As filed with the Securities and Exchange Commission on September
30, 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)
Louisiana 6711 72-0701203
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification
incorporation or Number)
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)
<TABLE>
<C> <C> <C>
Copy to: DAVID B. KELSO Copy to:
ANTHONY J. CORRERO, III 210 Baronne Street CATHY E. CHESSIN
Correro, Fishman & New Orleans, Louisiana 70112 Gordon, Arata, McCollam
Casteix, L.L.P. (504) 561-1371 & Duplantis, L.L.P.
47th Floor (Name, address, including zip 40th Floor
201 St. Charles Avenue telephone number, including area 201 St. Charles Avenue
New Orleans, Louisiana 70170-4700 code, of agent for service) New Orleans, Louisiana 70170
</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
==============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Number of Offering Aggregate
Class of Securities Shares to be Price Per Offering Amount of
to be Registered registered<FN1> Share<FN2> Price<FN2> Registration<FN2>
______________________________________________________________________________
Common Stock
$5 Par value 562,500 $78.79 $7,879,000 $2,717
<FN1> Based on the minimum closing sales price of a share of First Commerce
Corporation ("FCC") Common Stock, $5 par value per share of $24.00
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 August 31, 1994 of the shares of common stock, $5
par value per share, of Bancorp 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 Bancorp Common
Stock on August 31, 1994 of $78.79 by 100,000 representing the number
of issued and outstanding shares of Bancorp Common Stock on
August 31, 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.
==============================================================================
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
2. Inside Front and Outside Inside Cover; Table of Contents
Back Cover Pages of Prospectus
3. Risk Factors, Ratio of Earnings *
to Fixed Charges and Other
Information
4. Terms of the Transaction Summary; The Plan
5. Pro Forma Financial First Commerce Corporation Pro
Information Forma Condensed Combined
Financial Statements (Unaudited)
6. Material Contacts with *
the Company Being
Acquired
7. Additional Information *
Required for Reoffering
by Persons and Parties
Deemed to be Underwriters
8. Interests of Named *
Experts and Counsel
9. Disclosure of Commission *
Position on Indemnification
for Securities Act Liability
B. Information About the Registrant
10. Information with Respect Information about FCC
to S-3 Registrants
11. Incorporation of Certain Information about FCC
Information by Reference
12. Information with Respect *
to S-2 or S-3 Registrants
13. Incorporation of Certain *
Information by Reference
14. Information with Respect *
to Registrants other than
S-2 or S-3 Registrants
C. Information About the Company Being Acquired
15. Information with Respect *
to S-3 Companies
16. Information with Respect *
to S-2 or S-3 Companies
17. Information with Respect Information about Bancorp
to Companies other than
S-2 or S-3 Companies
D. Voting and Management Information
18. Information if Proxies,
Consents or Authorizations
are to be Solicited
(1) Date, Time and Place Introductory Statement-General
Information
(2) Revocability of Proxy Introductory Statement-
Solicitation, Voting and
Revocation of Proxies
(3) Dissenters' Rights Dissenters' Rights
of Appraisal
(4) Persons Making Solicitation Introductory Statement-General
(5) Interests of Certain Summary-Interest of Certain
Persons in Matters Persons in the Mergers; The
to be Acted upon; Plan - Interest of Certain
Voting Securities Persons in the Mergers; The
and Principal Holders Plan - Employee Benefits;
Thereof Information About Bancorp -
Security Ownership of
Principal Shareholders and
Management
(6) Vote Required for Approval Introductory Statement-Shares
Entitled to Vote; Quorum; Vote
Required
(7) Directors and Executive Information About Bancorp;
Officers; Executive Information About FCC
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>
CITY BANCORP, INC.
712 Center Street
New Iberia, Louisiana 70560
____________, 1994
Dear Shareholder:
You are invited to attend a special meeting of
shareholders of City Bancorp, Inc. ("Bancorp") to be held on
____________, ____________, 1994 at ________ __.m., local
time at Bancorp's main office, 712 Center Street, in the
City of New Iberia, Louisiana.
At the meeting, you will be asked to approve an
Agreement and Plan of Merger and two related merger
agreements (collectively, the "Plan") pursuant to which,
among other things, City Bank & Trust Company, New Iberia,
Louisiana ("City Bank"), the wholly-owned banking subsidiary
of Bancorp, will merge into The First National Bank of
Lafayette ("FNBL"), a wholly-owned banking subsidiary of
First Commerce Corporation ("FCC") (the "Bank Merger") and,
immediately thereafter, Bancorp will merge into FCC (the
"Holding Company Merger" which, together with the Bank
Merger, are collectively called 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 Bancorp will be converted into shares of FCC common
stock as more fully described in the attached Proxy
Statement. You are urged carefully to read the Proxy
Statement in its entirety for a more complete description of
the terms of the Plan and the proposed Mergers.
The Plan has been approved unanimously by your Board of
Directors. The Board believes that the proposed Mergers are
in the best interests of Bancorp'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.
Through its wholly-owned bank subsidiary FNBL, FCC will be
better able to offer a broad range of banking services to
Iberia and St. Martin Parishes and to compete more
effectively with bank holding companies and other financial
institutions in the changing economic and legal environment
facing all financial institutions. The Board also believes
that the Plan provides fair financial terms to Bancorp's
shareholders.
The Board of Directors recommends that you vote FOR the
Plan and urges you to execute the enclosed proxy and return
it promptly in the accompanying envelope.
Very truly yours,
Richard L. Delhomme
President
<PAGE>
CITY BANCORP, INC.
712 Center Street
New Iberia, Louisiana 70560
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________, 1994
New Iberia, Louisiana
____________, 1994
A special meeting of shareholders of City Bancorp, Inc.
("Bancorp") will be held on ____________, ____________, 1994
at ________ __.m. local time at Bancorp's main office, 712
Center Street, New Iberia, Louisiana, to vote upon the
following matters:
1. A proposal to approve an Agreement and Plan
of Merger and two related merger agreements
(collectively, the "Plan") pursuant to which, among
other things: (a) City Bank & Trust Company, New
Iberia, Louisiana, the wholly-owned bank subsidiary of
Bancorp, will merge into The First National Bank of
Lafayette, a wholly-owned bank subsidiary of First
Commerce Corporation ("FCC"), (b) immediately
thereafter, Bancorp will merge into FCC (the "Holding
Company Merger"), and (c) on the effective date of the
Holding Company Merger, each outstanding share of
common stock of Bancorp will be converted into a number
of shares of FCC common stock as determined in
accordance with the terms of the Plan.
2. Such other matters as may properly come
before the meeting or any adjournments 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 Bancorp.
Your vote is important regardless of the number of
shares you own. Whether or not you plan to attend the
special meeting, please mark, date and sign the enclosed
proxy and return it promptly in the enclosed stamped
envelope. Your proxy may be revoked by appropriate notice
of Bancorp's Secretary at any time prior to the voting
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
______________________________
Beldon E. Fox, Sr.
Chairman of the Board
________________________
Patrick D. Burke
Secretary
<PAGE>
FIRST COMMERCE CORPORATION
Common Stock, $5.00 par value
________________________________________
City Bancorp, 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
562,500 shares of common stock, $5 par value, of FCC ("FCC
Common Stock") which may be issued in connection with a
proposed merger of City Bancorp, Inc. ("Bancorp") into FCC
as determined on the basis of the operation of the pricing
formula described herein. This document constitutes a Proxy
Statement of Bancorp 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 Agreement and Plan of Merger 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 Bancorp. 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 Bancorp since the date hereof.
________________________________________
This Proxy Statement and Prospectus is dated ____________,
1994
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 captioned
"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.
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
Reasons for the Plan; Recommendation of
Bancorp's Board of Directors ii
Opinion of Chaffe & Associates, Inc. iii
Conversion of Bancorp Common Stock iii
Exchange of Certificates iv
Conditions to Consummation of the Mergers v
Waiver, Amendment and Termination v
Interests of Certain Persons in the Mergers vi
Joinder of Shareholders vi
Employee Benefits vii
Certain Federal Income Tax Consequences vii
Dissenters' Rights vii
Selected Financial Data of Bancorp viii
Selected Financial Data of FCC ix
Comparative Per Share Data (Unaudited) x
Market Prices and Dividends xii
INTRODUCTORY STATEMENT 1
General 1
Purpose of the Special Meeting 1
Shares Entitled to Vote; Quorum; Vote Required 1
Solicitation, Voting and Revocation of Proxies 2
THE PLAN 2
General 2
Background of and Reasons for the Plan 3
Opinion of Chaffe & Associates, Inc. 3
Conversion of Bancorp Common Stock 5
Effective Date 6
Exchange of Certificates 6
Regulatory Approvals and Other Conditions of the Mergers 7
Conduct of Business Prior to the Effective Date 8
Waiver, Amendment and Termination 9
Interests of Certain Persons in the Mergers 10
Joinder of Shareholders 11
Employee Benefits 11
Expenses 13
Status Under Federal Securities Laws; Certain
Restrictions on Resales 13
Accounting Treatment 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 14
DISSENTERS' RIGHTS 15
INFORMATION ABOUT BANCORP 17
Principal Business 17
Market Prices and Dividends 17
Property 18
Employees 19
Security Ownership of Principal
Shareholders and Management 19
BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE TWO YEARS ENDED DECEMBER 31, 1993 and 1992 21
Overview 21
Results of Operations 22
Analysis of Financial Condition 27
BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR
THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993 34
Overview 34
Results of Operations 34
Analysis of Financial Condition 36
INFORMATION ABOUT FCC 38
COMPARATIVE RIGHTS OF SHAREHOLDERS 38
Preferred Stock 38
Preemptive Rights 39
Shareholder Action by Consent 39
Limitation of Personal Liability of Directors
and Officers 39
Special Meetings of Shareholders 40
LEGAL MATTERS 40
EXPERTS 40
OTHER MATTERS 41
FIRST COMMERCE CORPORATION PRO FORMA
CONDENSED COMBINED FINANCIAL
STATEMENTS (UNAUDITED) F-1
CITY BANCORP, INC. CONSOLIDATED FINANCIAL
STATEMENTS TABLE OF CONTENTS F-18
Appendix A - Selected Portions of Agreement and
Plan of Merger A-1
Appendix B - Fairness Opinion of Chaffe & Associates, Inc. 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, Lake
Charles and Lafayette, Louisiana. FCC and its subsidiaries are
referred to collectively herein as "FCC's consolidated group."
At June 30, 1994, FCC had total consolidated assets of
approximately $6.3 billion and total consolidated deposits of
approximately $5.2 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."
City Bancorp, Inc., a Louisiana corporation ("Bancorp"), is
a one bank holding company that owns all of the outstanding stock
of City Bank & Trust Company, New Iberia, Louisiana ("City
Bank"). At June 30, 1994, Bancorp had total consolidated assets
of approximately $85.9 million and total consolidated deposits of
approximately $70.9 million. Bancorp's principal executive
offices are at 712 Center Street, New Iberia, Louisiana 70560,
and its telephone number is (318) 369-6311. Bancorp and City
Bank are referred to herein collectively as "Bancorp's
consolidated group." See "Information about Bancorp."
FCC and Bancorp are collectively referred to herein as the
"Companies."
The Banks
The First National Bank of Lafayette ("FNBL"), 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 Lafayette, St. Landry, Vermilion and Iberia
Parishes. At June 30, 1994, FNBL had total assets of
approximately $646 million and total deposits of approximately
$552 million. In addition to its main banking facility in
Lafayette, Louisiana, FNBL operates full service branches in
Abbeville, Carencro, New Iberia, Opelousas, Port Barre, Scott and
Sunset, Louisiana.
City Bank, a Louisiana state chartered bank that is a
wholly-owned subsidiary of Bancorp, is a full service commercial
bank offering consumer and commercial banking services in Iberia
and St. Martin Parishes. At June 30, 1994, City Bank had total
assets of approximately $85.9 million and total deposits of
approximately $70.9 million. In addition to its main banking
facility in New Iberia, Louisiana, City Bank operates five other
full service branches and three ATM locations in Iberia Parish,
Louisiana and an ATM location in St. Martin Parish.
FNBL and City Bank are collectively referred to herein as
the "Banks."
The Special Meeting
A special meeting of the shareholders of Bancorp will be
held on ____________, 1994 at the time and place set forth in the
accompanying Notice of Special Meeting of Shareholders (the
"Special Meeting"). Only record holders of the common stock, $5
par value, of Bancorp ("Bancorp Common Stock") on ____________,
____________, 1994 are entitled to notice of and to vote at the
Special Meeting. On that date, there were 100,000 shares of
Bancorp Common Stock issued and outstanding, each of which is
entitled to one vote on each matter properly to come before the
Special Meeting.
Purpose of the Special Meeting
The purpose of the Special Meeting is to vote upon a
proposal to approve an Agreement and Plan of Merger and two
related merger agreements (collectively, the "Plan"), selected
portions of which are attached hereto as Appendix A, pursuant to
which, among other things, City Bank will merge into FNBL (the
"Bank Merger") and, immediately thereafter, Bancorp will merge
into FCC (the "Holding Company Merger" which, together with the
Bank Merger, are collectively called the "Mergers"), with the
result that the business and properties of City Bank will become
the business and properties of FNBL, the business and properties
of Bancorp will become the business and properties of FCC and
shareholders of Bancorp will receive the consideration described
below under "Conversion of Bancorp 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 total voting power of Bancorp. Directors,
executive officers and certain principal shareholders of Bancorp
beneficially owning an aggregate of 51,341 shares, or
approximately 51.34% of the outstanding Bancorp Common Stock have
executed agreements pursuant to which they each agreed, subject
to certain conditions, to vote in favor of the Plan. Under
Louisiana law, shareholders of FCC are not required to approve
the Plan. See "Introductory Statement - Shares Entitled to Vote;
Quorum; Vote Required."
Reasons for the Plan; Recommendation of Bancorp's Board of
Directors
The Board of Directors of Bancorp believes that approval of
the Plan is in the best interests of Bancorp and its
shareholders. Among the factors considered by the Board in
recommending the Plan, in addition to the financial terms, were
(i) the likelihood that recent changes in the law and recent
mergers and acquisitions would result in increased competition
for City Bank in its market area from banking and other financial
institutions having greater resources than City Bank, (ii) the
liquidity afforded to shareholders of Bancorp through the
ownership of a publicly traded stock, and (ii) a review of the
business and prospects of FCC's consolidated group.
The financial and other terms of the Plan were arrived at
through arm's length negotiations between representatives of the
Companies and the Banks. Determination of the consideration to
be received by Bancorp's shareholders in exchange for their stock
was based upon various factors considered by the Boards of
Directors of FCC and Bancorp, including primarily the comparative
financial condition, historical results of operations, current
business and future prospects of the Companies and the Banks, the
market price and historical earnings per share of the common
stock of the Companies, and the desirability of combining the
financial and managerial resources of FNBL and City Bank to
pursue available consumer and commercial banking business in
Iberia and St. Martin Parishes.
The Board of Directors of Bancorp has unanimously approved
the Plan and recommends that its shareholders vote FOR approval
of the Plan. See "The Plan - Background of and Reasons for the
Plan."
Opinion of Chaffe & Associates, Inc.
Chaffe & Associates, Inc. ("Chaffe") was engaged as an
independent financial expert to render an opinion as to the
fairness to Bancorp and its shareholders from a financial point
of view of the consideration to be received by Bancorp's
shareholders pursuant to the Holding Company Merger. Chaffe was
selected because of its experience, reputation and expertise in
the financial services industry and its familiarity with the
financial condition of Bancorp and City Bank. A copy of the
fairness opinion is attached as Appendix B and should be read in
its entirety. The opinion concludes that, as of the date of such
opinion, and based on and subject to the assumptions made, the
factors considered, the review undertaken and the limitations
stated, the proposed Exchange Ratio (as defined in the fairness
opinion) is fair to Bancorp and its shareholders from a financial
point of view. Chaffe's opinion is directed only to the fairness
of the Exchange Ratio from a financial point of view and does not
constitute a recommendation to any shareholder on how to vote at
the Special Meeting.
Conversion of Bancorp Common Stock
Under the terms of the Plan, on the date the Holding Company
Merger becomes effective (the "Effective Date"), each issued and
outstanding share of Bancorp Common Stock will be converted into
a number of shares of common stock, $5.00 par value per share, of
FCC ("FCC Common Stock") equal to the quotient of (a) (i) $13.5
million less the Deductible Amount, as defined below, divided by
(ii) the "Average Sales Price", as defined below, of a share of
FCC Common Stock; provided that if the Average Sales price is
less than $24, then the divisor will be $24, and if the Average
Sales Price is greater than $30, then the divisor will be $30,
divided by (b) the number of outstanding shares of Bancorp Common
Stock on the Effective Date.
The "Deductible Amount" is defined in the Plan as the excess
over $150,000 of the legal, accounting, investment banking,
printing and filing fees and expenses incurred by Bancorp's
consolidated group in connection with the Plan and the Mergers.
The "Average Sales Price" is defined as the average of the
closing sales prices of a share of FCC Common Stock reported on
the National Association of Securities Dealers Automated
Quotation System for securities listed for trading on the Nasdaq
National Market for the five trading days ending on the last
trading day immediately prior to the Effective Date.
The following table sets forth examples of the number of
shares of FCC Common Stock into which each share of Bancorp
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 and there is no Deductible Amount. As of
____________, 1994, the legal, accounting and investment banking
fees and expenses that had been incurred by Bancorp's
consolidated group in connection with the Plan totalled
approximately $_______. [It is not certain whether, as of the
Effective Date, these fees and expenses (plus printing costs)
will exceed $150,000.]
Assumed Average Number of FCC
Sales Price of FCC Common Stock Shares Per Bancorp Share
$ 22 5.63
24 5.63
26 5.19
28 4.82
30 4.50
32 4.50
On ____________, 1994, the actual closing sales price for a share
of FCC Common Stock was $_____, and if such date had been the
Effective Date of the Mergers, the Average Sales Price would have
been $_____.
In lieu of the issuance of any fractional share of FCC
Common Stock to which a holder of Bancorp Common Stock may be
entitled, each shareholder of Bancorp, upon surrender of the
certificate or certificates which immediately prior to the
Effective Date represented Bancorp 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 Bancorp
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 Bancorp Common Stock for certificates
representing shares of FCC Common Stock will be mailed to each
person who was a shareholder of record of Bancorp on the
Effective Date of the Mergers. Shareholders are requested not to
send in their Bancorp Common Stock certificates until they have
received a letter of transmittal and further written
instructions.
Bancorp shareholders who cannot locate their certificates
are urged to contact promptly Patrick D. Burke, City Bancorp,
Inc., 712 Center Street, New Iberia, Louisiana 70560, telephone
number (318) 369-6311. 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 Bancorp and FCC
against any claim that may be made against Bancorp or FCC by the
owner of the certificate(s) alleged to have been lost or
destroyed. Bancorp or FCC may also require the shareholder to
post a bond in such sum as is sufficient to support the
shareholder's agreement to indemnify Bancorp and FCC. See "The
Plan - Exchange of Certificates."
Conditions to Consummation of the Mergers
In addition to approval by the shareholders of Bancorp,
consummation of the Mergers is conditioned upon, among other
things, (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, business or prospects of the other party's
consolidated group, (ii) the receipt by FCC and FNBL of required
regulatory approvals, (iii) the receipt by FCC of assurances that
the Mergers may be accounted for as a pooling-of-interests, (iv)
the receipt by FCC and Bancorp of opinions as to the
qualification of the Mergers as tax-free reorganizations under
applicable law, (iv) termination of certain litigation against
City Bank 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 September 8, 1994, FCC filed an application seeking
approval of the Bank Merger of the Office of the Comptroller of
the Currency (the "Comptroller") and on September 26, 1994, filed
an application seeking the prior approval of the Board of
Governors of the Federal Reserve System (the "Reserve Board").
FCC expects to receive such approvals by December 15, 1994;
however, there can be no assurance that the approvals 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 approval by the shareholders of Bancorp, the
receipt of all necessary regulatory approvals and the
satisfaction 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 Bancorp, by the mutual agreement
of the Boards of Directors of the parties to the Plan; provided
that, under the Louisiana Business Corporation Law any amendment
made subsequent to such shareholder approval may not alter the
amount or type of shares into which Bancorp Common Stock will 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 Bancorp.
The Plan may be terminated at any time prior to the
Effective Date of the Mergers by (i) the mutual consent of the
parties, (ii) the Board of Directors of either FCC or Bancorp 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 10
days after written notice of such breach or March 31, 1995; (iii)
the Board of Directors of either FCC or Bancorp if by March 31,
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, (iv) the Board of Directors of FCC or FNBL if the
number of shares of Bancorp Common Stock as to which holders
thereof have perfected dissenters' rights exceeds 5% of the total
number of shares of Bancorp Common Stock issued and outstanding
on the date of the closing or (v) the Board of Directors of
either FCC or FNBL if Bancorp'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 Bancorp's consolidated group or
any acquisition of 15% or more of any class of Bancorp'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
FCC and FNBL have agreed that, following the Effective Date,
they will indemnify each person who served as an officer or
director of Bancorp or City Bank on August 12, 1994 or who
previously served as an officer or director of Bancorp or City
Bank during the period beginning May 1, 1992, from and against
all damages, liabilities, judgments and claims based upon or
arising out of such person's service in such capacity to the same
extent as he would have been indemnified under the applicable
articles of incorporation or bylaws of Bancorp or City Bank, as
appropriate, as they were in effect on the date the Plan was
executed. With certain exceptions, the aggregate amount of
indemnification payments required to be made by FCC and FNBL to
such persons is $3.5 million. See "The Plan - Interests of
Certain Persons in the Mergers." Directors and officers who do
not execute a Joinder of Shareholders will not be entitled to the
indemnification set forth in the Plan.
Joinder of Shareholders
As a condition to the consummation of the Mergers, each
director and executive officer of Bancorp and each shareholder
who beneficially owns 9% or more of the outstanding shares of
Bancorp Common Stock has executed an individual agreement
pursuant to which such shareholder 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 City Bank or Bancorp, (ii)
not to transfer any shares of Bancorp Common Stock, except under
certain conditions, (iii) not to trade in FCC Common Stock in
violation of the federal securities laws or to affect the market
price thereof prior to the Effective Date, (iv) to release FCC
and FNBL from any indemnification obligations that either of them
may have to indemnify him in his capacity as an officer, director
or employee of any member of Bancorp's consolidated group except
as set forth in the Plan, and (v) that for a period of one year
following the Effective Date, he will not assume a significant
proprietary or managerial position with a financial institution
that competes in Iberia and Lafayette Parishes with the business
of City Bank as continued by FNBL, except that Ms. Moore and Mr.
Burke have executed a joinder agreement that does not contain an
agreement not to compete. See "The Plan - Joinder of
Shareholders."
Employee Benefits
Pursuant to the Plan, FCC has agreed that, from and after
the Effective Date, FCC or FNBL will offer to all persons who
were employees of Bancorp or City Bank immediately prior to the
Effective Date and who become employees of FNBL following the
Mergers, the same employee benefits as are offered by FCC or FNBL
to employees of FNBL, 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 Bancorp or City Bank who is an active employee on the
Effective Date will be denied such benefits under such plans for
a pre-existing condition. Full credit will be given for prior
service by such employees with Bancorp or City 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 agreed to pay certain additional
benefits accrued under plans of Bancorp and City Bank. See "The
Plan - Employee Benefits."
City Bank's Dividend/Bonus Plan shall remain in effect
until, and shall terminate on, the Effective Date, except that
the calculation of amounts payable and the timing of payments
under the bonus plan shall be determined in accordance with the
Plan.
Certain Federal Income Tax Consequences
Consummation of the Mergers is conditioned upon receipt by
the Companies of an opinion from Arthur Andersen LLP to the
effect that, among other things, each of the Mergers will qualify
as a tax-free reorganization under applicable law and that each
Bancorp 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 "Certain Federal Income Tax Consequences."
Dissenters' Rights
Under certain conditions, and by complying with the specific
procedures required by statute and described herein, shareholders
of Bancorp 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 Bancorp Common Stock. See "Dissenters'
Rights."
Selected Financial Data of Bancorp
Although not required to be provided by a "small business
issuer" as defined in Regulation S-B under the Securities Act of
1933, Bancorp has provided the following selected financial data
with respect to each of the fiscal years in the two-year period
ended December 31, 1993 and for the six-month periods ended June
30, 1994 and 1993, respectively, which has been derived from the
consolidated financial statements of Bancorp's consolidated
group. The selected financial data for the six months ended June
30, 1994 and 1993, respectively, are unaudited but, in the
opinion of Bancorp's management, reflect all adjustments which
are necessary for a fair presentation of the results of
operations for the interim periods presented. The results of
operations for the six-month period ended June 30, 1994 are not
necessarily indicative of the results to be expected for the
entire year. The information set forth below should be read in
conjunction with Bancorp's consolidated financial statements and
notes thereto appearing elsewhere in this Proxy Statement and
Prospectus.
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Six Months Year Ended
Ended June 30, December 31,
_______________________ ____________________
1994 1993 1993 1992
__________ ___________ _________ _________
<S> <C> <C> <C> <C>
Average Balance Sheet Data:
Total assets $85,757 $82,480 $82,957 $75,038
Earning assets 78,398 74,858 75,469 66,821
Loans and leases, net of unearned income 44,880 42,202 42,665 41,303
Investment securities 26,633 28,740 27,440 21,498
Interest bearing deposits 55,564 56,275 56,126 51,039
Noninterest bearing deposits 14,608 14,802 14,413 14,179
Long-term debt -0- -0- -0- -0-
Stockholders' equity 7,909 7,132 7,416 6,519
Income Statement Data:
Total interest income $ 2,981 $ 3,044 $ 6,033 $ 6,086
Net interest income 2,059 2,152 4,245 4,013
Provision for loan losses 65 90 205 236
Other income (exclusive of securities transactions) 331 393 808 692
Operating expenses 1,521 1,503 3,224 3,113
Net income 529 628 1,071 1,166
Per Share Data:
Primary earnings per share $ 5.29 $ 6.28 $ 10.71 $ 11.66
Cash dividends 0.00 0.00 2.57 2.78
Book value (period end) 79.15 74.34 76.20 68.06
Key Ratios:
Net income as a percent of average assets<FN1> 1.23% 1.52% 1.29% 1.55%
Net income as a percent of average equity<FN1> 13.39% 17.62% 14.45% 17.88%
Net interest margin 5.26% 5.75% 5.62% 6.01%
Allowance for loan losses as a percent of loans
and leases at period-end 1.38% 1.42% 1.48% 1.32%
Average equity as a percent of average total
assets 9.22% 8.65% 8.94% 8.69%
Dividend payout ratio 0.00% 0.00% 24.00% 23.84%
_________________
<FN1> Annualized.
</TABLE>
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 six-month periods ended June
30, 1994 and 1993, respectively, has been derived from the
consolidated financial statements of FCC's consolidated
group and should be read in conjunction with FCC's 1993
Report on Form 10-K and FCC's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994, that have been
incorporated by reference in this Proxy Statement and
Prospectus. The selected financial data reflect all
adjustments which are, in the opinion of FCC's management,
necessary for a fair presentation of the results of
operations for the interim periods presented. The results
of operations for the six-month period ended June 30, 1994
are not necessarily indicative of the results to be expected
for the entire year.
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
______________________ _______________________________________________________
1994 1993 1993 1992 1991 1990 1989
___________ __________ __________ __________ ___________ __________ _____________
<S> <C> <C> <C> <C> <C> <C> <C>
Average Balance
Sheet Data:
Total assets $6,463,157 $6,250,125 $6,335,669 $5,741,399 $4,671,478 $4,482,019 $4,202,912
Earning assets 5,899,182 5,732,759 5,812,761 5,280,347 4,257,388 4,035,104 3,719,972
Loans and leases* 2,670,621 2,322,521 2,407,231 2,184,584 2,323,018 2,402,541 2,232,213
Securities 3,151,608 3,085,904 3,110,544 2,734,925 1,515,299 1,290,487 1,061,206
Deposits 5,238,291 5,197,948 5,176,873 4,953,572 3,931,612 3,552,578 3,343,223
Long-term debt 89,520 95,577 95,238 97,154 101,246 103,033 104,863
Stockholders'
equity 511,207 450,046 469,694 355,716 235,385 239,011 231,097
Income Statement
Data:
Total interest
income $193,891 $ 197,017 $ 393,334 $ 398,701 $ 393,922 $408,996 $ 392,769
Net interest
income 124,736 126,026 250,010 235,353 191,862 168,021 156,005
Provision for
loan losses (8,664) (1,671) (4,504) 22,040 43,734 47,425 26,220
Other income
(exclusive of
securities
transactions) 54,610 51,586 102,844 96,369 83,419 73,213 64,215
Operating expense 115,483 107,121 221,080 203,781 185,963 165,325 155,397
Net income 45,211 48,515 95,214 72,475 34,029 22,038 28,197
Per Share Data:
Fully diluted
earnings
per share $ 1.51 $ 1.62 $ 3.18 $ 2.70 $ 1.56 $ .94 $ 1.20
Primary earnings
per share 1.63 1.78 3.48 2.88 1.56 .94 1.20
Cash dividends<FN1> .50 .40 .85 .70 .64 .64 .64
Book value
(period - end) 16.56 16.01 17.28 14.57 11.38 10.45 10.14
High stock price 30.00 32.20 32.20 27.86 18.14 12.54 12.74
Low stock price 23.50 25.33 23.90 16.94 7.20 6.66 9.27
Six Months
Ended June 30, Years Ended December 31,
______________________ _______________________________________________________
1994 1993 1993 1992 1991 1990 1989
___________ __________ __________ __________ ___________ __________ _____________
Key Ratios:
Net income as a
percent of
average assets 1.41% 1.57% 1.50% 1.26% .73% .49% .67%
Net income as a
percent of
average total
equity 17.83% 21.74% 20.27% 20.37% 14.46% 9.22% 12.20%
Net income as a
percent of
average common
equity 18.73% 23.96% 22.18% 22.85% 14.46% 9.11% 12.37%
Net interest
margin 4.34% 4.52% 4.40% 4.58% 4.69% 4.37% 4.42%
Allowance for loan
losses to loans
and leases* 2.09% 3.09% 2.55% 3.44% 3.11% 2.44% 1.91%
Leverage ratio 8.31% 7.31% 7.63% 6.76% 4.87% 4.66% 5.06%
Dividend payout
ratio 30.67% 22.47% 24.27% 25.78% 41.03% 68.09% 53.33%
______________________
*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.
</TABLE>
Comparative Per Share Data (Unaudited)
The following table presents certain net income, cash dividend and book
value per common share information for FCC and Bancorp 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.
(In addition to the Mergers, FCC has several other acquisitions pending.
There can be no assurance that any or all of these transactions will be
completed. Pro forma information giving effect to all of these acquisitions
is included beginning at page F-1 of this Proxy Statement and Prospectus.)
<TABLE>
<CAPTION>
Historical
_________________ Pro Forma Bancorp
FCC Bancorp Combined<FN1><FN2> Equivalent
_______ __________ __________________ ___________
<S> <C> <C> <C> <C>
Primary earnings per
common share<FN3>:
Years ended:
December 31, 1993 $ 3.48 $10.71 $ 3.44 $19.37
December 31, 1992 2.88 11.66 2.86 16.10
December 31, 1991 1.56 7.83 1.56 8.78
Six months ended:
June 30, 1994 $ 1.63 $5.29 $ 1.62 $ 9.12
Dividends declared per
common share<FN4>:
Years ended:
December 31, 1993 $ .85 $2.57 $ .84 $ 4.79
December 31, 1992 .70 2.78 .70 3.94
December 31, 1991 .64 1.80 .63 3.60
Six months ended:
June 30, 1994 $ .50 $ - $ .49 $ 2.82
Book value per
common share<FN5>:
As of December 31, 1993 $17.28 $76.20 $17.20 $96.84
As of June 30, 1994 $16.56 $79.15 $16.50 $92.90
</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 based on the
closing sales price of FCC Common Stock with a
maximum number of shares of 562,500. For purposes
of this table, it has been assumed that the
maximum number of shares issuable under the
Holding Company Merger will result in an assumed
conversion rate of 5.63 (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, of FCC and
Bancorp 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. The
Bancorp 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 Bancorp's dividend rates by the
applicable weighted average outstanding shares of
FCC and Bancorp 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 Bancorp 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
Bancorp's common stockholders' equity by the total
shares of FCC Common Stock outstanding as of
December 31, 1993 and June 30, 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 Bancorp 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 August 11, 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 $26.50. No
assurance can be given as to the market price of FCC Common
Stock on the Effective Date. On _____________, 1994, the
closing per share sales price for a share of FCC Common
Stock was $_____ and, if such date had been the Effective
Date of the Mergers the Average Sales Price would have been
$_____.
Bancorp Common Stock is not traded on any exchange, and
there is no established public trading market for the stock.
There are no bid or asked prices available for Bancorp
Common Stock. There is, however, very limited and sporadic
trading of Bancorp Common Stock in its local area. Based on
the limited information available to management, sales were
effected during the last two fiscal years at $45.00 per
share, but there can be no assurance that such trades were
effected on an arm's-length basis. See "Information About
Bancorp - Market Prices and Dividends."
INTRODUCTORY STATEMENT
General
This Proxy Statement and Prospectus is furnished to the
shareholders of City Bancorp, Inc. ("Bancorp") in connection
with the solicitation of proxies on behalf of its Board of
Directors for use at a special meeting of shareholders of
Bancorp (the "Special Meeting") to be held on the date and
at the time and place specified in the accompanying Notice
of Special Meeting of Shareholders, or any adjournments
thereof.
Bancorp and First Commerce Corporation (collectively,
the "Companies") have each supplied all information included
herein with respect to it and its consolidated subsidiaries.
Bancorp and its subsidiary are collectively referred to
herein as "Bancorp's consolidated group" and First Commerce
Corporation ("FCC") and its subsidiaries are collectively
referred to herein as "FCC's consolidated group."
This Proxy Statement and Prospectus was mailed to
shareholders of Bancorp on approximately ____________, 1994.
