UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
[ ] Transition Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number: 0-7931
FIRST COMMERCE CORPORATION
(exact name of registrant as specified in its charter)
Louisiana 72-0701203
(State of incorporation) (I.R.S. Employer Identification No.)
210 Baronne Street, New Orleans, Louisiana 70112
(address of principal executive offices and zip code)
Registrant's telephone number, including area code: (504) 561-1371
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Title of each class:
Common Stock, $5.00 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of February 16, 1996.
Approximately $1,100,232,326*
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Common Stock: $5.00 par value; 38,633,922 shares outstanding as of
February 16, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Documents Incorporated into which Incorporated
Annual Report to Stockholders for Parts II and IV
the year ended December 31, 1995
Definitive Proxy Statement Part III
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* For the purposes of this computation, shares beneficially owned by directors
and executive officers have been excluded.
<PAGE>
FIRST COMMERCE CORPORATION
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I.
PAGE
Item 1. Description of Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 7
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 8. Financial Statements and Supplementary Data 8
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 8
PART III.
Item 10. Directors and Executive Officers of the Registrant 8
Item 11. Executive Compensation 9
Item 12. Security Ownership of Certain Beneficial Owners and Management 9
Item 13. Certain Relationships and Related Transactions 9
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 9
<PAGE>
PART I
Item 1
Description of Business
General
First Commerce Corporation (FCC) is a multi-bank holding company with
six wholly-owned bank subsidiaries in Louisiana: First National Bank of Commerce
in New Orleans (FNBC), City National Bank of Baton Rouge (CNB), Central Bank of
Monroe (Central), The First National Bank of Lafayette (FNBL), Rapides Bank &
Trust Company in Alexandria (RB&T) and The First National Bank of Lake Charles
(FNBLC).
During 1995 FCC acquired five Louisiana financial institutions adding
$1.5 billion of assets . FCC's acquisitions of First Bancshares, Inc. (First),
Lakeside Bancshares, Inc. (Lakeside), Peoples Bancshares, Inc. (Peoples) and
Central Corporation (Central) were accounted for as poolings-of-interests. The
acquisition of City Bancorp, Inc. (City) was accounted for as a purchase. The
acquisition of Central marked FCC's entry into the north Louisiana market; the
remaining acquisitions expanded FCC's presence in its current markets. For
additional information regarding these acquisitions, see Note 2 of FCC's 1995
Annual Report, which is incorporated by reference into Item 8 of this Annual
Report on Form 10-K.
The six banks accounted for substantially all of the assets of FCC at
December 31, 1995, and substantially all of the net income for 1995. The banks
offer customary services of banks of similar size and similar markets, including
numerous types of interest-bearing and noninterest-bearing deposit accounts,
commercial and consumer loans, trust services, correspondent banking services
and safe deposit facilities. For further discussion of FCC's operations, see the
Financial Review section of FCC's 1995 Annual Report, which is incorporated by
reference into Item 7 of this Annual Report on Form 10-K.
FCC has a number of non-bank subsidiaries, none of which, individually
or in the aggregate with other non-bank subsidiaries, account for a significant
amount of assets, revenues or earnings.
Regulation
Like other bank holding companies in Louisiana, FCC is subject to
regulation by the Louisiana Commissioner of Financial Institutions and the
Federal Reserve Board. Under the terms of the Bank Holding Company Act of 1956
(Act), as amended, FCC is restricted to only banking or bank-related activities
specifically allowed by the Act or the Federal Reserve Board. The Act requires
FCC to file required reports with the Federal Reserve Board. Each of FCC's
subsidiary banks is a member of the Federal Reserve System and is subject to
regulation by the Federal Reserve Board and the FDIC. The four national bank
subsidiaries are also subject to regulation and supervision by the United States
Comptroller of the Currency, while the two state-chartered bank subsidiaries are
subject to regulation and supervision by the Louisiana Commissioner of Financial
Institutions.
Payment of Dividends
The primary source of funds for debt service obligations and the
dividends paid by FCC to its stockholders is the dividends it receives from the
bank subsidiaries. The payment of dividends by FCC's national banks is regulated
by the United States Comptroller of the Currency. The payment of dividends by
FCC's state banks is regulated by the Louisiana Commissioner of Financial
Institutions and the Federal Reserve Board. Prior approval must be obtained from
the appropriate regulatory authorities before dividends can be paid if the
amount of defined capital, surplus and retained earnings is below regulatory
limits. Additionally, the national bank subsidiaries may not pay dividends in
excess of their retained net profits (net income less dividends for the current
and prior two years) without prior regulatory approval. The state bank
subsidiaries may not pay dividends in excess of their retained net profits (the
lesser of net income less dividends for the current year and one prior year or
net income less dividends for the current year and two prior years) without
prior regulatory approval. Under certain circumstances, regulatory authorities
may prohibit the payment of dividends by a bank or its parent holding company.
See Note 14 of Notes to Consolidated Financial Statements, which is incorporated
by reference into Item 8 of this Annual Report on Form 10-K.
Borrowings by the Company
Federal law prohibits FCC or its non-bank subsidiaries from borrowing
from its bank subsidiaries, unless the borrowings are secured by specified
amounts and types of collateral. Additionally, such secured loans are generally
limited to 10% of each subsidiary bank's capital and surplus and, in the
aggregate with respect to FCC and all of its subsidiaries, to 20% of each
subsidiary bank's capital and surplus. Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of services.
Company Support of Bank Subsidiaries
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
(FIRREA) contains a "cross-guarantee" provision which could result in any
insured depository institution owned by FCC (i.e., any bank subsidiary) being
assessed for losses incurred by the FDIC in connection with assistance provided
to, or the failure of, any other depository institution owned by FCC. In
addition, under Federal Reserve Board policy, FCC is expected to act as a source
of financial strength to each of its bank subsidiaries and to commit resources
to support each such bank in circumstances in which the bank might need outside
support.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (1991
Act) provides, among other things, that undercapitalized institutions, as
defined by regulatory authorities, must submit recapitalization plans, and a
parent company of such an institution must either (i) guarantee the
institution's compliance with the capital plan, up to an amount equal to the
lesser of five percent of the institution's assets at the time it becomes
undercapitalized or the amount of the capital deficiency when the institution
fails to comply with the plan, or (ii) suffer certain adverse consequences such
as a prohibition of dividends by the parent company to its shareholders.
