As filed with the Securities and Exchange Commission on August 2, 1994
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
First Commerce Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<C> <C> <C>
Louisiana 6711 72-0701203
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation Classification Code Number) Identification Number)
or organization)
210 Baronne Street
New Orleans, Louisiana 70112
(504) 561-1371
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Copy to: DAVID B. KELSO Copy to:
ANTHONY J. CORRERO, III 210 Baronne Street ALAN JACOBS, ESQ.
Correro, Fishman & Casteix, L.L.P. New Orleans, Louisiana 70112 McGlinchey Stafford Lang
201 St. Charles Avenue, 47th Floor (504) 561-1371 A Law Corporation
New Orleans, Louisiana 70170 (Name, address, including zip code, 2777 Stemmons Freeway, Suite 925
and telephone number, Dallas, Texas 75207
including area code, of agent for service)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon the effective date of the mergers described in this registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, please check the following box.
CALCULATION OF REGISTRATION FEE
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<CAPTION>
<C> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum
Title of Each Number of Shares Offering Aggregate
Class of Securities to be Price Per Offering Amount of
to be Registered Registered<FN>1 Share<FN2> Price<FN2> Registration Fee<FN>2
Common Stock
$5 Par value 2,860,169 $25.58 $21,683,091 $7,477
</TABLE>
<FN1> Based on the minimum closing sales price of a share of
First Commerce Corporation("FCC") Common Stock, $5 par
value per share, of $23.60 that may be applied
pursuant to the pricing formula described herein.
<FN2> Calculated in accordance with Rule 457(f)(2), based on
the aggregate book value as of June 30, 1994 of the
shares of common stock, $1 par value per share, of
First Bancshares, Inc. ("FB") to be converted in
connection with the mergers, all as described in
the registration statement, and computed by multiplying
the book value per share of FB Common Stock on June 30,
1994 of $25.58 by 847,658, representing the number of
issued and outstanding shares of FB Common Stock on
June 30, 1994.
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 this
registration statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
FIRST COMMERCE CORPORATION
CROSS REFERENCE SHEET
Item of Form S-4 Location in Prospectus
A. Information About the Transaction
1. Forepart of Registration Cover Page
Statement and Outside
Front Cover Page of
Prospectus
02. Inside Front and Outside Inside Cover; Table of
Back Cover Pages of Pro- Contents
spectus
03. Risk Factors, Ratio of *
Earnings to Fixed Charges
and Other Information
04. Terms of the Transaction Summary; The Plan
05. Pro Forma Financial First Commerce Corporation Pro
Information Forma Condensed Combined
Financial Statements (Unaudited)
06. Material Contacts with *
the Company Being
Acquired
07. Additional Information *
Required for Reoffering
by Persons and Parties
Deemed to be Underwriters
08. Interests of Named *
Experts and Counsel
09. Disclosure of Commission *
Position on Indemnifica-
tion for Securities Act
Liability
B. Information About the Registrant
010. Information with Respect Information about FCC
to S-3 Registrants
011. Incorporation of Certain Information about FCC
Information by Reference
012. Information with Respect *
to S-2 or S-3 Registrants
013. Incorporation of Certain *
Information by Reference
014. Information with Respect *
to Registrants other than
S-2 or S-3 Registrants
C. Information About the Company Being Acquired
015. Information with Respect *
to S-3 Companies
016. Information with Respect *
to S-2 or S-3 Companies
017. Information with Respect Information about FB
to Companies other than
S-2 or S-3 Companies
D. Voting and Management Information
018. Information if Proxies,
Consents or Author-
izations are to be
Solicited
(1) Date, Time and Place Introductory Statement-General
Information
(2) Revocability of Introductory Statement-
Proxy Solicitation, Voting and
Revocation of Proxies
(3) Dissenters' Rights Dissenters' Rights
of Appraisal
(4) Persons Making Introductory Statement-General
Solicitation
(5) Interests of Certain Summary-Interests of Certain
Persons in Matters Persons in the Mergers; The
to be Acted upon; Plan - Interests of Certain
Voting Securities Persons in the Mergers; The
and Principal Plan - Employee Benefits;
Holders Thereof Information About FB -
Security Ownership of
Principal Shareholders and
Management
(6) Vote Required for Introductory Statement-Shares
Approval Entitled to Vote; Quorum; Vote
Required
(7) Directors and Information About FB;
Executive Officers; Information About FCC
Executive
Compensation;
Certain
Relationships and
Related Transactions
19. Information if Proxies, *
Consents or
Authorizations are not to
be Solicited or in an
Exchange Offer
_______________
* Not applicable or answer is in the negative.
<PAGE>
FIRST BANCSHARES, INC.
1431-A Gause Boulevard
Post Office Box 1049
Slidell, Louisiana 70459
________, 1994
To Our Shareholders:
You are cordially invited to attend a Special Meeting
of Shareholders of First Bancshares, Inc. ("FB") to be held
at _____________________________________________, Slidell,
Louisiana, on ________, 1994 at ________ __.m., Central
time.
At this meeting, you will be asked to consider and vote
upon a proposal to approve an Agreement and Plan of Merger
and two related merger agreements (collectively, the "Plan")
pursuant to which, First Bank ("Bank"), the wholly-owned
subsidiary of FB, will be merged with and into First
National Bank of Commerce ("FNBC"), a wholly-owned
subsidiary of First Commerce Corporation ("FCC") (the "Bank
Merger") and FB will be merged with and into FCC (the
"Holding Company Merger" which, together with the Bank
Merger, are hereinafter collectively referred to as the
"Mergers"). The terms of the Plan provide that, on the
effective date of the Holding Company Merger, each
outstanding share of common stock of FB will be converted
into shares of FCC common stock as more fully described in
the accompanying Proxy Statement and Prospectus. You are
urged to read carefully the Proxy Statement and Prospectus
in its entirety for a more complete description of the terms
of the Plan and the proposed Mergers.
The Plan has been approved by your Board of Directors.
The Board believes, based on its own analysis and the
opinion of FB's financial advisor (all of which are
described in the accompanying Proxy Statement and
Prospectus), that the proposed Mergers are in the best
interests of FB's shareholders. As a result of the proposed
Mergers, you, as a new shareholder of FCC, will own common
stock in a bank holding company whose stock is publicly
traded on the Nasdaq National Market. The Mergers present a
rare opportunity for our shareholders and I urge you to vote
your shares in favor of this transaction.
The Board of Directors recommends that you vote FOR the
Plan and the proposed Mergers by signing, dating and
returning promptly the enclosed proxy card in the
accompanying envelope.
Very truly yours,
Elton A. Arceneaux, Jr.
President
<PAGE>
FIRST BANCSHARES, INC.
1431-A Gause Boulevard
Post Office Box 1049
Slidell, Louisiana 70459
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of
First Bancshares, Inc.:
Notice is hereby given that a Special Meeting of
Shareholders of First Bancshares, Inc., a Louisiana
corporation ("FB"), will be held at
___________________________________, Slidell, Louisiana,
________, 1994 at ________ __.m., Central time, for the
following purposes:
1. To consider and vote upon a proposal to
approve an Agreement and Plan of Merger and two related
merger agreements (collectively, the "Plan") pursuant
to which, (a) First Bank, the wholly-owned subsidiary
of FB, will be merged with and into First National Bank
of Commerce, a wholly-owned subsidiary of First
Commerce Corporation ("FCC"), (b) FB will be merged
with and into FCC (the "Holding Company Merger"), and
(c) on the effective date of the Holding Company
Merger, each outstanding share of common stock of FB
will be converted into a number of shares of FCC common
stock as determined in accordance with the terms of the
Plan.
2. To transact such other business as may
properly come before the meeting and any adjournment
thereof.
Only shareholders of record at the close of business on
________, 1994 are entitled to notice of and to vote at the
special meeting.
Dissenting shareholders who comply with the procedural
requirements of the Business Corporation Law of Louisiana
will be entitled to receive payment of the fair cash value
of their shares if the Holding Company Merger is effected
upon approval by less than eighty percent (80%) of the total
voting power of FB.
Your vote is important regardless of the number of
shares you own. Even if you plan to attend the Special
Meeting, please date and sign the enclosed proxy and return
it promptly in the enclosed envelope, which requires no
postage. Your proxy may be revoked at any time prior to the
vote at the Special Meeting by notice to the Secretary of FB
or by execution and delivery of a subsequently dated proxy.
If you attend the Special Meeting, you may withdraw your
proxy and vote in person.
Slidell, Louisiana
________________, 1994
BY ORDER OF THE BOARD OF DIRECTORS
James C. Piercey
Secretary
<PAGE>
FIRST COMMERCE CORPORATION
Common Stock, $5.00 par value
________________________________________
First Bancshares, Inc.
Special Meeting of Shareholders to be held __________, 1994
First Commerce Corporation ("FCC") has filed a
Registration Statement pursuant to the Securities Act of
1933, as amended (the "Securities Act"), covering up to
2,860,169 shares of common stock, $5 par value, of FCC ("FCC
Common Stock") that may be issued in connection with a
proposed merger of First Bancshares, Inc. ("FB") into FCC as
determined on the basis of the operation of the pricing
formula described herein. This document constitutes a Proxy
Statement of FB in connection with the transactions
described herein and a Prospectus of FCC with respect to the
shares of FCC Common Stock to be issued if the merger is
consummated. The actual number of shares of FCC Common
Stock to be issued will be determined in accordance with the
terms of the agreements described herein.
________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________________________________
No person has been authorized to give any information
or to make any representations other than those contained in
this Proxy Statement and Prospectus, and, if given or made,
such information or representations must not be relied upon
as having been authorized by FCC or FB. This Proxy
Statement and Prospectus shall not constitute an offer by
FCC to sell or the solicitation of an offer by FCC to buy
nor shall there be any sale of the securities offered by
this Proxy Statement and Prospectus in any state in which,
or to any person to whom, it would be unlawful prior to
registration or qualification under the laws of such state
for FCC to make such an offer or solicitation. Neither the
delivery of this Proxy Statement and Prospectus nor any sale
made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of
FCC or FB since the date hereof.
________________________________________
This Proxy Statement and Prospectus is dated ______________, 1994
<PAGE>
AVAILABLE INFORMATION
FCC is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith is
required to file reports and other information with the
Securities and Exchange Commission (the "Commission"). Such
reports, together with proxy statements and other information
filed by FCC, can be inspected at, and copies thereof may be
obtained at prescribed rates from the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and from the Commission's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661.
FCC has filed with the Commission a Registration Statement
on Form S-4 ("Registration Statement") under the Securities Act
with respect to the common stock offered by this Proxy Statement
and Prospectus. This Proxy Statement and Prospectus does not
contain all of the information set forth in the Registration
Statement or the exhibits thereto. Statements contained in this
Proxy Statement and Prospectus as to the contents of any
documents are necessarily summaries of the documents, and each
statement is qualified in its entirety by reference to the copy
of the applicable document filed with the Commission. For
further information with respect to FCC, reference is made to the
Registration Statement, including the exhibits thereto.
As more fully set forth under the heading "Information about
FCC" elsewhere herein, certain information with respect to FCC
has been incorporated by reference into this Proxy Statement and
Prospectus. FCC hereby undertakes to provide without charge to
each person to whom a copy of this Proxy Statement and Prospectus
has been delivered, upon the written or oral request of such
person, a copy of any or all of the information or documents
which have been incorporated by reference herein, other than
exhibits to such documents. Requests for such copies should be
directed to Mr. Thomas L. Callicutt, Jr., Senior Vice President
and Controller, First Commerce Corporation, P. O. Box 60279, 925
Common Street, 7th Floor, New Orleans, Louisiana 70160,
telephone (504) 582-2900. In order to ensure timely delivery of
the documents, any request should be made by _______________,
1994.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY i
The Companies i
The Banks i
The Special Meeting ii
Purpose of the Special Meeting ii
Vote Required ii
Recommendation of the Board of Directors ii
Basis for the Terms of the Plan iii
Opinion of Montgomery Securities iii
Conversion of FB Common Stock iii
Exchange of Certificates v
Conditions to Consummation of the Mergers v
Waiver, Amendment and Termination vi
Interests of Certain Persons in the Mergers vii
Shareholder's Commitment viii
Employee Benefits viii
Material Federal Income Tax Consequences ix
Dissenters' Rights ix
Selected Financial Data of FB ix
Selected Financial Data of FCC xi
Comparative Per Share Data (Unaudited) xii
Market Prices and Dividends xiv
Recent Operating Results of FCC xv
INTRODUCTORY STATEMENT 1
General 1
Purpose of the Special Meeting 1
Solicitation, Voting and Revocation of Proxies 1
Shares Entitled to Vote; Quorum; Vote Required 2
THE PLAN 3
General 3
Background of and Reasons for the Plan 3
Opinion of Montgomery Securities 4
Conversion of FB Common Stock 8
Effective Date 10
Exchange of Certificates 10
Regulatory Approvals and Other Conditions of the Mergers 11
Conduct of Business Prior to the Effective Date 12
Waiver, Amendment and Termination 13
Interests of Certain Persons in the Mergers 14
Shareholder's Commitment 15
Employee Benefits 16
Expenses 16
Status Under Federal Securities Laws; Certain
Restrictions on Resales 16
Accounting Treatment 17
MATERIAL FEDERAL INCOME TAX CONSEQUENCES 17
DISSENTERS' RIGHTS 19
INFORMATION ABOUT FB 20
Description of the Business 20
Competition 21
Property 22
Employees 22
Legal Proceedings 22
Security Ownership of Principal Shareholders
and Management 22
FB MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 24
FB MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 39
INFORMATION ABOUT FCC 43
COMPARATIVE RIGHTS OF SHAREHOLDERS 43
Preferred Stock 43
Shareholders' Meetings 44
Fair Price Protection Statute 44
LEGAL MATTERS 44
EXPERTS 45
OTHER MATTERS 45
FIRST COMMERCE CORPORATION PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(UNAUDITED) F-1
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS OF FIRST BANCSHARES, INC. F-18
Appendix A - Pertinent Portions of Agreement and
Plan of Merger A-1
Appendix B - Fairness Opinion of Montgomery Securities B-1
Appendix C - Excerpt from Section 131 of the
Louisiana Business Corporation Law C-1
<PAGE>
SUMMARY
The following summary is necessarily incomplete and is
qualified in its entirety by the more detailed information
appearing elsewhere herein, the appendices hereto and the
documents incorporated herein by reference. Shareholders are
urged to read carefully all such material.
The Companies
First Commerce Corporation, a Louisiana corporation ("FCC"),
is a multi-bank holding company with five wholly owned bank
subsidiaries in New Orleans, Baton Rouge, Alexandria, Lafayette
and Lake Charles, Louisiana. FCC and its subsidiaries are
referred to collectively herein as "FCC's consolidated group."
At March 31, 1994, FCC had total consolidated assets of
approximately $6.4 billion and total consolidated deposits of
approximately $5.3 billion. FCC's principal executive offices
are at 210 Baronne Street, New Orleans, Louisiana 70112, and its
telephone number is (504) 561-1371. See "Information About FCC."
First Bancshares, Inc., a Louisiana corporation ("FB"), is a
one bank holding company that was incorporated in 1981 to acquire
all of the outstanding stock of First Bank ("Bank"). At March
31, 1994, FB had total consolidated assets of approximately
$246.5 million and shareholders' equity of approximately $20.9
million. FB's principal executive offices are at 1431-A Gause
Boulevard, Slidell, Louisiana 70459, telephone (504) 643-2700.
FB and Bank are referred to herein collectively as "FB's
consolidated group." See "Information About FB" and "Consolidated
Financial Statements of First Bancshares, Inc."
FCC and FB are collectively referred to herein as the
"Companies."
The Banks
First National Bank of Commerce ("FNBC"), a national banking
association that is a wholly owned subsidiary of FCC, is a full
service commercial bank offering consumer and commercial banking
services in Orleans, Jefferson, St. Tammany, St. Bernard, St.
Charles and St. John Parishes. At March 31, 1994, FNBC had total
assets of approximately $4.0 billion and total deposits of
approximately $3.2 billion. In addition to its main banking
facility in New Orleans, Louisiana, FNBC operates 41 full service
branches.
Bank, a Louisiana state chartered bank organized in 1906, is
a wholly owned subsidiary of FB, and provides full service
commercial banking services in Slidell, Louisiana and surrounding
areas of St. Tammany Parish, Louisiana, through its main banking
office at 2200 Front Street, Slidell, Louisiana, and at five full
service branches located in Slidell, Covington and Mandeville,
Louisiana. At March 31, 1994, Bank had total assets of
approximately $246.1 million and total deposits of approximately
$223.7 million.
FNBC and Bank are collectively referred to herein as the
"Banks."
The Special Meeting
A special meeting of the shareholders of FB will be held at
________________________, Slidell, Louisiana, on __________, 1994
at ________ __.m. Central time (the "Special Meeting"). Only
record holders of the common stock, $1.00 par value per share, of
FB ("FB Common Stock") at the close of business on __________,
1994 (the "Record Date") are entitled to notice of and to vote at
the Special Meeting. On the Record Date, there were 847,658
shares of FB Common Stock issued and outstanding.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote
upon a proposal to approve an Agreement and Plan of Merger and
two related merger agreements (collectively, the "Plan")
pertinent portions of which are attached hereto as Appendix A,
pursuant to which, among other things, (a) Bank will be merged
with and into FNBC (the "Bank Merger"), (b) FB will be merged
with and into FCC (the "Holding Company Merger", which, together
with the Bank Merger, are hereinafter collectively referred to as
the "Mergers"), and (c) on the effective date of the Holding
Company Merger, each outstanding share of FB Common Stock will be
converted into a number of shares of common stock, $5.00 par
value per share, of FCC ("FCC Common Stock"), as determined in
accordance with the terms of the Plan. As a result of the
Mergers, the business and properties of Bank will become the
business and properties of FNBC, the business and properties of
FB will become the business and properties of FCC and
shareholders of FB will receive the consideration described below
under "Conversion of FB Common Stock." See "Introductory
Statement - Purpose of the Special Meeting."
Vote Required
The Plan must be approved by the affirmative vote of two-
thirds of the voting power present, in person or by proxy, at the
Special Meeting, with each shareholder of FB Common Stock
entitled to one vote for each share owned by him. As a condition
to the consummation of the Mergers, each shareholder of FB who is
also a director or executive officer of FB or Bank, or who owns
five percent or more of the outstanding shares of FB Common
Stock, has executed an agreement (a "Shareholder's Commitment")
pursuant to which such shareholder, among other things, commits
to vote in favor of the approval of the Plan. The 12 persons who
have executed Shareholder's Commitments beneficially owned, as of
July 29, 1994, an aggregate of 494,123 shares, or approximately
58.29%, of the outstanding FB Common Stock on that date. Under
Louisiana law, shareholders of FCC are not required to approve
the Plan. See "Introductory Statement - Shares Entitled to Vote;
Quorum; Vote Required" and "The Plan - Shareholder's Commitment."
Recommendation of the Board of Directors
The Board of Directors of FB believes that the Plan is in
the best interests of the shareholders and recommends that the
shareholders vote "FOR" the approval of the Plan. The Board of
Directors has received from Montgomery Securities ("Montgomery")
an opinion that the consideration to be received by the
shareholders of FB pursuant to the Mergers, when taken as a
whole, is fair to FB and its shareholders from a financial point
of view. See "The Plan - Opinion of Montgomery Securities."
FB's Board of Directors believes that the terms of the Plan will
provide significant value to all FB shareholders and will enable
them to participate in opportunities for growth that FB's Board
of Directors believes the Mergers make possible. In recommending
the Plan to the shareholders, FB's Board of Directors considered,
among other factors, the financial terms of the Plan, the
liquidity it will afford FB's shareholders, and the likelihood
and potential adverse impact of increased competition for FB in
its market area if FB remains independent. See "The Plan -
Background of and Reasons for the Plan."
Basis for the Terms of the Plan
A number of factors in addition to those stated above were
considered by the Board of Directors of FB in approving the terms
of the Plan, including, without limitation, information
concerning the business, financial condition, results of
operations and prospects of FCC, FB, FNBC and Bank; the ability
of the combined entity to compete in the relevant banking
markets; the proposed treatment of the FB Common Stock in the
Holding Company Merger; the market price of FCC Common Stock; the
dividend policy of FCC and the absence of dividends on the part
of FB; the absence of an active trading market for the FB Common
Stock; the federal tax consequences of the Plan to FB's
shareholders, to the extent FCC Common Stock is received, for
federal income tax purposes; the financial terms of other
business combinations in the banking industry; and certain non-
monetary factors. See "The Plan - Background of and Reasons for
the Plan."
Opinion of Montgomery Securities
Montgomery, FB's financial advisor, has rendered its opinion
that the consideration to be received by the shareholders of FB
pursuant to the Plan, when taken as a whole, is fair to FB and
its shareholders from a financial point of view. The opinion of
Montgomery is attached hereto as Appendix B, and should be read
in its entirety with respect to the assumptions made therein and
other matters considered. See "The Plan - Opinion of Montgomery
Securities" for further information regarding, among other
things, the selection of Montgomery and its compensation
arrangement in connection with the Plan.
Conversion of FB Common Stock
Under the terms of the Plan, on the date the Holding Company
Merger becomes effective (the "Effective Date"), the outstanding
shares of FB Common Stock will be converted into a number of
shares of FCC Common Stock, equal to the sum of (a) 1,271,186
shares of FCC Common Stock plus (b) a number of shares of FCC
Common Stock equal to (i) $37.5 million, less the Deductible
Amount, as defined in the Plan, if any, divided by (ii) the
average of the closing sales price of a share of FCC Common Stock
on the Nasdaq National Market for the five trading days ending on
the last trading day immediately prior to the Effective Date (the
"Average Sales Price"), provided, that if the Average Sales Price
so determined is less than $23.60, then the divisor will be
23.60, and if the Average Sales Price is greater than $35.40,
then the divisor will be 35.40.
The term "Deductible Amount" is defined by the Plan as (i)
any amount in excess of $200,000 not reflected or reserved for on
FB's financial statements for the period ending March 31, 1994
that is attributable to legal, accounting, investment banking,
printing and other similar fees and expenses related to the
process leading to the selection of FCC and the negotiation,
execution and consummation of the Plan, other than investment
banking fees payable to Montgomery; (ii) any amounts over
$1,750,000 to be paid by FCC or FNBC pursuant to certain
employment and retention agreements and severance policies of FB
referred to in the Plan; (iii) any payments made pursuant to such
agreements, policies and arrangements set forth in clause (ii)
above to James C. Piercey, President and Chief Executive Officer
of the Bank, unless Mr. Piercey enters into a non-competition
agreement in form and substance satisfactory to FCC; and (iv) any
amounts over $540,000 to be paid by FCC or FNBC pursuant to
certain incentive pay arrangements and budgeted bonuses under
plans in effect prior to December 31, 1993 described in the Plan;
provided that the entire amount paid by FCC or FNBC under such
incentive pay arrangements and budgeted bonuses will be included
in the Deductible Amount unless FB has been accruing for those
payments since December 31, 1993. Because the determination of
the Deductible Amount is dependent on facts as of the date of
closing of the Mergers, it is not possible to estimate the
Deductible Amount, if any, with certainty at this time.
The following table sets forth examples of the number of
shares of FCC Common Stock into which each share of FB Common
Stock would be converted on the Effective Date, assuming that on
such date the Average Sales Price for FCC Common Stock is as
specified below, the table does not reflect any Deductible Amount,
which would reduce the number of FCC shares shown in each case.
<PAGE>
Assumed Average Number of FCC
Sales Price of FCC Common Stock Shares Per FB Share
_______________________________ ___________________
$ 24 3.34
26 3.20
28 3.08
30 2.97
32 2.88
34 2.80
36 2.73
On July 28, 1994, the actual closing sales price for a share
of FCC Common Stock was $26.75.
In lieu of the issuance of any fractional share of FCC
Common Stock to which a holder of FB Common Stock may be
entitled, each shareholder of FB, upon surrender of the
certificate or certificates which immediately prior to the
Effective Date represented FB Common Stock held by such
shareholder, shall be entitled to receive a cash payment (without
interest) equal to such fractional share multiplied by the
Average Sales Price. See "The Plan - Conversion of FB Common
Stock."
Exchange of Certificates
Upon consummation of the Mergers, a letter of transmittal,
together with instructions for the exchange of certificates
representing shares of FB Common Stock for certificates
representing shares of FCC Common Stock will be mailed to each
person who was a shareholder of record of FB on the Effective
Date of the Mergers. Shareholders are requested not to send in
their FB Common Stock certificates until they have received a
letter of transmittal and further written instructions.
FB shareholders who cannot locate their certificates are
urged promptly to contact James C. Piercey, First Bancshares,
Inc., 1431-A Gause Boulevard, Slidell, Louisiana 70459,
telephone (504) 643-2700. A new certificate will be issued to
replace the lost certificate(s) only upon execution by the
shareholder of an affidavit certifying that his certificate(s)
cannot be located and an agreement to indemnify FB and FCC, as
its successor, against any claim that may be made against it or
FCC, as its successor, by the owner of the certificate(s) alleged
to have been lost or destroyed. FB or FCC, as its successor, may
also require the shareholder to post a bond in such sum as is
sufficient to support the shareholder's agreement to indemnify FB
and FCC, as its successor. See "The Plan - Exchange of
Certificates."
Conditions to Consummation of the Mergers
In addition to approval by the shareholders of FB, consumma-
tion of the Mergers is conditioned upon, (i) the accuracy on the
date of closing of the representations and warranties and the
compliance with covenants made in the Plan by each party, and the
absence of any material adverse change in the financial
condition, results of operations or business of the other party's
consolidated group, taken as a whole, (ii) receipt by FCC and
FNBC of required regulatory approvals, (iii) that neither FCC's
independent accountants nor the Securities and Exchange
Commission shall have taken the position that the Mergers do not
qualify for pooling-of-interests accounting treatment, (iv) the
receipt by FCC and FB of opinions of counsel or accountants as to
the qualification of the Mergers as tax-free reorganizations
under applicable law, and (v) certain other conditions. The
Companies intend to consummate the Mergers as soon as practicable
after all of the conditions to the Mergers have been met or
waived.
On August 5, 1994, FCC expects to file a notice seeking a
waiver of the prior approval of the Board of Governors of the
Federal Reserve System (the "Reserve Board"), and an application
seeking the approval of the Office of the Comptroller of the
Currency (the "Comptroller") of the Bank Merger. FCC expects to
receive such waiver and such approval by November 5, 1994;
however, there can be no assurance that the waiver or the
approval will be obtained, or that the other conditions to
consummation of the Mergers will be satisfied by such date or at
all. See "The Plan - Regulatory Approvals and Other Conditions
of the Mergers."
Waiver, Amendment and Termination
The Plan provides that each of the parties to the Plan may
waive any of the conditions to its obligation to consummate the
Mergers other than the receipt of all necessary regulatory
approvals, the approval of the shareholders of FB and the satis-
faction of all requirements prescribed by law for consummation of
the Mergers.
The Plan may be amended, at any time before or after its
approval by the shareholders of FB, by the mutual agreement of
the Boards of Directors of the parties to the Plan; provided
that, any amendment made subsequent to such shareholder approval
may not alter the amount or type of shares into which FB Common
Stock may be converted, alter any term of the Articles of
Incorporation of FCC, or alter any term or condition of the Plan
in a manner that would adversely affect any shareholder of FB.
The Plan may be terminated at any time prior to the
Effective Date of the Mergers by (i) the mutual consent of the
Boards of Directors of FCC and FB; (ii) either FCC or FB in the
event of a material breach by any member of the consolidated
group of the other of them of any representation, warranty or
covenant in the Plan which cannot be cured by the earlier of 15
days after written notice of such breach or February 28, 1995;
(iii) either FCC or FB if by February 28, 1995 all the conditions
to closing required by the Plan have not been met or waived,
cannot be met, or the Mergers have not occurred; provided that
any party that is in material violation of a representation,
warranty or covenant set forth in the Plan may not seek to
terminate the Plan for the reasons set forth in this clause
(iii); (iv) FB if both (A) the quotient of the average closing
price of FCC Common Stock for the five trading days immediately
preceding the closing date of the Mergers divided by the closing
price of such stock on the date immediately preceding the date of
the Plan, as reported in the Wall Street Journal, is less than
0.75 and (B) the quotient of the average closing value of the
Standard & Poor's Regional Bank Index for the five trading days
preceding the closing date for the Mergers divided by the value
of the Standard & Poor's Regional Bank Index for the day
immediately preceding the date of the Plan exceeds the quotient
set forth above for FCC Common Stock by more than 0.15; (v) FCC
if the number of shares of FB Common Stock as to which holders
thereof are legally entitled to assert dissenters' rights exceeds
that number of shares of FB Common Stock that would preclude the
use of the pooling-of-interests method of accounting for the
Mergers; (vi) FCC or FNBC if the Plan or the Company Merger fails
to receive the requisite vote at any meeting of FB shareholders
called for the purpose of voting thereon; or (vii) the Board of
Directors of either FCC or FNBC if FB's Board of Directors (A)
withdraws, modifies or changes its recommendation to its
shareholders as contained herein or resolves to do so, (B)
recommends to its shareholders any other merger, consolidation,
share exchange, business combination or other similar
transaction, any sale, lease, transfer or other disposition of
all or substantially all of the assets of any member of FB's
consolidated group or any acquisition of 15% or more of any class
of FB's capital stock or (C) makes any announcement of an
intention or agreement to do any of the foregoing. See "The
Plan - Waiver, Amendment and Termination."
Interests of Certain Persons in the Mergers
In considering the Plan, holders of FB Common Stock should
be aware that the FB directors and officers have an interest in
the Mergers, as described below.
FCC and FNBC have agreed that, following the Effective Date
and subject to certain conditions, they will indemnify each
person who has served as a director or officer of FB or Bank
against all losses, claims, damages, liabilities and judgments
(and related expenses, including, but not limited to, attorney's
fees and amounts paid in investigating, defending, or settling
any action) based upon or arising from such person's service in
such capacity, to the same extent as he would have been
indemnified under the Articles of Incorporation or Association
and By-laws of FCC and FNBC in effect on May 27, 1994. The
aggregate amount of indemnification to which such persons are
entitled pursuant to the Plan is $5 million.
The Plan also provides for indemnification of FB's officers,
directors and controlling persons from and against liability
arising under the Securities Act of 1993, as amended, or
otherwise if such liability arises out of or is based on an
untrue statement or omission of a material fact required to be
stated in the Registration Statement, of which this Proxy
Statement and Prospectus forms a part, or in any state securities
application, or necessary to make the statements made in any of
the foregoing not misleading. This indemnification does not
apply to statements made in reliance on information furnished to
FCC by FB, Bank, or any officer, director, or controlling person
of FB or Bank, for use in the Registration Statement, of which
this Proxy Statement and Prospectus forms a part, or in any such
state application.
Certain severance plans and retention agreements were
adopted by Bank in 1994 to encourage its employees and senior
management to continue their employment with Bank in the context
of ongoing merger discussions between FB and certain non-
affiliated financial institutions as described elsewhere herein.
Mr. James C. Piercey, President and Chief Executive Officer
of Bank and Secretary of FB, has an employment agreement with
Bank that provides for certain severance payments if Mr. Piercey
is terminated or voluntarily resigns his employment within the
four months immediately following an "acquisition" of Bank or FB
(such term, as defined in such agreement, includes the Mergers).
As a result, if the Mergers are consummated and he is terminated
or voluntarily resigns his employment within the first four
months following consummation of the Mergers, Mr. Piercey will be
entitled to a severance payment equal to his full base salary at
regular intervals for the thirty-six months following his
termination or resignation, and a bonus equal to the average of
the annual incentive compensation received by Mr. Piercey during
each of the four fiscal years immediately preceding his
termination or resignation, which bonus shall be payable at the
conclusion of each succeeding year that ends during the thirty-
six months following his termination or resignation. Mr. Piercey
also has an interest in the Mergers adverse to the interests of
shareholders of FB to the extent that the consideration to be
received by such shareholders will be reduced by the dollar
amounts payable to Mr. Piercey under certain employment and
retention agreements or severance policies of FB referred to in
the Plan, unless Mr. Piercey enters into a two-year non-
competition agreement in form and substance satisfactory to FCC.
See "The Plan - Interests of Certain Persons in the Mergers."
Shareholder's Commitment
As a condition to consummation of the Mergers, each FB
director and executive officer and each shareholder beneficially
owning 5% or more of FB Common Stock has executed an individual
agreement pursuant to which he or she has agreed (i) to vote as a
shareholder in favor of the Plan and against any other proposal
relating to the sale or disposition of Bank or FB, (ii) not to
transfer any shares of FB Common Stock, except under certain
conditions, (iii) not to trade in FCC Common Stock prior to the
Effective Date, and (iv) to release FCC and FNBC from any
indemnification obligation that either of them may have to
indemnify him in his capacity as an officer, director or employee
of any member of FB's consolidated group except as set forth in
the Plan. See "The Plan - Shareholder's Commitment."
Employee Benefits
Pursuant to the Plan, FCC has agreed that, from and after
the Effective Date, FCC or FNBC will offer to all persons who
were employees of FB or Bank immediately prior to the Effective
Date and who become employees of FNBC following the Mergers, the
same employee benefits as are offered by FCC or FNBC to employees
of FNBC, except that there will not be a waiting period for
coverage under the First Commerce Corporation Flexible Benefit
Plan or any of its constituent plans, including the First
Commerce Corporation Medical and Dental Care Plan, and no
employee of Bank who is an active employee on the Effective Date
will be denied such benefits for a pre-existing condition. Full
credit will be given for prior service by such employees with FB
or Bank for eligibility and vesting purposes under all of FCC's
benefit plans and policies, except that credit for prior service
will not be given for eligibility, vesting or benefit accrual
purposes under FCC's retirement plan. FCC has also agreed to pay
certain additional benefits accrued under plans of Bank. See
"The Plan - Employee Benefits."
Material Federal Income Tax Consequences
Consummation of the Mergers is conditioned upon receipt by
the Companies of opinions from counsel or accountants
satisfactory to the parties to the effect that, among other
things, each of the Mergers will qualify as a tax-free
reorganization under applicable law, and that each FB shareholder
who receives FCC Common Stock pursuant to the Holding Company
Merger will not recognize gain or loss except with respect to the
receipt of cash (i) in lieu of fractional shares of FCC Common
Stock, or (ii) pursuant to the exercise of dissenters' rights.
Because of the complexity of the tax laws, each shareholder
should consult his tax advisor concerning the applicable federal,
state and local income tax consequences of the Mergers. See
"Material Federal Income Tax Consequences."
Dissenters' Rights
Under certain conditions, and by complying with the specific
procedures required by statute and described herein, shareholders
of FB will have the right to dissent from the Holding Company
Merger, in which event, if the Holding Company Merger is
consummated, they may be entitled to receive in cash the fair
value of their shares of FB Common Stock. See "Dissenters'
Rights" and Appendix C.
Selected Financial Data of FB
The following selected financial data of FB with respect to
each year in the five-year period ended December 31, 1993 and
with respect to the three-month periods ended March 31, 1994 and
1993, has been derived from the consolidated financial statements
of FB's consolidated group. The selected financial data for the
three months ended March 31, 1994 and 1993, are unaudited but, in
the opinion of FB management, reflect all adjustments that are
necessary for a fair presentation of the results of operations
for the interim periods presented. Results of operations for the
three-month period ended March 31, 1994 are not necessarily
indicative of the results for the entire year. The information
set forth below should be read in conjunction with FB's
consolidated financial statements, the notes thereto, "FB
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Years Ended December 31, 1993, 1992
and 1991" and "FB Management's Discussion and Analysis of
Financial Condition and Results of Operations for the Three
Months Ended March 31, 1994 and 1993" appearing elsewhere in this
Proxy Statement and Prospectus.
<PAGE>
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Three Months
Ended March 31, Years Ended December 31,
_______________________ ________________________________________________________
1994 1993 1993 1992 1991 1990 1989
____ ____ ____ ____ ____ ____ ____
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Balance
Sheet Data:
Total assets $240,719 $ 229,453 $ 233,291 $ 228,478 $ 199,497 $178,822 $ 183,963
Earning assets 221,911 210,567 216,166 206,257 179,447 161,245 163,636
Loans and leases* 154,126 139,289 148,523 145,315 136,685 128,679 129,981
Securities 58,467 52,659 56,357 52,040 35,352 24,611 21,856
Deposits 281,703 211,734 214,959 210,806 182,481 164,657 166,292
Long term debt 1,290 3,662 3,006 3,662 3,662 3,662 3,662
Shareholders'
equity 20,563 13,757 16,562 11,070 8,235 6,736 6,171
Income Statement Data:
Total interest
income $ 4,864 $ 4,814 $ 20,640 $ 20,495 $ 19,463 $ 17,759 $ 17,805
Net interest
income 3,638 3,453 15,610 13,813 10,275 7,982 7,294
Provision for
loan losses 75 -- (1,300) 680 1,334 1,500 1,578
Other income 827 645 2,544 2,106 2,169 2,026 2,007
Operating expense 2,453 2,666 10,586 9,785 8,249 7,187 7,725
Net income 1,296 1,693 6,621 3,680 1,990 1,009 120
Per Share Data:
Net income
per share $ 1.53 $ 2.00 $ 7.81 $ 4.34 $ 2.35 $ 1.19 $ 0.14
Cash dividends -- -- -- -- -- -- --
Book value
(period-end) 24.67 17.22 23.84 15.23 10.89 8.54 7.35
Key Ratios:
Net income as a
percent of
average assets 2.15% 2.95% 2.84% 1.61% 1.00% 0.56% 0.07%
Net income as a
percent of
average total
equity 25.21% 49.23% 39.98% 33.24% 24.17% 14.98% 1.94%
Net interest margin 6.56% 6.56% 7.22% 6.70% 5.73% 5.02% 4.59%
Allowance for loan
losses to
period-end loans 1.42% 2.29% (1.34%) 2.28% 2.08% 1.99% 1.42%
Leverage ratio 8.45% 6.31% 7.21% 5.48% 5.23% 5.40% 5.35%
__________________________
* Net of unearned income
</TABLE>
<PAGE>
Selected Financial Data of FCC
The following selected financial data with respect to each of the fiscal years
in the five-year period ended December 31, 1993 and for the three-month
periods ended March 31, 1994 and 1993, respectively, has been derived from
the consolidated financial statements or group and should be read in
conjunction with FCC's 1993 Annual Report on Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994, by reference in this Proxy Statement
and Prospectus. The selected financial adjustments that are, in the opinion
of FCC's management, necessary for a fa results of operations for the
interim periods presented. The results of oper month period ended
March 31, 1994 are not necessarily indicative of t the entire year.
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Three Months
Ended March 31, Years Ended December 31,
______________________ ___________________________________________________________
1994 1993 1993 1992 1991 1990 1989
____ ____ ____ ____ ____ ____ ____
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Balance
Sheet Data:
Total assets $6,597,863 $6,230,743 $6,335,669 $5,741,399 $4,671,478 $4,482,019 $4,202,912
Earning assets 6,011,953 5,715,968 5,812,761 5,280,347 4,257,388 4,035,104 3,719,972
Loans and leases* 2,633,335 2,294,602 2,407,231 2,184,584 2,323,018 2,402,541 2,232,213
Securities 3,287,273 3,067,975 3,110,544 2,734,925 1,515,299 1,290,487 1,061,206
Deposits 5,276,203 5,212,500 5,176,873 4,953,572 3,931,612 3,552,578 3,343,223
Long-term debt 89,694 95,636 95,238 97,154 101,246 103,033 104,863
Stockholders'
equity 518,026 439,743 469,694 355,716 235,385 239,011 231,097
Income Statement
Data:
Total interest
income $ 97,183 $ 99,061 $ 393,334 $ 398,701 $ 393,922 $408,996 $ 392,769
Net interest
income 62,746 63,092 250,010 235,353 191,862 168,021 156,005
Provision for
loan losses (3,832) 588 (4,504) 22,040 43,734 47,425 26,220
Other income
(exclusive of
securities
transactions) 27,379 24,589 102,844 96,369 83,419 73,213 64,215
Operating expense 56,472 52,536 221,080 203,781 185,963 165,325 155,397
Net income 26,132 23,127 95,214 72,475 34,029 22,038 28,197
Per Share Data:
Fully diluted
earnings
per share $ .86 $ .78 $ 3.18 $ 2.70 $ 1.56 $ .94 $ 1.20
Primary earnings
per share .95 .85 3.48 2.88 1.56 .94 1.20
Cash dividends<FN1> .25 .20 .85 .70 .64 .64 .64
Book value
(period - end) 17.14 15.22 17.28 14.57 11.38 10.45 10.14
High stock price 28.50 31.00 32.20 27.86 18.14 12.54 12.74
Low stock price 24.00 25.33 23.90 16.94 7.20 6.66 9.27
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31,
_____________________ _________________________________________________________
1994 1993 1993 1992 1991 1990 1989
____ ____ ____ ____ ____ ____ ____
(unaudited)
<C> <C> <C> <C> <C> <C> <C> <C>
Key Ratios:
Net income as a
percent of
average assets 1.61% 1.51% 1.50% 1.26% .73% .49% .67%
Net income as a
percent of
average total
equity 20.46% 21.33% 20.27% 20.37% 14.46% 9.22% 12.20%
Net income as a
percent of
average common
equity 22.17% 23.54% 22.18% 22.85% 14.46% 9.11% 12.37%
Net interest
margin 4.30% 4.56% 4.40% 4.58% 4.69% 4.37% 4.42%
Allowance for loan
losses to loans
and leases* 2.40% 3.45% 2.55% 3.44% 3.11% 2.44% 1.91%
Leverage ratio 7.81% 7.00% 7.63% 6.76% 4.87% 4.66% 5.06%
Dividend payout
ratio 26.32% 23.53% 24.27% 25.78% 41.03% 68.09% 53.33%
</TABLE>
_____________________
*Net of unearned income.
<FN1> On July 18, 1994, the Board of Directors declared
its regular third quarter dividend to be paid on
October 3, 1994 to shareholders of record on September
16, 1994, and increased the regular quarterly dividend
to $.30 per share.
Comparative Per Share Data (Unaudited)
The following table presents certain net income, cash
dividend and book value per common share information for FCC
and FB on an historical, unaudited pro forma combined and
unaudited pro forma equivalent basis. The unaudited pro forma
combined information is based upon the historical financial
condition and results of operations of the Companies and
adjustments directly attributable to the proposed Holding
Company Merger based on estimates derived from information
currently available. They do not purport to be indicative of
the results that would actually have been obtained if the
Holding Company Merger had been in effect on the date
or for the periods indicated below, or the results that may be
obtained in the future.
<TABLE>
<CAPTION>
Historical Pro Forma FB
_____________
FCC FB Combined<FN1><FN2> Equivalent
____ __ ____________ __________
<S> <C> <C> <C> <C>
Primary earnings per
common share <FN3>:
Years ended:
December 31, 1993 $ 3.48 $7.02 $ 3.34 $11.26
December 31, 1992 2.88 4.34 2.71 9.13
December 31, 1991 1.56 2.35 1.46 4.92
Three months ended:
March 31, 1994 $ .95 $1.53 $ .90 $ 3.03
</TABLE>
<TABLE>
<CAPTION>
Historical Pro Forma FB
______________
FCC FB Combined<FN1><FN2> Equivalent
_____ ____ _____________ __________
<S> <C> <C> <C> <C>
Dividends declared per
common share <FN4>:
Years ended:
December 31, 1993 $ .85 $ - $ .77 $ 2.86
December 31, 1992 .70 - .62 2.36
December 31, 1991 .64 - .57 2.16
Three months ended:
March 31, 1994 $ .25 $ - $ .23 $ .84
Book value per
common share <FN5>:
As of December 31, 1993 $17.28 $23.84 $16.27 $54.83
As of March 31, 1994 $17.14 $24.67 $16.17 $54.49
____________
</TABLE>
<FN1> In accordance with generally accepted accounting
principles, FCC will account for the Mergers using the
pooling-of-interests method.
<FN2> To calculate pro forma combined per share information,
it has been assumed that the number of outstanding
shares of FCC Common Stock includes shares to be issued
by FCC upon consummation of the Holding Company Merger.
Under the terms of the Plan, the number of shares of
FCC Common Stock to be delivered will be determined at
the time the Holding Company Merger is effected, among
other things, based on the Average Sales Price of FCC
Common Stock. The maximum number of shares of FCC
Common Stock issuable in the Holding Company Merger is
2,860,169. For purposes of this table, it has been
assumed that the maximum number of shares issuable
under the Holding Company Merger will be issued,
resulting in an assumed conversion rate of 3.37 (the
"Assumed Conversion Rate").
<FN3> Pro forma primary earnings per common share was
calculated by dividing the combined net income,
adjusted for preferred stock dividends and, in the case
of FB, a 1993 accounting change (See Note 6 to FB's
Consolidated Financial Statements appearing elsewhere
herein), of FCC and FB during the periods presented by
the weighted average outstanding shares of FCC Common
Stock during such periods, after adjustment for shares
of FCC Common Stock to be issued in connection with the
Holding Company Merger. FB adopted Statement of
Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes" in 1993 and reported the
cumulative effect of this accounting change in its 1993
consolidated statement of income. The effect of FB's
adoption of SFAS No. 109 was a $672,000 increase in net
income for FB. This amount is not considered to be a
component of ongoing results and accordingly has not
been included in the historical or pro forma combined
amounts presented. The FB equivalent data presented is
the product of the pro forma combined per share
information multiplied by the Assumed Conversion Rate.