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, The
First National Bank of Lafayette ("FNBL"), on the one hand,
and Bancorp, and its wholly owned subsidiary, City Bank &
Trust Company, New Iberia, Louisiana ("City Bank"), on the
other, and a related Agreement of Merger between FNBL and
City Bank (the "Bank Merger Agreement") and Joint Agreement
of Merger between FCC and Bancorp (the "Company Merger
Agreement" and, together with the Bank Merger Agreement and
the Agreement and Plan of Merger, the "Plan"). Pursuant to
the Plan, City Bank will merge into FNBL (the "Bank Merger")
and, immediately thereafter, Bancorp will merge into FCC
(the "Holding Company Merger" which, together with the Bank
Merger, are collectively called the "Mergers") and each
outstanding share of common stock, $5.00 par value, of
Bancorp ("Bancorp Common Stock") will be converted into a
number of shares of common stock, $5.00 par value, of FCC
("FCC Common Stock") as described under the heading
captioned "The Plan - Conversion of Bancorp Common Stock."
Shares Entitled to Vote; Quorum; Vote Required
Only holders of record of Bancorp Common Stock at the
close of business on ____________, 1994 are entitled to
notice of and to vote at the Special Meeting. On that date,
there were 100,000 shares of Bancorp Common Stock
outstanding, each of which is each entitled to one vote on
each matter properly brought before the Special Meeting.
With respect to consideration of the Plan and any other
matter properly brought 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
Bancorp Common Stock is necessary to constitute a quorum.
The Plan must be approved by the affirmative vote of
two-thirds of the total number of shares outstanding of
Bancorp. 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. Directors, executive officers and certain principal
shareholders of Bancorp beneficially owning an aggregate of
51,341 shares, or approximately 51.34% of the outstanding
Bancorp Common Stock, have executed agreements pursuant to
which they have agreed to vote in favor of the Plan.
Louisiana law does not require that shareholders of FCC
approve the Plan.
Solicitation, Voting and Revocation of Proxies
In addition to soliciting proxies by mail, directors,
officers and employees of Bancorp, without receiving
additional compensation therefor, may solicit proxies by
telephone and in person. Arrangements will also be made
with brokerage firms and other custodians, nominees and
fiduciaries to forward solicitation materials to the
beneficial owners of shares of Bancorp Common Stock, and
Bancorp will reimburse such parties for reasonable out-of-
pocket expenses incurred in connection therewith. The cost
of soliciting proxies is being paid for by Bancorp.
The proxies that accompany this Proxy Statement and
Prospectus permit each holder of record of Bancorp Common
Stock on the record date to vote on all matters that
properly come before the Special Meeting. Where a share-
holder specifies his choice on the proxy with respect to the
proposal to approve the Plan, the shares represented by the
proxy will be voted in accordance with such specification.
If no such specification is made, the shares will be voted
in favor of the Plan. If a shareholder does not sign and
return a proxy and specify on the proxy an instruction to
vote against the Plan, he will not be able to exercise
dissenters' rights with respect to the Holding Company
Merger unless he attends the Special Meeting in person and
votes against the Plan and gives written notice of his
dissent from the Plan at or prior to the Special Meeting.
See "Dissenters' Rights." A proxy may be revoked by (i)
giving written notice of revocation at any time before its
exercise to Patrick D. Burke, City Bancorp, Inc., 712 Center
Street, New Iberia, Louisiana 70560, (ii) executing and
delivering to Mr. Burke at any time before its exercise a
later dated proxy or (iii) attending the Special Meeting and
voting in person.
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 does not purport
to be complete and is qualified in its entirety by reference
to the Plan, a copy of selected portions 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 City
Bank will become the business and properties of FNBL, the
business and properties of Bancorp will become the business
and properties of FCC and the shareholders of Bancorp will
become shareholders of FCC. The steps taken to achieve this
result involve the following transactions: (i) City Bank
will merge into FNBL and the separate existence of City Bank
will cease; (ii) Bancorp will merge into FCC and the
separate existence of Bancorp will cease and (iii)
shareholders of Bancorp will receive the consideration
described below under the heading captioned "The Plan -
Conversion of Bancorp Common Stock."
Background of and Reasons for the Plan
The Board of Directors of Bancorp believes that
approval of the Plan is in the best interests of Bancorp and
its shareholders. Among the factors considered by the Board
in recommending the Plan, in addition to the financial
terms, was the likelihood that City Bank would continue to
face significant additional competitive pressures in its
market area from larger banking and other financial
institutions capable of offering a broad array of financial
services. Given City Bank's relatively small size and
market position, the Board believes that this increasing
competition could adversely impact the performance of City
Bank. Other factors considered by the Board were the
liquidity that would be afforded to Bancorp's shareholders
by the ownership of a publicly traded stock and a review of
the business and prospects of FCC's consolidated group.
The financial and other terms of the Plan were arrived
at through arm's length negotiations between representatives
of the Companies and the Banks. Determination of the
consideration to be received by Bancorp' shareholders in
exchange for their stock was based upon various factors
considered by the Boards of Directors of FCC and Bancorp,
including primarily the comparative financial condition,
historical results of operations, current business and
future prospects of the Companies and the Banks, the market
price and historical earnings per share of the common stock
of the Companies, and the desirability of combining the
financial and managerial resources of FNBL and City Bank to
pursue available consumer and commercial banking business in
Iberia and St. Martin Parishes and surrounding areas.
The Board of Directors of Bancorp unanimously approved
the Plan and recommends that its shareholders vote FOR
approval of the Plan.
Opinion of Chaffe & Associates, Inc.
Chaffe & Associates, Inc. ("Chaffe") was engaged as an
independent financial expert to render an opinion as to the
fairness of the Exchange Ratio (as defined in the opinion)
to Bancorp and Bancorp's shareholders from a financial point
of view. Chaffe is a recognized investment banking firm and
is experienced in the securities industry, in investment
analysis and appraisal and in related corporate finance and
investment banking activities, including mergers and
acquisitions, corporate recapitalizations and valuations for
estate, corporate and other purposes. It is frequently
retained to perform similar services for other banks and
bank holding companies. Chaffe was selected to render the
fairness opinion because of its experience, reputation and
expertise in the financial services industry and its
familiarity with the financial condition of Bancorp and City
Bank. Chaffe was also engaged by Bancorp to provide a
valuation of the outstanding stock of Bancorp, and Chaffe
assisted Bancorp in negotiating the consideration to be paid
pursuant to the Plan.
Bancorp has paid Chaffe a fee of $8,000 plus out of
pocket expenses for the valuation and has paid or will pay
Chaffe a fee of $8,000 plus out of pocket expenses for the
fairness opinion. For other services requested of Chaffe by
Bancorp, including participating in negotiations in
connection with the Mergers, Bancorp has agreed to pay
Chaffe on an hourly basis. Bancorp expects to pay Chaffe
approximately $48,000 for the valuation, the fairness
opinion and other services in connection with the Mergers.
According to Chaffe, this amount is insignificant when
compared to Chaffe's total gross revenues. Chaffe has no
interest in the securities of Bancorp or FCC, nor is the
compensation to Chaffe dependent upon the approval or
disapproval of the Plan or the Mergers by shareholders or
regulatory authorities.
Bancorp has agreed to indemnify and hold harmless
Chaffe, its subsidiaries and affiliates, the officers,
directors, shareholders, employees, attorneys, agents and
representatives of such companies and their heirs, legatees,
legal representatives, successors and assigns from liability
or costs arising directly or indirectly from or in any way
related to the fairness opinion or certain other related
services performed by Chaffe, provided that such persons
were not guilty of willful misconduct in connection with the
opinion or such services.
In rendering its opinion, Chaffe reviewed certain
materials bearing upon the transaction and upon the
financial and operating condition of FCC and Bancorp, as
well as certain historical market information and current
market conditions and trading levels of the Common Stocks of
FCC and Bancorp, and certain statistical and financial
information for comparable companies. Chaffe analyzed the
historical performances of FCC and Bancorp and considered
the current financial conditions, operations and prospects
of both Companies. Chaffe held discussions with the
management of both Companies about these matters. Chaffe
analyzed information and data provided by the management of
Bancorp concerning the loans, other real estate, securities
portfolio, fixed assets and operations of Bancorp's
consolidated group, although it did not perform an
independent review of the assets and liabilities of
Bancorp's consolidated group. Chaffe relied solely on FCC
and Bancorp for information as to the adequacies of their
respective loan loss reserve and the values of their
respective other real estate held.
In its review, Chaffe relied, without independent
verification, upon the accuracy and completeness of the
historical and projected financial information and other
information reviewed by it for purposes of its opinion.
Chaffe expressed no opinion on the tax consequences of the
proposed transaction or the effect of any tax consequences
on the value received by the holders of Bancorp Common
Stock.
A copy of the fairness opinion is attached as Appendix
B and should be read in its entirety. The opinion concludes
that, as of the date of such opinion, and based on and
subject to the assumptions made, the factors considered, the
review undertaken and the limitations stated, the proposed
Exchange Ratio is fair to Bancorp and its shareholders from
a financial point of view. Chaffe's opinion is directed
only to the fairness of the proposed Exchange Ratio from a
financial point of view and does not constitute a
recommendation to any shareholder on how to vote at the
Special Meeting.
Conversion of Bancorp Common Stock
In consideration of the Mergers, each share of Bancorp
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 quotient
of (a) (i) $13.5 million less the Deductible Amount, as
defined below, divided by (ii) the Average Sales Price, as
defined below, of a share of FCC Common Stock; provided,
that if the Average Sales Price is less than $24, then the
divisor will be $24, and if the Average Sales Price is
greater than $30, then the divisor will be $30, divided by
(b) the number of shares of Bancorp Common Stock outstanding
on the Effective Date.
As defined in the Plan, the term "Deductible Amount"
means the excess over $150,000 of the legal, accounting,
investment banking, printing and filing fees and expenses
incurred by Bancorp's consolidated group in connection with
the Plan. As defined in the Plan, the "Average Sales Price"
is the average of the closing per share sales prices of FCC
Common Stock for the five trading days, ending on the last
trading day immediately prior to the closing date for the
Mergers, for which sales of FCC Common Stock were reported
on the National Association of Securities Dealers Automated
Quotation System for securities listed for trading on the
Nasdaq National Market.
The following table sets forth examples of the number
of shares of FCC Common Stock into which each share of
Bancorp 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 and there is no
Deductible Amount. As of ____________, 1994, the legal,
accounting and investment banking fees and expenses that had
been incurred by Bancorp's consolidated group in connection
with the Plan totalled approximately $_______. [It is not
certain whether, as of the Effective Date, these fees and
expenses (plus printing costs) will exceed $150,000.]
Assumed Average Number of FCC
Sales Price of FCC Common Stock Shares Per Bancorp Share
_________________________________ _____________________________
$22 5.63
24 5.63
26 5.19
28 4.82
30 4.50
32 4.50
On ____________, 1994, the actual closing sales price for a
share of FCC Common Stock was $_____ and, if such date had
been the Effective Date of the Mergers the Average Sales
Price would have been $_____.
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 Bancorp Common Stock may
be entitled, each shareholder of Bancorp, upon surrender of
the certificate or certificates which immediately prior to
the Effective Date represented Bancorp 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 Bancorp shareholders, see "- Status under Federal
Securities Laws; Certain Restrictions on Resales."
Effective Date
The Company Merger Agreement and the Bank Merger
Agreement have been executed by the Boards of Directors of
the Companies and the Banks, respectively. The Bank Merger
Agreement has been 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 shareholder approval is obtained
and all other 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 in-
tended that the Bank Merger will be consummated immediately
prior to consummation of the Holding Company Merger. FCC
and Bancorp 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 Bancorp shareholder will
cease to have any rights as a shareholder of Bancorp and his
sole rights will pertain to the shares of FCC Common Stock
into which his shares of Bancorp 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 Bancorp Common Stock for
certificates representing shares of FCC Common Stock will be
mailed to each person who was a shareholder of record of
Bancorp on the Effective Date of the Mergers. Shareholders
are requested not to send in their Bancorp Common Stock
certificates until they have received a letter of
transmittal and further written instructions.
After the Effective Date and until surrendered,
certificates representing Bancorp 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 Bancorp Common Stock have
been converted. FCC, at its option, may decline to pay
former shareholders of Bancorp 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 Bancorp
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.
Bancorp shareholders who cannot locate their
certificates are urged to contact promptly Patrick D. Burke,
City Bancorp, Inc., 712 Center Street, New Iberia, Louisiana
70560, telephone number (318) 369-6311. 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 Bancorp and FCC against any claim that may be
made against Bancorp or FCC by the owner of the
certificate(s) alleged to have been lost or destroyed.
Bancorp or FCC may also require the shareholder to post a
bond in such sum as is sufficient to support the
shareholder's agreement to indemnify Bancorp and FCC.
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 September 8, 1994, FCC
filed an application seeking the approval of the Bank Merger
of the Comptroller and on September 26, 1994 filed an
application seeking the prior approval of the Reserve Board
with respect to the Holding Company Merger. FCC expects to
receive the approvals by December 15, 1994; however, there
can be no assurance that the waiver and 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) the receipt of an opinion of
Arthur Andersen LLP as to certain tax aspects of the
Mergers; (ii) the receipt of customary legal opinions; (iii)
that prior to the Effective Date there not have been a
material adverse change in the financial condition, results
of operations, business or prospects of the other party's
consolidated group; and (iv) 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.
The obligation of FCC and FNBL to consummate the
Mergers is also conditioned upon, among other things, (i)
the receipt by FCC of satisfactory assurance from its
independent public accountants, Arthur Andersen LLP, that
FCC is permitted to account for the Mergers as a pooling-of-
interests; (ii) receipt of a comfort letter from Bancorp's
independent public accountants; (iii) confirmation from the
directors, executive officers and certain principal
shareholders of Bancorp as to certain representations and
covenants previously made by them in certain Joinders of
Shareholders discussed further herein (see "The Plan -
Joinder of Shareholders"); and (iv) termination of certain
litigation against City 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
Bancorp and City 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 the chief executive officer of FCC
or his duly authorized designee, and except as otherwise
provided in the Plan, each will not, among other things, (a)
declare or pay any dividend or pay any bonuses to employees,
other than Bancorp's regular dividends and regular employee
bonuses, which will not exceed in the aggregate $380,000,
unless the Effective Date is after December 31, 1994 and
then only to the extent described in the Plan, 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) merge or consolidate with
another entity, or sell or dispose of a substantial part of
its assets, or except in the ordinary course of business and
as otherwise provided in the Plan, sell any of its assets;
(d) dispose of investment securities having an aggregate
market value greater than $500,000, acquire investment
securities, other than investment grade securities having an
aggregate market value not exceeding $500,000 and having a
maturity not exceeding five years and other than securities
acquired from First National Bank of Commerce or make
investments in noninvestment grade securities; (e) charge
off (except as required by law or regulatory authorities or
generally accepted accounting principles consistently
applied) or sell (except for a price not less than the book
value thereof) any loans, discounts or financing leases,
other than sales of mortgage loans in a manner consistent
with past practices; or sell any asset held by City Bank as
other real estate or other foreclosed assets other than
assets having a book value of $15,000 or less as of March
31, 1994 sold for an amount equal to at least 50% of such
asset's book value as of March 31, 1994 and other than cars
and trucks sold upon foreclosure in a manner consistent with
past practices; (f) enter into or modify any agreement
pertaining to compensation arrangements with its present or
former directors, officers or employees or increase the
compensation of such persons whose annual compensation
would, following such increase, exceed $25,000 (other than
increases resulting from City Bank's Bonus Plan); (h) except
in the ordinary course of business consistent with past
practices, place any mortgage, pledge or other encumbrance
on any of its assets (except as allowed under the Plan) or
cancel any material indebtedness in excess of $10,000 owing
to it or any claims in excess of $10,000 which it may
possess, or waive any right of substantial value in excess
of $10,000 or discharge or satisfy any material noncurrent
liability; (i) make any extension of new credit which,
together with all other extensions of credit to the borrower
and its affiliates, would exceed $200,000, or, without
reasonable prior notice to FCC, commit to make any
extensions of new credit in excess of $200,000; (j) fail to
pay, or make adequate provision in all material respects 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; (k) 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; or (l) enter into any new line of business.
In addition, Bancorp and City Bank have agreed that,
without the prior approval of the chief executive officer of
FCC or his designee, they will not solicit or initiate
inquiries or proposals with respect to, or, except as may be
necessary as advised in writing by its counsel to discharge
its fiduciary duties, furnish any information relating to,
or participate in any negotiations or discussions
concerning, 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 Bancorp
or City Bank, other than as contemplated by the Plan. Each
of Bancorp and City Bank has also agreed to instruct its
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 such negotiations or
discussions are sought to be initiated with, it or any of
its officers, directors, agents and affiliates.
Further, Bancorp has committed that, except as may be
necessary as advised in writing by its counsel to discharge
its fiduciary duties, neither Bancorp's Board of Directors
nor any committee thereof will (i) withdraw or modify or
propose to withdraw or modify in a manner adverse to FCC 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 Bancorp or
City Bank, except such action that its counsel advises in
writing is necessary to discharge its fiduciary duties to
Bancorp's consolidated group and its shareholders, or (iii)
modify, or waive or release any party from any material
provision of or fail to enforce any material provision of,
if enforcement is requested by FCC, any confidentiality
agreement entered into by Bancorp or City 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 and shareholder approval of the Plan as
prescribed by law. A waiver must be in writing.
The Plan, including all related agreements, may be
amended or modified at any time, before or after its
approval by the shareholders of Bancorp, by the mutual
agreement in writing of the Boards of Directors of the
parties to the Plan; provided that, under the LBCL any
amendment made subsequent to such shareholder approval may
not alter the amount or type of shares into which Bancorp's
stock will 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 Bancorp. 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 to correct typographical
errors or other misstatements which are not material to the
substance of the transaction contemplated by such parties.
The Plan may be terminated at any time prior to the
Effective Date by (i) the mutual consent of the respective
Boards of Directors of FCC and Bancorp, (ii) the Board of
Directors of either FCC or Bancorp 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 contained in the Plan which cannot be cured by the
earlier of 10 days after written notice of such breach or
March 31, 1995; (iii) the Board of Directors of either FCC
or Bancorp if by March 31, 1995 all conditions to
consummating the Mergers required by the Plan have not been
met or waived, cannot be met, or the Mergers have not
occurred, (iv) the Board of Directors of FCC or FNBL if the
number of shares of Bancorp Common Stock as to which holders
thereof have perfected dissenters' rights exceeds 5% of the
total number of issued and outstanding shares of Bancorp
Common Stock on the date of the closing, or (v) the Board of
Directors of either FCC or FNBL if the Board of Directors of
Bancorp (A) withdraws, modifies or changes its
recommendation to its shareholders regarding the Plan and
the Mergers or shall have resolved to do any of the
foregoing, (B) recommends to its shareholders (a) any
merger, consolidation, share exchange, business combination
or other similar transaction (other than transactions
contemplated by the Plan), (b) any sale, lease, transfer or
other disposition of all or substantially all of the assets
of any member of Bancorp's consolidated group, or (c) any
acquisition, by any person or group, of beneficial ownership
of 15% or more of any class of Bancorp capital stock, or (C)
makes any announcement of a proposal, plan or intention to
do any of the foregoing or agreement to engage in any of the
foregoing.
Interests of Certain Persons in the Mergers
Pursuant to the Plan, FCC and FNBL have agreed that,
following the Effective Time, they will indemnify each
person who as of August 12, 1994 served as an officer or
director of Bancorp or City Bank or who has previously
served as an officer or director of Bancorp or City Bank
during the period beginning May 1, 1992 (an "Indemnified
Person") from and against all damages, liabilities,
judgments and claims, and related expenses, based upon or
arising out of such person's capacity as an officer or
director of Bancorp or City Bank to the same extent as he
would have been indemnified under the Articles of
Association (or Articles of Incorporation) or Bylaws of
Bancorp or City Bank, as appropriate, as such Articles or
Bylaws were in effect on August 12, 1994.
The aggregate amount of indemnification payments
required to be made by FCC and FNBL pursuant to the Plan is
$3.5 million; however, this limit does not apply to damages,
liabilities, judgments and claims arising out of or based
upon (i) a misstatement by FCC or FNBL of a material fact in
the registration statement of which this Proxy Statement and
Prospectus is a part; or (ii) any omission by FCC or FNBL of
a material fact required to be stated in the registration
statement of which this Proxy Statement and Prospectus is a
part or necessary in order to make a statement therein not
misleading. Indemnification otherwise required to be paid
by FCC or FNBL will be reduced by any amounts that the
Indemnified Person recovers by virtue of the claim for which
indemnification is sought and no Indemnified Person is
entitled to indemnification for any claim made prior to the
closing of the Mergers of which the Indemnified Person,
Bancorp or City Bank was aware but did not disclose FCC or
FNBL. Receipt of the indemnification benefits set forth in
the Plan by directors and officers of Bancorp and City Bank
is conditioned upon their execution of the agreements
described in more detail under the heading captioned "-
Joinder of Shareholders" or similar agreements. Any claim
for indemnification pursuant to the Plan must be submitted
in writing to FCC's chief executive officer on or before ten
years and one day from the Effective Date.
Pursuant to Bancorp's severance plan, provided certain
conditions are met Mr. Schexnayder, Chief Executive Officer
of Bancorp, will be entitled upon consummation of the
Mergers to a severance payment of his base pay, payable in
twelve equal monthly installments, with the last such
payment due on the first anniversary of the consummation of
the Mergers. See "- Employee Benefits."
Joinder of Shareholders
As a condition to consummation of the Mergers, each
Bancorp director and executive officer and each shareholder
owning 9% or more of Bancorp Common Stock has executed an
individual agreement (the "Joinder Agreement") pursuant to
which he has agreed solely in his capacity as a shareholder
of Bancorp (i) to vote in favor of the Plan and against any
other proposal relating to the sale or disposition of City
Bank or Bancorp unless FCC or FNBL 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 Bancorp 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 Joinder of
Shareholders; (iii) not to deal in FCC Common Stock or other
securities of FCC in violation of the federal securities
laws or to affect the market price of FCC Common Stock until
the earlier of the Effective Date or the date the Plan has
been terminated; (iv) to release, as of the Effective Date,
FCC and FNBL 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 Bancorp's
consolidated group, except to the extent set forth in the
Plan; and (v) for a period of one year following the
Effective Date not to serve as a director, officer, employee
or advisor of, or have any investment in any financial
institution that competes with the business of City Bank as
continued by FNBL in Iberia and Lafayette Parishes; however,
such person may continue to hold any investment that he held
on the date of the Joinder Agreement and may make an
investment in any such financial institution if the
investment does not materially enhance the ability of the
financial institution to compete with FNBL; except that Ms.
Moore and Mr. Burke have executed a Joinder Agreement that
does not contain an agreement not to compete.
Employee Benefits
Pursuant to the Plan, FCC has agreed that, from and
after the Effective Date, FCC or FNBL will offer to all
persons who were employees of Bancorp or City Bank
immediately prior to the Effective Date and who become
employees of FNBL following the Mergers, the same employee
benefits as are offered by FCC or FNBL to employees of FNBL,
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 City 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 Bancorp or City Bank for
eligibility and vesting purposes under all of FCC's benefit
plans and policies, except for FCC's Retirement Plan. In
addition, all benefits accrued through the Effective Date
under Bancorp's and City Bank's benefit plans will be paid
by FCC or FNBL to the extent such benefits are not otherwise
provided to such employees under the benefit plans of FCC or
FNBL.
City Bank's Dividend/Bonus Plan shall remain in effect
until, and shall be terminated on the Effective Date, except
that the time of payments of amounts due and the calculation
of the amounts payable under the bonus plan shall be
determined in accordance with the Plan.
As a condition to consummation of the Mergers, Bancorp
and City Bank have adopted a severance plan. Benefits are
payable under the severance plan only upon consummation of
the Mergers and only if the triggering events described
below occur. The triggering events are:
1. Consummation of the Mergers if (a) the
employee remains employed full time by City Bank until the
Mergers take place and (b) prior to the Mergers, such
employee did not receive an offer of employment from FNBL
(i) that would begin immediately following the Mergers, (ii)
that was for a position other than a temporary position and
that was at a rate of base pay of at least 100% of the
employee's rate of pay in effect on June 30, 1994 (without
including bonuses, overtime or other additional
compensation) (defined as the "Base Pay") and (iii) that was
within the market area served by City Bank or FNBL; or
2. Consummation of the Mergers if the employee's
employment is terminated (a) by City Bank without "Cause"
prior to the Mergers (provided that FNBL notifies City Bank
in writing that it is satisfied that the termination is not
for the purpose of providing severance benefits to the
employee) or (b) by FNBL without "Cause" within one year
after the Mergers. The term "Cause" means the employee's
misconduct or malfeasance, commission of a felony or a crime
involving moral turpitude, unexcused absence from work for
one or more days (excluding approved periods of vacation or
excused or protected absences), or failure adequately to
perform the duties assigned to him or her as determined in
the good faith judgment of his or her supervisor.
Anyone whose employment terminates for any reason other
than those described above as triggering events is not
entitled to any benefit under the severance plan. Anyone
whose employment terminates for a triggering event as
described above is entitled to receive within 30 days after
the event a cash lump sum (subject to withholding) in an
amount equal to the number of full years of service of the
employee (with City Bank and FNBL) multiplied by his Weeks
Pay (his Base Pay divided by 52).
The severance plan also provides with respect to the
Chief Executive Officer of City Bank that if he has executed
the Joinder Agreement requested by FCC, remains in the full
time employ of City Bank until consummation of the Mergers,
performs his duties in a manner satisfactory to the Board of
Directors of City Bank and has supported the Mergers to the
employees of City Bank and to the public, he will be
entitled to a severance payment of his Base Pay, payable in
twelve equal monthly installments with the last such payment
due on the first anniversary of the consummation of the
Mergers.
The severance plan will be administered by the Board of
Directors of Bancorp prior to the Mergers and by FCC after
the Mergers or a duly constituted committee thereof (the
"Administrator"). The severance plan automatically
terminates if the Mergers are abandoned or otherwise
terminate.
Other than as specified in the above described
severance plan, employees of Bancorp and City Bank are not
entitled to severance payments.
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, except
for expenses that are included in the Deductible Amount.
Status Under Federal Securities Laws; Certain Restrictions
on Resales
The shares of FCC Common Stock to be issued to share-
holders of Bancorp pursuant to the Plan have been registered
under the Securities Act of 1933 (the "Securities Act")
thereby allowing such shares to be freely traded without re-
striction by persons who will not be "affiliates" of FCC or
who were not "affiliates" of Bancorp, as that term is de-
fined in the Securities Act.
Directors and certain officers of Bancorp may be deemed
to be "affiliates" within the meaning of the Securities Act.
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. Bancorp has
agreed to use its best efforts to cause all such affiliates
to enter into agreements not to sell shares of FCC Common
Stock received by them in violation of the Securities Act.
Further, in accordance with the requirements for using
the pooling-of-interests method of accounting, Bancorp
shareholders who are deemed "affiliates" will not be
permitted to sell the shares of FCC Common Stock received by
them in consideration of the Mergers until at least 30 days
of combined earnings of FCC and Bancorp have been published
by FCC.
Accounting Treatment
It is a condition to FCC's obligation to consummate the
Mergers that it receive assurances from its independent
public accountants that the Mergers may 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 Securities and Exchange
Commission (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 Bancorp
information, the recorded assets and liabilities of FCC and
Bancorp 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 Bancorp for the entire fiscal year in which the Mergers
occur and the reported earnings of FCC and Bancorp 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."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of material
federal income tax consequences to holders of Bancorp 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 the Companies of an opinion from Arthur Andersen LLP to
the following effects, among others:
(a) Each of the Mergers qualifies as a reorganization
under Section 368(a)(1)(A) of the Internal Revenue Code (the
"Code"), and Bancorp, City Bank, FCC and FNBL each will be a
"party to a reorganization" within the meaning of Section
368(b) of the Code.
(b) No material gain or loss will be recognized by
Bancorp, City Bank, FCC or FNBL as a result of the Mergers.
(c) No gain or loss will be recognized by a
shareholder of Bancorp on the receipt solely of FCC Common
Stock in exchange for his shares of Bancorp Common Stock.
(d) The basis of the shares of FCC Common Stock to be
received by Bancorp's shareholders pursuant to the Holding
Company Merger will, in each instance, be the same as the
basis of the shares of Bancorp 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 Bancorp's shareholders pursuant to
the Holding Company Merger will, in each instance, include
the holding period of the respective shares of Bancorp
Common Stock exchanged therefor, provided that the shares of
Bancorp Common Stock are held as capital assets on the date
of the Holding Company Merger.
(f) The payment of cash to Bancorp'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) A Bancorp shareholder who perfects his statutory
right to dissent to the Holding Company Merger and who
receives solely cash in exchange for his Bancorp Common
Stock will be treated as having received such cash payment
as a distribution in redemption of his shares of Bancorp
Common Stock, subject to the provisions and limitations of
Section 302 of the Code. After such distribution, if the
former Bancorp shareholder does not actually or construc-
tively own any Bancorp Common Stock, the redemption will
constitute a complete termination of interest and be treated
as a distribution in full payment in exchange for the
Bancorp Common Stock redeemed.
The opinion of Arthur Andersen LLP is not binding on
the Internal Revenue Service, which could take positions
contrary to the conclusions in such opinion.
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 Bancorp consult his
personal tax advisor concerning the applicable federal,
state and local income tax consequences of the Mergers.
DISSENTERS' RIGHTS
Unless the Plan is approved by the holders of at least
80% of the total voting power of Bancorp, Section 131 of the
LBCL allows a shareholder of Bancorp 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 have paid to him in cash the fair cash value of his
shares of Bancorp 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 (i)
must file with Bancorp a written objection to the Plan prior
to or at the Special Meeting and (ii) must also 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 constitute 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 to 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 total
number of shares of Bancorp Common Stock outstanding, then
promptly after the Effective Date written notice of the
consummation of the Holding Company Merger will be given by
FCC by registered mail to each former shareholder of Bancorp
who filed a written objection to the Plan and voted against
it at such shareholder's last address on Bancorp's records.
Within 20 days after the mailing of such notice, the share-
holder 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 Bancorp Common Stock in escrow with a bank or trust com-
pany located in Orleans Parish, Louisiana. The certificates
must be duly endorsed and transferred to FCC upon the sole
condition that they be delivered to FCC upon payment of the
value of the shares in accordance with Section 131. With
the above-mentioned demand, the shareholder must also
deliver to FCC the written acknowledgment of such bank or
trust company that it holds the certificate(s), duly
endorsed as described above.
Unless the shareholder objects to and votes against the
Holding Company Merger, demands payment, endorses and
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 to 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-
edgment, notify such shareholder in writing at the
designated post office address 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 entitled 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 Bancorp for a judicial
determination of the fair cash value of such other share-
holder'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
Bancorp should send any communications regarding their
rights to Patrick D. Burke, City Bancorp, Inc., 712 Center
Street, New Iberia, Louisiana 70560. 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 Bancorp.
FCC has the right to terminate the Plan if the number of
shares of Bancorp Common Stock as to which the holders
thereof have perfected dissenters' rights exceeds 5% of the
total number of outstanding shares of Bancorp Common Stock
on the date of closing. 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 BANCORP
Principal Business
Bancorp, 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 May 1982 to acquire all of the stock of City
Bank pursuant to a reorganization that was consummated that
year (the "Reorganization"). From that date to the present,
City Bank has been Bancorp's only subsidiary. At June 30,
1994, Bancorp had total consolidated assets of approximately
$85.9 million and total consolidated deposits of
approximately $70.6 million. Bancorp's executive offices
are at 712 Center Street, P.O. Box 10210, New Iberia,
Louisiana 70562-0210.
City Bank, a Louisiana banking association that opened
for business in 1958, is a full service commercial bank
offering consumer and commercial banking services in Iberia
and St. Martin Parishes. It operates a main office in the
central business district of New Iberia, Louisiana and has
five other full service branches in Iberia Parish. It also
has three ATM locations in Iberia Parish and one in St.
Martin Parish. Major services provided by City Bank include
consumer financing, commercial lending, credit card
services, savings and checking accounts for individuals,
businesses and public bodies and the offering of Series EE
savings bonds, certificates of deposit and individual
retirement accounts. All deposit accounts are insured by
the FDIC to the maximum legal limits. Credit services
offered by City Bank include secured and unsecured
commercial loans, Small Business Administration loans,
agricultural loans, real estate loans and consumer loans.
City 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
other than school board funds. No significant portion of
City Bank's loans is concentrated within a single industry
or group of related industries. There are no material
seasonal factors that would have any adverse effect on City
Bank. City Bank does not rely on foreign sources of funds
or income.
Market Prices and Dividends
Market Prices. Bancorp Common Stock is not traded on
any exchange or in any other established public trading
market. There are no bid or asked prices available for
Bancorp Common Stock. There is, however, very limited and
sporadic trading of Bancorp Common Stock in its local area.
Management has trading information available to it with
respect to approximately 20 trades that were effected during
the last two fiscal years. All of the trades of which
management is aware were effected at $45 per share, but
management is unable to assure that all of those trades, or
any of them, were effected on an arm's-length basis.
At ____________, 1994, there were 314 shareholders of
Bancorp.
Cash Dividends. Bancorp declared dividends of $2.78
and $2.57 per share in 1992 and 1993, respectively. Bancorp
has not declared any dividends in 1994. However, prior to
the Mergers becoming effective, Bancorp intends to declare
and pay a dividend for 1994 (assuming funds legally
available therefor) in accordance with its current
Dividend/Bonus plan. Bancorp has agreed in the Plan that it
will not declare, set aside, increase or pay any dividend
other than dividends in accordance with its current
Dividend/Bonus plan in amounts consistent with past
practices and Bancorp's current budget and that the
aggregate of all dividends and bonuses paid shall not exceed
$380,000 in the aggregate if the Mergers become effective on
or before December 31, 1994.
Substantially all of the funds used by Bancorp to pay
dividends to its shareholders are derived from dividends
paid to it by City Bank, which are subject to certain legal
restrictions. With respect to City Bank, the prior approval
of the Commissioner is required if the total of all divi-
dends declared and paid in any calendar year will exceed the
sum of its net profits of that year combined with the
retained net profits of the immediately preceding year. The
FDIC also has the power to restrict a state bank's dividend
payments if such payments are deemed an unsafe or unsound
banking practice or if the FDIC deems the bank's capital
inadequate.
Property
City Bank owns the building and land (except with
respect to the Torrido Village branch) where each of its
branches is located, as well as certain related properties.
City Bank leases the building and land where the Torrido
Village branch is located. City Bank also leases its four
non-branch ATM locations. The following table gives the
location of City Bank's branches and related properties.
None of the branches or related properties is subject to a
mortgage.
