEMNIFICATION
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 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, before final disposition of a proceeding,
advance funds to pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding because he is a director if he delivers
to the corporation;
(1) A written affirmation of his good faith belief that he has
met the relevant standard of conduct described in Section 79-4-8.51 or that the
proceeding involves conduct for which
<PAGE> 75
liability has been eliminated under a provision of the articles of
incorporation as authorized by Section 79-4-2.02 (b)(4); and
(2) His written undertaking, to repay any funds advanced if he
is not entitled to mandatory indemnification under Section 79-4-8.52 and it is
ultimately determined under Section 79-4-8.54 or Section 79-4-8.55 that he has
not met the standard of conduct described in Section 79-4-8.51.
(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 the financial ability of the director to make repayment.
(c) Authorizations under this section shall be made in the manner
specified in Section 79-4-8.55:
(1) By the board of directors:
(i) If there are two (2) or more disinterested directors, by a
majority vote of the disinterested directors (a majority of whom shall for such
purpose constitute a quorum) or by a majority of the members of a committee of
two (2) or more disinterested directors appointed by such a vote; or
(ii) If there are fewer than two (2) disinterested directors,
by a vote for action by the board in accordance with Section 79-4-8.24(c), in
which authorization directors who do not qualify as disinterested directors may
participate; or
(2) By the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director may not be voted on the authorization.
Section 79-4-8.54 COURT ORDERED INDEMNIFICATION
(a) A director who is a party to a proceeding because he is a director
may apply for indemnification or an advance for expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of application, and after giving any notice it considers necessary, the
court shall:
(1) Order indemnification if the court determines that the director is
entitled to mandatory indemnification under Section 79-4-8.52;
(2) Order indemnification or advance for expenses if the court
determines that the director is entitled to indemnification or advance for
expenses pursuant to a provision authorized by Section 79-4-8.58(a); or
<PAGE> 76
(3) Order indemnification or advance for expenses if the court
determines, in view of all the relevant circumstances, that it is fair and
reasonable:
(i)To indemnify a director; or
(ii) To advance expenses to a director, even if he has not met
the relevant standard of conduct set forth in Section 79-4-8.51(a), failed to
comply with Section 79-4-8.53 or was adjudged liable in a proceeding referred
to in subsection 79-4-8.51(d)(1)or (d)(2), but if he was adjudged so liable his
indemnification shall be limited to reasonable expenses incurred in connection
with the proceeding.
(b) If the court determines that the director is entitled to
indemnification under subsection (a)(1) or to indemnification or advance of
expenses under subsection (a)(2), it shall also order the corporation to pay
the director's reasonable expenses incurred in connection with obtaining
court-ordered indemnification or advance for expenses. If the court determines
that the director is entitled to indemnification or advance for expenses under
subsection (a)(3), it may also order the corporation to pay the director's
reasonable expenses to obtain court-ordered indemnification or advance for
expenses.
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 for a specific proceeding after a determination has been made
that indemnification of the director is permissible because he has met the
relevant standard of conduct set forth in Section 79-4-8.51.
(b) The determination shall be made:
(1) If there are two (2) or more disinterested directors, by
the board by a majority vote of all the disinterested directors (a majority of
whom shall for such purpose constitute quorum), or by a majority of the members
of a committee of two (2) or more disinterested directors appointed by such a
vote;
(2) By special legal counsel:
(i) Selected in the manner prescribed in subdivision
(1); or
(ii) If there are fewer than two (2) disinterested
directors elected by the board of directors (in which selection directors who
do not qualify as disinterested directors may participate); or
<PAGE> 77
(3) By the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director may not be voted on the determination.
(c) Authorization of indemnification shall be made in the same
manner as the determination that indemnification is permissible, except that if
there are fewer than two (2) disinterested directors, authorization of
indemnification shall be made by those entitled under subsection (b)(2)(ii) to
select special legal counsel.
Section 79-4-8.56 INDEMNIFICATION OF OFFICER, EMPLOYEES AND AGENTS
(a) A corporation may indemnify and advance expenses under this
subarticle to an officer of the corporation who is a party to a proceeding
because he is an officer of the corporation:
(1) To the same extent as a director; and
(2) If he is an officer but not a director, to such further
extent as may be provided by the articles of incorporation, the bylaws, a
resolution of the board or directors or contract except for (A) liability in
connection with a proceeding by or in the right of a corporation other than for
reasonable expenses incurred in connection with the proceeding or (B) liability
arising out of conduct that constitutes (i) receipt by him of a financial
benefit to which he is not entitled, (ii) an intentional infliction of harm on
the corporation or shareholders, or (iii) an intentional violation of criminal
law.
(b) The provisions of subsection (a)(2) shall apply to an officer who
is also a director if the basis on which he is made a party to the proceeding
is an act or omission solely as an officer.
(c) An officer of a corporation who is not a director is entitled to
mandatory indemnification under Section 79-4-8.52, and may apply to a court
under Section 79-4-8.54 for indemnification or an advance for expenses, in each
case as to the same extent to which a director may be entitled to
indemnification or advance for expenses under those provisions.
Section 79-4-8.57 INSURANCE
A corporation may purchase and maintain insurance on behalf of an
individual who is a director or officer of the corporation, or who, while a
director or officer of the corporation, serves at the corporation's request as
a director, officer, partner, trustee, employee or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee benefit plan
or other entity, against liability asserted against or incurred by him in that
capacity or arising from his status as a director or officer,
<PAGE> 78
whether or not the corporation would have the power to indemnify or advance
expenses to him against the same liability under this subarticle.
Section 79-4-8.58 APPLICATION OF ARTICLE
(a) A corporation may, by a provision in its articles of incorporation
or bylaws or in a resolution adopted or a contract approved by its board of
directors or shareholders, obligate itself in advance of the act or omission
giving rise to a proceeding to provide indemnification in accordance with
Section 79-4-8.51 or advance funds to pay for or reimburse expenses in
accordance with Section 79-4-8.53. Any such provision that obligates the
corporation to provide indemnification to the fullest extent permitted by law
shall be deemed to obligate the corporation to advance funds to pay for
reimburse expenses in accordance with Section 79-4-8.53 to the fullest extent
permitted by law, unless the provision specifically provides otherwise.
(b) Any provision pursuant to subsection (a) shall not obligate the
corporation to indemnify or advance expenses to a director of a predecessor of
the corporation, pertaining to conduct with respect to the predecessor, unless
otherwise specifically provided. Any provision for indemnification or advance
for expenses in the articles of incorporation, bylaws, or a resolution of the
board of directors or shareholders of a predecessor of the corporation in a
merger or in a contract to which the predecessor is a party, existing at the
time the merger takes effect, shall be governed by Section 79-4-11.06(a)(3).