Prompt Corrective Action
The 1991 Act and implementing regulations classify banks into five
categories generally relating to their regulatory capital ratios and institutes
a system of supervisory actions indexed to particular classification. Generally,
banks that are classified as "well capitalized" or "adequately capitalized" are
not subject to the supervisory actions specified in the 1991 Act for prompt
corrective action, but may be restricted from taking certain actions that would
lower their classification. Banks classified as "undercapitalized",
"significantly undercapitalized" or "critically undercapitalized" are subject to
restrictions and supervisory actions of increasing stringency based on the level
of classification.
Under the present regulation, all six of FCC's banks are
"well-capitalized". While such a classification would exclude the banks from the
restrictions and actions envisioned by the prompt corrective action provisions
of the 1991 Act, the regulatory agencies have broad powers under other
provisions of federal law that would permit them to place restrictions on the
banks or take other supervisory action regardless of such classification.
Other Provisions of the 1991 Act
In general, the 1991 Act subjected banks and bank holding companies to
significantly increased regulation and supervision. Other significant provisions
of the 1991 Act require the federal regulators to draft non-capital regulatory
measures to assure bank safety, including underwriting standards and minimum
earnings levels. The legislation further requires regulators to perform annual
on-site bank examinations, places limits on real estate lending and tightens
audit requirements. The 1991 Act and implementing regulations also impose
disclosure requirements relating to fees charged and interest paid on checking
and deposit accounts.
Interstate Banking and Branching Efficiency Act
In 1994, the Interstate Banking and Branching Efficiency Act of 1994
(Interstate Act) was enacted. Among other things, the Interstate Act (i) allows
bank holding companies after September 1995 to acquire a bank located in any
state, subject to certain limitations that may be imposed by the state, (ii)
allows banks after June 1, 1997, (or earlier if permitted by state law) to merge
across state lines unless the home state has enacted prior to June 1, 1997, a
law opting out of interstate bank mergers, and (iii) permits banks to establish
branches outside their state of domicile if expressly permitted by the law of
the state in which the branch is to be located. In 1995, the Louisiana
Legislature enacted legislation permitting an out-of-state bank holding company
to convert its Louisiana banks, as defined, into branches of the holding
company's out-of-state banks, effective June 1, 1997. Prior thereto an
out-of-state holding company is permitted only with certain limitations to
acquire Louisiana banks as separate entities. Registrant is unable to predict at
this time the effect of the Interstate Act and the Louisiana legislation on
competition.
Annual Insurance Assessment
FCC's bank subsidiaries are subject to deposit insurance assessment by
the FDIC. Effective January 1, 1996, the rate paid by the banks for deposit
insurance to the Bank Insurance Fund (BIF) was reduced to zero. Legislation is
pending regarding a special one-time assessment of approximately $.87 per $100
of deposits insured by the Savings Association Fund (SAIF). Approximately 85% of
FCC's deposits are insured by the BIF, while approximately $1.0 billion are
SAIF-insured deposits.
Miscellaneous
Federal and Louisiana laws provide for the enforcement of any pro rata
assessment of stockholders of a bank to cover impairment of capital stock by
sale, to the extent necessary, of the stock of any assessed stockholder failing
to pay the assessment. FCC, as the stockholder of its bank subsidiaries, is
subject to these provisions.
Item 2
Properties
FCC's executive offices are located in leased facilities in the Central
Business District of New Orleans. Through its subsidiaries, FCC also owns or
leases its principal banking facilities and offices in New Orleans, Baton Rouge,
Monroe, Lafayette, Alexandria and Lake Charles. Of the 142 banking offices open
at the end of 1995, 97 are owned and 45 are leased.
Data processing services for FCC and each of its subsidiaries are
performed in a facility in the Metropolitan New Orleans area, which is owned by
a subsidiary of FCC.
Management considers all properties owned or leased to be suitable and
adequate for their intended purposes and considers the leases to be fair and
reasonable. For additional information concerning premises and information
concerning FCC's obligations under long-term leases, see Note 9 of Notes to
Consolidated Financial Statements, which is incorporated by reference into Item
8 of this Annual Report on Form 10-K.
Item 3
Legal Proceedings
In the quarter ended March 31, 1989, suit was filed against
Registrant's wholly owned subsidiary, FNBC, in the matter entitled Guidry v.
Bank of LaPlace and others, Civil District Court for the Parish of Orleans.
Plaintiff sought to recover losses on certain investments, claiming that the
defendants breached duties owed to him. On April 22, 1994, a jury found that
FNBC had breached a state law duty to the plaintiff, and found it partially
responsible for plaintiff's loss, which it determined to be $4.5 million, plus
interest from April 17, 1989. On May 3, 1994, the court entered judgment against
FNBC for 15% of the $4.5 million (approximately $681,000) plus interest from
April 17, 1989. On September 15, 1995, the Louisiana Court of Appeals, Fourth
Circuit, reversed the lower court and held that FNBC was not liable for any
amount to the plaintiff. All parties applied for a review of the decision by the
Louisiana Supreme Court and on January 5, 1996, the Court denied the
application, thus finally concluding the litigation.
In the quarter ended December 31, 1995, suit was filed against the
Registrant's wholly-owned subsidiary, FNBC, among other defendants, in the
matter entitled City of New Orleans and Rivergate Development Corporation v.