City Bank & Trust Company Admiral Doyle Branch
712 Center Street 631 E. Admiral Doyle Drive
New Iberia, LA 70560 New Iberia, LA 70560
Iberia Parish Iberia Parish
Coteau Branch Duperier Street Branch
La. Hwy. 88 154 Duperier Avenue
New Iberia, LA 70560 New Ibernia, LA 70560
Iberia Parish Iberia Parish
St. Peter Street Branch Torrido Village Branch
142 W. St. Peter Street 910 E. Main Street
New Iberia, LA 70560 New Iberia, LA 70560
Iberia Parish Iberia Parish
Vacant Lot<FN1> Parking Lot and Warehouse<FN1>
724 Weeks Street 725 Weeks Street
New Iberia, LA 70560 New Iberia, LA 70560
Iberia Parish Iberia Parish
Vacant Lot<FN1>
726 Weeks Street
New Iberia, LA 70560
Iberia Parish
__________________
<FN1> These properties are adjacent to City Bank's main
office located at 712 Center Street in New Iberia,
Louisiana.
______________________________________
Employees
Bancorp and City Bank have, in the aggregate,
approximately 62 full-time equivalent employees. Bancorp
considers its relationship with all such employees to be
good.
Security Ownership of Principal Shareholders and Management
Principal Shareholders. The following table reflects
as of ____________, 1994 the only persons or entities known
to Bancorp to own beneficially or of record more than five
percent of the outstanding shares of Bancorp Common Stock.
Name and Address of Number of Percent of
Beneficial Owner Shares Stock
___________________ __________ __________
Richard L. Delhomme 21,717 21.72%
P. O. Box 9662
New Iberia, LA 70562-9662
Beldon E. Fox, Sr. 6,110 6.11%
P. O. Box 10539
New Iberia, LA 70562-0539
Charles A. Dorsey 9,649 9.65%
P. O. Box 9008
New Iberia, LA 70562-9008
Management. The following table sets forth the number
of shares and the percentage of outstanding Bancorp Common
Stock beneficially owned by each director of Bancorp, the
Chief Executive Officer of Bancorp and all directors and
executive officers of Bancorp as a group as of ____________,
1994. Unless otherwise indicated, beneficial ownership
consists of sole voting and investment power.
Shares of Stock
Name and Address of Owned Percent
Beneficial Owner Beneficially of Class
_____________________ __________________ _____________
J. S. Brown, III
105 W. Santa Clara 4,666 4.67%
New Iberia, LA 70560
Patrick D. Burke
1700 Loreauville Road 1,285<FN1> 1.29%
New Iberia, LA 70560
Beldon E. Fox, Sr.
1021 Loreauville Road 6,110 6.11%
New Iberia, LA 70560
Daniel J. Gonsoulin
2605 East Admiral
Doyle Dr. 1,130 1.13%
New Iberia, LA 70560
E. A. Dauterive, Jr.
419 Duperier Ave. 500 .50%
New Iberia, LA 70560
Richard L. Delhomme
805 Loreauville Road 21,717 21.72%
New Iberia, LA 70560
Arthur L. Schexnayder, Jr.<FN2> 1,361 1.36%
101 Candleglow Dr.
New Iberia, LA 70560
Norris Rader, Sr.
1587 Jefferson Terrace 2,335<FN3> 2.34%
New Iberia, LA 70560
Preston Guillote
2 Rue Du Verger 1,165 1.17%
New Iberia, LA 70560
Rayward Fremin, Sr.
2714 Valery Road 1,404 1.40%
New Iberia, LA 70560
All Directors and
Executive Officers as a 41,692 41.70%
Group (11 persons)
____________________
<FN1> Includes 170 shares held jointly with spouse and
daughter.
<FN2> Mr. Schexnayder is both the Chief Executive Officer and
a director of Bancorp. All of the other individuals
listed are directors of Bancorp and some also hold
positions as executive officers.
<FN3> Includes 990 shares owned by Norris Rader, Inc. Profit
Sharing 401(k) Plan.
_________________________________________________
BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
TWO YEARS ENDED DECEMBER 31, 1993 AND 1992
The following discussion provides certain information
concerning the financial condition and results of operations
of Bancorp for the two years ended December 31, 1993. The
financial position and results of operations of Bancorp were
due primarily to its banking subsidiary, City Bank. (For
purposes of this discussion, Bancorp and City Bank are
collectively referred to as Bancorp.) Management's
discussion should be read in conjunction with the financial
statements and accompanying notes presented elsewhere in
this Proxy Statement and Prospectus.
Overview
Net income for 1993 totaled $1,071,000 compared to
$1,166,000 for 1992. Return on average assets was 1.29% and
return on average equity was 14.45% for 1993, compared to
1.55% and 17.88%, respectively, for 1992. The decrease in
net income of $95,000 from 1992 to 1993 was caused by an
increase in income tax expense of $326,000. Income tax
expense in 1992 was reduced by the benefit of a net
operating loss carryover in the amount of $247,000. No such
benefit was available in 1993 and income tax expense as a
percent of pre-tax income was at the full statutory rate of
34%. Pre-tax income in 1993 was $232,000 higher than in
1992, attributable primarily to an increase in net interest
income of $232,000. Increases in other income of $79,000 and
a decrease in the provision for loan losses of $31,000 were
offset by an increase in other expenses of $110,000.
Average assets in 1993 increased by $7,919,000, or
10.55%, from 1992 caused by an increase in customer deposits
of $5,321,000, or 8.16%, and an increase in securities sold
under agreements to repurchase of $1,491,000. The increase
in deposits was caused by an increase in average deposits
from a local governmental entity of $6,050,000 and other
interest bearing deposit accounts of $2,152,000, offset
partially by a decline in time deposits of $3,109,000. The
increase in deposits and securities sold under agreements to
repurchase helped to fund the increase in average
investments of $5,942,000 and consumer loans of $2,573,000
and the changes in other asset accounts.
The net interest margin, the percentage of net interest
income to average earning assets, decreased slightly in
1993, from 6.01% to 5.62%, but the decline in interest
income caused by the decreased net interest margin was
offset by additional interest income generated from the
increase in the volume of deposits. The net interest margin
of 5.62% in 1993 is favorable to the bank and is a
reflection of the continued low interest rates and healthy
spread between rates on deposits and yields on investments
and loans. Average earning assets comprised 90.97% and
89.05% of total average assets in 1993 and 1992,
respectively.
Results of Operations
Net Interest Income. Net interest income for 1993 was
$4,245,000, compared to $4,013,000 for 1992. The increase
of $232,000 was caused by the increase in average net assets
and was offset partially by the decrease in the net interest
margin of 39 basis points. Average non-interest bearing
deposits as a percent of total deposits remained level from
1992 to 1993. The shrinkage of certificates of deposit and
the increase in interest bearing demand deposits at lower
rates contributed to the lower costs of funds in 1993.
Loans continued to be the largest component of earning
assets. Average loans, including mortgage loans held for
sale, for 1993, was $42,665,000, or 56.53% of average
earning assets. Average investment securities totaled
$27,439,000 and comprised 36.36% of average earning assets.
The remaining earning asset of Bancorp was its position in
federal funds sold. The net yield on loans declined .74%
from 1992 to 1993. The net yield on investment securities
declined 1.01% during that same time. This was caused
primarily by management shortening the maturities of
reinvestments from the investment portfolio. The net yield
on total earning assets declined 1.12% from 1992 to 1993,
and was partially offset by a .89% decrease in the rate paid
on interest bearing liabilities, for a net decrease in the
net interest spread of .23%.
Table 1 presents the average balance sheets, net
interest income and net yield for each category of assets
for 1993 and 1992. Table 2 provides the components of
changes in net interest income in the format of a
rate/volume analysis.
Interest Rate Sensitivity. The interest rate
sensitivity gap is the difference between the amount of
interest bearing assets and interest bearing liabilities
maturing in any given time frame. A primary objective of
asset/liability management is to maximize net interest
margin while not subjecting Bancorp to significant interest
rate risk in periods of rising or falling interest rates.
At December 31, 1993 Bancorp's one year repricing gap,
defined as repricing assets minus repricing liabilities as a
percentage of total assets, was -23.61%, i.e. more of
Bancorp's liabilities than assets reprice within a one year
time frame. However, Bancorp does have discretion in
repricing the majority of liabilities that reprice in under
a year. Because more liabilities reprice in the one year
time frame, a rise in interest rates will cause a decrease
in net interest income. Table 3 details Bancorp's interest
rate sensitivity position at various time intervals.
Provision for Loan Losses. The provision for loan
losses charged to operating expense is the result of a
continuing review and assessment of the loan portfolio,
taking into consideration the history of chargeoffs in the
loan portfolio by category, the current economic condition
in the lending area, the payment history, ability to repay
and strength of collateral of specific borrowers, and other
relevant factors. The 1993 provision is $205,000, compared
to $236,000 in 1992. Actual chargeoffs, net of recoveries,
were $142,000 in 1993 and $187,000 in 1992. Since the
provision exceeded net chargeoffs in both years, the result
was an increase in the allowance for loan losses.
Bancorp maintains an allowance for loan losses which it
believes is adequate to absorb reasonably foreseeable losses
in the loan portfolio. The allowance for loan losses
increased $63,000 from December 31, 1992 to 1993, to
$590,000 and was 1.48% of loans. The 1992 balance in the
allowance for loan losses was $527,000 or 1.32% of loans.
In May 1993, the Financial Accounting Standards Board
issued Statement No. 114, "Accounting by Creditors for
Impairment of a Loan," which requires that impaired loans
that are within the scope of this statement be measured
based on the present value of expected future cash flows
discounted at the loan's effective interest rate or at the
loan's market price or the fair value of the collateral if
the loan is collateral dependent. Adoption of the new
standard is required for fiscal years beginning after
December 15, 1994. The standard is to be adopted
prospectively with the effect of initially applying the
standard to be reflected as an adjustment to the bank's
provision for loan losses in the year of adoption. The
effect, if any, the new standard may have on Bancorp's
financial position and results of operations is not expected
to be significant.
Nox-Interest Income. Non-interest income in 1993
totaled $807,000 compared to $728,000 in 1992. The increase
was caused mostly by an increase in overdraft charges of
$30,000 and an increase in the gain on the sale of mortgage
loans of $64,000.
<PAGE>
Table 1
<TABLE>
<CAPTION>
Average Balance Sheets, Interest Income/Expense, Yields, Rates & Statistics for the Years 1993 and 1992
1993 1992
___________________________________ __________________________________
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield
Balance Expense Rate Balance Expense Rate
____________ ____________ __________ ___________ ___________ ___________
<S> <C> <C> <C> <C> <C> <C>
Interest and average yields/rates
(Dollars in thousands)
ASSETS:
Earning Assets:
Interest Bearing Deposits
with other banks $ 1,280 $ 52 4.06% $ 2,356 $ 123 5.22%
U.S. Treasury Securities 7,325 328 4.48% 3,527 187 5.30%
Federal Agencies 13,627 731 5.36% 11,906 757 6.36%
State & Municipal Obligations<FN1> 529 42 7.94% 533 43 8.07%
Other Securities 4,678 263 5.62% 3,175 216 6.80%
______ ______ _______ ______ ______ ______
Total Investment Securities 27,439 1,416 5.16% 21,497 1,326 6.17%
Federal Funds Sold and Securities
Purchased under Agreements to
Repurchase 5,365 153 2.85% 4,021 134 3.33%
Loans (Net) <FN2><FN3> 42,665 4,464 10.46% 41,303 4,626 11.20%
______ ______ _______ ______ ______ ______
Total Earning Assets 75,469 6,033 7.99% 66,821 6,086 9.11%
Allowance for Possible Loan Losses (540) (488)
Cash and Due From Banks 5,013 5,351
Premises and Equipment, Net 2,076 2,239
Other Real Estate 74 297
Other Assets 865 818
______ ______
Total Assets $82,957 $75,038
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest Bearing Liabilities:
Money Market Deposits $ 2,859 $ 77 2.69% $ 2,585 76 2.94%
NOW Deposits 20,142 580 2.88% 13,573 458 3.37%
Savings Deposits 8,132 201 2.47% 6,779 207 3.05%
Certificates of Deposit of
$100,000 or more 8,988 302 3.36% 9,650 427 4.42%
Other Time Deposits 16,005 545 3.41% 18,452 839 4.55%
Federal Funds Purchased and
Securities Sold under
Agreements to Repurchase 4,254 83 1.95% 2,764 66 2.39%
______ ______ ______ ______ _____ ______
Total Interest Bearing Liabilities 60,380 1,788 2.96% 53,803 2,073 3.85%
Non-interest Bearing Deposits 14,413 14,179
Other Liabilities 748 537
______ ______
Total Liabilities 75,541 68,519
Shareholders' Equity 7,416 6,519
______ ______
Total Liabilities and Shareholders'
Equity $82,957 $75,038
====== ======
Net Interest Spread 5.03% 5.26%
====== ======
Net Interest Income/Margin $ 4,245 5.62% $ 4,013 6.01%
====== ====== ====== ======
___________________
<FN1> The yield on tax exempt securities is not on a tax equivalent basis for this
schedule.
<FN2> Interest income includes loan fees of $400,000 and $393,000 for the years ended
December 31, 1993 and 1992. Loans are presented net of unearned discount.
Nonaccrual loans are included in average balances and income on such loans is
recognized on a cash basis.
<FN3> Includes mortgage loans held for sale.
</TABLE>
Table 2
Rate/Volume Analysis
(Dollars in thousands)
<TABLE>
<CAPTION>
1993/1992 1992/1991
_________________________________ ______________________________________
Change Attributable To Change Attributable To
_________________________________ ______________________________________
Total Total
Increase Increase
Rate Volume (Decrease) Rate Volume (Decrease)
__________ __________ ____________ ___________ ___________ ____________
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Interest Bearing Deposits
with Other Banks ($15) ($56) ($71) ($55) ($130) ($185)
Investment Securities (1) (280) 441 161 (216) 319 103
FFS & Sec. Purc. w/Agree
to Resell (26) 45 19 (88) (95) (183)
Loans (316) 153 (163) (449) 251 (198)
__________ __________ __________ ___________ ___________ _________
Total Interest Income (637) 583 (54) (808) 345 (463)
Interest Bearing Liabilities:
Money Market, NOW & Savings
Deposits (147) 265 118 (370) 320 (50)
Certificates of Deposit
$100,000 or more (95) (29) (124) (209) (59) (268)
Other time deposits (185) (111) (296) (362) (114) (476)
FFP and Securities sold under
agmts. to repurchase (20) 36 16 (78) (84) (162)
__________ __________ __________ ___________ ___________ _________
Total Interest Expense (447) 161 (286) (1,019) 63 (956)
__________ __________ __________ ___________ ___________ _________
Net Interest Income ($190) $422 $232 $ 211 $282 $493
========== ========== ========== =========== =========== =========
____________________
<FN1> Not presented on a tax equivalent basis for this schedule.
NOTE: The charges in interest due to both volume and rate have been allocated
proportionately between rate and volume. Interest income includes loan
fees of $400,000, $393,000 and $349,000 for the years ended December
31, 1993, 1992 and 1991. Nonaccrual loans are included in average
balances and income on such loans is recognized on a cash basis.
</TABLE>
Table 3
Interest Rate Sensitivity Analysis at December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
After Non
0-3 4-6 7-12 One Interest
Months Months Months Year Bearing Total
__________ ___________ __________ __________ _____________ _________
<S> <C> <C> <C> <C> <C> <C>
Assets
Mortgage Loans Held for Sale $ 5,631 $ 0 $ 0 $ 0 $ 0 $ 5,631
Loans 8,227 2,243 2,352 26,514 0 39,336
Investments 9,277 3,229 4,589 7,621 0 24,716
Interest Bearing Deposits
with Banks 198 198 198 99 0 693
Fed Funds Sold 2,425 0 0 0 0 2,425
Other Assets 0 0 0 0 7,395 7,395
______ ______ ______ ______ ______ ______
Total Assets 25,758 5,670 7,139 34,234 7,395 80,196
______ ______ ______ ______ ______ ______
Sources of Funds
Savings 8,096 0 0 0 0 8,096
Money Market and NOW Accounts 21,681 0 0 0 0 21,681
CDs over $100,000 4,254 3,248 400 164 0 8,066
Other Time Deposits 7,646 5,498 1,768 732 0 15,644
Fed Funds Purchased and Securities
Sold under Agreements to
Repurchase 4,114 800 0 0 0 4,914
Non-interest Bearing Deposits 0 0 0 0 13,565 13,565
Other Liabilities 0 0 0 0 611 611
Shareholders' Equity 0 0 0 0 7,619 7,619
______ ______ ______ _____ ______ ______
Total Sources of Funds 45,791 9,546 2,168 896 21,795 80,196
______ ______ ______ _____ ______ ______
Rate Sensitivity Gap (20,033) (3,876) 4,971 33,338 (14,400)
Cumulative Rate Sensitivity Gap (20,033) (23,909) (18,938) 14,400 0
Cumulative Rate Sensitivity Gap
as a Percentage of Total Asset -24.98% -29.81% -23.61% 17.96% 0.00%
______________________________
</TABLE>
Non-Interest Expenses. Non-interest expenses increased by $110,000
or 3.57% from 1992 levels. Salaries and related benefits increased $67,000.
Occupancy expense remained virtually unchanged from 1992 to 1993. Other
operating expenses increased by $86,000, including an increase in service
charges paid to correspondent banks of $50,000 due to a restructuring of the
terms of the agreement. A summary of non-interest expenses for 1993 and 1992
is as follows:
(Dollars in thousands)
Year Ended December 31,
_______________________
1993 1992
________ ________
Salaries and Benefits $1,593 $1,526
Occupancy 593 600
(Income) Loss on Foreclosed
Real Estate, Net (13) 22
Other Expenses $1,051 $ 965
________ ________
Total $3,224 $3,113
======== ========
Statement of Financing Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other
Than Pensions," which is effective for fiscal years
beginning after December 15, 1992, requires recognition of
estimated future postretirement costs over employees'
periods of service. Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which is effective for fiscal years beginning
after December 15, 1993, requires recognition of estimated
future postemployment costs over employees' periods of
service. Bancorp offers no postretirement health or medical
benefits or postemployment benefits to any of its employees
or former employees. The severance plan adopted by Bancorp
in connection with the Mergers would result in payments by
FCC, and not Bancorp, under certain circumstances if the
Mergers take place.
Analysis of Financial Condition
Investment Securities. In 1993 average investment
securities increased by $5,942,000 from 1992. The total
market value of investment securities at December 31, 1993
was $24,915,000, including gross unrealized gains of
$286,000 and gross unrealized losses of $87,000. The
investment securities portfolio is used as a source of
liquidity and a means of managing interest rates and
interest rate sensitivity. In addition, the portfolio
serves as a source of collateral on certain deposits.
Securities Portfolio. The carrying amount of
securities at the dates indicated is set forth in the table
below:
(Dollars in thousands)
December 31,
_________________________________
1993 1992
______________ ________________
Amount Percent Amount Percent
______ _______ _______ ________
U.S. Treasury $5,513 22.31% $7,863 29.38%
U.S. Government Agencies 13,135 53.15% 13,470 50.32%
State and Municipals 525 2.12% 530 1.98%
Other Securities 453 1.83% 453 1.69%
Mortgage Backed Securities 5,090 20.59% 4,450 16.63%
_______ _______ ________ ________
Total $24,716 100.00% $26,766 100.00%
======== ======= ======== ========
______________________________
Investment Securities Maturity Distribution. The amortized cost and
estimated market value of securities at December 31, 1993, by
contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because the issuers may have the
right to prepay obligations with or without penalties.
(Dollars in thousands)
Maturity Breakdown as of December, 1993
________________________________________________
One Year 1-5 5-10 Over 10
or Less Years Years Years Total
__________ _________ _________ _________ ________
U.S. Treasury
_____________
Amount $ 5,513 $ 0 $ 0 $ 0 $5,513
Yield 4.5450% 0.0000% 0.0000% 0.0000%
U.S. Agencies
_____________
Amount $ 4,958 $7,762 $ 415 $ 0 $13,135
Yield 5.6211% 4.7528% 3.4580% 0.0000%
Other Securities
________________
Amount $ 0 $ 0 $ 0 $ 253 $ 253
Yield 0.0000% 0.0000% 0.0000% 2.6619%
State and Municipal
___________________
Amount $ 5 $ 520 $ 0 $ 0 $ 525
Yield<FN1> 8.4950% 8.0211% 0.0000% 0.0000%
_________ ________ ________ _________ ________
Subtotal $10,476 $8,282 $ 415 $ 253 19,426
========= ======== ======== ========= ========
Mortgage Backs 5,090
Equity Securities 200
________
Total Investment Securities $24,716
========
____________________
<FN1> The yield on tax-exempt securities is not on a tax
equivalent basis for this schedule.
______________________________
Bancorp's mortgage-backed securities and collateralized
mortgage obligations consists of ownership interests in
pools of residential mortgages guaranteed by U.S. government
agencies with contract maturities up to 30 years. However,
the underlying mortgages are subject to significant
prepayments, particularly when the contract rates on the
mortgages exceed the current market rates on such loans.
The weighted average life of the mortgage backed securities
portfolio, based on current prepayment assumptions, is
approximately seven years.
For a discussion of Financial Accounting Standards
Board Statement No. 115, which Bancorp adopted effective
January 1, 1994, see the accompanying footnotes to the
December 31, 1993 financial statements.
Loans. Loans outstanding at December 31, 1993, totaled
$39,925,000. Mortgage loans held for sale at December 31,
1993 totaled $5,631,000. Total average loans in 1993,
including mortgage loans held for sale, were $42,665,000, an
increase of $1,362,000 from the average for 1992. Average
consumer loans increased by $2,573,000 and average mortgage
loans decreased $1,392,000 from 1992 to 1993.
The following table shows the amounts of loans
outstanding according to the type of loan for each of the
periods indicated:
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
____________________________________________________
1993 1992
________________________ __________________________
Amount Percent Amount Percent
___________ ____________ ___________ _____________
<S> <C> <C> <C> <C>
Commercial, Industrial and
Agricultural $ 5,933 14.86% $ 5,366 13,48%
Real Estate - Construction 15 0.04% 125 0.31%
Real Estate - Mortgage 11,587 29.02% 11,212 28.17%
Consumer, Net of Unearned
Income 22,390 56.08% 20,957 51.76%
Term Federal Funds $ 0 0.00% $ 2,500 100.00%
____________ ____________ ___________ _____________
Total Loans $ 39,925 100.00% $ 39,800 100.00%
============ ============ =========== =============
Allowance for Loan Losses:
Commercial, Industrial and
Agricultural $ 185 31.35% $ 201 38.14%
Real Estate - Mortgage 12 2.04% 0 0.00%
Consumer 336 56.95% 249 47.25%
Unallocated 57 9.66% $ 77 14.61%
_____________ ___________ ____________ _____________
Total $ 590 100.00% $ 527 100.00%
============= =========== ============ =============
______________________________
</TABLE>
Consumer loans is the largest category of loans,
comprising 56.08% and 51.76% of total loans at December 31,
1993 and 1992, respectively.
At December 31, 1993, fixed rate loans totaled
$31,755,000 and variable rate loans totaled $8,171,000.
Mortgage Loans held for Sale. Bancorp originates
mortgage loans for resale. The aggregate market value of
loans held for sale at December 31, 1993 was $5,578,000.
Bancorp is servicing approximately $33,169,000 of mortgage
loans previously sold as of December 31, 1993. Servicing
fees charged on loans serviced for others are included in
interest income.
Nonperforming Assets. Nonaccrual loans and foreclosed
assets are included in nonperforming assets. Nonperforming
assets increased $114,000 during 1993 to $436,000 at
December 31, 1993. The increase is attributable to an
increase in nonperforming loans.
Nonaccrual loans are loans on which the accrual of
interest income has been discontinued and previously accrued
interest has been reversed because the borrower's financial
condition has deteriorated to the extent that the collection
of principal and interest is doubtful. Until the loan is
returned to performing status, generally as the result of
the full payment of all past due principal and interest,
interest income is recorded on the cash basis. Interest
income that would have been recognized on nonaccrual loans
had those loans been on accrual status at contractual terms
throughout 1993 was approximately $25,000. Interest income
recognized on nonaccrual loans for 1993 was not significant.
The table below summarizes nonperforming assets and
includes several ratios that measure the level of
nonperforming assets.
______________________________
(Dollars in thousands)
December 31,
________________________________
1993 1992
Nonperforming Loans:
Nonaccrual loans $ 354 $ 209
__________ __________
Total Nonperforming Loans 354 209
Real Estate Acquired through
Foreclosure 62 84
Other Assets Acquired through
Repossession 20 29
__________ __________
Total Nonperforming Assets $ 436 $ 322
========== ==========
Accruing Loans Past Due Ninety
Days or More $ 26 $ 160
========== ==========
Nonperforming loans as a % of
total loans 0.89% 0.53%
Nonperforming assets as a % of
total loans and real estate
and other property acquired
by foreclosure 1.09% 0.81%
Allowance for loan losses as a
% of nonperforming loans 166.67% 252.15%
______________________________
Bancorp's management is not aware of any loans
classified for regulatory purposes and excluded from the
above table which: (1) represent or result from trends or
uncertainties that will materially impact future operating
results, liquidity, or capital resources, or (2) represent
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.
Summary of Loan Loss Experience. The following table
summarizes the loan loss experience for each of the periods
indicated:
(Dollars in thousands) December 31,
___________________________________
1993 1992
___________ __________
Balance at beginning of year $ 527 $ 478
Provision charged to expense 205 236
Charge-offs:
Real Estate 0 47
Consumer 159 167
Credit Cards 12 15
Commercial and all other 1 26
___________ ___________
Total Charge-offs 172 255
___________ ___________
Recoveries:
Real Estate 16 49
Consumer 11 14
Credit Cards 2 1
Commercial and all other 1 4
___________ ___________
Total Recoveries 30 68
___________ ___________
Net Loan Charge-offs 142 187
___________ ___________
Balance at end of year $ 590 $ 527
=========== ===========
Net loan charge-offs as a % of
average loans 0.33% 0.45%
Recoveries as a % of charge-offs 17.44% 26.67%
Allowance for loan losses as a %
of year-end loans 1.48% 1.32%
______________________________
Deposits. Total deposits at December 31, 1993 were
$67,053,000, an increase of $2,524,000 from the December 31,
1992 total of $64,529,000. Average deposits in 1993
increased $5,321,000 from 1992. As noted earlier, an
increase occurred in the average balance of interest bearing
checking and was partially offset by a decrease in the
average balance of certificates of deposit.
Effective July 1, 1992, Bancorp became the fiscal agent
of the local parish school board. All checking accounts,
including interest bearing accounts, are maintained at
Bancorp. Bancorp pays a variable interest rate on the
interest bearing accounts at a rate equal to the average of
the weekly auctions for six month US Treasury bills for the
preceding six months, adjustable semi-annually. The initial
term of the agreement expires on June 30, 1994 and
automatically renews for three one-year periods unless
cancelled in advance in writing. Bancorp has been able to
use this deposit to allow more expensive deposits to leave
the bank and is confident that it could be replaced, if
necessary.
Time deposits of $100,000 or more were $8,066,000 at
December 31, 1993, which comprises 12.03% of total deposits.
Bancorp had no brokered deposits at December 31, 1993.
Deposit Average Balances and Rates. The following
table indicates the average daily amount of deposits and
rates paid on such deposits for the periods indicated:
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
__________________________________________________________
1993 1992
____________________________ ____________________________
Amount Percent Amount Percent
_____________ ______________ ______________ ______________
<S> <C> <C> <C> <C>
Non-interest bearing demand $ 14,413 0.00% $ 14,179 0.00%
Interest bearing demand 23,001 2.86% 16,158 3.31%
Savings 8,132 2.48% 6,779 3.05%
Time deposits 24,993 3.39% 28,102 4.50%
____________ ______________ ______________ ______________
Total $ 70,539 2.42% $ 65,218 3.08%
============ ============== ============== ==============
______________________________
</TABLE>
Maturities of Time Deposits of $100,000 or More. The
maturities of time deposits of $100,000 or more are
summarized in the table below:
(Dollars in thousands)
December 31,
__________________________
1993 1992
__________ __________
Three months or less $ 4,254 $ 6,360
Over three months through 12 months 3,648 2,166
Over one year through five years 164 0
Over five years 0 0
__________ __________
Total $ 8,066 $ 8,526
========== ==========
Short-Term Borrowings. Short-term borrowings consists
mainly of securities sold under an agreement to repurchase
which are arrangements with large commercial depositors.
Terms vary from 30 to 180 days. Occasionally, Bancorp will
also purchase federal funds if needed for short term
liquidity purposes. The following table summarizes the
activity in short-term borrowings:
(Dollars in thousands)
<TABLE>
<CAPTION>
1993 1992
_____________________________________ _______________________________________
Sec Sold Sec Sold
Under Under
Agreements Agreements
Fed Funds to Fed Funds to
Purchased Repurchase Purchased Repurchase
________________ __________________ __________________ ___________________
<S> <C> <C> <C> <C>
Amounts Outstanding
as of December 31 $ 0 $ 4,914 $ 0 $ 7,219
Weighted Average Interest
Rate 00.00% 2.15% 0.00% 3.13%
Maximum Amount of Borrowings
Outstanding at any Month
End During the Year Ended
December 31 $ 0 $ 8,585 $ 0 $ 7,219
Average Balance $ 6 $ 4,248 $ 0 $ 2,764
Weighted Average Rate 3.24% 1.94% 0.00% 2.42%
</TABLE>
______________________________
Liquidity. Liquidity involves Bancorp's ability to
raise funds to support asset growth or to reduce assets,
meet deposit withdrawals and other borrowing needs, maintain
reserve requirements and otherwise operate the company on an
ongoing basis.
As shown in the accompanying 1993 statement of cash
flows, cash and cash equivalents increased by $2,871,000
from December 31, 1992 to December 31, 1993. Cash and cash
equivalents were generated primarily by proceeds from the
sale of securities of $13,566,000 and were partially offset
by the purchase of investment securities of $11,677,000.
The cash and cash equivalents generated by the increase in
deposits was offset by the decrease in federal funds and
securities sold under repurchase agreements. In addition,
operating activities provided net cash of $108,000.
Capital Resources. Bancorp maintains adequate capital
for regulatory purposes and has sufficient capital to absorb
the risks inherent in the business. Risk-based capital
requirements have been established that weight different
assets according to the level of risk associated with those
types of assets. The table below summarizes Bancorp's
capital levels for December 31, 1993 and 1992.
(Dollars in thousands)
December 31,
____________________ Regulatory
1993 1992 Minimums
________ ________ __________
Capital:
Tier I $ 7,616 $ 7,327
Tier II 590 527
________ ________
Total Capital $ 8,206 $ 7,854
======== =========
Risk Weighted Assets $67,303 $71,758
========= =========
Tier I Capital to Risk Weighted Assets 11.32% 10.21% 4%
Total Capital to Risk Weighted Assets 12.19% 10.95% 8%
Leverage - Tier I Capital to Adjusted
Total Assets 9.11% 8.96% 4% - 5%
Equity to Assets 9.19% 9.07%
Dividend Payout Ratio 23.99% 23.85%
BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
The following discussion provides certain information
concerning the financial condition and results of operations
of Bancorp for the six months ended June 30, 1994 and 1993.
The financial position and results of operations of Bancorp
were due primarily to its banking subsidiary, City Bank.
Overview
Net income for the first six months of 1994 was
$529,000 compared to $628,000 for the same period in 1993.
The decrease of $99,000 was caused by a decrease in the net
interest margin of $93,000, a decrease in other income of
$62,000, and an increase in other expenses of $18,000,
offset by reductions in the provision for loan losses of
$25,000 and income tax expense of $49,000.
Average assets for the first six months of 1994 were
$85,757,000, an increase of $3,277,000 over the same period
for 1993. Increases occurred in federal funds sold and
loans, and decreases occurred in investments and cash
instruments.
Results of Operations
Net Interest Income. Net interest income for the first
six months of 1994 was $2,059,000, compared to $2,152,000
for 1993. The $93,000 decrease is attributable to a
decrease in the net interest margin and occurs despite an
increase in average assets. The net interest margin
continues to shrink as assets mature and are repriced at
current rates, which are generally lower. The average yield
on assets for the first six months of 1994 was .52% lower
than for the same period in 1993. The rate paid for
deposits decreased by .03%, resulting in a net decrease in
the net interest spread of 49 basis points.
Interest Rate Sensitivity. The interest rate
sensitivity gap is the difference between the amount of
interest bearing assets and interest bearing liabilities
maturing in any given time frame. These differences provide
a relative indication of the extent to which future interest
rate changes will affect net interest income. Bancorp
continues to operate at a negative gap, meaning that more
liabilities reprice in a short time frame than do assets.
At June 30, 1994 the one year repricing gap was -20.48%.
Provision for Loan Losses. The provision for loan
losses is the periodic charge to earnings for potential
losses in the loan portfolio. The provision is based on a
continuing review and assessment of the loan portfolio,
taking into consideration the history of the portfolio, the
current economy, the health of specific industries and the
condition of individual borrowers. The provision for the
first six months of 1994 was $65,000 compared to $90,000 for
the first six months of 1993.
Bancorp maintains an allowance for loan losses which it
believes is adequate to absorb reasonably foreseeable losses
in the loan portfolio. The allowance for loan losses was
$573,000 at June 30, 1994. Net chargeoffs of $82,000 were
more than the provision and caused a decrease in the reserve
during the first six months of 1994 of $17,000. The balance
at June 30, 1994 was 1.38% of outstanding loans.
Non-Interest Income. Non-interest income for the first
six months of 1994 was $331,000, which was a $62,000
decrease from the $393,000 recorded for the first six months
of 1993. Modest increases in fees and other income of
$18,000 were countered by a decrease in the gain on the sale
of mortgage loans of $80,000. The change from a falling to
a rising interest rate environment limited the opportunities
to make a gain on the sale of mortgage loans originated for
resale.
Non-Interest Expense. Non-interest expense for the
first six months of 1994 increased by $18,000 or 1.23% over
the same period of 1993. Salaries and employee benefits
increased $33,000 and was partially offset by a decrease in
other expenses. The components of non-interest expense are
detailed below for the first six months of 1994 and 1993.