<FN4> Pro forma dividends were calculated by multiplying
FCC's and FB's dividend rates by the applicable
weighted average outstanding shares of FCC and FB
common stock. Pro forma dividends per common share
were then calculated by dividing pro forma total
dividends by the weighted average outstanding shares of
FCC Common Stock during such periods, after adjustment
for shares of FCC Common Stock to be issued in
connection with the Holding Company Merger. The FB
equivalent data presented was calculated by multiplying
the historical per share FCC Common Stock dividend by
the Assumed Conversion Rate. On July 18, 1994, the
Board of Directors of FCC declared its regular third
quarter dividend to be paid on October 3, 1994 to
shareholders of record on September 16, 1994, and
increased the regular quarterly dividend to $.30 per
share.
<FN5> Pro forma combined book value per common share was
calculated by dividing the total of FCC's and FB's
common stockholders' equity by the total shares of FCC
Common Stock outstanding as of December 31, 1993 and
March 31, 1994, respectively, after adjustment for
unearned shares of FCC restricted stock and for shares
of FCC Common Stock to be issued in connection with the
Holding Company Merger. The FB equivalent data
presented is the product of the pro forma combined per
share information multiplied by the Assumed Conversion
Rate.
Market Prices and Dividends
Market Prices. On May 26, 1994, the day preceding the
date that the Companies entered into the Plan, the closing
sales price for a share of FCC Common Stock, as quoted on
the Nasdaq National Market, was $29.75. No assurance can be
given as to the market price of FCC Common Stock on the Ef-
fective Date. On July 28, 1994 the closing sales price for
a share of FCC Common Stock was $26.75 and, if such date had
been the Effective Date of the Mergers the Average Sales
Price would have been $26.80.
FB Common Stock is not actively traded, and there is no
established market for FB Common Stock. At July 29, 1994,
there were 191 shareholders of record of FB.
Cash Dividends. FB has not declared or paid a dividend
on FB Common Stock during the last two years, and has agreed
in the Plan that it will not declare, set aside, increase or
pay any dividend prior to the Effective Date of the Mergers
without the written consent of FCC.
Substantially all of the funds available to FB to pay
dividends to its shareholders are derived from dividends
paid to it by Bank, which are subject to certain legal
restrictions. With respect to Bank, the prior approval of
the Commissioner is required if the total of all dividends
declared in any one year will exceed the sum of its net
profits of that year and net profits of the immediately
preceding year. Additionally, dividends may not be declared
or paid by a Louisiana state bank unless the bank has
unimpaired surplus equal to 50% of the outstanding capital
stock of the bank, and no dividend payment may reduce the
bank's unimpaired surplus below 50%. At March 31, 1994,
Bank had approximately $7,278,000 available for the payment
of dividends without prior approval of the Commissioner.
Recent Operating Results of FCC
FCC reported its second quarter results on July 14,
1994. Net income was $19.1 million, versus $25.4 million in
1993's second quarter. The most significant factor
affecting the results was a $4.3 million after tax loss on
securities transactions caused by sales of lower yielding
securities made to take advantage of opportunities to
acquire higher yielding securities as to which the losses
would be recouped in future periods.
Net interest income was $62.0 million in the second
quarter, compared to $62.9 million in the second quarter of
1993. The small decrease was primarily attributable to the
decline in the earning assets yield related to lower rates
on new loans and securities than on the loans and securities
which paid off or matured. The decrease was partially
offset by an improved earning assets mix resulting from loan
growth.
The provision for loan losses was a negative $4.8
million for the second quarter compared to negative $2.3
million in 1993's second quarter. Continued loan quality
improvements resulted in the negative provision again this
quarter.
Other income, excluding securities transactions, was
$27.2 million, compared to $27.0 million in 1993's second
quarter. Credit card income, trust fees and ATM fees were
higher in the current quarter than in the prior quarter.
These increases were partially offset by lower broker/dealer
revenues.
Operating expense was $59.0 million in the second
quarter, and $54.6 million in 1993's second quarter. The
increase was primarily due to additional employees, merit
raises for employees, depreciation of new branch automation
equipment, and increased professional fees principally in
connection with efforts to improve profitability.
<PAGE>
INTRODUCTORY STATEMENT
General
This Proxy Statement and Prospectus is being furnished
on or about ________, 1994 to the shareholders of First
Bancshares, Inc. ("FB") in connection with the solicitation
of proxies on behalf of its Board of Directors for use at a
special meeting of shareholders of FB (the "Special Meet-
ing") to be held on the date and at the time and place
specified in the accompanying Notice of Special Meeting of
Shareholders, or any adjournment thereof.
Each of FB and First Commerce Corporation
(collectively, the "Companies") has furnished all
information included herein with respect to it and its
consolidated subsidiaries. FB and its subsidiary are
collectively referred to herein as "FB's consolidated group"
and First Commerce Corporation ("FCC") and its subsidiaries
are collectively referred to herein as "FCC's consolidated
group."
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and
vote upon a proposal to approve an Agreement and Plan of
Merger between FCC and its wholly owned subsidiary, First
National Bank of Commerce ("FNBC"), on the one hand, and FB,
and its wholly owned subsidiary, First Bank ("Bank"), on the
other, and a related Agreement of Merger between FNBC and
Bank (the "Bank Merger Agreement") and Joint Agreement of
Merger between FCC and FB (the "Company Merger Agreement"
and, together with the Bank Merger Agreement, the "Plan").
Pursuant to the Plan, Bank will be merged with and into FNBC
(the "Bank Merger") and, FB will be merged with and into FCC
(the "Holding Company Merger" which, together with the Bank
Merger, are collectively referred to as the "Mergers") and
each outstanding share of common stock, $1.00 par value per
share, of FB ("FB Common Stock") will be converted into a
number of shares of common stock, $5.00 par value per share,
of FCC ("FCC Common Stock") as described below under the
heading "The Plan - Conversion of FB Common Stock."
Solicitation, Voting and Revocation of Proxies
When a proxy in the form accompanying this Proxy
Statement and Prospectus is properly executed and returned,
the shares represented thereby will be voted in accordance
with the instructions marked thereon. ALL EXECUTED BUT
UNMARKED PROXIES THAT ARE RETURNED WILL BE VOTED "FOR" THE
PROPOSAL TO APPROVE THE PLAN.
No matters are expected to be considered at the Special
Meeting other than the proposal to approve the Plan, but if
any other matters should properly come before the Special
Meeting, it is intended that proxies in the form
accompanying this Proxy Statement and Prospectus will be
voted on all such matters in accordance with the judgment of
the person(s) voting such proxies.
Any proxy may be revoked at any time before its
exercise by filing with the Secretary of FB a written
revocation or a duly executed proxy bearing a later date. A
shareholder who votes in person at the Special Meeting in a
manner inconsistent with a proxy previously filed on the
shareholder's behalf will be deemed to have revoked such
proxy as it relates to the matter voted upon in person.
The cost of soliciting proxies, and the cost of
printing and mailing these proxy materials, will be borne by
FB. In addition to the use of the mails, proxies may be
solicited personally, by telephone, telecopier, or telegram
by directors, officers and employees of FB. Such officers,
directors and employees will continue to receive any
compensation from FB to which they are entitled by virtue of
their employment or status as an officer or director, but
will not receive any additional fee, compensation, or other
remuneration for soliciting proxies in connection with the
Special Meeting. An outside solicitation firm, The Herman
Group, Inc., has been retained by FB to assist in the
solicitation of proxies for an aggregate fee of $________
plus out-of-pocket expenses.
Shares Entitled to Vote; Quorum; Vote Required
The Board of Directors of FB has fixed the close of
business on [July __, 1994], as the record date for the
determination of shareholders entitled to notice of and to
vote at the Special Meeting (the "Record Date"). As of the
Record Date, there were 847,658 shares of FB Common Stock
outstanding. Each share of FB Common Stock is entitled to
one vote on all matters to come before the Special Meeting.
The presence at the Special Meeting, in person or by proxy,
of the holders of a majority of the outstanding shares of FB
Common Stock is necessary to constitute a quorum. The Plan
must be approved by the affirmative vote of two-thirds of
the voting power present at the Special Meeting. An
abstention will have the effect of a vote against the Plan
but will cause a shareholder otherwise entitled to
dissenters' rights to forfeit any claim to such rights. See
"Dissenters' Rights."
As a condition to the consummation of the Mergers, each
shareholder of FB who is also a director or executive
officer of FB or Bank, or who owns five percent or more of
the outstanding shares of FB Common Stock, has executed an
agreement (a "Shareholder's Commitment") pursuant to which
such shareholder, among other things, has committed to vote
in favor of the approval of the Plan. The 12 persons who
have executed Shareholder's Commitments beneficially owned,
as of July 29, 1994, an aggregate of 494,123 shares, or
approximately 58.29%, of the outstanding FB Common Stock on
that date. See "The Plan - Shareholder's Commitment."
Under Louisiana law, shareholders of FCC are not
required to approve the Plan.
<PAGE>
THE PLAN
General
The transactions contemplated by the Plan are to be
effected in accordance with the terms and conditions set
forth in the Plan, which is incorporated herein by
reference. The following brief description of the Plan does
not purport to be complete and is qualified in its entirety
by reference to the Plan, a copy of which is attached hereto
as Appendix A.
The ultimate result of the transactions contemplated by
the Plan will be that the business and properties of Bank
will become the business and properties of FNBC, the
business and properties of FB will become the business and
properties of FCC and the shareholders of FB will become
shareholders of FCC. The steps taken to achieve this result
involve the following transactions: (i) Bank will be merged
with and into FNBC and the separate existence of Bank will
cease; (ii) FB will be merged with and into FCC and the
separate existence of FB will cease and (iii) shareholders
of FB will receive the consideration described below under
the heading "The Plan - Conversion of FB Common Stock."
Background of and Reasons for the Plan
Background. In February 1994, the Board of Directors
of FB engaged Montgomery Securities ("Montgomery") to
evaluate strategic alternatives for FB. Based upon
Montgomery's presentation of strategic alternatives
available to FB, the Board on March 3, 1994, determined to
solicit preliminary indications of interest for the purchase
of FB from interested and capable buyers. Montgomery
contacted four local and regional financial institutions,
and was approached by three other financial institutions.
Four potential buyers expressed an acceptable preliminary
indication of interest and were subsequently allowed to
conduct document and record reviews before the submission of
final acquisition proposals. Three of these financial
institutions, including FCC, submitted final acquisition
proposals, and one other financial institution, which had
not submitted a preliminary indication of interest,
submitted a non-binding indication of interest. The
proposals were considered by the Board of Directors of FB at
a Special Meeting held for that purpose on May 26, 1994. At
the meeting, representatives of Montgomery advised the Board
of Directors regarding the competing proposals. Based upon
the foregoing and its analysis of the competing proposals,
the Board of Directors determined that the sale of FB to FCC
pursuant to its acquisition proposal was in the best
interests of FB and its shareholders and approved the Plan.
Reasons for the Plan. In reaching its decision that
the Plan is in the best interests of FB and its
shareholders, FB's Board of Directors consulted with its
financial and other advisors, as well as with FB's
management, and considered a number of factors, including,
but not limited to, the following:
(a) The financial condition and results of operations
of, and prospects for, each of FCC and FB;
(b) The market for Bank's services and the competitive
pressures existing in Bank's market area;
(c) FB has not declared a dividend on FB Common Stock
since 1988;
(d) The amount and type of consideration to be
received by FB's shareholders pursuant to the
Plan;
(e) The FCC Common Stock to be received pursuant to
the Plan will be listed for trading on the Nasdaq
National Market and should provide FB's
shareholders with liquidity that is unavailable to
holders of FB Common Stock;
(f) The Plan will allow FB's shareholders to become
shareholders of FCC, an institution that is the
largest bank holding company headquartered in
Louisiana;
(g) Recent changes in the regulatory environment will
result in FB facing additional competitive
pressures in its market area from other financial
institutions with greater financial resources
capable of offering a broad array of financial
services;
(h) Each of the Mergers is expected to qualify as a
tax-free reorganization so that neither FB nor its
shareholders (except to the extent that cash is
received in respect of their shares) will
recognize any gain in the transaction (see
"Material Federal Income Tax Consequences"); and
(i) The opinion received from Montgomery that the
consideration to be received by the shareholders
of FB pursuant to the Plan, when taken as a whole,
is fair to FB and its shareholders from a
financial point of view, as of the date thereof
(see "Opinion of Montgomery Securities").
FB's Board of Directors did not assign any specific or
relative weight to the foregoing factors in its
considerations. FB's Board of Directors believes that the
Plan will provide significant value to all FB shareholders
and will enable them to participate in opportunities for
growth that FB's Board of Directors believes the Mergers
make possible.
Based on the foregoing, the Board of Directors of FB
has approved the Plan, believes that the Plan is in the best
interests of FB's shareholders, and recommends that all
shareholders vote "FOR" the approval of the Plan.
Opinion of Montgomery Securities
General. Pursuant to an engagement letter dated
February 2, 1994 (the "Engagement Letter"), FB engaged
Montgomery to act as its financial advisor in connection
with its evaluation of its strategic alternatives, including
the possible sale of FB. Montgomery is a nationally
recognized investment banking firm and, as part of its
investment banking activities, is regularly engaged in the
valuation of businesses and their securities in connection
with merger transactions and other types of acquisitions,
negotiated underwritings, placements and valuations for
corporate and other purposes. FB selected Montgomery as its
financial advisor on the basis of its experience and
expertise in transactions similar to the Plan and its
reputation in the banking and investment communities.
At the May 26, 1994 meeting of FB's Board of Directors,
Montgomery delivered its oral opinion, subsequently
confirmed in writing, that the consideration to be received
by the shareholders of FB pursuant to the Plan, when taken
as a whole, is fair to FB and its shareholders from a
financial point of view, as of the date thereof. No
limitations were imposed by FB on Montgomery with respect to
the investigations made or procedures followed in rendering
its opinion. The full text of Montgomery's written opinion
to the FB Board of Directors, which sets forth the
assumptions made, matters considered, and limitations of the
review by Montgomery, is attached hereto as Appendix B and
is incorporated herein by reference and should be read
carefully and in its entirety in connection with this Proxy
Statement and Prospectus. The following summary of
Montgomery's opinion is qualified in its entirety by
reference to the full text of the opinion. Montgomery's
opinion is addressed to the FB Board of Directors only and
does not constitute a recommendation to any shareholder of
FB as to how such shareholder should vote at the Special
Meeting.
In connection with its opinion, Montgomery, among other
things: (i) reviewed certain publicly available financial
and other data with respect to FCC and certain financial and
other data with respect to FB, including the consolidated
financial statements for recent years and interim periods to
March 31, 1994, and certain other relevant financial and
operating data relating to FB and FCC made available to
Montgomery from published sources and from the internal
records of FB; (ii) reviewed the Plan; (iii) reviewed
certain historical market prices and trading volumes of FCC
Common Stock on the Nasdaq National Market; (iv) compared
FCC from a financial point of view with certain other
companies in the banking industry that Montgomery deemed to
be relevant; (v) considered the financial terms, to the
extent publicly available, of selected recent business
combinations of companies in the banking industry that
Montgomery deemed to be comparable, in whole or in part, to
the Plan; (vi) reviewed and discussed with representatives
of the management of FB and FCC certain information of a
business and financial nature regarding FB and FCC,
furnished to Montgomery by FB and FCC, including financial
forecasts and related assumptions of FB; (vii) made
inquiries regarding and discussed the Plan and other matters
related thereto with FB's counsel; and (viii) performed such
other analyses and examinations as Montgomery deemed
appropriate.
In connection with its review, Montgomery did not
independently verify any of the foregoing information, and
relied on such information and assumed such information was
complete and accurate in all material respects. With
respect to the financial forecasts for FB provided to
Montgomery by FB's management, Montgomery assumed for
purposes of its opinion that such forecasts were reasonably
prepared on bases reflecting the best available estimates
and judgments of FB's management at the time of preparation
as to the future financial performance of FB and provided a
reasonable basis upon which Montgomery could form its
opinion. Montgomery also assumed that there were no
material changes in FB's or FCC's assets, financial
condition, results of operations, business or prospects
since the respective dates of the last financial statements
made available to Montgomery. Montgomery relied on advice
of counsel to FB as to all legal matters with respect to FB
and the Plan. Montgomery is not expert in the evaluation of
loan portfolios for purposes of assessing the adequacy of
the allowance for losses with respect thereto and assumed
for purposes of its opinion that such allowances for each of
FB and FCC are in the aggregate adequate to cover such
losses. In addition, Montgomery did not review any
individual credit files, did not make an independent
evaluation, appraisal or physical inspection of the assets
or individual properties of FB or FCC, and was not furnished
with any such appraisals. Further, Montgomery's opinion was
based on economic, monetary and market conditions existing
as of May 26, 1994, and on the assumption that the Plan will
be consummated in accordance with its terms, without any
amendment thereto and without waiver by FB of any of the
conditions to its obligations thereunder.
Set forth below is a brief summary of the report
presented by Montgomery to the FB Board of Directors on May
26, 1994 in connection with its opinion.
Comparable Company Analysis. Using public and other
available information, Montgomery compared certain financial
ratios of FCC (including the ratio of net income to average
total assets ("return on average assets"), the ratio of net
income to average total equity ("return on average equity"),
the ratio of average equity to average assets, the ratio of
noninterest expense to revenue ("cost control") and certain
credit ratios) for the four years ended December 31, 1993
and for the three months ended March 31, 1994, to a national
proxy group consisting of 50 selected national banks (the
"National Bank Proxy Group"), and to a southeast proxy group
consisting of nine banks located in the Southeast region of
the United States (the "Southeast Bank Proxy Group"). No
company used in the analysis is identical to FCC. The
analysis necessarily involved complex considerations and
judgments concerning differences in financial and operating
characteristics of the companies.
Analysis of Selected Bank Merger Transactions.
Montgomery reviewed the consideration paid in recently
announced transactions whereby certain banks were acquired.
Specifically, Montgomery reviewed 281 transactions involving
acquisitions of banks in the Southeast region of the United
States announced since January 1990 (the "Southeast
Acquisitions") and acquisitions of 19 selected Louisiana
banks announced since September 1990 (the "Louisiana
Acquisitions"). For each bank acquired or to be acquired in
such transactions, Montgomery compiled figures illustrating,
among other things, the ratio of the premium (i.e., purchase
price in excess of book value) to core deposits, purchase
price to deposits, purchase price to book value and purchase
price to last twelve-months ("LTM") earnings.
The figures for banks acquired or to be acquired in the
Southeast Acquisitions and the Louisiana Acquisitions
produced: (i) median return on average equity of 10.86% and
16.09%, respectively; (ii) median return on average assets
of .92% and 1.11%, respectively; and (iii) median
nonperforming assets to total assets of 1.27% and 1.44%,
respectively. In comparison, Montgomery determined that for
the year ended December 31, 1993 and the three months ended
March 31, 1994, Bank's return on average equity was 35.92%
and 25.21%, respectively, its return on average assets was
2.50% and 2.14%, respectively, and its nonperforming assets
to total assets were .75% and .95%, respectively.
The figures for the Southeast Acquisitions and the
Louisiana Acquisitions produced: (i) median percentage of
premium (purchase price in excess of book value) to core
deposits of 6.39% and 8.92%, respectively; (ii) median
purchase price to deposits of 15.45% and 18.17%,
respectively; (iii) median ratio of purchase price to book
value of 1.52 and 1.69, respectively; and (iv) median ratio
of purchase price to LTM earnings of 15.1 and 12.1,
respectively. In comparison, assuming the consideration to
be paid in the Mergers for each share of FB Common Stock
equals that number of shares of FCC Common Stock with a
value of $88.47, Montgomery determined that the
consideration to be received by the holders of FB Common
Stock in the Mergers represented a percentage of premium to
core deposits of 24.21%, a percentage of price to deposits
of 33.57%, a ratio of price to book value of 3.59 and a
ratio of price to FB's earnings for the twelve months ended
March 31, 1994 of 13.5 on the basis of actual earnings and
16.0 on the basis of earnings as adjusted to exclude a
negative loss provision of $1.3 million taken during the
fourth quarter of 1993.
No other company or transaction used in the above
analysis as a comparison is identical to FB or the Plan.
Accordingly, an analysis of the results of the foregoing is
not mathematical; rather, it involves complex considerations
and judgments concerning differences in financial and
operating characteristics of the companies and other factors
that could affect the public trading value of the companies
to which FB and the Plan are being compared.
Contribution Analysis. Montgomery analyzed the
contribution of each of FB and FCC to, among other things,
common equity and net income of the pro forma combined
companies for the years ended December 31, 1993, and for the
three-month period ended March 31, 1994. This analysis
showed, among other things, that based on pro forma combined
balance sheets and income statements for FB and FCC as of
December 31, 1993 and March 31, 1994, FB would have
contributed 4.30% and 4.46%, respectively, of the pro forma
common equity, and for the year ended December 31, 1993 and
the three months ended March 31, 1994, FB would have
contributed 5.88% and 4.73%, respectively, of the pro forma
net income of the combined companies. Assuming the
consideration to be paid in the Mergers for each share of FB
Common Stock equals that number of shares of FCC Common
Stock with a value of $88.47, the FB shareholders would own
approximately 8.86% of the combined companies based on
common shares outstanding on March 31, 1994.
Dilution Analysis. Using estimates of future earnings
prepared by FB management and analysts' estimates for FCC,
Montgomery compared the calendar year 1994 estimated
earnings per share of FB Common Stock and FCC Common Stock
to the calendar year 1994 estimated earnings per share of
the common stock of the pro forma combined companies. Based
on such analysis and assuming the consideration to be paid
in the Mergers for each share of FB Common Stock equals that
number of shares of FCC Common Stock with a value of $88.47,
the proposed transaction would be dilutive to FCC's earnings
per share in 1994, prior to projected revenue enhancements
and cost savings, and accretive to FB's earnings per share.
The summary set forth above does not purport to be a
complete description of the presentation by Montgomery to
the FB Board of Directors or of the analyses performed by
Montgomery. The preparation of a fairness opinion
necessarily is not susceptible to partial analysis or
summary description. Montgomery believes that its analyses
and the summary set forth above must be considered as a
whole and that selecting a portion of its analyses and
factors would create an incomplete view of the process
underlying the analyses set forth in its presentation to the
FB Board of Directors. In addition, Montgomery may have
given certain analyses more or less weight than other
analyses, and may have deemed various assumptions more or
less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described
above should not be taken to be Montgomery's view of the
actual value of FB or the combined companies. 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.
In performing its analyses, Montgomery made numerous
assumptions with respect to industry performance, general
business and economic conditions and other matters, many of
which are beyond the control of FB or FCC. The analyses
performed by Montgomery are not necessarily indicative of
actual values or actual future results, which may be
significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as part of
Montgomery's analysis of the fairness of the consideration
to be received by the FB shareholders in the Mergers and
were provided to the FB Board of Directors in connection
with the delivery of Montgomery's opinion. The analyses do
not purport to be appraisals or to reflect the prices at
which a company might actually be sold or the prices at
which any securities may trade at the present time or any
time in the future. Montgomery used in its analyses various
projections of future performance prepared by the management
of FB. The projections are based on numerous variables and
assumptions which are inherently unpredictable and must be
considered not certain of occurrence as projected.
Accordingly, actual results could vary significantly from
those set forth in such projections.
As described above, Montgomery's opinion and
presentation to the FB Board of Directors were among the
many factors taken into consideration by the Board in making
its determination to approve the Plan.
Pursuant to the Engagement Letter, FB paid Montgomery a
retainer fee of $25,000, which will be credited against any
other fee to be paid to Montgomery under the Engagement
Letter. If the Mergers are consummated, and assuming the
consideration to be paid in the Mergers for each share of FB
Common Stock equals that number of shares of FCC Common
Stock with a value of $88.47, Montgomery will be paid a fee
equal to 1.4% of the total consideration involved in the
Mergers. FB has also agreed to reimburse Montgomery for its
reasonable out-of-pocket expenses in an amount not to exceed
$15,000, excluding legal fees of up to $15,000 which FB also
agreed to reimburse. FB has agreed to indemnify Montgomery,
its affiliates, and their respective partners, directors,
officers, agents, consultants, employees and controlling
persons against certain liabilities, including liabilities
under the federal securities laws. Neither FCC nor FB has
paid Montgomery any other fees during the last two years.
In the ordinary course of its business, Montgomery may
trade equity securities of FCC for its own account and for
the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
Conversion of FB Common Stock
In consideration of the Mergers, the FB Common Stock
outstanding on the date the Mergers become effective (the
"Effective Date") will be converted into a number of shares
of FCC Common Stock equal to the sum of (a) 1,271,186 shares
of FCC Common Stock plus (b) a number of shares of FCC
Common Stock equal (i) to $37.5 million, less the Deductible
Amount, as defined below, if any, divided by (ii) the
average of the closing sales price of a share of FCC Common
Stock on the Nasdaq National Market for the five trading
days ending on the last trading day immediately prior to the
Effective Date (the "Average Sales Price"), provided,
however, that if the Average Sales Price so determined is
less than $23.60, then the divisor shall be 23.60, and if
such Average Sales Price is greater than $35.40, then the
divisor shall be 35.40.
As defined in the Plan, the term "Deductible Amount"
means the sum of (i) any amount in excess of $200,000 not
reflected or reserved for on FB's financial statements for
the period ending March 31, 1994 that is attributable to
legal, accounting, investment banking, printing and other
similar fees and expenses related to the process leading to
the selection of FCC and the negotiation, execution and
consummation of the Plan, other than investment banking fees
payable to Montgomery; (ii) any amounts over $1,750,000 to
be paid by FCC or FNBC pursuant to certain employment and
retention agreements and severance policies of FB referred
to in the Plan; (iii) any payments made pursuant to such
agreements, policies and arrangements set forth in clause
(ii) above to James C. Piercey, President and Chief
Executive Officer of the Bank, unless Mr. Piercey enters
into a non-competition agreement in form and substance
satisfactory to FCC; and (iv) any amounts over $540,000 to
be paid by FCC or FNBC pursuant to certain incentive pay
arrangements and budgeted bonuses under plans in effect
prior to December 31, 1993 described in the Plan; provided
that the entire amount to be paid by FCC or FNBC under such
incentive pay arrangements and budgeted bonuses will be
included in the Deductible Amount unless FB has been
accruing for those payments since December 31, 1993. Because
the determination of the Deductible Amount is dependent on
facts as of the date of closing of the Mergers, it is not
possible to estimate the Deductible Amount, if any, with
certainty at this time.
The following table sets forth examples of the number
of shares of FCC Common Stock into which each share of FB
Common Stock would be converted on the Effective Date,
assuming that on such date the Average Sales Price for FCC
Common Stock is as specified below. The table does not
reflect any Deductive Amount, which would reduce the number
of FCC shares shown in each case.
Assumed Average Number of FCC
Sales Price of FCC Common Stock Shares Per FB Share
_______________________________ ___________________
$24 3.34
26 3.20
28 3.08
30 2.97
32 2.88
34 2.80
36 2.73
On July 28, 1994, the actual closing sales price for a
share of FCC Common Stock was $26.75 and, if such date had
been the Effective Date of the Mergers the Average Sales
Price would have been $26.80.
Shareholders who perfect dissenters' rights will not
receive FCC Common Stock but instead will be entitled to
receive the "fair cash value" of their shares as determined
under Section 131 of the Louisiana Business Corporation Law
(the "LBCL"). See "Dissenters' Rights."
In lieu of the issuance of any fractional share of FCC
Common Stock to which a holder of FB Common Stock may be
entitled, each shareholder of FB, upon surrender of the
certificate or certificates which immediately prior to the
Effective Date represented FB Common Stock held by such
shareholder, shall be entitled to receive a cash payment
(without interest) equal to such fractional share multiplied
by the Average Sales Price.
For information regarding restrictions on the transfer
of securities received pursuant to the Mergers applicable to
certain FB shareholders, see "-Status under Federal
Securities Laws; Certain Restrictions on Resales."
Effective Date
The Bank Merger Agreement and the Company Merger
Agreement have been executed. The Bank Merger Agreement
will be filed with the Office of the Comptroller of the
Currency (the "Comptroller"), and will be filed for
recordation with the Louisiana Commissioner of Financial
Institutions (the "Commissioner") and the Bank Merger will
be effective at the time and date specified in a certificate
or other written record issued by the Comptroller or in the
Certificate of Merger issued by the Commissioner, whichever
date is later. The Company Merger Agreement will be filed
for recordation with the Secretary of State of Louisiana as
soon as practicable after all conditions to the consummation
of the Mergers have been satisfied or waived, and the
Holding Company Merger will be effective at the date and
time specified in a certificate issued by the Secretary of
State. It is intended that the Bank Merger will be
consummated immediately prior to consummation of the Holding
Company Merger. FCC and FB are not able to predict the
effective date of the Bank Merger or the Holding Company
Merger and no assurance can be given that the transactions
contemplated by the Plan will be effected at any time. See
"- Regulatory Approvals and Other Conditions of the
Mergers."
Exchange of Certificates
On the Effective Date, each FB shareholder will cease
to have any rights as a shareholder of FB and his sole
rights will pertain to the shares of FCC Common Stock into
which his shares of FB Common Stock have been converted
pursuant to the Holding Company Merger, except for any such
shareholder who exercises statutory dissenters' rights and
except for the right to receive cash for any fractional
shares. See "Dissenters' Rights."
Upon the consummation of the Mergers, a letter of
transmittal, together with instructions for the exchange of
certificates representing shares of FB Common Stock for
certificates representing shares of FCC Common Stock will be
mailed to each person who was a shareholder of record of FB
on the Effective Date of the Mergers. Shareholders are
requested not to send in their FB Common Stock certificates
until they have received a letter of transmittal and further
written instructions.
After the Effective Date and until surrendered,
certificates representing FB Common Stock will be deemed for
all purposes, other than the payment of dividends or other
distributions, if any, in respect of FCC Common Stock, to
represent the number of whole shares of FCC Common Stock
into which such shares of FB Common Stock have been
converted. FCC, at its option, may decline to pay former
shareholders of FB who become holders of FCC Common Stock
pursuant to the Holding Company Merger any dividends or
other distributions that may have become payable to holders
of record of FCC Common Stock following the Effective Date
until they have surrendered their certificates evidencing
ownership of shares of FB Common Stock. Any dividends not
paid after one year from the date of payment will revert in
ownership to FCC and FCC will have no further obligation to
pay such dividends.
FB shareholders who cannot locate their certificates
are urged promptly to contact James C. Piercey, First
Bancshares, Inc., 1431-A Gause Boulevard, Slidell, Louisiana
70459, telephone number (504) 643-2700. A new certificate
will be issued to replace the lost certificate(s) only upon
execution by the shareholder of an affidavit certifying that
his or her certificate(s) cannot be located and an agreement
to indemnify FB and FCC, as its successor, against any claim
that may be made against it or FCC, as its successor, by the
owner of the certificate(s) alleged to have been lost or
destroyed. FB or FCC, as its successor, may also require
the shareholder to post a bond in such sum as is sufficient
to support the shareholder's agreement to indemnify FB and
FCC, as its successor.
Regulatory Approvals and Other Conditions of the Mergers
In addition to shareholder approval, consummation of
the Mergers will require the approvals of the Board of
Governors of the Federal Reserve System (the "Reserve
Board") and the Comptroller. On August 5, 1994 FCC expects
to file a request for waiver of the prior approval of the
Reserve Board with respect to the Holding Company Merger and
an application seeking the approval of the Comptroller of
the Bank Merger. FCC expects to receive such waiver and
such approval by November 5, 1994; however, there can be no
assurance that the waiver or the approval will be obtained
by that time or at all.
The obligations of the parties to the Plan are also
subject to other conditions set forth in the Plan,
including, among others: (i) that on the date of closing
the representations and warranties made in the Plan by each
party are true and correct in all material respects; (ii)
that prior to the Effective Date there not have been a
material adverse change in the financial condition, results
of operations or business of the other party's consolidated
group; (iii) the receipt of opinions of counsel or
accountants as to certain tax aspects of the Mergers; and
(iv) the receipt of customary legal opinions.
The obligation of FCC and FNBC to consummate the
Mergers is also subject to the following conditions: (i)
neither FCC's independent public accountants, Arthur
Andersen & Co., nor the Securities and Exchange Commission
(the "Commission") shall have taken the position that FCC is
not permitted to account for the Mergers as a pooling-of-
interests; (ii) receipt of a comfort letter from FB's
independent public accountants; (iii) confirmation from the
directors, executive officers and certain shareholders of FB
as to certain representations and covenants previously made
by them in certain Shareholder's Commitments discussed
further herein under "- Shareholder's Commitment;" and (iv)
James C. Piercey, President and Chief Executive Officer of
the Bank, shall have entered into a two-year non-competition
agreement in form and substance satisfactory to FCC;
provided that the failure to enter into such non-competition
agreement will not result in termination of the Plan but in
a reduction in the value of the shares into which FB Common
Stock will be converted by the amount of any payments made
to Mr. Piercey under any employment agreement, retention
agreement or severance policy of FB or the Bank.
The Companies intend to consummate the Mergers as soon
as practicable after all of the conditions to the Mergers
have been met or waived; however, there can be no assurance
that the conditions to the Mergers will be satisfied.
Conduct of Business Prior to the Effective Date
FB and Bank have agreed pursuant to the Plan that,
prior to the Effective Date, each will conduct its business
only in the ordinary course and that, without the prior
written consent of FCC and except as otherwise provided in
the Plan, will not, among other things, (a) declare or pay
any dividend or change the number of outstanding shares of
its capital stock; (b) amend its articles of incorporation
or bylaws or adopt or amend any resolution or agreement
concerning indemnification of its directors and officers;
(c) acquire another business or entity, or sell or dispose
of a material part of its assets, except in the ordinary
course of business consistent with past practices; (d)
dispose of investment securities having an aggregate market
value greater than 10% of the aggregate book value of its
investment portfolio on March 31, 1994 or make investments
in non-investment grade securities or which are inconsistent
with past investment practices; (e) charge off (except as
required by law or regulatory authorities or generally
accepted accounting principles consistently applied) or sell
any of its portfolio of loans, discounts or financing leases
except for a price not less than the value thereof, or sell
any asset held as other real estate owned or other
foreclosed assets for an amount less than 100% of such
asset's book value as of March 31, 1994; (f) enter into or
modify any agreement pertaining to compensation arrangements
with its present or former directors, officers or employees
except such agreements as are terminable at will without any
penalty or other payment, or increase by more than 5% the
compensation of any such person whose annual compensation
would, following such increase, exceed $30,000, or increase
any compensation in any manner inconsistent with past
practices; (g) except in the ordinary course of business,
place any mortgage, pledge or other encumbrance on any of
its assets or forgive any material indebtedness owing to it
or any claims in excess of $100,000 which it may possess, or
waive any right of substantial value in excess of $100,000
or discharge or satisfy any material noncurrent liability;
(h) fail to pay, or make adequate provision for the payment
of, all taxes, interest payments and penalties due and
payable, except those being contested in good faith by
appropriate proceedings and for which sufficient reserves
have been established; (i) take or cause to be taken any
action that would disqualify the Mergers as a "pooling-of-
interests" for accounting purposes or as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue
Code (the "Code"); or (j) enter into any new line of
business.
In addition, FB and Bank have agreed that, without the
prior approval of FCC they will not solicit or encourage
inquiries or proposals with respect to, or, except to the
extent required in the opinion of their counsel to discharge
properly their fiduciary duties to FB's consolidated group
and its shareholders, furnish any information relating to or
participate in any negotiations or discussions regarding,
any acquisition or purchase of all or a substantial portion
of the assets of, or a substantial equity interest in, or
any business combination with FB or Bank, other than as
contemplated by the Plan. FB and Bank have also each agreed
to instruct their officers, directors, agents and affiliates
to refrain from doing any of the above and to notify FCC
immediately if any such inquiries or proposals are received
by, any such information is requested from, or any
negotiations or discussions are sought to be initiated with
it or any of its officers, directors, agents and affiliates.
Further, FB has committed that neither its Board of
Directors nor any committee thereof will (i) withdraw or
modify or propose to withdraw or modify the approval or
recommendation to its shareholders of the Plan and the
Mergers, (ii) approve or recommend, or propose to recommend
any takeover proposal with respect to FB or Bank, except
such action that is required in the written opinion of its
counsel to discharge its fiduciary duties to FB's
consolidated group and its shareholders, or (iii) modify, or
waive or release any party from any provision of or fail to
enforce any provision of, if enforcement is requested by
FCC, any confidentiality agreement entered into by FB or
Bank with any prospective acquiror after the date of the
Plan or during the two years prior to such date.
Waiver, Amendment and Termination
The Plan provides that the parties thereto may waive
any of the conditions to their respective obligations to
consummate the Mergers other than the receipt of necessary
regulatory approvals, shareholder approval of the Plan, the
satisfaction of all conditions prescribed by law for
consummation of the Mergers and certain other conditions
that have already been satisfied. A waiver must be in
writing and approved by the Board of Directors of the
waiving party.
The Plan, including all related agreements, may be
amended or modified at any time, before or after its
approval by the shareholders of FB, by the mutual agreement
in writing of the Boards of Directors of the parties to the
Plan; provided that any amendment made subsequent to such
shareholder approval may not alter the amount or type of
shares into which FB Common Stock may be converted, alter
any term of the Articles of Incorporation of FCC, or alter
any term or condition of the Plan in a manner that would
adversely affect any shareholders of FB. Additionally, the
Plan may be amended at any time by the sole action of the
chief executive officers of the respective parties to the
Plan or their designees to correct typographical errors or
other misstatements that are not material to the substance
of the transactions contemplated by such parties.
The Plan may be terminated at any time prior to the
Effective Date of the Mergers by (i) the mutual consent of
the Boards of Directors of FCC and FB; (ii) either FCC or FB
in the event of a material breach by any member of the
consolidated group of the other of them of any
representation, warranty or covenant in the Plan which
cannot be cured by the earlier of 15 days after written
notice of such breach or February 28, 1995; (iii) either FCC
or FB if by February 28, 1995 all the conditions to closing
required by the Plan have not been met or waived, cannot be
met, or the Mergers have not occurred; provided any party
that is in material violation of a representation, warranty
or covenant set forth in the Plan may not seek to terminate
the Plan for the reasons set forth in this clause (iii);
(iv) FB if both (A) the quotient of the average closing
price of FCC Common Stock for the five trading days
immediately preceding the closing date of the Mergers
divided by the closing price of such stock on the date
immediately preceding the date of the Plan, as reported in
the Wall Street Journal, is less than 0.75 and (B) the
quotient of the average closing value of the Standard &
Poor's Regional Bank Index for the five trading days
preceding the closing date for the Mergers divided by the
value of the Standard & Poor's Regional Bank Index for the
day immediately preceding the date of the Plan exceeds the
quotient set forth above for FCC Common Stock by more than
0.15; (v) FCC if the number of shares of FB Common Stock as
to which holders thereof are legally entitled to assert
dissenters' rights exceeds that number of shares of FB
Common Stock that would preclude the use of the pooling-of-
interests method of accounting for the Mergers; (vi) FCC or
FNBC if the Plan or the Company Merger fails to receive the
requisite vote at any meeting of FB shareholders called for
the purpose of voting thereon; or (vii) the Board of
Directors of either FCC or FNBC if FB's Board of Directors
(A) withdraws, modifies or changes its recommendation to its
shareholders as contained herein or resolves to do so, (B)
recommends to its shareholders any other merger,
consolidation, share exchange, business combination or other
similar transaction, any sale, lease, transfer or other
disposition of all or substantially all of the assets of any
member of FB's consolidated group or any acquisition of 15%
or more of any class of FB's capital stock or (C) makes any
announcement of an intention or agreement to do any of the
foregoing.
Interests of Certain Persons in the Merger
In considering the Plan, holders of FB Common Stock
should be aware that the FB directors and officers have an
interest in the Mergers, as described below.
Indemnification of FB Directors and Officers. FCC and
FNBC have agreed that, following the Effective Date and
subject to certain limitations, they will indemnify each
person who has served as a director or officer of FB or Bank
against all losses, claims, damages, liabilities and
judgments (and related expenses, including, but not limited
to, attorney's fees and amounts paid in investigating,
defending, or settling any action) based upon or arising
from such person's service in such capacity, to the same
extent as he would have been indemnified under the Articles
of Incorporation or Association and By-laws of FCC and FNBC
in effect on May 27, 1994, except that the Plan limits FCC's
aggregate liability for such indemnification to $5 million
and requires each officer and director eligible for such
indemnification to execute a Shareholder's Commitment in
which each such person agrees, among other things, to
release FCC and FNBC from any obligation that either of them
may have to indemnify such person for acts taken by such
person as an officer, director, or employee of FB or Bank,
except to the extent set forth in the Plan.
Indemnification for Liabilities under the Securities
Act. The Plan also provides for indemnification of FB's
officers, directors and controlling persons from and against
liability arising under the Securities Act of 1933 (the
"Securities Act") or otherwise if such liability arises out
of or is based on an untrue statement or omission of a
material fact required to be stated in the Registration
Statement, of which this Proxy Statement and Prospectus
forms a part , or in any amendment or supplement thereto, or
in any state application for qualification, permit,
exemption or registration as a broker/dealer, or in any
amendment or supplement thereto, or necessary to make the
statements made in any of the foregoing not misleading.
This indemnification does not apply to statements made in
reliance on information furnished to FCC by FB, Bank, or any
officer, director, or controlling person of FB or Bank, for
use in the Registration Statement, or in any such state
application.
Severance and Retention Benefits. Certain severance
plans and retention agreements were adopted by Bank in 1994
to encourage its employees and senior management to continue
their employment with Bank in the context of ongoing merger
discussions between FB and certain non-affiliated financial
institutions as described elsewhere herein.
Pursuant to the First Bank Employee Severance Plan (the
"Severance Plan"), full-time employees of Bank other than
James C. Piercey, its President, who have been employed by
Bank for at least 12 consecutive months, will receive a
severance benefit based upon years of service and level of
compensation if they remain in the employ of Bank until the
Effective Date of the Mergers and either are not offered
employment by FNBC or FCC following the Mergers, or are
offered employment by FNBC or FCC, the nature of which is
"substantially different" (as defined in the Severance Plan)
from the nature of such employee's position with Bank
immediately prior to the Mergers. The Severance Plan also
provides certain benefits to employees who are hired by FCC
or FNBC and then terminated without cause during a
"Severance Protection Period" (as defined in the Severance
Plan).
Pursuant to the employee and senior management
retention agreements, certain employees and senior
management of Bank will receive retention pay equal to three
months and six months, respectively, of each such person's
base pay on the closing date of the Mergers, if they remain
in the employ of Bank until the closing date of the Mergers,
continue to perform their duties at the level of competence
which Bank has come to expect of such persons, and aid in
the preparation for the Mergers, to the extent requested by
Bank.
Employment Agreement With James C. Piercey. Mr. James
C. Piercey, President and Chief Executive Officer of Bank
and Secretary of FB, currently has an employment agreement
with Bank that provides for certain severance payments if
Mr. Piercey is terminated or voluntarily resigns his
employment within the four months immediately following an
"acquisition" of Bank or FB (such term, as defined in such
agreement, includes the Mergers). As a result, if the
Mergers are consummated and he is terminated or voluntarily
resigns his employment within the first four months
following consummation of the Mergers, Mr. Piercey will be
entitled to a severance payment equal to his full base
salary at regular intervals for the thirty-six months
following his termination or resignation, and a bonus equal
to the average of the annual incentive compensation received
by Mr. Piercey during each of the four fiscal years
immediately preceeding his termination or resignation, which
bonus shall be payable at the conclusion of each succeeding
year that ends during the thirty-six months following his
termination or resignation. Mr. Piercey also has an
interest in the Mergers adverse to the interests of
shareholders of FB to the extent that the consideration to
be received by such shareholders will be reduced by the
dollar amounts payable to Mr. Piercey under certain
employment and retention agreements or severance policies of
FB referred to in the Plan, unless Mr. Piercey enters into a
two-year non-competition agreement in form and substance
satisfactory to FCC.
Shareholder's Commitment
Each FB director and executive officer and each
shareholder owning 5% or more of FB Common Stock has
executed a Shareholder's Commitment pursuant to which he has
agreed solely in his capacity as a shareholder of FB (i) to
vote in favor of the Plan and against any other proposal
relating to the sale or disposition of Bank or FB unless FCC
or FNBC is in breach or default in any material respect of
any covenant, representation or warranty contained in the
Plan; (ii) not to transfer any of the shares of FB Common
Stock over which he has dispositive power, or grant any
proxy thereto not approved by FCC, until the earlier of the
Effective Date or the date that the Plan has been
terminated, except for transfers by operation of law or
transfers in connection with which the transferee agrees to
be bound by the Shareholder's Commitment; (iii) not to deal
in FCC Common Stock or other securities of FCC until the
earlier of the Effective Date or the date the Plan has been
terminated; and (iv) to release, as of the Effective Date,
FCC and FNBC from any obligation that either of them may
have to indemnify such shareholder for acts taken as an
officer, director or employee of any member of FB's
consolidated group, except to the extent set forth in the
Plan.
Employee Benefits
Pursuant to the Plan, FCC has agreed that, from and
after the Effective Date, FCC or FNBC will offer to all
persons who were employees of FB or Bank immediately prior
to the Effective Date and who become employees of FNBC
immediately following the Effective Date, the same employee
benefits as are offered by FCC or FNBC to employees of FNBC,
except that there will not be a waiting period for coverage
under the First Commerce Corporation Flexible Benefit Plan
or any of its constituent plans, including the First
Commerce Corporation Medical and Dental Care Plan, and no
employee of Bank who is an active employee on the Effective
Date will be denied such benefits for a pre-existing
condition. Full credit will be given for prior service by
such employees with FB or Bank for eligibility and vesting
purposes under all of FCC's benefit plans and policies,
except that credit for prior service will not be given for
eligibility, vesting or benefit accrual purposes under FCC's
retirement plan.