(c) A corporation may, by a provision in its articles of
incorporation, limit any of the rights to indemnification or advance for
expenses created by or pursuant to this subarticle.
(d) This subarticle does not limit a corporation's power to pay or
reimburse expenses incurred by a director or an officer in connection with his
appearance as a witness in a proceeding at a time when he is not a party.
(e) This subarticle does not limit a corporation's power to indemnify,
advance expenses to or to provide or maintain insurance on behalf of an
employee or agent.
Section 79-4-8.59 SUBARTICLE TO BE CONTROLLING
A corporation may provide indemnification or advance expenses to a
director or officer only as permitted by this subarticle.
<PAGE> 79
ITEM 21.(a) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
<S> <C> <C>
2. Merger Agreement Exhibit 2
3. Articles of Incorporation of
Trustmark Corporation *
3.1 Bylaws of Trustmark *
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 *
13. Annual Report to security holders *
13.1 Quarterly report to security
holders *
21. Subsidiaries of registrant *
23.1 Consent of Arthur Anderson LLP Exhibit 23.1
23.2 Consent of Deloitte & Touche LLP Exhibit 23.2
23.3 Consent of Brunini, Grantham,
Grower, & Hewes, PLLC Exhibit 23.3
23.4 Consent of Chaffe &
Associates, Inc. Exhibit 23.4
27 Financial Data Schedule *
99 Form of Notice of Special
Meeting and Proxy to be used
in connection with Special Meeting
of Shareholders of PCB Exhibit 99
0
</TABLE>
(*) Included in documents incorporated by reference
<PAGE> 80
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 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 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> 81
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 July 10, 1997.
TRUSTMARK CORPORATION
BY: /s/ Frank R. Day
-------------------------------
Frank R. Day, Its Chairman
of the Board
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Gerard R. Host Principal Financial & July 10, 1997
- ----------------------------- Accounting Officer of -----------------------
Gerard R. Host Trustmark
/s/Frank R. Day Director July 10, 1997
- ----------------------------- -----------------------
Frank R. Day
/s/Richard G. Hickson Director & July 10, 1997
- ----------------------------- Chief Executive Officer -----------------------
Richard G. Hickson
/s/J. Kelly Allgood Director July 10, 1997
- ----------------------------- -----------------------
J. Kelly Allgood
/s/Reuben V. Anderson Director July 10, 1997
- ----------------------------- -----------------------
Reuben V. Anderson
/s/John L. Black, Jr. Director July 10, 1997
- ----------------------------- -----------------------
John L. Black, Jr.
/s/Harry H. Bush Director July 10, 1997
- ----------------------------- -----------------------
Harry H. Bush
/s/Robert P. Cooke, III Director July 10, 1997
- ----------------------------- -----------------------
Robert P. Cooke, III
/s/William C. Deviney, Jr. Director July 10, 1997
- ----------------------------- -----------------------
William C. Deviney, Jr.
</TABLE>
<PAGE> 82
<TABLE>
<S> <C> <C>
/s/D. G. Fountain, Jr. Director July 10, 1997
- ----------------------------- -----------------------
D. G. Fountain, Jr.
/s/C. Gerald Garnett Director July 10, 1997
- ----------------------------- -----------------------
Gerald Garnett
Director July 10, 1997
- ----------------------------- -----------------------
Matthew L. Holleman, III
/s/Fred A. Jones Director July 10, 1997
- ----------------------------- -----------------------
Fred A. Jones
/s/T. H. Kendall, III Director July 10, 1997
- ----------------------------- -----------------------
T. H. Kendall, III
Director July 10, 1997
- ----------------------------- -----------------------
Larry L. Lambiotte
/s/Robert V. Massengill Director July 10, 1997
- ----------------------------- -----------------------
Robert V. Massengill
/s/Donald E. Meiners Director July 10, 1997
- ----------------------------- -----------------------
Donald E. Meiners
/s/William Neville, III Director July 10, 1997
- ----------------------------- -----------------------
William Neville, III
/s/Richard H. Puckett Director July 10, 1997
- ----------------------------- -----------------------
Richard H. Puckett
/s/Charles W. Renfrow Director July 10, 1997
- ----------------------------- -----------------------
Charles W. Renfrow
/s/Clyda S. Rent Director July 10, 1997
- ----------------------------- -----------------------
Clyda S. Rent
/s/William Thomas Shows Director July 10, 1997
- ----------------------------- -----------------------
William Thomas Shows
/s/Harry M. Walker Director July 10, 1997
- ----------------------------- -----------------------
Harry M. Walker
</TABLE>
<PAGE> 83
<TABLE>
<S> <C> <C>
/s/LeRoy G. Walker, Jr. Director July 10, 1997
- ----------------------------- -----------------------
LeRoy G. Walker, Jr.
/s/Paul H. Watson, Jr. Director July 10, 1997
- ----------------------------- -----------------------
Paul H. Watson, Jr.
/s/John C. Wheeless, Jr. Director July 10, 1997
- ----------------------------- -----------------------
John C. Wheelesss, Jr.
/s/Allen Wood, Jr. Director July 10, 1997
- ----------------------------- -----------------------
Allen Wood
</TABLE>
<PAGE> 84
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
2. Merger Agreement Exhibit 2
3. Articles of Incorporation of
Trustmark Corporation *
3.1 Bylaws of Trustmark *
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 *
13. Annual Report to security holders *
13.1 Quarterly report to security
holders *
21. Subsidiaries of registrant *
23.1 Consent of Arthur Anderson LLP Exhibit 23.1
23.2 Consent of Deloitte & Touche LLP Exhibit 23.2
23.3 Consent of Brunini, Grantham,
Grower, & Hewes, PLLC Exhibit 23.3
23.4 Consent of Chaffe &
Associates, Inc. Exhibit 23.4
27 Financial Data Schedule *
99 Form of Notice of Special
Meeting and Proxy to be used
in connection with Special Meeting
of Shareholders of PCB Exhibit 99
0
</TABLE>
(*) Included in documents incorporated by reference
<PAGE> 1
EXHIBIT 2
MERGER AGREEMENT
This Merger Agreement ("Agreement") is executed as of the 1th day of
May, 1997, 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 Perry County Bank, a Mississippi
state chartered banking institution ("Bank").