Six months ended June 30
__________________________
(Dollars in thousands) 1994 1993
____________ _____________
Salaries and Benefits $ 754 $ 721
Occupancy 288 286
Income on Foreclosed Real Estate, Net (21) (22)
Other Expenses 500 518
____________ ______________
Total $ 1,521 $1,503
============ ==============
In 1991, Bancorp adopted a dividend and bonus plan to
allow for a predetermined formula for the payment of yearly
dividends and employee bonuses. The plan is ratified each
year by the Board, subject to the achieving by Bancorp of
certain goals set by the Board. The plan calls for a
percentage of net income to be divided between dividends and
bonuses. The amount of net income to be paid in bonuses,
subject to the meeting of the goals for the year, is 9.3 %
of net income. Because of the contingent nature of the
bonus it has been Bancorp's policy to not accrue for this
liability during the year. Assuming goals are met, the
liability at June 30, 1994 based on net income at that date
would be approximately $49,900.
Income Tax Expense. Income tax expense continues to be
accrued at the statutory rate of 34%. Deferred taxes are
recognized for timing differences between book and tax
income.
Analysis of Financial Condition
Investment Securities. In May 1993, the FASB issued
SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". This standard requires that Bancorp
classify its securities portfolio into securities held for
trading, securities held to maturity, and securities
available for sale. Criteria are established for
determining whether a security is held for trading or held
to maturity. If the security does not fit into either one
of those categories, it is classified as available for sale.
Gains and losses caused by fluctuations in the market value
of securities held for trading are charged to the income
statement in the year that the increase or decrease in value
occurs. Fluctuations in the market value, net of related
tax effect, of securities available for sale are accounted
for as a change in a component of shareholders' equity and
are not charged to the income statement. No adjustment to
carrying value for fluctuations in market value is made for
securities held to maturity. Bancorp adopted this
accounting method effective January 1, 1994. Approximately
20% of the existing investment portfolio is classified as
held to maturity. The remaining 80% of the portfolio is
classified as available for sale and includes most
mortgaged-backed and agency securities and all U.S. Treasury
securities. The classification of these securities as
available for sale has resulted in a decrease to
shareholders' equity of $234,000. See Note 2 to the
accompanying financial statements for an analysis of
securities between available for sale and held to maturity,
together with the unrealized gains and losses for each
category.
Loans. Total loans outstanding at June 30, 1994 were
$41,430,000, an increase of $1,504,000 since December 31,
1993. An increase in consumer loans of $1,632,000 was
partially offset by a decrease in mortgage loans of
$217,000. Consumer loans continue to be the largest
component of the loan portfolio, comprising 58% at June 30,
1994.
Mortgage Loans Held For Sale. Bancorp originates
mortgage loans for resale. The aggregate market value of
loans held for sale at June 30, 1994 was approximately
$4,245,000. Bancorp is servicing approximately $34,014,000
of mortgage loans previously sold as of June 30, 1994.
Servicing fees charged on loans serviced for others are
included in interest income.
Nonperforming Assets. Nonaccrual loans and foreclosed
assets are included in nonperforming assets. Nonperforming
assets totaled $490,000 at June 30, 1994 and are detailed in
the table below.
<TABLE>
<CAPTION>
June 30
__________________________________
(Dollars in thousands) 1994 1993
_________________ _______________
<S> <C> <C>
Nonperforming Loans:
Nonaccrual Loans $ 410 $ 221
_______________ _______________
Total Nonperforming Loans 410 221
Real Estate Acquired through Foreclosure 49 81
Other Assets Acquired through Repossession 31 25
_______________ _______________
Total Nonperforming Assets $ 490 $ 327
=============== ================
Accruing Loans Past Due Ninety Days or More $ 53 $ 98
=============== ================
Nonperforming loans as a % of total loans 0.99% 0.56%
Nonperforming assets as a % of total loans and real estate
and other property acquired by foreclosure 1.18% 0.81%
Allowance for loan losses as a % of nonperforming loans 139.76% 257.47%
</TABLE>
______________________________
Bancorp's management is not aware of any loans
classified for regulatory purposes and excluded from the
above table which: (1) represent or result from trends or
uncertainties that will materially impact future operating
results, liquidity, or capital resources, or (2) represent
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.
Deposits. The average balance for total deposits at
June 30, 1994 is not materially different from June 30,
1993. An increase in the average balance in interest
bearing demand deposits was offset by a decrease in time
deposits. This was caused by depositors electing to keep
funds liquid due to low interest rates and a relatively
small difference between rates on demand and short-term time
deposits.
Short-Term Borrowings. Short-term borrowings consists
of securities sold under an agreement to repurchase, which
are arrangements with large commercial depositors. Terms
vary from 30 to 180 days. The average balance in repurchase
agreements for the first six months of 1994 increased
$3,366,000 from the first six months of 1993. This increase
was the main source of additional funds for Bancorp.
Liquidity. Liquidity involves Bancorp's ability to
raise funds to support asset growth or to reduce assets,
meet deposit withdrawals and other borrowing needs, maintain
reserve requirements and otherwise operate the company on an
ongoing basis. As shown in the accompanying statement of
cash flows for the six months ended June 30, 1994, Bancorp's
cash and cash equivalents totaled $10,711,000 at the end of
the period, an increase of $3,862,000 since December 31,
1993. This increase was caused by Bancorp's increased
position in federal funds sold at June 30, 1994.
Capital Resources. Bancorp maintains adequate capital
for regulatory purposes and has sufficient capital to absorb
the risks inherent in the business. At June 30, 1994
Bancorp had a Tier I capital to risk weighted asset ratio of
11.65% and a leverage ratio of 9.42%. For regulatory
purposes, City Bank is considered a well-capitalized
institution.
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; FCC's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 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 Securities Exchange Act of 1934 (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 Bancorp approve the Plan and the
Mergers are subsequently consummated, all shareholders of
Bancorp, other than those exercising dissenters' rights,
will become shareholders of FCC and their rights will be
governed by and be subject to the Articles of Incorporation
and Bylaws of FCC rather than the Articles of Incorporation
and Bylaws of Bancorp. The following is a brief summary of
certain of the principal differences between the rights of
shareholders of FCC and Bancorp 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 designations, 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 June 30, 1994, FCC had
2,398,170 shares of Series 1992 Preferred Stock outstanding.
The Articles of Incorporation of Bancorp do not
authorize the issuance of preferred stock.
Preemptive Rights
Bancorp's Articles of Incorporation provide that
holders of common stock have preemptive rights. Such rights
enable holders of Bancorp Common Stock to subscribe for
their proportionate share of new voting shares being issued
by Bancorp for cash. FCC's Articles of Incorporation do not
provide for preemptive rights.
Shareholder Action by Consent
Bancorp's Articles of Incorporation permit its
shareholders to act by written consent that is signed only
by shareholders holding that proportion of the total voting
power on the question that is required by law or the
Articles of Incorporation.
FCC's Articles of Incorporation do not contain such a
provision and therefore its shareholders may act by written
consent only if it is unanimous.
Limitation of Personal Liability of Directors and Officers
The Articles of Incorporation of FCC contain a
provision limiting the personal liability of FCC's directors
and officers under certain circumstances (the "Limitation of
Liability Provision"). Pursuant to the Limitation of
Liability Provision, the officers and directors of FCC have
no personal liability to FCC or its shareholders for
monetary damages for breach of their fiduciary duty as a
director or officer of FCC except for (a) any breach of the
director's or officer's duty of loyalty to FCC or its
shareholders, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation
of law, (c) liability under Section 92(D) of the LBCL
(pertaining generally to acts related to an unlawful stock
repurchase or payment of a dividend) or (d) any transaction
from which the director or officer derived an improper
personal benefit.
The Limitation of Liability Provision also provides
that any subsequent amendment or repeal or the adoption of
any inconsistent provision cannot retroactively eliminate or
reduce the protection it provides directors and officers
with regard to claims that arise after the effective date of
the proposed amendment but before any such subsequent
amendment, repeal or adoption of any inconsistent provision.
Additionally, while a two-thirds vote of FCC's voting power
present is required generally to amend its Articles of
Incorporation, 80% of the total voting power of FCC is
required to amend or repeal the Limitation of Liability
Provision.
Bancorp's Articles of Incorporation do not contain a
limitation of liability provision.
Special Meetings of Shareholders
FCC's Articles of Incorporation provide that a special
meeting of shareholders may be called by the holders of a
majority of the total voting power of FCC. Because this
provision is contained in FCC's Articles of Incorporation,
it may only be amended by a vote of FCC's shareholders.
Bancorp's Bylaws contain a similar provision; however,
because it is contained in Bancorp's By laws, it may be
amended under certain circumstances by the directors.
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
Bancorp and its subsidiary as of and for the years ended
December 31, 1993 and 1992 have been audited by Castaing,
Hussey & Lolan, 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 LLP, 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 LLP 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 LLP 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, Bancorp had not been informed of any matters
to be presented by or on behalf of Bancorp 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
Bancorp, and return it at once in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
_____________________________
Richard L. Delhomme
President
New Iberia, Louisiana
____________, 1994
<PAGE>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
In addition to the Merger with City Bancorp, 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 June 30, 1994 and the unaudited pro forma condensed
combined statements of income for the years ended December 31, 1993, 1992
and 1991 and for the six months ended June 30, 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. (First) have signed a definitive
agreement to merge the two companies and their respective subsidiaries,
First National Bank of Commerce and First Bank. Shareholders of First 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 definitive agreement
to merge the two companies and their respective subsidiaries, The First
National Bank of Lafayette and City Bank and Trust Company, New Iberia,
Louisiana. Shareholders of City 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 562,500 shares.
FCC and Wolcott Mortgage Group, Inc. (Wolcott) have signed a definitive
agreement for First National Bank of Commerce, a subsidiary of FCC, to
acquire Wolcott. The shareholders of Wolcott will receive $1.251 million
at closing, in the form of cash. A second contingent payment, in the form
of 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, First, 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 pro forma 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 City and FCC and the notes thereto
included elsewhere herein or incorporated by reference hereto.
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 1994
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
--------------------------------------------------------------- Forma Forma
FCC Lakeside First City Wolcott Adjustments<FN1>Combined
----------- ----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 330,723 $ 11,836 $ 11,657 $ 4,961 $ 186 $ (2,500) $ 356,863
Interest-bearing deposits in other banks 36,134 6,776 269 396 83 - 43,658
Securities held to maturity 314,512 48,819 8,124 5,405 - - 376,860
Securities available for sale 2,574,140 12,078 48,216 21,521 - - 2,655,955
Trading account securities 526 - - - - - 526
Federal funds sold and securities
purchased under resale agreements 24,225 5 7,730 5,750 - - 37,710
Loans and leases, net of unearned income 2,813,840 89,779 155,040 45,675 1,419 - 3,105,753
Allowance for loan losses (58,755) (2,859) (2,308) (573) - - (64,495)
Net loans and leases 2,755,085 86,920 152,732 45,102 1,419 3,041,258
Premises and equipment 110,157 8,398 6,346 1,949 41 - 126,891
Goodwill and other intangible assets 14,899 - - - - 2,165 <FN6> 17,064
Other assets 155,771 2,378 4,609 843 41 - 163,642
----------- ----------- ----------- ----------- ----------- --------- -----------
Total assets $6,316,172 $ 177,210 $ 239,683 $ 85,927 $ 1,770 $ (335) $6,820,427
=========== =========== =========== =========== =========== ========= ===========
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $1,208,690 $ 41,292 $ 43,315 $ 14,237 $ - $ - $1,307,534
Interest-bearing deposits 4,020,829 118,348 172,902 56,413 - - 4,368,492
Foreign branch interest-bearing deposits 6,403 - - - - - 6,403
----------- ----------- ----------- ----------- ----------- --------- -----------
Total deposits 5,235,922 159,640 216,217 70,650 - - 5,682,429
Short-term borrowings 437,050 - 500 6,676 1,419 - 445,645
Other liabilities 61,560 1,026 1,280 686 16 - 64,568
Long-term debt 89,056 - - - - - 89,056
----------- ----------- ----------- ----------- ----------- --------- -----------
Total liabilities 5,823,588 160,666 217,997 78,012 1,435 6,281,698
----------- ----------- ----------- ----------- ----------- --------- -----------
STOCKHOLDERS' EQUITY
Preferred stock 59,954 - - - 147 (147)<FN2> 59,954
Common stock 130,811 1,250 848 500 3 22,213 <FN2> 155,625
Capital surplus 137,559 2,500 3,823 2,504 - (22,216)<FN2> 124,170
Retained earnings 214,230 12,860 17,365 5,145 185 (185)<FN2> 249,600
Unearned restricted stock compensation (1,042) - - - - - (1,042)
Unrealized gain(loss) on securities
available for sale (48,928) (66) (350) (234) - - (49,578)
----------- ----------- ----------- ----------- ----------- --------- -----------
Total stockholders' equity 492,584 16,544 21,686 7,915 335 (335) 538,729
----------- ----------- ----------- ----------- ----------- --------- -----------
Total liabilities and stockholders'
equity $6,316,172 $ 177,210 $ 239,683 $ 85,927 $ 1,770 $ (335) $6,820,427
=========== =========== =========== =========== =========== ========= ===========
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1993
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
-------------------------------------------------- Forma Forma
FCC Lakeside First 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 22,216 <FN2> 155,125
Capital surplus 135,911 2,500 3,823 2,504 (22,216)<FN2> 122,522
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 (3) - - 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
=========== =========== =========== =========== =========== ===========
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1994
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
--------------------------------------------------------------- Forma Forma
FCC Lakeside First City Wolcott Adjustments Combined
----------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 193,891 $ 5,810 $ 9,526 $ 2,981 $ 85 $ $ 212,293
Interest expense 69,155 1,415 2,266 922 60 73,818
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income 124,736 4,395 7,260 2,059 25 138,475
Provision for loan losses (8,664) - 125 65 - (8,474)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income after
provision for loan losses 133,400 4,395 7,135 1,994 25 146,949
Other income 49,049 1,630 1,431 331 527 52,968
Operating expense 115,483 4,645 4,818 1,521 584 54<FN6> 127,105
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income tax
expense 66,966 1,380 3,748 804 (32) (54) 72,812
Income tax expense (benefit) 21,755 481 1,239 275 (11) 23,739
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) 45,211 899 2,509 529 (21) (54) 49,073
Preferred dividend requirements 2,174 - - - 2 2,176
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) applicable to common
shares $ 43,037 $ 899 $ 2,509 $ 529 $ (23) $ (54) $ 46,897
=========== =========== =========== =========== =========== =========== ===========
Earnings (loss) per share <FN4>
Primary $ 1.63 $ 1.80 $ 2.96 $ 5.29 $ (766.67) $ 1.50
Fully diluted $ 1.51 $ 1.80 $ 2.96 $ 5.29 $ (766.67) $ 1.41
Weighted average shares outstanding <FN4>
Primary 26,315,449 500,000 847,658 100,000 30 31,277,683
Fully diluted 32,262,682 500,000 847,658 100,000 30 37,224,916
(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 First 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 1,391 108<FN6>246,153
----------- ----------- ----------- ----------- --------- ----------- ---------
Income before income tax expense 135,855 2,284 8,868 1,623 128 (108) 148,650
Income tax expense 40,641 822 2,919 552 41 44,975
----------- ----------- ----------- ----------- --------- ----------- --------
Net income <FN5> 95,214 1,462 5,949 1,071 87 (108) 103,675
Preferred dividend requirements 4,348 - - - 9 4,357
----------- ----------- ----------- ----------- --------- ----------- --------
Income applicable to common shares $ 90,866 $ 1,462 $ 5,949 $ 1,071 $ 78 $ (108) $ 99,318
=========== =========== =========== =========== ========= =========== =========
Earnings per share <FN4>
Primary $ 3.48 $ 2.92 $ 7.02 $ 10.71 $ 2,600.00 $ 3.19
Fully diluted $ 3.18 $ 2.92 $ 7.02 $ 10.71 $ 2,600.00 $ 2.98
Weighted average shares outstanding <FN4>
Primary 26,132,211 500,000 847,787 100,000 30 31,094,445
Fully diluted 32,125,003 500,000 847,787 100,000 30 37,087,237
(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>
Historical Pro Pro
-------------------------------------------------- Forma Forma
FCC Lakeside First 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 $ 2.49
Weighted average shares outstanding <FN4>
Primary 23,728,540 500,000 847,787 100,000 28,690,774
Fully diluted 29,568,365 500,000 847,787 100,000 34,530,599
(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>
Historical Pro Pro
-------------------------------------------------- Forma Forma
FCC Lakeside First 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 26,771,175
Fully diluted 21,808,941 500,000 847,787 100,000 26,771,175
(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 its
Common Stock to the shareholders of Lakeside, First, and City. 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, First, and City 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, 2,860,169 and 562,500, respectively.
For purposes of these pro formas, it has been assumed that the
maximum number of shares issuable under the proposed mergers with
Lakeside, First, and City will be issued. Under the terms of the
proposed merger with Wolcott, the shareholders of Wolcott will
receive, upon consummation, $1,251,000, in the form of 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 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, in the form of cash, is paid for Wolcott.
<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, First,
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. An analysis of
these adjustments follows (in thousands, except share data):
<TABLE>
<CPATION>
Stockholders' Equity
Unrealized
Unearned Gain (Loss) On
Excess Restricted Securities Total
Cost Over Preferred Common Capital Retained Stock Available Stockholders'
Cash Book 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)
First (B) - - - 14,301 (9,630) - - - 4,671
(848) (3,823) (4,671)
City (C) - - - 2,813 191 - - - 3,004
(500) (2,504) (3,004)
Wolcott (D) (2,500) 2,165 - - - - - - -
(147) (3) - (185) - - (335)
---------- --------- -------- ----------- ---------- ------- ------------ -------------- ------------
Total $ (2,500) $ 2,165 $ (147) $ 22,213 $ (22,216) $ (185) $ - $ - $ (335)
========== ========= ======== =========== ========== ======= ============ ============== ============
</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 First
common stock in a transaction accounted for
as a pooling-of-interests. FCC's Common
Stock account has been decreased by the
balance in First's common stock account
($848) and increased by the par value of the
FCC Common Stock issued ($14,301).
(C) Issuance of 562,500 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 ($2,813).
(D) Payment of $2,500 in cash 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 $2,165 will
be recorded a of this transaction.
<FN3> First 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 First 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 First. 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 $2,165,000. The excess cost is being amortized over 20 years
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>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(City Bancorp Transaction Only)
The unaudited pro forma condensed combined balance sheets as of
December 31, 1993 and June 30, 1994 and the unaudited pro forma condensed
combined statements of income for the years ended December 31, 1993, 1992
and 1991 and for the six months ended June 30, 1994 appearing on the
following pages give effect to the proposed City Bancorp, Inc. (City)
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 City (collectively the "Companies") have signed a definitive
agreement to merge the two companies and their respective subsidiaries, The
First National Bank of Lafayette and City Bank and Trust Company, New
Iberia, Lousiana (the "Mergers"). Shareholders of City 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 562,500 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 pro forma 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
June 30, 1994
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
---------------------------- Forma Forma
FCC City Adjustments<FN1> Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 330,723 $ 4,961 $ - $ 335,684
Interest-bearing deposits in other banks 36,134 396 - 36,530
Securities held to maturity 314,512 5,405 - 319,917
Securities available for sale 2,574,140 21,521 - 2,595,661
Trading account securities 526 - - 526
Federal funds sold and securities
purchased under resale agreements 24,225 5,750 - 29,975
Loans and leases, net of unearned income 2,813,840 45,675 - 2,859,515
Allowance for loan losses (58,755) (573) - (59,328)
------------- ------------- ------------- -------------
Net loans and leases 2,755,085 45,102 - 2,800,187
Premises and equipment 110,157 1,949 - 112,106
Goodwill and other intangible assets 14,899 - - 14,899
Other assets 155,771 843 - 156,614
------------- ------------- ------------- -------------
Total assets $ 6,316,172 $ 85,927 $ - $ 6,402,099
============= ============= ============= =============
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,208,690 $ 14,237 $ - $ 1,222,927
Interest-bearing deposits 4,020,829 56,413 - 4,077,242
Foreign branch interest-bearing deposits 6,403 - - 6,403
------------- ------------- ------------- -------------
Total deposits 5,235,922 70,650 - 5,306,572
Short-term borrowings 437,050 6,676 - 443,726
Other liabilities 61,560 686 - 62,246
Long-term debt 89,056 - - 89,056
------------- ------------- ------------- -------------
Total liabilities 5,823,588 78,012 - 5,901,600
------------- ------------- ------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock 59,954 - - 59,954
Common stock 130,811 500 2,313 <FN2> 133,624
Capital surplus 137,559 2,504 (2,313)<FN2> 137,750
Retained earnings 214,230 5,145 - 219,375
Unearned restricted stock compensation (1,042) - - (1,042)
Unrealized gain(loss) on securities
available for sale (48,928) (234) - (49,162)
------------- ------------- ------------- -------------
Total stockholders' equity 492,584 7,915 - 500,499
------------- ------------- ------------- -------------
Total liabilities and stockholders' equity$ 6,316,172 $ 85,927 $ - $ 6,402,099
============= ============= ============= =============
(See accompanying notes)
</TABLE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1993
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
---------------------------- Froma Forma
FCC City Adjustments<FN1> Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 387,548 $ 4,424 $ - $ 391,972
Interest-bearing deposits in other banks 55,422 693 - 56,115
Securities held for investment 1,523,638 24,716 - 1,548,354
Securities held for sale 1,779,927 - - 1,779,927
Trading account securities 482 - - 482
Federal funds sold and securities
purchased under resale agreements 28,600 2,425 - 31,025
Loans and leases, net of unearned income 2,674,697 45,557 - 2,720,254
Allowance for loan losses (68,302) (590) - (68,892)
------------- ------------- ------------- -------------
Net loans and leases 2,606,395 44,967 2,651,362
Premises and equipment 102,230 2,053 - 104,283
Goodwill and other intangible assets 16,143 - - 16,143
Other assets 159,900 918 - 160,818
------------- ------------- ------------- -------------
Total assets $ 6,660,285 $ 80,196 $ $ 6,740,481
============= ============= ============= =============
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,196,259 $ 13,565 $ - $ 1,209,824
Interest-bearing deposits 4,107,813 53,487 - 4,161,300
Foreign branch interest-bearing deposits 5,787 - - 5,787
------------- ------------- ------------- -------------
Total deposits 5,309,859 67,052 5,376,911
Short-term borrowings 678,316 4,914 - 683,230
Other liabilities 72,734 610 - 73,344
Long-term debt 89,704 - - 89,704
------------- ------------- ------------- -------------
Total liabilities 6,150,613 72,576 6,223,189
------------- ------------- ------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock 59,979 - - 59,979
Common stock 130,311 500 2,313 <FN2> 133,124
Capital surplus 135,911 2,504 (2,313)<FN2> 136,102
Retained earnings 184,288 4,616 - 188,904
Unearned restricted stock compensation (817) - - (817)
Unrealized gain(loss) on securities
available for sale - - - -
------------- ------------- ------------- -------------
Total stockholders' equity 509,672 7,620 517,292
------------- ------------- ------------- -------------
Total liabilities and stockholders' equity$ 6,660,285 $ 80,196 $ $ 6,740,481
============= ============= ============= =============
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1994
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Pro
---------------------------- Forma Forma
FCC City Adjustments Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income $ 193,891 $ 2,981 $ - $ 196,872
Interest expense 69,155 922 - 70,077
------------- ------------- ------------- -------------
Net interest income 124,736 2,059 - 126,795
Provision for loan losses (8,664) 65 - (8,599)
------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 133,400 1,994 - 135,394
Other income 49,049 331 - 49,380
Operating expense 115,483 1,521 - 117,004
------------- ------------- ------------- -------------
Income before income tax expense 66,966 804 - 67,770
Income tax expense 21,755 275 - 22,030
------------- ------------- ------------- -------------
Net income 45,211 529 - 45,740
Preferred dividend requirements 2,174 - - 2,174
------------- ------------- ------------- -------------
Income applicable to common shares $ 43,037 $ 529 $ - $ 43,566
============= ============= ============= =============
Earnings per share <FN3>
Primary $ 1.63 $ 5.29 $ 1.62
Fully diluted $ 1.51 $ 5.29 $ 1.50
Weighted average shares outstanding <FN3>
Primary 26,315,449 100,000 26,877,949
Fully diluted 32,262,682 100,000 32,825,182
(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 City Adjustments Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income $ 393,334 $ 6,033 $ - $ 399,367
Interest expense 143,324 1,788 - 145,112
------------- ------------- ------------- -------------
Net interest income 250,010 4,245 - 254,255
Provision for loan losses (4,504) 205 - (4,299)
Net interest income after ------------- ------------- ------------- -------------
provision for loan losses 254,514 4,040 - 258,554
Other income 102,421 807 - 103,228
Operating expense 221,080 3,224 - 224,304
------------- ------------- ------------- -------------
Income before income tax expense 135,855 1,623 - 137,478
Income tax expense 40,641 552 - 41,193
------------- ------------- ------------- -------------
Net income 95,214 1,071 - 96,285
Preferred dividend requirements 4,348 - - 4,348
------------- ------------- ------------- -------------
Income applicable to common shares $ 90,866 $ 1,071 $ - $ 91,937
============= ============= ============= =============
Earnings per share <FN3>
Primary $ 3.48 $ 10.71 $ 3.44
Fully diluted $ 3.18 $ 10.71 $ 3.16
Weighted average shares outstanding <FN3>
Primary 26,132,211 100,000 26,694,711
Fully diluted 32,125,003 100,000 32,687,503
(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>
Historical Pro Pro
---------------------------- Forma Forma
FCC City Adjustments Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income $ 398,701 $ 6,086 $ - $ 404,787
Interest expense 163,348 2,073 - 165,421
------------- ------------- ------------- -------------
Net interest income 235,353 4,013 - 239,366
Provision for loan losses 22,040 236 - 22,276
------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 213,313 3,777 - 217,090
Other income 96,627 728 - 97,355
Operating expense 203,781 3,113 - 206,894
------------- ------------- ------------- -------------
Income before income tax expense and
minority interest 106,159 1,392 - 107,551
Income tax expense 32,766 226 - 32,992
Income before minority interest 73,393 1,166 - 74,559
Earnings of minority interest 918 - - 918
------------- ------------- ------------- -------------
Net income 72,475 1,166 - 73,641
Preferred dividend requirements 4,076 - - 4,076
------------- ------------- ------------- -------------
Income applicable to common shares $ 68,399 $ 1,166 $ - $ 69,565
============= ============= ============= =============
Earnings per share <FN3>
Primary $ 2.88 $ 11.66 $ 2.86
Fully diluted $ 2.70 $ 11.66 $ 2.69
Weighted average shares outstanding <FN3>
Primary 23,728,540 100,000 24,291,040
Fully diluted 29,568,365 100,000 30,130,865
(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>
Historical Pro Pro
---------------------------- Forma Forma
FCC City Adjustments Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income $ 393,922 $ 6,549 $ - $ 400,471
Interest expense 202,060 3,031 - 205,091
------------- ------------- ------------- -------------
Net interest income 191,862 3,518 - 195,380
Provision for loan losses 43,734 80 - 43,814
------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 148,128 3,438 - 151,566
Other income 83,678 369 - 84,047
Operating expense 185,963 3,011 - 188,974
------------- ------------- ------------- -------------
Income before income tax expense and
minority interest 45,843 796 - 46,639
Income tax expense 10,936 13 - 10,949
------------- ------------- ------------- -------------
Income before minority interest 34,907 783 - 35,690
Earnings of minority interest 878 - - 878
------------- ------------- ------------- -------------
Net income 34,029 783 - 34,812
Preferred dividend requirements - - - -
------------- ------------- ------------- -------------
Income applicable to common shares $ 34,029 $ 783 $ - $ 34,812
============= ============= ============= =============
Earnings per share <FN3>
Primary $ 1.56 $ 7.83 $ 1.56
Fully diluted $ 1.56 $ 7.83 $ 1.56
Weighted average shares outstanding <FN3>
Primary 21,808,941 100,000 22,371,441
Fully diluted 21,808,941 100,000 22,371,441
(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 its
Common Stock to the shareholders of City. 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 City, 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 562,500. For purposes of
these pro formas, it has been assumed that the maximum number of
shares issuable under the proposed Mergers with City 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 City 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>
Unrealized
Unearned Gain (Loss) On
Restricted Securities Total
Preferred Common Capital Retained Stock Available Stockholders'
Stock Stock Surplus Earnings Compensation For Sale Equity
----------- ----------- -------- ----------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
City (A) $ - $ 2,813 $ 191 $ - $ - $ - $ 3,004
(500) (2,504) (3,004)
----------- ----------- -------- ----------- ---------------- ------------ ------------
Total $ - $ 2,313 $(2,313) $ - $ - $ - $ -
=========== =========== ======== =========== ================ ============ ============
</TABLE>
(A) Issuance of 562,500 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 the FCC Common Stock
issued ($2,813).
<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.
<PAGE>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT F-19
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992:
Consolidated Statements of Financial Condition F-20
Consolidated Statements of Income F-21
Consolidated Statements of Changes In
Shareholders' Equity F-23
Consolidated Statements of Cash Flows F-24
Notes to Consolidated Financial Statements F-25
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1993 (UNAUDITED):
Consolidated Statements of Financial Condition F-33
Consolidated Statements of Income F-34
Consolidated Statements of Changes in Shareholders' Equity F-35
Consolidated Statements of Cash Flows F-36
Selected Information with respect to Unaudited Consolidated
Financial Statements F-37
INDEPENDENT AUDITORS' REPORT
Board of Directors
City Bancorp, Inc. and Subsidiary
New Iberia, LA
We have audited the accompanying consolidated statements of
financial condition of City Bancorp, Inc. 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 years then ended. These financial
statements are the responsibility of the Holding Corporation and
Subsidiary'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 audits 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 consolidated
financial condition of City Bancorp, Inc. and Subsidiary as of
December 31, 1993 and 1992, and the consolidated results of their
operations and their cash flows for each of the years then ended,
in conformity with generally accepted accounting principles.
New Iberia, Louisiana, Castaing, Hussey & Lolan
January 14, 1994
<TABLE>
<CAPTION>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION DECEMBER 31, 1993 AND 1992
__________________________________________________________________________________________________________
ASSETS
__________
1993 1992
_____________ _____________
<S> <C> <C>
Cash and Due from Banks $ 4,424,178 $ 3,603,443
Federal Funds Sold 2,425,000 375,000
_____________ _____________
Total Cash and Cash Equivalents 6,849,178 3,978,443
Certificates of Deposit 693,000 1,976,000
Investment Securities (market value of approximately
$24,914,778 and $27,087,793 at 1993 and 1992, respectively) 24,715,875 26,766,189
Mortgage Loans Held for Sale 5,631,337 3,971,308
Loans (net of allowance for loan losses of $589,889 and
$526,929 in 1993 and 1992, respectively) 39,335,864 39,273,199
Premises and Equipment, Net 2,052,646 2,144,074
Real Estate and Other Property Acquired by
Foreclosure, Net 82,451 113,165
Accrued Interest Receivable 581,641 488,094
Other Assets 253,919 369,224
_____________ _____________
TOTAL ASSETS 80,195,911 $ 79,079,696
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
_____________________________________
LIABILITIES
Deposits:
Non-interest Bearing Deposits $ 13,565,445 $ 15,460,653
Interest Bearing Deposits 53,487,398 49,067,880
______________ ______________
Total Deposits 67,052,843 64,528,533
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase 4,914,491 7,219,231
Accrued Interest Payable 158,380 167,582
Income Taxes Payable and Deferred 323,556 188,551
Other Liabilities 126,860 170,281
_____________ ______________
TOTAL LIABILITIES 72,576,130 72,274,178
_____________ ______________
SHAREHOLDERS' EQUITY
Common Stock, $5 Par Value; Authorized
10,000,000 Shares; Issued 100,000 Shares 500,000 500,000
Surplus 2,503,911 2,503,911
Undivided Profits 4,615,870 3,801,607
______________ ______________
TOTAL SHAREHOLDERS' EQUITY 7,619,781 6,805,518
______________ ______________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 80,195,911 $ 79,079,696
============== ==============
The accompanying Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>
<PAGE>
<TABLE>
CITY BANCORP, INC. AND SUBSIDIARY
FOR THE YEARS ENDED
CONSOLIDATED STATEMENTS OF INCOME DECEMBER 31, 1993 AND 1992
__________________________________________________________________________________________________________
1993 1992
________________ ______________
<S> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $ 4,463,760 $ 4,626,276
Interest on Investment Securities:
U.S. Treasury 328,454 187,155
U.S. Government Agencies and Corporations 993,678 973,460
States and Political Subdivisions 42,464 42,893
Interest on Federal Funds Sold 152,548 133,695
Interest on Certificates of Deposit 52,195 122,869
________________ _______________
TOTAL INTEREST INCOME 6,033,099 6,086,348
________________ _______________
INTEREST EXPENSE:
Interest on Deposits 1,705,153 2,006,868
Interest on Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase 82,775 66,934
________________ _______________
TOTAL INTEREST EXPENSE 1,787,928 2,073,802
________________ _______________
NET INTEREST INCOME 4,245,171 4,012,546
PROVISION FOR LOAN LOSSES 205,000 236,000
________________ _______________
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 4,040,171 3,776,546
________________ _______________
OTHER INCOME:
Customer Service Fees 608,218 568,057
Gain on Sale of Mortgage Loans 142,497 77,975
Gain (Loss) on Sale of Investment Securities (293) 36,240
Other Income 56,847 46,210
________________ _______________
TOTAL OTHER INCOME 807,269 728,482
________________ _______________
OTHER OPERATING EXPENSES:
Salaries and Employee Benefits 1,592,853 1,525,977
Occupancy Expense 593,566 599,930
(Income) Loss on Foreclosed Real Estate, Net (13,476) 22,403
Other Operating Expenses 1,050,781 964,677
________________ ________________
TOTAL OTHER EXPENSES 3,223,724 3,112,987
________________ ________________
INCOME BEFORE INCOME TAX EXPENSE 1,623,716 1,392,041
INCOME TAX EXPENSE 552,453 226,452
________________ ________________
NET INCOME $ 1,071,263 $ 1,165,589
================ ================
NET INCOME PER SHARE $ 10.71 $ 11.66
================ ================
The accompanying Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS FOR THE YEARS ENDED
OF CHANGES IN SHAREHOLDERS' EQUITY DECEMBER 31, 1993 AND 1992
______________________________________________________________________________________________________________
Common Undivided
Stock Surplus Profits
______________ _____________ ____________
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 $ 500,000 $ 2,503,911 $ 2,914,018
Net Income 1,165,589
Dividends ($2.78 per share) (278,000)
______________ _____________ ____________
BALANCE, DECEMBER 31, 1992 500,000 2,503,911 3,801,607
Net Income 1,071,263
Dividends ($2.57 per share) (257,000)
______________ _____________ ____________
BALANCE, DECEMBER 31, 1993 $ 500,000 $ 2,503,911 $ 4,615,870
============== ============= ============
The accompanying Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>
<PAGE>
<TABLE>
CITY BANCORP, INC. AND SUBSIDIARY
FOR THE YEARS ENDED
CONSOLIDATED STATEMENTS OF CASH FLOWS DECEMBER 31, 1993 AND 1992
___________________________________________________________________________________________________
1993 1992
______________ ______________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,071,263 $ 1,165,589
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Loss (Gain) on Sale of Investment Securities 293 (36,240)
Net Amortization of Premium 160,532 42,461
Provision for Deferred Income Taxes 135,005 188,551
Provision for Loan Losses 205,000 236,000
(Gain) Loss on Sales and Writedowns of Other
Real Estate and Other Property Acquired (19,903) 12,123
Depreciation and Amortization 246,223 257,605
Loss on Disposal of Equipment 722 2,440
Increase In Mortgage Loans Held For Sale (1,660,029) (115,104)
Decrease (Increase) In Accrued Interest
Receivable (93,547) 38,228
Decrease (Increase) In Other Assets 115,305 (53,360)
Decrease In Accrued Interest Payable (9,202) (141,144)
Decrease In Income Taxes Payable -0- (4,130)
(Decrease) Increase In Other Liabilities (43,421) 35,370
______________ _____________
NET CASH PROVIDED BY OPERATING ACTIVITIES 108,241 1,628,389
______________ _____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Decrease in Certificates of Deposit 1,283,000 1,885,000
Purchase of Investment Securities (11,676,635) (28,264,996)
Proceeds from Sales and Calls of Investment Securities 2,991,103 4,176,709
Proceeds from Maturities of Investment Securities 10,575,021 13,104,876
Proceeds from Sales of Real Estate and
Other Property Acquired by Foreclosure 219,091 637,108
Proceeds from Reverse Repurchase Agreements -0- 2,000,000
Net Increase in Loans (436,139) (4,472,925)
Purchase of Premises and Equipment (155,517) (50,596)
_______________ _____________
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 2,799,924 (10,984,824)
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CITY BANCORP, INC. AND SUBSIDIARY
FOR THE YEARS ENDED
CONSOLIDATED STATEMENTS OF CASH FLOWS DECEMBER 31, 1993 AND 1992
_____________________________________________________________________________________________________
1993 1992
________________ _______________
<S>
CASH FLOWS FROM FINANCING ACTIVITIES: <C> <C>
Net Increase in Customer Deposits $ 2,524,310 $ 2,911,446
Net Increase (Decrease) in Federal Funds Purchased
and Securities Sold Under Repurchase Agreements (2,304,740) 3,162,083
Dividends Paid (257,000) (278,000)
________________ _______________
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (37,430) 5,795,529
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,870,735 (3,560,906)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 3,978,443 7,539,349
_________________ _______________
CASH AND CASH EQUIVALENTS, END OF YEAR $ 6,849,178 $ 3,978,443
================= ===============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Paid During the Year for Interest $ 1,797,130 $ 2,214,946
================= ===============
Cash Paid During the Year for Income Taxes $ 383,000 $ 129,879
================= ===============
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Other Real Estate and Other Property Acquired in
Settlement of Loans $ 168,474 $ 229,424
================= ===============
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
CITY BANCORP, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1993 AND 1992
_________________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES:
The accounting and reporting policies of City Bancorp, Inc. (Holding
Corporation) and Subsidiary conform to generally accepted accounting
principles and the prevailing practices within the banking industry.