FCC has also agreed to pay all benefits accrued and
unpaid through the Effective Date under the Bank's retention
agreements and severance policy as in effect on May 27, 1994
and all COBRA benefits payable by FB or Bank under the Code
or the Employee Retirement Income Security Act of 1974, to
the extent such benefits are not otherwise provided to
employees of FB or Bank under the benefit plans of FCC or
FNBC. FB intends to amend its 401(k) plan to provide that
all participants in the plan who were employed by FB or Bank
on May 27, 1994 will be fully vested in their plan accounts
as of the Effective Date. FCC has agreed to take all
reasonable actions necessary after the Effective Date of the
Mergers to maintain the qualification and tax-exempt status
of FB's 401(k) plan and to meet all other requirements of
law and of the plan until it is either terminated and fully
liquidated or combined with a plan of FCC. FCC and FNBC
will not otherwise be required to continue any benefit plan
maintained by FB or Bank.
Expenses
The Plan provides that regardless of whether the
Mergers are consummated, expenses incurred in connection
with the Plan and the transactions contemplated thereby
shall be borne by the party that has incurred them.
Status Under Federal Securities Laws; Certain Restrictions
on Resales
The shares of FCC Common Stock to be issued to share-
holders of FB pursuant to the Plan have been registered
under the Securities Act thereby allowing such shares to be
freely transferred without restriction by persons who will
not be "affiliates" of FCC or who were not "affiliates" of
FB, within the meaning of Rule 145 under the Securities Act.
In general, affiliates of FB include its executive officers
and directors and any person who controls, is controlled by
or is under common control with FB. Rule 145, among other
things, imposes certain restrictions upon the resale of
securities received by affiliates in connection with certain
reclassifications, mergers, consolidations or asset
transfers. FCC Common Stock received by affiliates of FB
will be subject to the applicable resale limitations of Rule
145.
Such persons will not be able to resell the FCC Common
Stock received by them pursuant to the Holding Company
Merger unless such stock is registered for resale under the
Securities Act or an exemption from the registration re-
quirements of the Securities Act is available. All such
persons should carefully consider the limitations imposed by
Rules 144 and 145 promulgated under the Securities Act prior
to effecting any resales of FCC Common Stock. FB has agreed
to use its best efforts to cause each of its directors and
executive officers and each person who is a beneficial owner
of 5% or more of the outstanding FB Common Stock (each of
whom may be deemed to be an "affiliate" under the Securities
Act) to enter into an agreement not to sell shares of FCC
Common Stock received by him in violation of the Securities
Act or the rules and regulations of the Commission
thereunder, or in a manner that would disqualify the Mergers
from pooling-of-interests accounting treatment. The
Commission's pooling-of-interests accounting rules, among
other things, will prohibit affiliates of FB from disposing
of FCC Common Stock received by them in the Holding Company
Merger until such time as financial results covering at
least 30 days of combined operations of FCC and FB have been
published.
Accounting Treatment
It is a condition to FCC's obligation to consummate the
Mergers that neither FCC's independent accountants nor the
Commission shall have taken the position that the Mergers
may not be accounted for as a pooling-of-interests under the
requirements of Opinion No. 16 of the Accounting Principles
Board of the American Institute of Certified Public
Accountants and the published rules and regulations of the
Commission for accounting and financial reporting purposes.
Under the pooling-of-interests method of accounting, after
certain adjustments necessary to conform the basis of
presentation of the FCC and FB information, the recorded
assets and liabilities of FCC and FB will be carried forward
to FCC's consolidated financial statements at their recorded
amounts, the consolidated earnings of FCC will include
earnings of FCC and FB for the entire fiscal year in which
the Mergers occur and the reported earnings of FCC and FB
for prior periods will be combined and restated as
consolidated earnings of FCC. See "- Regulatory Approvals
and Other Conditions of the Mergers" and "- Status Under
Federal Securities Laws; Certain Restrictions on Resales."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of material
federal income tax consequences to holders of FB Common
Stock resulting from the Mergers. The discussion set forth
below is based upon applicable federal law and judicial and
administrative interpretations on the date hereof, any of
which is subject to change at any time.
Consummation of the Mergers is conditioned upon receipt
by FCC and FB of an opinion from McGlinchey Stafford Lang, A
Law Corporation, to the following effects, among others:
(a) Each of the Mergers will constitute a
reorganization under Section 368(a)(1)(A) of the Code and
FB, Bank, FCC and FNBC each will be a "party to a reor-
ganization" within the meaning of Section 368(b) of the
Code.
(b) No material gain or loss will be recognized by FB,
Bank, FCC or FNBC as a result of the Mergers.
(c) No gain or loss will be recognized by a
shareholder of FB on the receipt solely of FCC Common Stock
in exchange for his shares of FB Common Stock.
(d) The basis of the shares of FCC Common Stock to be
received by FB's shareholders pursuant to the Holding
Company Merger will, in each instance, be the same as the
basis of the shares of FB Common Stock surrendered in
exchange therefor, increased by any gain recognized on the
exchange.
(e) The holding period of the shares of FCC Common
Stock to be received by FB's shareholders pursuant to the
Holding Company Merger will, in each instance, include the
holding period of the respective shares of FB Common Stock
exchanged therefor, provided that the shares of FB Common
Stock are held as capital assets on the date of the Holding
Company Merger.
(f) The payment of cash to FB's shareholders in lieu
of fractional share interests of FCC Common Stock will be
treated as if the fractional shares were distributed as part
of the exchange and then redeemed by FCC. These cash
payments will be treated as having been received as a
distribution in redemption of that fractional share interest
subject to the conditions and limitations of Section 302 of
the Code. If a fractional share of FCC Common Stock would
constitute a capital asset in the hands of a redeeming
shareholder, any resulting gain or loss will be
characterized as capital gain or loss in accordance with the
provisions and limitations of Subchapter P of Chapter 1 of
the Code.
(g) An FB shareholder who perfects his statutory right
to dissent from the Holding Company Merger and who receives
solely cash in exchange for his FB Common Stock will be
treated as having received such cash payment as a
distribution in redemption of his shares of FB Common Stock,
subject to the provisions and limitations of Section 302 of
the Code. After such distribution, if the former FB
shareholder does not actually or constructively own any FB
Common Stock, the redemption will constitute a complete
termination of interest and be treated as a distribution in
full payment in exchange for the FB Common Stock redeemed.
Such opinions are not binding on the Internal Revenue
Service which could take positions contrary to the
conclusions in such opinions.
As a result of the complexity of the tax laws, and
because the tax consequences to any particular shareholder
may be affected by matters not discussed herein, it is
recommended that each shareholder of FB consult his personal
tax advisor concerning the applicable federal, state and
local income tax consequences of the Mergers to him.
<PAGE>
DISSENTERS' RIGHTS
Unless the Plan is approved by the holders of at least
80% of the total voting power of FB, Section 131 of the LBCL
allows a shareholder of FB who objects to the Holding
Company Merger and who complies with the provisions of that
section to dissent from the Holding Company Merger and to be
paid in cash the fair cash value of his shares of FB Common
Stock as of the day before the Special Meeting, as
determined by agreement between the shareholder and FCC or
by the state district court for the Parish of Orleans if the
shareholder and FCC are unable to agree upon the fair cash
value.
To exercise the right of dissent, a shareholder must
(i) file with FB a written objection to the Plan prior to or
at the Special Meeting and also (ii) vote his shares (in
person or by proxy) against the Plan at the Special Meeting.
Neither a vote against the Plan nor a specification in a
proxy to vote against the Plan will in and of itself consti-
tute the necessary written objection to the Plan. Moreover,
by voting in favor of, or abstaining from voting on, the
Plan, or by returning the enclosed proxy without instructing
the proxy holders to vote against the Plan, a shareholder
waives his rights under Section 131. The right to dissent
may be exercised only by the record owners of the shares and
not by persons who hold shares only beneficially.
Beneficial owners who wish to dissent from the Holding
Company Merger should have the record ownership of the
shares transferred to their names or instruct the record
owner to follow the Section 131 procedure on their behalf.
If the Plan is approved by less than 80% of the number
of shares of FB Common Stock outstanding, then promptly
after the Effective Date written notice of the consummation
of the Holding Company Merger will be given by registered
mail to each former shareholder of FB who filed a written
objection to the Plan and voted against it. Within 20 days
after the mailing of such notice, the shareholder must file
with FCC a written demand for payment for his shares at
their fair cash value as of the day before the Special
Meeting and must state the amount demanded and a post office
address to which FCC may reply. He must also deposit the
certificate(s) formerly representing his shares of FB Common
Stock in escrow with a bank or trust company located in
Orleans Parish, Louisiana. With the above-mentioned demand,
the shareholder must also deliver to FCC the written
acknowledgement of such bank or trust company that it holds
the certificate(s), duly endorsed and transferred to FCC,
upon the sole condition that the certificate(s) will be
delivered to FCC upon payment of the value of the shares in
accordance with Section 131.
Unless the shareholder objects to and votes against the
Holding Company Merger, demands payment, deposits his
certificates and delivers the required acknowledgment in
accordance with the procedures and within the time periods
set forth above, the shareholder will conclusively be
presumed to have acquiesced to the Mergers and will forfeit
any right to seek payment pursuant to Section 131.
If FCC does not agree with the amount demanded by the
shareholder, or does not agree that payment is due, it will,
within 20 days after receipt of such demand and acknowl-
edgement, notify such shareholder in writing of either (i)
the value it will agree to pay or (ii) its belief that no
payment is due. If the shareholder does not agree to accept
the offered amount, or disagrees with FCC's assertion that
no payment is due, he must, within 60 days after receipt of
such notice, file suit against FCC in the Civil District
Court for the Parish of Orleans for a judicial determination
of the fair cash value of the shares. Any shareholder en-
titled to file such suit may, within such 60-day period but
not thereafter, intervene as a plaintiff in any suit filed
against FCC by another former shareholder of FB for a judi-
cial determination of the fair cash value of such other
shareholder's shares. If a shareholder fails to bring or to
intervene in such a suit within the applicable 60-day
period, he will be deemed to have consented to accept FCC's
statement that no payment is due or, if FCC does not contend
that no payment is due, to accept the amount specified by
FCC in its notice of disagreement.
If upon the filing of any such suit or intervention FCC
deposits with the court the amount, if any, which it speci-
fied in its notice of disagreement, and if in that notice
FCC offered to pay such amount to the shareholder on demand,
then the costs (not including legal fees) of the suit or
intervention will be taxed against the shareholder if the
amount finally awarded to him, exclusive of interest and
costs, is equal to or less than the amount so deposited;
otherwise, the costs (not including legal fees) will be
taxed against FCC.
Upon filing a demand for the value of his shares, a
shareholder ceases to have any rights of a shareholder
except the rights created by Section 131. The shareholder's
demand may be withdrawn voluntarily at any time before FCC
gives its notice of disagreement, but thereafter only with
the written consent of FCC. If his demand is properly
withdrawn, or if the shareholder otherwise loses his dis-
senters' rights, he will be restored to his rights as a
shareholder as of the time of filing of his demand for fair
cash value.
Prior to the Effective Date, dissenting shareholders of
FB should send any communications regarding their rights to
James C. Piercey, Secretary, First Bancshares, Inc., 1431-A
Gause Boulevard, Slidell, Louisiana 70459. On or after the
Effective Date, dissenting shareholders should send any
communications regarding their rights to Thomas L.
Callicutt, Jr., Senior Vice President and Controller, First
Commerce Corporation, 210 Baronne Street, New Orleans,
Louisiana 70112. All such communications should be signed
by or on behalf of the dissenting shareholder in the form in
which his shares are registered on the books of FB. FCC has
the right to terminate the Plan if the number of shares of
FB Common Stock as to which holders thereof are legally
entitled to assert dissenters' rights exceeds that number of
shares of FB Common Stock that would preclude the use of the
pooling-of-interests method of accounting for the Mergers.
See "The Plan - Waiver, Amendment and Termination."
The foregoing summary of Section 131 of the LBCL is
necessarily incomplete and is qualified in its entirety by
reference to excerpts from that section set forth herein as
Appendix C.
INFORMATION ABOUT FB
Description of the Business
FB, a business corporation organized under the laws of
Louisiana and a registered bank holding company under the
Federal Bank Holding Company Act of 1956, was incorporated
in 1981 to acquire the outstanding stock of Bank. FB has no
other subsidiaries. At March 31, 1994, FB had total
consolidated assets of approximately $246.5 million and
shareholders' equity of approximately $20.9 million. FB's
principal executive office is located at 1431-A Gause
Boulevard, Slidell, Louisiana 70459, and its telephone
number is (504) 643-2700.
Bank, a Louisiana state bank organized in 1906,
provides full-service consumer and commercial banking
services in Slidell, Louisiana and surrounding areas of St.
Tammany Parish, Louisiana, through its main banking office
at 2200 Front Street, Slidell, Louisiana, and at five full
service branches located in Slidell, Covington and
Mandeville, Louisiana. Deposits of Bank are insured by the
Federal Deposit Insurance Corporation ("FDIC") up to
applicable legal limits. Bank offers an array of deposit
services, including demand accounts, NOW accounts,
certificates of deposit, and money market accounts, and
provides safe deposit boxes, night depository, individual
retirement accounts, and drive-in banking services. Bank's
lending activities consist principally of real estate,
consumer, and commercial loans. At March 31, 1994, Bank had
total deposits of approximately $223.7 million.
Bank's deposits represent a cross-section of the area's
economy and there is no material concentration of deposits
from any single customer or group of customers. Bank's
loan portfolio contains a concentration of loans to the
construction industry. At December 31, 1993, Bank had
approximately $45,927,000 of loans outstanding to borrowers
in the construction industry, which represented 226.04% of
Bank's Tier I Capital and 28.7% of Bank's total outstanding
loans on such date. There are no material seasonal factors
that would have an adverse effect on Bank.
Competition
FB's general market area is the Greater New Orleans
Metropolitan Area, which has a population of approximately
1,200,000 and in which there are numerous banks and other
financial institutions. FB's primary market area, St.
Tammany Parish, has a population of approximately 160,000.
Competition among banks for loan customers is generally
governed by such factors as loan terms, including interest
charges, restrictions on borrowers and compensating
balances, and other services offered by such banks. FB
competes with numerous other commercial banks, savings and
loan associations and credit unions for customer deposits,
as well as with a broad range of financial institutions in
consumer and commercial lending activities. In addition to
thrift institutions, other businesses in the financial
services industry compete with FB for retail and commercial
deposit funds and for retail and commercial loan business.
Competition for loans and deposits is intense among the
financial institutions in the area.
At present, several holding companies with greater
resources than those of FB have acquired banks or
established branches in FB's market area and are continuing
to do so. The size of these institutions allows certain
economies of scale that permit their operation on a narrower
profit margin than would be appropriate for FB. FB has also
experienced some competitive pressure on interest rates that
it is able to charge on its new loans.
Property
The executive office of FB and Bank, located at 1431-A
Gause Boulevard, Slidell, Louisiana, is owned by Bank and is
not subject to a mortgage. Bank also owns the building and
land where each of its branches is located, except for the
Covington Branch, which is located on leased premises under
a lease that expires in 1999, subject to Bank's option to
renew the lease for a five-year period. Bank also leases
the offices in which its Baton Rouge and Mandeville Mortgage
Departments and Retail Lending and Collections Office are
located under leases that expire on various dates through
1996, subject in each case to renewal options. None of the
properties owned by Bank is subject to a mortgage.
Employees
FB and Bank have, in the aggregate, approximately 166
full-time and 21 part-time employees and considers its
relationship with its employees to be good. None of FB's or
Bank's employees are subject to a collective bargaining
agreement.
Legal Proceedings
FB and Bank normally are parties to and have pending
routine litigation arising from their regular business
activities of furnishing financial services, including
providing credit and collecting secured and unsecured
indebtedness. In some instances, such litigation involves
claims or counterclaims against FB and Bank, or either of
them. In the opinion of management of FB and Bank, as of
the date of this Proxy Statement and Prospectus, FB and Bank
had no litigation pending that if adversely decided, would
have a material adverse effect on the financial condition or
results of operations of FB's consolidated group.
Security Ownership of Principal Shareholders and Management
The following table sets forth, as of the Record Date,
certain information with respect to the beneficial
ownership, direct and indirect, of the outstanding shares of
FB Common Stock by: (i) each person known by FB to be the
beneficial owner of more than five percent of the
outstanding FB Common Stock; (ii) each director of FB, the
Chief Executive Officer of FB, and each executive officer of
FB whose total annual cash compensation exceeds $100,000;
and (iii) all directors and executive officers of FB as a
group.
Number of
Name and Address Shares Owned Percentage
of Beneficial Owner Beneficially<FN1> of Class
___________________ ______________ __________
Elton A. Arceneaux, Jr. 2,380<FN2> *
Linda P. Arceneaux 58,445<FN3> 6.89%
W.A. Baker, Sr. 9,110 1.07%
John J. Coerver 1,635 *
Arthur B. Crow 126,575<FN4> 14.93%
Gus A. Fritchie, Jr. 9,685 1.14%
Paul E. Gasser 1,000 *
Timothy H. O'Neil, Jr. 1,000 *
James C. Piercey 30,198<FN5> 3.56%
V.J. Scogin, Sr. 6,380 *
Gerald H. Smith 175,072<FN6> 20.65%
R. Preston Wailes 72,643<FN7> 8.57%
All Directors and 260,606 30.74%
Executive Officers as a
Group (10 persons)
_____________________
* Less than one percent of class
<FN1> Except as otherwise noted, the shareholders listed
exercise sole voting and investment power, subject to
applicable community property laws.
<FN2> Does not include 58,445 shares beneficially owned by
Linda P. Arceneaux, Mr. Arceneaux's wife, as to which
Mr. Arceneaux disclaims beneficial ownership.
<FN3> Includes 9,500 shares held of record by Ms. Arceneaux,
35,000 shares in seven equal lots held of record by Ms.
Arceneaux as usufructuary for Anna C. Arceneaux Miller,
Catherine M. Arceneaux Hetzel, Charisse M. Arceneaux
Webb, Greg Thomas Arceneaux and Randal Chris Arceneaux,
and 13,945 shares held of record by Ms. Arceneaux as
trustee for the Jonathan Adam Arceneaux Trust. Does
not include 2,380 shares held of record by Elton A.
Arceneaux, Jr., Ms. Arceneaux's husband, as to which
Ms. Arceneaux disclaims beneficial ownership. Ms.
Arceneaux's address is 9 Wren Road, Covington,
Louisiana 70433.
<FN4> Includes 124,875 shares held of record by Mr. Crow and
1,700 shares held of record by Leah V. Crow, Mr. Crow's
wife. Mr. Crow's address is P. O. Box 1299, Pearl
River, Louisiana 70452.
<FN5> Includes 24,573 shares held of record by Mr. Piercey
and 5,625 shares held of record by Donna E. Piercey,
Mr. Piercey's wife.
<FN6> Includes 143,472 shares held of record by Mr. Smith and
31,600 shares held of record by Mr. Smith as trustee
for Elizabeth Smith. Mr. Smith's address is P. O. Box
131405, Houston, Texas 77219.
<FN7> Mr. Wailes' address is 1528 Nashville Avenue, New
Orleans, Louisiana 70115.
<PAGE>
FB MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollar Amounts in Thousands except per share information)
I. RESULTS OF OPERATIONS
______________________
Overview
________
FB reported consolidated net income of $6,621 for the
year ended December 31, 1993, compared to $3,680 during the
year ended December 31, 1992 and $1,990 during the year ended
December 31, 1991. Net income per share for these periods was
$7.81, $4.34 and $2.35, respectively. The improvement in
earnings over the three years ended December 31, 1993 was
principally attributable to growth in earning assets, a
favorable interest rate environment, and improved loan quality
and lower net charge-offs resulting in a $654 decrease in the
provision for loan losses from 1991 to 1992 and a $1.3 million
negative provision in 1993. Net income for 1993 included $672
($.79 per share) of income related to the adoption of a new
accounting standard for income taxes. All of the consolidated
earnings of FB are attributable to the operations of Bank.
The following table sets forth a summary of FB's
consolidated results of operations for each of the three years
ended December 31, 1993.
CONSOLIDATED SUMMARY OF OPERATIONS
(in thousands of dollars)
For the Years Ended December 31,
______________________________________
1993 1992 1991
____ ____ ____
Interest income $ 20,640 $ 20,495 $ 19,463
Interest expense 5,030 6,682 9,187
______ ______ ______
Net interest income 15,610 13,813 10,276
Provision for possible
loan losses (1,300) 680 1,334
______ ______ ______
Net interest income
after provision 16,910 13,133 8,942
Non-interest income 2,544 2,106 2,169
Non-interest expense 10,586 9,785 8,249
______ ______ ______
Income before income
taxes and cummulative
effect of accounting
change 8,868 5,454 2,862
Income taxes 2,919 1,774 872
______ ______ ______
Income before cumulative
effect of accounting
change 5,949 3,680 1,990
Cumulative effect of
accounting change 672 - -
______ ______ ______
Net income $ 6,621 $ 3,680 $ 1,990
====== ====== ======
Earnings per common
share*:
Income before cumulative
effect of accounting
change 7.02 4.34 2.35
Cumulative effect of
accounting change .79 - -
Net income 7.81 4.34 2.35
*Per share data are based upon a weighted average number of shares
outstanding of 847,787.
<TABLE>
<CAPTION>
For the Years Ended December 31,
________________________________
1993 1992 1991
Ratios: ____ ____ ____
<S> <C> <C> <C>
Net income as a percent of average assets 2.79 1.61 1.00
Net income as a percent of average equity 39.98 33.24 24.17
Average equity as a percent of average total assets 7.00 4.87 4.19
Dividend payout ratio - - -
</TABLE>
<PAGE>
A. NET INTEREST INCOME
___________________
The principal component of FB's net earnings is net interest
income, which is the difference between interest and fees earned
on interest-earning assets and interest paid on deposits and
borrowed funds. Net interest income, when expressed as a
percentage of total average interest-earning assets, is referred
to as net interest margin. Net interest income for 1993 increased
to $15,610 from $13,813 recorded in 1992, an increase of 13.0%.
Net interest income grew 34.42% in 1992 from the 1991 amount of
$10,276. The improvement in 1993 was primarily the result of an
increase in average earning assets. Net interest income in 1993
and 1992 was favorably impacted by FB's increase in interim
residential real estate construction lending. This lending
activity resulted in increased average loan volumes as well as
additional loan fee income which favorably impacted FB's net
interest income. Total loan fee income included in interest
income during 1993, 1992 and 1991 was $2,836, $1,535 and $823,
respectively. With the anticipated increase in residential
mortgage lending rates, FB does not expect this loan volume to
continue at the pace experienced in 1993. A lower interest cost
also contributed to the increase in net interest income during
1992.
Average earning assets were $216,166 for the year ended
December 31, 1993, $206,257 for 1992 and $179,447 for 1991.
Earning assets were up significantly in 1993 due to strong loan
demand particularly in the residential construction area.
Economic activity remained generally good throughout 1993,
increasing the demand for loans. As a result, funds provided by
deposit growth were used to fund loan growth and purchase
investment securities. Average loans rose 2.21% from 1992 to
1993. Net interest margin decreased to 5.87% in 1993 from 5.95%
in 1992. The net interest margin was 5.26% in 1991.
FB's net interest income is affected by the change in the
amount and mix of interest-earning assets and interest-bearing
liabilities, and by changes in yields earned on assets and rate
paid on deposits and other borrowed funds. The following table
sets forth certain information concerning average interest-earning
assets and interest-bearing liabilities, the yields and rates
thereon for the years presented.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND INTEREST RATES
1993 1992 1991
_____________________________ _____________________________ ______________________________
Interest and Average Interest Average Interest Average Interest Average
Yield/Rates on Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Taxable Equivalent Basis Balance Expense Rate Balance Expense Rate Balance Expense Rate
_____________________________ _______ ________ _______ _______ ________ _______ _______ ________ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning asset:
Interest bearing deposits
with other banks $ 476 $ 12 2.60 $ 689 $ 18 2.68 $ 493 $ 25 5.04
U.S. treasury securities 23,509 1,307 5.56 14,160 904 6.36 6,251 483 7.73
Federal agencies 31,024 2,035 6.47 34,964 2,641 7.43 24,720 2,163 8.63
State and municipal
obligations <FN1> 1,562 137 8.77 2,161 191 8.83 3,283 306 9.32
Other securities 262 25 9.39 755 59 7.82 1,098 86 7.80
_______ _______ _______ _______ _______ ______
Total investment
securities <FN3> 56,357 3,504 6.22 52,040 3,795 7.29 35,352 3,038 8.59
Federal funds sold and
securities purchased under
resale agreements 10,810 323 2.95 8,211 274 3.28 6,917 385 5.48
Loans (net) <FN2> 148,523 13,945<FN4> 9.39 145,317 14,938<FN4> 10.30 136,685 15,293<FN4> 11.19
_______ _______ _______ _______ _______ ______
Total earning assets 216,166 17,784 8.23 206,257 19,025 9.22 179,447 18,741 10.44
Non-earning assets:
Allowance for possible
loan losses (3,304) (3,462) (2,890)
Cash and due from banks 11,990 9,558 6,866
Premises and equipment 6,409 6,299 5,850
Other real estate 3,127 5,868 5,728
Other assets 2,157 2,925 1,640
_______ _______ _______
Total assets $236,545 $227,445 $196,641
LIABILITIES AND SHARESHOLDERS'
EQUITY:
Interest bearing liabilities:
Money market deposits $ 46,513 $ 957 2.06 $ 49,812 $ 1,470 2.95 $ 40,063 $ 2,005 5.00
NOW deposits 43,829 892 2.04 39,080 1,063 2.71 28,756 1,228 4.26
Savings deposits 21,194 452 2.13 19,038 570 2.99 14,337 722 5.03
Certificates of deposits
$100,000 or more 10,042 370 3.69 12,121 515 4.24 15,363 1,018 6.63
Other time deposits 52,241 1,982 3.79 55,278 2,565 4.64 56,854 3,679 6.47
Federal funds purchased and
securities sold under
repurchase agreements -- -- -- -- -- -- -- -- --
Other short term borrowing 539 16 3.03 546 19 3.49 452 27 5.91
Note payable -- -- -- 521 41 7.87 678 69 10.18
Subordinated debentures 3,006 361 12.00 3,662 439 12.00 3,662 439 12.00
_______ _______ _______ _______ _______ _______
Total interest bearing
liabilities 177,364 5,030 2.84 180,058 6,682 3.71 160,165 9,187 5.74
Non-interest bearing deposits 41,140 35,477 27,108
Other liabilities 1,479 840 1,133
_______ _______ _______
Total liabilities 219,983 216,375 188,406
Shareholders' equity 16,562 11,070 8,235
_______ _______ _______
Total liabilities and
shareholders' equity $236,545 $227,445 $196,641
======= ======= =======
Net interest income (FTE)
and margin 12,754 5.89 12,343 5.98 9,554 5.31
======= ===== ======= ===== ======= =====
Net earning assets and spread $ 38,802 5.39 $ 26,199 5.51 $ 19,282 4.69
======= ===== ======= ===== ======= =====
</TABLE>
_________________________
<FN1> Determined full taxable equivalent using a 34% tax
rate for 1993, 1992 and 1991.
<FN2> Net of unearned income and including non-accrual loans.
<FN3> Amounts computed based on historical cost without giving
effect to the market valuation for securities classified as
available for sale.
<FN4> Interest amounts do not include loan fee income.
<PAGE>
The following table sets forth changes in interest income and
interest expense for each major category of interest-earning assets and
interest-bearing liabilities and the amount of change attributable to
volume change and rate change for the period indicated. The change in
interest income due to both volume change and rate change has been
allocated to volume change and rate change on a pro rata basis.
<TABLE>
<CAPTION>
RATE/VOLUME ANALYSIS
TAXABLE EQUIVALENT BASIS
________________________
1993/1992 1992/1991
___________________________________ ______________________________________
Change Total Change Total
Attributable to Increase Attributable to Increase
_________________ ___________ ____________________ ___________
Rate Volume (Decrease) Rate Volume (Decrease)
____ ______ _________ ______ ________ __________
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Interest bearing deposits
with
other banks -- (6) (6) (17) 10 (7)
Investment securities*
Federal funds sold and (588) 297 (291) (512) 1,269 757
securities
purchased under resale
agreements
Loans (38) 87 49 (183) 72 (111)
Total interest income (1,323) 330 (993) (1,321) 966 (355)
______ _____ _______ _______ _______ ______
(1,949) 708 (1,241) (2,033) 2,317 284
INTEREST BEARING
LIABILITIES:
Money market, NOW and
savings
deposits (906) 104 (802) (2,030) 1,193 (837)
Certificates of deposit
$100,000 or more (57) (88) (145) (288) (215) (503)
Other time deposits (442) (141) (583) (1,026) (103) (1,129)
Other borrowings -- (122) (122) (29) (7) (36)
______ _____ _______ _______ _______ ______
Total interest expense $(1,405) $ (247) $ (1,652) $ (3,373) $ 868 $ 2,505
______ _____ _______ _______ _______ ______
NET INTEREST INCOME $ (544) $ 955 $ 411 $ 1,340 $ 1,449 $ 2,789
====== ===== ======= ======= ======= ======
* Fully taxable equivalent basis using a 34% tax rate in 1993, 1992 and 1991.
</TABLE>
B. PROVISION FOR LOAN LOSSES
__________________________
The provision for loan losses is the periodic charge to
earnings for potential losses in the loan portfolio. The amounts
provided for loan losses are determined by management after
evaluations of the loan portfolio. This evaluation process
requires that management apply various judgments, assumptions and
estimates concerning the impact certain factors may have on
amounts provided. Factors considered by management in its
evaluation process include known and inherent losses in the loan
portfolio, the current economic environment, the composition of
and risk in the loan portfolio, prior loss experience and
underlying collateral values. While management considers the
amounts provided through December 31, 1993 to be adequate,
subsequent changes in these factors and related assumptions may
warrant significant adjustments in amounts provided, based on
conditions prevailing at the time. In addition, various
regulatory agencies, as an integral part of the examination
process, review Bank's allowance for loan losses. Such agencies
may require Bank to make additions to the allowance based on their
judgments of information available to them at the time of their
examination.
The provision for loan losses for the years ended
December 31, 1993, 1992 and 1991 was $(1,300), $680 and $1,334,
respectively. Improving economic conditions which led to lower
nonperforming loans and lower net charge-offs resulted in the
negative provision for loan losses in 1993. A continuation of
negative provisions in 1994 is unlikely, although any provision in
1994 is expected to be low in comparison to historical levels.
C. NON-INTEREST INCOME
___________________
Non-interest income, excluding securities transactions, was
$2,544 for 1993 compared to $2,020 in 1992 and $2,169 in 1991.
Service charges on deposit accounts, the largest component of non-
interest income, increased 19.57% in 1993 to $2,091. The increase
in 1993 is due primarily to the utilization of a new method of
calculating service charges.
D. NON-INTEREST EXPENSE
_____________________
The following table sets forth information by category of
non-interest expense for FB for the years indicated.
NON-INTEREST EXPENSE
____________________
1993 1992 1991
_____ ____ ____
Salaries and Benefits $ 4,796 $ 4,031 $ 3,276
FDIC Insurance 477 462 357
Occupancy 1,511 1,302 1,077
Postage 271 257 204
Ad Valorem Taxes 518 334 174
Stationery and Printing 226 268 165
Net Other Real Estate Expense 991 1,399 1,103
Other expense 1,796 1,732 1,893
______ ______ ______
Total 10,586 9,785 8,249
====== ====== ======
Non-interest expense for the year ended December 31, 1993
increased $801 or 8.89% over 1992 which, in turn, reflected a
$1,536 or 18.62% increase over 1991. The primary factor in the
increase from 1992 to 1993 was an 18.98% increase in personnel
expenses as a consequence of additional personnel due to increased
activity by Bank in mortgage banking and commercial lending. The
increase in non-interest expense between 1991 and 1992 was due
primarily to increased personnel expenses and writedown of other
real estate.
II. FINANCIAL CONDITION
___________________
At December 31, 1993, total assets were approximately
$238,744, as compared to $236,577 at December 31, 1992. Average
total assets for these years was approximately $236,500 for 1993
and $227,400 for 1992. The increase from 1992 to 1993 was
attributable primarily to modest increases in investment
securities, loans, and cash and due from banks.
A. INVESTMENT SECURITIES
_____________________
At December 31, 1993, FB's investment securities portfolio
aggregated $56,146, an increase of $5,164 and $8,213,
respectively, from the $50,982 reported at December 31, 1992 and
$47,933 reported at December 31, 1991.
The following table sets forth the composition of FB's
investment portfolio at the end of each period presented.
INVESTMENT SECURITIES
_____________________
Available
for Sale Held to Maturity
_________ _________________________
1993 1993 1992 1991
____ ____ ____ ____
U.S. Treasury $26,489 $ - $16,930 $ 9,503
U.S. Government Agencies 20,201 6,809 29,112 30,517
State and municipal - 1,782 2,048 3,299
Other Securities 865 - 2,892 4,614
_______ ______ _______ _______
Total $47,555 $8,591 $50,982 $47,933
======= ====== ======= =======
As of December 31, 1993, FB adopted Financial Accounting
Standards Board Statement of Financial Accounting Standard
("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Under this standard, securities classified as
held to maturity are those debt securities which Bank has the
positive intent and ability to hold to maturity. These criteria
are not considered satisfied when a security would be available to
be sold in response to significant interest rate changes which
were not anticipated in Bank's asset and liability management
strategies, changes in the types of products offered by Bank,
changes in its deposit structure, or potential liquidity needs.
Bank has no trading securities, which are defined as securities
bought and held principally for the purpose of selling them in the
near term. Securities not meeting the criteria for classification
as held to maturity or trading are classified as securities
available for sale.
Bank holds a $1,000 investment in debentures of an affiliated
bank, which Bank had fully reserved in prior years. On August 1,
1994, the affiliated bank consummated a merger with another
financial institution. As a result, Bank expects to collect
approximately $1.8 million and will recognize this entire amount
as income in the third quarter of 1994. See Notes 2 and 16 to the
Notes to FB's Consolidated Financial Statements included elsewhere
herein.
At year end, the held to maturity securities portfolio had a
net unrealized gain of $193 with gross gains of $193 and gross
losses of $0. There were no investment sales during 1993 or 1991.
Gross realized gains of $86 and gross realized losses of $0 were
realized on investment sales during 1992. There are no securities
whose book value, other than securities of the U.S. Government and
related agencies, exceeded 10% of shareholders' equity.
The following table presents selected contractual maturity
data for the investment securities in FB's portfolio at
December 31, 1993.
One year One to Five to Over Ten
Available for Sale: or less Five Years Ten Years Years
__________________ ________ __________ _________ ________
U.S. Treasury:
Amount $ 9,140 $17,349 $ - $ -
Yield 6.13% 5.15% - -
U.S. Agencies:
Amount $ - $ 1,894 $ 3,622 $14,685
Yield - 8.33% 5.47% 6.59%
Other Securities
Amount $ - $ - $ - $ 865
Yield - - - 4.40%
______ ______ ______ ______
9,140 19,243 3,622 $15,550
====== ====== ====== ======
Held to Maturity:
________________
U.S. Agencies:
Amount $ 1,312 $ 2,000 $ 3,497 -
Yield 7.97% 4.50% 5.89% -
State and Municipal:
Amount $ 200 $ 1,582 - -
Taxable equivalent
yield 5.70% 6.54% - -
______ ______ ______ ______
$ 1,512 $ 3,582 $ 3,497 $ 0
====== ====== ====== ======
See Note 2 to FB's Consolidated Financial Statements appearing
elsewhere in this Proxy Statement for information concerning the
amortized cost and estimated fair values of FB's investment securities at
December 31, 1993.
B. LOANS
______
FB engages in real estate lending through real estate construction
and mortgage loans, and commercial and consumer lending. The lending
activities of FB are guided by the basic lending policy established by
its Board of Directors. Each loan is evaluated based on, among other
things, character and leverage capacity of the borrower, capital and
investment in a particular property, if applicable, cash flow,
collateral, market conditions for the borrower's business or project and
prevailing economic trends and conditions.
The following table sets forth the type and amount of loans
outstanding as of the date indicated:
LOAN PORTFOLIO
______________
<TABLE>
<CAPTION>
December 31,
__________________________________________________
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Commercial and Industrial $ 8,690 $ 12,075 $ 16,784 $ 16,382 $ 20,949
Real estate - construction 26,870 17,867 14,619 7,330 7,461
Real estate - mortgage 81,675 75,356 76,664 66,442 60,591
Consumer 44,975 41,442 41,586 40,830 40,082
Other loans 2,111 1,935 2,919 2,096 3,886
_______ _______ _______ _______ _______
Total loans 164,321 148,675 152,572 133,080 $132,969
Unearned income $ (3,914) $ (3,685) $ (3,979) $ (3,864) (3,875)
======= ======= ======= ======= =======
Total loans (net) $160,407 $144,990 $148,593 $129,216 $129,094
======= ======= ======= ======= =======
</TABLE>
FB's loan portfolio contains a concentration of loans to the
residential real estate construction industry. A concentration is
defined as amounts loaned to a multiple number of borrowers
engaged in similar activities, which would cause them to be
similarly impacted by economic or other conditions, where the
amount exceeds 10% of total loans. At December 31, 1993, Bank had
approximately $45,927 of loans outstanding to borrowers in the
residential real estate construction industry, which represented
235.16% of Bank's Tier I Capital and approximately 28.63% of
Bank's total outstanding loans on such date.
Average loans have increased over the three years ended
December 31, 1993 from $136,685 in 1991, to $145,317 and $148,523
in 1992 and 1993, respectively, principally as a result of
increased loan demand in the market served by Bank as the local
economy strengthened and single-family residential construction
increased. FB's loan to deposit ratio was 74.47% and 66.53% at
December 31, 1993 and 1992, respectively.
The following table provides information concerning loan
portfolio maturity as of December 31, 1993. Loan portfolio
maturity by type of loan as presented in the table above is not
readily available.
Within One Year $ 85,376
After One But Within
Five Years 71,990
After Five Years $ 3,041
________
Total $ 160,407
========
Variable interest rates $ 16,607
Fixed interest rates 143,800
________
Total $ 160,407
========
Non-performing Assets. Management classifies loans as non-
performing when they are either on non-accrual, accruing and past
due ninety days or more, or a troubled debt restructuring. Loans
are automatically placed on non-accrual when principal or interest
is past due ninety days or more, unless the loan is both well
secured and in the process of being collected. Additionally,
loans are placed on non-accrual when collection of all principal
or interest is deemed unlikely. Loans totaling $297 were
classified as non-performing at year-end 1993, compared to $709
for 1992 and $2,475 for 1991. If these loans had performed in
accordance with their original terms, interest income for 1993,
1992 and 1991 would have increased by approximately $36, $128 and
$527, respectively. Income recognized on nonaccrual loans
totalled approximately $6, $19 and $109 in 1993, 1992 and 1991,
respectively. The following table summarizes the risk element in
the loan portfolio and real estate and other assets acquired
through foreclosures.
Management is not aware of any loans classified for
regulatory purposes as loss, doubtful, substandard, or special
mention and excluded from the above table which: (1) represents
or results from trends or uncertainties that will materially
impact future operating results, liquidity or capital reserves, or
(2) represents material credits about which management is aware of
any information which causes doubts as to the ability of such
borrowers to comply with the loan repayment terms.
NON-PERFORMING ASSETS
_____________________
<TABLE>
<CAPTION>
December 31,
_________________________________________________
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Non-accrual loans $ 105 $ 662 $1,527 $1,817 $1,962
Accruing loans past due
ninety days or more 192 47 366 1,281 759
Troubled debt restructing - - 582 - -
_____ _____ _____ _____ _____
Non-performing loans $ 297 $ 709 $2,475 $3,098 $2,721
===== ===== ===== ===== =====
Real estate acquired
through foreclosure $1,692 $4,934 $5,281 $6,441 $6,868
===== ===== ===== ===== =====
Other assets acquired
through repossession $ 28 $ 55 $ 305 $ 101 $ 174
===== ===== ===== ===== =====
</TABLE>
Allowance for Loan Losses. A certain degree of risk is
inherent in the extension of credit. Management has credit
policies in place to monitor and attempt to control the level of
loan losses and nonperforming loans. One product of FB's credit
risk management is the maintenance of the allowance for loan
losses at a level considered by management to be adequate to
absorb estimated known and inherent losses in the existing
portfolio, including commitments and standby letters of credit.
The allowance for loan losses is established through charges to
operations in the form of provisions for loan losses.
The allowance is based upon a regular review of current
economic conditions, which might affect a borrower's ability to
pay, underlying collateral values, risk in and the composition of
the loan portfolio, prior loss experience and industry averages.
Loans that are deemed to be uncollectible are charged-off and
deducted from the allowance. The provision for loan losses and
recoveries on loans previously charged-off are added to the
allowance.
The following table sets forth FB's loan loss experience and
certain information relating to its allowance for loan losses as
of the dates and for the periods indicated.
ALLOWANCE FOR POSSIBLE LOAN LOSSES
__________________________________
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
_____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $ 3,308 $ 3,071 $ 2,571 $ 1,828 $ 1,460
Provision charged (credited)
to expense (1,300) 680 1,334 1,500 1,578
Charge-offs:
Real estate 89 212 606 573 631
Consumer 156 142 368 182 414
Commercial and all other - 366 181 494 620
________ ________ ________ ________ ________
Total charge-offs 245 720 1,155 1,249 1,665
Recoveries:
Real estate 295 104 163 252 161
Consumer 80 87 80 96 105
Commercial and all other 19 86 78 144 189
_________ _________ ________ _________ ________
Total recoveries 394 277 321 492 455
_________ _________ _________ _________ _________
Net loan charge-offs (recoveries) (149) 443 834 757 1,210
_________ _________ _________ _________ _________
Balance at end of year $ 2,157 $ 3,308 $ 3,071 $ 2,571 $ 1,828
========= ========= ========= ========= =========
Ratios:
Net loan charge-offs
as a % of average loans
and leases 0.10% 0.30% 0.61% 0.59% 0.93%
Recoveries as a %
of charge-offs 160.82% 38.47% 27.79% 39.39% 27.33%
Allowance for possible
loan losses as a %
of year-end loans and leases 1.34% 2.28% 2.08% 1.99% 1.42%
________________________
</TABLE>
Management believes that the allowance for loan losses at
December 31, 1993 was adequate to absorb the known and inherent
risks in the loan portfolio at that time. However, no assurance
can be given that future changes in economic conditions that might
adversely affect FB's principal market area, borrowers or
collateral values, and other circumstances will not result in
increased losses in FB's loan portfolio in the future.
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 114, "Accounting by Creditors
for Impairment of a Loan," which is effective January 1, 1995.
This statement establishes standards, including the use of
discounted cash flow techniques, for measuring the impairment of a
loan when it is probable that the contractual terms will not be
met. In management's opinion, the adoption of this standard is
not anticipated to have a significant impact on FB's financial
statements based on the current loan portfolio.
Although FB does not normally allocate the allowance for loan
losses to specific loan categories, an allocation has been made
for purposes of this discussion as set forth below. The following
table sets forth the approximate dollar amount of the allowance
for loan losses allocable to the stated loan categories, and the
percent of total loans in each such category for the periods
presented.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
___________________________________________
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
______________ _____________ ____________ _____________ ___________
Allow. Loans Allow. Loans Allow. Loans Allow. Loans Allow. Loans
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and
Industrial $ 64 5.29% $ 61 8.11% $ 80 11.00% $ 76 12.30% $ 65 15.75%
Real Estate
Construction 0 16.35% 0 12.02% 0 9.58% 0 5.51% 36 5.61%
Real Estate Mortgage 483 49.70% 486 50.69% 449 50.25% 1,001 49.93% 598 45.57%
Consumer 601 28.66% 587 29.18% 624 29.17% 630 32.26% 620 33.07%
Unallocated 1,009 - 2,174 - 1,918 - 864 - 509 -
_______ _______ ______ _______ ______ _______ ______ _______ ______ _______
$2,157 100.00% $3,308 100.00% $3,071 100% $2,571 100% $1,828 100%
====== ======= ====== ======= ====== ======= ====== ======= ====== =======
</TABLE>
The allocation of the allowance for loan losses should not be
interpreted as an indication of future credit trends or that
losses will occur in these amounts or proportions. Furthermore,
the portion allocated to each loan category is not the total
amount available for future losses that might occur within such
categories, since even on the above basis there is a substantial
unallocated portion of the allowance, and the total allowance is a
general allowance applicable to the entire portfolio.
C. DEPOSITS
________
Deposits are the primary source of funding for FB's earning
assets. Total deposits at the end of 1993, 1992 and 1991 were
approximately $215,391, $217,923 and $205,691, respectively. Time
certificates of deposit of $100 or more, which were approximately
$9,921 at December 31, 1993 and $10,140 at December 31, 1992, had
remaining maturities as follows as of December 31:
Remaining Maturity 1993 1992
______ ______
Three months or less $ 1,300 $ 1,778
Over three through twelve months 6,020 7,071
Over one year through five years 2,601 1,291
Over five years - -
__________ __________
Total $ 9,921 $ 10,140
D. INTEREST RATE SENSITIVITY
_________________________
Interest rate risk is the potential impact of changes in
interest rates on net interest income and results from disparities
in repricing opportunities of assets and liabilities over a period
of time. Management estimates the effects of changing interest
rates and various balance sheet strategies on the level of net
interest income. Management may alter the mix of floating- and
fixed-rate assets and liabilities, change pricing schedules, and
adjust maturities through sales and purchases of securities
available for sale as a means of limiting interest rate risk.
Presented below is FB's interest rate sensitivity position at
December 31, 1993. This profile is based on a point in time and
may not be meaningful because it does not consider subsequent
changes in interest rate levels or spreads between asset and
liability categories.