Harrah's Entertainment, Inc. and others, Civil District Court for the Parish of
Orleans. The plaintiffs sued FNBC in its capacity as Trustee under the $435
million Trust Indenture created to finance construction of a land-based casino
in New Orleans, claiming that FNBC breached an "implied duty of good faith" to
the City as an additional beneficiary under the Notes Completion Guarantee, a
security instrument executed in connection with the Trust Indenture. Plaintiffs
seek the joint and several liability of all named defendants to complete
construction of the land-based casino, at an estimated cost of $190 million. On
January 23, 1996, Harrah's Entertainment, Inc. and its related defendants, with
the consent of FNBC, removed the suit from state to the federal bankruptcy
court in New Orleans. Plaintiffs subsequently filed a motion to return the
suit to state court and FNBC also filed a motion for dismissal from the
lawsuit, based on the assertion that the plaintiff has not stated a valid
cause of action against FNBC. Both plaintiffs' and FNBC's motions are pending.
In the opinion of management, after consulting with counsel, the ultimate
outcome of the litigation will not result in a material adverse effect upon FCC.
FCC and its subsidiaries have been named as defendants in various other
legal actions arising from normal business activities in which damages of
various amounts are claimed. The amount, if any, of ultimate liability with
respect to such matters cannot be determined. However, after consulting with
legal counsel, management believes any such liability will not have a material
effect on FCC's consolidated financial condition or results of operations.
Item 4
Submission of Matters to a Vote of Security Holders
Not Applicable
PART II
Information required for Items 5 through 8 is included in First
Commerce Corporation's 1995 Annual Report to stockholders filed as Exhibit 13
herewith and incorporated herein on the pages indicated below.
Item 5
Market for the Registrant's Common Stock and Related Stockholder Matters, Pages
34-36
Item 6
Selected Financial Data, Pages 34-36
Item 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Pages 15-33
Item 8
Financial Statements and Supplementary Data, Pages 37-58
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not Applicable
PART III
Item 10
Directors and Executive Officers of the Registrant
IAN ARNOF, 56 -- President, Chief Executive Officer and Director of FCC since
1983.
JAMES A. ALTICK, 56 -- Chairman of the Board of Directors of Central Bank of
Monroe, La. (acquired by Registrant in 1995) since 1982; President and Chief
Executive Officer of Central Bank from 1976 to 1996.
R. JEFFREY BROOKS, 47 -- Executive Vice President since 1993; Director of
Strategic Support of FCC from 1993 to 1994; President and Chief Operating
Officer of FNBLC from 1992 to 1993; Senior Vice President and Bankcard Group
Manager of FNBC from 1986 to 1992.
THOMAS L. CALLICUTT, JR., 48 -- Senior Vice President, Controller and Principal
Accounting Officer of FCC since 1987.
MICHAEL A. FLICK, 47 -- Executive Vice President of FCC since 1985; Chief
Administrative Officer of FCC since 1994; Chief Credit Policy Officer of FCC
from 1985 to 1994; Chief Financial Officer from 1988 to 1992; Secretary of FCC
since 1987.
HOWARD C. GAINES, 55 -- Chairman of the Board of Directors of FNBC since 1988;
Chief Executive Officer of FNBC from 1988 to 1994.
THOMAS C. JAEGER, 45 -- Executive Vice President and Chief Financial Officer of
FCC since 1994; Senior Vice President and Chief Internal Auditor of FCC from
1989 to 1994.
KIMBERLY Y. LEE, 35 -- Executive Vice President and Chief Internal Auditor of
FCC since 1994; Senior Vice President and Manager of Audit and Credit Review
from 1992 to 1994. Ms. Lee served as a national bank examiner for the Office of
the Comptroller of the Currency from 1982 to 1992.
ASHTON J. RYAN, JR., 48 -- Senior Executive Vice President of FCC since 1993;
President of FNBC since 1991; Chief Executive Officer of FNBC since 1994; Chief
Operating Officer of FNBC from 1991 to 1994.
E. GRAHAM THOMPSON, 59 -- Executive Vice President and Chief Credit Policy
Officer of FCC since 1994; Chief Executive Officer of FNBL from 1992 to 1994;
Chairman of FNBL from 1993 to 1994; President of FNBL from 1992 to 1993; Chief
Executive Officer of RBT from 1992 to 1994; President and Chief Executive
Officer of CNB from 1987 to 1992.
JOSEPH V. WILSON III, 46 -- Senior Executive Vice President of FCC since 1993;
Executive Vice President of FCC from 1989 to 1992.
The remaining information required under Item 10, and the information
required by Items 11 through 13 is incorporated by reference to the Registrant's
definitive Proxy Statement for the 1996 Annual Meeting of Stockholders filed
with the Securities and Exchange Commission.
PART IV
Item 14
Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Item 8.
2. Financial Statement Schedules - All schedules are omitted,
since they are either not applicable or the required
information is shown in the financial statements or notes
thereto.
3. Exhibit 3.1 Composite Articles of
Incorporation of First Commerce Corporation.
3.2 Amended and Restated By-laws of First
Commerce Corporation.
4.1 Indenture between First Commerce Corporation
and Republic Bank, Dallas, N.A., Trustee,
(trusteeship since transferred to The Bank
of New York) including the form of 12 3/4%
Convertible Debentures 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,
(trusteeship since transferred to The Bank
of New York) including the form of 12 3/4%
Convertible Debentures 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, 1985 and
incorporated herein by reference.
4.3 Rights Agreement between First Commerce
Corporation and First Chicago Trust Company
of New York as Rights Agent.
10.1 Form of Employment Agreement between First
Commerce Corporation and Messrs. Arnof,
Brooks, Flick, Gaines, Ryan, Thompson,
Wilson and Ms. Lee.
10.2 Amended and Restated First Commerce
Corporation Supplemental Tax-Deferred
Savings Plan included as Exhibit 10.1 to
First Commerce Corporation's Annual Report
on Form 10-K for the year ended December 31,
1994, and incorporated herein by reference.