A summary of significant accounting policies is as follows:
Principles of Consolidation: The consolidated financial statements
include the accounts of City Bancorp, Inc. (a bank holding company)
and its wholly-owned subsidiary, City Bank & Trust Company (a state
bank). All material intercompany balances and transactions have been
eliminated.
Financial Reporting: City Bancorp, Inc. and Subsidiary use the
accrual method of accounting for the preparation of financial
statements and income tax returns.
Investment Securities: Investment securities are carried at cost,
adjusted for amortization of premiums and accretion of discounts which
are recognized as adjustments to interest income using the level yield
method. Gains or losses on disposition are recorded in other income
on the trade date based on the net proceeds and the adjusted carrying
amount of the securities sold using the specific identification
method. It is the Holding Corporation and Subsidiary's intent, and it
has the ability, to hold these securities to maturity.
In May 1993, the Financial Accounting Standards Board issued Statement
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This standard addresses the accounting and reporting for
investments in equity securities that have readily determinable fair
values and for all investments in debt securities. Adoption of the
new standard is required for fiscal years beginning after December 15,
1993. The Bank plans to adopt this statement on January 1, 1994.
After reviewing the investment portfolio, the Bank intends to classify
investments with book value of $19,549,724 as "Available for Sale"
which will have an effect of increasing shareholders' equity to the
extent market value of the securities exceeds book value on January 1,
1994. As of December 31, 1993, this effect would be a $61,156
increase in shareholders' equity, net of tax.
Loans: Loans are stated at the principal amount outstanding, net of
unearned discount and allowance for loan losses. Unearned discount
relates principally to consumer installment loans. The related
interest income for consumer installment loans is recognized using
methods which generally approximate the interest method. For all
other loans, interest is accrued daily on the outstanding balance
using the simple interest method. Loan fees and related costs which
represent an adjustment to the interest yield are deferred and
amortized over the estimated life of the loan.
When the payment of principal or interest on a loan is delinquent for
90 days, or earlier in some cases, the loan is placed on non-accrual
status, unless the loan is in the process of collection and the
underlying collateral fully supports the carrying value of the loan.
If the decision is made to continue accruing interest on the loan,
periodic reviews are made to confirm the accruing status of the loan.
When a loan is placed on non-accrual status, interest accrued during
the current year prior to the judgement of uncollectibility is charged
to operations. Interest accrued during prior periods is charged to
the allowance for loan losses. Generally, any payments received on
non-accrual loans are applied first to outstanding loan amounts and
next to the recovery of charged-off loan amounts. Any excess is
treated as recovery of lost interest.
The majority of mortgage loans originated by the Bank are held for
sale. The Bank retains the servicing rights to these loans. These
loans are reported at the lower of cost or market value determined on
an aggregate basis. Loan origination fees and the direct loan
origination costs on oans held for resale are deferred until the
related loan is sold.
Allowance For Loan Losses: The allowance for loan losses is a
valuation allowance available for losses incurred on loans. All
losses are charged to the allowance for loan losses when the loss
actually occurs or when a determination is made that a loss is likely
to occur. Recoveries are credited to the allowance at the time of
recovery.
NOTE A - (continued)
Management's judgement as to the level of future losses on existing
loans involves the consideration of current and anticipated economic
conditions and their potential effects on specific borrowers; an
evaluation of the existing relationships among loans, potential loan
losses, and the present level of the allowance; results of
examinations of the loan portfolio by regulatory agencies; and
management's internal review of the loan portfolio.
It should be understood that estimates of future loan losses involve
an exercise of judgement. While it is possible that in particular
periods the Bank may sustain losses which are substantial relative to
the allowance for loan losses, it is the judgement of management that
the allowance for loan losses reflected in the consolidated statements
of condition is adequate to absorb possible losses in the existing
loan portfolio.
Premises and Equipment: Premises and equipment are stated at cost
less accumulated depreciation. Depreciation expense is computed by
the straight-line and accelerated methods over the estimated useful
lives of the assets which range from 5 to 40 years.
Real Estate Acquired by Foreclosure: Real estate acquired by
foreclosure is recorded at the lower of the Bank's cost or the asset's
fair value, less estimated costs to sell, which becomes the property's
new basis. Any write-downs based on the asset's fair value at date of
acquisition are charged to the allowance for loan losses. Costs
incurred in maintaining foreclosed real estate and subsequent write-
downs to reflect declines in the fair value of the property are
included in income (loss) on foreclosed property. Gains on sales of
such real estate are taken into income based on the buyer's initial
and continuing investment in the property.
Income Taxes: Provisions for income taxes are based on amounts
reported in the statements of income (after exclusion of non-taxable
income such as interest on municipal securities) and include deferred
taxes on temporary differences in the recognition of income and
expense for tax and financial statement purposes. Deferred taxes are
computed on the liability method as prescribed in SFAS No. 109,
"Accounting for Income Taxes." The holding company and its subsidiary
file a consolidated federal income tax return. The tax sharing
agreement between the holding company and subsidiary states that the
Bank is responsible for the tax liability less applicable credits
calculated as if it were filing a separate return.
Net Income Per Share: Net income per share is computer by dividing
net income by the average common shares outstanding during the year.
Consolidated Statements of Cash Flows: For purposes of reporting cash
flows, cash and cash equivalents includes cash on hand, amounts due
from banks and short-term federal funds sold.
Trust Assets and Fees: Assets of the trust department, other than
trust cash on deposit at the Bank, are not included in these financial
statements. In accordance with general practice within the banking
industry, trust fees are recorded when received. Reporting of such
revenue on an accrual basis would not materially affect the results of
operations reported herein. As of December 31, 1993, the Bank
completely phased out all trust operations.
Reclassifications: Certain prior years' amounts have been
reclassified to conform with current year financial statement
presentation.
NOTE B - CASH AND DUE FROM BANKS:
The Bank is required to maintain average non-interest bearing reserve
balances, which are based on a percentage of deposit liabilities with
the Federal Reserve Bank or in cash on hand. Average amounts so
restricted were approximately $821,000 for 1993 and $600,000 for 1992.
NOTE C - INVESTMENT SECURITIES:
The carrying value and estimated market value of investment securities
are presented below:
<TABLE>
<CAPTION>
December 31, 1993
______________________________________________________________________
Carrying Unrealized Unrealized Market
Value Gains Losses Value
_____________ _______________ ______________ _______________
<S> <C> <C> <C> <C>
U.S. Treasuries $ 5,513,303 $ 20,134 $ -0- $ 5,533,437
U.S. Agencies 13,134,930 150,785 36,830 13,248,885
States and Political
Subdivisions 525,211 69,116 -0- 594,327
Mortgage-Backed
Securities 5,089,549 46,090 42,385 5,093,254
Foreign Government
Securities 252,882 -0- 8,007 244,875
Other 200,000 -0- -0- 200,000
______________ ________________ _______________ _______________
Totals $ 24,715,875 $ 286,125 $ 87,222 $ 24,914,778
============== ================ =============== ==============
December 31, 1992
______________________________________________________________________
Carrying Unrealized Unrealized Market
Value Gains Losses Value
_____________ _______________ ______________ _______________
U.S. Treasuries $ 7,863,133 $ 54,069 $ 5,143 $ 7,912,059
U.S. Agencies 13,469,933 190,561 14,737 13,645,757
States and Political
Subdivisions 530,253 74,243 -0- 604,496
Mortgage-Backed
Securities 4,449,834 64,984 34,337 4,480,481
Foreign Government
Securities 253,036 -0- 8,036 245,000
Other 200,000 -0- -0- 200,000
______________ _______________ _______________ ______________
Totals $ 26,766,189 $ 383,857 $ 62,253 $ 27,087,793
============== =============== =============== ==============
The carrying value and estimated market 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.
Carrying Market
Value Value
_____________ _____________
Due in One Year or Less $ 10,475,487 $ 10,521,329
Due After One Year through Five Years 8,282,492 8,417,508
Due After Five Years through Ten Years 415,465 437,812
Due After Ten Years 252,882 244,875
____________ ____________
Subtotal 19,426,326 19,621,524
Mortgage-Backed Securities 5,089,549 5,093,254
____________ ____________
Total Debt Securities $ 24,515,875 $ 24,714,778
============ ============
Proceeds from the sales of investments in debt securities during 1993
were $2,991,103. Gross gains of $-0- and gross losses of $293 were
realized on those sales.
Proceeds from the sales of investments in debt securities during 1992
were $4,176,925. Gross gains of $42,374 and gross losses of $6,134
were realized on those sales.
Investment securities with a carrying amount of approximately
$22,295,002 and $17,582,896 and an estimated market value of
$22,518,533 and $17,804,244 at December 31, 1993 and 1992,
respectively, were pledged to secure public deposits and for other
purposes required or permitted by law.
NOTE D - LOANS:
The loan portfolio consists of various types of loans classified by
major type as follows:
1993 1992
___________ ____________
Real Estate Construction $ 15,300 $ 124,785
Real Estate Mortgage 11,587,360 11,212,040
Commercial and Industrial 5,755,420 5,195,052
Agriculture 177,416 171,201
Term Fed Funds -0- 2,500,000
Consumer Installment 25,290,262 23,517,200
Unearned Income (2,900,005) (2,920,150)
_____________ ____________
Total Loans 39,925,753 39,800,128
Allowance for Loan Losses (589,889) (526,929)
_____________ ____________
Loans, Net $ 39,335,864 $ 39,273,199
============= ============
At December 31, 1993, fixed rate loans totaled $31,754,607 and variable rate loans totaled
$8,171,146. At December 31, 1992, fixed rate loans totaled $31,554,359 and variable rate loans
totaled $8,245,769.
At December 31, 1993 and 1992 loans on which the accrual of interest had been discontinued or
reduced amounted to $354,479 and $208,526, respectively. Interest income that would have been
earned under these original terms of the loans was $24,968 and $16,835 for the years ended
December 31, 1993 and 1992, respectively.
An analysis of activity in the allowance for loan losses is as follows:
1993 1992
______________ ______________
Balance at Beginning of Year $ 526,929 $ 477,909
Provision Charged to Operations 205,000 236,000
Charge-Offs (171,756) (255,113)
Recoveries 29,716 68,133
______________ ______________
Balance at End of Year $ 589,889 $ 526,929
============== ==============
NOTE E - PREMISES AND EQUIPMENT:
Premises and Equipment are summarized below:
1993 1992
______________ ______________
Land $ 306,551 $ 306,551
Buildings and Improvements 2,277,431 2,262,533
Furniture, Fixtures and Equipment 1,828,347 1,715,611
______________ ______________
Subtotal 4,412,329 4,284,695
Accumulated Depreciation (2,359,683) (2,140,621)
______________ ______________
Premises and Equipment, Net $ 2,052,646 $ 2,144,074
============== ==============
Depreciation expense included in the consolidated statements of income
was $246,223 and $257,605 for the years ended December 31, 1993 and
1992.
NOTE F - DEPOSITS:
1993 1992
________________ ________________
Deposits are summarized below:
Demand $ 13,565,445 $ 15,460,653
NOW Accounts 21,681,348 15,371,775
Savings 8,096,013 8,271,251
Time Certificates of Deposit
under $100,000 15,643,901 16,899,700
Time Certificates of Deposit
over $100,000 8,066,136 8,525,154
________________ _________________
Totals $ 67,052,843 $ 64,528,533
================ =================
NOTE G - INCOME TAXES:
The components of income tax expense are as follows:
1993 1992
_________________ _________________
Current $ 417,448 $ 37,901
Change in Valuation Allowance -0- (333,350)
Deferred 135,005 521,901
_________________ _________________
Income Tax Expense $ 552,453 $ 226,452
================= =================
Total tax expense on income before taxes resulted in effective tax rates that differed from the
federal statutory income tax rate as follows:
1993 1992
_____________ _____________
Amount % Amount %
_______ ____ ________ ____
Total Calculated at Statutory Rate $ 552,063 34.0 $ 473,294 34.0
Increase (Decrease) in Taxes
Resulting From:
Utilization of Net Operating Loss -0- - (246,842) (17.7)
Other, Net 390 - -0- -
_________ ____ _________ ____
Totals $ 552,453 34.0 $ 226,452 16.3
========= ==== ========= ====
The deferred tax liability at December 31, 1993 and 1992 is as follows:
1993 1992
__________ ___________
Deferred Tax Assets:
Other Real Estate $ 25,759 $ 76,881
Tax Credits Available -0- 68,409
___________ ____________
Subtotal 25,759 145,290
___________ ____________
Deferred Tax Liabilities:
Allowance For Loan Losses (92,823) (116,427)
Bank Premises and Equipment (217,862) (215,900)
Other (38,630) (1,514)
____________ ____________
Subtotal (349,315) (333,841)
____________ ____________
Net Deferred Tax Liability $ (323,556) $ (188,551)
============ ============
NOTE H - OTHER OPERATING EXPENSES:
The components of other operating expenses were:
1993 1992
____________ _____________
Advertising $ 71,242 $ 66,983
Directors' Fees 117,700 101,700
Legal and Professional 116,801 110,223
Regulatory Assessments 170,646 153,185
Ad Valorem Taxes 83,073 77,895
Other Operating Expenses 491,319 454,691
____________ _____________
Total Other Operating Expenses $ 1,050,781 $ 964,677
============ =============
NOTE I - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
The Bank is a party to various financial instruments with off-balance
sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include
commitments to extend credit and standby letters of credit and
involve, to varying degrees, elements of credit risk in excess of the
amounts recognized in the consolidated statements of condition. As of
December 31, 1993 and 1992, the Bank's commitments to extend credit
totaled $7,460,258 and $8,318,105, respectively, and standby letters
of credit totaled $502,550 and $285,050, respectively. Bank
management does not anticipate any material loss as a result of these
transactions.
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 some of
the commitments are expected to expire without being drawn upon, the
total commitment amounts disclosed above do not necessarily represent
future cash requirements. The Bank evaluated each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained, if considered necessary by the Bank upon extension of
credit, is based on management's credit evaluation of the
counterparty.
Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. The
credit risk involved in issuing letters of credit is essentially the
same as that involved in extending standard lending arrangements.
NOTE J - CONCENTRATION OF CREDIT RISK:
The Bank grants primarily consumer and real estate loans to customers
in Iberia Parish and the immediate surrounding areas. The Bank's
portfolio consists of business loans extending across many industry
types, as well as individuals. Although the Bank has a diversified
loan portfolio, a substantial portion of its debtors' ability to honor
their contracts is dependent upon real estate values and the business
economic sector.
NOTE K - INTEREST-BEARING DEPOSITS:
As of December 31, 1993, the Bank held interest-bearing demand
deposits for a public entity which amounted to 15.5% of total
interest-bearing deposits. The interest paid on these deposits is
computed using a weighted average U. S. Treasury bill rate and is
determined semi-annually. Historically, the rate paid on these funds
has been higher than the rate paid on other interest-bearing demand
deposits.
NOTE L - LEASE COMMITMENTS:
The subsidiary Bank leases the locations of four automated teller
machines and a branch location under operating leases which expire in
1995 through 1998. All of the leases contain five year renewal
options.
NOTE L - (continued)
The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31,
1993:
Year Ending December 31:
1994 $ 26,850
1995 20,850
1996 14,850
1997 9,450
1998 6,350
After 1998 -0-
____________
Total Minimum Payments Required $ 78,350
============
The composition of total rental expense for all operating leases is as follows:
1993 1992
________________ _______________
Minimum Rentals $ 24,550 $ 23,700
Contingent Rentals 71 -0-
_________________ _______________
Total Operating Lease
Expense $ 24,621 $ 23,700
================= ===============
Contingent rentals relate to one ATM location and are determined based
on a ten cents fee per transaction.
NOTE M - REGULATORY MATTERS:
The Bank is restricted under applicable laws in the payment of
dividends to an amount equal to current year earnings plus
undistributed earnings for the immediately preceding year, unless
prior permission is received from the Commissioner of Financial
Institutions. The amount of retained earnings available for payment
of dividends without prior Commissioner approval was $1,705,079 at
December 31, 1993. The Bank is also required to maintain minimum
amounts of capital to total "risk weighted" assets, as defined by the
banking regulators. At December 31, 1993, the Bank is required to
have a minimum risk-based capital ratio of 8% and a leverage capital
ratio of 3%. The Bank's actual risk-based capital ratio and leverage
capital ratio at December 31, 1993 were 12.19% and 9.11%,
respectively. The Bank's Tier 1 capital ratio at December 31, 1993
was 11.32%.
NOTE N - RELATED PARTY TRANSACTIONS:
As of December 31, 1993 and 1992, loans outstanding to directors,
officers, and their affiliates were approximately $2,746,206 and
$1,720,992, respectively. In the opinion of management, all
transactions entered into between the Bank and such related parties
have been and are, in the ordinary course of business, made on the
same terms and conditions as similar transactions with unaffiliated
persons. During 1993, $2,303,810 of new loans were made and
repayments of $1,278,596 were received. During 1992, $1,296,644 of
new loans were made and repayments of $1,384,334 were received.
Letters of Credit and unadvanced lines of credit to directors,
officers, and their affiliates totaled $1,801,850 and $2,427,220 at
December 31, 1993 and 1992, respectively.
Officers', directors' and their affiliates' demand deposit accounts
and securities sold under repurchase agreements were approximately
$4,988,102 and $4,247,016 at December 31, 1993 and 1992, respectively.
NOTE O - PROFIT SHARING PLAN:
The Bank has a noncontributory profit-sharing plan covering all
employees who meet length of service requirements. All contributions
to the plan are determined annually at the sole discretion of the
board of directors. No contributions were made for either year
presented. During 1993, the Bank added a 401(K) feature to its profit
sharing plan which allows employee contributions to self directed
participant accounts.
NOTE P - PARENT COMPANY FINANCIAL STATEMENTS:
STATEMENTS OF FINANCIAL CONDITION
______________________________________
1993 1992
____________ _____________
Cash $ 3,812 $ 4,957
Investment in Subsidiary Bank 7,615,969 6,800,561
____________ _____________
Total Assets $ 7,619,781 $ 6,805,518
============ =============
Common Stock $ 500,000 $ 500,000
Surplus 2,503,911 2,503,911
Undivided Profits 4,615,870 3,801,607
_____________ _____________
Total Liabilities
and Shareholders' Equity $ 7,619,781 $ 6,805,518
============= =============
STATEMENTS OF INCOME
______________________
Dividends from Subsidiary Bank $ 257,000 $ 278,000
Less: Expenses 1,145 2,082
______________ ______________
Income Before Equity in
Undistributed Income of
Subsidiary Bank 255,855 275,918
Equity in Undistributed Income
of Subsidiary Bank 815,408 905,738
_____________ _____________
Net Income $ 1,071,263 $ 1,181,656
============= ==============
STATEMENTS OF CASH FLOWS
______________________________
Cash Flows from Operating
Activities:
Net Income $ 1,071,263 $ 1,181,656
Equity in Undistributed Income
of Subsidiary Bank (815,408) (905,738)
______________ ______________
Net Cash Provided By
Operating Activities 255,855 275,918
______________ _______________
Cash Flows from Financing Activities:
Dividends Paid (257,000) (278,000)
______________ _______________
Net Cash Used In Financing
Activities (257,000) (278,000)
______________ ______________
Decrease in Cash and Cash
Equivalents (1,145) (2,082)
Cash and Cash Equivalents,
Beginning of Year 4,957 7,039
______________ ______________
Cash and Cash Equivalents,
End of Year $ 3,812 $ 4,957
============== ===============
<PAGE>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION - UNAUDITED JUNE 30, 1994 AND 1993
______________________________________________________________________________
ASSETS
____________
1994 1993
____________ _____________
Cash and Due From Banks $ 4,960,691 $ 4,814,325
Federal Funds Sold 5,750,000 6,550,000
______________ _____________
Total Cash and Cash Equivalents 10,710,691 11,364,325
Certificates of Deposit 396,000 1,485,000
Investment Securities (market value
of approximately $26,943,380 and
$26,286,641 at 1994 and 1993,
respectively) 26,925,986 25,954,832
Mortgage Loans Held for Sale 4,245,144 2,333,115
Loans (net of allowance for loan
losses of $573,049 and $586,717 at
1994 and 1993, respectively) 40,856,740 39,561,475
Premises and Equipment, Net 1,949,489 2,042,476
Real Estate and Other Property
Acquired by Foreclosure, Net 79,509 106,527
Accrued Interest Receivable 494,272 555,691
Other Assets 269,090 318,672
_______________ ______________
TOTAL ASSETS $ 85,926,921 $ 83,722,113
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________
LIABILITIES
Deposits:
Non-interest Bearing Deposits $ 14,237,384 $ 13,054,163
Interest Bearing Deposits 56,413,109 59,258,063
_______________ ______________
Total Deposits 70,650,493 72,312,226
Federal Funds Purchased and Securities
Sold under Agreements to Repurchase 6,676,231 3,274,231
Accrued Interest Payable 136,936 151,297
Income Taxes Payable and Deferred 367,001 382,505
Other Liabilities 181,507 167,962
________________ ______________
TOTAL LIABILITIES 78,012,168 76,288,221
________________ ______________
SHAREHOLDERS' EQUITY
Common Stock, $5 Par Value; Authorized
10,000,000 Shares; Issued and
Outstanding 100,000 Shares 500,000 500,000
Surplus 2,503,911 2,503,911
Undivided Profits 5,145,285 4,429,981
Net Unrealized Loss on Investment
Securities Available for Sale (234,443) -0-
_________________ _______________
TOTAL SHAREHOLDERS' EQUITY 7,914,753 7,433,892
_________________ _______________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 85,926,921 $ 83,722,113
================= ===============
See accompanying selected information
<PAGE>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS FOR THE SIX MONTHS ENDED
OF INCOME - UNAUDITED JUNE 30, 1994 AND 1993
______________________________________________________________________________
1994 1993
________________ _______________
INTEREST INCOME:
Interest and Fees on Loans $ 2,212,140 $ 2,245,785
Interest on Investment Securities
U.S. Treasury 136,353 174,315
U.S. Government Agencies
and Corporations 485,841 511,398
States and Political Subdivisions 21,071 21,286
Interest on Federal Funds Sold 115,054 55,456
Interest on Certificates of Deposit 10,165 35,502
_________________ _______________
TOTAL INTEREST INCOME 2,980,624 3,043,742
_________________ _______________
INTEREST EXPENSE:
Interest on Deposits 829,637 859,525
Interest on Federal Funds
Purchased and Securities Sold
Under Agreements to Repurchase 91,994 32,503
_________________ _______________
TOTAL INTEREST EXPENSE 921,631 892,028
_________________ _______________
NET INTEREST INCOME 2,058,993 2,151,714
PROVISION FOR LOAN LOSSES 65,000 90,000
_________________ _______________
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 1,993,993 2,061,714
_________________ _______________
OTHER INCOME:
Customer Service Fees 295,807 286,778
Gain on Sale of Mortgage Loans 322 80,337
Other Income 35,286 26,082
_________________ _______________
TOTAL OTHER INCOME 331,415 393,197
_________________ _______________
OTHER EXPENSES:
Salaries and Employee Benefits 753,548 721,167
Occupancy Expense 287,762 285,556
Income on Foreclosed Real Estate, Net (20,825) (21,804)
Other Operating Expenses 500,504 517,664
__________________ _______________
TOTAL OTHER EXPENSES 1,520,989 1,502,583
__________________ _______________
INCOME BEFORE INCOME TAX EXPENSE 804,419 952,328
INCOME TAX EXPENSE 275,004 323,954
__________________ _______________
NET INCOME $ 529,415 $ 628,374
================== ===============
NET INCOME PER SHARE $ 5.29 $ 6.28
================== ===============
See accompanying selected information
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES FOR THE SIX MONTHS ENDED
IN SHAREHOLDERS' EQUITY - UNAUDITED JUNE 30, 1994 AND 1993
___________________________________________________________________________________________________________________
Net
Unrealized
Loss on
Investment
Securities
Common Undivided Available
Stock Surplus Profits For Sale
________________ _________________ ________________ ________________
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $ 500,000 $ 2,503,911 $ 3,801,607 $ -0-
Net Income through
June 30, 1993 628,374
________________ _________________ ________________ ________________
Balance, June 30, 1993 $ 500,000 $ 2,503,911 $ 4,429,981 $ -0-
================ ================= ================ ================
Balance, January 1, 1994 $ 500,000 $ 2,503,911 $ 4,615,870 $ -0-
================ ================= ================ ================
Net Income through
June 30, 1994 529,415
Change in Net Unrealized
Loss on Investment
Securities Available
for Sale (234,443)
__________________ _________________ ______________ ________________
Balance, June 30, 1994 $ 500,000 $ 2,503,911 $ 5,145,285 $ (234,443)
================== ================= ============== ================
</TABLE>
See accompanying selected information
<PAGE>
CITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS FOR THE SIX MONTHS ENDED
OF CASH FLOWS - UNAUDITED JUNE 30, 1994 AND 1993
______________________________________________________________________________
1994 1993
________________ ______________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 529,415 $ 628,374
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Net Amortization of Premium 47,399 62,333
Provision for Loan Losses 65,000 90,000
Gain on Sales and Writedowns of
Other Real Estate and Other
Property Acquired (24,927) (24,500)
Depreciation and Amortization 120,952 118,393
Decrease in Mortgage Loans Held
For Sale 1,386,193 1,638,193
Decrease (Increase) in Other Assets 72,198 (17,045)
Increase in Other Liabilities 76,648 175,350
________________ _______________
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,272,878 2,671,098
================ ===============
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Decrease in Certificates of Deposit 297,000 491,000
Purchase of Investment Securities (11,419,755) (8,072,585)
Proceeds from Sales and Calls of
Investment Securities -0- 2,991,396
Proceeds from Maturities of
Investment Securities 8,927,802 5,830,213
Proceeds from Sales of Real Estate
and Other Property Acquired by
Foreclosure 92,739 131,223
Net Increase in Loans (1,650,746) (478,361)
Purchase of Premises and Equipment (17,795) (16,795)
________________ _______________
NET CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES (3,770,755) 876,091
_________________ ________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Customer Deposits 3,597,650 7,783,693
Net Increase (Decrease) in Federal
Funds Purchased and Securities Sold
Under Repurchase Agreements 1,761,740 (3,945,000)
_________________ _________________
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,359,390 3,838,693
_________________ _________________
INCREASE IN CASH AND CASH EQUIVALENTS 3,861,513 7,385,882
CASH AND CASH EQUIVALENTS, BEGINNING 6,849,178 3,978,443
_________________ __________________
CASH AND CASH EQUIVALENTS, END $ 10,710,691 $ 11,364,325
=================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash Paid for Interest $ 943,075 $ 908,313
Cash Paid for Income Taxes $ 231,559 $ 130,000
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Other Real Estate and Other Property
Acquired in Settlement of Loans $ 64,870 $ 100,085
See accompanying selected information
<PAGE>
CITY BANCORP, INC. AND SUBSIDIARY
SELECTED INFORMATION - Substantially
All Disclosures Required by Generally
Accepted Accounting Principles are Not Included JUNE 30, 1994 AND 1993
______________________________________________________________________________
NOTE 1. UNAUDITED STATEMENTS
The accompanying unaudited, consolidated financial statements have been
prepared by City Bancorp, Inc. in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements have been condensed or omitted
pursuant to such rules and regulations, although management believes that
the disclosures are adequate to make the information presented not misleading.
In the opinion of management, the accompanying financial statements contain
all adjustments necessary for a fair statement of the result of the
interim periods presented, and all adjustments are of a normal, recurring
nature.
NOTE 2. INVESTMENT SECURITIES
The carrying value and estimated market value of investment securities are
presented below:
<TABLE>
<CAPTION>
June 30, 1994
______________________________________________________________
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
______________ ________________ _____________ _____________
<S> <C> <C> <C> <C>
Investment Securities Held to Maturity
______________________________________
U.S. Treasuries $ -0- $ -0- $ -0- $ -0-
U.S. Agencies 3,775,233 21,995 (49,185) 3,748,043
State and Political Subdivisions 520,168 45,807 -0- 565,975
Mortgage Backed Securities 909,982 11,427 (12,650) 908,759
Other 200,000 -0- -0- 200,000
________________ ______________ _____________ _____________
Subtotal 5,405,383 79,229 (61,835) 5,422,777
________________ _______________ ______________ _____________
Investment Securities Available for Sale
U.S. Treasuries 6,466,997 -0- (37,167) 6,429,830
U.S. Agencies 11,508,049 14,783 (124,183) 11,398,649
State and Political Subdivisions 5,042 81 -0- 5,123
Mortgage Backed Securities 3,522,153 -0- (106,839) 3,415,314
Foreign Government Securities 252,805 18,882 -0- 271,687
_______________ _______________ _____________ _____________
Subtotal 21,755,046 33,746 (268,189) 21,520,603
_______________ _______________ _____________ _____________
Total $ 27,160,429 $ 112,975 $ (330,024) $ 26,943,380
=============== =============== ============= =============
</TABLE>
<PAGE>
NOTE 2. INVESTMENT SECURITIES (continued)
<TABLE>
<CAPTION>
June 30, 1993
______________________________________________________________
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
______________ ________________ _____________ _____________
<S> <C> <C> <C> <C>
U.S. Treasuries $ 7,813,421 $ 48,457 $ (293) $ 7,861,585
U.S. Agencies 12,921,931 195,292 (27,543) 13,089,680
State and Political Subdivisions 530,253 69,248 -0- 599,501
Mortgage Backed Securities 4,236,268 89,496 (15,889) 4,309,875
Foreign Government Securities 252,959 -0- (26,959) 226,000
Other 200,000 -0- -0- 200,000
______________ ________________ _____________ ______________
Total $ 25,954,832 $ 402,493 $ (70,684) $ 26,286,641
=============== ================ ============= ==============
</TABLE>
The following is a reconciliation of the amortized cost of investment
securities to the amount reported in the financial statements for
the six months ended June 30, 1994:
Amortized Cost of Investment Securities $ 27,160,429
Unrealized Holding Gains on Securities
Available for Sale 33,746
Unrealized Holding Losses on Securities
Available for Sale (268,189)
_________________
Carrying Value of Investment Securities $ 2,925,986
=================
The amortized cost and related market value of investment securities at June
30, 1994, 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.