The degree of interest rate sensitivity is not equal for all
types of assets and liabilities. FB's experience has indicated
that the repricing of interest-bearing demand, savings and money
market accounts does not move with the same magnitude as general
market rates. Additionally, these deposit categories, along with
non-interest demand, have historically been stable sources of
funds to FB, which indicates a much longer implicit maturity than
their contractual availability. The accompanying table reflects
cumulative gap to total assets as a negative 21.61% within the
three-month period. A negative gap implies that earnings would
increase in a falling interest rate environment and decrease in a
rising interest rate environment.
INTEREST RATE SENSITIVITY ANALYSIS AT DECEMBER 31, 1993
_______________________________________________________
<TABLE>
<CAPTION>
0-3 4-6 7-12 After One Non-interest
Months Months Months Year bearing Total
__________ _________ __________ _________ ____________ __________
<S> <C> <C> <C> <C> <C> <C>
Assets:
Loans $ 44,411 $ 11,742 $ 28,962 $ 75,291 - $ 160,406
Investments 7,730 2,199 10,296 35,921 - 56,146
Interest-bearing
deposits with banks 357 - - - - 357
Fed funds 2,000 - - - - 2,000
Other non interest -
bearing assets - - - - 19,835 19,835
___________ __________ ___________ _________ ___________ ___________
Total assets
$ 54,498 $ 13,941 $ 39,258 $ 111,212 $ 19,835 238,744
Sources of funds:
Savings and NOW
accounts 68,402 - - 21,730 - 90,132
Money Market Accounts 19,903 - - - - 19,903
CD's over $100,000 3,840 2,349 1,131 2,601 - 9,921
Other time deposits 13,440 10,110 11,106 16,314 - 50,970
Subordinated mandatory
convertible capital notes - - 1,451 - - 1,451
Other liabilities 500 - - - 45,653 46,153
Shareholders' equity - - - - 20,214 20,214
___________ ___________ ____________ __________ _________ __________
Total source
of funds $ 106,085 $ 12,459 $ 13,688 $ 40,645 $ 65,867 $ 238,744
___________ ____________ _____________ ___________ __________ __________
Repricing gap $ (51,587) $ 1,482 $ 25,570 $ 70,567 (46,032)
Cumulative repricing gap (51,587) (50,105) (24,535) 46,032 -
Cumulative repricing gap/
Total assets (21.61)% (20.99)% (10.28)% 19.28%
</TABLE>
E. LIQUIDITY
__________
FB seeks to manage its liquidity position to attempt to
ensure that sufficient funds are available to meet customers'
needs for borrowing and deposit withdrawals. Liquidity is derived
from both the asset and liability sides of the balance sheet.
Asset liquidity arises from the ability to convert assets to cash
and self-liquidation or maturity of assets. Liquid asset balances
include cash, interest-bearing deposits with financial
institutions, short-term investments and federal funds sold.
Liability liquidity arises from a diversity of funding sources as
well as from the ability of FB to attract deposits of varying
maturities. If FB were limited to only one source of funding or
all its deposits had the same maturity, its liquidity position
would be adversely impacted.
FB's funding source is primarily its deposit base which is
comprised of interest-bearing and noninterest-bearing accounts,
augmented through securities sold under repurchase agreements and
other short-term borrowings, which are interest-bearing. FB's
non-interest bearing demand deposits are, by their very nature,
subject to withdrawal upon demand. Declines in one form of
funding source require FB to obtain funds from another source. If
FB were to experience a decline in noninterest-bearing demand
deposits and was to have a significant increase in loan volume
without a commensurate increase in such deposits, it would utilize
alternative sources of funds, probably at higher cost, to maintain
its liquidity and to meet its loan funding needs. This would
place downward pressure on FB's net interest margin and might have
a negative impact on FB's liquidity position.
Bank's liquidity expressed as a percentage of net liquid
assets to net liabilities was 30.93% and 37.51% at December 31,
1993 and 1992, respectively.
F. CAPITAL ADEQUACY
_________________
At December 31, 1993, FB's total shareholders' equity was
$20,214, an increase of 56.6% from $12,909 at December 31, 1992.
Book value per common share is presented in the table below.
December 31,
___________________________________________
1993 1992 1991
_____ _____ ______
Shares Outstanding 847,787 847,787 847,787
Shareholders' equity $ 20,214 $ 12,909 $ 9,230
Book value per
common share 23.84 15.23 10.89
Adequate levels of capital are necessary over time to sustain
growth and absorb losses. In the case of banks and bank holding
companies, capital levels must also meet minimum regulatory
requirements. Regulatory guidelines designed to measure capital
adequacy in terms of risk-weighted assets became effective at the
end of 1990 with compliance required by the end of 1992 to reach
regulatory minimum of 4% Tier I and 8% total risk-based capital.
Tier I capital consists of a certain amount of the allowance for
loan losses, certain types of preferred stock and qualifying
subordinated debt. Each tier is then divided by risk-weighted
assets. The four categories of risk weightings are intended to
reflect the creditworthiness of each asset and off-balance sheet
exposure. In conjunction with the risk-based capital guidelines,
the regulators have issued capital leverage guidelines. The
minimum for all banks is 3% with higher minimums dependent upon
the condition of the individual bank. FB's capital ratios
exceeded the regulatory minimums as indicated in the capital table
below:
<TABLE>
<CAPTION>
December 31,
__________________________ Regulatory
1993 1992 Minimum
_______ _________ ___________
<S> <C> <C> <C>
Capital:
Tier I $ 19,530 $ 12,910
Tier II 2,061 2,732
__________ ___________
Total Capital $ 21,591 15,642
========== ===========
Risk-weighted assets $ 164,843 $ 159,983
Ratios:
Tier I capital to
risk-weighted assets 11.85% 8.07% 4.0%
Tier II capital to
risk-weighted assets 1.25 1.71 -
Total capital to
risk-weighted assets 13.10 9.78 8.0
Leverage Ratio 5.53 8.47 3.0
</TABLE>
The amount of retained earnings that could be paid to FB
after December 31, 1993 without prior approval was $7,440 plus an
amount equal to Bank's net income for 1994.
G. FAIR VALUE OF FINANCIAL INSTRUMENTS
___________________________________
The fair value of certain financial assets and liabilities as
of December 31, 1993 is disclosed in Note 13 of the Notes to
Consolidated Financial Statements for the years ended December 31,
1993 and 1992. Fair values were determined based on market
quotes, where available, or were calculated using discounted cash
flows, if no market quotes were available. The differences
between fair values and book values were primarily caused by
differences between contractual and market interest rates at year-
end.
Fluctuations in fair value will occur as interest rates
change. Since FB maintains the repricing of its assets and
liabilities relatively matched, changes in fair values are not
expected to have a material impact on FB's financial condition,
results of operations, liquidity or capital resources. Although
FB's balance sheet gap reflects a negative 21.58% three month
cumulative gap, FB's stress analysis results indicate a slightly
positive gap position due to the historical repricing experience
on interest bearing liabilities relative to changes in movement of
market interest rates.
H. NEW ACCOUNTING STANDARDS
________________________
In December 1990, the Financial Accounting Standards Board
issued SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The Statement, which is effective
for fiscal years beginning after December 15, 1994 for FB,
requires the accrual of the expected costs of postretirement
benefits during the years that an eligible employee renders
service to the employer. FB had not adopted the new standards as
of December 31, 1993. As of January 1, 1993, the accumulated
postretirement benefit obligation ("APBO") related to these
benefits was approximately $278. FB had the option, upon adopting
SFAS No. 106, of recognizing the APBO immediately or over a 20
year period. Subsequent to adoption of SFAS No. 106, FB does not
expect the annual expense related to these benefits to materially
differ from that recognized prior to adoption.
In November 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits." The
Statement which is effective January 1, 1994, will not have a
material effect on FB's financial position or results of operation
as FB does not offer a significant number of postemployment
benefits.
FB MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollar Amounts in Thousands except per share information)
I. RESULTS OF OPERATIONS
_____________________
Overview
________
FB reported net income of $1,296 or $1.53 per share for the
three months ended March 31, 1994, which was a decrease of $427
from the same period last year. Net income for the three months
ended March 31, 1993 was $1,723 or $2.03 per share. The decrease
was due to FB's adoption of Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes" during
the first quarter of 1993, which had the effect of increasing net
income for that period by $672.
The major components of income are net interest income,
provisions for loan losses, non-interest income, and non-interest
expense. The following discusses certain changes in each of these
items for the first three months of 1994 and 1993.
A. NET INTEREST INCOME
___________________
Net interest income for the first three months of 1994 was
$3,638 as compared to $3,453 for the same period in 1993. The
improvement was due to an increase in earning assets, primarily
federal funds sold and investment securities, and continued low
rates on interest bearing liabilities. The net interest margin,
net interest income expressed as a percentage of average earning
assets, was 6.55% for the three-months ended March 31, 1994, as
compared to 6.50% for the same period in 1993. The recent general
increase in market interest rates did not affect net interest
income for the first three months of 1994, however some reduction
is expected throughout the remainder of 1994.
B. PROVISION FOR LOAN LOSSES
_________________________
The provision for loan losses is the periodic charge to
earnings for potential losses in the loan portfolio. The
evaluation process to determine potential losses includes
consideration of the industry, the risk characteristics of the
loan portfolio, the specific conditions of individual borrowers
and the general economic environment. As these factors change,
the level of loan loss provision changes. FB's provision for loan
losses was $75 for the first three months of 1994 and $-0- for the
same period last year.
C. NON-INTEREST INCOME
___________________
Non-interest income was $827 for the first three months of
1994 compared to $645 for the same period a year ago. Service
charges on deposit accounts, the largest component of non-interest
income, increased $9 in 1994 compared to the same period last
year. Increases in ATM fees, credit card income and commissions
on credit life insurance of $70, 37 and 35, respectively,
accounted for a substantial portion of the remaining increase of
$182 over the previous period amount.
D. NON-INTEREST EXPENSE
____________________
Non-interest expense was $2,453 for the first quarter of 1994
compared to $2,666 for the same period last year. Reductions in
other real estate expenses of $385 offset by increases in
personnel costs of $109 accounted for substantially all the
decline from the prior period. Other real estate expenses
declined due to fewer writedowns of real estate properties.
Increases in the number of personnel accounted for the increase in
personnel cost. Details of the components of non-interest expense
are listed below for the first three months of the year.
NON-INTEREST EXPENSE
____________________
Three months ended March 31,
____________________________
1994 1993
_____ _____
Salaries and Benefits $ 1,227 $ 1,118
Occupancy 381 360
FDIC Insurance 118 119
Ad Valorem Taxes 135 121
Net other real estate
expenses 58 443
Other Expenses 534 505
________ ________
Total $ 2,453 $ 2,666
========= ========
II. FINANCIAL CONDITION
___________________
A. INVESTMENT SECURITIES
______________________
FB experienced an increase in its investment portfolio
of $7,639 over the December 31, 1993 balance with $7,622 of
the increase being in the available for sale portfolio. The
increase in the portfolio is attributable to the increase in
deposits and the reduction in the loan portfolio experienced
during the three month period ended March 31, 1994. With
the increase in market interest rates, FB's available for
sale portfolio experienced a reduction in value of $598, net
of tax, from the $684, net of taxes, of appreciation as of
December 31, 1993. There were no securities sold during the
three month period.
B. LOANS
______
At March 31, 1994, total loans were approximately
$152,604, as compared to $160,406 at December 31, 1993. The
reason for the decline in the portfolio is attributable
primarily to loan maturities and a sale of residential real
estate loans in the first quarter.
Non-performing Assets. Management classifies loans as
non-performing when they are either non-accrual, accruing
and past due ninety days or more, or involve a troubled debt
restructuring. The detail of nonperforming assets is given
below.
NON-PERFORMING ASSETS
_____________________
March 31, December 31,
1994 1993
_____________ ____________
Non-Accrual Loans 698 105
Accruing loans past due 90
days or more 27 192
Trouble Debt Restructuring - -
_______ _______
Nonperforming Loans 725 297
======= =======
Real Estate Acquired
Through Foreclosure 1,604 1,693
======= =======
Other Assets Acquired
Through Repossession - 28
======== =======
Non performing loans as a
percent of total loans .5% .2%
======== ========
total loans
Management reviews the allowance quarterly and will
make changes to the allowance as appropriate. FB's loan
portfolio contains a concentration of loans to the
residential real estate construction industry. A
concentration is defined as amounts loaned to a multiple
number of borrowers engaged in similar activities which
would cause them to be similarly impacted by economic or
other conditions, where the amount exceeds 10% of total
loans. At March 31, 1994, Bank had approximately $30,893 of
loans outstanding to borrowers in the construction industry,
which represented 148.5% of Bank's Tier I Capital and 20.5%
of Bank's total outstanding loans on such date.
The allowance for loan losses totaled $2,241 as of
March 31, 1994, compared to $2,157 at December 31, 1993.
Net charged off loans were ($9) for the three months ended
March 31, 1994 compared to $49 for the same period in the
prior year.
The allowance for loan losses as a percentage of total
loans was 1.47% at March 31, 1994 compared to 1.34% at
December 31, 1993. A lower level of loans and a decrease in
the balance contributed to the higher percentage.
C. DEPOSITS
________
Total deposits increased to $223,387 at March 31, 1994
from $215,391 at December 31, 1993. Non-interest bearing
deposits increased by $3,637 and interest bearing deposits,
primarily time deposits, increased by $4,359.
D. INTEREST RATE SENSITIVITY
_________________________
Interest rate sensitivity is the result of differences
between the dollar amount of assets and liabilities that
mature or reprice within a period of time. These
differences, or interest rate "gap," provide a relative
indication of the extent to which net interest income is
affected by interest rate movements in future periods.
FB's negative gap at March 31, 1994 at the three month
period was 19.99%. At December 31, 1993 the three month
repricing gap was a negative 21.61%. Bancshares' goal is to
mitigate significant exposure to changes in interest rate.
E. LIQUIDITY
_________
FB's primary sources of liquidity are cash, amounts due
from banks, short term investments, and federal funds sold.
In addition, liquidity is provided by maturing loans and
securities. FB's liquidity position remained stable between
December 31, 1993 and March 31, 1994. FB's liquidity
expressed as the percentage of net liquid assets to net
liabilities was 30.66% at March 31, 1994 and 30.93% at
December 31, 1993.
On March 21, 1994, FB retired all of the remaining 12%
subordinated debentures which were maturing on September 22,
1994. The retirement of the debentures was funded by a
$1,500 dividend from the Bank.
F. CAPITAL ADEQUACY
________________
At March 31, 1994, FB's total shareholders equity was
$20,912, an increase of $698 from $20,214 at December 31,
1993. FB has not declared dividends to its shareholders
during the past five years.
FB had a Tier I capital to risk weighted asset ratio of
14.22% and a leverage ratio of 8.45% at March 31, 1994.
Book value per common share was $24.67 at March 31,
1994 compared to $23.84 at December 31, 1993.
The amount of retained earnings that could be paid to
FB after March 31, 1994 without prior approval was $7,236
plus an amount equal to Bank's net income for 1994.
INFORMATION ABOUT FCC
The following documents, or the indicated portions thereof,
have been filed by FCC with the Commission, and are incorporated
by reference into this Proxy Statement and Prospectus: FCC's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993; FCC's quarterly report on Form 10-Q for the fiscal quarter
ended March 31, 1994; and the description of FCC Common Stock set
forth in FCC's Applications for Registration on Form 8-A filed
with the Commission on November 9, 1972 and December 22, 1976, as
amended by a report on Form 8 filed with the Commission on June
19, 1989 and by a report on Form 8-A/A filed with the Commission
on August 12, 1993.
In addition, all other documents that will be filed by FCC
with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act between the date of this Proxy
Statement and Prospectus and the date of the Special Meeting
shall be deemed to be incorporated herein by reference from the
date of filing. See "Available Information" for information with
respect to securing copies of documents incorporated by reference
in this Proxy Statement and Prospectus.
Any statement contained in a document incorporated or deemed
to be incorporated by reference shall be deemed to be modified or
superseded to the extent that a statement contained herein or in
any other document subsequently filed and incorporated or deemed
to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Proxy Statement and Prospectus.
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the shareholders of FB approve the Plan and the Mergers
are subsequently consummated, all shareholders of FB, other than
those perfecting and not withdrawing or forfeiting dissenters'
rights, will become shareholders of FCC and their rights will be
governed by and be subject to the Articles of Incorporation and
By-laws of FCC rather than the Articles of Incorporation and By-
laws of FB, as amended. The following is a brief summary of
certain of the principal differences between the rights of
shareholders of FCC and FB not described elsewhere herein.
Preferred Stock
The Board of Directors of FCC is authorized, without action
of its shareholders, to issue FCC preferred stock (the "FCC
Preferred Stock") from time to time and to establish the designa-
tions, preferences and relative, optional or other special rights
and qualifications, limitations and restrictions thereof, as well
as to establish and fix variations in the relative rights as
between holders of any one or more series of such FCC Preferred
Stock. The authority of the Board of Directors includes but is
not limited to the determination or fixing of the following with
respect to each series of FCC Preferred Stock which may be
issued: (i) the designation of such series; (ii) the number of
shares initially constituting such series; (iii) the dividend
rate and conditions and the dividend preferences, if any, in
respect of the FCC Common Stock and among the series of FCC
Preferred Stock; (iv) whether, and upon what terms, the FCC
Preferred Stock would be convertible into or exchanged for shares
of any other class or other series of the same class; (v)
whether, and to what extent, holders of one or more shares of a
series of FCC Preferred Stock will have voting rights; and (vi)
the restrictions, if any, that are to apply on the issue or
reissue of any additional FCC Preferred Stock.
Shares of FCC Preferred Stock that are authorized would be
available for issuance in connection with the acquisition of
other businesses, infusion of capital, or for other lawful
corporate purposes, at the discretion of the Board of Directors.
The Board of Directors could issue FCC Preferred Stock to a
person or persons who would support management in connection with
a proxy contest to replace an incumbent director or in opposition
to an unsolicited tender offer. As a result, such proposals or
tender offers could be defeated even though favored by the
holders of a majority of the FCC Common Stock. As of March 31,
1994, FCC had 2,398,170 shares of Series 1992 Preferred Stock
outstanding.
The Articles of Incorporation of FB contain a similar
provision; however, they require that such preferred stock have
cumulative dividend rights.
Shareholders' Meetings
FCC's Articles of Incorporation and By-laws provide that
upon the written request of holders of a majority of the voting
power of FCC, the secretary shall call a special meeting of
shareholders. FB's By-laws provide that the President, the Board
of Directors or any one or more shareholders owning an aggregate
of at least 1/5 of all outstanding stock of FB may call a special
meeting of shareholders at any time.
Fair Price Protection Statute
FCC is subject to Louisiana's Fair Price Protection Statute
(Sections 132 - 134 of the LBCL), which requires that, in
addition to any vote otherwise required by law or a corporation's
articles of incorporation, any "business combination" (as defined
in the statute) between a corporation and the holder of 10% or
more of its total voting power be recommended by the
corporation's Board of Directors and approved by (i) at least 80%
of the total voting power of the corporation and (ii) at least
two-thirds of the votes entitled to be cast by shareholders other
than the 10% shareholder, unless certain minimum price, form of
consideration and procedural requirements are satisfied by the
10% shareholder, or if the Board approves the business
combination before the 10% shareholder becomes a 10% shareholder.
The provisions of this statute are not applicable to FB.
LEGAL MATTERS
Correro, Fishman & Casteix, L.L.P., New Orleans, Louisiana,
has rendered its opinion that the shares of FCC Common Stock to
be issued in connection with the Holding Company Merger have been
duly authorized and, if and when issued pursuant to the terms of
the Plan, will be validly issued, fully paid and non-assessable.
EXPERTS
The audited consolidated financial statements of FB and its
subsidiaries included in this Proxy Statement and Prospectus have
been audited by Arthur Andersen & Co., independent public
accountants, as indicated in their report with respect thereto,
and have been included herein in reliance upon the authority of
such firm as experts in accounting and auditing.
The audited consolidated financial statements of FCC and its
subsidiaries incorporated by reference in this Proxy Statement
and Prospectus have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their report with
respect thereto, and have been so incorporated by reference in
reliance upon the authority of such firm as experts in accounting
and auditing. With respect to the unaudited consolidated interim
financial information of FCC and its subsidiaries incorporated by
reference in this Proxy Statement and Prospectus from FCC's
quarterly report on Form 10-Q, Arthur Andersen & Co. has applied
limited procedures in accordance with professional standards for
a review of that information. However, their separate report
thereon states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the
degree of reliance on their report on that information should be
restricted in light of the limited nature of the review
procedures applied. In addition, Arthur Andersen & Co. is not
subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim
financial information because that report is not a "report" or a
"part" of the registration statement prepared or certified by
them within the meaning of Sections 7 and 11 of the Securities
Act.
OTHER MATTERS
At the time of the preparation of this Proxy Statement and
Prospectus, FB had not been informed of any matters to be
presented by or on behalf of FB or its management for action at
the Special Meeting other than those listed in the Notice of
Special Meeting of Shareholders and referred to herein. If any
other matters come before the meeting or any adjournment thereof,
the persons named in the enclosed proxy will vote on such matters
according to their best judgment.
Shareholders are urged to sign the enclosed proxy, which is
solicited on behalf of the Board of Directors of FB, and return
it at once in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
___________________________________
Elton A. Arceneaux, President
Slidell, Louisiana
____________, 1994
<PAGE>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
In addition to the Merger with First Bancshares, Inc., First
Commerce Corporation has several other transactions pending which are
described below. The unaudited pro forma condensed combined balance
sheets as of December 31, 1993 and March 31, 1994 and the unaudited pro
forma condensed combined statements of income for the years ended
December 31, 1993, 1992 and 1991 and for the three months ended March
31, 1994 appearing on the following pages give effect to the proposed
mergers of Lakeside Bancshares, Inc., First Bancshares, Inc., City
Bancorp, Inc., and Wolcott Mortgage Group, Inc. with First Commerce
Corporation ("FCC"). A brief description of each of the proposed plans
of merger follows.
FCC and Lakeside Bancshares, Inc. (Lakeside) have signed a
definitive agreement to merge the two companies and their respective
subsidiaries, The First National Bank of Lake Charles and Lakeside
National Bank. Shareholders of Lakeside will receive shares of FCC
Common Stock. The number of shares will be determined at the time the
mergers are effected, but will not exceed approximately 1,540,000
shares.
FCC and First Bancshares, Inc. (FB) have signed a definitive
agreement to merge the two companies and their respective subsidiaries,
First National Bank of Commerce and First Bank. Shareholders of FB will
receive shares of FCC Common Stock. The exact number of shares will be
determined at the time the mergers are effected, but in no event will
exceed 2,860,169 shares.
FCC and City Bancorp, Inc. (City) have signed a letter of intent
to merge the two companies and their respective subsidiaries, The First
National Bank of Lafayette and City Bank and Trust Company.
Shareholders of City will receive approximately 4.75 shares of FCC
Common Stock for each one share of City common stock owned. The total
number of FCC shares issuable in this transaction is fixed at 475,000.
FCC and Wolcott Mortgage Group, Inc. ("Wolcott") have signed a
definitive agreement for FCC to acquire Wolcott. The shareholders of
Wolcott will receive $1.251 million at closing, in the form of 51% FCC
Common Stock and 49% cash. A second contingent payment, 51% FCC Common
Stock and 49% cash, will be made one year from closing, with payment
determined by loan origination volume by Wolcott. The maximum total
purchase price will not exceed $2.5 million.
The Lakeside, FB, and City mergers will be accounted for under the
pooling-of-interests method of accounting. The Wolcott merger will be
accounted for under the purchase method of accounting. The pro forma
financial statements have been prepared to reflect the consummation of
all of the mergers. No assurance can be given, however, that any or all
of the mergers will be consummated, and consummation of one or more
mergers is not a condition to the consummation of any other merger.
No provision has been made for nonrecurring charges or credits
directly related to the mergers, and any such charges or credits are not
expected to be material. Certain direct costs of the mergers which have
been incurred and included in the pro forma financial statements are
immaterial. The unaudited pro forma condensed combined balance sheets
include adjustments directly attributable to the proposed mergers based
on estimates derived from information currently available.
The proforma financial statements do not purport to be indicative
of the financial position or results of operations that would actually
have been obtained if the mergers had been in effect at such dates or
for such periods, or of the results that may be obtained in the future.
These statements and related notes should be read in conjunction with
the consolidated financial statements of FB and FCC and the notes
thereto included elsewhere herein or incorporated by reference hereto.
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 1994
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
------------------------------------------------------------------ Forma Forma
FCC Lakeside FB City Wolcott Adjustments<FN1> Combined
----------- ----------- ---------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 303,760 $ 15,341 $ 12,491 $ 4,651 $ 341 $ (1,225) $ 335,359
Interest-bearing deposits in
other banks 90,430 7,159 263 495 142 - 98,489
Securities held to maturity 446,697 48,976 8,608 4,765 - - 509,046
Securities available for sale 2,560,192 12,253 55,177 21,138 - - 2,648,760
Trading account securities 466 - - - - - 466
Federal funds sold and securities
purchased under resale agreements 106,900 5,347 8,430 10,650 - - 131,327
Loans and leases, net of unearned
income 2,658,134 92,943 152,604 44,950 2,454 - 2,951,085
Allowance for loan losses (63,844) (2,894) (2,241) (556) - - (69,535)
------------ --------- ---------- ------------ --------- --------- ------------
Net loans and leases 2,594,290 90,049 150,363 44,394 2,454 2,881,550
Premises and equipment 106,832 8,413 6,471 2,006 40 - 123,762
Goodwill and other intangible
assets 15,494 - - - - 2,141<FN6> 17,635
Other assets 148,063 2,586 4,725 895 58 - 156,327
------------ --------- ---------- ------------ --------- --------- ------------
Total assets $ 6,373,124 $ 190,124 $ 246,528 $ 88,994 $ 3,035 $ 916 $ 6,902,721
============ ========== ========== ============ ========= ========= ============
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,287,217 $ 42,994 $ 48,102 $ 14,527 $ - $ - $ 1,392,840
Interest-bearing deposits 4,005,366 129,499 175,285 58,094 - - 4,368,244
Foreign branch interest-bearing
deposits 4,979 - - - - - 4,979
------------ ---------- ---------- ------------ --------- --------- ------------
Total deposits 5,297,562 172,493 223,387 72,621 - 5,766,063
Short-term borrowings 407,868 - 554 7,782 2,609 - 418,813
Other liabilities 70,544 1,144 1,675 752 67 - 74,182
Long-term debt 89,682 - - - - 89,682
------------ ---------- ---------- ------------ --------- --------- ------------
Total liabilities 5,865,656 173,637 225,616 81,155 2,676 6,348,740
------------ ---------- ---------- ------------ --------- --------- ------------
STOCKHOLDERS' EQUITY
Preferred stock 59,979 - - - 147 (147)<FN2> 59,979
Common stock 130,720 1,250 848 500 3 22,016 <FN2> 155,337
Capital surplus 137,406 2,500 3,823 2,504 - (20,744)<FN2> 125,489
Retained earnings 202,797 12,698 16,155 4,886 209 (209)<FN2> 236,536
Unearned restricted stock
compensation (1,191) - - - - - (1,191)
Unrealized gain(loss) on
securities available for sale (22,243) 39 86 (51) - - (22,169)
------------ ---------- ---------- ------------ --------- --------- ------------
Total stockholders' equity 507,468 16,487 20,912 7,839 359 916 553,981
------------ ---------- ---------- ------------ --------- --------- ------------
Total liabilities and
stockholders' equity $ 6,373,124 $ 190,124 $ 246,528 $ 88,994 $ 3,035 $ 916 $ 6,902,721
============ ========== ========== ============ ========= ========= ============
</TABLE>
(See accompanying notes)
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1993
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
--------------------------------------------------------- Forma Forma
FCC Lakeside FB City Adjustments<FN1> Combined<FN7>
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 387,548 $ 18,915 $ 11,042 $ 4,424 $ - $ 421,929
Interest-bearing deposits
in other banks 55,422 2,750 357 693 - 59,222
Securities held for investment 1,523,638 58,916 8,591 24,716 - 1,615,861
Securities held for sale 1,779,927 - 47,555 - - 1,827,482
Trading account securities 482 - - - - 482
Federal funds sold and
securities purchased under
resale agreements 28,600 3,500 2,000 2,425 - 36,525
Loans and leases, net of
unearned income 2,674,697 96,827 160,406 45,557 - 2,977,487
Allowance for loan losses (68,302) (2,971) (2,157) (590) - (74,020)
------------ ------------ ------------ ------------ ------------ ------------
Net loans and leases 2,606,395 93,856 158,249 44,967 2,903,467
Premises and equipment 102,230 8,498 6,634 2,053 - 119,415
Goodwill and other intangible
assets 16,143 - - - - 16,143
Other assets 159,900 2,043 4,316 918 - 167,177
------------ ------------ ------------ ------------ ------------ ------------
Total assets $ 6,660,285 $ 188,478 $ 238,744 $ 80,196 $ $ 7,167,703
============ ============ ============ ============ ============ ============
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,196,259 $ 45,691 $ 44,465 $ 13,565 $ - $ 1,299,980
Interest-bearing deposits 4,107,813 125,863 170,926 53,487 - 4,458,089
Foreign branch interest-bearing
deposits 5,787 - - - - 5,787
------------ ------------ ------------ ------------ ------------ ------------
Total deposits 5,309,859 171,554 215,391 67,052 5,763,856
Short-term borrowings 678,316 - 1,951 4,914 - 685,181
Other liabilities 72,734 938 1,188 610 - 75,470
Long-term debt 89,704 - - - - 89,704
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities 6,150,613 172,492 218,530 72,576 6,614,211
------------ ------------ ------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock 59,979 - - - - 59,979
Common stock 130,311 1,250 848 500 21,778 <FN2> 154,687
Capital surplus 135,911 2,500 3,823 2,504 (21,778)<FN2> 122,960
Retained earnings 184,288 12,236 14,859 4,616 - 215,999
Unearned restricted stock
compensation (817) - - - - (817)
Unrealized gain(loss) on
securities available for sale - - 684<FN3> - - 684
------------ ------------ ------------ ------------ ------------ ------------
Total stockholders' equity 509,672 15,986 20,214 7,620 - 553,492
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities and
stockholders' equity $ 6,660,285 $ 188,478 $ 238,744 $ 80,196 $ - $ 7,167,703
============ ============ ============ ============ ============ ============
</TABLE>
(See accompanying notes)
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Three Months Ended March 31, 1994
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
------------------------------------------------------------------------ Forma Forma
FCC Lakeside FB City Wolcott Adjustments Combined
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 97,183 $ 2,902 $ 4,762 $ 1,434 $ 39 $ - $ 106,320
Interest expense 34,437 717 1,124 457 33 - 36,768
------------ ------------ ------------ ------------ ------------ ---------- ------------
Net interest income 62,746 2,185 3,638 977 6 - 69,552
Provision for loan losses (3,832) - 75 20 - - (3,737)
Net interest income after ------------ ------------ ------------ ------------ ------------ ---------- ------------
provision for loan losses 66,578 2,185 3,563 957 6 - 73,289
Other income 28,501 823 827 255 260 - 30,666
Operating expense 56,472 2,319 2,453 803 261 27 <FN6> 62,335
------------ ------------ ------------ ------------ ------------ ---------- ------------
Income before income tax
expense 38,607 689 1,937 409 5 (27) 41,620
Income tax expense 12,475 227 641 139 2 - 13,484
------------ ------------ ------------ ------------ ------------ ---------- ------------
Net income 26,132 462 1,296 270 3 (27) 28,136
Preferred dividend
requirements 1,087 - - - 2 - 1,089
------------ ------------ ------------ ------------ ------------ ---------- ------------
Income applicable to common
shares $ 25,045 $ 462 $ 1,296 $ 270 $ 1 $ (27) $ 27,047
============ ============ ============ ============ ============ ========== ============
Earnings per share <FN4>
Primary $ .95 $ .92 $ 1.53 $ 2.70 $ 33.33 $ .87
Fully diluted $ .86 $ .92 $ 1.53 $ 2.70 $ 33.33 $ .80
Weighted average shares
outstanding <FN4)>
Primary 26,302,120 500,000 847,658 100,000 30 31,224,967
Fully diluted 32,244,994 500,000 847,658 100,000 30 37,167,841
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
------------------------------------------------------------------------ Forma Forma
FCC Lakeside FB City Wolcott Adjustments Combined
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 393,334 $ 11,999 $ 20,640 $ 6,033 $ 308 $ - $ 432,314
Interest expense 143,324 3,207 5,030 1,788 254 - 153,603
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net interest income 250,010 8,792 15,610 4,245 54 - 278,711
Provision for loan losses (4,504) - (1,300) 205 - - (5,599)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 254,514 8,792 16,910 4,040 54 - 284,310
Other income 102,421 3,256 2,544 807 1,465 - 110,493
Operating expense 221,080 9,764 10,586 3,224 1,391 107 <FN6> 246,152
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income before income tax
expense 135,855 2,284 8,868 1,623 128 (107) 148,651
Income tax expense 40,641 822 2,919 552 41 - 44,975
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income <FN5> 95,214 1,462 5,949 1,071 87 (107) 103,676
Preferred dividend
requirements 4,348 - - - 9 - 4,357
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income applicable to
common shares $ 90,866 $ 1,462 $ 5,949 $ 1,071 $ 78 $ (107) $ 99,319
============ ============ ============ ============ ============ ============ ============
Earnings per share <FN4><FN5>
Primary $ 3.48 $ 2.92 $ 7.02 $ 10.71 $ 2,600.00 $ 3.20
Fully diluted $ 3.18 $ 2.92 $ 7.02 $ 10.71 $ 2,600.00 $ 2.99
Weighted average shares
outstanding <FN4>
Primary 26,132,211 500,000 847,787 100,000 30 31,055,058
Fully diluted 32,125,003 500,000 847,787 100,000 30 37,047,850
</TABLE>
(See accompanying notes)
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
--------------------------------------------------------- Forma Forma
FCC Lakeside FB City Adjustments Combined
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 398,701 $ 13,593 $ 20,495 $ 6,086 $ - $ 438,875
Interest expense 163,348 4,798 6,682 2,073 - 176,901
------------ ------------ ------------ ------------ ------------ ------------
Net interest income 235,353 8,795 13,813 4,013 - 261,974
Provision for loan losses 22,040 675 680 236 - 23,631
------------ ------------ ------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 213,313 8,120 13,133 3,777 - 238,343
Other income 96,627 4,167 2,106 728 - 103,628
Operating expense 203,781 10,383 9,785 3,113 - 227,062
------------ ------------ ------------ ------------ ------------ ------------
Income before income tax
expense and minority
interest 106,159 1,904 5,454 1,392 - 114,909
Income tax expense 32,766 689 1,774 226 - 35,455
------------ ------------ ------------ ------------ ------------ ------------
Income before minority
interest 73,393 1,215 3,680 1,166 - 79,454
Earnings of minority
interest 918 - - - - 918
------------ ------------ ------------ ------------ ------------ ------------
Net income 72,475 1,215 3,680 1,166 - 78,536
Preferred dividend
requirements 4,076 - - - - 4,076
------------ ------------ ------------ ------------ ------------ ------------
Income applicable to
common shares $ 68,399 $ 1,215 $ 3,680 $ 1,166 $ -$ 74,460
============ ============ ============ ============ ============ ============
Earnings per share <FN4>
Primary $ 2.88 $ 2.43 $ 4.34 $ 11.66 $ 2.60
Fully diluted $ 2.70 $ 2.43 $ 4.34 $ 11.66 $ 2.50
Weighted average shares
outstanding <FN4>
Primary 23,728,540 500,000 847,787 100,000 28,603,274
Fully diluted 29,568,365 500,000 847,787 100,000 34,443,099
</TABLE>
(See accompanying notes)
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
--------------------------------------------------------- Forma Forma
FCC Lakeside FB City Adjustments Combined
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 393,922 $ 16,779 $ 19,463 $ 6,549 $ -$ 436,713
Interest expense 202,060 7,986 9,187 3,031 - 222,264
------------ ------------ ------------ ------------ ------------ ------------
Net interest income 191,862 8,793 10,276 3,518 - 214,449
Provision for loan losses 43,734 300 1,334 80 - 45,448
------------ ------------ ------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 148,128 8,493 8,942 3,438 - 169,001
Other income 83,678 3,720 2,169 369 - 89,936
Operating expense 185,963 10,005 8,249 3,011 - 207,228
------------ ------------ ------------ ------------ ------------ ------------
Income before income tax expense and
minority interest 45,843 2,208 2,862 796 - 51,709
Income tax expense 10,936 547 872 13 - 12,368
------------ ------------ ------------ ------------ ------------ ------------
Income before minority interest 34,907 1,661 1,990 783 - 39,341
Earnings of minority interest 878 - - - - 878
------------ ------------ ------------ ------------ ------------ ------------
Net income 34,029 1,661 1,990 783 - 38,463
Preferred dividend requirements - - - - - -
Income applicable to common shares $ 34,029 $ 1,661 $ 1,990 $ 783 $ -$ 38,463
============ ============ ============ ============ ============ ============
Earnings per share <FN4>
Primary $ 1.56 $ 3.32 $ 2.35 $ 7.83 $ 1.44
Fully diluted $ 1.56 $ 3.32 $ 2.35 $ 7.83 $ 1.44
Weighted average shares outstanding <FN4>
Primary 21,808,941 500,000 847,787 100,000 26,683,675
Fully diluted 21,808,941 500,000 847,787 100,000 26,683,675
</TABLE>
(See accompanying notes)
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (Unaudited)
<FN1> In connection with the mergers, FCC will issue shares of its
Common Stock to the shareholders of Lakeside, FB, City, and Wolcott. To
calculate pro forma information, it has been assumed that the number of
outstanding shares of FCC Common Stock includes shares to be issued upon
consummation of the mergers. Under the terms of the proposed mergers
with Lakeside and FB, the number of shares of FCC Common Stock to be
delivered will be determined at the time the mergers are effected based
on the closing sales price of FCC Common Stock with a maximum number of
shares to be issued in the transactions of 1,540,000 and 2,860,169,
respectively. For purposes of these pro formas, it has been assumed
that the maximum number of shares issuable under the proposed mergers
with Lakeside and FB will be issued. The total number of shares of FCC
Common Stock issuable in the transaction with City is fixed at 475,000.
Under the terms of the proposed merger with Wolcott, the number of
shares to be delivered will be determined, among other things, by the
average sales price of a share of FCC Common Stock. Upon consummation,
the shareholders of Wolcott will receive $1,251,000, in the form of 51%
FCC Common Stock and 49% cash. A second contingent payment will be made
one year from closing, with payment determined by loan origination
volume at Wolcott. Payment of this second contingent payment will be in
the form of 51% stock and 49% cash. The maximum purchase price will not
exceed $2,500,000. For purposes of these pro formas, it has been
assumed that the maximum amount of $2,500,000, 51% FCC Common Stock; 49%
cash, is paid for Wolcott with an average sales price of FCC Common
Stock of $26.50 resulting in the issuance of 48,113 shares of FCC Common
Stock.
<FN2> Calculation of Pro Forma Capital. As required by generally
accepted accounting principles under the pooling-of-interests method of
accounting, FCC's Common Stock account has been decreased by the balance
in common stock for Lakeside, FB, and City and increased by the par
value of the FCC Common Stock assumed to be issued under the mergers.
As required by generally accepted accounting principles under the
purchase method of accounting, FCC's stockholders' equity has been
decreased by the balance in Wolcott's stockholders' equity accounts and
increased by the fair value of the FCC Common Stock assumed to be issued
under the merger. An analysis of these adjustments follows (in
thousands, except share data):
<TABLE>
<CAPTION>
Stockholders' Equity
___________________________________________________________________________________
Unrealized
Unearned Gain (Loss) On
Excess Restricted Securities Total
Cost Over Preferred Common Capital Retained Stock Available Stockholders'
Cash Fair Value Stock Stock Surplus Earnings Compensation For Sale Equity
____ __________ _________ ______ _______ ________ ____________ _____________ ____________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lakeside (A) $ - $ - $ - $ 7,700 $ (3,950) $ - $ - $ - $ 3,750
(1,250) (2,500) (3,750)
FB (B) - - - 14,301 (9,630) - - - 4,671
(848) (3,823) (4,671)
City (C) - - - 2,375 629 - - - 3,004
(500) (2,504) (3,004)
Wolcott (D) (1,225) 2,141 - 241 1,034 - - - 1,275
(147) (3) - (209) - - (359)
______ ______ ______ _______ _______ ______ ________ _________ _______
Total $(1,225) $ 2,141 $ (147) $ 22,016 $(20,744) $ (209) $ - $ - $ 916
====== ====== ====== ======= ======= ====== ======== ========= =======
</TABLE>
(A) Issuance of 1,540,000 shares of FCC Common Stock for
500,000 shares of Lakeside common stock in a transaction
accounted for as a pooling-of-interests. FCC's Common
Stock account has been decreased by the balance in
Lakeside's common stock account ($1,250) and increased by
the par value of the FCC Common Stock issued ($7,700).
(B) Issuance of 2,860,169 shares of FCC Common Stock for
847,787 shares of FB Common Stock in a transaction
accounted for as a pooling-of-interests. FCC's Common
Stock account has been decreased by the balance in FB's
Common Stock account ($848) and increased by the par value
of the FCC Common Stock issued ($14,301).
(C) Issuance of 475,000 shares of FCC Common Stock for
100,000 shares of City common stock in a transaction
accounted for as a pooling-of-interests. FCC's Common
Stock account has been decreased by the balance in City's
common stock account ($500) and increased by the par value
of the FCC Common Stock issued ($2,375).
(D) Payment of $1,225 in cash and issuance of 48,113 shares of
FCC Common Stock in exchange for 30 shares of Wolcott
common stock and 120 shares of Wolcott preferred stock in
a transaction accounted for as a purchase. Excess cost
over fair value of $2,141 will be recorded as a result of
this transaction.
<FN3> FB adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities" as of December 31, 1993. FCC, Lakeside, and City adopted
SFAS No. 115 as of January 1, 1994.
<FN4> Pro forma earnings per share have been computed on the pro
forma combined weighted average shares outstanding. Pro forma
combined weighted average shares outstanding include weighted average
outstanding shares of FCC Common Stock, after adjustment for shares of
FCC Common Stock assumed to be issued in connection with the mergers.
Income for primary earnings per share is adjusted for preferred stock
dividends. Income for fully diluted earnings per share is adjusted
for interest related to convertible debentures, net of the related
income tax effect, and preferred stock dividends.
<FN5> Lakeside and FB adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" in 1993 and reported
the cumulative effect of this accounting change in their respective
1993 consolidated statements of income. The effect of this change was
a $131,000 decrease in net income for Lakeside and a $672,000 increase
in net income for FB. These amounts are not considered to be
components of ongoing results and accordingly have not been included
in the historical or combined pro forma amounts presented.
<FN6> To record the excess cost over fair value for the Wolcott
merger of $2,141,000. The excess cost is being amortized over 20
years on a straight line basis.
<FN7> The pro forma condensed combined balance sheet as of
December 31, 1993 reflects only those mergers accounted for under the
pooling-of-interests method of accounting.
<PAGE>
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
(First Bancshares Transaction Only)
The unaudited pro forma condensed combined balance sheets as of
December 31, 1993 and March 31, 1994 and the unaudited pro forma
condensed combined statements of income for the years ended December
31, 1993, 1992 and 1991 and for the three months ended March 31, 1994
appearing on the following pages give effect to the proposed First
Bancshares, Inc. (FB) merger with First Commerce Corporation (FCC)
using the pooling-of-interests method of accounting. A brief
description of the proposed plan of merger follows.
FCC and FB (collectively the "Companies") have signed a
definitive agreement to merge the two companies and their respective
subsidiaries, First National Bank of Commerce and First Bank (the
"Mergers"). Shareholders of FB will receive shares of FCC Common
Stock. The exact number of shares will be determined at the time the
Mergers are effected, but in no event would exceed 2,860,169 shares.
No provision has been made for nonrecurring charges or credits
directly related to the Mergers, and any such charges or credits are
not expected to be material. Certain direct costs of the Mergers
which have been incurred and included in the pro forma financial
statements are immaterial. The unaudited pro forma condensed combined
balance sheets include adjustments directly attributable to the
proposed Mergers based on estimates derived from information currently
available.
The proforma financial statements do not purport to be indicative
of the financial position or results of operations that would actually
have been obtained if the Mergers had been in effect at such dates or
for such periods, or of the results that may be obtained in the
future. These statements and related notes should be read in
conjunction with the consolidated financial statements of the
Companies and the notes thereto included elsewhere herein or
incorporated by reference hereto.