10.3 First Commerce Corporation Retirement
Benefit Restoration Plan included as Exhibit
10.2 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended
December 31, 1994, and incorporated herein
by reference.
10.4 First Commerce Corporation Amended and
Restated 1992 Stock Incentive Plan, Form of
Nonqualified Stock Option Agreement and Form
of Restricted Stock Agreement included as
Exhibit 10.4 to First Commerce Corporation's
Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated
herein by reference.
11 Statement Re: Computation of Earnings Per
Share
13 First Commerce Corporation's 1995 Annual
Report to Stockholders
21 Subsidiaries of First Commerce Corporation
23 Consent of Arthur Andersen LLP
24 Power of Attorney
27 Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K dated November 3, 1995 was filed by the
registrant reporting Item 2 - Acquisition or Disposition of
Assets and Item 7 - Financial Statements and Exhibits. The
report contained information regarding the consummation of
FCC's acquisition of Central Corporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
First Commerce Corporation
(Registrant)
By /s/ THOMAS L. CALLICUTT, JR.
-----------------------------
Thomas L. Callicutt, Jr.
Senior Vice President, Controller and
Principal Accounting Officer
Date March 21, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities on the dates indicated.
Signatures Title
Ian Arnof President and Chief Executive Officer
Hermann Moyse, Jr. Chairman of the Board
Thomas C. Jaeger Executive Vice President and Chief Financial Officer
James J. Bailey III Director
John W. Barton Director
Sydney J. Besthoff III Director
Robert C. Cudd III Director
Frances B. Davis Director
Laurance Eustis, Jr. Director
William P. Fuller Director
Arthur Hollins III Director
F. Ben James, Jr. Director By /s/ THOMAS L. CALLICUTT, JR.
Erik F. Johnsen Director -----------------------------
J. Merrick Jones, Jr. Director Thomas L. Callicutt, Jr.
Edwin Lupberger Director Attorney-in-Fact
Mary Chavanne Martin Director
Hugh G. McDonald, Jr. Director Date: March 21, 1996
Saul A. Mintz Director
O. Miles Pollard, Jr. Director
G. Frank Purvis, Jr. Director
T.H. Scott Director
Edward M. Simmons Director
H. Leighton Steward Director
Robert A. Weigle Director
COMPOSITE ARTICLES OF INCORPORATION
OF
FIRST COMMERCE CORPORATION
ARTICLE I
NAME
The name of the Corporation is First Commerce Corporation.
ARTICLE II
PURPOSE
The purpose of the Corporation is to engage in any lawful activity for
which corporations may be formed under the Business Corporation Law of
Louisiana.
ARTICLE III
CAPITAL
A. The Corporation has authority to issue one hundred million
(100,000,000) shares of $5.00 par value per share Common Stock and five million
(5,000,000) shares of no par value per share Preferred Stock.
B. Shares of the Preferred Stock may be issued from time to time in one
or more classes or series, each of which shall have such distinctive designation
or title and such voting rights, preferences and relative, optional or other
special rights, and qualifications, limitations or restrictions as shall be
fixed by the Board of Directors of the Corporation prior to the issuance of any
shares thereof by amendment to these Articles of Incorporation adopted by the
Board of Directors.
C. Of the 5,000,000 shares or authorized no par value per share
Preferred Stock, 2,400,000 shares shall constitute a separate series of
Preferred Stock with the voting powers and the preferences and rights
hereinafter set forth.
(1) Designation. The series of Preferred Stock created
hereunder is designated "Cumulative Convertible Preferred Stock, Series 1992"
(the "1992 Preferred Stock").
(2) Stated Value. The stated value of each share of
Preferred Stock is $25.
------------
(3) Dividend Rights.
(a) The holders of record of the shares of 1992
Preferred Stock are entitled to receive, but only when, as and if declared by
the Board of Directors, in their discretion, and out of the funds of the
Corporation legally available for that purpose, cumulative cash dividends at the
rate of $1.8125 per annum, payable quarterly on the first day of January, April,
July, and October in each year, or on such earlier dates as the Board of
Directors may from time to time fix as the dates for payment of quarterly
dividends on the Common Stock, beginning with the first such date that is at
least 45 days after the date of the original issuance of the shares. Dividends
on each share of 1992 Preferred Stock shall be cumulative from the date of
original issuance thereof whether or not there shall be funds legally available
for the payment of such dividends. Dividends payable on the 1992 Preferred Stock
(i) for any period other than a full year shall be computed on the basis of a
360-day year consisting of twelve 30-day months and (ii) for each full dividend
period shall be computed by dividing the annual dividend rate by four.
(b) No dividends, in cash or property, may be
declared or paid or set apart for payment on the Common Stock or on any series
of Preferred Stock ranking, as to dividends, junior to the 1992 Preferred Stock
for any period unless full cumulative dividends for each previous quarterly
dividend period, whether or not earned or declared, have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the 1992 Preferred Stock. If
dividends are paid in part and not in full upon the shares of 1992 Preferred
Stock and on any other Preferred Stock ranking on a parity, as to dividends,
with the 1992 Preferred Stock, such dividends must be divided pro rata among
such parity shares in proportion to the respective dividends accrued and unpaid
thereon as of the dividend payment date. Except as otherwise provided in this
Section, holders of shares of the 1992 Preferred Stock are not entitled to any
dividend, whether payable in cash, property or stock, in excess of the full
cumulative dividend stipulated in Paragraph (a). No interest or sum of money in
lieu of interest, is payable in respect of any dividend payment or payments on
1992 Preferred Stock which may be in arrears.
(4) Redemption.
(a) On or after January 1, 1997, the Corporation may,
at its option, redeem the whole or, from time to time, any part of the 1992
Preferred Stock at a redemption price per share equal to the sum of (i) $25 and
(ii) all accrued and unpaid dividends thereon to the date fixed for redemption,
whether or not earned or declared.