WHEREAS, the parties desire to merge Bank with Trustmark Bank, with
Trustmark Bank as the surviving association;
NOW, THEREFORE, for the considerations and mutual covenants and
conditions contained in this Agreement, Buyers and Bank do hereby agree as
follows:
1. THE MERGER.
Pursuant to this Agreement and the Plan and Agreement of
Merger in the form attached as Exhibit "A", Bank shall be merged with and into
Trustmark Bank (the "Merger"). As a result of and as part of the Merger and
subject to the adjustments and limitations provided for in Sections 2.2 and 2.3
of this Agreement, on the effective date of the Merger ("Effective Time") each
of the issued and outstanding shares of the common stock of Perry County Bank
as of the date of Bank's special shareholders meeting (the "Meeting Date")
called to vote on the Merger shall be converted into cash or Trustmark common
shares on the basis described in Section 2 herein.
<PAGE> 2
As a consequence of the Merger, all assets of Bank, as they
exist at the Effective Time of the Merger, 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 Bank as
of the Effective Time of the Merger.
2. CONVERSION OF BANK COMMON STOCK.
2.1 Election Procedures and Exchange of Shares.
(a) Right to Elect Type of Consideration; Election. Each
holder of shares of the common stock of Bank as of the Meeting Date shall be
given the opportunity to elect, in accordance with the procedures set forth in
Section 2.1(b) hereof (the "Election") to receive either:
(i) Cash in an amount equal to $752.00 per share for all of
the Bank shares owned by such holder of record as of the Meeting Date (the
"Available Cash Election"). The Available Cash Election is subject to the
following conditions:
(A) A minimum of twenty-five percent (25%) of the
total value of all consideration paid in the Merger (the "Merger
Consideration") shall be paid in cash.
(B) If the total cash payable to Bank shareholders
(including cash paid to holders for fractional shares and cash paid to
dissenters to the transaction) would exceed forty percent (40%) of the Merger
Consideration, the number of shares of each holder's Bank common stock that
will be exchanged for cash under the Available Cash Election shall be
proportionately reduced so that
2
<PAGE> 3
the total cash payable to Bank shareholders shall not exceed forty percent
(40%) of the total Merger Consideration.
(C) Each Bank common share not exchanged for cash
under the Available Cash Election shall be exchanged for shares of Trustmark
common stock at the exchange ratio established in Section 2.1(a)(ii) hereof
(the "Exchange Ratio"); or
(ii) Shares of Trustmark common stock in an amount equal
to a total Merger Consideration of $9.4 Million utilizing a value of $752.00
per share for each Bank common share held by such holder of record as of the
Meeting Date ("Share Election") as to which an Available Cash Election is not
applicable. The Exchange Ratio shall be the quotient of $752.00 divided by the
average closing bid/asked market price (computed on the basis of the last trade
of the day) of Trustmark shares as reported in the National Association of
Securities' Dealers Automated Quotation System for National Market Issues for
the ten consecutive trading days preceding the third (3rd) day prior to the
Meeting Date ("Average Trustmark Price").
(b) Form of Election. Trustmark and Bank agree that the
forms for making the Election (the "Forms of Election"), shall be mailed to
each holder of Bank shares eligible to vote at the Bank special shareholders'
meeting called to vote on the Merger as part of the proxy statement for the
meeting. The Forms of Election must be properly completed and returned to Bank
on or before the Meeting Date in accordance with the instructions applicable
thereto. Any holder of Bank shares who does not return a properly executed
Form
3
<PAGE> 4
of Election on or before the Meeting Date (a "Non-Electing Shareholder") shall
be deemed to have made a Share Election. If the Merger is approved, Bank shall
furnish Trustmark with the original Forms of Election as soon as is practicable
following Bank's special shareholder's meeting.
(c) Change in Election; Revocation. Any Bank shareholder
who has made a valid Election may at any time change such shareholder's
Election by submitting a revised, subsequently dated Form of Election on or
before the Meeting Date.
(d) Bank Shares Held by Trustmark and Treasury Shares.
Any Bank common shares held by Trustmark, whether outright or under option,
(excluding shares held in a fiduciary capacity) or in the treasury of Bank at
the Effective Time shall not be converted but shall be canceled and retired,
and no cash, stock, or other property shall be issuable with respect thereto.
(e) Distribution of Trustmark Stock and Cash. Promptly
following the Effective Date, Trustmark shall send to Bank's shareholders of
record as of the Meeting Date transmittal materials for use in exchanging their
Bank common shares for cash and Trustmark shares in accordance with the
Election. Promptly after the Effective Time, Trustmark shall issue its shares
and pay cash in accordance with the Elections to the Bank shareholders who
surrender their shares to Trustmark. Unless and until the shares of Bank shall
be so surrendered, such former Bank shareholders shall not be entitled to
receive the cash and share certificates to which such shareholder is entitled
or any dividends payable with
4
<PAGE> 5
respect to such shares. Upon the subsequent surrender of such Bank shares, the
former Bank shareholder shall be issued the Trustmark shares and shall be paid
the cash and dividends (without interest) to which such shareholder is
entitled.
2.2 Fractional Shares. No fractional Trustmark common
shares shall be issued upon the surrender for exchange of certificates
representing Bank common shares. In lieu of any such fractional share, each
holder of Bank common shares who would otherwise be entitled to a fractional
share of Trustmark common stock will be paid cash upon surrender of all the
stock certificates representing Bank common shares held by such holder in the
amount equal to the product of such fraction multiplied by the Average
Trustmark Price.
2.3 Calculations and Adjustments If, between the date of
this Agreement and the Effective Time 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, stock split or stock dividend
with a record date within said period, the number of Trustmark common shares to
be issued and delivered upon the Merger as provided in this Agreement shall be
appropriately and proportionately adjusted so that the number of such shares
that will be issued and delivered as a result of the Merger will equal the
number of Trustmark common shares that holders of shares of Bank common stock
would have received had the record date for such reclassification,
recapitalization, stock split or stock dividend been immediately following the
Effective Time of the Merger.
5
<PAGE> 6
If the Average Trustmark Price is less than $24.50 or greater
than $28.50 per share on the Meeting Date and the Merger is approved by the
Bank's shareholders, the following provisions shall apply:
(a) Buyers and Bank shall promptly meet to consider the
implications of the Average Trustmark Price on the proposed transaction;
(b) The Boards of Directors of Trustmark and Bank shall be
fully authorized, under the circumstances and in the best interests of each
organization, to renegotiate the Exchange Ratio for the number of shares of
Trustmark stock in to which Bank common shares shall be converted;
(c) If Trustmark and Bank are unable to negotiate a mutually
acceptable exchange ratio for the number of shares of Trustmark stock in to
which Bank common shares shall be converted, either Trustmark or Bank may
terminate this Agreement upon written notice delivered personally to the other
party on or before ten (10) days prior to the Closing Date.