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 1994
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Pro
Historical Forma Forma
-----------------------------
FCC FB Adjustments<FN1> Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 303,760 $ 12,491 $ - $ 316,251
Interest-bearing deposits in other banks 90,430 263 - 90,693
Securities held to maturity 446,697 8,608 - 455,305
Securities available for sale 2,560,192 55,177 - 2,615,369
Trading account securities 466 - - 466
Federal funds sold and securities
purchased under resale agreements 106,900 8,430 - 115,330
Loans and leases, net of unearned income 2,658,134 152,604 - 2,810,738
Allowance for loan losses (63,844) (2,241) - (66,085)
------------ ------------ ------------ ------------
Net loans and leases 2,594,290 150,363 - 2,744,653
Premises and equipment 106,832 6,471 - 113,303
Goodwill and other intangible assets 15,494 - - 15,494
Other assets 148,063 4,725 - 152,788
------------ ------------ ------------ ------------
Total assets $ 6,373,124 $ 246,528 $ - $ 6,619,652
============ ============ ============ ============
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,287,217 $ 48,102 $ - $ 1,335,319
Interest-bearing deposits 4,005,366 175,285 - 4,180,651
Foreign branch interest-bearing deposits 4,979 - - 4,979
------------ ------------ ------------ ------------
Total deposits 5,297,562 223,387 - 5,520,949
Short-term borrowings 407,868 554 - 408,422
Other liabilities 70,544 1,675 - 72,219
Long-term debt 89,682 - - 89,682
------------ ------------ ------------ ------------
Total liabilities 5,865,656 225,616 - 6,091,272
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock 59,979 - - 59,979
Common stock 130,720 848 13,453 <FN2> 145,021
Capital surplus 137,406 3,823 (13,453)<FN2> 127,776
Retained earnings 202,797 16,155 - 218,952
Unearned restricted stock compensation (1,191) - - (1,191)
Unrealized gain(loss) on securities
available for sale (22,243) 86 - (22,157)
------------ ------------ ------------ ------------
Total stockholders' equity 507,468 20,912 - 528,380
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 6,373,124 $ 246,528 $ - $ 6,619,652
============ ============ ============ ============
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1993
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Pro
Historical Forma Forma
-----------------------------
FCC FB Adjustments<FN1> Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 387,548 $ 11,042 $ - $ 398,590
Interest-bearing deposits in other banks 55,422 357 - 55,779
Securities held for investment 1,523,638 8,591 - 1,532,229
Securities held for sale 1,779,927 47,555 - 1,827,482
Trading account securities 482 - - 482
Federal funds sold and securities
purchased under resale agreements 28,600 2,000 - 30,600
Loans and leases, net of unearned income 2,674,697 160,406 - 2,835,103
Allowance for loan losses (68,302) (2,157) - (70,459)
------------ ------------ ------------ ------------
Net loans and leases 2,606,395 158,249 - 2,764,644
Premises and equipment 102,230 6,634 - 108,864
Goodwill and other intangible assets 16,143 - - 16,143
Other assets 159,900 4,316 - 164,216
------------ ------------ ------------ ------------
Total assets $ 6,660,285 $ 238,744 $ - $ 6,899,029
============ ============ ============ ============
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,196,259 $ 44,465 $ - $ 1,240,724
Interest-bearing deposits 4,107,813 170,926 - 4,278,739
Foreign branch interest-bearing deposits 5,787 - - 5,787
------------ ------------ ------------ ------------
Total deposits 5,309,859 215,391 - 5,525,250
Short-term borrowings 678,316 1,951 - 680,267
Other liabilities 72,734 1,188 - 73,922
Long-term debt 89,704 - - 89,704
------------ ------------ ------------ ------------
Total liabilities 6,150,613 218,530 - 6,369,143
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock 59,979 - - 59,979
Common stock 130,311 848 13,453 <FN2> 144,612
Capital surplus 135,911 3,823 (13,453)<FN2> 126,281
Retained earnings 184,288 14,859 - 199,147
Unearned restricted stock compensation (817) - - (817)
Unrealized gain(loss) on securities
available for sale - 684 - 684
------------ ------------ ------------ ------------
Total stockholders' equity 509,672 20,214 - 529,886
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 6,660,285 $ 238,744 $ - $ 6,899,029
============ ============ ============ ============
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Three Months Ended March 31, 1994
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Pro
Historical Forma Forma
-----------------------------
FCC FB Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income $ 97,183 $ 4,762 $ - $ 101,945
Interest expense 34,437 1,124 - 35,561
------------ ------------ ------------ ------------
Net interest income 62,746 3,638 - 66,384
Provision for loan losses (3,832) 75 - (3,757)
------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 66,578 3,563 - 70,141
Other income 28,501 827 - 29,328
Operating expense 56,472 2,453 - 58,925
------------ ------------ ------------ ------------
Income before income tax expense 38,607 1,937 - 40,544
Income tax expense 12,475 641 - 13,116
------------ ------------ ------------ ------------
Net income 26,132 1,296 - 27,428
Preferred dividend requirements 1,087 - - 1,087
------------ ------------ ------------ ------------
Income applicable to common shares $ 25,045 $ 1,296 $ - $ 26,341
============ ============ ============ ============
Earnings per share <FN3>
Primary $ .95 $ 1.53 $ .90
Fully diluted $ .86 $ 1.53 $ .83
Weighted average shares outstanding <FN3>
Primary 26,302,120 847,658 29,161,854
Fully diluted 32,244,994 847,658 35,104,728
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Pro
Historical Forma Forma
-----------------------------
FCC FB Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income $ 393,334 $ 20,640 $ - $ 413,974
Interest expense 143,324 5,030 - 148,354
------------ ------------ ------------ ------------
Net interest income 250,010 15,610 - 265,620
Provision for loan losses (4,504) (1,300) - (5,804)
------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 254,514 16,910 - 271,424
Other income 102,421 2,544 - 104,965
Operating expense 221,080 10,586 - 231,666
------------ ------------ ------------ ------------
Income before income tax expense 135,855 8,868 - 144,723
Income tax expense 40,641 2,919 - 43,560
------------ ------------ ------------ ------------
Net income <FN4> 95,214 5,949 - 101,163
Preferred dividend requirements 4,348 - - 4,348
------------ ------------ ------------ ------------
Income applicable to common shares $ 90,866 $ 5,949 $ - $ 96,815
============ ============ ============ ============
Earnings per share <FN3><FN4>
Primary $ 3.48 $ 7.02 $ 3.34
Fully diluted $ 3.18 $ 7.02 $ 3.09
Weighted average shares outstanding <FN3>
Primary 26,132,211 847,787 28,991,945
Fully diluted 32,125,003 847,787 34,984,737
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Pro
Historical Forma Forma
-----------------------------
FCC FB Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income $ 398,701 $ 20,495 $ - $ 419,196
Interest expense 163,348 6,682 - 170,030
------------ ------------ ------------ ------------
Net interest income 235,353 13,813 - 249,166
Provision for loan losses 22,040 680 - 22,720
------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 213,313 13,133 - 226,446
Other income 96,627 2,106 - 98,733
Operating expense 203,781 9,785 - 213,566
------------ ------------ ------------ ------------
Income before income tax expense and
minority interest 106,159 5,454 - 111,613
Income tax expense 32,766 1,774 - 34,540
------------ ------------ ------------ ------------
Income before minority interest 73,393 3,680 - 77,073
Earnings of minority interest 918 - - 918
------------ ------------ ------------ ------------
Net income 72,475 3,680 - 76,155
Preferred dividend requirements 4,076 - - 4,076
------------ ------------ ------------ ------------
Income applicable to common shares $ 68,399 $ 3,680 $ - $ 72,079
============ ============ ============ ============
Earnings per share <FN3>
Primary $ 2.88 $ 4.34 $ 2.71
Fully diluted $ 2.70 $ 4.34 $ 2.58
Weighted average shares outstanding <FN3>
Primary 23,728,540 847,787 26,588,274
Fully diluted 29,568,365 847,787 32,428,099
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Pro
Historical Forma Forma
-----------------------------
FCC FB Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income $ 393,922 $ 19,463 $ - $ 413,385
Interest expense 202,060 9,187 - 211,247
------------ ------------ ------------ ------------
Net interest income 191,862 10,276 - 202,138
Provision for loan losses 43,734 1,334 - 45,068
Net interest income after ------------ ------------ ------------ ------------
provision for loan losses 148,128 8,942 - 157,070
Other income 83,678 2,169 - 85,847
Operating expense 185,963 8,249 - 194,212
------------ ------------ ------------ ------------
Income before income tax expense and
minority interest 45,843 2,862 - 48,705
Income tax expense 10,936 872 - 11,808
------------ ------------ ------------ ------------
Income before minority interest 34,907 1,990 - 36,897
Earnings of minority interest 878 - - 878
------------ ------------ ------------ ------------
Net income 34,029 1,990 - 36,019
Preferred dividend requirements - - - -
------------ ------------ ------------ ------------
Income applicable to common shares $ 34,029 $ 1,990 $ - $ 36,019
============ ============ ============ ============
Earnings per share <FN3>
Primary $ 1.56 $ 2.35 $ 1.46
Fully diluted $ 1.56 $ 2.35 $ 1.46
Weighted average shares outstanding <FN3>
Primary 21,808,941 847,787 24,668,675
Fully diluted 21,808,941 847,787 24,668,675
(See accompanying notes)
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (Unaudited)
<FN1> In connection with the Mergers, FCC will issue shares of Common Stock
to the shareholders of FB. To calculate pro forma information, it has been
assumed that the number of outstanding shares of FCC Common Stock includes
shares to be issued upon consummation of the Mergers. Under the terms of the
proprosed Mergers with FB, the number of shares of FCC Common Stock to be
delivered will be determined at the time the Mergers are effected based on
the closing sales price of FCC Common Stock with a maximum number of shares
of 2,860,169. For purposes of these pro formas, it has been assumed that the
maximum number of shares issuable under the proposed Mergers with FB will be
issued.
<FN2> Calculation of Pro Forma Capital. As required by generally accepted
accounting principles under the pooling-of-interests method of accounting,
FCC's Common Stock account has been decreased by the balance in common stock
for FB and increased by the par value of the FCC Common Stock assumed to be
issued under the Mergers. An analysis of these adjustments follows (in
thousands, except share data):
<TABLE>
<CAPTION>
December 31, Preferred Common Capital Retained Unearned Unrealized Total
1993 Stock Stock Surplus Earnings Restricted Gain Stockholders'
and Stock (Loss) Equity
March 31, 1994 Compensation on
Securities
Available
For Sale
<S> <C> <C> <C> <C> <C> <C> <C>
FB <FNA> $ -- $ 14,301 $ (9,630) $ -- $ -- $ -- $ 4,671
(848) (3,823) (4,671)
________________________________________________________________________
Total $ -- $ 13,453 $ (13,453) $ -- $ -- $ -- $ --
========================================================================
</TABLE>
(A) Issuance of 2,860,169 shares of FCC Common Stock for 847,787 shares of
FB Common Stock in a transaction accounted for as a pooling-of-interests.
FCC's Common Stock account has been decreased by the balance in FB's Common
Stock account ($848) and increased by the par value of the FCC Common Stock
issued ($14,301).
<FN3>Pro forma earnings per share have been computed on the pro forma
combined weighted average shares outstanding. Pro forma combined weighted
average shares outstanding include weighted average outstanding shares of FCC
Common Stock, after adjustment for shares of FCC Common Stock assumed to be
issued in connection with the Mergers. Income for primary earnings per
share is adjusted for preferred stock dividends. Income for fully diluted
earnings per share is adjusted for interest related to convertible
debentures, net of the related income tax effect, and preferred stock
dividends.
<FN4>FB adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" in 1993 and reported the cumulative effect of
this accounting change in their 1993 consolidated statement of income. The
effect of this change was a $672,000 increase in net income for FB. This
amount is not considered to be a component of ongoing results and accordingly
has not been included in the historical or combined pro forma amounts
presented.
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF
FIRST BANCSHARES, INC.
Page
Report of Independent Public Accountant......................F-19
Consolidated Balance Sheets as of
December 31, 1993 and 1992
and March 31, 1994 .....................................F-20
Consolidated Statements of Income for
the Years Ended December 31, 1993,
1992 and 1991 and the Three
Months ended March 31, 1994 and 1993....................F-21
Consolidated Statements of Shareholders'
Equity for the Years Ended
December 31, 1993, 1992 and 1991
and the Three Months ended
March 31, 1994..........................................F-22
Consolidated Statements of Cash Flows for
the Years Ended December 31, 1993,
1992 and 1991 and the Three
Months ended March 31, 1994 and 1993....................F-23
Notes to Consolidated Financial Statements...................F-24
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of
Directors of First Bancshares, Inc.:
We have audited the accompanying consolidated balance sheets
of First Bancshares, Inc. (a Louisiana corporation) and
subsidiary as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in shareholders'
equity and cash flows for each of the three years in the
period ended December 31, 1993. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of First Bancshares, Inc. and subsidiary as of
December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years
in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in notes 1 and 6 to the consolidated financial
statements, the Company changed its method of accounting for
certain investments in debt and equity securities as of
December 31, 1993 and its method of accounting for income
taxes as of January 1, 1993.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana,
March 11, 1994
<PAGE>
FIRST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1993 AND 1992 AND MARCH 31, 1994
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
March 31,
ASSETS 1994 1993 1992
______ ________ _________ _________
<S> <C> <C> <C>
CASH AND DUE FROM BANKS $ 12,754 $ 11,399 $ 13,169
FEDERAL FUNDS SOLD 8,430 2,000 16,800
INVESTMENT SECURITIES AVAILABLE
FOR SALE, at fair value 55,177 47,555 _
INVESTMENT SECURITIES HELD TO MATURITY
(fair value of approximately $8,784,334
in 1993 and $52,340,452 in 1992) 8,608 8,591 50,982
LOANS 152,604 160,406 144,989
Less: Reserve for possible loan losses (2,241) (2,157) (3,308)
________ ________ ________
Net loans 150,363 158,249 141,681
PREMISES AND EQUIPMENT 6,471 6,634 6,294
OTHER REAL ESTATE 1,604 1,693 4,934
ACCRUED INCOME RECEIVABLE 1,360 1,309 1,268
OTHER ASSETS 1,761 1,314 1,449
________ ________ ________
Total assets 246,528 238,744 236,577
======== ======== ========
LIABILITIES
DEPOSITS:
Non-interest bearing 48,102 44,465 42,378
Interest bearing 175,285 170,926 175,545
________ ________ ________
Total deposits 223,387 215,391 217,923
NOTE OPTION ACCOUNT 554 500 500
NOTE PAYABLE AND SUBORDINATED DEBENTURES 1,451 3,932
ACCRUED TAXES, INTEREST AND EXPENSES 1,675 1,188 1,313
________ ________ ________
Total liabilities 225,616 218,530 223,668
________ ________ ________
SHAREHOLDERS' EQUITY
COMMON STOCK, $1 par value, 907,500
shares authorized, 847,658
shares issued and outstanding
at March 31, 1994, 847,787 shares
issued and outstanding at
December 31, 1993 and 1992 848 848 848
PAID-IN CAPITAL 3,823 3,823 3,823
RETAINED EARNINGS 16,155 14,859 8,238
INVESTMENT SECURITIES MARKET VALUATION,
net of tax 86 684 -
________ ________ ________
Total shareholders' equity 20,912 20,214 12,909
________ ________ ________
Total liabilities and shareholders' equity 246,528 238,744 236,577
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
AND THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollar Amounts in Thousands except per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
Three months ended March 31, Year ended December 31,
_____________________________ _______________________________
1994 1993 1993 1992 1991
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 3,983 $ 3,834 $ 16,846 $ 16,473 $ 16,117
Interest on securities -
U.S. treasury securities 369 282 1,307 904 483
Mortgage-backed securities
and collateral mortgage
obligations 412 531 2,035 2,641 2,163
State and political obligations 29 30 117 171 264
Banker's acceptances 14 26
Interest on deposits with banks 3 6 12 18 25
Interest on Federal funds sold 68 131 323 274 385
______ ______ ______ ______ ______
Total interest income 4,864 4,814 20,640 20,495 19,463
______ ______ ______ ______ ______
INTEREST EXPENSE:
Interest on deposits 1,093 1,217 4,652 6,183 8,652
Interest on parent company
borrowings 28 108 361 480 508
Interest on Federal funds
purchased and other short-term
borrowings 105 36 17 19 27
______ ______ ______ ______ ______
Total interest expense 1,226 1,361 5,030 6,682 9,187
______ ______ ______ ______ ______
NET INTEREST INCOME 3,638 3,453 15,610 13,813 10,276
PROVISION FOR POSSIBLE LOAN LOSSES 75 - (1,300) 680 1,334
______ ______ ______ ______ ______
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN
LOSSES 3,563 3,453 16,910 13,133 8,942
______ ______ ______ ______ ______
NON-INTEREST INCOME:
Service charges on deposits 507 498 2,091 1,748 1,848
Net securities gains 86
Net other real estate
gains (losses) 19 12 90 (26) 27
Other income 301 135 363 298 294
______ ______ ______ ______ ______
Total non-interest income 827 645 2,544 2,106 2,169
NON-INTEREST EXPENSE:
Salaries and benefits 1,227 1,118 4,796 4,031 3,276
Occupancy 381 360 1,511 1,302 1,077
Net other real estate expense 58 443 991 1,399 1,103
Other operating expenses 787 745 3,288 3,053 2,793
______ ______ ______ ______ ______
Total non-interest expense 2,453 2,666 10,586 9,785 8,249
______ ______ ______ ______ ______
INCOME BEFORE TAXES AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 1,937 1,432 8,868 5,454 2,862
______ ______ ______ ______ ______
PROVISION (CREDIT) FOR INCOME
TAXES:
Current 513 297 2,272 2,109 1,108
Deferred 128 84 647 (335) (236)
______ ______ ______ ______ ______
Total provision for
income taxes 641 381 2,919 1,774 872
______ ______ ______ ______ ______
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 1,296 1,051 5,949 3,680 1,990
______ ______ ______ ______ ______
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE - 672 672 - -
______ ______ ______ ______ ______
NET INCOME $ 1,296 $ 1,723 $ 6,621 $ 3,680 $ 1,990
EARNINGS PER SHARE: ====== ====== ====== ====== ======
Income before cumulative
effect of accounting change $1.53 $1.24 $7.02 $4.34 $2.35
Cumulative effect of
accounting change - .79 .79 - -
_____ _____ _____ _____ _____
Net income per share $1.53 $2.03 $7.81 $4.34 $2.35
===== ===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
FIRST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
AND THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Investment
Common Stock Securities
__________________ Paid-in Retained Market
Shares Amount Capital Earnings Valuation
______ ______ _______ ________ __________
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1990 848 $ 848 $ 3,823 $ 2,568 $ -
Net income - 1991 1,990
______ _____ _______ ________ ________
BALANCE, December 31, 1991 848 848 3,823 4,558 $ -
Net income - 1992 3,680
______ _____ _______ ________ ________
BALANCE, December 31, 1992 848 848 3,823 8,238 $ -
Net income - 1993 6,621
Net change in investment
securities market
valuation - net of tax $ 684
______ _____ _______ ________ ________
BALANCE, December 31, 1993 848 $ 848 $ 3,823 $ 14,859 $ 684
______ _____ _______ ________ ________
Net income through
March 31, 1994* 1,296
Net change in investment
securities market (598)
valuation - net of tax* ______ _____ _______ ________ ________
BALANCE, March 31, 1994* 848 $ 848 $ 3,823 $ 16,155 $ 86
====== ===== ======= ======== ========
</TABLE>
___________________
* Unaudited Information
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
AND THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
Three months ended March 31, Year ended December 31,
____________________________ ____________________________________
1994 1993 1993 1992 1991
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,296 $1,693 $ 6,621 $ 3,680 $ 1,990
Adjustments to reconcile net
income to net operating
cash flows -
Provision for possible loan losses 75 - (1,300) 680 1,334
Provision for other real estate
losses - 375 686 1,050 606
Depreciation 198 179 791 698 610
Net accretion of security discount
and premium (17) (10) (68) (43) (83)
(Gains) Losses on sale of other
real estate (19) (47) (90) 25 (26)
(Increase) decrease in accrued
income receivable (51) (133) (42) 280 (83)
Decrease in accrued liabilities 487 458 (125) (214) (383)
______ ______ _____ _______ ______
Net operating cash flows 1,969 2,515 6,473 6,156 3,965
______ ______ _____ _______ ______
INVESTING ACTIVITIES:
Proceeds from maturities of
investment securities 4,637 3,592 15,687 16,696 7,222
Proceeds from sales of
investment securities - 2,499 -
Purchases of investment securities (12,857) (8,032) (19,746) (21,215) (32,097)
Net (increase) decrease in loan
portfolio 7,812 4,200 (15,268) 274 (20,532)
Net (increase) decrease in Federal
funds sold (6,430) 1,300 14,800 (13,800) 700
Net purchase of premises and
equipment (35) (269) (1,131) (610) (788)
Proceeds from sale of other real
estate 107 703 2,646 1,917 3,256
Net increase in other assets (447) (879) (219) (703) (389)
______ ______ ______ ______ ______
Net investing cash flows (7,213) 615 (3,231) (14,942) (42,628)
______ ______ ______ ______ ______
FINANCING ACTIVITIES:
Net increase (decrease) in
interest-free, money market,
savings and NOW deposits $ 5,391 $(5,596) $ (1,141) $ 24,132 $30,545
Net increase (decrease) in
certificate of deposit 2,605 512 (1,391) (11,900) 6,790
Net increase in short-term
borrowings 54 - - - 56
Net decrease in note payable (1,451) (269) (2,480) (375) (65)
______ ______ ______ ______ ______
Net financing cash flows 6,599 (5,353) (5,012) 11,857 37,326
______ ______ ______ ______ ______
INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS 1,355 (2,223) (1,770) 3,071 (1,337)
CASH AND DUE FROM BANKS AT
BENINNING OF PERIOD 11,399 13,169 13,169 10,098 11,435
______ ______ ______ ______ ______
CASH AND DUE FROM BANKS AT
ENDING OF PERIOD $ 12,754 $10,946 $ 11,399 $ 13,169 $10,098
====== ====== ====== ====== ======
CASH PAID FOR INTEREST $ 1,203 $ 1,412 $ 5,202 $ 6,996 $ 9,309
====== ====== ====== ====== ======
CASH PAID FOR TAXES $ - $ - $ 2,425 $ 2,399 $ 1,377
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1992 AND 1991
(Dollar Amounts in Thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
__________________________________________
Basis of Presentation
______________________
The accounting principles and reporting policies of First
Bancshares, Inc. (the Company) conform with generally
accepted accounting principles. The following is a
description of the more significant of these policies.
Consolidation
_____________
The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, First Bank
(the Bank). Intercompany accounts and transactions are
eliminated in consolidation.
Investment Securities
_____________________
As of December 31, 1993, the Company adopted the Financial
Accounting Standards Board (FASB) Statement of Financial
Accounting Standard (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Under this
standard, securities classified as held to maturity are
those debt securities in which the Bank has the positive
intent and ability to hold to maturity. These criteria are
not considered satisfied when a security would be available
to be sold in response to significant interest rate changes
which were not anticipated in the Bank's asset and liability
management strategies, changes in the types of products
offered by the Bank, changes in its deposit structure, or
potential liquidity needs. The Bank has no trading
securities, which are defined as securities bought and held
principally for the purpose of selling them in the near
term. Securities not meeting the criteria for
classification as held to maturity or trading are classified
as securities available for sale.
Securities held to maturity are stated at cost, adjusted for
amortization of premiums and accretion of discounts, which
does not differ materially from the interest method.
Available for sale securities are carried at fair value,
with the difference between cost and fair value reflected in
shareholders' equity net of tax as investment securities
market valuation account. Fair value for securities is
determined from quoted prices or quoted prices of similar
securities of comparable risk and maturity where no quoted
market price exists. Premiums and discounts on mortgage-
backed securities are amortized at a constant rate with
monthly adjustments for the amount of prepayments in
relation to the remaining balance. The lives used are
adjusted periodically due primarily to prepayment variations
resulting from changes in market interest rates.
Loans
_____
Loans are stated at the principal balance outstanding less
unearned discount on certain consumer loans. Interest on
loans, other than certain consumer loans, is recognized as
income based on the principal balance outstanding. Interest
on certain consumer loans is recognized as income over the
term of the loan using the sum-of-the-months' digits method,
which does not differ materially from the interest method.
Accrual of interest on a loan is discontinued when
management believes that collection of interest is doubtful,
after considering economic and business conditions and
collection efforts, and reviewing the borrower's financial
condition. Income is recorded on a cash basis for non-
accrual loans.
Nonperforming Loans
___________________
Loans and leases past due 90 days or more are considered to
be performing loans and leases until placed on nonaccrual
status. Loans and leases are placed on nonaccrual status
when, in the opinion of management, there is sufficient
uncertainty as to timely collection of interest or principal
so as to preclude the recognition in reported earnings of
some or all of the contractual interest. When a loan is
placed on nonaccrual status, interest accrued but not
collected is usually reversed against interest income.
Generally, any payments received on nonaccrual loans and
leases are first applied to reduce outstanding principal
amounts. Loans are not reclassified as accruing until
interest and principal payments are brought current and
future payments are reasonably assured.
Reserve for Possible Loan Losses
________________________________
The provision for possible loan losses charged to operating
expense is determined by management based on a review of the
past loan loss experience and an evaluation of the quality
of the current loan portfolio. The reserve for possible
loan losses is based on estimates and ultimate losses may
vary from current estimates. These estimates are reviewed
periodically and, as adjustments become necessary, they are
reported in earnings in the periods in which they become
known.
Premises and Equipment
______________________
Premises and equipment are stated at cost, less accumulated
depreciation. Depreciation expense is computed primarily on
a straight-line basis over the estimated useful lives of the
depreciable assets. Maintenance and repairs are charged to
operating expense, and gains or losses on dispositions are
reflected currently in the statements of income.
Income Taxes
_____________
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." In general, under this new
accounting standard, deferred taxes are recognized based on
temporary differences between book and tax bases of assets
and liabilities as of the balance sheet date. The change in
net deferred assets or liabilities between periods is
recognized as a deferred tax expense or benefit in the
consolidated statement of income. Income taxes and the
impact of adopting SFAS No. 109 are discussed in more detail
in Note 6. Prior to January 1, 1993, deferred taxes were
recognized based on the deferred method.
Other Real Estate
_________________
The cost basis of foreclosed real estate and other assets is
established at the lower of the loan balance or fair value
less estimated costs to sell the asset at the time of
foreclosure. Any excess of the loan balance over the fair
value less estimated costs to sell at foreclosure is charged
to the reserve for possible loan losses. Subsequent
declines in fair value of the assets below the initial cost
basis are provided for in the reserve for other real estate
losses in the period the decline is noted. These reserves
are periodically adjusted as fair values change; however,
the net carrying value of each asset never exceeds the cost
basis. Expenses associated with owning and operating other
real estate and gains and losses on disposition of such
assets are recorded in earnings in the period incurred.
Reclassifications
_________________
Certain prior year amounts have been reclassified in order
to conform with current year presentation.
2. INVESTMENT SECURITIES:
_____________________
The amortized cost and estimated fair values of investments
in debt securities are as follows:
AGGREGATE BOOK AND ESTIMATED FAIR VALUES
_________________________________________
<TABLE>
<CAPTION>
December 31, 1993
________________________________________________________________________________
Fair Value/
Unrealized Unrealized Book
Held to Maturity Book Value Gains Loses Fair Value Difference
________________ ______________ ____________ ____________ ___________ _______________
<S> <C> <C> <C> <C> <C>
U.S. governmental direct
agency obligations $ 6,809 $ 110 $ - $ 6,919 $ 110
State and political obligations 1,782 83 - 1,865 83
_______________ ____________ ___________ ____________ _______________
Total $ 8,591 $ 193 - $ 8,784 193
=============== ============ =========== ============ ===============
Fair Value/
Unrealized Unrealized Book
Available for Sale Book Value Gains Loses Fair Value Difference
________________ ______________ ____________ ____________ ___________ _______________
U.S. Treasury $ 25,969 $ 520 $ - $ 26,489 $ 520
U.S. government agencies:
Mortgage-backed securities 13,600 471 5 14,066 466
Collateral mortgage
obligations 6,949 69 18 7,000 51
______________ ______________ ____________ ____________ _______________
Total $ 46,518 $ 1,060 $ 23 $ 47,555 $ 1,037
============== ============== ============ ============ ===============
December 31, 1992
________________________________________________________________________
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
_______________ _______________ _____________ _______________
U.S. Treasury $ 16,930 $ 512 $ $ 17,442
U.S. government agencies: 15,476 513 (8) 15,981
Collateral mortgage obligations 12,183 198 (45) 12,336
Other 4,345 157 (5) 4,497
State and political obligations 2,048 48 (12) 2,084
________________ ________________ _____________ ______________
Total $ 50,982 $ 1,428 $ (70) $ 53,340
================ ================ ============= ==============
</TABLE>
The amortized cost and estimated fair value of debt securities at December 31,
1993, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
AMORTIZED COST AND ESTIMATED MARKET VALUE BY MATURITY
_____________________________________________________
<TABLE>
<CAPTION>
Held to Maturity Book Value Fair Value Difference
________________ ____________ ___________ ___________
<S> <C> <C> <C>
Due in one year or less $ 1,511 $ 1,551 $ 40
Due after one year through
five years 3,582 3,663 81
Due after five years through
ten years 3,498 3,570 72
____________ ____________ ___________
Total $ 8,591 $ 8,784 $ 193
============ ============ ===========
Available for Sale Book Value Fair Value Difference
________________ ____________ ___________ ___________
Due in one year or less $ 9,002 $ 9,140 $ 138
Due after one year through
five years 16,967 17,297 330
_____________ ____________ ____________
25,969 26,437 468
Mortgage-backed securities 20,549 21,118 569
_____________ ____________ ____________
Total $ 46,518 47,555 1,037
============= ============ ============
</TABLE>
The Bank's mortgage-backed securities consist of ownership interests in
pools of residential mortgages guaranteed by a U.S. government agency
with contract maturities ranging from approximately 1 to 39 years;
however, the underlying mortgages are subject to significant
prepayments, primarily when contractual interest rates exceed the
current market rate on similar mortgages. Based on current prepayment
assumptions, the estimated average remaining life of these securities
was approximately 4.1 years at December 31, 1993.
Investment securities with book values of $6,978 and $6,154 at
December 31, 1993 and 1992, respectively, were pledged as security for
public deposits and other liabilities as required by law.
During 1992, $3,030 of the Company's securities were sold or called
prior to maturity resulting in realized gains of $86 and no realized
losses. During 1993 and 1991 the Company sold no securities.
The Bank holds a $1,000 investment in debentures of an affiliated bank
consisting of 12% mandatory convertible subordinated debentures of First
Continental Bancshares, Inc. (FCB). The debentures were issued in 1986
and mature in 1996 with principal payment to be made with 78 shares of FCB
common stock per thousand in debenture face value. There is no active
market for these debentures or for the common stock into which they
convert. During 1988 and 1989, a reserve equal to the cost of these
debentures was recorded due to FCB's default on its then senior debt,
which debt was secured by 100% of the stock of FCB's only significant
asset, the First National Bank of Jefferson Parish. During December,
1993, FCB and Hibernia Corporation (Hibernia) entered into a definitive
agreement to merge. Under the terms of the agreement, Hibernia will
redeem all of the outstanding principal and accrued interest related to
FCB's outstanding debentures. The transaction is subject, among other
things, to approval by FCB shareholders and certain regulatory bodies.
The transaction is expected to close before the end of 1994.
The debenture agreement requires a redemption price of 105% and 103% if
redeemed during the twelve month period ending November 15, 1994 and 1995,
respectively. Therefore, the Bank will receive $1,000 of principal, all
outstanding accrued interest, which approximated $670 as of December 31,
1993, and a premium of $50 if the transaction is closed before
November 15, 1994.
As discussed above, the Bank assigned no value to the FCB debentures and
related accrued interest in the accompanying financial statements;
therefore, the Bank will recognize income when it collects the principal,
accrued interest, and related premium upon closing of the merger
transaction.
3. LOANS:
______
The composition of the loan portfolio was as follows:
December 31,
_________________________
1993 1992
________ _______
COMMERCIAL AND INDUSTRIAL
LOANS, other than real
estate $ 8,690 $ 12,075
REAL ESTATE LOANS -
Residential properties 55,162 52,632
Commercial properties 55,494 42,526
CONSUMER LOANS 44,975 41,442
__________ ___________
164,321 148,675
LESS: Unearned discount (3,914) (3,685)
__________ ___________
$ 160,407 $ 144,990
========== ===========
The Bank grants commercial, real estate and consumer loans to
customers located primarily in St. Tammany Parish and the
surrounding area. The Bank evaluates the credit risk of each
customer on an individual basis and, where deemed appropriate,
collateral is obtained. Collateral varies by individual loan
customer but may include accounts receivable, inventory, real
estate, equipment, deposits, personal and government guarantees,
and general security agreements. Access to collateral is
dependent upon the type of collateral obtained. On an on-going
basis, the bank monitors its collateral and the collateral value
related to the loan balance outstanding.
4. RESERVE FOR POSSIBLE LOAN LOSSES
AND OTHER REAL ESTATE LOSSES:
________________________________
The provision for possible loan losses charged to expense is
determined in accordance with the policy described in Note 1.
Transactions in the reserve for possible loan losses during 1993,
1992 and 1991 were as follows:
1993 1992 1991
_______ _______ _______
Balance, beginning of year $ 3,308 $ 3,071 $ 2,571
Provision for posible loan
losses (1,300) 680 1,334
Losses charged to the reserve (245) (720) (1,155)
Recoveries of loans previously
charged-off 394 277 321
_________ _________ _________
Balance, end of year $ 2,157 $ 3,308 $ 3,071
========= ========= =========
Transactions in the reserve for other real estate losses during 1993, 1992
and 1991 were as follows:
1993 1992 1991
______ ______ ______
Balance, beginning of year $ 509 $ 96 $ _
Provision charged to expense 686 1,050 606
Write-downs charged to the reserve (792) (637) (510)
______ _______ _______
Balance, end of year $ 403 $ 509 $ 96
====== ======= =======
Nonperforming assets include loans on nonaccrual status and real estate
acquired through foreclosure. Loans past due 90 days or more are considered
to be performing assets until placed on non-accrual status. Nonperforming
assets included in the accompanying consolidated balance sheets are
as follows:
December 31
_________________________
1993 1992
___________ ___________
Nonperforming assets:
Nonaccrual loans $ 105 $ 662
Other real estate, net 1,692 4,934
___________ ___________
Total nonperforming assets $ 1,797 $ 5,596
=========== ===========
Loans past due 90 days or
more and not on nonaccrual
status $ 192 $ 47
============ ===========
Nonperforming assets as a
percentage of loans and
forclosed property 1.11% 3.73%
Reserve for loan and other
real estate losses as a
percentage of:
Non performing assets 142.46% 68.21%
Gross loans 1.60% 2.63%
Income recognized on non-accrual loans totaled approximately $6, $19 and
$109 in 1993, 1992 and 1991, respectively. If the accrual of interest on
these loans had not been suspended, their recorded income would have totaled
approximately $36, $128 and $527, respectively.
In the opinion of management, progress has been made in its credit risk
management process and only normal risk and loss potential remains in
the loan portfolio. Consequently, the Company does not anticipate significant
increases in the level of nonperforming assets in the foreseeable future.
The current level of nonperforming assets is not anticipated to have a
significant, adverse affect on the results of operations of the Company.
The FASB has issued SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan," which is effective January 1, 1995. This statement establishes
standards, including the use of discounted cash flow techniques, for measuring
the impairment of a loan when it is probable that the contractual terms will
not be met. In management's opinion, the adoption of this standard is not
anticipated to have a significant impact on the Company's financial statements
based on the current loan portfolio.
5. PREMISES AND EQUIPMENT:
______________________
Premises and equipment, stated at cost less accumulated depreciation, consist
of the following:
December 31,
Estimated ____________________
Useful Life 1993 1992
___________ _________ _________
Land - $ 353 $ 50
Buildings and leasehold
improvements 5-40 years 8,050 8,024
Furniture, fixtures and
equipment 3-10 years 5,547 4,752
___________ __________
13,950 12,826
Less-accumulated depreciation (7,316) (6,532)
___________ __________
$ 6,634 $ 6,294
=========== ==========
Depreciation included in occupancy expenses totaled $791, $698 and $610
in 1993, 1992 and 1991, respectively.
6. FEDERAL INCOME TAXES:
_____________________
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes." The effect of adopting this statement was to increase the
deferred tax asset by $672, which is reflected in the consolidated statement
of income as the cumulative effect of an accounting change. Net deferred
tax assets, which are included in other assets in the consolidated balance
sheets, were approximately $516 and $819 as of December 31, 1993 and
1992, respectively. The components of the net deferred tax asset as of
December 31, 1993 were as follows:
Deferred tax assets:
Reserve for possible loan losses $ 205
Other real estate 329
Premises and equipment 335
_________
Total deferred tax assets $ 869
=========
Deferred tax liability - net unrealized
gain on securities available for sale $ (353)
=========
Net deferred tax asset $ 516
=========
In accordance with the provisions of SFAS No. 115 (Note 1), the deferred
provision related to the deferred tax liability above (net unrealized gain on
securities available for sale) is not included in deferred tax provision in
the consolidated statement of income; instead, it is included in the investment
securities market valuation account in the consolidated balance sheet.
Under SFAS No. 109, a valuation allowance must be established against deferred
tax assets if, based on all available evidence, it is more likely than not
that some or all of the assets will not be realized. Based on income taxes
paid during the available carryback period, a valuation allowance is not
required as of December 31, 1993. Also, there are no regulatory capital
restrictions related to the Company's deferred tax assets as of December 31,
1993.
The effective tax rate is less than the statutory Federal income tax rate for
each of the three years in the period ended December 31, 1993 because of the
following:
1993 1992 1991
_______ ________ ________
Statutory tax rate 34.0% 34.0% 34.0%
Tax exempt income (0.9) (1.6) (4.1)
Non-deductible expenses 0.1 0.2 0.6
Other (0.3) (0.1) -
_______ _________ ________
Effective tax rate 32.9% 32.5% 30.5%
======= ========= ========
The tax effect of temporary differences accounted for under the deferred
method (prior to the adoption of SFAS No. 109) was:
1992 1991
________ __________
Provision for possible
loan losses $ (139) $ (109)
Depreciation (3) (51)
ORE writedowns and sales (193) (104)
Alternative minimum tax
credit utilized - 30
Other - (2)
___________ ___________
$ (335) $ (236)
=========== ===========
7. NOTE PAYABLE AND SUBORDINATED DEBENTURES:
________________________________________
The note payable and subordinated debentures consist of the following:
December 31,
_______________________________
1993 1992
______ _______
12% subordinated debentures,
maturing September 22, 1994,
and redeemable at any time at
the option of the Company $ 1,451 $ 3,661
Note payable to a bank, which
bears interest at the Chase
Manhattan Bank's prime rate plus
one percent (7% at December 31,
1992), maturing June 19, 1998,
secured by 50,000 shares (27.6%
of total shares outstanding) of
First Bank common stock - 270
_________ __________
$ 1,451 $ 3,931
========== ==========
As further discussed in Note 10, the Company's ability to service its debt
requirements is dependent upon its cash reserves and dividends received
from the Bank. The 12% debentures are subordinated to the senior indebtedness
of the Company, as defined in the debenture agreement. The note payable
agreement provides, among other things, that the Bank may not merge or
consolidate with another corporation or be dissolved without the lender's
consent, may not issue common stock warrants or rights and must maintain
specific financial criteria.
In January, 1994, the Company received a dividend from the Bank of $1,500.
The Company intends to utilize this dividend to retire, in full, the
subordinated debentures in March, 1994.
8. EARNINGS PER SHARE:
___________________
Earnings per share are calculated based upon 847,787 weighted average shares
outstanding in 1993, 1992 and 1991.
9. RELATED PARTY TRANSACTIONS:
__________________________
In the ordinary course of business, the Bank makes loans to its directors,
executive officers and principal shareholders. These loans are made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons.
Loans made to directors, executive officers and principal shareholders,
including their family members and companies in which they have a significant
ownership interest, amounted to $2,501 and $4,690 as of December 31, 1993
and 1992, respectively.
The Bank has a number of banking relationships with other banks which have
some directors and officers in common. The most significant of these
relationships relates to loan participations purchased from and sold to
these banks. Participations purchased from these banks amounted to
approximately $386 and $223 at December 31, 1993 and 1992, respectively,
and participations sold totaled $2,424 and $2,169 at those dates. The
Bank's loan participations are made without recourse, on comparable terms
with the original loan, at market rates of interest which provide for
reimbursement of the originating Bank's loan origination and servicing costs.
Affiliated banks had no deposits in the Bank at December 31, 1993 and 1992.
The Bank held deposits in affiliated banks totaling $311 and $943 at December
31, 1993 and 1992, respectively.
Certain loan review, internal audit and consulting services are performed for
the Bank by related banks. Charges for these services are included in other
operating expenses and totaled approximately $129, $191 and $143 in 1993,
1992 and 1991, respectively.
10. REGULATORY MATTERS:
___________________
The Bank is required to maintain non-interest bearing balances with
correspondent banks to fulfill its regulatory reserve requirements. The
average reserve requirement was approximately $1,693 in 1993.
Dividends from the Bank to the Company currently do not require regulatory
approval.
As a result of an examination of the Bank during 1989 conducted by the FDIC,
the Bank consented to the issuance of a Regulatory Order. This Order was
terminated by the FDIC in June, 1992.
11. COMMITMENTS AND CONTINGENCIES:
______________________________
The Company is involved in various litigation which is routine to the nature
of its business. Management believes that resolution of these matters will
not result in any material adverse effect on the financial statements.
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include standby letters of credit and commitments
to extend credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
balance sheet.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is
based on management's credit evaluation of the counterparty. The extent of
collateral varies for each commitment but may include accounts receivable,
inventory, property, plant and equipment, and income-producing commercial
properties.
Standby letters of credit are commitments issued by the Company to guarantee
the performance of a customer to a third party. Those guarantees are primarily
issued to support public and private borrowing arrangements, including
commercial paper, bond financing, and similar transactions. Most guarantees
expire in 1994. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. The Company holds collateral supporting those commitments for
which collateral is deemed necessary. Mortgage loans sold with recourse are
pre-sold mortgage loans (FHA and VA type loans) that the Company sells to
various lenders. The Company does not retain any servicing rights and
interest rate risk is minimal as rates are locked in at closing. The loans
are sold with a 90-day recourse period.
Financial instruments whose contract amounts represent credit risk as of
December 31, 1993 and 1992 are as follows:
1993 1992
_________ _________
Commitments to extend credit $ 23,513 $ 14,910
Standby letters of credit 1,394 1,502
Mortgage loans sold with recourse 6,652 4,551
The Bank does not maintain insurance coverage protection for losses resulting
from actions of their directors or officers. The Bank has agreed to indemnify
its officers and directors for personal losses from litigation while serving
as officers and directors.
12. EMPLOYEE BENEFIT PLANS:
______________________
In December 1990, the FASB issued SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The
Statement, which is effective for fiscal years beginning after
December 15, 1994 for the Company, requires the accrual of the
expected costs of postretirement benefits during the years that
an eligible employee renders service to the employer. The
Company has not adopted the new standard as of December 31, 1993.
As of January 1, 1993, the accumulated postretirement benefit
obligation (APBO) related to these benefits was approximately
$278. The Company has the option, upon adopting SFAS No. 106, of
recognizing the APBO immediately or over a 20 year period.
Subsequent to adoption, the Company does not expect the annual
expense related to these benefits to materially differ from that
recognized prior to adoption.
Effective January 1, 1988, the Company adopted a defined
contribution savings plan for its employees. Under the terms of
the plan, the Company shall make a matching contribution of no
less than 40% of the first 3% of the employee's compensation
contributed. For 1993 and 1992, the Company matched 40% of the
first 4% of employee contributions representing contributions of
$33 and $29, respectively. In addition, the employer may make a
discretionary contribution as authorized by the Board of
Directors. In 1993 and 1992, the Company made discretionary
contributions of 110% and 60% of the employees' contributions,
resulting in contributions of $107 and $46, respectively.
13.FAIR VALUE OF FINANCIAL INSTRUMENTS:
Fair values of financial instruments are based on quoted market
prices when available. If quoted market prices are not
available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are
significantly affected by assumptions used, including the
discount rate and estimates of future cash flows. The derived
fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. Further, the disclosures
do not include estimated fair value for the core deposit
intangible, which is not a financial instrument, but represents
significant value to the Company. Accordingly, the aggregate
fair value amounts presented do not represent the underlying
value of the Company. The carrying amount of cash and short-term
investments, demand, money market and savings deposits and short-
term borrowing approximates the estimated fair value of these
financial instruments. The estimated fair value of securities is
based on quoted market prices, dealer quotes and prices obtained
from independent pricing services. The estimated fair value of
loans, time deposits and long-term debt is estimated based on
present values using applicable risk-adjusted spreads to the
U. S. Treasury bond yield curve to approximate entry-value
interest rates applicable to each category of these financial
instruments.
Entry-value interest rates were not adjusted for changes in
credit of performing commercial loans for which there are no
known credit concerns. Management believes that the risk factor
embedded in the entry-value interest rates results in a fair
valuation of these loans on an entry-value basis.
Variances between the carrying amount and the estimated fair
value of loans reflect both interest rate risk and credit risk.
The fair value estimates presented are based on information
available to management as of December 31, 1993 and 1992,
respectively. Subsequent to year-end, market interest rates on
the Bank's financial instruments have increased resulting in a
decline in the estimated fair values. Although the impact of the
change in the rates has not been quantified, management does not
believe that the increase in rates will have a significant
adverse effect on the Company's financial position.