June 30, 1994
________________________
Amortized Market
Cost Value
___________ ____________
Investment Securities Held to Maturity:
________________________________________
Due in One Year or Less $ 489,567 $ 489,567
Due After One Year through Five Years 2,046,573 2,043,195
Due After Five Years through Ten Years 1,759,261 1,781,256
Due After Ten Years -0- -0-
_____________ _____________
Subtotal 4,295,401 4,314,018
Mortgage Backed Securities 909,982 908,759
Other Securities 200,000 200,000
_____________ _____________
Subtotal 5,405,383 5,422,777
_____________ _____________
Investment Securities Available for Sale
_________________________________________
Due in One Year or Less 10,739,773 10,686,000
Due After One Year through Five Years 7,090,315 6,996,282
Due After Five Years through Ten Years 150,000 151,320
Due After Ten Years 252,805 271,687
______________ _____________
Subtotal 18,232,893 18,105,289
Mortgage Backed Securities 3,522,153 3,415,314
______________ _____________
Subtotal 21,755,046 21,520,603
______________ _____________
Totals $ 27,160,429 $ 26,943,380
============== =============
NOTE 3. LOANS
A summary of loans by type is as follows: June 30
(Dollars in thousands) ____________________________
1994 1993
______________ ____________
Commercial, Industrial and Agricultural $ 5,983 $ 5,416
Real Estate - Construction 54 90
Real Estate - Mortgage 11,371 11,034
Consumer 27,021 26,894
Unearned Income (2,999) (3,304)
______________ ____________
Total Loans $ 41,430 $ 40,130
============== ============
An analysis of the activity in the allowance for loan losses is as follows:
1994 1993
Balance, January 1 $ 589,889 $ 526,929
Chargeoffs (88,222) (68,850)
Recoveries 6,382 20,638
Provision for loans losses 65,000 90,000
______________ _____________
Balance, June 30 $ 573,049 $ 568,717
============== =============
NOTE 4. PREMISES AND EQUIPMENT
Premises and equipment are summarized below:
June 30, 1994
__________________________________________
Original Accumulated Present
Cost Depreciation Book Value
____________ _______________ _______________
Bank Building & Improvements $ 2,583,982 $ (1,128,220) $ 1,455,762
Furniture, Fixtures, & Equipment 1,846,142 (1,352,415) 493,727
____________ _______________ _______________
Totals $ 4,430,124 $ (2,480,635) $ 1,949,489
============ =============== ===============
June 30, 1993
__________________________________________
Original Accumulated Present
Cost Depreciation Book Value
_____________ _______________ _______________
Bank Building & Improvements $ 2,570,033 $ (1,056,579) $ 1,513,454
Furniture, Fixtures, & Equipment 1,731,456 (1,202,434) 529,022
_____________ _______________ _______________
Totals $ 4,301,489 $ (2,259,013) $ 2,042,476
============== =============== ===============
NOTE 5. DEPOSITS
June 30
____________________________
Deposits are summarized below: 1994 1993
____________ ______________
Demand $ 14,237,384 $ 13,054,163
NOW Accounts 25,011,916 25,385,125
Savings 8,323,076 8,321,634
Time Certificates of Deposit
under $100,000 15,836,619 15,566,425
Time Certificates of Deposit
over $100,000 7,241,498 9,984,879
_____________ ______________
Totals $ 70,650,493 $ 72,312,226
NOTE 6: FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK
In accordance with SFAS 105, there were approximately $6,920,000 and
$7,341,000 in unused commitments and $577,000 and $457,000 in financial
standby letters of credit as of June 30, 1994 and 1993, respectively.
<PAGE>
APPENDIX A
SELECTED PORTIONS
OF
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF MERGER
OF
FIRST COMMERCE CORPORATION
AND
CITY BANCORP, INC.
<PAGE>
TABLE OF CONTENTS
SECTION 1 Mergers and Closing................................ 1
1.01 Bank Merger........................................... 1
1.02 Holding Company Merger................................ 1
1.03 The Closing........................................... 1
1.04 The Effective Date and Time........................... 2
SECTION 2 Conversion of Stock of Holding..................... 2
2.01 Conversion of Stock of Holding........................ 2
SECTION 3 Representations and Warranties of
Holding and Bank................................... 2
3.01 Consolidated Group; Organization; Qualification....... 3
3.02 Capital Stock; Other Interests........................ 3
3.03 Corporate Authorization; No Conflicts................. 3
3.04 Financial Statements, Reports and Proxy Statements.... 4
3.05 Loan and Investment Portfolios........................ 4
3.06 Adequacy of Allowances for Losses..................... 5
3.07 Examination Reports................................... 5
3.08 Absence of Certain Changes or Events.................. 5
3.09 Taxes................................................. 7
3.10 Title to Assets....................................... 7
3.11 Litigation, Pending Proceedings
and Compliance with Laws.............................. 8
3.12 Employee Benefit Plans................................ 8
3.13 Insurance Policies.................................... 9
3.14 Agreements............................................ 9
3.15 Licenses, Franchises and Governmental
Authorizations........................................ 10
3.16 Corporate Documents................................... 10
3.17 Certain Transactions.................................. 10
3.18 Brokers' or Finders' Fees............................. 10
3.19 Environmental Matters................................. 11
3.20 Community Reinvestment Act............................ 12
3.21 Accuracy of Statements................................ 12
SECTION 4 Representations and Warranties of FCC and FNBL..... 13
4.01 Organization and Qualification........................ 13
4.02 Capital Stock; Other Interests........................ 13
4.03 Corporate Authorization; No Conflicts................. 13
4.04 FCC Corporate Documents............................... 14
4.05 Reports of FCC........................................ 14
4.06 Legality of FCC Securities............................ 14
4.07 Brokers' or Finders' Fees............................. 14
4.08 Litigation............................................ 15
4.09 Accuracy of Statements................................ 15
SECTION 5 Covenants and Conduct of Parties Prior
to the Effective Date.............................. 15
5.01 Investigations; Planning.............................. 15
5.02 Cooperation and Best Efforts.......................... 16
5.03 Information for, and Preparation of, Proxy
Statement............................................. 16
5.04 Approval of Bank Merger Agreement..................... 16
5.05 Press Releases........................................ 16
5.06 Preservation of Business.............................. 16
5.07 Conduct of Business in the Ordinary Course............ 17
5.08 Additional Information from Holding................... 18
5.09 Holding Shareholder Approval.......................... 19
5.10 Common Stock.......................................... 19
5.11 Loan Policy........................................... 19
5.12 No Solicitations...................................... 19
5.13 Operating Functions................................... 20
5.14 FCC Registration Statement............................ 20
5.15 Application to Regulatory Authorities................. 20
5.16 Revenue Ruling........................................ 20
5.17 Benefits Provided to Employees of
Holding's Consolidated Group.......................... 20
5.18 Schedule of Expenses.................................. 21
5.19 Additional Information from FCC....................... 21
5.20 Dividend/Bonus Plan................................... 21
5.21 Publication of Post-merger Financial Statements....... 21
5.22 Public Funds.......................................... 21
5.23 Consent of FCC and FNBL............................... 22
SECTION 6 Conditions of Closing.............................. 22
6.01 Conditions of All Parties............................. 22
(a) Shareholder Approval................................. 22
(b) Effective Registration Statement..................... 22
(c) No Restraining Action................................ 22
(d) Statutory Requirements and Regulatory Approval....... 22
(e) Tax Opinion.......................................... 23
6.02 Additional Conditions of FCC and FNBL................. 23
(a) Representations, Warranties and Covenants............ 23
(b) No Material Adverse Change........................... 23
(c) Accountants' Letters................................. 23
(d) Opinion of Counsel................................... 24
(e) Joinder of Shareholders; Confirmation................ 24
(f) Pooling-of-Interests................................. 24
(g) Schedule of Expenses................................. 24
(h) Termination of Claim..................................24
(i) Severance Benefits....................................24
6.03 Additional Conditions of Holding and Bank............. 24
(a) Representations, Warranties and Covenants............ 25
(b) Opinion of Counsel................................... 25
(c) Opinion of Investment Bankers........................ 25
(d) No Material Adverse Change........................... 25
6.04 Waiver of Conditions.................................. 25
SECTION 7 Termination........................................ 25
7.01 Termination........................................... 25
(a) Mutual Consent....................................... 25
(b) Material Breach...................................... 25
(c) Abandonment.......................................... 26
(d) Dissenting Shareholders.............................. 26
(e) Holding Recommendation............................... 26
(f) Fairness Opinion......................................26
7.02 Effect of Termination; Survival....................... 26
SECTION 8 Indemnification of Directors and Officers
of Holding and Bank................................ 26
8.01........................................................ 26
8.02........................................................ 27
8.03........................................................ 27
8.04........................................................ 27
SECTION 9 Miscellaneous...................................... 27
9.01 Notices............................................... 27
9.02 Waiver................................................ 29
9.03 Expenses.............................................. 29
9.04 Headings.............................................. 29
9.05 Exhibits and Schedules................................ 29
9.06 Integrated Agreement.................................. 29
9.07 Choice of Law......................................... 29
9.08 Parties in Interest................................... 29
9.09 Amendment............................................. 30
9.10 Counterparts.......................................... 30
9.11 Nonsurvival of Representations and Warranties......... 30
9.12 Cross-References...................................... 30
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made
August 12, 1994, between First Commerce Corporation, a Louisiana
corporation ("FCC"), and its wholly-owned subsidiary, First
National Bank of Lafayette, a national banking association
("FNBL"), on the one hand, and City Bancorp, Inc., a Louisiana
corporation ("Holding"), and its wholly-owned subsidiary, City
Bank & Trust Company, New Iberia, Louisiana, a Louisiana state
bank ("Bank"), on the other.
WHEREAS, the Board of Directors of FNBL and the Board of
Directors of Bank have each determined that it is desirable and
in the best interests of the institution and its sole shareholder
that Bank merge into FNBL (the "Bank Merger") on the terms and
subject to the conditions set forth in this Agreement and in the
agreement of merger attached hereto as Exhibit A (the "Bank
Merger Agreement"); and
WHEREAS, the Board of Directors of FCC and the Board of
Directors of Holding have each determined that it is desirable
and in the best interests of the corporations and their
respective shareholders that, immediately following the Bank
Merger, Holding merge into FCC (the "Holding Company Merger" and,
together with the Bank Merger, collectively called the "Mergers")
on the terms and subject to the conditions set forth in this
Agreement and in the joint agreement of merger attached hereto as
Exhibit B (the "Holding Company Merger Agreement" and, together
with the Bank Merger Agreement, collectively called the "Merger
Agreements").
NOW THEREFORE, in consideration of the representations,
warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
SECTION 1
Mergers and Closing
1.01 Bank Merger. Simultaneously with the execution of this
Agreement, FNBL and Bank have entered into the Bank Merger
Agreement, pursuant to which Bank will, subject to the conditions
stated herein and therein, merge into FNBL, which shall be the
surviving association.
1.02 Holding Company Merger. Simultaneously with the
execution of this Agreement, FCC and Holding have entered into
the Holding Company Merger Agreement, pursuant to which Holding
will, subject to the conditions stated herein and therein, merge
into FCC, which shall be the surviving corporation.
1.03 The Closing. The "Closing" of the transactions
contemplated hereby will take place in the Board Room of FCC,
Third Floor, 210 Baronne Street, New Orleans, Louisiana 70112, at
10:00 a.m., Central Time, on a mutually agreeable date as soon as
practicable following satisfaction of the conditions set forth in
subparagraphs (a), (b) and (d) of subsection 6.01 hereof, or if
no date has been agreed to, on any date specified by any party to
the others upon ten days notice following satisfaction of such
conditions. The date on which the Closing occurs is herein
called the "Closing Date". If all conditions set forth in
Section 6 hereof are satisfied or waived by the party entitled to
grant such waiver, at the Closing (a) FCC and FNBL, on the one
hand, and Holding and Bank, on the other hand, shall each provide
to the other such proof or indication of satisfaction of the
conditions set forth in Section 6 as the party whose obligations
are conditioned upon such satisfaction may reasonably request,
(b) the certificates, letters and opinions required by Section 6
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 6 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 7.01,
and no such delay shall interfere with the right of any party to
declare a termination pursuant to Section 7.
1.04 The Effective Date and Time. The Bank Merger Agreement
shall be filed and recorded as provided by law immediately
following (or concurrently with) the Closing, and the Bank Merger
will be effective at the time specified in a certificate or other
written record issued by the Office of the Comptroller of the
Currency ("OCC") or by the Louisiana Commissioner of Financial
Institutions, whichever time is later. The Holding Company
Merger Agreement shall be filed with and recorded by the
Secretary of State of Louisiana immediately following (or
concurrently with) the Closing, and the Holding Company Merger
shall be effective at the date and time specified in the Holding
Company Merger Agreement. The date on which and the time at
which the Holding Company Merger becomes effective are herein
referred to as the "Effective Date" and the "Effective Time,"
respectively.
SECTION 2
Conversion of Stock of Holding
2.01 Conversion of Stock of Holding. 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 Holding Company Merger, each issued and outstanding
share of the common stock, $5.00 per share par value, of Holding
("Holding Common Stock") shall be converted as set forth in
Section 4 of the Holding Company Merger Agreement.
SECTION 3
Representations and
Warranties of Holding and Bank
Holding and Bank represent and warrant to FCC and FNBL that,
except as set forth in the Schedule of Exceptions that Holding
and Bank have delivered to FCC and FNBL:
3.01 Consolidated Group; Organization; Qualification.
Holding's "consolidated group", as such term is used in this
Agreement, consists of Holding and Bank. Holding 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 of 1956, as amended (the
"Bank Holding Company Act"). Bank is a state chartered bank duly
organized and validly existing under the laws of the State of
Louisiana. Each member of Holding'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, business or
prospects.
3.02 Capital Stock; Other Interests. The authorized capital
stock of Holding consists of 10,000,000 shares of Holding Common
Stock, $5.00 par value per share, of which 100,000 shares are
issued and outstanding and no shares are held in its treasury.
The authorized capital stock of Bank consists of 30,000 shares of
common stock, $25.00 par value per share, of which 20,000 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 Holding'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 Holding) are
owned by Holding, free and clear of all liens, charges, security
interests, mortgages, pledges and other encumbrances (except as
provided in La.R.S. 6:262). No member of Holding's consolidated
group has outstanding any stock options or other rights to
acquire any shares of its capital stock or any security
convertible into such shares, or has any obligation or commitment
to issue, sell or deliver any of the foregoing or any shares of
its capital stock. The capital stock of each member of Holding's
consolidated group has been issued in compliance with all legal
requirements and in compliance with any preemptive or similar
rights. No member of Holding's consolidated group has a
subsidiary or direct or indirect ownership interest exceeding 5%
in any corporation, partnership or other entity except for
interests in any other such member.
3.03 Corporate Authorization; No Conflicts. Subject to the
approval of this Agreement and the Holding Company Merger
Agreement by the shareholders of Holding in accordance with the
BCL and this Agreement and the Bank Merger Agreement by Holding
as sole shareholder of Bank, all corporate acts and other
corporate proceedings required of each member of Holding'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
approvals and to such regulatory approvals as are required by
law, and satisfaction of any conditions imposed in connection
therewith, this Agreement and the Merger Agreements are legal,
valid and binding obligations of the members of Holding's
consolidated group that are parties thereto, respectively, and
are enforceable against such members in accordance with the
respective terms of such instruments, 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, 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 Holding'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 provisions of, (ii)
constitute a default (or event that, 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 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 material
portion 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 material portion of its
assets.
3.04 Financial Statements, Reports and Proxy Statements.
Holding has delivered to FCC true and complete copies of (a) the
consolidated balance sheets as of December 31, 1992 and 1993 of
Holding and its consolidated subsidiaries and the related
consolidated statements of income, changes in shareholders'
equity and cash flows for the respective years then ended, the
related notes thereto, and the report of its independent public
accountants with respect thereto (collectively, the "Financial
Statements"), (b) the unaudited consolidated balance sheets as of
March 31, 1994 and March 31, 1993 of Holding and its consolidated
subsidiaries, and the related unaudited statements of income,
changes in shareholders' equity and cash flows for the three-
month periods then ended (collectively, the "Interim Financial
Statements"), (c) the annual report to the Board of Governors of
the Federal Reserve System ("Federal Reserve Board") for the year
ended December 31, 1993, of each member of Holding's consolidated
group required to file such reports, (d) all call reports made to
the Federal Deposit Insurance Corporation ("FDIC") or the Federal
Reserve Board, as the case may be, since December 31, 1991, of
each member of Holding's consolidated group required to file such
reports, and (e) all Proxy Statements disseminated to Holding's
shareholders or the shareholders of any of its subsidiaries at
any time since December 31, 1991. The Financial Statements and
the Interim Financial Statements have been prepared in conformity
with generally accepted accounting principles applied on a basis
consistent with prior periods, and present fairly, in conformity
with generally accepted accounting principles, the consolidated
results of operations of Holding'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 referred to above have been filed on
the appropriate form and prepared in all material respects in
accordance with such form's instructions and the applicable rules
and regulations of the regulating federal agency. No member of
Holding's consolidated group has, nor are any of any such
member's assets subject to, any material liability, commitment,
indebtedness or obligation (of any kind whatsoever, whether
absolute, accrued, contingent, known, unknown, matured or
unmatured) which is not reflected and adequately reserved against
in the latest balance sheet forming part of the Interim Financial
Statements (the "Latest Balance Sheet"). The Financial
Statements and Interim Financial Statements are supported by and
consistent with 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 FCC.
3.05 Loan and Investment Portfolios. All loans, discounts
and financing leases (in which a member of Holding's consolidated
group is lessor) reflected on the Latest Balance Sheet (a) were,
at the time 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 Holding's consolidated
group as of such date, have been delivered to FCC.
3.06 Adequacy of Allowances for Losses. Each of the
allowances for losses on loans, financing leases and other real
estate shown on the Latest Balance Sheet is adequate in
accordance with applicable regulatory guidelines and generally
accepted accounting principles in all material respects, and
there are no facts or circumstances known to any executive
officer of Holding or Bank which are likely to require in
accordance with applicable regulatory guidelines or generally
accepted accounting principles a future material increase in any
such provisions for losses or a material decrease in any of the
allowances therefor reflected in the Latest Balance Sheet. Each
of the allowances for losses on loans, financing leases and other
real estate reflected on the books of Holding'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 generally accepted accounting
principles in all material respects.
3.07 Examination Reports. To the extent permitted by
applicable law, Holding has allowed representatives of FCC to
examine true and correct copies of all examination reports with
respect to each member of Holding's consolidated group made by
any federal or state bank or bank holding company regulatory
authority since December 31, 1991.
3.08 Absence of Certain Changes or Events. 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 Holding
or Bank, threatened or contemplated) that has had, or can
reasonably be anticipated to have, a material adverse effect on
the financial condition, results of operations, business or
prospects of any member of Holding's consolidated group. No such
member has, since the date of the Latest Balance Sheet:
(a) borrowed any money or, except in the ordinary course of
business consistent with past practices, (i) loaned 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 $10,000 in
the aggregate, other than sales of cars and trucks held as
foreclosed assets and sales of mortgage loans in each case
consistent with past practices, or (iv) incurred any material
liability, commitment, indebtedness or obligation (of any kind
whatsoever, whether accrued, contingent, known, unknown, matured
or unmatured);
(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) except solely by reason of the transactions contemplated
by this Agreement, 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 the Latest Balance Sheet or
waived any material right in connection with any aspect of its
business, whether or not in the ordinary course of business;
(h) cancelled any debt in excess of $10,000 owed to it, or
cancelled any of its claims in excess of $10,000, or paid any of
its noncurrent obligations or liabilities in excess of $10,000;
(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 such
agreements as are terminable at will without any penalty or other
payment by it, or increased 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 $25,000,
other than increases resulting through the operation of Bank's
Bonus Plan, described in subsection 5.20 hereof, consistent with
past practices;
(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
generally accepted accounting principles;
(l) made any loan, given any discount or entered into any
financing lease which has not been (i) at the time and under the
circumstances in which made, 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 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.
3.09 Taxes. Each member of Holding's consolidated group has
timely filed all federal, state, foreign 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
which have become due, has made (and will make) adequate
provision for the payment of all taxes accruable for all periods
ending on or before the date of this Agreement (and the Closing
Date) to any city, parish, state, foreign country, the United
States or any other taxing authority (other than with respect to
taxes being contested in good faith), and is not delinquent in
the payment of any tax or material governmental charge of any
nature. Neither the federal nor the state income tax returns of
Holding's consolidated group have been audited, nor is any audit,
examination or investigation presently being conducted or, to the
knowledge of Holding or Bank, threatened or contemplated, by any
taxing authority, no material unpaid tax deficiencies or
additional liabilities of any sort have been proposed to Holding
or Bank by any state or federal governmental representative, and
no agreements for an extension of time for any income tax returns
to be audited or for the assessment of any tax have been entered
into by or on behalf of any member of Holding's consolidated
group with the Internal Revenue Service or any state authority or
agency. 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, foreign and
local laws (including without limitation income, social security
and employment tax withholding for all forms of compensation).
3.10 Title to Assets. (a) On the date of the Latest Balance
Sheet, each member of Holding'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, 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 Holding'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 Holding or Bank 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
Holding'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 Holding Company
Merger nor the Bank Merger will constitute a default or a cause
for termination or modification of such lease.
(c) No member of Holding'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.
3.11 Litigation, Pending Proceedings and Compliance with
Laws. (a) Except as described in the list referred to in
subparagraph (e) below, no claims of any kind have been asserted
and there are no actions, suits, proceedings, arbitrations or
investigations pending or, to the knowledge of Holding or Bank,
threatened, nor does any member of Holding's 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
any governmental agency or instrumentality or arbitration panel
or otherwise, against any member of Holding's consolidated group.
(b) Each member of Holding's consolidated group has complied
in all material respects with and is not in default in any
material respect under (and has not been charged or, to its
knowledge, threatened with or come under investigation with
respect to any charge concerning any material violation of any
provision of) any federal, state or local law, regulation,
ordinance, rule or order (whether executive, judicial,
legislative or administrative) or any order, writ, injunction or
decree of any court, agency or instrumentality.
(c) 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
Holding's consolidated group as a result of examination by any
bank or bank holding company regulatory authority.
(d) No member of Holding's consolidated group is subject to
any written agreement, memorandum or order with or by any bank or
bank holding company regulatory authority.
(e) 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 Holding
or Bank, threatened to be made against any member of Holding's
consolidated group is listed in the Schedule of Exceptions.
3.12 Employee Benefit Plans. The members of Holding's
consolidated group maintain only one employee pension benefit
plan, as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
(together with the related trusts, the "Benefit Plan"). The
Benefit Plan was qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") prior to its
amendment on December 31, 1993, and the related trusts are exempt
from taxation under Section 501(a) of the Code. A request for
determination of the amended Benefit Plan's exempt status is
presently pending before the Internal Revenue Service, and such
determination has not been denied. The Benefit Plan is in
material compliance with the provisions of ERISA, the Code, and
all other applicable laws and is administered in all material
respects in accordance with the express provisions of the plan
documents and related trust agreements. No member of Holding's
consolidated group has any knowledge of any fact which would
adversely affect the qualified status of the Benefit Plan, as
amended. True and complete copies of the Benefit Plan, related
trust agreements, and any communications to or from the Internal
Revenue Service and the United States Department of Labor have
been delivered to FCC. The Benefit Plan is not subject to
regulation by the Pension Benefit Guaranty Corporation; no
termination, whether partial or complete, has occurred with
respect to the Benefit Plan, and there has been no failure to
make required contributions. Except for the qualified Benefit
Plan and the Dividend Bonus Plan, there is no profit-sharing,
pension, stock purchase, stock option, bonus, retirement or
similar employee benefit plan covering persons employed by any
member of Holding's consolidated group. All of the plans of
Holding's consolidated group have been fully funded, and all
necessary accruals therefor have been made on the books of
account of such consolidated group, in the manner and to the
extent required by generally accepted accounting principles.
3.13 Insurance Policies. Each member of Holding's
consolidated group maintains in force insurance policies and
bonds in such amounts and against such liabilities and hazards as
are considered adequate for institutions of such member's size
and type. An accurate list of all such insurance policies is set
forth in the Schedule of Exceptions. No member of Holding'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 Holding's consolidated group has received any
notice of a material premium increase or cancellation with
respect to any of its insurance policies or bonds now in effect.
Within the last three years, no member of Holding's consolidated
group has been refused any insurance coverage sought or applied
for (other than certain exclusions for coverage of certain events
or circumstances as stated in such policies), and no such member
has reason to believe that its existing insurance coverage cannot
be renewed as and when the same shall expire, upon terms and
conditions standard in the market at the time renewal is sought.
3.14 Agreements. No member of Holding's consolidated group
is a party to:
(a) any collective bargaining agreement;
(b) other than as described in this Agreement or the
Schedule of Exceptions hereto, any employment or other agreement
or contract with or commitment to any employee except such
agreements as are terminable without penalty upon not more than
five days notice by the employer;
(c) any obligation of guaranty or indemnification except
indemnification of officers, directors, employees and/or agents
of Holding's consolidated group as provided by law and/or in
their respective Articles of Incorporation and By-laws and
except, if entered into in the ordinary course of business with
respect to customers of any member of Holding's consolidated
group, letters of credit, guaranties of endorsements and
guaranties of signatures;
(d) any agreement, contract or commitment which is or if
performed would be likely to be materially adverse to the
financial condition, results of operations, business or prospects
of any member of Holding's consolidated group; or
(e) any agreement, contract or commitment containing any
covenant limiting the freedom of any member of Holding'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 banks or
bank holding companies.
The Schedule of Exceptions 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) to which any member of
Holding's consolidated group is a party or which materially
affects any such member. No member of Holding's consolidated
group has in any material respect breached, nor is there any
pending or, to the knowledge of Holding or Bank, threatened
claims that it has materially breached, any of the terms or
conditions of any of such agreements, contracts or commitments.
3.15 Licenses, Franchises and Governmental Authorizations.
Each member of Holding'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 the knowledge of Bank,
threatened proceedings to revoke or modify that insurance or for
relief under 12 U.S.C. Section 1818.
3.16 Corporate Documents. Holding has delivered to FCC,
with respect to each member of Holding's consolidated group, true
and correct copies of its articles of incorporation or articles
of 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 Holding's consolidated group are
current, complete and correct in all material respects.
3.17 Certain Transactions. No past or present director,
executive officer (as used herein, the term "executive officer"
shall refer to officers designated as such by Holding or Bank) or
five percent shareholder of any member of Holding's consolidated
group, except for Charles A. Dorsey with respect to whom Holding
and Bank have no knowledge that he, has, since January 1, 1991,
engaged in any transaction or series of transactions which, if
such member had been subject to Section 14(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") at all
times since that date, would be required to be disclosed in its
proxy materials pursuant to Item 404 of Regulation S-K of the
Rules and Regulations of the Securities and Exchange Commission
("SEC").
3.18 Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of any member of Holding'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 other than fees
payable to Chaffe & Associates, Inc. pursuant to a written
agreement with such firm a copy of which has heretofore been
furnished to FCC.
3.19 Environmental Matters.
(a) (i) Holding and each member of Holding'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) Holding 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)There are no past or present events, conditions,
circumstances, activities or plans by any member of Holding's
consolidated group related in any manner to Holding 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) 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 any executive officer of any
member of Holding's consolidated group, threatened by any person
against Holding 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 Holding's consolidated group is
subject to or responsible for any material Environmental
Liability that 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 biphenyls; (D) any "regulated substance" as
defined by 40 C.F.R. 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.S. 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 regarding the environment 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 regarding the environment requires
special handling in its collection, storage, treatment or
disposal.
(d) "Environmental Liability" shall mean (i) any liability
or obligation (of any kind whatsoever, whether absolute or
contingent, accrued or unaccrued, known or unknown) arising under
any Environmental Law Requirement, or (ii) any liability or
obligation (of any kind whatsoever, whether absolute or
contingent, accrued or unaccrued, known or unknown) under any
other 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 Materials, pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
3.20 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", and
has received no material criticism from regulators with respect
to discriminatory lending practices.
3.21 Accuracy of Statements. No warranty or representation
made or to be made by any member of Holding's consolidated group
in this Agreement or in any document furnished or to be furnished
by any member of Holding'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 5.14 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 4
Representations and Warranties
of FCC and FNBL
FCC and FNBL represent and warrant to Holding and Bank that:
4.01 Organization and Qualification. FCC 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. FNBL is a national banking
association duly organized and validly existing under the laws of
the United States. Each of FCC and FNBL 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 its financial condition, results of
operations, business or prospects.
4.02 Capital Stock; Other Interests. The authorized capital
stock of FCC consisted at June 30, 1994 of 100,000,000 shares of
common stock, $5.00 par value per share, of which at such date
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, of which at such date 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 FCC have been duly
authorized and are validly issued, fully paid and non-assessable.
FCC owns all of the issued and outstanding shares of capital
stock of FNBL free and clear of any encumbrances except as
provided in 12 U.S.C. Section 55.
4.03 Corporate Authorization; No Conflicts. Subject to the
approval of this Agreement and the Bank Merger Agreement by FCC
as sole shareholder of FNBL, all corporate acts and other
proceedings required of FCC and FNBL 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 FCC and FNBL, as the case
may be, and are enforceable against them in accordance with the
respective terms of such instruments, 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. With respect to each of FCC and FNBL,
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 that, 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 articles of 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 FCC Corporate Documents. FCC and FNBL have delivered
to Holding true and correct copies of their articles of
incorporation or association, as amended, and by-laws, as
amended.
4.05 Reports of FCC. FCC has delivered to Holding true and
complete copies of (i) its Quarterly Reports to the SEC on Form
10-Q for the quarters ended March 31, 1994 and March 31, 1993;
(ii) its Annual Reports to the SEC on Form 10-K for the years
ended December 31, 1993 and 1992; (iii) its 1994 Proxy Statement
and all proxy statements disseminated to FCC's shareholders at
any time since January 1, 1992; (iv) any reports disseminated to
its shareholders since January 1, 1993; (v) any other report made
by it to the SEC since December 31, 1992; and (vi) its annual
report to the Federal Reserve for the year ended December 31,
1993. The financial statements contained in FCC's annual reports
to the SEC on Form 10-K for the years ended December 31, 1993 and
1992 and in its quarterly reports to the SEC on Form 10-Q for the
quarters ended March 31, 1994 and March 31, 1993 have been
prepared in conformity with generally accepted accounting
principles applied on a basis consistent with prior periods, and
present fairly, in conformity with generally accepted accounting
principles, the consolidated results of operations of FCC'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 of FNBL filed
since December 31, 1991 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. No member of FCC's consolidated group has, nor are any
of such member's assets subject to, any material liability,
commitment, indebtedness or obligation (of any kind whatsoever,
whether absolute, accrued, contingent, known, unknown, matured or
unmatured) which is not reflected and adequately reserved against
in the March 31, 1994 financial statements. The financial
statements referred to above are supported by and consistent with
detailed trial balances of investment securities, loans and
commitments, depositors' accounts and cash balances on deposit
with other institutions.
4.06 Legality of FCC Securities. All shares of FCC Common
Stock (as such term is defined in the Holding Company Merger
Agreement) to be issued pursuant to the Holding Company Merger
have been duly authorized and, when issued pursuant to the
Holding Company Merger Agreement, will be validly issued, fully
paid and non-assessable and free and clear of all liens, charges,
security interests, mortgages, pledges and other encumbrances and
any preemptive or similar rights, other than liens, charges,
security interests, mortgages, pledges and other encumbrances
placed thereon by holders of Holding Common Stock.
4.07 Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of FCC or FNBL 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 FCC
pursuant to a written agreement which has been delivered to
Holding.
4.08 Litigation. Except as disclosed by FCC 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 knowledge, threatened
against FCC 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 FCC 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 FCC's consolidated group.
4.09 Accuracy of Statements. No warranty or representation
made or to be made by FCC or FNBL in this Agreement or in any
document furnished or to be furnished by FCC or FNBL 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 5.14 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 5
Covenants and Conduct of Parties
Prior to the Effective Date
The parties covenant and agree as follows:
5.01 Investigations; Planning. Each member of Holding's
consolidated group shall continue to provide to FCC and FNBL 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 FCC and FNBL and such
representatives with such financial and operating data and other
information of any kind respecting its business and properties as
FCC and FNBL shall from time to time reasonably request, except
as restricted by applicable law. Any investigation shall be
conducted in a manner which does not unreasonably interfere with
the operation of the business of Holding's consolidated group.
Each member of Holding's consolidated group agrees to cooperate
with FCC and FNBL in connection with planning for the efficient
and orderly combination of the parties and the operation of FCC
and FNBL after consummation of the Mergers. In the event of
termination of this Agreement prior to the Effective Date, FCC
and FNBL shall return, without retaining copies thereof, all
confidential or non-public documents, work papers and other
materials obtained from Holding's consolidated group or their
employees, agents or representatives in connection with the
transactions contemplated hereby and destroy any work papers,
analyses or other materials prepared based on such information
and, for a period of not less than three years following such
termination, shall keep such information confidential, not
disclose such information to any other person or entity except as
may be required by law, and not use such information (including
any work papers, analyses and other materials prepared by it in
reliance upon such information) in connection with its business
and shall use its best efforts to cause its employees, agents and
representatives to do the same, in each case unless and until
such information shall come into the public domain through no
fault of FCC or FNBL. Until March 1, 1995, if this Agreement is
terminated prior to that time, neither FCC or FNBL will solicit
for employment any officers or employees of Holding or Bank
without obtaining the prior written consent of Holding or Bank.
5.02 Cooperation and Best Efforts. Each of the parties will
cooperate with the other parties and use its best efforts to (a)
procure all necessary consents and approvals, (b) complete all
necessary filings, registrations 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.
5.03 Information for, and Preparation of, Proxy Statement.
Each of the parties will cooperate in the preparation of the
Registration Statement referred to in subsection 5.14 and a proxy
statement of Holding (the "Proxy Statement") which complies with
the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the rules and regulations promulgated
thereunder and other applicable federal and state laws, for the
purpose of submitting this Agreement, the Holding Company Merger
Agreement and the transactions contemplated hereby and thereby to
Holding's shareholders for approval. Each of the parties 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 Proxy Statement and
the Registration Statement.
5.04 Approval of Bank Merger Agreement. FCC, as the sole
shareholder of FNBL, and Holding, as the sole shareholder of
Bank, shall take all action necessary to effect shareholder
approval of the Bank Merger Agreement.
5.05 Press Releases. The consolidated groups of FCC and
Holding 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 or the
termination of this Agreement. Without the prior written consent
of the chief executive officer of the other party or his
designee, no member of Holding's or FCC'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, and, if practical,
prior notice of such release is provided to the other parties.
5.06 Preservation of Business. Each member of Holding'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, 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.