(d) In the event that either party exercises its right of
termination under and in accordance with the above provisions of this Section
2.3, the terminating party shall reimburse and pay to the other party all of
the non-terminating party's reasonable expenses, including but not limited to,
attorneys' fees which such party shall have incurred under this Agreement and
in pursuance of the transaction covered by this Agreement.
6
<PAGE> 7
2.4 Lost or Destroyed Certificates. Any person whose
certificates representing shares of Bank common stock shall have been lost or
destroyed may nevertheless obtain the shares of Trustmark or cash to which such
Bank shareholder is entitled as a result of the Merger if such Bank shareholder
provides Trustmark with the 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 certificate being thereafter presented to Trustmark for exchange.
3. REPRESENTATION AND WARRANTIES OF BANK.
Bank makes 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 and shall not survive the
Closing Date and the Merger:
3.1 Organization. Bank is a state chartered banking
institution duly organized, validly existing and in good standing under the
laws of the State of Mississippi and has full corporate power 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 Board of Directors of Bank. Upon approval by the shareholders
of Bank and upon obtaining the required approvals of all applicable regulatory
and judicial authorities (and such approvals are no longer subject to judicial
or administrative review, and all waiting periods required by law have
expired):
7
<PAGE> 8
(a) This Agreement shall be a valid, binding obligation
of Bank, enforceable in accordance with its terms, and
(b) Consummation of the transactions contemplated by this
Agreement will not: (i) result in a breach of or default under any agreement
to which Bank is a party, (ii) 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 (iii) conflict with, or result in the breach of, the
articles of association or bylaws of Bank.
3.3 Capitalization. The authorized capital stock of Bank
consists of 12,500 shares of common stock $10.00 par value, of which 12,500
shares are issued and outstanding.
Each share of Bank stock outstanding as of the date hereof is
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights. Other than as described in this Section 3.3, Bank does not
have 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 securities into securities of a different
kind or class. Bank does not have any debt securities outstanding.
3.4 Financial Statements. Bank has delivered to Buyers
the audited financial statements of Bank for the periods ended December 31,
1994, December 31, 1995, and December 31, 1996. As promptly as same are
available, Bank shall deliver to Buyers a copy of any
8
<PAGE> 9
subsequent quarterly and annual financial statements of Bank and its quarterly
call reports. 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 condition of Bank as of the dates thereof in
all material respects and have been or will be prepared in conformity with
generally accepted accounting principals, consistently applied, for the periods
involved. All other statements and reports delivered pursuant to this Section
3.4 do and will fairly present the financial information purported to be shown
therein in all material respects. The $666,313 reserve for loan losses
reflected in the audited financial statements for the period ended December 31,
1996, to the best of Bank's knowledge adequately provides for the anticipated
loan losses of Bank as of such date in accordance with accepted audit, bank
examination and bank regulatory standards.
3.5 Absence of Undisclosed Liabilities. Bank has no
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 audited financial statements for
the period ended December 31, 1996, or otherwise disclosed in this Agreement or
the documents, statements, lists, and exhibits referred to herein and delivered
on the date hereof which could have a material adverse effect on the financial
condition, properties or prospects of Bank.
3.6 Compliance with Laws. To the best of Bank's
knowledge, Bank has no uncorrected deficiencies noted in any examination
9
<PAGE> 10
report by federal or state regulatory authorities and is not in violation of
any material federal, state or local law, rule, ordinance or regulation. Bank
will promptly provide to Buyers copies of all examination reports of and
material communications with all federal and state regulatory authorities from
the date hereof until the Closing Date.
3.7 Contracts and Commitments. As of the date of this
Agreement, Bank has supplied Buyers with copies of all contracts, leases,
licenses, pension or profit sharing agreements and other agreements ("Plans")
relating in any way to Bank, such agreements being described in Exhibit "B"
hereto. To the best of Bank's knowledge, there have been no material breaches
of or defaults under any of the provisions of any such contracts, leases,
licenses, Plans or other agreements, not previously cured. 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) 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.
3.8 Assets Employed. All of Bank'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
necessary to or used or employed in the business and operations of Bank as
currently conducted. Bank has
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good, indefeasible, marketable title to all of its significant tangible assets
free of all liens, encumbrances and claims, except as required by law for
deposits of public funds and to secure repurchase agreements. Leases covering
material tangible assets in which Bank has a leasehold interest only are valid
and enforceable in accordance with their terms and the Merger will not result
in a default thereunder.
3.9 Litigation. Except as described in Exhibit "C"
(Pending Litigation), neither Bank nor any of its 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 Bank therefor.
3.10 Brokers, Finders or Advisers. Bank has not employed
or incurred any liability to any broker, finder or adviser in connection with
the transactions contemplated by this Agreement.
3.11 Taxes. The amounts provided for taxes on the audited
financial statement for the period ended December 31, 1996, 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 Bank for the period
ending on the date of such financial statements and for all prior periods.
Bank has filed all material federal, state, county, municipal and other tax
returns and all other reports which are required to be filed in respect of all
such taxes and, to the extent that its
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liabilities for taxes have not been fully discharged, full and adequate
reserves have been established in the financial statements therefor. The
federal income tax returns of Bank have been audited by the Internal Revenue
Service through the year ending December 31, 1993. Bank is not in default in
the payment of any taxes due or payable or of any assessments of any kind, and
has not received any notice of material assessment or proposed material
assessment of any tax.
3.12 Insurance. True and correct copies of all insurance
policies covering Bank or its officers, directors or employees have been
provided to Buyers, such policies being described in Exhibit "D" hereto. Such
insurance policies, or policies providing substantially equivalent coverage,
have been in force continuously, without gaps in coverage, for at least the
preceding three (3) years and provide the coverage indicated, or substantially
equivalent coverages, for all insurable events occurring during such three year
period.
3.13 Parent, Subsidiaries. Bank has no parent corporation
or subsidiaries.
3.14 Other Regulatory Filings. Subject to applicable
disclosure restrictions, Bank has delivered to Buyers true and correct copies
of all reports filed by it with the Mississippi Department of Banking and
Consumer Finance and Federal Deposit Insurance Corporation and any other
financial regulatory agency since January 1, 1994, such reports being described
in Exhibit "E" hereto. Each of such reports is true and correct in all
material respects.
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3.15 Full Disclosure. To the best of Bank's knowledge,
this Agreement, including all information provided to Buyers pursuant to this
Agreement, does not contain any untrue statement of material fact and Bank has
not omitted to disclose to Buyers any material fact concerning the financial
condition, properties or prospects of Bank.