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
___________________________ _____________________________
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
____________ _____________ ____________ _____________
<S> <C> <C> <C> <C>
ASSETS:
Cash and short-term investments $ 13,399 $ 13,399 $ 29,969 $ 29,969
Securities 56,146 56,340 50,982 52,340
Commercial loans 95,885 97,723 81,474 83,402
Installment loans 62,364 63,168 60,208 61,733
LIABILITIES:
Demand deposits 44,465 44,465 42,579 42,579
Savings deposits 110,035 110,035 113,062 113,062
Time deposits 60,891 61,257 62,281 62,648
Short-term borrowings - - 770 770
Long-term debt 1,451 1,478 3,662 3,832
OFF-BALANCE SHEET
FINANCIAL INSTRUMENTS:
Commitments to extend credit 23,513 23,513 14,910 14,910
Standby letters of credit 1,394 1,394 1,502 1,502
Mortgage loans sold with recourse 6,652 6,652 4,551 4,551
</TABLE>
<PAGE>
14. BANK ONLY FINANCIAL DATA:
_________________________
The balance sheet of First Bank as of December 31, 1993, and the statement
of income for the year then ended are as follows:
BALANCE SHEET
_____________
ASSETS
_____________
CASH AND DUE FROM BANKS $ 11,399
FEDERAL FUNDS SOLD 2,000
INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair value 47,555
INVESTMENT SECURITIES HELD TO MATURITY
(fair value of approximately $8,784,334) 8,591
LOANS 160,406
Less- Reserve for possible loan losses (2,157)
__________
Net loans 158,249
PREMISES AND EQUIPMENT 6,545
OTHER REAL ESTATE 1,693
ACCRUED INCOME RECEIVABLE 1,309
OTHER ASSETS 1,242
__________
Total assets $ 238,583
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
_____________________________________
DEPOSITS:
Non-interest bearing $ 44,788
Interest bearing 170,926
____________
Total deposits 215,714
NOTE OPTION ACCOUNT 500
ACCRUED TAXES, INTEREST AND EXPENSES 1,129
_____________
Total liabilities 217,343
_____________
SHAREHOLDER'S EQUITY:
Common Stock 907
Paid-in Capital 4,092
Retained earnings 15,557
Investment securities market valuation, net of tax 684
______________
Total shareholder's equity 21,240
______________
Total liabilities and shareholder's equity $ 238,583
==============
<PAGE>
STATEMENT OF INCOME
____________________
INTEREST INCOME:
Interest and fees on loans $ 16,846
Interest on securities-
U.S. treasury securities 1,307
Mortgage-backed securities and collateral
mortgage obligations 2,035
State and political obligations 117
Interest on deposits with banks 12
Interest on Federal funds sold 323
_______________
Total interest income 20,640
_______________
INTEREST EXPENSE:
Interest on deposits 4,668
Interest on short-term borrowings 17
______________
Total interest expense 4,685
______________
NET INTEREST INCOME 15,955
PROVISION FOR POSSIBLE LOAN LOSSES 1,300
______________
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 17,255
NON-INTEREST INCOME:
Service charges on deposits 2,090
Other income 453
______________
Total non-interest income 2,543
______________
NON-INTEREST EXPENSE:
Salaries and benefits 4,796
Occupancy 1,499
Other operating expense 4,138
______________
Total non-interest expense 10,433
______________
INCOME BEFORE TAXES 9,365
______________
PROVISION FOR INCOME TAXES:
Current 2,441
Deferred 647
______________
Total provision for income taxes 3,088
______________
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 6,277
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 909
______________
NET INCOME $ 7,186
==============
15. PARENT COMPANY ONLY FINANCIAL DATA:
The condensed balance sheet of First Bancshares, Inc. (parent company only)
as of December 31, 1993, and the statement of income for the year then ended
follow:
BALANCE SHEET
ASSETS
INVESTMENT IN FIRST BANK $ 21,240
CASH 323
OTHER ASSETS 161
______________
Total assets $ 21,724
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
NOTE PAYABLE AND SUBORDINATED DEBENTURES $ 1,451
ACCRUED TAXES, INTEREST AND EXPENSES 59
______________
Total liabilities 1,510
SHAREHOLDERS' EQUITY 20,214
______________
Total liabilities and shareholders' equity $ 21,724
==============
STATEMENT OF INCOME
REVENUES:
Dividends received from First Bank $ 3,000
Undistributed earnings of First Bank 4,186
Interest income 16
______________
Total revenues 7,202
______________
EXPENSES:
Interest expense 361
Other expenses, net 152
______________
Total expenses 513
______________
INCOME BEFORE INCOME TAXES 6,689
CREDIT FOR INCOME TAXES 169
______________
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 6,858
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (237)
______________
NET INCOME $ 6,621
==============
16.EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT:
On May 26, 1994, the Board of Directors approved an Agreement and
Plan of Merger and two related merger agreements (collectively,
the "Plan") pursuant to which (a) the Bank will be merged into
First National Bank of Commerce, a wholly owned subsidiary of
First Commerce Corporation ("FCC"), (b) immediately thereafter
the Company will be merged into FCC, and (c) on the effective
date of the FCC merger, each outstanding share of common stock of
the Company will be converted into shares of FCC common stock as
determined in accordance with the terms of the Plan. The Plan is
subject to approval by the shareholders of the Company as well as
certain other contingencies.
As discussed in Note 2, the Bank holds a $1,000,000 investment in
an affiliated bank which entered into a merger agreement with
Hibernia. On August 1, 1994, this merger was consummated. As a
result, the Bank expects to collect approximately $1.8 million,
including premium and accrued interest, in the third quarter of
1994, and will recognize this entire amount as income in that
period.
<PAGE>
APPENDIX A
PERTINENT PORTIONS
OF
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF MERGER
OF
FIRST COMMERCE CORPORATION
AND
FIRST BANCSHARES, INC.
<PAGE>
TABLE OF CONTENTS
SECTION 1. The Mergers.......................................1
1.01 Mergers.............................................1
SECTION 2. Closing...........................................1
2.01 The Closing.........................................1
2.02 The Effective Date and Time.........................2
SECTION 3. Conversion of Stock of FB.........................2
3.01 Conversion of Stock of FB...........................2
3.02 Closing Transfer Books..............................2
SECTION 4. Representations and Warranties of FB and Bank.....2
4.01 Consolidated Group; Organization; Qualification.....2
4.02 Capital Stock; Other Interests......................3
4.03 Corporate Authorization; No Conflicts...............3
4.04 Financial Statements, Reports and Proxy Statements..4
4.05 Loan and Investment Portfolios......................5
4.06 Adequacy of Allowances for Loan Losses..............5
4.07 Absence of Certain Changes or Events................6
4.08 Taxes...............................................7
4.09 Title to Assets.....................................8
4.10 Litigation..........................................9
4.11 Employee Benefit Plans..............................9
4.12 Insurance Policies..................................11
4.13 Agreements..........................................11
4.14 Licenses, Franchises and Governmental
Authorizations......................................13
4.15 Corporate Documents.................................13
4.16 Certain Transactions................................13
4.17 Broker's or Finder's Fees...........................13
4.18 Environmental Matters...............................14
4.19 Compliance with Laws................................16
4.20 Intellectual Property...............................16
4.21 Community Reinvestment Act..........................16
4.22 Representations and Warranties......................16
4.23 Accuracy of Statements..............................16
SECTION 5. Representations and Warranties of Acquiror and
Acq. Bank................................................17
5.01 Organization and Qualification......................17
5.02 Capital Stock: Other Interests......................17
5.03 Corporate Authorization; No Conflicts...............17
5.04 Financial Statements, Reports and Proxy Statements..18
5.05 Legality of Acquiror Securities.....................19
5.06 Broker's or Finder's Fees...........................19
5.07 Litigation..........................................19
5.08 Environmental Matters...............................19
5.09 Regulatory Matters..................................20
5.10 Accuracy of Statements..............................20
SECTION 6. Covenants and Conduct of Parties Prior to the
Effective Date...........................................20
6.01 Cooperation and Best Efforts........................20
6.02 Information for, and Preparation of, Registration
Statement and Proxy Statement.......................20
6.03 Approval of Bank Merger Agreement...................21
6.04 Press Releases......................................21
6.05 Investigations; Planning............................21
6.06 Preservation of Business............................22
6.07 Conduct of Business in the Ordinary Course..........22
6.08 Additional Information from FB......................24
6.09 FB Shareholder Approval.............................24
6.10 Affiliates Letter...................................24
6.11 Loan Policy.........................................24
6.12 No Solicitations....................................24
6.13 Operating Functions.................................25
6.14 Intentionally Left Blank............................25
6.15 Acquiror Registration Statement.....................25
6.16 Application to Regulatory Authorities...............26
6.17 Revenue Ruling......................................26
6.18 Additional Information from Acquiror................26
6.19 Indemnification of Directors and Officers of FB
and Bank............................................27
6.20 Benefits Provided to Employees of FB's
Consolidated Group..................................28
6.21 FB's 401(k) Plan....................................29
6.22 Publications of Post-Merger Financial Statements....29
6.23 Dissenters..........................................29
6.24 Withholding.........................................29
SECTION 7. Conditions of Closing.............................30
7.01 Conditions of All Parties...........................30
(a) Shareholder Approval...........................30
(b) Effective Registration Statement...............30
(c) No Restraining Action..........................30
(d) Statutory Requirements and Regulatory
Approval.......................................30
7.02 Additional Conditions of Acquiror and Acq. Bank.....30
(a) Representations, Warranties and Covenants......31
(b) No Material Adverse Change.....................31
(c) Opinion of Counsel.............................32
(d) Pooling of Interests...........................32
(e) Accountant's Letters...........................32
(f) Shareholder's Commitment; Confirmation.........32
(g) Regulatory Action..............................32
(h) First Continental Debentures...................33
(i) Noncompetition Agreements......................33
7.03 Additional Conditions of FB and Bank................33
(a) Representations, Warranties and Covenants......33
(b) No Material Adverse Change.....................33
(c) Opinion of Counsel.............................34
(d) Opinion of Investment Bankers..................34
(e) Tax Opinion....................................34
7.04 Waiver of Conditions................................34
SECTION 8. Termination.......................................34
8.01 Termination.........................................34
(a) Mutual Consent.................................34
(b) Material Breach................................34
(c) Abandonment....................................35
(d) Price of Acquiror Common Stock.................35
(e) Dissenting Shareholders........................35
(f) Shareholder Vote...............................35
(g) FB Recommendation..............................35
8.02 Effect of Termination: Survival.....................36
SECTION 9. MISCELLANEOUS.....................................36
9.01 Notices.............................................36
9.02 Waiver..............................................37
9.03 Expenses............................................37
9.04 Non-Survival of Representations and Warranties......37
9.05 Headings............................................37
9.06 Annexes, Exhibits and Schedules.....................37
9.07 Integrated Agreement................................37
9.08 Choice of Law.......................................38
9.09 Parties in Interest.................................38
9.10 Amendment...........................................38
9.11 Counterparts........................................38
Exhibit A Agreement of Merger of First Bank into First
National Bank of Commerce
Exhibit B Joint Agreement of Merger of First Bancshares,
Inc. with and into First Commerce Corporation
Exhibit C Shareholder's Commitment
Exhibit D Opinion of McGlinchey Stafford Lang to First
Commerce Corporation
Exhibit E Accountants' Letters
Exhibit F List of Officers
Exhibit G Opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre to First Bancshares, Inc.
Annex A List of Additional Corporations in First
Bancshares, Inc.'s Consolidated Group
Annex B Financial Statements and Documents delivered by
First Bancshares, Inc.
Annex C Financial Statements and Documents delivered by
First Commerce Corporation
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made May
____, 1994, between First Commerce Corporation ("Acquiror"), and
its wholly-owned subsidiary, First National Bank of Commerce
("Acq. Bank"), on the one hand; and First Bancshares, Inc.
("FB"), and its wholly-owned subsidiary, First Bank ("Bank"), on
the other hand.
PREAMBLE
Acquiror and FB desire to effect a business combination
pursuant to which Acquiror and FB, and their respective
subsidiaries, Acq. Bank and Bank, will merge and the holders of
common stock, $1 par value per share, of FB ("FB Common Stock")
will receive shares of Acquiror common stock. The Board of
Directors of Acquiror and of FB each has approved the Mergers, as
hereinafter defined, and the Board of Directors of FB has
recommended that its shareholders approve the Mergers.
ACCORDINGLY, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. The Mergers
1.01 Mergers. Before the Closing Date, as hereinafter
defined, (i) Acq. Bank and Bank shall enter into an agreement of
merger, substantially in the form attached hereto as Exhibit A
(the "Bank Merger Agreement"), pursuant to which Bank will merge
with and into Acq. Bank (the "Bank Merger"), and (ii) Acquiror
and FB shall enter into a joint agreement of merger,
substantially in the form attached hereto as Exhibit B (the
"Company Merger Agreement" and together with the Bank Merger
Agreement the "Merger Agreements"), pursuant to which FB will
merge with and into Acquiror (the "Company Merger" and together
with the Bank Merger the "Mergers") in each case subject to the
conditions set forth in Section 7 hereof.
SECTION 2. Closing
2.01 The Closing. The "Closing" of the Mergers will take
place at the Board Room of Acq. Bank, 210 Baronne Street, New
Orleans, Louisiana, at 10:00 a.m., Central Time, on a mutually
agreeable date as soon as practicable following satisfaction of
the conditions in subparagraphs (a), (b) and (d) of subsection
7.01 hereof, or if no date has been agreed to, on any date
specified by any party to the others upon 10 days notice
following satisfaction of such conditions. The date on which the
Closing occurs is herein called the "Closing Date". If all
conditions in Section 7 hereof are satisfied or waived by the
party entitled to grant such waiver, at the Closing (a) Acquiror
and Acq. Bank, on the one hand, and FB and Bank, on the other
hand, shall each provide to the other such proof of satisfaction
of the conditions in Section 7 as the party whose obligations are
conditioned upon such satisfaction may reasonably request, (b)
the certificates, letters and opinions required by Section 7
shall be delivered, (c) the appropriate officers of the parties
shall execute, deliver and acknowledge the Merger Agreements, and
(d) the parties shall take such further action as is required to
consummate the transactions contemplated by this Agreement and
the Merger Agreements. If on any date established for the
Closing all conditions in Section 7 hereof have not been
satisfied or waived by the party entitled to grant such waiver,
then any party, on one or more occasions, may declare a delay of
the Closing of such duration, not exceeding 10 business days, as
the declaring party shall select but no such delay shall extend
beyond the date set forth in subparagraph (c) of subsection 8.01,
and no such delay shall interfere with the right of any party to
declare a termination pursuant to Section 8 hereof.
2.02 The Effective Date and Time. Immediately following (or
concurrently with) the Closing (i) the Bank Merger Agreement
shall be filed with the Office of the Comptroller of the Currency
(the "OCC") as provided by law and the Bank Merger will be
effective at the date and time of such filing; and (ii) the
Company Merger Agreement shall be filed with and recorded by the
Secretary of State of Louisiana and the Company Merger shall be
effective at the date and time specified in the Company Merger
Agreement. The date on which and the time at which the Company
Merger becomes effective are herein referred to as the "Effective
Date" and the "Effective Time," respectively.
SECTION 3. Conversion of Stock of FB
3.01 Conversion of Stock of FB. Except for shares as to
which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under Section 131 of the Louisiana Business
Corporation Law (the "BCL"), on the Effective Date, by reason of
the Company Merger, each issued and outstanding share of FB
Common Stock shall be converted as set forth in Section 4 of the
Company Merger Agreement.
3.02 Closing Transfer Books.At the Effective Time, the stock
transfer books of FB shall be closed and no transfer of shares of
FB Common Stock shall be made thereafter.
SECTION 4. Representations and Warranties of FB and Bank
FB and Bank represent and warrant to Acquiror and Acq. Bank
that, except as set forth in the corresponding subsection of the
Schedule of Exceptions that FB and Bank have delivered to
Acquiror and Acq. Bank:
4.01 Consolidated Group; Organization; Qualification. FB's
"consolidated group," as such term is used in this Agreement,
consists of FB, Bank and those corporations listed on Annex A.
FB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana, and is a bank
holding company within the meaning of the Bank Holding Company
Act of 1956, as amended (the "Bank Holding Company Act"). Bank
is a state chartered bank duly organized, validly existing and in
good standing under the laws of the State of Louisiana. Each
corporation listed on Annex A is duly organized, validly existing
and in good standing under the laws of the state of its
incorporation. Each member of FB's consolidated group has all
requisite corporate power and authority to own and lease its
property and to carry on its business as it is currently being
conducted and is qualified and in good standing as a foreign
corporation in all jurisdictions in which the failure to so
qualify would have a material adverse effect on such member's
financial condition, results of operations or business.
4.02 Capital Stock; Other Interests. The authorized capital
stock (i) of FB consists of 907,500 shares of FB Common Stock, of
which 847,668 shares are issued and outstanding, and 119 shares
are held in its treasury, and (ii) of Bank consists of 181,500
shares of common stock, $5 par value per share, of which 181,500
shares are issued and outstanding and no shares are held in its
treasury. All issued and outstanding shares of capital stock of
each member of FB's consolidated group have been duly authorized
and are validly issued, fully paid and (except as provided in
La.R.S. 6:262) non-assessable, and all of the outstanding shares
of each such member (other than FB) are owned by FB or Bank, free
and clear of all liens, charges, security interests, mortgages,
pledges and other encumbrances. No member of FB's consolidated
group has outstanding any stock options or other rights to
acquire any shares of its capital stock. The outstanding capital
stock of each member of FB's consolidated group has been issued
in compliance with all legal requirements and any preemptive or
similar rights. No member of FB's consolidated group has a
subsidiary or direct or indirect ownership interest exceeding 5%
in any corporation, partnership or other entity.
4.03 Corporate Authorization; No Conflicts. Subject to the
approval of this Agreement and the Company Merger Agreement by
the shareholders of FB, all corporate acts and other corporate
proceedings required of each member of FB's consolidated group
for the due and valid authorization, execution, delivery and
performance of this Agreement and the Merger Agreements and
consummation of the Mergers have been validly and appropriately
taken. Subject to such shareholder approval and to such
regulatory approvals as are required by law, this Agreement and
the Merger Agreements are legal, valid and binding obligations of
FB and Bank, as the case may be, and are enforceable against them
in accordance with the respective terms hereof and thereof,
except that enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court
decisions relating to or affecting the enforcement of creditors'
rights generally and by general equitable principles and by
provisions of United States and Louisiana laws relating to
deceptive practices, misstatements or omissions of material facts
in the sale of securities, fraud and gross fault. With respect
to each member of FB's consolidated group, neither the execution,
delivery or performance of this Agreement or the Merger
Agreements, nor the consummation of the transactions contemplated
hereby or thereby will (i) violate, conflict with, or result in a
breach of any provision of, (ii) constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, (iii) result in the termination of
or accelerate the performance required by, or (iv) result in the
creation of any lien, security interest, charge or encumbrance
upon any of its properties or assets under, any of the terms,
conditions or provisions of its articles of incorporation or
association or by-laws or any material note, bond, mortgage,
indenture, deed of trust, lease, license, agreement or other
instrument or obligation to or by which it or any of its assets
is bound; or violate any order, writ, injunction, decree,
statute, rule or regulation of any governmental body applicable
to it or any of its assets.
4.04 Financial Statements, Reports and Proxy Statements.
(a) FB has delivered to Acquiror true and complete
copies of the Financial Statements, Interim Financial Statements
and other documents listed on Annex B.
(b) The Financial Statements and the Interim Financial
Statements have been (and all financial statements delivered to
Acquiror as required by this Agreement will be) prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a basis consistent with prior periods, and present
fairly, in conformity with GAAP, the consolidated results of
operations of FB's consolidated group for the respective periods
covered thereby and the consolidated financial condition of its
consolidated group as of the respective dates thereof. All call
and other regulatory reports have been filed on the appropriate
form and prepared in accordance with such form's instructions and
the applicable rules and regulations of the regulating federal
agency. As of the date of the latest balance sheet forming part
of the Interim Financial Statements (the "Latest Balance Sheet"),
no member of FB's consolidated group had, nor were any of any
such member's assets subject to, any material liability,
commitment, indebtedness or obligation, which is not reflected
and adequately reserved against in the Latest Balance Sheet in
accordance with GAAP. No report, including any report filed with
the Federal Reserve Board, or other report, proxy statement or
registration statement filed by any member of FB's consolidated
group with the Securities and Exchange Commission ("SEC"), and no
report made to shareholders of FB, as of the respective dates
thereof, contained and no such report, proxy statement,
registration statement or report to shareholders filed or
disseminated after the date of this Agreement will contain, any
untrue statement of a material fact or omitted, or will omit, to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Financial
Statements and Interim Financial Statements are supported by and
consistent with a general ledger and detailed trial balances of
investment securities, loans and commitments, depositors'
accounts and cash balances on deposit with other institutions,
copies of which have been made available to Acquiror.
4.05 Loan and Investment Portfolios. All loans, discounts
and financing leases (in which a member of FB's consolidated
group is lessor) reflected on the Latest Balance Sheet (a) were,
at the times and under the circumstances in which made, made for
good, valuable and adequate consideration in the ordinary course
of business of its consolidated group, (b) are evidenced by
genuine notes, agreements or other evidences of indebtedness and
(c) to the extent secured, have been secured by valid liens and
security interests which have been perfected. Accurate lists of
all such loans, discounts and financing leases as of the date of
the Latest Balance Sheet (or a more recent date), and of the
investment portfolios of each member of FB's consolidated group
as of such date, have been delivered to Acquiror. Except as
specifically noted on the loan schedule attached to the Schedule
of Exceptions, Bank is not a party to any written or oral loan
agreement, note or borrowing arrangement, including any loan
guaranty, that was, as of the most recent month-end (i)
delinquent by more than 30 days in the payment of principal or
interest, (ii) known by Bank to be otherwise in material default
for more than 30 days, (iii) classified as "substandard,"
"doubtful," "loss," "other assets especially mentioned" or any
comparable classification by Bank or the Federal Deposit
Insurance Corporation, (iv) an obligation of any director,
executive officer or 10% shareholder of any member of FB's
consolidated group who is subject to Regulation O of the Federal
Reserve Board (12 C.F.R. Part 215), or any person, corporation or
enterprise controlling, controlled by or under common control
with any of the foregoing, or (v) in violation of any law,
regulation or rule of any governmental authority, other than
those that are immaterial in amount.
4.06 Adequacy of Allowances for Loan Losses. Each of the
allowances for losses on loans, financing leases and other real
estate owned shown on the Latest Balance Sheet is adequate in
accordance with applicable regulatory guidelines and GAAP in all
material respects, and there are no facts or circumstances known
to any executive officer of FB or Bank which are likely to
require in accordance with applicable regulatory guidelines or
GAAP a future material increase in any of such provisions for
losses or a material decrease in the allowances therefor
reflected in the Latest Balance Sheet. Each of the allowances
for losses on loans, financing leases and other real estate owned
reflected on the books of FB's consolidated group at all times
from and after the date of the Latest Balance Sheet has been and
will be adequate in accordance with applicable regulatory
guidelines and GAAP in all material respects.
4.07 Absence of Certain Changes or Events. Since December
31, 1993, neither FB nor any member of FB's consolidated group
has declared, set aside for payment or paid any dividend to
holders of, or declared or made any distribution on, any shares
of FB's capital stock. Since the date of the Latest Balance
Sheet, there has been no event or condition of any character
(whether actual or to the knowledge of any executive officer of
FB or Bank threatened) that has had, or can reasonably be
anticipated to have, a material adverse effect on the financial
condition, results of operations or business of any member of
FB's consolidated group, taken as a whole. Except as may result
from the transactions contemplated by this Agreement, no such
member has, since the date of the Latest Balance Sheet:
(a) borrowed any money or entered into any capital
lease or leases or, except in the ordinary course of business
consistent with past practices, (i) lent any money or pledged any
of its credit in connection with any aspect of its business, (ii)
mortgaged or otherwise subjected to any lien, encumbrance or
other liability any of its assets, (iii) sold, assigned or
transferred any of its assets in excess of $100,000 in the
aggregate, except for the sale of raw land behind the Mandeville
Branch Office, or (iv) incurred any material liability,
commitment, indebtedness or obligation (of any kind whatsoever,
whether absolute or contingent);
(b) suffered any material damage, destruction or loss,
whether or not covered by insurance;
(c) experienced any material change in asset
concentrations as to customers or industries or in the nature and
source of its liabilities or in the mix of interest-bearing
versus non-interest bearing deposits;
(d) received notice or had knowledge or reason to
believe that any material labor unrest exists among any of its
employees or that any group, organization or union has attempted
to organize any of its employees;
(e) received notice or had knowledge or reason to
believe that any of its substantial customers has terminated or
intends to terminate such customer's relationship with it;
(f) failed to operate its business in the ordinary
course consistent with past practices, or failed to preserve its
business organization intact or to preserve the goodwill of its
customers and others with whom it has business relations;
(g) incurred any material loss except for losses
adequately reserved against on the date of this Agreement or
waived any material right in connection with any aspect of its
business, whether or not in the ordinary course of business;
(h) forgiven any debt owed to it in excess of
$100,000, or canceled any of its claims in excess of $100,000, or
paid any of its noncurrent obligations or liabilities in excess
of $25,000;
(i) made any capital expenditure or capital addition
or betterment in excess of $25,000 each;
(j) entered into any agreement requiring the payment,
conditionally or otherwise, of any salary, bonus, extra
compensation, pension or severance payment to any of its present
or former directors, officers or employees, except for (i) that
certain Executive Employment Agreement, dated as of April 19,
1994, between the Bank and James C. Piercey, (ii) those certain
retention agreements between the Bank and its executive officers
and its department and branch managers and lending personnel,
(iii) the adoption of a severance policy in the event of an
acquisition transaction, (iv) incentive pay arrangements for the
Bank's lenders and branch management, (v) budgeted bonuses for
the Bank's senior management consistent with past practices and
(vi) such agreements as are terminable at will without any
penalty or other payment by it, or increased (except for
increases of not more than 5% consistent with past practices) the
compensation (including salaries, fees, bonuses, profit sharing,
incentive, pension, retirement or other similar payments) of any
such person whose annual compensation would, following such
increase, exceed $30,000, except as may be provided in the
exceptions to the first clause of this paragraph (j);
(k) changed any accounting practice followed or
employed in preparing the Financial Statements or Interim
Financial Statements except changes required to be made in
accordance with GAAP;
(l) made any loan, given any discount or entered into
any financing lease which has not been (i) made, at the time and
under the circumstances in which made, for good, valuable and
adequate consideration in the ordinary course of business, (ii)
evidenced by genuine notes or other evidences of indebtedness and
(iii) fully reserved against in an amount sufficient in
accordance with applicable regulatory guidelines to provide for
all charge-offs reasonably anticipated in the ordinary course of
business after taking into account all recoveries reasonably
anticipated in the ordinary course of business; or
(m) entered into any agreement, contract or commitment
to do any of the foregoing.
4.08 Taxes. Each member of FB's consolidated group has
timely filed all federal, state and local income, franchise,
excise, real and personal property, employment and other tax
returns, tax information returns and reports required to be
filed, has paid all taxes, interest payments and penalties as
reflected therein which have become due, has made adequate
provision for the payment of all such taxes for all periods
ending on or before the date of this Agreement (and will make
such accruals through the Closing Date) to any city, parish,
state, the United States or any other taxing authority, and is
not delinquent in the payment of any tax or material governmental
charge of any nature. The consolidated federal income tax returns
of FB's consolidated group have not been audited by the Internal
Revenue Service for the last seven years. No audit, examination
or investigation is presently being conducted or, to the
knowledge of FB's executive officers, is presently being
threatened by any taxing authority, no material unpaid tax
deficiencies or additional liabilities of any sort have been
proposed to any member of FB's consolidated group by any
governmental representative, and no agreements for extension of
time for the assessment of any tax have been entered into by or
on behalf of any member of FB's consolidated group. Each such
member has withheld from its employees (and timely paid to the
appropriate governmental entity) proper and accurate amounts for
all periods in compliance with all tax withholding provisions of
applicable federal, state and local laws (including, without
limitation, income, social security and employment tax
withholding for all forms of compensation).
4.09 Title to Assets. (a) On the date of the Latest Balance
Sheet, each member of FB's consolidated group had and, except
with respect to assets disposed of for adequate consideration in
the ordinary course of business since such date, now has, good
and merchantable title to all real property and good and
merchantable title to all other material properties and assets
reflected on the Latest Balance Sheet, and has good and
merchantable title to all real property and good and merchantable
title to all other material properties and assets acquired since
the date of the Latest Balance Sheet, in each case free and clear
of all mortgages, liens, pledges, restrictions, security
interests, charges and encumbrances of any nature except for (i)
mortgages and encumbrances which secure indebtedness which is
properly reflected in the Latest Balance Sheet or which secure
deposits of public funds as required by law; (ii) liens for taxes
accrued but not yet payable; (iii) liens arising as a matter of
law in the ordinary course of business with respect to
obligations incurred after the date of the Latest Balance Sheet,
provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (iv) such
imperfections of title and encumbrances, if any, as do not
materially detract from the value or materially interfere with
the present use of any of such properties or assets or the
potential sale of any of such owned properties or assets; and (v)
capital leases and leases, if any, to third parties for fair and
adequate consideration. Each member of FB's consolidated group
owns, or has valid leasehold interests in, all material
properties and assets used in the conduct of its business. Any
real property and other material assets held under lease by any
such member are held under valid, subsisting and enforceable
leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made by such member
of such property.
(b) With respect to each lease of any real property or
a material amount of personal property to which any member of
FCB's consolidated group is a party, except for financing leases
in which a member of such consolidated group is lessor, (i) such
lease is in full force and effect in accordance with its terms;
(ii) all rents and other monetary amounts that have become due
and payable thereunder have been paid; (iii) there exists no
default, or event, occurrence, condition or act, which with the
giving of notice, the lapse of time or the happening of any
further event, occurrence, condition or act would become a
default under such lease; and (iv) neither the Company Merger nor
the Bank Merger will constitute a default or a cause for
termination or modification of such lease.
(c) No member of FB's consolidated group has any legal
obligation, absolute or contingent, to any other person to sell
or otherwise dispose of any substantial part of its assets; or to
sell or dispose of any of its assets except in the ordinary
course of business consistent with past practices.
4.10 Litigation. (a) Except for the actions listed on the
subsection of the Schedule of Exceptions that corresponds to this
subsection, there are no material claims, actions, suits,
proceedings, arbitrations or investigations pending or, to the
knowledge of any executive officer of FB, threatened against FB
or any member of its consolidated group nor does any executive
officer of FB have knowledge of any facts or circumstances that
would be likely to form the basis for any material claim, in any
court or before or by any governmental agency or instrumentality
or arbitration panel or otherwise, against any member of FB's
consolidated group.
(b) The subsection of the Schedule of Exceptions that
corresponds to this subsection lists each claim, action, suit,
proceeding, arbitration, or investigation, pending or known to be
threatened, in which any material claim or demand is made or, to
the knowledge of any executive officer of FB, threatened to be
made against any member of FB's consolidated group or any person
by reason of his or her being or having been an officer,
director, advisory director or employee of any such member.
4.11 Employee Benefit Plans. (a) Except for the plans
listed on the subsection of the Schedule of Exceptions that
corresponds to this subsection (the "ERISA Plans"), no member of
FB's consolidated group sponsors, maintains or contributes to,
and no such member has at any time sponsored, maintained or
contributed to, any employee benefit plan that is subject to any
of the provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in which any employee of any such
member is or was a participant (whether or not on an active or
frozen basis). Except as set forth in the Schedule of
Exceptions, all contributions required to be made by any member
of FB's consolidated group have been made, all insurance premiums
required have been paid and each of the ERISA Plans has been
maintained and administered in all material respects in
compliance with its terms, the provisions of ERISA and all other
applicable laws, and, where applicable, the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"). With
respect to each of the ERISA Plans, no transaction has occurred
that could result in the imposition of a tax or penalty on
prohibited transactions or party-in-interest transactions
pursuant to Section 4975 of the Code or Section 502(i) of ERISA;
there is no matter relating to any of the ERISA Plans pending or,
to the knowledge of any executive officer of FB, threatened, nor,
to the knowledge of any executive officer of FB, are there any
facts or circumstances existing that could lead to (other than
routine filings such as qualification determination filings)
proceedings before, or administrative actions by, any
governmental agency; there are no actions, suits or claims
pending or, to the knowledge of any executive officer of FB,
threatened (including, without limitation, breach of fiduciary
duty actions, but excluding routine uncontested claims for
benefits) against any of the ERISA Plans or the assets thereof.
Each member of FB's consolidated group has complied in all
material respects with the reporting and disclosure requirements
of ERISA and the Code. None of the ERISA Plans are multi-
employer plans within the meaning of Section 3(37) of ERISA.
Except as set forth on the Schedule of Exceptions, a favorable
determination letter has been issued by the Internal Revenue
Service with respect to each ERISA Plan that is intended to be
qualified under Section 401(a) of the Code, the Internal Revenue
Service has taken no action to revoke any such letter and nothing
has occurred, whether by action or failure to act, which would
cause the loss of such qualification. Except as set forth on the
Schedule of Exceptions, no member of FB's consolidated group has
sponsored, maintained or made contributions to any plan, fund or
arrangement subject to Title IV of ERISA or the requirements of
Section 412 of the Code or providing for post-retirement medical
benefits or insurance coverage or other similar benefits.
(b) Set forth on the subsection of the Schedule of
Exceptions corresponding to this subsection is a true and
complete list and description of each and every benefit plan and
benefit arrangement of any member of FB's consolidated group
other than the ERISA Plans. True and complete copies of all plan
(including ERISA Plan) documents and written agreements
(including all amendments and modifications thereof), together
with copies of any tax determination letters, trust agreements,
summary plan descriptions, insurance contracts, investment
management agreements and the three most recent annual reports on
form series 5500 with respect to such plan or arrangement have
been delivered to Acquiror. No such ERISA Plan or other plan
constitutes a defined benefit pension plan or has any
"accumulated funding deficiency" within the meaning of the Code.
(c) All group health plans of any member of FB's
consolidated group to which Section 4980B(f) of the Code or
Section 601 of ERISA applies are in compliance in all material
respects with continuation coverage requirements of Section
4980B(f) of the Code and Section 601 of ERISA and any prior
violations of such sections have been cured prior to the date
hereof.
(d) Except as contemplated by Sections 6.20 and 6.21
hereof, the consummation of the transactions contemplated
hereunder will not (i) result in the imposition of any obligation
or liability on any member of FB's consolidated group, Acquiror
or Acq. Bank to any such plan, fund or arrangement or to any
employee or former employee of any member of FB's consolidated
group or (ii) result in a prohibited transaction as such term is
used in Code Section 4975 or ERISA Section 406.
(e) Each plan, fund or arrangement previously
sponsored or maintained by any member of FB's consolidated group,
or to which any member of FB's consolidated group previously made
contributions which has been terminated by any member of FB's
consolidated group was terminated in accordance with ERISA, the
Code and the terms of such plan, fund or arrangement and no event
has occurred and no condition exists that would subject any
member of FB's consolidated group, Acquiror, or Acq. Bank to any
tax, penalty, fine or other liability as a result of, directly or
indirectly, the termination of such plan, fund or arrangement.
4.12 Insurance Policies. Each member of FB's consolidated
group maintains in force insurance policies and bonds in such
amounts and against such liabilities and hazards as are
considered by it to be adequate. An accurate list of all such
insurance policies is attached to the Schedule of Exceptions. No
member of FB's consolidated group is now liable, nor will any
such member become liable, for any material retroactive premium
adjustment. All policies are valid and enforceable and in full
force and effect, and no member of FB's consolidated group has
received any notice of a material premium increase or
cancellation with respect to any of its insurance policies or
bonds. Within the last three years, no member of FB's
consolidated group has been refused any basic insurance coverage
sought or applied for (other than certain exclusions for coverage
of certain events or circumstances as stated in such polices),
and no such member has reason to believe that its existing
insurance coverage cannot be renewed as and when same shall
expire, upon terms and conditions standard in the market at the
time renewal is sought.
4.13 Agreements. (a) No member of FB's consolidated group
is a party to:
(i) any collective bargaining agreement;
(ii) other than the employee benefits and plans
referred to in the section of the Schedule of
Exceptions that corresponds to subsection 4.11 of this
Agreement, any employment or other agreement or
contract with or commitment to any employee except the
agreements, arrangements, policies and practices
referred to in the exceptions to paragraph (j) of
subsection 4.07 of this Agreement and such agreements
as are terminable without penalty upon not more than 30
days notice by the employer;
(iii) any obligation of guaranty or
indemnification except such indemnification of
officers, directors, employees and agents of FB's
consolidated group as on the date of this Agreement may
be provided in their respective articles of
incorporation or association and by-laws (and no
indemnification of any such officer, director, employee
or agent has been authorized, granted or awarded except
as set forth in the subsection of the Schedule of
Exceptions that corresponds with this subsection), and
except if entered into in the ordinary course of
business with respect to customers of any member of
FB's consolidated group, letters of credit, guaranties
of endorsements and guaranties of signatures;
(iv) any agreement, contract or commitment which
is or if performed will be materially adverse to the
financial condition, results of operations or business
of any member of FB's consolidated group;
(v) any agreement, contract or commitment
containing any covenant limiting the freedom of any
member of FB's consolidated group to engage in any line
of business or to compete with any person in a line of
business permitted by applicable regulatory guidelines
to be engaged in by bank holding companies or Louisiana
state banks, or their subsidiaries; or
(vi) any written agreement, memorandum, letter,
order or decree, formal or informal, with any federal
or state regulatory agency.
(b) The subsection of the Schedule of Exceptions that
corresponds to this subsection contains a list of each material
agreement, contract or commitment (except those entered into in
the ordinary course of business with respect to loans, lines of
credit, letters of credit, depositor agreements, certificates of
deposit and similar banking activities and equipment maintenance
agreements which are not material) to which any member of FB's
consolidated group is a party or which affects any such member.
No member of FB's consolidated group has in any material respect
breached, nor is there any pending or to any of its executive
officers' knowledge threatened claim that it has materially
breached, any of the terms or conditions of any of such
agreements, contracts or commitments or of any material
agreement, contract or commitment that it enters into after the
date of this Agreement. No member of FB's consolidated group is
in material violation of any written agreement, memorandum,
letter, order or decree, formal or informal, with any federal or
state regulatory agency.
4.14 Licenses, Franchises and Governmental Authorizations.
Each member of FB's consolidated group possesses all licenses,
franchises, permits and other governmental authorizations
necessary for the continued conduct of its business without
interference or interruption. The deposits of Bank are insured
by the FDIC to the extent provided by applicable law, and there
are no pending or to any of Bank's executive officers' knowledge
threatened proceedings to revoke or modify that insurance or for
relief under 12 U.S.C. Section 1818.
4.15 Corporate Documents. FB has delivered to Acquiror,
with respect to each member of FB's consolidated group, true and
correct copies of its articles of incorporation or association,
and its by-laws, all as amended. All of the foregoing and all of
the corporate minutes and stock transfer records of each member
of FB's consolidated group are current, complete and correct in
all material respects.
4.16 Certain Transactions. Except as disclosed in the
subsection of the Schedule of Exceptions that corresponds to this
subsection, no past or present director, executive officer or
five percent shareholder of FB has, since January 1, 1990,
engaged in any transaction or series of transactions which, if FB
had been subject to Section 14(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), would have been
required to be disclosed pursuant to Item 404 of Regulation S-K
of the Rules and Regulations of the Securities Exchange Committee
(the "SEC"), and no director or executive officer of Bank has,
since January 1, 1990, engaged in any transaction or series of
transactions which, if Bank had been subject to Section 14(a) of
the Exchange Act, would have been required to be disclosed under
Item 404 of Regulation S-K of the Rules and Regulations of the
SEC.
4.17 Broker's or Finder's Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of any member of FB's consolidated group
is entitled to any commission, broker's or finder's fee from any
of the parties hereto in connection with any of the transactions
contemplated by this Agreement, except for the financial advisor
retained by FB pursuant to the written agreement which has been
delivered to Acquiror.
4.18 Environmental Matters.
(a) (i) Each member of FB's consolidated group has
obtained all material permits, licenses and other
authorizations that are required to be obtained by it
under any applicable Environmental Law Requirements (as
hereinafter defined) in connection with the operation
of its businesses and ownership of its properties
(collectively, the "Subject Properties"), including
without limitation properties acquired by foreclosure
or in settlement of loans;
(ii) Except as disclosed in the subsection of the
Schedule of Exceptions that corresponds to this
subsection, FB and each member of its consolidated
group is in compliance in all material respects with
all terms and conditions of such permits, licenses and
authorizations and with all applicable Environmental
Law Requirements;
(iii) Except as disclosed in the subsection of the
Schedule of Exceptions that corresponds to this
subsection, there are no past or present events,
conditions, circumstances, activities or plans by any
member of FB's consolidated group related in any manner
to FB or any member of its consolidated group or the
Subject Properties that did or would, in any material
respect, violate or prevent compliance or continued
compliance with any of the Environmental Law
Requirements or give rise to any Environmental
Liability, as hereinafter defined;
(iv) Except as set forth in the Schedule of
Exceptions pursuant to clause (iii) above, there is no
civil, criminal or administrative action, suit, demand,
claim, order, judgment, hearing, notice or demand
letter, notice of violation, investigation or
proceeding pending or to the knowledge of the executive
officers of FB's consolidated group threatened by any
person against FB or any member of its consolidated
group, or any prior owner of any of the Subject
Properties and relating to the Subject Properties, and
relating in any way to any Environmental Law
Requirement, or seeking to impose any Environmental
Liability; and
(v) No member of FB's consolidated group is
subject to or responsible for any material
Environmental Liability which is not set forth and
adequately reserved against on the Latest Balance
Sheet.
(b) "Environmental Law Requirement" means all
applicable statutes, regulations, rules, ordinances, codes,
licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items, of all
governmental agencies, departments, commissions, boards,
bureaus, or instrumentalities of the United States, states
and political subdivisions thereof and all applicable
judicial, administrative, and regulatory decrees, judgments
and orders relating to the protection of human health or the
environment, including without limitation: (A) all
requirements, including but not limited to, those (i)
pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges,
releases or threatened releases of Hazardous Materials (as
such term is defined below), chemical substances,
pollutants, contaminants, or hazardous or toxic substances,
materials or wastes whether solid, liquid, or gaseous in
nature, into the air, surface water, groundwater, or land,
or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
Hazardous Materials, chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials or
wastes, whether solid, liquid, or gaseous in nature; (B) all
requirements pertaining to protection of the health and
safety of employees or the public; and (C) all requirements
pertaining to the (i) drilling, production, and abandonment
of oil and gas wells, (ii) the transportation of produced
oil and gas, and (iii) the remediation of sites related to
that drilling, production or transportation.
(c) "Hazardous Materials" shall mean: (A) Any
"hazardous substance" as defined by either the Comprehensive
Environmental Response, Compensation and Liability Act of
1980 (42 USC Section 9601, et seq.) ("CERCLA"), as amended
from time to time, or regulations promulgated thereunder; (B)
asbestos; (C) polychlorinated byphenyls; (D) any "regulated
substance" as defined by 40 C.F.C. Section 280.12, or La.
Admin. Code 33:XI.103; (E) any naturally occurring
radioactive material ("NORM"), as defined by La. Admin.
Code 33:XV, Chapter 14, as amended from time to time,
irrespective of whether the NORM is located in
Louisiana or another jurisdiction; (F) any non-hazardous
oilfield wastes ("NOW") defined under La. R.R. 30:1, et
seq., and regulations promulgated thereunder, irrespective
of whether those wastes are located in Louisiana or another
jurisdiction; (G) any substance the presence of which on the
Subject Properties is prohibited by any lawful rules and
regulations of legally constituted authorities from time
to time in force and effect relating to the Subject
Properties; and (H) any other substance which by any such
rule or regulation requires special handling in its
collection, storage, treatment or disposal.
(d) "Environmental Liability" shall mean (i) any
liability or obligation arising under any Environmental Law
Requirement, or (ii) any liability or obligation under any
other current theory of law or equity (including, without
limitation, any liability for personal injury, property
damage or remediation) that results from, or is based upon
or related to, the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or
the emission, discharge, release or threatened release into
the environment, of any Hazardous Material, pollutant,
contaminant, chemical, or industrial, toxic or hazardous
substance or waste.
4.19 Compliance with Laws. The business of each member of
FB's consolidated group has been conducted in compliance with all
applicable laws, rules, regulations, orders, writs, judgments and
decrees the noncompliance with which could cause a material
adverse change with respect to FB's consolidated group or could
have a material adverse effect on the financial condition,
results of operations or business of FB's consolidated group
taken as a whole. There are no governmental investigations
pending or known by any executive officer of any member of FB's
consolidated group to be threatened against any such member.
There are no material uncured violations, or violations with
respect to which material refunds or restitution may be required,
cited in any compliance report to any member of FB's consolidated
group as a result of examination by any bank or bank holding
company regulatory authority, except those cited in examination
reports previously submitted to, and reviewed by, Acquiror.
4.20 Intellectual Property. Each member of FB's
consolidated group owns all trademarks, tradenames, service marks
and other intellectual property that is material to the conduct
of its business.
4.21 Community Reinvestment Act. Bank has complied in all
material respects with the provisions of the Community
Reinvestment Act ("CRA") and the rules and regulations
thereunder, has a CRA rating of not less than "satisfactory," has
received no material criticism from regulators with respect to
discriminatory lending practices, and has no knowledge of any
conditions or circumstances that are likely to result in a CRA
rating of less than "satisfactory" or material criticism from
regulators with respect to discriminatory lending practices.
4.22 Representations and Warranties. Each of the
representations and warranties contained in Section 4 is true and
correct on the date of this Agreement and will be true and
correct on the Closing Date, as if made again on and as of the
Closing Date.
4.23 Accuracy of Statements. No warranty or representation
made or to be made by any member of FB's consolidated group in
this Agreement or in any document furnished or to be furnished by
any member of FB's consolidated group pursuant to this Agreement,
and no information furnished by any such member pursuant to this
Agreement, contains or will contain, as of the date of this
Agreement, the effective date of the Registration Statement, as
defined in subsection 6.15 hereof, or the Closing Date, an untrue
statement of a material fact or an omission of a material fact
necessary to make the statements contained herein and therein, in
light of the circumstances in which they are made, not
misleading.
SECTION 5. Representations and Warranties of Acquiror and Acq.