(b) If the Corporation redeems fewer than all of the
outstanding shares of 1992 Preferred Stock, it must select the shares to be
redeemed by lot or pro rata, in such manner as the Board of Directors may
determine to be fair and appropriate. The Board of Directors has full power and
authority, subject to the limitations and provisions herein contained, to
prescribe the manner in which and the terms and conditions upon which shares of
the 1992 Preferred Stock are to be redeemed.
(c) Notice of redemption must be given by first class
mail, postage prepaid, mailed not fewer than 60 nor more than 90 days before the
redemption date, to each holder of record of shares to be redeemed, at the
holder's address as it appears on the stock register of the Corporation. Each
notice must state: (i) the redemption date; (ii) the total number of shares of
1992 Preferred Stock to be redeemed and, if fewer than all the shares held by
the holder are to be redeemed, the number of shares to be redeemed from the
holders; (iii) the redemption price; (iv) the place or places for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on the redemption date; and (vi) that the holder has the right to convert
the shares into Common Stock until the close of business on the tenth day
preceding the redemption date at the Conversion Price then in effect and the
place where certificates for the shares of the 1992 Preferred Stock may be
surrendered for conversion.
(d) Unless the Corporation fails to pay the
redemption price, the right to convert shares of the 1992 Preferred Stock called
for redemption shall expire at the close of business on the tenth day preceding
the date fixed for redemption of such shares, and, from and after the redemption
date, dividends on the shares of 1992 Preferred Stock called for redemption
shall cease to accrue, and such shares shall no longer be deemed to be
outstanding, and all rights of the holders of such shares as shareholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender of the certificates for any shares so
redeemed in accordance with the requirement of the notice of redemption
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation so require and the notice so states), such shares shall be redeemed
by the Corporation at the redemption price. If fewer than all the shares
represented by any such certificates are redeemed, the Corporation is obligated
to issue without cost to the holder a new certificate representing the shares
not redeemed.
(e) Any shares of 1992 Preferred Stock converted
under Subsection (5), or redeemed or otherwise acquired by the Corporation, have
the status of authorized but unissued shares of Preferred Stock, without
designation as to series, preferences, limitations or relative rights until the
shares are once more designated as part of a particular series by the Board of
Directors of the Corporation.
(f) The Corporation may, before the redemption date
specified in the notice of redemption, deposit in trust for the account of the
holders of shares of the 1992 Preferred Stock to be redeemed, with a bank or
trust company in good standing organized under the laws of the United States of
America or of the State of Louisiana and having capital, surplus and undivided
profits aggregating at least $20,000,000, designated in the notice of
redemption, all funds necessary for the redemption, together with irrevocable
written instructions authorizing the bank or trust company, on behalf and at the
expense of the Corporation, to have the notice of redemption mailed as provided
in Paragraph (c) and to include in the notice of redemption a statement that all
funds necessary for the redemption have been so deposited in trust and are
immediately available. Immediately upon the mailing of such notice,
notwithstanding that any certificate for shares of 1992 Preferred Stock so
called for redemption has not been surrendered for cancellation, all shares of
1992 Preferred Stock with respect to which the deposit has been made shall cease
to be outstanding and all rights with respect to such shares of 1992 Preferred
Stock shall terminate other than the right of the holders thereof to receive
from the bank or trust company, at any time after the time of the deposit, the
redemption price of the shares so to be redeemed, and the right, if any, to
convert the shares into Common Stock until the close of business on the tenth
day preceding the redemption date; provided, however, that the Corporation may
take any action under this Paragraph (f) only on or after January 1, 1997. If
the holder of any shares of the 1992 Preferred Stock called for redemption does
not, within four years after the redemption date, claim the amount deposited for
the redemption thereof, the depositary shall, upon the request of the
Corporation expressed in a resolution of its board of directors, pay over to the
Corporation the unclaimed amount, which shall then escheat and revert in full
ownership to the Corporation.
(g) Notwithstanding the foregoing provisions of this
Subsection (4), so long as any dividends on the 1992 Preferred Stock are in
arrears, the Corporation may not redeem any shares of the 1992 Preferred Stock
unless all outstanding shares of the 1992 Preferred Stock are simultaneously
redeemed and may not purchase or otherwise acquire any shares of 1992 Preferred
Stock. The foregoing shall not, however, prevent the purchase or acquisition of
shares of 1992 Preferred Stock pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of 1992 Preferred Stock.
(5) Conversion. The holders of shares of the 1992 Preferred
Stock have the right, at their option, to convert all or any part of such shares
into shares of Common Stock of the Corporation at any time before the close of
business on the tenth day preceding the date, if any, fixed for redemption of
those shares, subject to the following terms and conditions:
(a) The number of shares of Common Stock issuable
upon the conversion of each share of Preferred Stock shall be equal to $25
divided by the Conversion Price in effect at the time of conversion determined
as provided below. The Conversion Price at which the Company is required to
deliver shares of Common Stock upon conversion shall initially be $40.25 per
share of Common Stock. The initial Conversion Price shall be subject to
adjustment from time to time as provided in Paragraph (e). The Corporation shall
make no payment or adjustment on account of any dividends accrued on any shares
of 1992 Preferred Stock surrendered for conversion. If any shares of 1992
Preferred Stock are called for redemption, the right of conversion shall expire
as to the shares designated for redemption at the close of business on the tenth
day immediately preceding the date fixed for redemption, unless default is made
in the payment of the redemption price on such shares.