3.16 Disclosure Documents. With respect to information
supplied or to be supplied by Banks for inclusion in the proxy statement
relating to the meeting of Bank's stockholders for the approval of the 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 Merger (the "Registration Statement"), (i)
the Proxy Statement, at the time of the mailing thereof to stockholders of Bank
and at the time of the meeting of Bank's stockholders 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.
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4. REPRESENTATIONS AND WARRANTIES OF BUYERS.
In order to induce Bank to enter into this Agreement and to
consummate the transactions contemplated herein, Buyers represent and warrant
the following matters to Bank, each of which is being relied on by Bank, 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 and shall not survive the Closing 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 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 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
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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: (i) conflict with or result in the breach of the charter or
bylaws of Buyers, (ii) result in a breach of or default under any agreement to
which Buyers are presently a party, or (iii) 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.
4.3 Capitalization. The authorized capital stock of
Trustmark consists of 100,000,000 shares of common stock, no par value, of
which 36,386,808 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.
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Other than as described herein, neither Trustmark nor
Trustmark Bank 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. Bank and Buyers understand and agree that Trustmark Bank and
Trustmark may issue additional shares of common stock or other securities at
any time for the purpose of making acquisitions or for other business purposes.
4.4 Financial Statements. Buyers have delivered to Bank
the audited financial statements of Trustmark and its consolidated subsidiaries
for the periods ended December 31, 1994, December 31, 1995, and December 31,
1996. As promptly as same are available, Buyers shall deliver to Bank a copy
of any subsequent quarterly and annual financial statements of Trustmark and
consolidated subsidiaries, and quarterly call reports of Trustmark Bank. 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 conditions of Trustmark and consolidated subsidiaries as of the
dates thereof in all material respects and have been or will be prepared in
conformity with generally accepted accounting principles, consistently applied,
for the periods involved. All other statements and reports delivered pursuant
to this Section 4.4 will fairly present the financial information purported to
be shown therein in all material respects.
4.5 Absence of Undisclosed Liabilities. Neither
Trustmark nor Trustmark Bank has any known liabilities or obligations of any
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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 ended December 31, 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 hereof 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, indefeasible, marketable title to all of their
significant tangible assets free of all liens, encumbrances and claims, except
as required by law for deposits of public funds and to secure repurchase
agreements. Leases covering material tangible assets in which Trustmark Bank
has a leasehold interest only are valid and enforceable in accordance with
their terms and the Merger will not result in a default thereunder.
4.7 Taxes. The amounts provided for taxes on the audited
financial statement for the period ending December 31, 1996, 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
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Bank for the period ending on the date of such financial statements and for all
prior periods. Trustmark and Trustmark Bank have filed 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 statements 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.
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4.9 Full Disclosure. To the best of Buyers' knowledge,
this Agreement, including all information provided to Bank pursuant to this
Agreement, does not contain any untrue statement of material fact and Buyers
have not omitted to disclose to Bank any material fact concerning the financial
condition, properties or prospects of Trustmark or Trustmark Bank.
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) compliance with the applicable requirements, if any,
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
(b) compliance with the applicable requirements of the
Securities Exchange Act of 1934 ("Exchange Act") and the rules and regulations
promulgated thereunder;
(c) compliance with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder;
(d) compliance with applicable foreign or state
securities or "blue sky" laws;
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(e) compliance with the applicable requirements of the
Bank Holding Company Act of 1956 and the National Bank Act, both as amended;
and
(f) 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.
4.12 Litigation. Except as disclosed in the reports
referred to in Section 4.8 or as set forth in Exhibit "F", 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 Bank's stockholders for the approval of the 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 Merger (the "Registration Statement"), (i)
the Proxy Statement, at the time of the mailing thereof to
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stockholders of Bank and at the Meeting Date, 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 the Securities Act and
Exchange Act, respectively, and the rules and regulations thereunder.
4.14 Absence of Certain Changes. Since December 31,
1996, 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;
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(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.
5. SPECIAL AGREEMENTS.
5.1 Dividends. On June 30, 1997, Bank shall be permitted
to declare and pay a cash dividend out of current operating profits earned
since January 1, 1997 of up to $10.00 per share; and if the Closing of the
transaction has not occurred by the end of each subsequent calendar quarter, a
dividend out of current operating profits earned during each full calendar
quarter subsequent to June 30, 1997 or prorated portion thereof of up to $5.00
per share until the Closing shall have occurred. Except as set forth in this
Section 5.1, Bank shall not declare any cash or other dividends prior to the
Closing.
5.2 Employment. Trustmark intends to continue the
employment of the employees of Bank after the Closing Date. However, as
employees of Trustmark, such persons are subject to salary review, reassignment
and termination in the same manner as other employees of Trustmark.
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5.3 Confidentiality. Buyers and Bank 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 Bank agree to return all materials concerning the
other to the party from which obtained. 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 Covenant Not to Compete. Each Director of Bank
agrees that for the period from the date hereof until one year after the
Closing Date, he 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 within Perry
County, Mississippi. Other than in the capacity of an officer of Trustmark
Bank subsequent to Closing, the Directors of Bank further agree not to initiate
any action to induce any officer of Trustmark Bank 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 the period from the date hereof until one year after the Closing
Date.
5.5 Payment of Expenses. Except as otherwise provided
herein, Buyers and Bank shall bear their own expenses in connection with the
negotiation and consummation of the transactions contemplated by this
Agreement.
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5.6 Employee Benefit Plans. Following the Closing Date,
the employees of Bank will be entitled to the same employee benefits as are
presently being provided to employees of Trustmark Bank. At Buyer's option,
Bank's existing 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 and with the consent of the Bank, Bank's existing
plan will be merged with Buyer's existing retirement plan. All employees of
Bank will receive credit for years of service at Bank for purposes of vesting
in Buyer's retirement plan.
5.7 Recommendation of Directors; Voting of Shares. The
Board of Directors of Bank hereby agree to recommend that the shareholders of
Bank approve the Merger, to vote their Bank shares in favor of the Merger and
to take all action reasonably required to effect the 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 Merger, provided that no party
hereto shall be prohibited from making any press release or other public
statement which its legal counsel deems necessary.
5.9 Due Diligence. Buyers shall promptly conduct a due
diligence examination of the books, records, assets, and liabilities of Bank,
which shall be completed no later than thirty (30) days after the date hereof.
If such inquiry or examination
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should reveal any previously unknown financial information which Buyers, in
their sole discretion, deem to be adverse, then Buyers may promptly notify Bank
of such finding and may exercise their right of termination set forth in
Section 11(d) of this Agreement.