Bank
Acquiror and Acq. Bank represent and warrant to FB and
Bank that:
5.01 Organization and Qualification. Acquiror is a
corporation duly organized and validly existing under the laws of
the State of Louisiana and is a bank holding company within the
meaning of the Bank Holding Company Act. Acq. Bank is a national
banking association duly organized and validly existing under the
laws of the United States. Each of Acquiror and Acq. Bank has
all requisite corporate power and authority to own and lease its
property and to carry on its business as it is currently being
conducted and, as to Acquiror, is qualified and in good standing
as a foreign corporation in all jurisdictions in which the
failure to so qualify would have a material adverse effect on its
financial condition, results of operations or business.
5.02 Capital Stock: Other Interests. The authorized capital
stock of Acquiror consists of 100,000,000 shares of Acquiror
Common Stock, $5 par value per share, of which, at March 31,
1994, 26,144,036 shares were issued and outstanding and no shares
were held in its treasury; and 5,000,000 shares of preferred
stock, no par value per share, of which 2,399,170 shares were
issued and outstanding and no shares were held in its treasury.
All issued and outstanding shares of capital stock of Acquiror
and Acq. Bank have been duly authorized and are validly issued,
fully paid and non-assessable. The outstanding capital stock of
each of Acquiror and Acq. Bank has been issued in compliance with
all legal requirements and any preemptive or similar rights.
Acquiror owns all of the issued and outstanding shares of capital
stock of Acq. Bank free and clear of all liens, charges, security
interests, mortgages, pledges and other encumbrances. Neither
Acquiror nor Acq. Bank has outstanding as of March 31, 1994 any
stock options or other rights to acquire any shares of its
capital stock, other than (i) stock options and restricted stock
granted or issued under existing stock compensation plans, (ii)
Acquiror's 12 3/4% convertible debentures and (iii) Acquiror's
convertible preferred stock.
5.03 Corporate Authorization; No Conflicts. Subject to the
approval of this Agreement and the Bank Merger Agreement by
Acquiror as sole shareholder of Acq. Bank, all corporate acts and
other proceedings required of Acquiror and Acq. Bank for the due
and valid authorization, execution, delivery and performance of
this Agreement and the Merger Agreements and consummation of the
Mergers have been validly and appropriately taken. Subject to
such shareholder approval and to such regulatory approvals as are
required by law, this Agreement and the Merger Agreements are
legal, valid and binding obligations of Acquiror and Acq. Bank,
as the case may be, and are enforceable against them in
accordance with the respective terms of such agreements, except
that enforcement may be limited by bankruptcy, reorganization,
insolvency and other similar laws and court decisions relating to
or affecting the enforcement of creditors' rights generally and
by general equitable principles and by provisions of United
States and Louisiana laws relating to deceptive practices,
misstatements or omissions of material facts in the sale of
securities, fraud and gross fault. With respect to each of
Acquiror and Acq. Bank, neither the execution, delivery or
performance of this Agreement or the Merger Agreements, nor the
consummation of the transactions contemplated hereby or thereby
will (i) violate, conflict with, or result in a breach of any
provision of, (ii) constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, (iii) result in the termination of or accelerate the
performance required by, or (iv) result in the creation of any
lien, security interest, charge or encumbrance upon any of its
properties or assets under, any of the terms, conditions or
provisions of its articles of incorporation or association or by-
laws or any material note, bond, mortgage, indenture, deed of
trust, lease, license, agreement or other instrument or
obligation to or by which it or any of its assets is bound; or
violate any order, writ, injunction, decree, statute, rule or
regulation of any governmental body applicable to it or any of
its assets.
5.04 Financial Statements, Reports and Proxy Statements.
(a) Acquiror has delivered to FB true and complete
copies of the Financial Statements, Interim Financial Statements
and other documents listed on Annex C.
(b) The Financial Statements and the Interim Financial
Statements have been prepared in conformity with GAAP applied on
a basis consistent with prior periods, and present fairly, in
conformity with GAAP, the consolidated results of operations of
Acquiror's consolidated group for the respective periods covered
thereby and the consolidated financial condition of its
consolidated group as of the respective dates thereof. All call
reports have been filed on the appropriate form and prepared in
accordance with such form's instructions and the applicable rules
and regulations of the regulating federal agency. As of the date
of the latest balance sheet forming part of the Interim Financial
Statements (the "Latest Balance Sheet"), no member of Acquiror's
consolidated group had, nor were any of any of such member's
assets subject to, any material liability, commitment,
indebtedness or obligation, which is not reflected and adequately
reserved against in the Latest Balance Sheet in accordance with
GAAP.
5.05 Legality of Acquiror Securities. All shares of
Acquiror Common Stock to be issued pursuant to the Company Merger
have been duly authorized and, when issued pursuant to the
Company Merger Agreement, will be validly and legally issued,
fully paid and non-assessable, and will be, at the time of their
delivery, free and clear of all liens, charges, security
interests, mortgages, pledges and other encumbrances and any
preemptive or similar rights.
5.06 Broker's or Finder's Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of Acquiror or Acq. Bank is entitled to
any commission, broker's or finder's fee from any of the parties
hereto in connection with any of the transactions contemplated by
this Agreement.
5.07 Litigation. Except as disclosed by Acquiror in any
report filed by it with the SEC prior to the date of this
Agreement, there are no material actions, suits, proceedings,
arbitrations or investigations pending or, to its executive
officers' knowledge, threatened against Acquiror or its
consolidated subsidiaries which are required to be disclosed
pursuant to Items 3 and 5 of Form 8-K, Items 1 and 5 of Form 10-Q
and Item 103 of Regulation S-K of the SEC's Rules and Regulations
nor does any executive officer of Acquiror or any member of its
consolidated group have knowledge of any facts or circumstances
that would be likely to form the basis for any material claim, in
any court or before or by any governmental agency or
instrumentality or arbitration panel or otherwise, against any
member of Acquiror's consolidated group.
5.08 Environmental Matters. (a) Each of Acquiror and Acq.
Bank has obtained all material permits, licenses and other
authorizations that are required to be obtained by it under any
applicable Environmental Law Requirements in connection with the
operation of its businesses and ownership of its properties,
including without limitation properties acquired by foreclosure
or in settlement of loans (collectively, the "Acquiror's Subject
Properties").
(b) Acquiror and each member of its consolidated
group is in compliance in all material respects with all terms
and conditions of such permits, licenses and authorizations and
with all applicable Environmental Law Requirements.
(c) There are no past or present events, conditions,
circumstances, activities or plans by Acquiror or Acq. Bank
related in any manner to Acquiror or any member of its
consolidated group or the Acquiror's Subject Properties that did
or would, in any material respect, violate or prevent compliance
or continued compliance with any of the Environmental Law
Requirements, or give rise to any Environmental Liability.
(d) There is no civil, criminal or administrative
action, suit, demand, claim, order, judgment, hearing, notice or
demand letter, notice or violation, investigation or proceeding
pending or, to the knowledge of any of the executive officers of
Acquiror's consolidated group, threatened by any person against
Acquiror or any member of its consolidated group, or any prior
owner of the Acquiror's Subject Properties and relating to the
Acquiror's Subject Properties, and relating in any way to any
Environmental Law Requirement, or seeking to impose any
Environmental Liability.
5.09 Regulatory Matters. During the last five years,
neither Acquiror nor any of its banking subsidiaries has received
a Community Reinvestment Act rating of less than "satisfactory"
and, during the same period, neither Acquiror nor any of its
banking subsidiaries has been cited for discriminatory lending
practices by any of its regulatory authorities.
5.10 Accuracy of Statements. No warranty or representation
made or to be made by Acquiror or Acq. Bank in this Agreement or
in any document furnished or to be furnished by Acquiror or Acq.
Bank pursuant to this Agreement, and no information furnished by
either pursuant to this Agreement, contains or will contain, as
of the date of this Agreement, the effective date of the
Registration Statement, as defined in subsection 6.15 hereof, and
the Closing Date, an untrue statement of a material fact or an
omission of a material fact necessary to make the statements
contained herein and therein, in light of the circumstances in
which they are made, not misleading.
SECTION 6.Covenants and Conduct of Parties Prior to the Effective
Date
The parties further covenant and agree as follows:
6.01 Cooperation and Best Efforts. Each of the parties
hereto will cooperate with the other parties and use its best
efforts to (a) procure all necessary consents and approvals of
third parties, (b) complete all necessary filings, registrations,
applications, schedules and certificates, (c) satisfy all
requirements prescribed by law for, and all conditions set forth
in this Agreement to, the consummation of the Mergers and the
transactions contemplated hereby and by the Merger Agreements,
and (d) effect the transactions contemplated by this Agreement
and the Merger Agreements at the earliest practicable date.
6.02 Information for, and Preparation of, Registration
Statement and Proxy Statement. Each of the parties hereto will
cooperate in the preparation of the Registration Statement
referred to in subsection 6.15 hereof and a proxy statement of FB
(the "Proxy Statement") which complies with the requirements of
the Securities Act of 1933 (the "Securities Act"), the rules and
regulations promulgated thereunder and other applicable federal
and state laws, for the purpose of submitting this Agreement, the
Company Merger Agreement and the transactions contemplated hereby
and thereby, and any amendments to FB's articles of incorporation
required by the aforesaid agreements and transactions to FB's
shareholders for approval. Each of the parties hereto will as
promptly as practicable after the date hereof furnish all such
data and information relating to it and its subsidiaries as any
of the other parties may reasonably request for the purpose of
including such data and information in the Registration Statement
and the Proxy Statement.
6.03 Approval of Bank Merger Agreement. Acquiror, as the
sole shareholder of Acq. Bank, and FB, as the sole shareholder of
Bank, shall take all action necessary to effect shareholder
approval of the Bank Merger Agreement.
6.04 Press Releases. Acquiror and FB will cooperate with
each other in the preparation of any press releases announcing
the execution of this Agreement or the consummation of the
transactions contemplated hereby. Without the prior written
consent of Acquiror, no member of FB's consolidated group will
issue any press release or other written statement for general
circulation relating to the transactions contemplated hereby,
except as may otherwise be required by law.
6.05 Investigations; Planning. Each member of FB's
consolidated group shall continue to provide to Acquiror and Acq.
Bank and to their authorized representatives full access during
all reasonable times to its premises, properties, books and
records (including, without limitation, all corporate minutes and
stock transfer records), and to furnish Acquiror and Acq. Bank
and such representatives with such financial and operating data
and other information of any kind respecting its business and
properties as Acquiror and Acq. Bank shall from time to time
reasonably request. Any investigation shall be conducted in a
manner which does not unreasonably interfere with the operation
of the business of FB's consolidated group. Each member of FB's
consolidated group agrees to cooperate with Acquiror and Acq.
Bank in connection with planning for the efficient and orderly
combination of the parties and the operation of Acquiror and Acq.
Bank after consummation of the Mergers. In the event of
termination of this Agreement prior to the Effective Date,
Acquiror and Acq. Bank shall, except to any extent necessary to
assert any rights under this Agreement or the Merger Agreements,
return, without retaining copies thereof, or destroy (and certify
to same under penalty of perjury) all confidential or non-public
documents, work papers and other materials obtained from FB's
consolidated group in connection with the transactions
contemplated hereby and shall keep such information confidential,
not disclose such information to any other person or entity
except as may be required by legal process, and not use such
information in connection with its business, and shall cause all
of its employees, agents and representatives to keep such
information confidential and not to disclose such information or
to use it in connection with its business, in each case unless
and until such information shall come into the public domain
through no fault of Acquiror or Acq. Bank.
6.06 Preservation of Business. Each member of FB's
consolidated group will use its best efforts to preserve the
possession and control of all of its assets other than those
consumed or disposed of for value in the ordinary course of
business or pursuant to the terms of this Agreement, to preserve
the goodwill of customers and others having business relations
with it and to do nothing knowingly to impair its ability to keep
and preserve its business as it exists on the date of this
Agreement.
6.07 Conduct of Business in the Ordinary Course. Each
member of FB's consolidated group shall conduct its business only
in the ordinary course consistent with past practices, and,
except as otherwise provided herein, it shall not, without the
prior written consent of Acquiror:
(a) declare, set aside, increase or pay any dividend,
or declare or make any distribution on, or directly or indirectly
combine, redeem, reclassify, purchase, or otherwise acquire, any
shares of its capital stock or authorize the creation or issuance
of or issue any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable for
its capital stock, provided that this subparagraph shall not
apply to prevent dividends or distributions from any member of
FB's consolidated group to any other member of such consolidated
group;
(b) amend its articles of incorporation or association
or by-laws, or adopt or amend any resolution or agreement
concerning indemnification of its directors or officers;
(c) enter into or modify any agreement so as to
require the payment, conditionally or otherwise, of any salary,
bonus, extra compensation, pension or severance payment to any of
its present or former directors, officers or employees except
such agreements as are terminable at will without any penalty or
other payment by it, or increase by more than 5% the compensation
(including salaries, fees, bonuses, profit sharing, incentive,
pension, retirement or other similar benefits and payments) of
any such person whose annual compensation would, following such
increase, exceed $30,000, or increase any such compensation in
any manner inconsistent with its past practices;
(d) except as described in the Schedule of Exceptions
or except in the ordinary course of business, place or suffer to
exist on any of its assets or properties any mortgage, pledge,
lien, charge or other encumbrance, except those of the character
described in subsection 4.09 hereof, or forgive any material
indebtedness owing to it or any claims in excess of $100,000
which it may have possessed, or waive any right of substantial
value in excess of $100,000 or discharge or satisfy any material
noncurrent liability;
(e) acquire another business or entity, or sell or
otherwise dispose of a material part of its assets, except in the
ordinary course of business consistent with past practices or as
described in the Schedule of Exceptions;
(f) knowingly commit or omit to do any act which act
or omission would cause a breach of any covenant of FB or Bank
contained in this Agreement or would cause any representation or
warranty of FB or Bank contained in this Agreement to become
untrue, as if each such representation and warranty were
continuously made from and after the date hereof;
(g) violate in any material respect any applicable
law, statute, rule, governmental regulation or order;
(h) fail to maintain its books, accounts and records
in the usual manner on a basis consistent with that heretofore
employed;
(i) fail to pay, or to make adequate provision in all
material respects for the payment of, all taxes, interest
payments and penalties due and payable (for all periods up to the
Effective Date, including that portion of its fiscal year to and
including the Effective Date) to any city, parish, state, the
United States or any other taxing authority, except those being
contested in good faith by appropriate proceedings and for which
sufficient reserves have been established;
(j) enter into any new line of business;
(k) except as described in the Schedule of Exceptions,
charge off (except as may otherwise be required by law or by
regulatory authorities or by generally accepted accounting
principles consistently applied) or sell (except for a price not
less than the value thereof) any of its portfolio of loans,
discounts or financing leases, or sell any asset held as other
real estate owned or other foreclosed assets for an amount less
than 100% of its book value at the Latest Balance Sheet;
(l) dispose of investment securities having an
aggregate market value greater than 10% of the aggregate book
value of its investment securities portfolio on the date of the
Latest Balance Sheet; or make investments in non-investment grade
securities or which are inconsistent with past investment
practices;
(m) take or cause to be taken any action which would
disqualify the Mergers as a "pooling of interests" for accounting
purposes or as a "reorganization" within the meaning of Section
368(a) of the Code; or
(n) agree or commit to do any of the foregoing.
6.08 Additional Information from FB. FB will provide
Acquiror and Acq. Bank (a) with prompt written notice of any
material adverse change in the financial condition, results of
operations or business of any member of its consolidated group,
any material breach by any such member of any of its warranties,
representations or covenants in this Agreement, or any material
action taken or proposed to be taken with respect to any member
of FB's consolidated group by any regulatory agency, (b) as soon
as they become available, copies of any financial statements,
reports and other documents of the type referred to in subsection
4.04 hereof with respect to FB and Bank, and (c) promptly upon
its dissemination, any report disseminated to shareholders of FB.
6.09 FB Shareholder Approval. FB's Board of Directors shall
submit this Agreement and the Company Merger Agreement to its
shareholders for approval in accordance with the BCL at a special
meeting of shareholders duly called and convened for that purpose
as soon as practicable.
6.10 Affiliates Letter. FB will use its best efforts to
obtain by the Closing Date an agreement from each person who is a
director, executive officer or 5% beneficial owner of securities
of FB who will receive shares of Acquiror Common Stock by virtue
of the Company Merger to the effect that such person will not
dispose of any Acquiror Common Stock received pursuant to the
Company Merger in violation of Rule 145 of the Securities Act or
the rules and regulations of the SEC thereunder or in a manner
that would disqualify the transactions contemplated hereby from
pooling of interests accounting treatment.
6.11 Loan Policy.No member of FB's consolidated group will
make any loans, or enter into any commitments to make loans,
which vary other than in immaterial respects from its written
loan policies, a true and correct copy of which loan policies
have been provided to Acquiror, provided that this covenant shall
not prohibit Bank from extending or renewing credit or loans in
the ordinary course of business consistent with past lending
practices or in connection with the workout or renegotiation of
loans currently in its loan portfolio.
6.12 No Solicitations. (a) Prior to the Effective Date or
until the termination of this Agreement, no member of FB's
consolidated group shall, without the prior approval of Acquiror,
solicit or encourage inquiries or proposals with respect to, or,
except to the extent required in the opinion of its counsel to
discharge properly its fiduciary duties to FB's consolidated
group and its shareholders, furnish any information relating to
or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of its
assets, or of a substantial equity interest in it, or any
business combination with it, other than as contemplated by this
Agreement (and in no event will any such information be supplied
except pursuant to a confidentiality agreement in form and
substance substantially the same as the confidentiality agreement
between FB and Acquiror); and each such member shall instruct its
officers, directors, agents and affiliates to refrain from doing
any of the above, and will notify Acquiror immediately if any
such inquiries or proposals are received by it, any such
information is requested from it, or any such negotiations or
discussions are sought to be initiated with it; provided,
however, that nothing contained herein shall be deemed to
prohibit any officer or director of FB or Bank from taking any
action that is required by law or is required to discharge his
fiduciary duties to FB's consolidated group and its shareholders.
(b) Neither the Board of Directors of FB nor any
committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Acquiror, the approval
or recommendation to shareholders of this Agreement or the
Mergers, (ii) approve or recommend, or propose to recommend any
takeover proposal with respect to FB or Bank, except such action
that is required in the written opinion of its counsel to
discharge its fiduciary duties to FB's consolidated group and its
shareholders, or (iii) modify, or waive or release any party from
any provision of, or fail to enforce any provision of, if
Acquiror so requests such enforcement, any confidentiality
agreement entered into by FB or Bank with any prospective
acquiror after the date of this Agreement or within two years
prior to such date.
6.13 Operating Functions. Each member of FB's consolidated
group agrees to cooperate in the consolidation of appropriate
operating functions with Acquiror and Acq. Bank to be effective
on the Effective Date, provided that the foregoing shall not be
deemed to require any action which, in the opinion of such
member's Board of Directors, would adversely affect its
operations if the Mergers were not consummated.
6.14 Intentionally Left Blank.
6.15 Acquiror Registration Statement. (a) Acquiror will
promptly prepare and file on Form S-4 a registration statement
(the "Registration Statement") under the Securities Act (which
will include the Proxy Statement) complying with all the
requirements of the Securities Act applicable thereto, for the
purpose, among other things, of registering the Acquiror Common
Stock which will be issued to the holders of FB Common Stock
pursuant to the Company Merger. Acquiror shall use its best
efforts to cause the Registration Statement to become effective
as soon as practicable, to qualify the Acquiror Common Stock
under the securities or blue sky laws of such jurisdictions as
may be required and to keep the Registration Statement and such
qualifications current and in effect for so long as is necessary
to consummate the transactions contemplated hereby.
(b) Acquiror will indemnify and hold harmless each
member of FB's consolidated group and each of their respective
directors, officers and other persons, if any, who control FB
within the meaning of the Securities Act from and against any
losses, claims, damages, liabilities or judgments, joint or
several, to which they or any of them may become subject, under
the Securities Act or any state securities or blue sky laws or
otherwise, insofar as such losses, claims, damages, liabilities,
or judgments (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or in any
amendment or supplement thereto, or in any state application for
qualification, permit, exemption or registration as a
broker/dealer, or in any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse each such person for any legal or other expenses
reasonably incurred by such person in connection with
investigating or defending any such action or claim; provided,
however, that Acquiror shall not be liable, in any such case, to
the extent that any such loss, claim, damage, liability, or
judgment (or action in respect thereof) arises out of or is based
upon any untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, or any
such amendment or supplement thereto, or in any such state
application, or in any amendment or supplement thereto, in
reliance upon and in conformity with information furnished to
Acquiror by or on behalf of any member of FB's consolidated group
or any officer, director or affiliate of any such member for use
therein.
6.16 Application to Regulatory Authorities. Acquiror shall
prepare, as promptly as practicable, all regulatory applications
and filings which are required to be made with respect to the
Mergers and provide copies thereof to FB at least five days in
advance of filing for FB's prior review and approval.
6.17 Revenue Ruling. Acquiror or FB may elect to prepare
(and in that event the other party shall cooperate in the
preparation of) a request for a ruling from the Internal Revenue
Service with respect to certain tax matters in connection with
the transactions contemplated by this Agreement and the Merger
Agreements.
6.18 Additional Information from Acquiror. Acquiror will
provide FB with: (a) prompt written notice of any material
adverse change in the financial condition, results of operations
or business of Acquiror or Acq. Bank, (b) as soon as they become
available and are publicly disclosed, copies of any financial
statements, reports and other documents of the type referred to
in subsection 5.04(a) hereof with respect to Acquiror and Acq.
Bank and (c) promptly upon its dissemination, any report
disseminated to the shareholders of Acquiror.
6.19 Indemnification of Directors and Officers of FB and
Bank. (a) From and after the Effective Time of the Mergers,
Acquiror agrees to indemnify and hold harmless each person who
from time to time has served or who shall hereafter serve as an
officer or director of FB and Acq. Bank agrees to indemnify and
hold harmless each person who from time to time has served or who
shall hereafter serve as an officer or director of Bank, in each
case from and against all losses, claims, damages, liabilities
and judgments (and related expenses including, but not limited
to, attorney's fees and amounts paid in investigating or
defending any action in respect thereof or in settlement of any
such action) based upon or arising from his capacity as an
officer or director of FB or Bank, as the case may be, to the
same extent he would have been indemnified under the articles of
incorporation or association and by-laws of Acquiror or Acq.
Bank, as appropriate, as such documents were in effect on the
date of this Agreement as if he were an officer or director of
Acquiror and/or Acq. Bank at all relevant times; provided,
however, that such indemnification shall be subject to the
limitations set forth in subparagraph (c) below. Any
indemnification to which subparagraph (b) of subsection 6.15
applies shall be paid pursuant thereto and shall not be payable
under this subsection 6.19. The persons entitled to
indemnification hereunder and their respective heirs, executors,
estates and assigns are hereinafter referred to as "Indemnified
Persons."
(b) The rights granted to the Indemnified Persons
hereby shall be contractual rights inuring to the benefit of all
Indemnified Persons and shall survive the Mergers, and any
merger, consolidation or reorganization of Acquiror or Acq. Bank.
(c) The rights to indemnification granted by this
subsection 6.19 shall be subject to the following limitation: the
total aggregate indemnification to be provided by Acquiror and
Acq. Bank, collectively, pursuant to this subsection 6.19 shall
not exceed, as to all of the Indemnified Persons as a group,
$5,000,000 (less any amount paid as indemnification by any member
of FB's consolidated group to any Indemnified Person after the
date of this Agreement and less any indemnification required to
be paid to any Indemnified Person by Acquiror or Acq. Bank
otherwise than pursuant to subsection 6.15 or 6.19 of this
Agreement by reason of such person's service as an officer or
director of any member of FB's consolidated group). Neither
Acquiror nor Acq. Bank shall have any responsibility to any
Indemnified Person for the manner in which indemnification
payments are made or allocated among the Indemnified Persons, and
Acquiror and Acq. Bank shall be entitled to pay indemnification
claims in the order in which they are approved for
indemnification or in which reimbursements are requested or
pursuant to any other reasonable method in their sole discretion
(but the Indemnified Persons may seek reallocation among
themselves). A director or officer of FB or Bank who would
otherwise be an Indemnified Person under this subsection 6.19
shall not be entitled to the benefits thereof unless such person
has executed a Shareholder's Commitment in the form required of
such person pursuant to Exhibit C hereto, and an officer who
would otherwise be an Indemnified Person and is not required to
execute a Shareholder's Commitment shall not be entitled to the
benefits of this subsection 6.19 until he or she has executed a
waiver of all indemnification obligations of Acquiror, Acq. Bank
and each member of FB's consolidated group except for obligations
arising under subsection 6.15 or 6.19 hereof. Amounts otherwise
required to be paid by Acquiror or Acq. Bank to an Indemnified
Person pursuant to this subsection 6.19 shall be reduced by any
amounts that such Indemnified Person recovers by virtue of the
claim for which indemnification is sought, and no indemnification
shall be provided to any person with respect to any pending or
threatened claim of which such person has knowledge and which is
not set forth in the Schedule of Exceptions to this Agreement.
(d) An Indemnified Person shall give Acquiror and Acq.
Bank prompt notice of any matter as to which indemnification is
provided, shall employ counsel that is reasonably acceptable to
Acquiror and Acq. Bank (and no more than one counsel for all
Indemnified Persons shall be employed in any one matter or series
of related matters except to the extent that actual conflicts of
interest require otherwise) and shall not settle any such matter
unless Acquiror or Acq. Bank, as the case may be, shall first
consent thereto in writing.
6.20 Benefits Provided to Employees of FB's Consolidated
Group. From and after the Effective Date, Acquiror or Acq. Bank
shall offer to all persons who were employees of FB or Bank
immediately prior to the Effective Date and who become employees
of Acq. Bank immediately following the Effective Date, the same
employee benefits (including benefits under Acquiror's
retirement, 401(k), flexible benefit, vacation, severance and
sick leave plans or policies) as are offered by Acquiror or Acq.
Bank to similarly situated employees of Acq. Bank, except that
there shall be no waiting period for coverage under Acquiror's
Flexible Benefit Plan or any of its constituent plans (including
Acquiror's Medical and Dental Care Plan) and no employee who
becomes an active employee of Acq. Bank on the Effective Date
shall be denied benefits under such plans for a pre-existing
condition. Full credit shall be given for prior service by such
employees with FB or Bank for eligibility and vesting purposes
under all of Acquiror's benefit plans and policies, except that
credit for prior service shall not be given for eligibility,
vesting or benefit accrual purposes under Acquiror's Retirement
Plan. Neither Acquiror not Acq. Bank shall be obligated to
continue any ERISA plan or other employee benefit plan maintained
by FB or any member of its consolidated group, except to the
limited extent provided in the following sentence and in
subsection 6.21; and FB shall, prior to the Effective Date, take
all action necessary for all such plans to terminate at the
Effective Time and be of no force or effect thereafter except as
otherwise specifically provided in the following sentence and in
subsection 6.21. All benefits accrued and unpaid through the
Effective Date under the Bank's retention agreements and
severance policy as in effect on the date of this Agreement and
all COBRA benefits payable by FB or Bank under Section 4980B(f)
of the Code and Section 601 of ERISA, shall be paid by Acquiror
or Acq. Bank after the Effective Date to the extent such benefits
are not otherwise provided to such employees under the benefit
plans of Acquiror or Acq. Bank.
6.21 FB's 401(k) Plan. FB shall amend its 401(k) plan to
provide that all participants in such plan who are employed by FB
or Bank on the date of this Agreement shall be fully vested in
their accounts in such plan as of the Effective Date. Acquiror
shall take all reasonable actions necessary after the Effective
Date to maintain the qualification and tax-exempt status of FB's
401(k) plan and to meet all other requirements of applicable law
and regulations and the provision of such plan until such plans
are either terminated and fully liquidated or combined with a
plan of Acquiror.
6.22 Publications of Post-Merger Financial Statements.
Acquiror shall file all Form 10-Qs and 10-Ks required to be filed
by it with the SEC timely and will issue press releases
concerning earnings in accordance with its established practice.
6.23 Dissenters. FB shall give Acquiror (i) prompt written
notice of, and a copy of, any instrument received by FB with
respect to the assertion or perfection of dissenters rights, and
(ii) the opportunity to participate in all negotiations and
proceedings with respect to dissenters rights, should Acquiror
desire to do so.
6.24 Withholding. Acquiror shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder
of FB Common Stock after the Effective Time such amounts as
Acquiror may be required by law to deduct and withhold therefrom.
All such deductions and withholdings shall be deemed for all
purposes of this Agreement and the Company Merger Agreement to
have been paid to the person with respect to whom such deduction
and withholding was made.
SECTION 7. Conditions of Closing
7.01 Conditions of All Parties. The obligations of each of
the parties hereto to consummate the Mergers are subject to the
satisfaction of the following conditions at or prior to the
Closing:
(a) Shareholder Approval. This Agreement and the
Company Merger Agreement shall have been duly approved by the
shareholders of FB and this Agreement and the Bank Merger
Agreement shall have been duly approved by the shareholders of
Bank and Acq. Bank.
(b) Effective Registration Statement. The
Registration Statement shall have become effective prior to the
mailing of the Proxy Statement, no stop order suspending the
effectiveness of the Registration Statement shall have been
issued, and no proceedings for that purpose shall have been
instituted or, to the knowledge of any party, shall be
contemplated, and Acquiror shall have received all state
securities laws permits and authorizations necessary to
consummate the transactions contemplated hereby.
(c) No Restraining Action. No action or proceeding
shall have been threatened or instituted before a court or other
governmental body to restrain or prohibit the transactions
contemplated by the Merger Agreements or this Agreement or to
obtain damages or other relief in connection with the execution
of such agreements or the consummation of the transactions
contemplated hereby or thereby; and no governmental agency shall
have given notice to any party hereto to the effect that
consummation of the transactions contemplated by the Merger
Agreements or this Agreement would constitute a violation of any
law or that it intends to commence proceedings to restrain
consummation of either of the Mergers.
(d) Statutory Requirements and Regulatory Approval.
All statutory requirements for the valid consummation of the
transactions contemplated by the Merger Agreements and this
Agreement shall have been fulfilled; all appropriate orders,
consents and approvals from all regulatory agencies and other
governmental authorities whose order, consent or approval is
required by law for the consummation of the transactions
contemplated by this Agreement and the Merger Agreements shall
have been received; and the terms of all requisite orders,
consents and approvals shall then permit the effectuation of the
Mergers without imposing any material conditions with respect
thereto except for any such conditions that are acceptable to
Acquiror.
7.02 Additional Conditions of Acquiror and Acq. Bank. The
obligations of Acquiror and Acq. Bank to consummate the Mergers
are also subject to the satisfaction of the following additional
conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. Each
of the representations and warranties of FB and Bank contained in
this Agreement shall be true and correct in all material respects
on and as of the Closing Date, with the same effect as though
made on and as of such date, except to the extent of changes
permitted by the terms of this Agreement (it being understood
that exceptions noted in the certificate referred to in the
following sentence or in any notice given by any member of FB's
consolidated group do not constitute changes permitted by the
terms of this Agreement), and each of FB and Bank shall have in
all material respects performed all obligations and complied with
all covenants required by this Agreement and the Merger
Agreements to be performed or complied with by it at or prior to
the Closing. In addition, each of FB and Bank shall have
delivered to Acquiror and Acq. Bank its certificate dated as of
the Closing Date and signed by its chief executive officer and
chief financial officer to the effect that, except as specified
in such certificate, such persons do not know, and have no
reasonable grounds to know, of any material failure or breach of
any representation, warranty or covenant made by it in this
Agreement. Without limiting what would constitute, for purposes
of this subparagraph and all other purposes of this Agreement, a
material event or amount with respect to FB's consolidated group
taken as a whole, any single event or series of related events
(excluding unrealized gains and losses on securities and expenses
incurred in connection with this Agreement and the Merger
Agreements, and the transactions contemplated hereby or thereby)
that exceeds, or the effect or result of which can reasonably be
expected to exceed, singly or in the aggregate, $500,000 shall be
deemed to be material with respect to such consolidated group.
In determining whether a representation or warranty of any member
of FB's consolidated group is true and correct in all material
respects for purposes of this subparagraph or other provisions of
this Agreement, all references in such representation or warranty
to the word "material" shall be ignored, and any untruth or
incorrectness shall be measured, if measurable as a dollar
amount, against the definition of materiality in the preceding
sentence.
(b) No Material Adverse Change. There shall not have
occurred any material adverse change from the date of the Latest
Balance Sheet to the Closing Date in the financial condition,
results of operations or business of FB's consolidated group
taken as a whole. Without limiting the occurrences that would
constitute such a material adverse change with respect to FB's
consolidated group, each of the following shall be deemed to
constitute such a change with respect to such group for all
purposes of this Agreement: (i) any change or changes which, in
the aggregate, involve or have resulted or are likely to result
in a reduction of earnings before securities gains and losses and
provisions for loan losses, financing leases and other real
estate owned, or of net earnings, of 10% or more, or in
stockholder's equity of 5% or more from the amount or amounts
contained in FB's budget for its fiscal year ending December 31,
1994, a copy of which has been provided to Acquiror (excluding in
each relevant case unrealized gains and losses on securities and
all expenses incurred in connection with this Agreement and the
Merger Agreements and the transactions contemplated hereby and
thereby); and (ii) any net decrease in the core deposits (meaning
all deposits other than public funds and time deposits that
exceed $100,000 each) of FB's consolidated group, if such net
decrease exceeds by more than 5% the amount of such core deposits
at the date of the Latest Balance Sheet.
(c) Opinion of Counsel. Acquiror shall have received
from McGlinchey Stafford Lang, A Law Corporation, special counsel
to FB, an opinion, dated as of the Closing Date, in form and
substance satisfactory to Acquiror, to the effect set forth in
Exhibit D to this Agreement. In giving such opinion, such
counsel may rely as to questions of fact upon certificates of one
or more officers of FB or members of FB's consolidated group, and
governmental officials and as to matters of law other than
Louisiana, Delaware or federal law on the opinions of foreign
counsel retained by them or FB.
(d) Pooling of Interests. Neither Acquiror's inde-
pendent accountants nor the SEC shall have taken the position
that the transactions contemplated by this Agreement and the
Merger Agreements do not qualify for pooling of interests
accounting treatment.
(e) Accountant's Letters. Acquiror and Acq. Bank
shall have received letters from Arthur Andersen & Co., in its
capacity as independent public accountants for FB and Bank,
dated, respectively, the date of the Proxy Statement and
immediately prior to the Closing Date, in form and substance
satisfactory to Acquiror and Acq. Bank, to the effect set forth
in Exhibit E to this Agreement.
(f) Shareholder's Commitment; Confirmation. A Share-
holder's Commitment in the form specified on Exhibit C hereto
shall have been executed by each person who serves as an
executive officer or director of FB or Bank or who owns 5% or
more of the FB Common Stock outstanding; and Acquiror and Acq.
Bank shall have received from each such person a written
confirmation dated not earlier than five days prior to the
Closing Date, to the effect that each representation made in such
person's Shareholder's Commitment is true and correct as of the
date of such confirmation and that such person has complied with
all of his or her covenants therein through the date of such
confirmation.
(g) Regulatory Action. No adverse regulatory action
shall be pending or threatened against any member of FB's
consolidated group, including (without limitation) any proposed
amendment to any existing agreement, memorandum, letter, order or
decree, formal or informal, between any regulator and any member
of FB's consolidated group, if such action would or could impose
any material liability on Acquiror or Acq. Bank or interfere with
their conduct of the businesses of FB's consolidated group
following the Mergers.
(h) First Continental Debentures. FB shall not have
sold or otherwise disposed of the debentures of First Continental
Bancshares, Inc. held as assets of FB's consolidated group as of
the date of the Latest Balance Sheet.
(i) Noncompetition Agreements. The officers of FB and
Bank listed on Exhibit F hereto shall have entered into two-year
noncompetition agreements in form and substance satisfactory to
Acquiror; provided that in lieu of termination of this Agreement
pursuant to subsection 8.01 hereof if this condition is not
satisfied, Acquiror shall reduce the number of shares of Acquiror
Common Stock into which the FB Common Stock will be converted as
set forth in subsection 4.1 of the Company Merger Agreement.
(j) Tax Opinion. Acquiror shall have received an
opinion of counsel or accountants as to certain tax aspects of
the transactions contemplated by this Agreement and the Merger
Agreements.
7.03 Additional Conditions of FB and Bank. The obligations
of FB and Bank to consummate the Mergers are also subject to the
satisfaction of the following additional conditions at or prior
to the Closing:
(a) Representations, Warranties and Covenants. Each
of the representations and warranties of Acquiror and Acq. Bank
contained in this Agreement shall be true and correct in all
material respects on the Closing Date, with the same effect as
though made on and as of such date, except to the extent of
changes permitted by the terms of this Agreement, and each of
Acquiror and Acq. Bank shall have in all material respects
performed all obligations and complied with all covenants
required by this Agreement and the Merger Agreements to be
performed or complied with by it at or prior to the Closing. In
addition, each of Acquiror and Acq. Bank shall have delivered to
FB and Bank its certificate dated as of the Closing Date and
signed by its chief executive officer and chief financial officer
to the effect that, except as specified in such certificate, such
persons do not know, and have no reasonable grounds to know, of
any material failure or breach of any representation, warranty or
covenant made by it in this Agreement.
(b) No Material Adverse Change. There shall not have
occurred any material adverse change from the date of the Latest
Balance Sheet to the Closing Date in the financial condition,
results of operations or business of Acquiror's consolidated
group taken as a whole.
(c) Opinion of Counsel. FB shall have received from
counsel for Acquiror, an opinion, dated as of the Closing Date,
in form and substance satisfactory to Acquiror and Acquiror's
consolidated group, to the effect set forth in Exhibit G to this
Agreement. In giving such opinion, such counsel may rely as to
questions of fact upon certificates of one or more officers of
Acquiror or members of Acquiror's consolidated group, and
governmental officials and as to matters of law other than
Louisiana, Delaware or federal law on the opinions of foreign
counsel retained by them or Acquiror.
(d) Opinion of Investment Bankers. FB shall have
received a letter from its financial advisor referred to in
subsection 4.17 hereof, dated on or within 10 days prior to the
date of mailing the Proxy Statement to its shareholders, in form
and substance satisfactory to FB, confirming such financial
advisor's prior oral opinion to the Board of Directors of FB to
the effect that the consideration to be paid in the Mergers is
fair to it and its shareholders from a financial point of view.
(e) Tax Opinion. FB shall have received the opinion
of McGlinchey Stafford Lang, A Law Corporation, as to certain tax
aspects of the transactions contemplated by this Agreement and
the Merger Agreements.
7.04 Waiver of Conditions. Any condition to a party's
obligations hereunder may be waived by that party, other than the
conditions specified in subparagraphs (a), (b) and (d) of
subsection 7.01 hereof and the condition specified in
subparagraph (d) of subsection 7.03 hereof. The failure to waive
any condition hereunder shall not be deemed a breach of
subsection 6.01 hereof.
SECTION 8. Termination
8.01 Termination. This Agreement and the Merger Agreements
may be terminated and the Mergers contemplated herein abandoned
at any time before the Effective Time, whether before or after
approval by the shareholders of FB:
(a) Mutual Consent. By the mutual consent of the
Boards of Directors of Acquiror and FB.
(b) Material Breach. By either Acquiror or FB in the
event of a material breach by any member of the consolidated
group of the other of them of any representation or warranty
contained in this Agreement or of any covenant contained in this
Agreement, which in either case cannot be, or has not been, cured
within 15 days after written notice of such breach is given to
the entity committing such breach, provided that the right to
effect such cure shall not extend beyond the date set forth in
subparagraph (c) below. Acq. Bank and Bank shall be entitled to
terminate this Agreement for any reason that would permit
Acquiror or FB, respectively, to terminate it.
(c) Abandonment. By either Acquiror or FB if (i) all
conditions to Closing required by Section 7 hereof have not been
met by or waived by February 28, 1995, (ii) any such condition
cannot be met by such date and has not been waived by each party
in whose favor such condition inures, or (iii) the Bank Merger
has not occurred by such date; provided, however, that neither
Acquiror nor FB shall be entitled to terminate this Agreement
pursuant to this subparagraph (c) if such party is in material
violation of any of its representations, warranties or covenants
in this Agreement.
(d) Price of Acquiror Common Stock. By FB if both (i)
the quotient of the average closing price of Acquiror Common
Stock for the five trading days immediately preceding the Closing
Date divided by the closing price of such stock on the day
immediately preceding the date of this Agreement, as reported in
The Wall Street Journal, (the "Acquiror Quotient") is less than
0.75 and (ii) the quotient of the average closing value of the
Standard & Poors Regional Bank Index for the five trading days
preceding the Closing Date divided by the value of the Standard &
Poors Regional Bank Index for the day immediately preceding the
date of this Agreement (the "S&P Quotient") exceeds the Acquiror
Quotient by more than 0.15.
(e) Dissenting Shareholders. By Acquiror, if the
number of shares of FB Common Stock as to which the holders
thereof are, at the time of Closing, legally entitled to assert
dissenting shareholders rights exceeds that number of shares of
FB Common Stock that would preclude pooling of interests
accounting for the Mergers.
(f) Shareholder Vote. By Acquiror or Acq. Bank if
this Agreement or the Company Merger fail to receive the
requisite vote at any meeting of FB shareholders called for the
purpose of voting on any thereof.
(g) FB Recommendation. By Acquiror or Acq. Bank if
the Board of Directors of FB (A) shall withdraw, modify or change
its recommendation of this Agreement or the Mergers or shall have
resolved to do any of the foregoing; or (B) shall have
recommended to the shareholders of FB (i) any merger,
consolidation, share exchange, business combination or other
similar transaction (other than the transactions contemplated by
this Agreement); (ii) any sale, lease, transfer or other
disposition of all or substantially all of the assets of any
material member of FB's consolidated group; or (iii) any
acquisition, by any person or group, of the beneficial ownership
of 15% or more of any class of FB's capital stock; or (C) shall
have made any announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the
foregoing.
8.02 Effect of Termination: Survival. Upon termination of
this Agreement pursuant to this Section 8, the Merger Agreements
shall also terminate, and this Agreement and the Merger
Agreements shall be void and of no effect, and there shall be no
liability by reason of this Agreement or the Merger Agreements,
or the termination thereof, on the part of any party or their
respective directors, officers, employees, agents or shareholders
except for any liability of a party hereto arising out of an
intentional breach of any representation, warranty or covenant in
this Agreement prior to the date of termination, except if such
breach was required by law or by any bank or bank holding company
regulatory authority, or of any covenant that survives pursuant
to the following sentence. The following provisions shall
survive any termination of this Agreement: the last sentence of
subsection 6.05; subsection 8.02; and Section 9.
SECTION 9. MISCELLANEOUS
9.01 Notices. Any notice, communication, request, reply,
advice or disclosure (hereinafter severally and collectively
referred to as "notice") required or permitted to be given or
made by any party to another in connection with this Agreement or
the Merger Agreements or the transactions herein or therein
contemplated must be in writing and may be given or served by
depositing the same in the United States mail, postage prepaid
and registered or certified with return receipt requested, or by
delivering the same to the address of the person or entity to be
notified, or by sending the same by a national commercial courier
service (such as Federal Express, Emery Air Freight, Network
Courier, Purolator or the like) for next-day delivery provided
such delivery is confirmed in writing by such courier. Notice
deposited in the mail in the manner hereinabove described shall
be effective 48 hours after such deposit, and notice delivered in
person or by commercial courier shall be effective at the time of
delivery. A party delivering notice shall endeavor to obtain a
receipt therefor. For purposes of notice, the addresses of the
parties shall, until changed as hereinafter provided, be as
follows:
If to Acquiror or Acq. Bank:
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana
Attn: David Kelso
With a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre
201 St. Charles Avenue
New Orleans, Louisiana 70170-5100
Attn: Anthony J. Correro, III, Esq.
If to FB or Bank:
First Bancshares, Inc.
1431-A Gause Boulevard
Slidell, LA 70459
Attn: Mr. Elton A. Arceneaux, Jr., President
With a copy to:
McGlinchey Stafford Lang
A Law Corporation
643 Magazine Street
New Orleans, LA 70130
Attn: B. Franklin Martin, III, Esq.
or such substituted persons or addresses of which any of the
parties hereto may give notice to the other in writing.
9.02 Waiver. The failure by any party to enforce any of its
rights hereunder shall not be deemed to be a waiver of such
rights, unless such waiver is an express written waiver which has
been signed by the waiving party. Waiver of any one breach shall
not be deemed to be a waiver of any other breach of the same or
any other provision hereof.
9.03 Expenses. Regardless of whether the Mergers are
consummated, all expenses incurred in connection with this
Agreement and the Merger Agreements and the transactions
contemplated hereby and thereby shall be borne by the party
incurring them.
9.04 Non-Survival of Representations and Warranties. None
of the representations and warranties in this Agreement shall
survive the Effective Time, or the earlier termination of this
Agreement pursuant to Section 8 hereof.
9.05 Headings. The headings in this Agreement have been
included solely for reference and shall not be considered in the
interpretation or construction of this Agreement.
9.06 Annexes, Exhibits and Schedules. The annexes, exhibits
and schedules to this Agreement are incorporated herein by this
reference and expressly made a part hereof.
9.07 Integrated Agreement. This Agreement, the Merger
Agreements, the exhibits and schedules hereto and all other
documents and instruments delivered in accordance with the terms
hereof constitute the entire understanding and agreement among
the parties hereto with respect to the subject matter hereof, and
there are no agreements, understanding, restrictions,
representations or warranties among the parties other than those
set forth herein or therein, all prior agreements and
understandings being superseded hereby.