(b) To convert any shares of 1992 Preferred Stock
into Common Stock, the holder must surrender the certificate or certificates
therefor, duly endorsed to the Corporation or in blank, at the principal office
of the Corporation or at such other place or places as the Board of Directors
may designate and must give written notice to the Corporation at that office or
place that the holder elects to convert all or a part of such shares, setting
forth the name or names (with the address or addresses) in which the shares of
Common Stock are to be issued. The Corporation shall, as soon as practicable
thereafter, cause to be issued and delivered at that office or place to the
holder, or the holder's designee or designees, a certificate or certificates for
the number of whole shares of Common Stock to which such holder is entitled,
together with a certificate or certificates representing any shares of 1992
Preferred Stock which are not to be converted but constitute part of the shares
of 1992 Preferred Stock represented by the certificate or certificates
surrendered and any cash to which such holder may be entitled in lieu of the
issuance of a fractional share. A conversion shall be effective as of the close
of business on the date of the due surrender of the shares to be converted, and
the rights of the holder of such shares shall, to the extent of such conversion,
cease at such time, and the person or persons entitled to receive shares of the
Common Stock upon conversion of such shares of 1992 Preferred Stock shall be
treated for all purposes as having become the record holder or holders of the
Common Stock at that time.
(c) No fractional shares of Common Stock shall be
issued on conversion. In lieu of the issuance of fractional shares of Common
Stock, a holder of 1992 Preferred Stock otherwise entitled to receive a
fractional share is entitled to receive a cash payment (without interest) equal
to the fair market value of any fraction of a share of Common Stock to which the
holder would be entitled but for this provision. The fair market value of a
fraction of a share of the Common Stock shall be such fraction multiplied by the
current market price of a share of Common Stock as of the close of business on
the date such shares are duly surrendered for conversion or, if such date is not
a trading date, on the next succeeding trading date.
(d) In the case of any shares of 1992 Preferred Stock
converted after any record date for payment of a dividend on the 1992 Preferred
Stock and on or before the date for payment of the dividend, the dividend
declared and payable on the dividend payment date shall continue to be payable
on the dividend payment date to the holder of record of the shares as of such
preceding record date notwithstanding their conversion. Shares of the 1992
Preferred Stock surrendered for conversion during the period from the close of
business on any such record date to the opening of business on the dividend
payment date shall be accompanied by payment in funds acceptable to the
Corporation of an amount equal to the dividend payable on the dividend payment
date on the shares of the 1992 Preferred Stock surrendered for conversion,
except that no such payment is required to be made with respect to shares so
converted which have been called for redemption on a redemption date occurring
during the period from the close of business on any record date for the payment
of a dividend on the 1992 Preferred Stock to the opening of business on the
dividend payment date, and the dividend payable on any such shares shall
continue to be payable on the dividend payment date to the holder of record of
such shares on such dividend record date notwithstanding their conversion.
Except as provided in this subsection, no payment or adjustment shall be made
upon any conversion on account of any dividends accrued on shares of the 1992
Preferred Stock surrendered for conversion or on account of any dividends on the
shares of Common Stock issued upon conversion.
(e) The Conversion Price shall be adjusted from time
to time as follows:
(i) If the Corporation at any time (A) pays a dividend or
makes a distribution to all holders of its Common Stock in shares of its Common
Stock, (B) subdivides its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or (C) combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then in each such
case the Conversion Price in effect immediately before that event shall be
adjusted so that the holder of any shares of 1992 Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of whole
shares of Common Stock that the holder would have owned or been entitled to
receive immediately following such event if those shares of 1992 Preferred Stock
had been converted into Common Stock immediately before that even. An adjustment
made under this Subparagraph (i) becomes effective immediately after the payment
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision or combination. No adjustment in the
Conversion Price shall be made if, at the same time the Corporation issues
shares of Common Stock as a dividend or distribution on the outstanding shares
of Common Stock which, as provided in this Subparagraph (i), would otherwise
call for an adjustment in the Conversion Price, the Corporation issues shares of
Common Stock as a dividend or distribution on the outstanding shares of 1992
Preferred Stock equivalent to the number of shares distributable on the shares
of Common Stock into which 1992 Preferred Stock is then convertible.
(ii) If the Corporation issues rights or warrants to all
holders of its shares of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the current
market price per share of Common Stock on the date fixed for determination of
shareholders entitled to such rights (the "record date"), then in each such case
the Conversion Price to be in effect after the record date shall be reduced by
multiplying the Conversion Price in effect at the close of business on the date
immediately before the record date by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding on the record date plus the
number of shares of Common Stock which the aggregate exercise, subscription or
purchase price of the total number of shares so offered would purchase at the
current market price and the denominator of which shall be the number of shares
of Common Stock outstanding at the close of business on the record date plus the
number of additional shares of Common Stock offered for subscription or
purchase.
(iii) If the Corporation distributes to all holders of shares
of Common Stock evidence of its indebtedness or assets (excluding cash dividends
or distributions payable out of consolidated earnings or earned surplus or stock
dividends referred to in Subparagraph (i)(A) above) or subscription rights or
warrants (excluding those referred to in Subparagraph (ii) above), then in each
such case the Conversion Price to be in effect thereafter shall be determined by
multiplying the Conversion Price in effect immediately before the record date
for determining shareholders entitled to receive the distribution (the "record
date") by a fraction, the numerator of which shall be the current market price
per share of Common Stock as of the close of business on the record date less
the then fair market value (as determined by the Board of Directors of the
Corporation whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness so distributed or of such subscription
rights or warrants applicable to one share of Common Stock and the denominator
of which shall be the current market price per share of Common Stock on the
record date.
(iv) No adjustment in the Conversion Price shall be required
unless the adjustment would require an increase or decrease in the Conversion
Price by more than one percent, but any adjustments not required to be made by
reason of this subparagraph shall be carried forward cumulatively and taken into
account in any subsequent adjustments. All calculations under this Paragraph (e)
shall be made to the nearest one-tenth of one percent.