5.10 Credit Extensions. Banks agree to notify and consult
with Buyers before making, advancing, extending or renewing any loans or
credits above $75,000 before the Closing Date.
5.11 Community Bank Branch Office. Following the
consummation of the Merger, Bank will operate as a separate community bank
branch office of Trustmark Bank, subject to reevaluation and reorganization in
the same manner as all other community bank branch offices of Trustmark Bank.
5.12 Fairness Opinion. Buyers shall obtain, at Buyers'
expense, an opinion that the Merger is fair, from a financial point of view, to
the shareholders of Trustmark and Trustmark Bank.
6. COVENANTS OF BANK PENDING CLOSING.
6.1 Shareholders' Meeting. As promptly as practical
after the effective date of the Registration Statement for the Trustmark shares
to be issued in connection with the Merger, Bank and its directors shall cause
to be convened a meeting of the shareholders of Bank for the purpose of
approving the Merger and completing the Forms of Election. Such meeting shall
be properly called and held in accordance with applicable law and the articles
of association and bylaws of Bank.
6.2 Documents of Title. Bank agrees to allow Buyers to
examine all documents relating to any real or personal property owned by Bank.
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6.3 Access to Properties and Records. Bank will provide
Buyers and their authorized representatives full access during normal business
hours and under reasonable circumstances to any and all of its premises,
properties, contracts, commitments, books, records and other information and
will cause its officers to furnish any and all financial, technical and
operating data and other information pertaining to its business 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, subject to their fiduciary
obligations and duties, Bank and its 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 Bank 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 Bank, or the
acquisition of a majority of the outstanding shares of Bank's common stock or a
majority of the assets of Bank, other than the transaction contemplated by
this Agreement.
6.5 Other Affirmative Covenants. Bank covenants with
Buyers that at all times prior to the Closing Date, Bank will:
(a) Operate its business in substantially the manner in
which such business is now being operated and use its reasonable efforts to
maintain the goodwill of the depositors, customers and suppliers of Bank;
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(b) Use its reasonable efforts to retain the services of
its officers and employees; provided, however, that Bank shall have the right
to terminate the employment of any officer or employee in accordance with
established procedures;
(c) Maintain its 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 it or any of its 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 required by law to
be withheld or collected;
(f) Notify Buyers of any unusual or material problems or
developments with respect to its business; and
(g) Use its reasonable efforts to bring about the
transaction contemplated by this Agreement.
6.6 Negative Covenants of Bank. From the date hereof
until the Closing Date, without the prior written consent of Buyers, Bank will
not:
(a) Incur any material obligation except current
contracts entered into 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
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for officers and employees that will be conducted in January of 1998 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 association or bylaws;
(d) Sell, transfer or convey any of its investment
securities other than in the ordinary course of business;
(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) Except to the extent permitted pursuant to Section
5.1 hereof, declare or pay any dividend or make any other distribution with
respect to its stock;
(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 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;
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(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;
(l) Take any action that causes a failure to comply with
any representation, warranty or covenant contained herein;
(m) Make, advance, extend or renew any loan or credit
above $75,000; or
(n) Enter into any agreement to do any of the foregoing
matters.
7. COVENANTS OF BUYERS PENDING CLOSING.
7.1 Corporate Action. Prior to the Closing Date, Buyers
shall cause the Merger to be approved by the directors of Trustmark and the
shareholder of Trustmark Bank.
7.2 Other Affirmative Covenants. Buyers covenant with
Bank that at all times prior to the Closing Date, Buyers will and will cause
Trustmark Bank to:
(a) Operate their businesses in substantially the manner
in which such businesses are now being operated and use their reasonable
efforts to maintain the good will of the depositors, customers and suppliers of
Trustmark Bank;
(b) Use their reasonable efforts to retain the services
of the officers and employees of 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;
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(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 reasonable efforts to bring about the
transaction contemplated by this Agreement; and
(g) Notify Bank of any unusual or material problems or
developments with respect to the business of Trustmark or Trustmark Bank.
8. CONDITIONS PRECEDENT TO BUYERS' OBLIGATIONS TO CLOSE.
Buyers obligations to consummate the Merger 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
Bank shall be true and correct on the Closing Date in all material respects.
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8.2 Governmental Authority Approval. The consummation of
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.
8.3 Corporate Approval. The Merger shall have been
authorized by the Board of Directors and shareholders of Bank in accordance
with the provisions of applicable law and the articles of association and
bylaws of Bank, and Bank shall have furnished Buyers with certified copies of
resolutions duly adopted by the Board of Directors and shareholders of Bank
approving this Agreement and authorizing the Merger.
8.4 Compliance with Undertakings. Each of the acts,
covenants, agreements and undertakings of Bank and its directors 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 Bank since December 31, 1996, other than as a result of the
transactions contemplated hereby.
8.6 Federal Income Taxation. Buyers shall be satisfied
that the Merger will qualify as a tax-free reorganization under Section 368 of
the Code.
8.7 Fairness Opinion. Buyers shall have received the
fairness opinion described in Section 5.12 of the Agreement.
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8.8 Opinion of Counsel. Bank shall cause to be delivered
to Trustmark the opinion of Forman, Perry, Watkins, Krutz & Tardy, PLLC as of
the Closing Date to the effect that:
(a) Bank is duly organized, validly existing and in good
standing as a state-chartered banking institution under the laws of the State
of Mississippi. To the actual knowledge of such counsel, and following
reasonable inquiry, but without independent verification of facts presented or
represented by Bank to such counsel and with the ability to rely upon
certifications of officers, Bank's authorized capitalization consists of ____
common shares, of which 12,500 shares are issued and outstanding and such
outstanding shares have been duly authorized and validly issued and are fully
paid and not assessable.
(b) This Agreement is valid, binding and enforceable
against Bank 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.
(c) The Merger has been duly authorized by all requisite
corporate and shareholder action of Bank.
(d) Such counsel has no actual knowledge, following
reasonable inquiry, but without independent verification of facts presented or
represented by Bank to such counsel and with the ability to rely upon
certificates of officers and other legal opinions, of any material
misrepresentation, breach of any material warranty or breach of any material
covenant or condition in this Agreement or in any document, statement, list or
schedule referred to herein, by Bank.
32
<PAGE> 33
8.9 Special Financial Covenants. On the Closing Date,
the reserve for loan losses then maintained by Bank shall adequately provide
for the anticipated loan losses of Bank as of such date in accordance with
accepted audit, bank examination and bank regulatory standards. Further, the
tangible assets of Bank, 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 President of Bank shall execute and deliver a closing certificate
to the effect that all representations and warranties by or concerning Bank are
true and correct as of the Closing Date and that all other conditions precedent
to Buyers' obligations to close have been performed and complied with in all
material respects.