9.08 Choice of Law. The validity of this Agreement and the
Merger Agreements, the construction of their terms and the
determination of the rights and duties of the parties hereto in
accordance therewith shall be governed by and construed in
accordance with the laws of the United States and those of the
State of Louisiana applicable to contracts made and to be
performed wholly within such State.
9.09 Parties in Interest. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns, except that this Agreement may not be
transferred or assigned by any member of the consolidated group
of Acquiror or FB without the prior written consent of the other
parties hereto including any transfer or assignment by operation
of law. Nothing in this Agreement or the Merger Agreements is
intended or shall be construed to confer upon or to give any
person other than the parties hereto any rights or remedies under
or by reason of this Agreement or the Merger Agreements, except
as expressly provided for herein and therein.
9.10 Amendment. The parties may, by mutual agreement,
amend, modify or supplement this Agreement, the Merger
Agreements, or any exhibit or schedule of any of them, in such
manner as may be agreed upon by the parties in writing, at any
time before or after approval of this Agreement and the Merger
Agreements and the transactions contemplated hereby and thereby
by the shareholders of the parties hereto. This Agreement and
any exhibit or schedule to this Agreement may be amended at any
time and, as amended, restated by the chief executive officers of
the respective parties (or their respective designees) without
the necessity for approval by their respective Boards of
Directors or shareholders, to correct typographical errors or to
change erroneous references or cross references, or in any other
manner which is not material to the substance of the transactions
contemplated hereby.
9.11 Counterparts. This Agreement may be executed by the
parties in any number of counterparts, all of which shall be
deemed an original, but all of which taken together shall
constitute one and the same document.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
FIRST COMMERCE CORPORATION FIRST BANCSHARES, INC.
By: ________________________ By: __________________________
Elton A. Arceneaux, Jr.
President
FIRST NATIONAL BANK FIRST BANK
OF COMMERCE
By: ________________________ By: __________________________
James C. Piercey
President
<PAGE>
EXHIBIT A
AGREEMENT OF MERGER
OF
FIRST BANK
INTO
FIRST NATIONAL BANK OF COMMERCE
This Agreement of Merger (this "Agreement") is made and
entered into as of this ______ day of ________, 1994, between
First Bank, a Louisiana state bank domiciled at Slidell,
Louisiana ("Bank"), and First National Bank of Commerce, a
national banking association domiciled at New Orleans, Louisiana
("FNBC" or the "Receiving Association").
WHEREAS, the respective Boards of Directors of Bank and FNBC
(collectively called the "Merging Associations") deem it
advisable that Bank be merged with and into FNBC (the "Bank
Merger"), as provided in this Agreement and in the Agreement and
Plan of Merger dated ________, 1994 (the "Plan"), among the
Merging Associations, First Commerce Corporation, a Louisiana
corporation ("FCC") of which FNBC is a wholly-owned subsidiary,
and First Bancshares, Inc., a Louisiana corporation ("FB") of
which Bank is a wholly-owned subsidiary, which sets forth, among
other things, certain representations, warranties, covenants and
conditions relating to the Bank Merger; and
WHEREAS, the respective Boards of Directors of the Merging
Associations wish to enter into this Agreement and submit it to
the respective shareholders of the Merging Associations for
approval in the manner required by law and, subject to said
approval and to approval by the Comptroller of the Currency of
the United States (the "Comptroller") being duly given and to
such other approvals as may be required by law, to effect the
Bank Merger, all in accordance with the provisions of this
Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the Bank Merger, the parties
hereto agree as follows:
1. The Bank Merger. At the Effective Time (as defined in
Section 2 hereof), Bank shall be merged with and into FNBC under
the Articles of Association of FNBC, as amended, existing Charter
No. 13689, pursuant to the provisions of, and with the effect
provided in, 12 U.S.C. Section 215a and La. R.S. 6:351 et seq.
At the Effective Time, FNBC, the Receiving Association, shall
continue to be a national banking association, and its business
shall continue to be conducted at its main office in New Orleans,
Louisiana, and at its legally established branches (including,
without limitation, the legally established offices from which
Bank conducted business immediately prior to the Effective Time).
The Articles of Association of FNBC shall not be altered or
amended by virtue of the Bank Merger, and the incumbency of the
directors and officers of FNBC shall not be affected by the Bank
Merger nor shall any person succeed to such positions by virtue
of the Bank Merger.
2. Effective Time. FNBC will file the Bank Merger
Agreement with the Louisiana Commissioner of Financial
Institutions (the "Commissioner") pursuant to La. R.S. 6:352 and
make appropriate filings with the Comptroller, and the Bank
Merger will be effective at the time (the "Effective Time")
specified in the Certificate of Merger issued by the
Commissioner, or in the certificate or other written record
issued by the Comptroller, whichever date is later.
3. Cancellation of Capital Stock of Bank. At the
Effective Time, by virtue of the Bank Merger, all shares of the
capital stock of Bank shall be cancelled.
4. Capital Stock of the Receiving Association. The shares
of the capital stock of FNBC, the Receiving Association, issued
and outstanding immediately prior to the Effective Time shall, at
the Effective Time, continue to be issued and outstanding, and no
additional shares of FNBC shall be issued as a result of the Bank
Merger. Therefore, at the Effective Time, the amount of capital
stock of FNBC, the Receiving Association, shall be $9,275,000,
divided into 927,500 shares of common stock, par value $10.00 per
share.
5. Assets and Liabilities of the Merging Associations. At
the Effective Time, the corporate existence of each of the
Merging Associations shall be merged into and continued in FNBC,
the Receiving Association, and such Receiving Association shall
be deemed to be the same corporation as each bank or banking
association participating in the Bank Merger. All rights,
franchises, and interests of the individual Merging Associations
in and to every type of property (real, personal and mixed) and
choses in action shall be transferred to and vested in the
Receiving Association by virtue of the Bank Merger without any
deed or other transfer. The Receiving Association, upon the Bank
Merger and without any order or other action on the part of any
court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations,
and nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian
of estates, and in every other fiduciary capacity, in the same
manner and to the same extent as such rights, franchises, and
interests were held or enjoyed by any one of the Merging
Associations at the time of the Bank Merger, subject to the
conditions specified in 12 U.S.C. Section 215a(f). The
Receiving Association shall, from and after the Effective Time,
be liable for all liabilities of the Merging Associations.
6. Shareholder Approval; Conditions; Filing. This
Agreement shall be submitted to the shareholders of the Merging
Associations for ratification and confirmation in accordance with
applicable provisions of law. The obligations of the Merging
Associations to effect the Bank Merger shall be subject to all
the terms and conditions of the Plan. If the shareholders of the
Merging Associations ratify and confirm this Agreement, then the
fact of such approval shall be certified hereon by the Secretary
of each of the Merging Associations and this Agreement, so
approved and certified, shall, as soon as is practicable, be
signed and acknowledged by the President or Vice-President of
each of them. As soon as may be practicable thereafter, this
Agreement, so certified, signed and acknowledged, shall be
delivered to the Commissioner and to the Comptroller for filing
in the manner required by law.
7. Miscellaneous. This Agreement may, at any time prior
to the Effective Time, be amended or terminated as provided in
the Plan. This Agreement may be executed in counterparts, each
of which shall be deemed to constitute an original. This
Agreement shall be governed and interpreted in accordance with
federal law and the applicable laws of the State of Louisiana.
This Agreement may be assigned only to the extent that the party
seeking to assign it is permitted to assign its interests in the
Plan, and subject to the same effect as any such assignment. The
headings in this Agreement are inserted for convenience only and
are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by a
majority of the directors of each of the Merging Associations, as
of the day and year first above written.
FOR THE BOARD OF DIRECTORS OF
FIRST BANK:
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
FOR THE BOARD OF DIRECTORS OF
FIRST NATIONAL BANK OF COMMERCE:
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
<PAGE>
CERTIFICATE OF SECRETARY OF
FIRST BANK
(a Louisiana state bank)
I hereby certify that I am the duly elected Secretary of
First Bank, a Louisiana state bank, presently serving in such
capacity and that the foregoing Agreement was, in the manner
required by law, duly approved, without alteration or amendment,
by the sole shareholder of First Bank.
Certificate dated , 1994.
_______________________________
____________________, Secretary
CERTIFICATE OF SECRETARY OF
FIRST NATIONAL BANK OF COMMERCE
(a national banking association)
I hereby certify that I am the duly elected Secretary of
First National Bank of Commerce, a national banking association,
presently serving in such capacity and that the foregoing
Agreement was, in the manner required by law, duly approved,
without alteration or amendment, by the sole shareholder of First
National Bank of Commerce.
Certificate dated , 1994.
______________________________
Michael A. Flick, Secretary
<PAGE>
EXECUTION BY BANKS
Considering the approval of this Agreement by the
shareholders of the parties hereto, as certified above, this
Agreement is executed by such parties, acting through their
respective Presidents, this _____ day of _______________, 1994.
FIRST BANK
By: _______________________________
President
Attest:
___________________________________
Secretary
FIRST NATIONAL BANK OF
COMMERCE
By: ______________________________
President
Attest:
___________________________________
Secretary
<PAGE>
ACKNOWLEDGMENT AS TO
FIRST BANK
STATE OF LOUISIANA
PARISH OF _______________
BEFORE ME, the undesigned authority, personally came and
appeared ____________________, who, being duly sworn, declared
and acknowledged before me that he is the President of First Bank
and that in such capacity he was duly authorized to and did
execute the foregoing Agreement on behalf of such bank, for the
purposes therein expressed and as his and such bank's free act
and deed.
_____________________________
Appearer
Sworn to and subscribed before me
this _____ day of __________, 1994.
___________________________________
Notary Public
<PAGE>
ACKNOWLEDGMENT AS TO
FIRST NATIONAL BANK OF COMMERCE
STATE OF LOUISIANA
PARISH OF ____________________
BEFORE ME, the undersigned authority, personally came and
appeared Ashton J. Ryan, Jr. who, being duly sworn, declared and
acknowledged before me that he is the President of First National
Bank of Commerce and that in such capacity he was duly authorized
to and did execute the foregoing Agreement on behalf of such
bank, for the purposes therein expressed and as his and such
bank's free act and deed.
_____________________________
Appearer
Sworn to and subscribed before me
this _____ day of __________, 1994.
___________________________________
Notary Public
<PAGE>
EXHIBIT B
JOINT AGREEMENT OF MERGER
OF
FIRST BANCSHARES, INC.
WITH AND INTO
FIRST COMMERCE CORPORATION
This Joint Agreement of Merger (this "Joint Agreement") is
dated as of the ____ day of May, 1994, between First Bancshares,
Inc., a Louisiana corporation ("FB"), and First Commerce
Corporation, a Louisiana corporation ("Acquiror"); and is entered
into pursuant to the provisions of Sections 111 et seq of the
Louisiana Business Corporation Law ("BCL").
W I T N E S E T H:
WHEREAS, the respective Boards of Directors of FB and
Acquiror (collectively, the "Merging Corporations") deem it
advisable that FB be merged with and into Acquiror (the
"Merger"), as provided in this Joint Agreement and in the
Agreement and Plan of Merger, dated May ____, 1994 (the "Plan"),
among the Merging Corporations, [Acq. Bank] (which is a wholly-
owned subsidiary of Acquiror), and First Bank (which is a wholly-
owned subsidiary of FB), which sets forth, among other things,
certain representations, warranties, covenants and conditions
relating to the Merger; and
WHEREAS, the respective Boards of Directors of the Merging
Corporations wish to enter into this Joint Agreement and submit
it to the shareholders of FB for approval in the manner required
by law (approval by the shareholders of Acquiror not being
required by virtue of Section 112E of the BCL) and, subject to
such approval and to such other approvals as may be required, to
effect the Merger, all in accordance with the provisions of this
Joint Agreement;
NOW, THEREFORE, in consideration of the mutual benefits to
be derived from this Joint Agreement and the Merger, the parties
hereto agree as follows:
SECTION 1: The Merger
In accordance with the applicable provisions of the BCL, FB
shall be merged with and into Acquiror; the separate existence of
FB shall cease; and Acquiror shall be the corporation surviving
the Merger.
SECTION 2: Effectiveness of the Merger
2.1 Effective Time of the Merger. The Merger shall become
effective at the time (the "Effective Time") at which this Joint
Agreement, having been executed and acknowledged in the manner
required by law, is filed in the office of the Secretary of State
of Louisiana.
2.2 Effect of the Merger. At the Effective Time, (i) the
separate existence of FB shall cease and FB shall be merged with
and into Acquiror; (ii) Acquiror shall continue to possess all of
the rights, privileges and franchises possessed by it and shall,
at the Effective Time, become vested with and possess all rights,
privileges and franchises possessed by FB; (iii) Acquiror shall
be responsible for all of the liabilities and obligations of FB
in the same manner as if Acquiror had itself incurred such
liabilities or obligations, and the Merger shall not affect or
impair the rights of the creditors or of any persons dealing with
the Merging Corporations; (iv) the Merger will not of itself
cause a change, alteration or amendment to the Articles of
Incorporation or the By-Laws of Acquiror; (v) the Merger will not
of itself affect the tenure in office of any officer or director
of Acquiror and no such person will succeed to such positions
solely by virtue of the Merger; and (vi) the Merger shall, from
and after the Effective Time, have all the effects provided by
applicable Louisiana law.
2.3 Additional Actions. If, at any time after the
Effective Time, Acquiror shall consider or be advised that any
further assignments or assurances in law or any other acts are
necessary or desirable (a) to vest, perfect or confirm, of record
or otherwise, in Acquiror, title to or the possession of any
property or right of FB acquired or to be acquired by reason of,
or as a result of, the Merger, or (b) otherwise to carry out the
purposes of this Joint Agreement, FB and its proper officers and
directors shall be deemed to have granted to Acquiror an
irrevocable power of attorney to execute and deliver all such
proper deeds, assignments and assurances in law and to do all
acts necessary or proper to vest, perfect or confirm title to and
possession of such property or rights in Acquiror and otherwise
to carry out the purposes of this Joint Agreement; and the proper
officers and directors of Acquiror are fully authorized in the
name of FB to take any and all such action.
SECTION 3: Method of Carrying Merger Into Effect
This Joint Agreement shall be submitted to the shareholders
of FB for their approval. If such approval is given, then the
fact of such approval shall be certified hereon by the Secretary
of FB. Approval of this Joint Agreement by the shareholders of
Acquiror is not required by virtue of Section 112E of the BCL,
and that fact shall be certified hereon by the Secretary of
Acquiror. This Joint Agreement, so approved and certified shall,
as soon as is practicable, be signed and acknowledged by the
President or Vice President of each of the Merging Corporations.
As soon as may be practicable thereafter, this Joint Agreement,
so certified, signed and acknowledged, shall be delivered to the
Secretary of State of Louisiana for filing in the manner required
by law and shall be effective at the Effective Time; and
thereafter, as soon as practicable, a copy of the Certificate of
Merger issued by the Secretary of State of Louisiana, and
certified by him to be a true copy, shall be filed for record in
the Office of the Recorder of Mortgages of the parishes in which
the Merging Corporations have their respective registered offices
and in the Office of the Recorder of Conveyances of each parish
in which FB has immovable property.
SECTION 4: Conversion of Shares
4.1 Conversion of FB Shares. (a) Except for shares as to
which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under Section 131 of the BCL, on the
Effective Date, by reason of the Merger, the issued and
outstanding shares of Common Stock, $1 par value per share, of FB
("FB Common Stock"), other than any such shares which are owned
by Acquiror or any of its subsidiaries or affiliates, or are held
in the treasury of FB, shall be converted into that number of
shares of common stock, $ par value per share, of Acquiror
("Acquiror Common Stock") equal to the sum of (i) 1,271,186
shares of Acquiror Common Stock plus (ii) a number of shares of
Acquiror Common Stock equal to $37.5 million, less the
"Deductible Amount," defined below, if any, divided by the
average of the closing sales price of a share of Acquiror Common
Stock on The NASDAQ Stock Market for the five trading days ending
on the last trading day immediately prior to the Effective Date,
provided, however, that if the average closing sales price so
determined is less than $23.60, then the divisor shall be $23.60,
and if such average closing sales price is greater than $35.40,
then the divisor shall be $35.40. On the Effective Date, each
share of FB Common Stock owned by Acquiror or any of its
subsidiaries or held in the treasury of FB shall be cancelled.
(b) The term "Deductible Amount" shall mean the sum of
(i) any amount in excess of $200,000 not reflected or reserved
for on the Financial Statements for the period ending March 31,
1994 that is attributable to legal, accounting, investment
banking, printing and other similar fees and expenses related to
the process leading to the selection of Acquiror and the
negotiation, execution and consummation of this Joint Agreement
and the Plan other than investment banking fees payable to
Montgomery Securities, Inc. pursuant to the letter agreement
previously furnished to Acquiror; (ii) any amounts over
$1,750,000 to be paid by Acquiror or Acq. Bank pursuant to those
certain employment agreements, retention agreements and severance
policies referred to in paragraph (j) of subsection 4.07 of the
Plan; (iii) any payments made pursuant to such agreements,
policies and arrangements set forth in clause (ii) above to
officers of FB or First Bank who do not enter into noncompetition
agreements as provided by subparagraph (i) of subsection 7.03 of
the Plan; and (iv) any amounts over $540,000 to be paid by
Acquiror or Acq. Bank pursuant to those incentive pay
arrangements and budgeted bonus under plans in effect prior to
December 31, 1993 and referred to in paragraph (j) of subsection
4.07 of the Plan; provided that the entire amount to be paid by
Acquiror or Acq. Bank under such incentive pay arrangements and
budgeted bonuses shall be deducted unless FB has been accruing
for these payments since December 31, 1993.
4.2 Fractional Shares. In lieu of the issuance of any
fractional share of Acquiror Common Stock to which a holder of FB
Common Stock may be entitled (after aggregation of all fractional
shares to which such holder is entitled), each shareholder of FB,
upon surrender of the certificate or certificates which
immediately prior to the Effective Time represented FB Common
Stock held by such shareholder, shall be entitled to receive a
cash payment (without interest) equal to such fractional share
multiplied by the Conversion Price.
4.3 Exchange of Certificates. After the Effective Time,
each holder of an outstanding certificate or certificates
theretofore representing shares of FB Common Stock (other than
shares as to which dissenters' rights have been perfected and not
withdrawn or otherwise forfeited under Section 131 of the BCL),
upon surrender thereof to Acquiror, shall be entitled to receive
the property into which such shares have been converted as
provided in Section 4.1 and cash in lieu of any fractional share
as provided in Section 4.2. Until so surrendered, each
outstanding certificate shall be deemed for all purposes, other
than as provided below with respect to the payment of dividends
or other distributions, if any, in respect of Acquiror Common
Stock, to represent the number of whole shares of Acquiror Common
Stock into which the shares of FB Common Stock theretofore
represented thereby shall have been converted. Acquiror may, at
its option, refuse to pay any dividend or other distribution, if
any, payable on or in respect of Acquiror Common Stock to the
holders of certificates evidencing unsurrendered FB Common Stock,
provided, however, that upon surrender of such certificates there
shall be paid to the record holders of the stock certificate or
certificates issued in exchange therefor the amount, without
interest, of dividends and other distributions, if any, which
have become payable with respect to the number of whole shares of
Acquiror Common Stock into which the shares of FB Common Stock
theretofore represented thereby shall have been converted and
which have not previously been paid. Whether or not a stock
certificate representing FB Common Stock is surrendered, from and
after the Effective Time such certificate shall under no
circumstances evidence, represent or otherwise constitute any
stock or other interest in FB or any other person, firm or
corporation (other than Acquiror).
4.4 Shares of Acquiror. The shares of capital stock of
Acquiror outstanding immediately prior to the Effective Time
shall not be changed or converted by virtue of the Merger.
SECTION 5: Miscellaneous
5.1 Termination. Prior to the Effective Time this Joint
Agreement may be terminated, and the Merger abandoned, as set
forth in the Plan.
5.2 Headings. The descriptive headings of the sections of
this Joint Agreement are inserted for convenience only and do not
constitute a part thereof for any other purpose.
5.3 Modifications, Amendments and Waivers. At any time
prior to the Effective Time (notwithstanding any shareholder
approval that may have already been given), the parties hereto
may, to the extent permitted by and as provided in the Plan,
modify, amend or supplement any term or provision of this Joint
Agreement.
5.4 Governing Law. This Joint Agreement shall be governed
by the laws of the State of Louisiana (regardless of the laws
that might be applicable under principles of conflicts of law) as
to all matters, including but not limited to matters of
validity, construction, effect and performance.
IN WITNESS WHEREOF, the parties have executed this Joint
Agreement as of the day and year first above written.
FIRST COMMERCE CORPORATION FIRST BANCSHARES, INC.
BY: _________________________By: __________________________
Elton A. Arceneaux, Jr.
President President
<PAGE>
CERTIFICATE OF SECRETARY OF
FIRST BANCSHARES, INC.
I hereby certify that I am the duly elected Secretary of
First Bancshares, Inc., a Louisiana corporation, presently
serving in such capacity and that the foregoing Agreement was, in
the manner required by law, duly approved, without alteration or
amendment, by a majority of the voting power present of First
Bancshares, Inc.
Certificate dated ________________, 1994.
_________________________
, Secretary
CERTIFICATE OF SECRETARY OF
FIRST COMMERCE CORPORATION
I hereby certify that I am the duly elected Secretary of
First Commerce Corporation, a Louisiana corporation, presently
serving in such capacity and that the foregoing Agreement was
adopted pursuant to La. R.S. 12:112E and that, as of the date of
this certificate, First Commerce Corporation had a sufficient
number of shares of Acquiror Common Stock outstanding to render
La. R.S. 12:112E applicable to this Agreement.
Certificate dated ________________, 1994.
___________________________
, Secretary
<PAGE>
EXECUTION BY CORPORATIONS
Considering the approval of this Agreement by the
shareholders of First Bancshares, Inc., as certified above, this
Agreement is executed by such corporation and by First Commerce
Corporation, acting through their respective Presidents, this
______ day of ________________, 1994.
FIRST BANCSHARES, INC.
(Seal)
By: __________________________
President
Attest:
______________________________
, Secretary
FIRST COMMERCE CORPORATION
(Seal)
By: _________________________
Chief Executive Officer
Attest:
______________________________
, Secretary
<PAGE>
ACKNOWLEDGMENT AS TO
FIRST BANCSHARES, INC.
STATE OF LOUISIANA
PARISH OF __________
BEFORE ME, the undersigned authority, personally came and
appeared Elton A. Arceneaux, Jr. who, being duly sworn, declared
and acknowledged before me that he is the President of First
Bancshares, Inc. and that in such capacity he was duly authorized
to and did execute the foregoing Agreement on behalf of such
corporation, for the purposes therein expressed and as his and
such corporation's free act and deed.
_________________________
Appearer
Sworn to and subscribed before me
this _____ day of ________, 1994.
______________________________
Notary Public
<PAGE>
ACKNOWLEDGMENT AS TO
FIRST COMMERCE CORPORATION
STATE OF LOUISIANA
PARISH OF _____________
BEFORE ME, the undersigned authority, personally came and
appeared who being duly sworn, declared and
acknowledged before me that he is the Chief Executive Officer of
First Commerce Corporation and that in such capacity he was duly
authorized to and did execute the foregoing Agreement on behalf
of such corporation, for the purposes therein expressed and as
his and such corporation's free act and deed.
________________________
Appearer
Sworn to and subscribed before me
this _____ day of ________, 1994.
______________________________
Notary Public
<PAGE>
APPENDIX B
MONTGOMERY SECURITIES
FAIRNESS OPINION
<PAGE>
May 26, 1994
Members of the Board of Directors
First Bancshares, Inc.
1431-A Gause Boulevard
Slidell, Louisiana 70459
Gentlemen:
We understand that First Bancshares, Inc., a Louisiana
corporation ("FBCI"), and its wholly-owned subsidiary, First Bank
("FB") on the one hand, and First Commerce Corporation, a
Louisiana corporation ("FCOM"), and its wholly-owned subsidiary,
First National Bank of Commerce ("FNBC") on the other hand,
propose to enter into an Agreement and Plan of Merger dated May
27, 1994 (the "Merger Agreement"), pursuant to which FB will
merge with and into FNBC (the "Bank Merger") and FBCI will merge
with and into FCOM (the "Company Merger"). The Bank Merger and
the Company Merger are together referred to herein as the
"Merger". Pursuant to the Merger, as more fully described in the
Merger Agreement, we understand that, except for shares as to
which dissenter's rights have been perfected, each outstanding
share of the common stock, $1.00 par value per share, of FBCI
(the "FBCI Common Stock") will be converted into that number of
shares of common stock, $5 par value per share, of FCOM (the
"FCOM Common Stock") equal to the sum of (i) 1,271,186 shares of
FCOM Common Stock plus (ii) a number of shares of FCOM Common
Stock equal to $37.5 million, less the "Deductible Amount" (as
defined in the Merger Agreement), if any, divided by the average
of the closing sale prices of FCOM Common Stock on the Nasdaq
National Market for the five trading days ending on the last
trading day immediately prior to the Effective Date (as defined
in the Merger Agreement) (subject to certain adjustments as
provided for in the Merger Agreement) (the "Consideration").
You have asked for our opinion as to whether the
Consideration to be received by the shareholders of FBCI pursuant
to the Merger is fair to the shareholders of FBCI from a
financial point of view, as of the date hereof.
In connection with our opinion, we have, among other things:
(i) reviewed certain publicly available financial and other data
with respect to FCOM and certain financial and other data with
respect to FBCI, including the consolidated financial statements
for recent years and the interim period to March 31, 1994, and
certain other relevant financial and operating data relating to
FBCI and FCOM made available to us from published sources and
from the internal records of FBCI; (ii) reviewed the form of the
Merger Agreement; (iii) reviewed certain historical market prices
and trading volumes of the common stock of FCOM on the Nasdaq
National Market as reported by NASDAQ, Inc.; (iv) compared FBCI
<PAGE>
Members of the Board of Directors
May 26, 1994
Page 2
and FCOM from a financial point of view with certain other
companies in the banking industry which we deemed to be relevant;
(v) considered the financial terms, to the extent publicly
available, of selected recent business combinations of companies
in the banking industry which we deemed to be comparable, in
whole or in part, to the Merger; (vi) reviewed and discussed with
representatives of the management of FBCI and FCOM certain
information of a business and financial nature regarding FBCI and
FCOM, furnished to us by them, including financial forecasts and
related assumptions of FBCI; (vii) made inquiries regarding and
discussed the Merger and the Merger Agreement and other matters
related thereto with FBCI's counsel; and (viii) performed such
other analyses and examinations as we have deemed appropriate.
In connection with our review, we have not independently
verified any of the foregoing information with respect to FBCI or
FCOM, have relied on all such information, and have assumed that
all such information is complete and accurate in all material
respects. With respect to the financial forecasts for FBCI
provided to us by its management, we have assumed for purposes of
our opinion that the forecasts have been reasonably prepared on
bases reflecting the best available estimates and judgments of
its management at the time of preparation as to the future
financial performance of FBCI and that they provide a reasonable
basis upon which we can form our opinion. We have also assumed
that there have been no material changes in FBCI's or FCOM's
assets, financial condition, results of operations, business or
prospects since the respective dates of their last financial
statements made available to us. We have relied on advice of
counsel to FBCI as to all legal matters with respect to FBCI, the
Merger and the Merger Agreement. We are not experts in the
evaluation of loan portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and
have assumed, with your consent, that such allowances for each of
FBCI and FCOM are in the aggregate adequate to cover such losses.
In addition, we have not reviewed any individual credit files,
and we have not made an independent evaluation, appraisal or
physical inspection of the assets or individual properties of
FBCI or FCOM, nor have we been furnished with any such
appraisals. Finally, our opinion is based on economic, monetary
and market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
We have further assumed, with your consent, that the Merger
will be consummated in accordance with the terms described in the
form of the Merger Agreement, without any further amendments
thereto, and without waiver by FBCI of any of the conditions to
its obligation thereunder.
In the ordinary course of our business, we may trade the
equity securities of FCOM for our own accounts and for the
accounts of customers and, accordingly, may at any time have a
long or short position in such securities.
<PAGE>
Member of the Board of Directors
May 26, 1994
Page 3
Based upon the foregoing and in reliance thereon, it is our
opinion that the Consideration to be received by the shareholders
of FBCI pursuant to the Merger is fair to such shareholders from
a financial point of view, as of the date hereof.
This opinion is furnished pursuant to our engagement letter,
dated February 2, 1994, and is solely for the benefit of the
Board of Directors of FBCI. Except as provided in such
engagement letter, this opinion may not be used or referred to by
FBCI, or quoted or disclosed to any person in any manner without
our prior written consent. This opinion is not intended to be
and shall not be deemed to be a recommendation to any shareholder
as to how such shareholder should vote with respect to the
Merger.
Very truly yours,
MONTGOMERY SECURITIES
<PAGE>
APPENDIX C
EXCERPT FROM SECTION 131 OF THE
LOUISIANA BUSINESS CORPORATION LAW
<PAGE>
APPENDIX C
EXCERPT FROM SECTION 131 OF
THE LOUISIANA BUSINESS CORPORATION LAW
C. [A]ny shareholder electing to exercise such right of
dissent shall file with the corporation, prior to or at the
meeting of shareholders at which such proposed corporate action
is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action.
If such proposed corporate action be taken by the required vote,
but by less than eighty percent of the total voting power, and
the merger, consolidation or sale, lease or exchange of assets
authorized thereby be effected, the corporation shall promptly
thereafter give written notice thereof, by registered mail, to
each shareholder who filed such written objection to, and voted
his shares against, such action, at such shareholder's last
address on the corporation's records. Each such shareholder may,
within twenty days after the mailing of such notice to him, but
not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote
was taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of the
corporation may be sent, and at the same time deposit in escrow
in a chartered bank or trust company located in the parish of the
registered office of the corporation, the certificates
representing his shares, duly endorsed and transferred to the
corporation upon the sole condition that said certificates shall
be delivered to the corporation upon payment of the value of the
shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the
corporation, the written acknowledgment of such bank or trust
company that it so holds his certificates of stock. Unless the
objection, demand and acknowledgment aforesaid be made and
delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the
corporate action proposed or taken....
D. If the corporation does not agree to the value so
stated and demanded, or does not agree that a payment is due, it
shall, within twenty days after receipt of such demand and
acknowledgment, notify in writing the shareholder, at the
designated post office address, of its disagreement, and shall
state in such notice the value it will agree to pay if any
payment should be held to be due; otherwise it shall be liable
for, and shall pay to the dissatisfied shareholder, the value
demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or
as to whether any payment is due, after compliance by the parties
with the provisions of subsections C and D of this section, the
dissatisfied shareholder, within sixty days after receipt of
notice in writing of the corporation's disagreement, but not
thereafter, may file suit against the corporation, or the merged
or consolidated corporation, as the case may be, in the district
court of the parish in which the corporation or the merged or
consolidated corporation, as the case may be, has its registered
office, praying the court to fix and decree the fair cash value
of the dissatisfied shareholder's shares as of the day before
such corporate action complained of was taken, and the court
shall, on such evidence as may be adduced in relation thereto,
determine summarily whether any payment is due, and, if so, such
cash value, and render judgment accordingly. Any shareholder
entitled to file such suit may, within such sixty-day period but
not thereafter, intervene as a plaintiff in such suit filed by
another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or
decree shall be made by the court staying the proposed corporate
action, and any such corporate action may be carried to
completion notwithstanding any such suit. Failure of the
shareholder to bring suit, or to intervene in such a suit, within
sixty days after receipt of notice of disagreement by the
corporation shall conclusively bind the shareholder (1) by the
corporation's statement that no payment is due, or (2) if the
corporation does not contend that no payment is due, to accept
the value of his shares as fixed by the corporation in its notice
of disagreement.
F. When the fair value of the shares has been agreed upon
between the shareholder and the corporation, or when the corpora-
tion has become liable for the value demanded by the shareholder
because of failure to give notice of disagreement and of the
value it will pay, or when the shareholder has become bound to
accept the value the corporation agrees is due because of his
failure to bring suit within sixty days after receipt of notice
of the corporation's disagreement, the action of the shareholder
to recover such value must be brought within five years from the
date the value was agreed upon, or the liability of the
corporation became fixed.
G. If the corporation or the merged or consolidated
corporation, as the case may be, shall, in its notice of
disagreement, have offered to pay the dissatisfied shareholder on
demand an amount in cash deemed by it to be the fair cash value
of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the
amount so offered, the corporation, or the merged or consolidated
corporation, as the case may be, shall deposit in the registry of
the court, there to remain until the final determination of the
cause, the amount so offered, then, if the amount finally awarded
such shareholder, exclusive of interest and costs, be more than
the amount offered and deposited as aforesaid, the costs of the
proceeding shall be taxed against the corporation, or the merged
or consolidated corporation, as the case may be; otherwise the
costs of the proceeding shall be taxed against such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a
shareholder except the rights accorded by this section. Such a
demand may be withdrawn by the shareholder at any time before the
corporation gives notice of disagreement, as provided in
subsection D of this section. After such notice of disagreement
is given, withdrawal of a notice of election shall require the
written consent of the corporation. If a notice of election is
withdrawn, or the proposed corporate action is abandoned or
rescinded, or a court shall determine that the shareholder is not
entitled to receive payment for his shares, or the shareholder
shall otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares, his share
certificates shall be returned to him (and, on his request, new
certificates shall be issued to him in exchange for the old ones
endorsed to the corporation), and he shall be reinstated to all
his rights as a shareholder as of the filing of his demand for
value, including any intervening preemptive rights, and the right
to payment of any intervening dividend or other distribution, or,
if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value
thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any
corporate proceedings that may have been taken in the interim.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 83 of the Louisiana Business Corporation Law
provides in part that a corporation may indemnify any
director, officer, employee or agent of the corporation
against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any action, suit or
proceeding to which he is or was a party or is threatened to
be made a party (including any action by or in the right of
the corporation) if such action arises out of the fact that
he is or was a director, officer, employee or agent of the
corporation and he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
The indemnification provisions of the Louisiana
Business Corporation Law are not exclusive; however, no
corporation may indemnify any person for willful or
intentional misconduct. A corporation has the power to
obtain and maintain insurance, or to create a form of self-
insurance on behalf of any person who is or was acting for
the corporation, regardless of whether the corporation has
the legal authority to indemnify the insured person against
such liability.
Section 11 of FCC's by-laws (the "Indemnification By-
Law") provides for mandatory indemnification for directors
and officers or former directors and officers of FCC to the
full extent permitted by Louisiana law. The right to
indemnification provided by the Indemnification By-law
applies to all covered claims, whether such claims arose
before or after the date the Indemnification By-law was
adopted.
As permitted by FCC's Articles of Incorporation, FCC
has entered into contracts with its directors and officers
providing for indemnification to the fullest extent
permitted by law ("Indemnification Contracts"). The rights
of the directors and officers under the Indemnification
Contracts substantially mirror those granted under the
Indemnification By-law.
FCC maintains an insurance policy covering the
liability of its directors and officers for actions taken in
their official capacity.
The Indemnification Contracts provide that, to the
extent insurance is reasonably available, FCC will maintain
comparable insurance coverage for each contracting party as
long as he or she serves as an officer or director and
thereafter for so long as he or she is subject to possible
personal liability for actions taken in such capacities.
The Indemnification Contracts also provide that if FCC does
not maintain comparable insurance, it will hold harmless and
indemnify a contracting party to the full extent of the
coverage that would otherwise have been provided for his or
her benefit.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits. The following Exhibits are filed as
part of this Registration Statement:
Exhibit No. Description
2 Agreement and Plan of Merger dated May 27,
1994 included in the Registration Statement
as Appendix A.
4.1 Indenture between First Commerce Corporation
and Republic Bank Dallas, N.A., Trustee,
including the form of 12 3/4% Convertible
Debenture due 2000, Series A included as
Exhibit 4.1 to First Commerce Corporation's
Annual Report on Form 10-K for the year ended
December 31, 1985 and incorporated herein by
reference.
4.2 Indenture between First Commerce Corporation
and Republic Bank Dallas, N.A., Trustee,
including the form of 12 3/4% Convertible
Debenture due 2000, Series B included as
Exhibit 4.2 to First Commerce Corporation's
Annual Report on Form 10-K for the year ended
December 31, 1986 and incorporated herein by
reference.
5 Opinion of Correro, Fishman & Casteix, L.L.P.
8 Form of opinion of McGlinchey Stafford Lang,
A Law Corporation as to certain tax matters.*
15 Letter of Arthur Andersen & Co. regarding
unaudited interim financial information.
23.1 Consent of Arthur Andersen & Co.
23.2 Consent of Arthur Andersen & Co.
23.3 Consent of Correro, Fishman & Casteix,
L.L.P., included in Exhibit 5.
24 Powers of Attorney of directors of First
Commerce Corporation contained on page S-1 of
the registration statement.
99 Form of Proxy of First Bancshares, Inc.
_________________
* To be filed by amendment.
(b) Financial Statement Schedules
None.
Item 22. Undertakings
The undersigned Registrant hereby undertakes as
follows:
(1) To respond to requests for information that
is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11, or 13 of Form S-4,
within one business day of receipt of such request, and
to send the incorporated documents by first class mail
or other equally prompt means. This includes
information contained in documents filed subsequent to
the effective date of the Registration Statement
through the date of responding to the request.
(2) To supply by means of a post-effective
amendment all information concerning a transaction, and
the company being acquired involved therein, that was
not the subject of and included in the Registration
Statement when it became effective.
(3) That for purposes of determining any
liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") (and, where applicable, each
filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement
related 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.
(4) 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
Registrant 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.
(5) That every prospectus (i) that is filed
pursuant to paragraph (4) immediately preceding, or
(ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until
such amendment is effective, and that, for purposes of
determining any liability under the Securities Act,
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.
(6) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to
directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against
such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling
person in connection with the securities being
registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification
by it is against public policy as expressed in the
Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
Signatures
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 New Orleans, State of Louisiana on
the 29th day of July, 1994.
FIRST COMMERCE CORPORATION
By: /s/ THOMAS L. CALLICUTT, JR.
Thomas L. Callicutt, Jr.
Senior Vice President and Controller
(Principal Accounting Officer and
Acting Chief Financial Officer)
Pursuant to the requirements of the Securities Act,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby
constitutes and appoints David B. Kelso and Thomas L.
Callicutt, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all
amendments to such Registration Statement, including post-
effective amendments, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact or
agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Signature Title Date
/s/ IAN ARNOF President and Chief July 29, 1994
Ian Arnof Executive Officer and
Director
/s/ HERMANN MOYSE, JR. Chairman of the Board July 29, 1994
Hermann Moyse, Jr.
Executive Vice July , 1994
David B. Kelso President and Chief
Financial Officer
/s/ THOMAS L. CALLICUTT, JR. Senior Vice President July 29, 1994
Thomas L. Callicutt, Jr. and Controller
Thomas L. Callicutt, Jr. (Principal Accounting
Officer and Acting
Chief Financial
Officer)
Director July , 1994
James J. Bailey III
/s/ JOHN W. BARTON Director July 29, 1994
John W. Barton
Director July , 1994
Sydney J. Bestoff III
/s/ ROBERT H. BOLTON Director July 29, 1994
Robert H. Bolton
/s/ FRANCES B. DAVIS Director July 29, 1994
Frances B. Davis
/s/ LAURANCE EUSTIS, JR. Director July 29, 1994
Laurance Eustis, Jr.
/s/ WILLIAM P. FULLER Director July 29, 1994
William P. Fuller
/s/ ARTHUR HOLLINS III Director July 29, 1994
Arthur Hollins III
/s/ F. BEN JAMES, JR. Director July 29, 1994
F. Ben James, Jr.
/s/ ERIK F. JOHNSEN Director July 29, 1994
Erik F. Johnsen
/s/ JOSEPH MERRICK JONES, JR. Director July 29, 1994
Joseph Merrick Jones, Jr.
Director July , 1994
Edwin Lupberger
/s/ O. MILES POLLARD, JR. Director July 29, 1994
O. Miles Pollard, Jr.
/s/ G. FRANK PURVIS, JR. Director July 29, 1994
G. Frank Purvis, Jr.
/s/ EDWARD M. SIMMONS Director July 29, 1994
Edward M. Simmons
/s/ H. LEIGHTON STEWARD Director July 29, 1994
H. Leighton Steward
/s/ JOSEPH B. STOREY Director July 29, 1994
Joseph B. Storey
/s/ ROBERT A. WEIGLE Director July 29, 1994
Robert A. Weigle
<PAGE>
EXHIBIT INDEX
Sequentially
Numbered
Exhibits Pages
2 Agreement and Plan of Merger dated May 27,
1994 included in the Registration Statement
as Appendix A.
4.1 Indenture between First Commerce
Corporation and Republic Bank Dallas, N.A.,
Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series A
included as Exhibit 4.1 to First Commerce
Corporation's Annual Report on Form 10-K
for the year ended December 31, 1985 and
incorporated herein by reference.
4.2 Indenture between First Commerce
Corporation and Republic Bank Dallas, N.A.,
Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series B
included as Exhibit 4.2 to First Commerce
Corporation's Annual Report on Form 10-K
for the year ended December 31, 1986 and
incorporated herein by reference.
5 Opinion of Correro, Fishman & Casteix,
L.L.P.
8 Form of opinion of McGlilnchey Stafford
Lang, A Law Corporation as to certain tax
matters.*
15 Letter of Arthur Andersen & Co. regarding
unaudited interim financial information.
23.1 Consent of Arthur Andersen & Co.
23.2 Consent of Arthur Andersen & Co.
23.3 Consent of Correro, Fishman & Casteix,
L.L.P. included in Exhibit 5.
24 Powers of Attorney of directors of First
Commerce Corporation contained on page S-1
of the registration statement.
99 Form of Proxy of First Bancshares, Inc.
_________________
* To be filed by amendment.
EXHIBIT 5
[CORRERO, FISHMAN & CASTEIX, L.L.P. LETTERHEAD]
July 28, 1994
First Commerce Corporation
210 Baronne Street
New Orleans, LA 70112
Gentlemen:
We have acted as counsel for First
Commerce Corporation, a Louisiana corporation
(the "Company"), in connection with the
Company's Registration Statement on Form S-4
(the "Registration Statement") covering up to
2,860,169 shares of common stock (the "Common
Stock") of the Company (the "Shares") which
the Company proposes to issue to shareholders
of First Bancshares, Inc. in accordance with
the Agreement and Plan of Merger (the "Plan")
described in the Registration Statement.
For the purposes of the opinions
expressed below, we have examined the
Registration Statement, the Plan, the
Articles of Incorporation, as amended, and
By-laws, as amended, of the Company,
resolutions adopted by the Board of Directors
and Executive Committee of the Company and
such other documents and sources of law as we
considered necessary.
On the basis of the foregoing, we are of
the opinion that the proposed issuance of the
Shares has been duly authorized by all
necessary corporate action, and the Shares
will, when issued in accordance with the
terms of the Plan, be validly issued, fully
paid and non-assessable.
We hereby consent (i) to be named in the
Registration Statement under the heading
"Legal Matters" as counsel for the Company
and (ii) to the filing of this opinion as an
Exhibit to the Registration Statement. In so
doing we do not thereby admit that we are
"experts" within the meaning of the
Securities Act of 1933.
Yours sincerely,
Anthony J. Correro, III
EXHIBIT 15
August 1, 1994
First Commerce Corporation:
We are aware that First Commerce Corporation
has incorporated by reference in its
Registration Statement its Form 10-Q for the
quarter ended March 31, 1994, which includes
our report dated April 13, 1994, covering the
unaudited interim financial information
contained therein. Pursuant to Regulation C
of the Securities Act of 1993, that report is
not considered a part of the registration
statement prepared or certified by our firm
or reports prepared or certified by our firm
within the meaning of Sections 7 and 11 of
the Act.
Very truly yours,
Arthur Andersen & Co.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby
consent to the incorporation by reference in
this registration statement of our report
dated January 12, 1994 included in First
Commerce Corporation's Form 10-K for the year
ended December 31, 1993 and to all references
to our Firm included in this registration
statement.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana
July 29, 1994
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby
consent to the use of our report dated March
11, 1994 covering the audited financial
statements of First Bancshares, Inc. (and to
all references to our Firm) included in this
registration statement.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana
July 29, 1994
EXHIBIT 99
PROXY
FIRST BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
________, 1994
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and
appoints ________, ________ and ________, or
any of them, the proxies of the undersigned,
with full power of substitution, to represent
the undersigned and to vote all of the shares
of common stock of First Bancshares, Inc.
("FB") that the undersigned is entitled to
vote at the Special Meeting of Shareholders
of FB to be held on ________, 1994 and any
adjournments thereof.
1. A proposal to approve an Agreement and
Plan of Merger and two related merger
agreements (collectively, the "Plan")
pursuant to which (a) First Bank, the
wholly-owned subsidiary of FB, will be
merged with and into First National Bank
of Commerce, a wholly-owned subsidiary
of First Commerce Corporation ("FCC");
(b) FB will be merged with and into FCC
(the "Holding Company Merger"); and (c)
on the effective date of the Holding
Company Merger, each outstanding share
of common stock of FB will be converted
into a number of shares of FCC common
stock as determined in accordance with
the Plan.
FOR ______ AGAINST ______ ABSTAIN ______
2. In their discretion, to vote upon such
other business as may properly come
before the meeting or any adjournment
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFIC DIRECTIONS ARE GIVEN, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL 1 SET FORTH
HEREIN.
=============================================
PLEASE SIGN, DATE AND RETURN THIS PROXY
TO FB PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as the name appears
on the certificate or certificates
representing shares to be voted by this
proxy. When signing as executor,
administrator, attorney, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by president or other authorized person.
If a partnership, please sign in partnership
name by authorized persons.
Dated: ________, 1994
__________________________
Signature of Shareholder
Insert Mailing Label __________________________
Signature (if jointly owned)