(v) In case of any reclassification of the Common Stock
(other than subdivision or combination of outstanding shares of Common Stock for
which adjustment is provided in Subparagraph (i) above), or a consolidation or
merger of the Corporation with or into any other corporation (other than a
consolidation or a merger in which the Corporation is the continuing corporation
and the outstanding shares of the Corporation's Common Stock are not changed
into or exchanged for stock or other securities of any other person or cash or
any other property as a result of or in connection with such consolidation or
merger) or a sale of the properties and assets of the Corporation as, or
substantially as, an entirety to any other business organization, or a statutory
share exchange in which all shares of Common Stock or any series or class of
Common Stock are exchanged for shares of another corporation or other entity,
each share of 1992 Preferred Stock shall, after such reclassification,
consolidation, merger, sale or exchange and upon the terms and conditions
specified in this Subsection (5), be convertible into or represent the right to
receive the number of shares of stock or other securities or property (including
cash) to which the shares of Common Stock deliverable (at the time of such
reclassification, consolidation, merger, sale or exchange) upon conversion
thereof would have been entitled upon such reclassification of Common Stock,
consolidation, merger, sale or exchange, if the conversion of the 1992 Preferred
Stock into Common Stock had taken place immediately before that event; and in
any case, if necessary, the provisions set forth in this Subparagraph (v) with
respect to the rights and interests thereafter of the holders of the shares of
1992 Preferred Stock shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares of stock or other securities or
property (including cash) thereafter deliverable upon conversion of shares of
1992 Preferred Stock.
(vi) Whenever the Conversion Price is
adjusted as provided in this Paragraph (e):
(A) The Corporation shall compute
the adjusted Conversion Price in accordance with this Paragraph (e) and shall
prepare a certificate signed by the President or any Vice President of the
Corporation setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and the
certificate shall promptly be filed with the transfer agent for the 1992
Preferred Stock, but the transfer agent for 1992 Preferred Stock has no duty
with respect to any such certificate filed with it except to keep the same on
file and available for inspection during reasonable hours; and
(B) The Corporation shall cause to
be mailed to each holder of shares of 1992 Preferred Stock at his then
registered address by first-class mail, postage prepaid, a notice stating that
the Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.
(vii) Without limiting the obligation of the Corporation to
give the notices provided in Subparagraph (vi), the failure of the Corporation
to give such notice shall not invalidate any corporate action by the
Corporation.
(f) For the purpose of any computation under
Paragraph (c) or (e), "current market price" means, with respect to Common Stock
on any date, the average of the daily closing prices per share of Common Stock
for the 20 consecutive trading days immediately before that date. The "closing
price" for a day is the last sale price, regular way, or in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on that exchange, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if it is not listed or admitted to trading on any national
securities exchange the mean of the closing bid and asked prices as reported by
National Association of Securities Dealers Automated Quotation System or, if it
is not so listed or reported, as reported by NQB or any successor thereof, of if
not so reported, as determined in good faith by the Board of Directors of the
Corporation.
(g) The Corporation shall at all times reserve and
keep available, free from preemptive rights for the purpose of effecting the
conversion of the shares of 1992 Preferred Stock, the full number of shares of
Common Stock then deliverable upon the conversion of all shares of 1992
Preferred Stock then outstanding.
(h) The Corporation is not obligated to pay any tax
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that in which the shares of 1992 Preferred
Stock so converted were registered, and the Corporation is not obligated to make
any such issue or delivery unless and until the person requesting such issue has
paid to the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(i) The Corporation may make such reductions in the
Conversion Price, in addition to those required by Paragraph (e), as it
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(j) In the event that:
(i) the Corporation declares a dividend or any other
distribution on its Common Stock, payable otherwise than in cash out of retained
earnings or earned surplus; or
(ii) the Corporation authorizes the granting to the holders of
its Common Stock of rights to subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
(iii) any capital reorganization of the
Corporation, reclassification of the capital stock of the Corporation,
consolidation or merger of the Corporation with or into another corporation
(other than a member in which the Corporation is the surviving corporation), or
sale, lease or conveyance of the assets of the Corporation as an entirety or
substantially as an entirety to another corporation occurs; or
(iv) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation occurs;
the Corporation shall cause to be mailed to the
holders of record of the 1992 Preferred Stock at least 20 days before the
applicable date hereinafter specified a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights are to
be determined or (y) the date on which such reorganization, reclassification,
consolidation, merger, sale, lease, conveyance, dissolution, liquidation or
winding up is expected to take place, and the date, if any is to be fixed, as of
which holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, lease,
conveyance, dissolution, liquidation or winding up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding up.
(6) Voting.
(a) Except as otherwise expressly required by
applicable law or by the terms of this Section C, the holders of shares of the
1992 Preferred Stock are not entitled to any vote on any matter, including but
not limited to any merger, consolidation or transfer of assets, or statutory
share exchange, and to no notice of any meeting of shareholders of the
Corporation.
(b) Whenever the vote, approval or other action of
holders of shares of the 1992 Preferred Stock is required or permitted by
applicable law or by the terms of this Section C, each share is entitled to one
vote and the affirmative vote of a majority of shares of 1992 Preferred Stock
present or represented at the meeting at which a quorum is present is sufficient
to constitute such vote, approval or other action.
(c) If, at any time, the Corporation falls in arrears
in the payment of dividends on the 1992 Preferred Stock in an aggregate amount
at least equal to the accrued dividends for six full quarterly dividend periods
(which need not be consecutive), the number of directors constituting the full
board of directors of the Corporation shall be automatically increased by two
and the holders of 1992 Preferred Stock, voting separately as a single class,
shall be entitled to elect two directors of the Corporation to fill the two
newly created directorships, at a special meeting called for that purpose in
accordance with paragraph (f) and thereafter at each meeting of the shareholders
held for the purpose of electing directors, so long as there continues to be any
arrearage in the payment of dividends on the 1992 Preferred Stock for any past
quarterly dividend period.
(d) When all dividends on the 1992 Preferred Stock
for all past quarterly dividend periods have been paid in full, the right or the
holders of 1992 Preferred Stock to elect directors ceases (subject to revesting
from time to time as provided in Paragraph (c)), the number of directors of the
Corporation shall be automatically reduced by two and the term of office of all
directors elected by the holders of the 1992 Preferred Stock terminates.