9. CONDITIONS PRECEDENT TO BANK'S OBLIGATION TO CLOSE.
Bank's obligation to consummate the Merger is subject to each
of the following conditions precedent, any of which may be waived by Bank 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,
nothing in this Agreement shall prohibit or impair the ability of Trustmark or
Trustmark Bank to make further acquisitions using cash or through the issuance
of additional securities or to issue additional securities for other business
purposes.
33
<PAGE> 34
9.2 Governmental Authority Approval. The consummation of
the 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 Merger shall have been
authorized by the Board of Directors of Trustmark and Trustmark Bank and the
shareholder of Trustmark Bank in accordance with the provisions of applicable
law and the articles and bylaws of Trustmark Bank.
9.4 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 to the terms hereof
shall have been duly performed and caused to be complied with in all material
respects.
9.5 No Material Adverse Change. There shall have been no
material adverse change in the condition, financial or otherwise, of Trustmark
Bank since December 31, 1996, other than as a result of the transaction
contemplated hereby.
9.6 Federal Income Taxation. Bank shall be satisfied
that the Merger will qualify as a tax-free reorganization under Section 368 of
the Code.
9.7 Opinion of Counsel. Buyers shall cause to be
delivered to Bank the 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.
34
<PAGE> 35
(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 Bank, 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 Merger has been duly authorized by all requisite
corporate and shareholder action of Trustmark and Trustmark Bank, and has been
appropriately approved by all applicable regulatory authorities.
(e) Such counsel has no actual 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, of any material misrepresentation, material breach of any
warranty or breach of any material covenant or condition in this Agreement or
in any document, statement, list or schedule referred to herein by the Buyers.
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
35
<PAGE> 36
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 Bank's 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, Bank shall merge with and into Trustmark Bank pursuant to the
Plan and Agreement of Merger attached as Exhibit "A." The Merger will be
effective (the "Effective Time of the Merger") upon the date established by the
United States Comptroller of the Currency.
At the Effective Time of the Merger, the separate corporate existence
of Bank shall cease and Trustmark Bank shall be the surviving association of
the Merger.
The Closing will take place at the main office of Bank 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 Articles 8 and 9 hereof shall be delivered and
the appropriate officers of Bank, 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 Merger.
11. TERMINATION.
This Agreement may be terminated and the Merger and the Closing
abandoned at any time prior to the Closing Date without liability on the part
of Bank or Buyers, as follows:
36
<PAGE> 37
(a) By the mutual consents of the boards of directors of
Bank and Trustmark;
(b) By any party 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 Bank; 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 Bank arising subsequent to the completion of due diligence as
referred to in Section 5.9 hereof.
(f) By Bank, 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, 1996.
(g) By either Buyers or Bank in accordance with and
subject to the provisions of Section 2.3 hereof.
(h) By either Buyers or Bank, if the stockholders of
Bank fail to approve the Merger at the meeting of stockholders called for such
purposes (including any adjournment or postponement thereof);
37
<PAGE> 38
(i) By Buyers if there has been a material breach by Bank
(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 Bank 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 Bank.
12. MISCELLANEOUS.
12.1 Further Assurances. If, at any time after the
Effective Time of the Merger, Buyers shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm, of record or otherwise,
in Trustmark Bank its right, title or interest in, to or under any of the
rights, properties or assets of Bank acquired or to be acquired as a result of
the Merger or to otherwise carry out this Agreement, the officers and directors
of Buyers shall, and will be authorized to, execute and deliver, in the name
and on behalf of Bank all such deeds, bills of sale, assignments and assurances
and take and do, in the name of and on behalf of Bank, 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 or
assets in Trustmark Bank or to otherwise carry out this Agreement.
38
<PAGE> 39
12.2 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Mississippi, except to the extent
federal law is applicable.
12.3 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 5 days after
being mailed by United States certified or registered mail, return receipt
requested, postage prepaid and addressed:
TO: Perry County Bank
Attn: W. H. Howard, Jr.
100 Main Street
New Augusta, MS 39462
WITH A COPY TO: Steven M. Hendrix
Forman, Perry, Watkins, Krutz & Tardy, PLLC
188 E. Capitol Street, 1th Floor
P. O. Box 22068
Jackson, MS 39225-2608
TO: Trustmark or Trustmark Bank
ATTN: Gerard R. Host
248 E. Capitol Street
Jackson, Mississippi 39201
WITH A COPY TO: Granville Tate, Jr.
Brunini, Grantham, Grower & Hewes, PLLC
P. O. Drawer 119
Jackson, Mississippi 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.
12.4 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
39
<PAGE> 40
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.
12.5 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.
12.6 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 provision were omitted.
12.7 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.
12.8 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
12.9 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.
40
<PAGE> 41
12.10 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. 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 Bank, on the other.
12.11 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.
12.12 Definition of Material. With reference to the
representations, warranties and covenants of Bank contained in this Agreement,
such representations, warranties and covenants shall be strictly satisfied and
complied with. Accordingly, when used with reference to Bank "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
aggregate with any other such breach, does or could result in a cost, loss,
detriment or obligation in excess of $200,000. 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
41
<PAGE> 42
reduction in the book value of Bank 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 Bank or Trustmark.
12.13 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.
42
<PAGE> 43
WITNESS the signatures of the parties as of the date first set forth
above.
(SEAL)
TRUSTMARK CORPORATION
By:
--------------------------------
Frank R. Day, Its Chairman of
the Board and Chief Executive
Officer
(SEAL)
TRUSTMARK NATIONAL BANK
By:
--------------------------------
Frank R. Day, Its Chairman of
the Board and Chief Executive
Officer
PERRY COUNTY BANK
By:
--------------------------------
W. H. Howard, Jr.
Chairman of the Board
(SEAL)
Board of Directors of Perry County
Bank
------------------------------------
Leo M. Fike
------------------------------------
Dorothy F. Harvison
------------------------------------
Matthew L. Holleman, III
------------------------------------
W. H. Howard, Jr.
------------------------------------
Nathan D. Matthews
------------------------------------
Juanita D. Tolar
43
<PAGE> 44
EXHIBIT INDEX
Merger Agreement
Exhibit "A" Plan and Agreement of Merger
Exhibit "B" Contracts
Exhibit "C" Pending Litigation - Bank
Exhibit "D" Insurance Policies
Exhibit "E" Regulatory Reports
Exhibit "F" Pending Litigation - Buyers
<PAGE> 1
EXHIBIT 5
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
1400 TRUSTMARK BUILDING
248 EAST CAPITOL STREET EDMUND L. BRUNINI
JACKSON, MISSISSIPPI 39201 (1911-1992)
ROBERT D. DRINKWATER R. GORDON GRANTHAM
(1912-1986)
DIRECT: MAILING ADDRESS
(601) 960-6852 POST OFFICE DRAWER 119 JOHN M. GROWER
JACKSON, MISSISSIPPI 39205 OF COUNSEL
INTERNET: TELEPHONE
[email protected] (601) 948-3101
FACSIMILE
(601) 960-6902
______________, 1997
Board of Directors and Shareholders
Perry County Bank
100 Main St.
New Augusta, Mississippi 39462
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 May 13, 1997, (the "Merger Agreement") by and among Trustmark, Trustmark
Bank and Perry County Bank, a Mississippi banking corporation ("PCB"). 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 duly organized, validly existing and in good
standing as a business corporation under the laws of the State
of Mississippi. The shares of Trustmark's common stock to be
issued as a result of the Merger 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 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.