5.07 Conduct of Business in the Ordinary Course. Each
member of Holding'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 the chief executive officer of FCC or
his duly authorized designee, which consent will not be
unreasonably withheld:
(a) declare, set aside, increase or pay any dividend or pay
any bonuses to employees, other than Holding's regular dividends
and regular employee bonuses in amounts consistent with past
practices and Holding's current budget, which dividends and
bonuses shall not exceed in the aggregate $380,000 (except to the
extent otherwise provided in Section 5.20 hereof), 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
Holding's consolidated group to any other member of such
consolidated group, and provided further that no employee bonuses
shall be paid earlier than the Effective Date;
(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) except as permitted under subsection 5.07(a), enter into
or modify any agreement so as to require the payment,
conditionally or otherwise, of any salary, extra compensation,
pension or severance payment to any of its present or former
directors, officers or employees or increase the compensation or
the basis for determining 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 $25,000,
other than increases resulting from the operation of Bank's Bonus
Plan, described in subsection 5.20 hereof, consistent with past
practices;
(d) except in the ordinary course of business consistent
with past practices or as otherwise permitted in this subsection
5.07, 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 3.10 hereof, or
cancel any indebtedness in excess of $10,000 owing to it or any
claims in excess of $10,000 which it may have possessed, or waive
any right of substantial value in excess of $10,000 or discharge
or satisfy any material noncurrent liability;
(e) merge or consolidate with another entity, or sell or
otherwise dispose of a substantial part of its assets or, except
in the ordinary course of business consistent with past
practices, or as otherwise permitted in this subsection 5.07,
sell any of its assets;
(f) commit or omit to do any act which act or omission would
cause a breach of any covenant of Holding or Bank contained in
this Agreement or would cause any representation or warranty of
Holding 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 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 (and/or accruable 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, foreign country, 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) acquire investment securities, other than investment
grade securities having an aggregate market value not exceeding
$500,000 and having a maturity not exceeding five years and other
than securities acquired from First National Bank of Commerce in
New Orleans, make investments in non-investment grade securities
or dispose of investment securities having an aggregate market
value greater than $500,000;
(k) enter into any new line of business;
(l) 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 book value thereof) any of its portfolio of loans,
discounts or financing leases, other than sales of mortgage loans
in a manner consistent with past practices; or sell any assets
held as other real estate or other foreclosed assets, other than
(i) assets having a book value of $15,000 or less as of the date
of the Latest Balance Sheet sold for an amount equal to at least
50% of such asset's book value at the date of the Latest Balance
Sheet and (ii) cars and trucks sold upon foreclosure in a manner
consistent with past practices;
(m) make any extension of new credit which, when added to
all other extensions of credit to the borrower and its
affiliates, would exceed $200,000 or, unless reasonable prior
notice is provided the chief executive officer of FCC or his
authorized designee, commit or otherwise become obligated to make
any such extension of new credit in excess of $200,000; or
(n) 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.
5.08 Additional Information from Holding. Holding will
provide FCC and FNBL (a) with prompt written notice of any
material adverse change in the financial condition, results of
operations, business or prospects of any member of its
consolidated group, (b) as soon as they become available, copies
of any financial statements, reports and other documents of the
type referred to in subsection 3.04 with respect to each member
of its consolidated group, (c) promptly upon its dissemination,
any report disseminated to shareholders of Holding and (d) to the
extent permitted by law, will allow FCC and FNBL to examine
documents of the type referred to in subsection 3.07 with respect
to each member of its consolidated group.
5.09 Holding Shareholder Approval. Holding's Board of
Directors shall submit this Agreement and the Holding Company
Merger Agreement to its shareholders for approval in accordance
with the BCL, together with its recommendation that such approval
be given, provided that it has obtained a fairness opinion from
Chaffe & Associates, Inc. in form and substance satisfactory to
it as provided in Section 6.03(c), at a special meeting of
shareholders duly called and convened for that purpose as soon as
practicable after all regulatory filings have been made.
5.10 Common Stock. Holding will use its best efforts to
obtain by the Closing Date an agreement from each person (other
than Charles A. Dorsey) who beneficially owns, within the meaning
of Rule 13d-3 under the Exchange Act, 10% or more of the capital
stock of Holding or is a director or executive officer who will
receive shares of FCC Common Stock by virtue of the Holding
Company Merger to the effect that such person will not dispose of
any FCC Common Stock received pursuant to the Holding Company
Merger in violation of Section 5 of the Securities Act or the
rules and regulations of the SEC thereunder. FCC will seek to
obtain such agreement from Charles A. Dorsey.
5.11 Loan Policy. No member of Holding's consolidated group
will make any loans, or enter into any commitments to make loans,
which vary in any material respect from its written loan
policies, a true and correct copy of which loan policies have
been provided to FCC, provided that this covenant shall not
prohibit Bank from extending or renewing credit or loans in
connection with the workout or renegotiation of loans currently
in its loan portfolio.
5.12 No Solicitations. (a) Prior to the Effective Time or
until the termination of this Agreement, no member of Holding's
consolidated group shall, without the prior approval of FCC,
directly or indirectly, solicit or initiate inquiries or
proposals with respect to, or, except as may be necessary as
advised in writing by its counsel to discharge its fiduciary
duties, furnish any information relating to, or participate in
any negotiations or discussions concerning, any transaction of
the type that is referred to in clauses (B) (i), (ii) and (iii)
of subparagraph (e) of subsection 7.01 of this Agreement (and in
no event will any such information be supplied except pursuant to
a confidentiality agreement that reasonably protects the
confidentiality of such information); and each such member shall
instruct its officers, directors, agents and affiliates to
refrain from doing any of the above, and will notify FCC
immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations
or discussions are sought to be initiated with it or any of its
officers, directors, agents and affiliates; provided, however,
that nothing contained herein shall be deemed to prohibit any
officer or director of Holding or Bank from taking any action
that counsel has advised in writing is required by law or is
required to discharge his fiduciary duties to Holding's
consolidated group and its shareholders.
(b) Except as may be necessary as advised in writing by its
counsel to discharge its fiduciary duties, neither the Board of
Directors of Holding nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse
to FCC, the approval or recommendation to shareholders of this
Agreement or the Mergers, provided that Holding shall have
received the opinion of Chaffe & Associates, Inc. in form and
substance reasonably satisfactory to it to the effect that the
terms of the transactions as contemplated by this Agreement and
the Merger Agreements are fair to Holding and its shareholders
from a financial point of view as required by subsection 6.03(c),
(ii) approve or recommend, or propose to recommend any takeover
proposal with respect to Holding or Bank, except such action that
counsel advises in writing is necessary to discharge its
fiduciary duties to Holding's consolidated group and its
shareholders, or (iii) modify, or waive or release any party from
any material provision of, or fail to enforce any material
provision of, if FCC so requests such enforcement, any
confidentiality agreement entered into by Holding or Bank with
any prospective acquiror after the date of this Agreement or
within two years prior to such date.
5.13 Operating Functions. Each member of Holding's
consolidated group agrees to cooperate in the consolidation of
appropriate operating functions with FCC and FNBL to be effective
on the Effective Date, provided that the foregoing shall not be
deemed to require any action that, in the opinion of such
member's Board of Directors, would adversely affect its
operations if the Mergers were not consummated.
5.14 FCC Registration Statement. FCC will 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 FCC Common Stock which will be issued
to the holders of Holding Common Stock pursuant to the Holding
Company Merger. FCC shall use its best efforts to cause the
Registration Statement to become effective as soon as
practicable, to qualify the FCC 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.
5.15 Application to Regulatory Authorities. FCC shall
prepare (and Holding's consolidated group will cooperate in the
preparation of), as promptly as practicable, all regulatory
applications and filings which are required to be made with
respect to the Mergers.
5.16 Revenue Ruling. FCC may elect to prepare (and in that
event Holding 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.
5.17 Benefits Provided to Employees of Holding's
Consolidated Group. From and after the Effective Date, FCC or
FNBL shall offer to all persons who were employees of Holding or
Bank immediately prior to the Effective Date and who become
employees of FNBL immediately following the Effective Date, the
same employee benefits (including benefits under FCC's
retirement, 401(k), flexible benefit, vacation, severance and
sick leave plans or policies) as are offered by FCC or FNBL to
employees of FNBL, except that there shall be no 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 who is in an active employee 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 Holding or Bank for eligibility vesting purposes under all
of FCC's benefit plans and policies, except that credit for prior
service shall not be given for eligibility, vesting or benefit
accrual purposes under FCC's Retirement Plan. All benefits
accrued through the Effective Date under benefit plans of Holding
or Bank shall be paid by FCC or FNBL to the extent such benefits
are not otherwise provided to such employees through the benefit
plans of FCC or FNBL. Neither FCC nor FNBL shall be obligated to
continue any employee benefit or ERISA Plan maintained by Holding
or Bank including, but not limited to, those set forth on the
Schedule of Exceptions.
5.18 Schedule of Expenses. If the aggregate of accounting,
legal, investment banking (including fees and expenses of
securing a fairness opinion), printing, and filing fees and
expenses of Holding and Bank related to the Mergers will exceed
$150,000, Holding will provide to FCC, five days prior to the
Closing Date, a schedule showing in reasonable detail such
expenses to facilitate the calculation set forth in subsection
4.1 of the Holding Company Merger Agreement.
5.19 Additional Information from FCC. FCC will provide
Holding with: (a) prompt written notice of any material adverse
change in the financial condition, results of operations,
business or prospects of FCC except to the extent such disclosure
is in violation of law, (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 Section
4.05 with respect to FCC and (c) promptly upon its dissemination,
any report disseminated to the shareholders of FCC.
5.20 Dividend/Bonus Plan. Bank's Dividend/Bonus Plan, full,
complete and correct copies of which have been provided to FCC,
shall remain in effect until the Effective Date. Dividend
payments may be made under such Plan only in accordance with the
limitations set forth in subsection 5.07(a) hereof and at times
consistent with past practices. Notwithstanding the limitations
set forth in Section 5.07(a), if the Closing occurs after
December 31, 1994, bonuses may be paid on the Effective Date in
the amount calculated under such Plan for 1994, which together
with all dividends declared or paid since the date of this
Agreement shall not exceed $380,000, plus an amount calculated
under such Plan for the then completed period of 1995 not to
exceed of the lesser of (i) net earnings for the same period in
1994 as corresponds to the period from December 31, 1994 to the
Effective Date, (ii) a pro rata portion of annualized net
earnings for 1995 to date or (iii) a pro rata portion of budgeted
annual net earnings for 1995.
5.21 Publication of Post-merger Financial Statements. FCC
shall file all Form 10-Qs and Form 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.
5.22 Public Funds. Bank shall use its best efforts
consistent with sound business judgment and past practice to
maintain all public funds deposits at Bank, including deposits of
the Iberia Parish School Board; and shall notify FCC and FNBL if
it receives notice that any such deposits are to be withdrawn and
the related accounts closed and shall take such actions as are
reasonably requested by FCC or FNBL to attempt to retain such
deposits.
5.23 Consent of FCC and FNBL. To the extent that any
member of Holding's consolidated group is required to obtain the
written consent of a representative of FCC or FNBL prior to
taking any action, FCC or FNBL, as the case may be, shall provide
a prompt written response to such request for consent. Any
failure to provide a prompt written response shall be deemed to
evidence the consent of FCC and FNBL to the action that is the
subject of the request for consent.
SECTION 6
Conditions of Closing
6.01 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 Holding
Company Merger Agreement shall have been duly approved by the
shareholders of Holding and this Agreement and the Bank Merger
Agreement shall have been duly approved by the shareholders of
Bank and FNBL.
(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 FCC 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 FCC
and FNBL.
(e) Tax Opinion. FCC and Holding shall have received the
opinion of Arthur Andersen & Co., substantially in the Form of
Exhibit C annexed hereto, as to certain tax aspects of the
Mergers, including an opinion that the receipt of FCC Common
Stock by Holding's shareholders will not be a taxable event to
such shareholders and an opinion that the consummation of the
Mergers will not be a taxable event to FCC.
6.02 Additional Conditions of FCC and FNBL. The obligations
of FCC and FNBL 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 Holding and 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 at such
date, except to the extent of changes permitted by the terms of
this Agreement, and each of Holding 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 Holding and Bank shall have delivered to FCC
and FNBL 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, business or prospects of Holding's
consolidated group taken as a whole. Without limiting the
occurrences that would constitute such a material adverse change
with respect to Holding'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: (a) any
change or changes which, in the aggregate, have resulted or are
likely to result in a reduction of either net earnings after
taxes or earnings before securities transactions and provision
for loan losses when compared to such earnings for the
corresponding period in 1993 of $100,000 or more; (b) any net
decrease in the core deposits (meaning all deposits other than
public funds, provided Bank has complied with subsection 5.22
hereof, and time deposits that exceed $100,000 each) of Holding's
consolidated group, if such net decrease exceeds by more than
$5,000,000 the amount of such core deposits at the date of the
Latest Balance Sheet; and (c) any claim of indemnification made
by an officer, director or employee of any member of Holding's
consolidated group for which FCC or FNBL would be responsible and
which FCC or FNBL concludes could reasonably be expected to
exceed $100,000.
(c) Accountants' Letters. FCC and FNBL shall have received
letters from Castaing, Hussey & Lolan, independent public
accountants for Holding, dated, respectively, the date of the
Proxy Statement and immediately prior to the Closing Date, in
form and substance satisfactory to FCC and FNBL, to the effect
set forth in Exhibit D to this Agreement.
(d) Opinion of Counsel. FCC and FNBL shall have received
from Gordon, Arata, McCollam & Duplantis, L.L.P., counsel for
Holding's consolidated group, an opinion dated as of the Closing
Date, in form and substance satisfactory to FCC and FNBL, to the
effect set forth in Exhibit E-1 to this Agreement and shall have
received the opinion set forth in Exhibit E-2 from Meeks and
Company.
(e) Joinder of Shareholders; Confirmation. A Joinder of
Shareholders in the form of Exhibit F-1 annexed hereto shall have
been executed by each person who serves as an executive officer
or director of Holding or Bank or who owns 9% or more of the
Holding Common Stock outstanding; provided that Arthur
Schexnayder shall sign the Joinder set forth as Exhibit F-2 and
Martha Moore and Patrick Burke shall sign the Joinder set forth
as Exhibit F-3; and FCC and FNBL shall have received from each
person who executes a Joinder of Shareholders a written
confirmation dated not earlier than 5 days prior to the Closing
Date to the effect that each representation made by such person
in the Joinder of Shareholders 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. It shall be an obligation of FCC to use its
reasonable best efforts to secure a Joinder of Shareholders and
confirmation from Charles A. Dorsey, who owns 9.9% of the Holding
Common Stock outstanding.
(f) Pooling-of-Interests. Neither FCC's independent
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 under generally accepted accounting principles.
(g) Schedule of Expenses. FCC and FNBL shall have received
from Holding a schedule showing expenses as required by
subsection 5.18, or a certificate of Holding that such expenses
will not exceed $150,000, at least five days prior to the Closing
Date.
(h) Termination of Claim. That certain suit captioned
Dorsey v. City Bank & Trust, no. 76899-A of the docket of the
16th Louisiana District Court, shall have been dismissed without
cost to Holding or the Bank, and the plaintiff therein shall have
executed a full and complete release with respect to actions or
claims against Holding, the Bank or any person who would be
entitled to indemnification from Holding or the Bank. Holding
and Bank shall have no obligation to seek or obtain such
dismissal or release.
(i) Severance Benefits. The Board of Directors of Holding
and Bank shall have adopted the severance benefit plan heretofore
agreed upon by the parties hereto and shall have taken any and
all action necessary to insure that such plan, as adopted, is the
only plan pursuant to which employees of Holding or Bank are
provided with severance benefits from the date of this Agreement
through the Effective Date.
6.03 Additional Conditions of Holding and Bank. The
obligations of Holding 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 FCC and FNBL contained in this
Agreement shall be true and correct on the Closing Date, with the
same effect as though made at such date, except to the extent of
changes permitted by the terms of this Agreement, and each of FCC
and FNBL shall have 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 FCC and FNBL shall have
delivered to Holding 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) Opinion of Counsel. Holding and Bank shall have
received from Correro, Fishman & Casteix, counsel for FCC and
FNBL, an opinion, dated as of the Closing Date, in form and
substance satisfactory to Holding and Bank, to the effect set
forth in Exhibit G annexed to this Agreement.
(c) Opinion of Investment Bankers. Holding shall have
received an opinion, dated within five days prior to the mailing
of the Proxy Statement to shareholders of Holding, from Chaffe
and Associates, in form and substance reasonably satisfactory to
Holding, to the effect that the terms of the transactions as
contemplated by this Agreement and the Merger Agreements are fair
to Holding and its shareholders from a financial point of view.
(d) No Material Adverse Change. There shall not have
occurred any material adverse change from March 31, 1994 to the
Closing Date in the financial condition, results of operations,
business or prospects of FCC's consolidated group.
6.04 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 6.01. The failure to waive any condition hereunder
shall not be deemed a breach of subsection 5.02 hereof.
SECTION 7
Termination
7.01 Termination. This Agreement may be terminated at any
time before the time at which the Bank Merger becomes effective:
(a) Mutual Consent. By the mutual consent of the Boards of
Directors of FCC and Holding.
(b) Material Breach. By the Board of Directors of either
FCC or Holding 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 cured
within 10 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.
(c) Abandonment. By the Board of Directors of either FCC
or Holding if (i) all conditions to Closing required by Section 6
have not been met or waived by March 31, 1995, or (ii) any such
condition cannot be met by such date and has not been waived by
each party in whose favor such condition runs or (iii) the Bank
Merger has not occurred by such date.
(d) Dissenting Shareholders. By the Board of Directors of
FCC or FNBL, if the number of shares of Holding Common Stock as
to which the holders thereof are, at the time of the Closing,
legally entitled to assert dissenting shareholder's rights
exceeds 5% of the total number of shares of Holding Common Stock
issued and outstanding on the Closing Date.
(e) Holding Recommendation. By the Board of Directors of
either FCC or FNBL if the Board of Directors of Holding (A) shall
withdraw, modify or change its recommendation to its shareholders
of this Agreement or the Mergers or shall have resolved to do any
of the foregoing; (B) shall have recommended to the shareholders
of Holding (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 member of Holding's consolidated group, or
(iii) any acquisition, by any person or group, of the beneficial
ownership of 15% or more of any class of Holding capital stock;
or (C) shall have made any announcement of a proposal, plan or
intention to do any of the foregoing or agreement to engage in
any of the foregoing.
(f) Fairness Opinion. By the Board of Directors of Holding
if the opinion referred to in Section 6.03(c) cannot be rendered
at the time referred to in such Section.
7.02 Effect of Termination; Survival. Upon termination of
this Agreement pursuant to this Section 7, 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 arising out of an intentional breach of
any 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 any covenant that
survives pursuant to the following sentence. The following
provisions shall survive any termination of this Agreement: the
last two sentences of subsection 5.01; subsection 5.05;
subsection 7.02; and Section 9.
SECTION 8
Indemnification of Directors and Officers of Holding and Bank
8.01 From and after the Effective Time of the Mergers, FCC
and FNBL agree to indemnify and hold harmless each person who is
an officer or director of Holding or Bank on the date of this
Agreement or who has previously served as an officer or director
of Holding or Bank during the period beginning May 1, 1992 (an
"Indemnified Person") from and against all damages, liabilities,
judgments and claims (and related expenses, including, but not
limited to, attorneys' fees and amounts paid in settlement) based
upon or arising from his capacity as an officer or director of
Holding or Bank, to the same extent as he would have been
indemnified under the articles of association (or articles of
incorporation) or bylaws of Holding or Bank, as appropriate, as
such articles of association (or articles of incorporation) or
bylaws were in effect on the date of execution of this Agreement.
8.02 The rights granted to the Indemnified Persons hereby
will be contractual rights inuring to the benefit of all
Indemnified Persons and shall survive this Agreement and any
merger, consolidation or reorganization of FCC or FNBL.
8.03 The rights to indemnification granted by this Section 8
are subject to the following limitations: (a) the total
aggregate indemnification to be provided by FCC or FNBL pursuant
to Section 8.01 hereof will not exceed, as to all of the
Indemnified Persons described herein as a group, the sum of $3.5
million, and FCC and FNBL will have no responsibility to any
Indemnified Person for the manner in which such sum is allocated
among that group (but the Indemnified Persons may seek
reallocation among themselves); (b) a director of officer who
would otherwise be an Indemnified Person under this Section 8
shall not be entitled to the benefits hereof unless such director
or officer has executed a Joinder of Shareholders (the "Joinder
of Shareholders") substantially in the form annexed to this
Agreement; provided that officers not otherwise required to sign
a Joinder of Shareholders shall sign an agreement containing the
waiver set forth in paragraph (4) of such Joinder of
Shareholders; (c) amounts otherwise required to be paid by FCC to
an Indemnified Person pursuant to this Section 8 will be reduced
by any amounts that such Indemnified Person recovers by virtue of
the claim for which indemnification is sought; (d) no Indemnified
Person shall be entitled to indemnification for any claim made or
threatened prior to the Closing Date of which such Indemnified
Person, Holding or Bank was aware but did not disclose to FCC and
FNBL prior to the execution of this Agreement, if the claim or
threatened claim was known on or before such time, or prior to
the Closing Date, if such claim became known after execution of
this Agreement; and (e) any claim for indemnification pursuant to
this Section 8 must be submitted in writing to the Chief
Executive Officer of FCC promptly upon such Indemnified Person
becoming aware of such claim and, in no event, more than ten
years and one day from the Effective Date.
8.04 FCC and FNBL agree that the indemnification limits set
forth in Section 8.03(a) will not apply to any damages,
liabilities, judgments and claims (and related expenses,
including, but not limited to, attorney's fees and amounts paid
in settlement) insofar as they arise out of or are based upon any
misstatement by FCC or FNBL of a material fact in the
Registration Statement or are based upon an omission by FCC or
FNBL of a material fact required to be stated therein, or
necessary in order to make a statement therein not misleading.
SECTION 9
Miscellaneous
9.01 Notices. Any notice, communication, request, reply,
advice or disclosure (hereinafter severally and collectively
called "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 FCC:
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Mr. Ian Arnof
With copies to:
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Mr. David B. Kelso
and
Anthony J. Correro, III
Correro, Fishman & Casteix
201 St. Charles Avenue, 47th Floor
New Orleans, Louisiana 70170
If to FNBL:
First National Bank of Lafayette
600 Jefferson Street
Lafayette, Louisiana 70501
Attention: Mr. E. Graham Thompson
With copies as aforesaid
If to Holding or Bank:
City Bancorp, Inc.
712 Center Street
New Iberia, Louisiana 70560
Attention: Arthur L. Schexnayder, Jr.
With copy to:
Gordon, Arata, McCollam & Duplantis, L.L.P.
201 St. Charles Avenue, 47th Floor
New Orleans, Louisiana 70170
Attention: Cathy E. Chessin
or such substituted persons or addresses of which any of the
parties 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 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.
9.05 Exhibits and Schedules. The exhibits and schedules to
this Agreement are incorporated herein by this reference and
expressly made a part hereof.
9.06 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 or herein or therein provided for,
all prior agreements and understandings being superseded hereby.
9.07 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.
9.08 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 Holding's consolidated
group without the prior written consent of FCC and FNBL,
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.
9.09 Amendment. The parties may, by mutual agreement of
their respective Boards of Directors, 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.
9.10 Counterparts. This Agreement may be executed by the
parties in one or more counterparts, all of which shall be deemed
an original, but all of which taken together shall constitute one
and the same instrument.
9.11 Nonsurvival of Representations, Warranties and
Covenants. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant hereto shall
survive the Effective Date of the Mergers. None of the covenants
in this Agreement or in any instrument delivered pursuant hereto
other than the last two sentences of subsection 5.01, subsection
5.17, subsection 5.21, subsection 7.02, Section 8 and Section 9
shall survive the Effective Date of the Mergers. Each party
hereby agrees that its sole right and remedy with respect to any
breach of a representation or warranty by the other party or the
breach of any covenant that does not survive hereunder by the
other party shall be not to close the transactions described
herein if such breach results in the nonsatisfaction of a
condition set forth in Section 6 hereof; provided, however, that
the foregoing shall not be deemed to be a waiver of any claim for
an intentional breach of a representation, warranty or covenant
or for fraud except if such breach was required by law or by any
bank or bank holding company regulatory authority, it being
understood that a disclosure in any closing certificate provided
in accordance with Sections 6.02(a) or 6.03(a) hereof concerning
an inaccuracy of a representation or warranty shall not of itself
be deemed to be an intentional breach of such representation or
warranty.
9.12 Cross-References. Any disclosure made in any exhibit
or schedule to this Agreement shall be considered a disclosure
made for all purposes under this Agreement.
[ALL SIGNATURE PAGES HAVE BEEN INTENTIONALLY OMITTED.]
<PAGE>
EXHIBIT A
AGREEMENT OF MERGER
OF
CITY BANK & TRUST COMPANY, NEW IBERIA, LOUISIANA
INTO
FIRST NATIONAL BANK OF LAFAYETTE
This Agreement of Merger (this "Agreement") is made and
entered into as of this ______ day of ________, 1994, between
City Bank & Trust Company, New Iberia, Louisiana, a Louisiana
state bank domiciled at New Iberia, Louisiana ("Bank"), and First
National Bank of Lafayette, a national banking association
domiciled at Lafayette, Louisiana ("FNBL" or the "Receiving
Association").
WHEREAS, the respective Boards of Directors of Bank and FNBL
(collectively called the "Merging Associations") deem it
advisable that Bank be merged with and into FNBL (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 FNBL is a wholly-owned subsidiary,
and City Bancorp, Inc., a Louisiana corporation ("Holding") 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 FNBL under
the Articles of Association of FNBL, as amended, existing Charter
No. 5023, 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, FNBL, the Receiving Association, shall
continue to be a national banking association, and its business
shall continue to be conducted at its main office in Lafayette,
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 FNBL shall not be altered or
amended by virtue of the Bank Merger, and the incumbency of the
directors and officers of FNBL 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. FNBL shall 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 shall become effective at the time (the "Effective Time")
specified in the Certificate of Merger 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 FNBL, 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 FNBL shall be issued as a result of the Bank
Merger. Therefore, at the Effective Time, the amount of capital
stock of FNBL, the Receiving Association, shall be $4,000,000,
divided into 100,000 shares of common stock, par value $10 per
share and 30,000 shares of preferred stock par value $100 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 FNBL,
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
chooses 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.
[ALL SIGNATURE PAGES HAVE BEEN INTENTIONALLY OMITTED.]
<PAGE>
EXHIBIT B
JOINT AGREEMENT OF MERGER
OF
CITY BANCORP
WITH AND INTO
FIRST COMMERCE CORPORATION
This Joint Agreement of Merger (this "Joint Agreement") is
dated as of the ______ day of ________, 1994, between City
Bancorp, Inc., a Louisiana corporation ("Holding"), and First
Commerce Corporation, a Louisiana corporation ("FCC"); and is
entered into pursuant to the provisions of Sections 111 et seq.
of the Louisiana Business Corporation Law ("LBCL").
WHEREAS, the respective Boards of Directors of Holding and
FCC (collectively, the "Merging Corporations") deem it advisable
that Holding be merged with and into FCC (the "Merger"), as
provided in this Joint Agreement and in the Agreement and Plan of
Merger dated ________, 1994 (the "Plan"), among First National
Bank of Lafayette (which is a wholly-owned subsidiary of FCC),
City Bank & Trust Company, New Iberia, Louisiana ("Bank") (which
is a wholly-owned subsidiary of Holding), Holding and FCC, 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 Holding for approval in the manner
required by law (approval by the shareholders of FCC not being
required by virtue of Section 112E of the LBCL) 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:
1. THE MERGER
In accordance with the applicable provisions of the LBCL,
Holding shall be merged with and into FCC; the separate existence
of Holding shall cease; and FCC shall be the corporation
surviving the Merger.
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 Holding shall cease and Holding shall be
merged with and into FCC; (ii) FCC 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 Holding; (iii) FCC
shall be responsible for all of the liabilities and obligations
of Holding in the same manner as if FCC 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 FCC; (v) the Merger will not of
itself affect the tenure in office of any officer or director of
FCC 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, FCC 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 FCC, title to or the possession of any property or
right of Holding 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, Holding and its proper officers and
directors shall be deemed to have granted to FCC 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 FCC and otherwise to carry out the
purposes of this Joint Agreement; and the proper officers and
directors of FCC are fully authorized in the name of Holding to
take any and all such action.
3. METHOD OF CARRYING MERGER INTO EFFECT
This Joint Agreement shall be submitted to the shareholders
of Holding for their approval. If such approval is given, then
the fact of such approval shall be certified hereon by the
Secretary of Holding. Approval of this Joint Agreement by the
shareholders of FCC is not required by virtue of Section 112E of
the LBCL, and that fact shall be certified hereon by the
Secretary of FCC. 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 Holding has immovable
property.
4. CONVERSION OF SHARES
4.1 Conversion of Holding Shares. (a) On the Effective
Date, by reason of the Merger, each issued and outstanding share
of the common stock, par value $5.00 per share, of Holding
("Holding Common Stock") shall be converted into that number of
shares of common stock, $5.00 par value per share, of FCC ("FCC
Common Stock") equal to (i) $13,500,000, less the Deductible
Amount, as defined below, divided by the average of the closing
sales prices of a share of FCC Common Stock on the NASDAQ Stock
Market for the five trading days ending on the last trading day
immediately prior to the closing date for the Merger; provided,
that if the market value of a share of FCC Common Stock as so
determined is less than $24, then the divisor shall be 24, and if
such market value is greater than $30, then the divisor shall be
30, divided by (ii) the number of outstanding shares of Holding
Common Stock on the date of consummation of the Merger; provided
that the formula set forth above shall be adjusted to take into
account any change in the number of shares of FCC Common Stock
outstanding as a result of a stock split or stock dividend. All
treasury shares of Holding shall be cancelled. Holders of shares
of Holding Common Stock as to which dissenters' rights have been
perfected and not withdrawn or otherwise forfeited under Section
131 of the LBCL shall not receive the shares of FCC Common Stock
into which such stock has been converted in accordance with the
formula set forth above, but shall have such rights as are
provided to them by Section 131 of the LBCL.
(b) The term "Deductible Amount" means the legal,
accounting, investment banking (including fees and expenses
related to obtaining a fairness opinion), printing and filing
fees and expenses of Holding and Bank incurred in connection with
or related to the transactions contemplated by this Agreement and
the Plan in excess of $150,000.
4.2 Fractional Shares. In lieu of the issuance of any
fractional share of FCC Common Stock to which a holder of Holding
Common Stock may be entitled (after aggregation of all fractional
shares to which such holder is entitled), each shareholder of
Holding, upon surrender of the certificate or certificates which
immediately prior to the Effective Time represented Holding
Common Stock held by such shareholder, shall be entitled to
receive a cash payment (without interest) equal to such
fractional share multiplied by the fair market value of a share
of FCC Common Stock as determined in accordance with Section
4.1(i)(B).
4.3 Exchange of Certificates. After the Effective Time,
each holder of an outstanding certificate or certificates
theretofore representing shares of Holding Common Stock (other
than shares as to which dissenters' rights have been perfected
and not withdrawn or otherwise forfeited under Section 131 of the
LBCL), upon surrender thereof to FCC, 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 the FCC Common
Stock, to represent the number of whole shares of FCC Common
Stock into which the shares of Holding Common Stock theretofore
represented thereby shall have been converted. FCC may, at its
option, refuse to pay any dividend or other distribution, if any,
payable to the holders of shares of FCC Common Stock to the
holders of unsurrendered certificates evidencing Holding 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 FCC Common Stock into which the shares of Holding
Common Stock theretofore represented thereby shall have been
converted and which have not previously been paid, unless such
dividend shall have reverted to FCC in full ownership pursuant to
its Articles of Incorporation. Whether or not a stock
certificate representing Holding 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 Holding or any other person, firm or
corporation (other than FCC).
4.4 Shares of FCC. The shares of capital stock of FCC
outstanding immediately prior to the Effective Time shall not be
changed or converted by virtue of the Merger.
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 hereof 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.
[ALL SIGNATURE PAGES HAVE BEEN INTENTIONALLY OMITTED.]
<PAGE>
APPENDIX B
CHAFFE & ASSOCIATES, INC.
FAIRNESS OPINION
<PAGE>
DRAFT - SUBJECT TO REVISION
PROXY STATEMENT OPINION
________ , 1994
The Board of Directors
City Bancorp, Inc.
712 Center Street
New Iberia, LA 70560-5504
Gentlemen:
You have requested our opinion as to the fairness, from a
financial point of view, to City Bancorp, Inc. ("Bancorp") and
its shareholders, of the proposed acquisition of its common
stock, $5.00 par value per share (the "Common Stock" or
"Shares"), by First Commerce Corporation ("FCC"). The terms of
the transaction contemplated are set forth in a Agreement and
Plan of Merger dated August 12, 1994 and two related merger
agreements (collectively, the "Plan"); and provide that Bancorp
will merge into FCC, and City Bank & Trust Company, Bancorp's
wholly-owned subsidiary, will merge into The First National Bank
of Lafayette, FCC's wholly-owned subsidiary. Under the terms of
the Plan, on the date the holding company merger becomes
effective, the shareholders of Bancorp will become shareholders
of FCC, as follows:
Each issued and outstanding share of the common stock, par
value $5.00 per share, of Bancorp ("Bancorp Common Stock"),
except for the shares as to which dissenters' rights of
appraisal have been perfected and not withdrawn or forfeited
in accordance with applicable law, shall be converted into a
number of shares of the common stock, $5.00 par value per
share, of FCC ("FCC Common Stock") equal to the quotient of
(a) (i) $13,500,000, less the Deductible Amount, as defined
below, divided by (ii) the "Average Sale Price", as defined
below, of a share of FCC Common Stock (the "Exchange
Ratio"); provided, that if the Average Sales Price is less
than $24, then the divisor shall be $24, and if the Average
Sales Price is greater than $30, then the divisor shall be
$30, divided by (b) the number of outstanding shares of
Bancorp Common Stock on the date of consummation of the
merger. The term, "Deductible Amount", is defined in the
Plan as the legal, accounting, investment banking, printing
and filing fees and expenses of Bancorp incurred in
connection with the transaction contemplated by the Plan
in excess of $150,000. The term, "Average Sales Price", is
defined in the Plan as the average of the closing sales
price of a share of FCC Common Stock reported on the
National Association of Securities Dealers Automated
Quotation System for securities listed for trading on the
NASDAQ National Market for the five trading days ending on
the last trading day immediately prior to the closing date
for the merger. In lieu of the issuance of any fractional
share of FCC Common Stock to which a Bancorp Shareholder
shall be entitled, each such Bancorp Shareholder shall be
entitled to receive a cash payment (without interest) equal
to such fractional share multiplied by the Average Sales
Price.