<PAGE> 2
Trustmark Corporation
_____________, 1997
Page 2
4. The Merger has 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
Robert D. Drinkwater
RDD/pf
<PAGE> 1
EXHIBIT 8
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
1400 TRUSTMARK BUILDING
248 EAST CAPITOL STREET EDMUND L. BRUNINI
JACKSON, MISSISSIPPI 39201 (1911-1992)
ROBERT D. DRINKWATER R. GORDON GRANTHAM
(1912-1986)
DIRECT: MAILING ADDRESS
(601) 960-6852 POST OFFICE DRAWER 119 JOHN M. GROWER
JACKSON, MISSISSIPPI 39205 OF COUNSEL
INTERNET: TELEPHONE
[email protected] (601) 948-3101
FACSIMILE
(601) 960-6902
______________, 1997
Board of Directors
Trustmark Corporation
248 East Capitol Street, Suite 300
Jackson, Mississippi 39201
Board of Directors and Shareholders
Perry County Bank
100 Main Street
New Augusta, Mississippi 39462-0227
Re: Merger Agreement by and among Trustmark Corporation, Trustmark
National Bank and Perry County Bank
Gentlemen:
We have acted as counsel to Trustmark Corporation, a Mississippi
corporation and registered bank holding company ("Trustmark") and its
subsidiary, and Trustmark National Bank, a national banking association
("Trustmark Bank"), in connection with the proposed merger (the "Merger") of
Perry County Bank, a Mississippi chartered bank, ("PCB"), with Trustmark Bank
under the existing charter of Trustmark Bank pursuant to the terms of the
Merger Agreement dated as of May 13, 1997, (the "Merger Agreement"), by and
among Trustmark, Trustmark Bank and PCB, each as described in the Registration
Statement on Form S-4 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 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,
<PAGE> 2
Trustmark Corporation
_____________, 1997
Page 2
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 and PCB.
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, PCB or their respective shareholders.
Based upon and subject to the foregoing, we are of the opinion that
the Merger will, under current law, constitute a tax-free reorganization under
Section 368(a) of the Code. It is further our opinion that Trustmark, Trustmark
Bank and PCB will each be a party to the Merger.
As a tax-free reorganization, the Merger will have the following
Federal income tax consequences for PCB and their shareholders and Trustmark
and Trustmark Bank:
1. No gain or loss will be recognized by the holders of the
common stock of PCB as a result of the exchange of such shares for shares of
Trustmark common stock ("Trustmark Common Stock") pursuant to the Merger. Cash
received by any PCB shareholders as a consequence of exercising their Available
Cash Elections or as a consequence of their perfecting dissenters' rights of
appraisal with respect to their PCB 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 PCB will equal the tax basis of such shareholder's
shares of PCB (reduced by any amount
<PAGE> 3
Trustmark Corporation
____________, 1997
Page 3
allocable to fractional share interests for which cash is received) exchanged
in the Merger, 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 PCB will include the holding period for the
shares of PCB exchanged in the Merger.
4. Trustmark and Trustmark Bank will not recognize gain or loss
as a result of the Merger.
5. PCB will not recognize gain or loss as a result of the Merger.
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
Merger, or of any transactions related to the Merger, or contemplated by the
Merger Agreement. This opinion is being furnished only to you in connection
with the Merger 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
Louis G. Fuller
LGF/pf
<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, 1997 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,
July 7, 1997.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement of Trustmark
Corporation on Form S-4 of our report dated January 17, 1997, relating to the
financial statements of Perry County Bank as of December 31, 1996 and 1995, and
for each of the three years in the period ended December 31, 1996 appearing in
the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Expert" in such
Prospectus.
/s/ Deloitte & Touche LLP
- ------------------------------
Deloitte & Touche LLP
Jackson, Mississippi
July 7, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
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 Perry County Bank
into Trustmark National Bank.
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
/s/ Robert D. Drinkwater
------------------------------
Robert D. Drinkwater
Jackson, Mississippi
July 8, 1997
<PAGE> 1
EXHIBIT 23.4
Consent of Chaffe & Associates, Inc.
We hereby consent to the references to our firm under the heading
"The Merger-Opinion of Trustmark's Financial Advisor" in the Registration
Statement of Form S-4 of Trustmark Corporation filed in connection with the
proposed merger of PCB County Bank into Trustmark National Bank. In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
CHAFFE & ASSOCIATES, INC.
By: /s/ Sherwood G. Briggs
------------------------------
Sherwood G. Briggs
Vice-President
New Orleans, Louisiana
July 7, 1997
<PAGE> 1
EXHIBIT 99
PERRY COUNTY BANK
_______________________________________________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON _______, 1997
TO THE STOCKHOLDERS:
Notice is hereby given that a Special Meeting of the stockholders of
Perry County Bank ("PCB") will be held at 100 Main St., New Augusta, MS 39462
on ___________, 1997, at [__]: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:
(1) Approval of the Merger Agreement dated May 13, 1997 among PCB,
Trustmark Corporation and Trustmark National Bank which
provides for the merger of PCB 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
___________, 1997, shall be entitled to notice of and to vote at the Special
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
<PAGE> 2
PROXY
Perry County Bank
New Augusta , Mississippi
SPECIAL MEETING OF STOCKHOLDERS
______________, 1997
The undersigned hereby appoint(s)____________________ and
________________, or either 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 Perry County Bank
("PCB") to be held at 100 Main Street, New Augusta, Mississippi 39462, at [___]
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 which provides for the merger
of PCB 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 PCB, 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 PCB.
Please date the Proxy and sign your name exactly as it appears on
the stock records of PCB. When shares are held by joint tenants, both are
requested to 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.