Chaffe & Associates, Inc. ("Chaffe"), through its experience in
the securities industry, investment analysis and appraisal, and
in related corporate finance and investment banking activities,
including mergers and acquisitions, corporate recapitalization,
and valuations for estate, corporate and other purposes, states
that it is competent to provide an opinion as to the fairness of
the transaction contemplated herein. Neither Chaffe nor any of
its officers or employees has an interest in the common stocks of
Bancorp or FCC. During the past year, Chaffe has provided
financial advisory services to Bancorp, including assistance in
negotiating the proposed transaction ("Advisory Services"). The
fee received for the preparation of this report is not, and fees
received for Advisory Services were not, dependent or contingent
upon any transaction.
In connection with this opinion, we have reviewed materials
bearing upon the transaction and upon the financial and operating
condition of Bancorp and City Bank and Trust Company (the
"Bank"), including, among other information: a) the Plan; b)
Bancorp's audited financial statements with examination and
opinion by Broussard, Poche, Lewis & Breaux, Inc., Certified
Public Accountants, for the years 1988 through 1991; c)
Bancorp's audited financial statements with examination and
opinion by Castaing, Hussy & Lolan, Certified Public Accountants,
for the years 1992 and 1993; d) Bancorp's Federal Reserve
Forms FR-Y6 dated December 31, 1992 and 1993, and Form FRY9-SP
dated June 30, 1994; e) Bancorp's Income Tax Return for the
years 1992 and 1993 prepared by Castaing, Hussy & Lolan,
Certified Public Accountants; f) Bank CALL Reports for each
quarter ended December 31, 1992 through June 30, 1994; g)
Bank's Uniform Bank Performance Report dated December 31, 1993;
h) Bank's 1994 Profit Plan, with actual performance through
August 1994; i) Bank's Five-Year Plan through 1998, dated
December 31, 1993, prepared with the assistance of National
Consulting Corporation; j) Articles of Incorporation and By-
Laws of both Bancorp and Bank; and k) various Bancorp and Bank
reports, unaudited financial statements, information, documents
and regulatory correspondence;
In addition, we have reviewed materials bearing upon the
financial and operating condition of FCC, including: a) FCC's
audited financial statements for the years 1988 through 1993; b)
FCC's Proxy Statements for Annual Shareholders Meetings held in
1990 through 1994; c) FCC's Annual Reports on Form 10-K for the
years 1989 through 1993 and quarterly reports on Form 10-Q for
the quarters ended
March 31, June 30 and September 30, 1993, and March 31 and June
30, 1994; d) FCC's Registration Statements on Form S-4 dated
August 8, 1994; Form S-4 dated August 5, 1994, and Form S-4 dated
September 9, 1993; and Form 8-A dated August 12, 1993; and FCC's
Schedule 13G dated April 8, 1994, and Schedule 13G dated February
10, 1994, e) FCC's Registration Statement on Form S-4 dated
_______, related to this proposed transaction, of which Bancorp's
Proxy Statement /FCC's Prospectus, to be dated October 3, 1994,
is a part; f) various FCC information and correspondence. We
have also reviewed statistical and financial information derived
from various statistical services for Bancorp, FCC, and
comparable companies, as well as certain publicly-available
information and analysis relating to them.
We have reviewed certain historical market information for the
common stock of Bancorp and note that no independent market
exists for the shares. We note that, at present, Bancorp has
authorized 10,000,000 shares, of which 100,000 shares are issued
and outstanding and no shares are held in its treasury. In
addition, we have reviewed certain historical market information
for the common stock of FCC. We note that at June 30, 1994, FCC
had authorized 100 million shares of FCC common stock, of which
at such date 26,144,036 shares were issued and outstanding, and
no shares were held as treasury stock. In addition, FCC had
authorized 5,000,000 shares of preferred stock , no par value,
authorized of which 2,399,170 shares were issued and outstanding
and no shares were held in its treasury.
We have analyzed the historical performance of Bancorp and FCC
and have considered the current financial condition, operations
and prospects for both companies. We have held discussions with
the management of both companies about these matters. We
analyzed information and data provided by the management of
Bancorp concerning the loans, other real estate, securities
portfolio, fixed assets and operations, although we did not
perform an independent review of Bancorp's assets or liabilities.
We have relied solely on Bancorp and FCC for information as to
the adequacy of the loan loss reserve and the value of other real
estate held.
Also, we compared certain financial and stock market data for
peer groups of bank holding companies whose securities are
publicly traded; reviewed the financial terms of business
combinations in the commercial banking industry specifically and
other industries generally; considered a number of valuation
methodologies, including among others, those that incorporate
book value, deposit base premium and capitalization of earnings;
and performed such other studies and analyses as we deemed
appropriate to this analysis. This opinion is necessarily based
upon market, economic and other conditions as they exist on, and
can be evaluated as of, the date of this letter.
In our review, we have relied, without independent verification,
upon the accuracy and completeness of the historical and
projected financial information and other information reviewed by
us for purposes of this opinion. We express no opinion on the
tax consequences of the proposed transaction or the effect of any
tax consequences on the value received by the holders of Bancorp
Common Stock.
Based upon and subject to the foregoing and based upon such other
matters as we considered relevant, it is our opinion that the
proposed Exchange Ratio is fair to City Bancorp, Inc., and its
shareholders, from a financial point of view.
Very truly yours,
CHAFFE & ASSOCIATES, INC.
<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.
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 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 August 12,
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 Arthur Andersen LLP as to
certain tax matters.
15 Letter of Arthur Andersen LLP regarding
unaudited interim financial information.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Castaing, Hussey & Lolan.
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 City Bancorp, Inc.
_________________
(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.
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
30th day of September, 1994.
FIRST COMMERCE CORPORATION
By: /s/ DAVID B. KELSO
David B. Kelso
Executive Vice President and
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 September 23, 1994
Ian Arnof Executive Officer
and Director
/s/ HERMANN MOYSE, JR. Chairman of the September 23, 1994
Hermann Moyse, Jr. Board
/s/ DAVID B. KELSO Executive Vice September 23, 1994
David B. Kelso President and Chief
Financial Officer
/s/ THOMAS L. CALICUTT, JR. Senior Vice President September 23, 1994
Thomas L. Callicutt, Jr. and Controller
(Principal Accounting
Officer)
Director , 1994
James J. Bailey III
/s/ JOHN W. BARTON Director September 23, 1994
John W. Barton
Director , 1994
Sydney J. Bestoff III
/s/ ROBERT H. BOLTON Director September 23, 1994
Robert H. Bolton
/s/ FRANCES B. DAVIS Director September 23, 1994
Frances B. Davis
/s/ LAURANCE EUSTIS, JR. Director September 23, 1994
Laurance Eustis, Jr.
/s/ WILLIAM P. FULLER Director September 23, 1994
William P. Fuller
/s/ ARTHUR HOLLINS III Director September 23, 1994
Arthur Hollins III
/s/ F. BEN JAMES, JR. Director September 23, 1994
F. Ben James, Jr.
/s/ ERIK F. JOHNSEN Director September 23, 1994
Erik F. Johnsen
/s/ JOSEPH MERRICK JONES, JR. Director September 23, 1994
Joseph Merrick Jones, Jr.
Director , 1994
Edwin Lupberger
/s/ O. MILES POLLARD, JR. Director September 23, 1994
O. Miles Pollard, Jr.
/s/ G. FRANK PURVIS, JR. Director September 23, 1994
G. Frank Purvis, Jr.
/s/ EDWARD M. SIMMONS Director September 23, 1994
Edward M. Simmons
/s/ H. LEIGHTON STEWARD Director September 23, 1994
H. Leighton Steward
/s/ JOSEPH B. STOREY Director September 23, 1994
Joseph B. Storey
/s/ ROBERT A. WEIGLE Director September 23, 1994
Robert A. Weigle
<PAGE>
EXHIBIT INDEX
Sequentially
Numbered
Exhibits Pages
2 Agreement and Plan of Merger dated August
12, 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 Arthur Andersen LLP,
independent public accountants as to
certain tax matters.
15 Letter of Arthur Andersen LLP regarding
unaudited interim financial information.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Castaing, Hussey & Lolan.
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 City Bancorp, Inc.
_________________
EXHIBIT 5
[CORRERO, FISHMAN & CASTEIX, L.L.P. LETTERHEAD]
September 30, 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 562,500 shares of common stock (the
"Common Stock"), of the Company (the "Shares") which the Company
proposes to issue to shareholders of City Bancorp, 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 admit that we
are "experts" within the meaning of the Securities Act of 1933.
Yours sincerely,
Anthony J. Correro, III
EXHIBIT 8
___________, 1994
D R A F T
BY HAND
Mr. Leon K. Poche, Jr.
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Dear Mr. Poche:
This opinion is being furnished to you in connection with the
proposed acquisition of City Bancorp, Inc. ("Holding") and its
wholly owned banking subsidiary, City Bank & Trust Company
("Bank"), by First Commerce Corporation ("FCC"), which is
expected to be completed on ___________, 1994 ("the Effective
Date"). You have requested our opinion concerning the
following:
. Whether the merger of Holding into FCC will qualify as a
reorganization under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended ("the Code").
. That the exchange of Holding common stock to the extent
exchanged for FCC common stock will not give rise to gain
or loss for federal income tax purposes to the holders of
Holding common stock with respect to such exchange.
. Whether the merger of Bank into First National Bank of
Lafayette ("FNBL"), a wholly-owned banking subsidiary of
FCC, will qualify as a reorganization under Section
368(a)(1)(A) of the Code.
You have asked for our opinion on the federal income tax
consequences to FCC, Holding, Bank, FNBL and the stockholders of
Holding. We have not considered any nonincome tax, state, local
or foreign income tax consequences, and, therefore, do not
express any opinion regarding the treatment that would be given
the merger by the applicable authorities on any nonincome tax or
any state, local or foreign tax issues. We also express no
opinion on nontax issues, such as corporate law or securities
law matters, including, but not limited to, all securities law
disclosure requirements.
In rendering our opinion, we have relied upon the accuracy and
completeness of the facts and information as contained in the
Agreement and Plan of Merger dated ___________, 1994 ("the
Agreement"), including all exhibits attached thereto, and the
representations included below. To the extent there are any
changes to the Agreement or representations, our opinion may be
affected accordingly.
The discussion and conclusions set forth below are based upon
the Code, the Treasury Regulations, and existing administrative
and judicial interpretations thereof as of the Effective Date,
all of which are subject to change. All section references are
to the Internal Revenue Code of 1986, as amended, unless
otherwise stated. If there is a change in the Code, the
Treasury Regulations or public rulings thereunder, the current
Internal Revenue Service rulings or releases, or in the
prevailing judicial interpretation of the foregoing, the opinion
expressed herein would necessarily have to be re-evaluated in
light of any such changes. We have no responsibility to update
this opinion for events, transactions, changes in the above-
listed law and authority or circumstances occurring after the
Effective Date.
This opinion is solely for the benefit of Holding and FCC and is
not intended to be relied upon by anyone other than Holding and
FCC. Although you do hereby have our express consent to inform
Bank, FNBL, and Holding common stockholders of our opinion by
including copies of this letter as an exhibit to the Agreement
and as an exhibit in the Registration Statement on Form S-4 for
the proposed transactions, we assume no responsibility for tax
consequences to them. Instead, each of these parties must
consult and rely upon the advice of his/her counsel, accountant
or other advisor. Except to the extent expressly permitted
hereby, and without the prior written consent of this firm, this
letter may not be quoted in whole or in part or otherwise
referred to in any documents or delivered to any other person or
entity.
Proposed Transaction
Our understanding of the proposed transactions, as described in
the Agreement, is as follows:
A. Bank will be merged with and into FNBL pursuant to Federal
law (12 U.S.C. Section 215a). No additional shares of
FNBL or FCC will be issued as a result of this
transaction.
B. The common stockholders of Holding will receive shares of
FCC common stock proportionate in value, based on the
terms contained in Section 4 of Exhibit B of the
Agreement. In lieu of issuing fractional shares of FCC
common stock as a result of the merger, common
stockholders of Holding will be entitled to receive a cash
payment equal to such fractional share multiplied by the
designated value of a share of FCC common stock.
C. Simultaneous with the merger of Bank into FNBL, and as
part of the same overall transaction, Holding will be
merged with and into FCC under the Articles of
Incorporation of FCC, pursuant to Louisiana Business
Corporation Law.
Unless stockholders of Holding common stock holding at least
eighty (80) percent of the voting rights of Holding approve the
plan of reorganization, objecting stockholders of Holding may
dissent from the merger involving Holding and FCC, and instead
receive cash in exchange for their shares of Holding common
stock, based on the fair market value of such stock determined
under Section 131 of the Louisiana Business Corporation Law (La.
R.S. Section 12:131).
Additional Representations
In addition to the representations included in the Agreement,
the following representations have been made to us by
representatives of FCC, FNBL, Holding, and Bank:
a) FCC and the stockholders of Holding will pay their
respective expenses, if any, incurred in connection with
the successful consummation of the transaction.
b) There is no intercorporate indebtedness existing between
Holding and FCC, or between FNBL and Bank, that was
issued, acquired, or will be settled at a discount.
c) The fair market value of the assets of Holding transferred
to FCC will equal or exceed the sum of the liabilities
assumed by FCC plus the amount of liabilities, if any, to
which the transferred assets are subject.
d) The fair market value of the assets of Bank transferred to
FNBL will equal or exceed the sum of the liabilities
assumed by FNBL plus the amount of liabilities, if any, to
which the transferred assets are subject.
e) None of the compensation received by any stockholder-
employees of Holding or Bank will be separate
consideration for, or allocable to, any of their shares of
Holding common stock; none of the shares of FCC common
stock received by any stockholder-employees will be
separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any
stockholder-employees will be for services actually
rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar
services.
f) Holding will be merged with and into FCC under the
Articles of Incorporation of FCC, pursuant to Louisiana
Business Corporation Law.
g) Bank will be merged with and into FNBL pursuant to Federal
law (12 U.S.C. Section 215a).
h) The Holding common stockholders will have unrestricted
rights of ownership of FCC common stock received in the
transaction, and their ability to retain the FCC common
stock received in the transaction will not be limited in
any way.
i) The ratio for the exchange of shares of Holding common
stock for FCC common stock in the transaction was
negotiated through arm's length bargaining. Accordingly,
the fair market value of the FCC common stock to be
received by Holding common stockholders in the transaction
will be approximately equal to the fair market value of
the Holding common stock surrendered by such stockholders
in exchange therefor.
The following representations have been made to us by
representatives of FCC and FNBL:
a) FCC has no plan or intention to re-acquire any of its
stock issued in the transaction.
b) FCC and FNBL have no plan or intention to sell or
otherwise dispose of the stock of Bank or any of the
assets of Holding or Bank acquired in the transactions,
except for dispositions made in the ordinary course of
business or transfers described in Section 368(a)(2)(C) of
the Code.
c) Following the transactions, FCC and FNBL will continue the
historic businesses of Holding and Bank, respectively, or
use a significant portion of these historic business
assets in the operation of a trade or business.
d) The payment of cash in lieu of fractional shares of FCC
common stock is solely for the purpose of avoiding the
expense and inconvenience to FCC of issuing fractional
shares and does not represent separately bargained-for
consideration. The total cash consideration that will be
paid in the transaction to the Holding stockholders
instead of issuing fractional shares of FCC common stock
will not exceed (1) one percent of the total consideration
that will be issued in the transaction to the Holding
stockholders in exchange for their shares of Holding
common stock. The fractional share interests of each
Holding stockholder will be aggregated, and no Holding
stockholder will receive cash for such fractional share
interests in an amount equal to or greater than the value
of one full share of FCC common stock.
e) The assumption by FCC of the liabilities of Holding, and
FNBL of the liabilities of Bank, pursuant to the
transactions are for bona fide business purposes and the
principal purpose of such assumptions is not the avoidance
of federal income tax on the transfer of assets of Holding
to FCC, or FNBL to Bank, respectively, pursuant to the
transactions.
f) FCC and FNBL are not investment companies as defined in
Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
g) The proposed transaction is being undertaken for reasons
germane to the continuance of the business of FCC and
FNBL.
The following representations have been made to us by
representatives of Holding and Bank:
a) There is no plan or intention by the Holding common
stockholders who own one percent or more of the stock, and
to the best of the knowledge of the management of Holding,
there is no plan or intention on the part of the remaining
common stockholders to sell, exchange, or otherwise
dispose of a number of shares of FCC common stock received
in the transaction that would reduce the stockholders'
ownership of FCC common stock to a number of shares having
a value, as of the Effective Date, of less than (50) fifty
percent of the value of all the formerly outstanding
common stock of Holding as of the same date. For purposes
of this representation, shares of Holding common stock
exchanged for cash in lieu of fractional shares of FCC
stock will be treated as outstanding Holding common stock
on the Effective Date. Moreover, shares of Holding common
stock and shares of FCC common stock held by Holding
stockholders and otherwise sold, redeemed, or disposed of
prior to the transaction, in contemplation thereof, or
subsequent to the transaction will be considered in making
this representation.
b) The liabilities of Holding and Bank assumed by FCC and
FNBL, respectively, and the liabilities to which the
transferred assets of Holding and Bank are subject were
incurred by Holding and Bank in the ordinary course of
business.
c) Holding and Bank are not investment companies as defined
in Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
d) The proposed transaction is being undertaken for reasons
germane to the continuance of the business of Holding and
Bank.
Analysis of Applicable Federal Tax Provisions
Section 354(a)(1) addresses the effects of corporate
reorganizations on shareholders, providing in general that no
gain or loss shall be recognized if stock or securities in a
corporation a party to a reorganization are, in pursuance of the
plan of reorganization, exchanged solely for stock or securities
in such corporation or in another corporation, a party to the
reorganization.
For purposes of Code Section 354, the terms "reorganization" and
"party to a reorganization" mean only a reorganization or a
party to a reorganization as defined in Sections 368(a)
and 368(b). Section 368(a)(1)(A) states that the term
reorganization includes a statutory merger or consolidation.
Reg. Section 1.368-2(b)(1) states that in order for a
transaction to qualify as a reorganization under Section
368(a)(1)(A), the transaction must be a merger or consolidation
effected pursuant to the corporation laws of the United States
or State or Territory or the District of Columbia. Under
Section 368(b), the term party to a reorganization includes both
corporations in the case of a reorganization resulting from the
acquisition by one corporation of stock or properties of
another.
The regulations under Section 368 require as a part of a
reorganization a continuity of the business enterprise under the
modified corporate form, a bona fide business purpose for the
reorganization, and a continuity of interest therein on the
part of those persons who, directly or indirectly, were owners
of the enterprise prior to the reorganization.
Reg. Section 1.368-1(d)(2) states that the continuity of
business enterprise requirement is met if the acquiring
corporation either continues the acquired corporation's historic
business or uses a significant portion of the acquired
corporation's business assets in the operation of a trade or
business. Based on the representations set forth above, the
continuity of business enterprise requirement is met with
respect to the assets and business operations of Bank.
Reg. Section 1.368-2(g) indicates that in addition to coming
within the scope of the specific language of Sec. 368(a), a
reorganization must also be "undertaken for reasons germane to
the continuance of the business of a corporation a party to the
reorganization." If the transaction or series of transactions
has no business or corporate purpose, then the plan is not a
reorganization pursuant to Section 368(a). [Reg. Section 1.368-
1(c).]
The continuity of interest requirement does not require that all
shareholders of the acquired corporation have a proprietary
interest in the surviving corporation after the acquisition; it
is not even necessary for a substantial percentage of such
shareholders to have such an interest. Rather, the IRS
announced in Rev. Proc. 77-37 that it would rule that the
continuity of interest requirement is met so long as one or more
of the acquired corporation's shareholders retain a sufficient
proprietary interest in the continuing corporation.
In addition to meeting the continuity of interest requirement
immediately after the reorganization, the former shareholders of
the acquired corporation must retain their interest in the
acquiring corporation for some time after the reorganization.
The courts have ruled that the tax-free nature of the
reorganization may be retroactively invalidated if the
continuity of interest is not maintained either because, at the
time of the reorganization, the shareholders intended to dispose
of the proprietary interest soon after the reorganization
(Christian Est. v. Comr., T.C. Memo 1989-413) or because a
shareholder disposes of stock immediately following the
reorganization in accordance with a pre-existing commitment to
sell (American Wire Fabrics Corp. v. Comr., 16 TC 607). The
courts have generally looked to the intent of the shareholders
at the time of the reorganization to dispose of their interests
in determining whether the continuity of interest requirement is
subsequently violated.
The Internal Revenue Service has ruled that the continuity of
interest requirement was met in situations similar to the
proposed transactions (PLR 8839036, PLR 8903054, PLR 9319017 and
PLR 9325026). It should be noted, however, that a private
letter ruling (PLR) is directed only to the taxpayer who
requested it. Section 6110(j)(3) provides that it may not be
used or cited as precedent. On the other hand, a PLR does
represent an indication of how the IRS may view the tax
consequences of a taxpayer with similar facts and circumstances.
In these rulings, a corporation and its wholly-owned subsidiary
were simultaneously merged into the acquiring parent and its
wholly-owned subsidiary, respectively, as part of the same
overall transaction.
Section 356(a)(1) provides that if Section 354 would apply to an
exchange but for the fact that the property received in the
exchange consists not only of property permitted to be received
under Section 354 without the recognition of gain but also of
other property or money then the gain, if any, to the recipient
shall be recognized but not in excess of the sum of money and
the fair market value of the property received.
Section 356(c) states that no loss from the exchange may be
recognized by the shareholder.
In other official pronouncements, the Internal Revenue Service
has treated the distribution of cash distributed as part of a
reorganization and in a transaction subject to Section 356
considerations by applying the redemption principles under
Section 302. Section 302 provides, in part, that a redemption
will be treated as a distribution in part or full payment in
exchange for stock if it can meet the tests of that section.
In Rev. Rul. 66-365, the IRS announced that in a transaction
qualifying as a reorganization under Section 368(a)(1)(A) of the
Code where a cash payment is made by the acquiring corporation
in lieu of fractional shares and is not separately bargained
for, such cash payment will be treated under Section 302 of the
Code as in redemption of fractional share interests. Therefore,
each shareholder's redemption will be treated as a distribution
in full payment in exchange for his or her fractional share
interest under Section 302(a) of the Code and accorded capital
gain or loss treatment provided the redemption is not
essentially equivalent to a dividend and that the fractional
shares redeemed constitute a capital asset in the hands of the
holder as discussed below. In Rev. Proc. 77-41, the IRS stated
that "a ruling will usually be issued under Section 302(a) of
the Code that cash to be distributed to shareholders in lieu of
fractional share interests arising in corporate
reorganizations...will be treated as having been received in
part or in full payment in exchange for the stock redeemed if
the cash distribution is undertaken solely for the purpose of
saving the corporation the expense and inconvenience of issuing
and transferring fractional shares, and is not separately
bargained-for consideration."
Under Section 302, where there is a complete redemption of all
of a shareholder's stock in a corporation (after consideration
of the constructive ownership rules of Section 302(c)), the
redemption payment is treated as made entirely in exchange for
the shareholder's stock in the corporation (Section 302(b)(3)).
Under Section 358(a)(1), in the case of an exchange to which
Section 354 or Section 356 applies, the basis of property which
is permitted to be received under such section without the
recognition of gain or loss shall be the same as that of the
property exchanged, decreased by the amount of any money
received by the recipient and the amount of loss recognized by
the recipient as a result of the exchange and increased by the
amount which was treated as a dividend and the amount of other
gain recognized by the recipient as a result of the transaction.
It should be noted that where cash is received in lieu of
fractional shares, the substance of the transaction is that of a
hypothetical receipt of the fractional shares and then a
redemption of such shares. Therefore, the basis that is to be
allocated to the stock of the acquiring corporation received
must be allocated to the shares retained and the fractional
shares hypothetically received. The gain or loss attributable
to the receipt of cash in lieu of fractional shares is measured
by comparing the cash received with the basis allocated to the
fractional shares that are hypothetically received, and such
gain or loss is recognized as discussed earlier pursuant to Rev.
Rul. 66-365.
Code Section 361(a) states that, as a general rule, no gain or
loss is to be recognized by a corporation if such corporation is
a party to a reorganization and exchanges property, in pursuance
of the plan of reorganization, solely for stock or securities in
another corporation a party to the reorganization.
Section 361(b) states that if Section 361(a) would apply to an
exchange but for the fact that the property received in exchange
consists not only of stock or securities afforded nonrecognition
treatment under Section 361(a), but also of other property or
money, then provided the corporation receiving such other
property or money distributes it in pursuance to the plan of
reorganization, no gain to the corporation shall be recognized
from the exchange. Section 361(a) states that as a general rule
no gain or loss shall be recognized to a corporation a party to
a reorganization on the distribution to its shareholders of any
stock in another corporation which is a party to the
reorganization if such stock was received by the distributing
corporation in the exchange.
Section 1032(a) states that no gain or loss shall be recognized
to a corporation on the receipt of money or other property in
exchange for such corporation's stock, including treasury stock.
Code Section 362(b) states that the basis of property received
by the acquiring corporation in a reorganization is the same as
it would be in the hands of the transferor of the assets,
increased by any gain recognized by the transferor. The
transferor for purposes of the preceding sentence in the instant
case is Holding.
Section 1221 defines a capital asset as property held by the
taxpayer which is not inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of a trade or business, property used in the taxpayer's trade or
business subject to the allowance for depreciation under Section
167, a copyright, literary, musical or artistic composition, a
letter or memorandum, or similar property created by the
personal efforts of the taxpayer, accounts or notes receivable
acquired in the ordinary course of a trade or business for
services rendered or from the sale of inventory or other
property held by the taxpayer primarily for sale to customers in
the ordinary course of business, or a publication of the United
States Government which is received from the United States
Government or any agency thereof other than by purchase at the
price at which it is offered for sale to the public.
Section 1223(1) states that in determining the period for which
a taxpayer has held property received in an exchange, there
shall be included the period for which he or she held the
property exchanged if the property has, for the purpose of
determining gain or loss from a sale or exchange, the same basis
as the property exchanged and the property exchanged was a
capital asset as defined in Section 1221 as of the date of the
exchange.
Section 1223(2) states that for determining the period for which
the taxpayer has held property however acquired there shall be
included the period for which such property was held by another
person if the property has the same basis in whole or in part in
his hands as it would have had in the hands of such other
person.
Subchapter P of Chapter 1 of the Code provides limitations on
the recognition of capital gains and losses including, but not
limited to, the allowance of capital losses to the extent of
capital gains with respect to corporate taxpayers and the
allowance of up to $3,000 of net capital losses with respect to
taxpayers other than corporate taxpayers.
Opinion
Based upon all of the foregoing, including representations of
the management of FCC and the management and Board of Directors
of Holding, it is our opinion that:
a) The merger of Holding with and into FCC, as described
above, will constitute a reorganization under Section 368
of the Code (Section 368(a)(1)(A)).
b) Holding and FCC will each be "a party to a reorganization"
(Section 368(b)).
c) No gain or loss will be recognized by the common
stockholders of Holding on the receipt of FCC common stock
in exchange for surrendered Holding common stock pursuant
to the plan of reorganization (Section 354(a)(1)).
d) The tax basis of the FCC common stock received by Holding
common stockholders will be the same as the basis of the
Holding common stock surrendered in exchange therefor,
decreased by the amount of basis allocated to the
fractional shares that are hypothetically received by the
stockholder and redeemed for cash, and increased by any
gain recognized on the exchange (not including any gain
recognized for the receipt of cash in lieu of fractional
shares) (Section 358(a)(1)).
e) The holding period of the FCC common stock received by the
Holding common stockholders will include the period during
which the Holding common stock surrendered in exchange
therefor was held, provided that the Holding common stock
is held as a capital asset in the hands of the Holding
stockholders on the Effective Date (Section 1223(1)).
f) The payment of cash in lieu of fractional share interests
of FCC common stock will be treated as if each fractional
share was distributed as part of the exchange and then
redeemed by FCC. Pursuant to Section 302(a) of the Code,
these cash payments will be treated as having been
received as distributions in full payment in exchange for
the FCC common stock. Any gain or loss recognized upon
such exchange (as determined under Section 1001 and
subject to the limitations of Section 267) will be capital
gain or loss provided the fractional share would
constitute a capital asset in the hands of the exchanging
stockholder (Rev. Rul. 66-365 and Rev. Proc. 77-41).
g) Each shareholder of Holding who elects to dissent from the
merger transaction involving Holding and FCC under the
provisions of Louisiana R.S. 12:131, and receives cash in
exchange for their shares of Holding common stock, will be
treated as receiving such payment in complete redemption
of their shares of Holding, provided such shareholder does
not actually or constructively own any Holding common
stock after the exchange under the provisions and
limitations of Section 302.
h) No gain or loss will be recognized by Holding on the
transfer of all of its assets to FCC solely in exchange
for FCC common stock and cash in lieu of fractional shares
which is subsequently distributed to Holding common
stockholders pursuant to the plan of reorganization
(Section 361).
i) No gain or loss will be recognized by FCC on the receipt
by FCC of substantially all of the assets of Holding in
exchange for FCC stock (Section 1032(a)).
j) The tax basis of Holding's assets in the hands of FCC will
be the same as the basis of those assets in the hands of
Holding immediately prior to the merger (Section 362(b)).
k) The holding period of the assets of Holding in the hands
of FCC will include the period during which such assets
were held by Holding (Section 1223(2)).
l) The merger of Bank with and into FNBL, as described above,
will constitute a reorganization under Section 368 of the
Code (Section 368 (a)(1)(A)).
m) FNBL and Bank will each be a "party to a reorganization"
(Section 368 (b)).
n) No gain or loss will be recognized by FCC on the merger of
Bank into FNBL (Section 354(a)(1)).
o) No gain or loss will be recognized by Bank on the transfer
of all of its assets to FNBL pursuant to the plan of
reorganization (Section 361).
p) The tax basis of Bank's assets in the hands of FNBL will
be the same as the basis of those assets in the hands of
Bank immediately prior to the transaction (Section
362(b)).
q) The holding period of the assets of Bank in the hands of
FNBL will include the period during which such assets were
held by Bank (Section 1223(2)).
We express no opinion on the impact, if any, on any other
sections of the Code, including but not limited to Section 382,
other than that as stated immediately above, and neither this
opinion nor any prior statements are intended to imply or to be
an opinion on any other matters.
In analyzing the authorities relevant to the potential tax
issues outlined in the opinions we have applied the standards of
"substantial authority" and "more likely than not proper," as
used in Section 6662 under current law. Based upon our
analysis, we have concluded that there is substantial authority
for the indicated tax treatment of the transaction, and we also
believe the indicated tax treatment of the transaction is more
likely than not proper.
The opinions expressed herein are based solely upon our
interpretation of the Code and income tax regulations as further
interpreted by court decisions, rulings, and procedures issued
by the Internal Revenue Service, as of the effective date of
this letter. Our opinions may be subject to change in the event
of changes in any of the foregoing authorities, some of which
could be retroactive. The opinions expressed herein are not
binding on the Internal Revenue Service, and there can be no
assurance that the Internal Revenue Service will not take a
position contrary to any of the opinions expressed herein, or if
the Internal Revenue Service took such a position, whether it
would be sustained by the courts.
The opinions expressed herein reflect our assessment of the
probable outcome of litigation and other adversarial proceedings
based solely on an analysis of the existing tax authorities
relating to the issues. It is important, however, to note that
litigation and other adversarial proceedings are frequently
decided on the basis of such matters as negotiation and
pragmatism. Furthermore, in recent years, the court of law has
exhibited a willingness to interpret prior authorities, as well
as to develop new theories, in order to reach a conclusion which
will maximize tax revenues. We have not considered the effect
of such negotiation, pragmatism, and judicial willingness upon
the outcome of such potential litigation or other adversarial
proceedings. Further, Bank, FNBL, and Holding common
stockholders are urged to discuss the consequences of the
proposed transactions with their own tax advisors.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Charles A. Giraud III
EXHIBIT 15
September 23, 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 June 30, 1994, which includes our report dated
July 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 LLP
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 LLP
New Orleans, Louisiana
September 23, 1994
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-4) and related
Prospectus of First Commerce Corporation for the registration of
its common stock to be issued pursuant to its proposed merger
with City Bancorp, Inc. and to the inclusion therein of our
report dated January 14, 1994, with respect to the consolidated
financial statements of City Bancorp, Inc. and also included
therein, filed with the Securities and Exchange Commission.
Castaing, Hussey & Lolan, CPAs
New Iberia, Louisiana
September 23, 1994
EXHIBIT 99
PROXY
CITY BANCORP, INC.
____________, 1994
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints Beldon E. Fox,
Sr., Richard L. Delhomme and Arthur L. Schexnayder, Jr., 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 City Bancorp, Inc. ("Bancorp")
that the undersigned is entitled to vote at the special meeting
of the shareholders of Bancorp to be held on ____________, 1994
and at any and all adjournments thereof.
1. A proposal to approve an Agreement and Plan of Merger and
two related merger agreements (collectively, the "Plan")
pursuant to which, among other things, (i) City Bank &
Trust Company, New Iberia, Louisiana, the wholly-owned bank
subsidiary of Bancorp, will merge into The First National
Bank of Lafayette, a wholly-owned bank subsidiary of First
Commerce Corporation ("FCC"); (ii) immediately thereafter,
Bancorp will merge into FCC (the "Holding Company Merger");
and (iii) on the effective date of the Holding Company
Merger, each outstanding share of common stock of Bancorp
will be converted into a number of shares of FCC common
stock as determined in accordance with the terms of 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 THE PROPOSAL
SET FORTH HEREIN.
Please sign exactly as 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 persons. If a partnership, please sign in
partnership name by authorized persons.
Dated: ________, 1994
Signature of Shareholder
Insert Mailing Label
Signature (if jointly owned)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
TO BANCORP PROMPTLY USING THE ENCLOSED ENVELOPE.