(e) A director elected by the holders of 1992
Preferred Stock shall hold office until the annual meeting next succeeding his
election or until his successor, if any, is elected by such holders. A director
so elected may be removed at any time with or without cause but only by the vote
of holders of the 1992 Preferred Stock at a meeting duly called for that
purpose. So long as the holders of the 1992 Preferred Stock have the right to
elect two directors, any vacancy in the office of a director elected by those
holders may be filled by the remaining director so elected or by the vote of the
holders of 1992 Preferred Stock at any annual meeting or any special meeting
called for the purpose.
(f) At any time when the power to elect directors
vests in the holders of the 1992 Preferred Stock, a proper officer of the
Corporation shall, on the written request of record holders of at least 10
percent of the number of shares of 1992 Preferred Stock then outstanding,
addressed to the secretary of the Corporation at its principal office, call a
special meeting of the holders of the 1992 Preferred Stock for the purpose of
electing directors. The meeting must be called on the notice required for annual
meetings of shareholders and must be held at the earliest practicable date, not
later than 20 days after receipt of the written request, in the city in which
the last preceding annual meeting of the shareholders of the Corporation was
held, but may be held at the time and place of the annual meeting if the annual
meeting is to be held within 60 days after the power to elect directors first
vests in the holders of the 1992 Preferred Stock. If the proper officer of the
Corporation does not call the meeting within the required time, then the holders
of record of 10 percent of the number of shares of 1992 Preferred Stock then
outstanding may, by written notice to the secretary of the Corporation at its
principal office, designate any person to call such meeting, and the person so
designated may call such meeting in the city above provided upon not fewer than
10 nor more than 20 days notice and for that purpose shall have access to the
stock books of the Corporation. At any meeting so called for the election of
directors by holders of the 1992 Preferred Stock or at any annual meeting held
while the holders of 1992 Preferred Stock have the right to elect directors,
holders of one-third of the shares of 1992 Preferred Stock then outstanding is
sufficient to constitute a quorum for the purpose of electing directors at such
a meeting. If at any such meeting a quorum of the 1992 Preferred Stock is not
present, the election of directors shall not take place, and the meeting shall
be adjourned from time to time for periods not exceeding 30 days until a quorum
is obtained.
(g) Approval of the holders of the 1992 Preferred
Stock, voting separately as a single class, is required to adopt any proposed
amendment to the Articles of Incorporation if the proposed amendment would
affect shares of the 1992 Preferred Stock in any one or more of the following
ways:
(i) Create or authorize any class of stock ranking prior to
such shares in respect of dividends or distribution of assets on liquidation or
otherwise alter or abolish the liquidation preferences or any other preferential
right of such shares.
(ii) Reduce the redemption price or
otherwise alter or abolish any right with respect to redemption of such shares
expressly provided by this Section C.
(iii) Alter or abolish any right of such shares expressly
provided by this Section C to receive dividends except as such right may be
affected by dividend rights of new shares being authorized of another class or
series of shares ranking on a par with or junior to the Preferred Stock.
(iv) Alter or abolish any right of holders of shares of the
1992 Preferred Stock under this Section C to convert such shares into shares of
Common Stock.
(v) Exclude or limit any voting rights of such shares
conferred by this Section C.
(7) Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up
of the Corporation, the holders of the shares of 1992 Preferred Stock shall be
entitled to receive upon liquidation and to be paid out of the assets of the
Corporation available for distribution to its shareholders, before any payment
or distribution may be made on the Common Stock or on any other class of stock
ranking junior to the 1992 Preferred Stock, the amount of $25 per share, plus a
sum equal to all dividends (whether or not earned or declared) on such shares
accrued and unpaid thereon to the date of final distribution.
(b) Neither the sale of all or substantially all the
property or business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or consolidation of
any other corporation into or with the Corporation, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, for the
purposes of this Subsection (7). This Paragraph (b) does not apply, however, to
a merger of the Corporation into a subsidiary pursuant to Section 112G of the
LBCL if the merger would cause the conversion of the 1992 Preferred Stock into
(i) an amount of cash per share of the 1992 Preferred Stock or (ii) a security
with terms less favorable than those contained in this Section C for the 1992
Preferred Stock.
(c) Upon payment to the holders of the shares of 1992
Preferred Stock of the full preferential amounts provided for in this Subsection
(7), the holders of 1992 Preferred Stock as such have no right or claim to any
of the remaining assets of the Corporation.
(d) If the assets of the Corporation available for
distribution to the holders of shares of 1992 Preferred Stock upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, are insufficient to pay in full all amounts to which such holders
are entitled under Paragraph (a) of this Subsection (7), no such distribution
may be made on account of any shares of any other class or series of Preferred
Stock ranking on a parity with the shares of 1992 Preferred Stock upon such
dissolution, liquidation or winding up unless proportionate distributive amounts
are paid on account of the shares of 1992 Preferred Stock, ratably, in
proportion to the full distributable amounts for which holders of all such
parity shares are respectively entitled upon dissolution, liquidation or winding
up.
(8) Ranking. For purposes of this Section C any stock of any
class or classes of the Corporation shall be deemed to rank:
(a) prior to the shares of 1992 Preferred Stock,
either as to dividends or upon liquidation, if the holders of such class or
classes are entitled under the Articles of Incorporation to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority to the
holders of shares of 1992 Preferred Stock;
(b) on a parity with shares of 1992 Preferred Stock,
either as to dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share or sinking
fund provisions, if any, are different from those of 1992 Preferred Stock, if
the holders of such class or classes are entitled under the Articles of
Incorporation to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such class
or classes and the holders of shares of 1992 Preferred Stock; and
(c) junior to shares of 1992 Preferred Stock, either
as to dividends or upon liquidation, if such class or classes are Common Stock
or if the holders of shares of 1992 Preferred Stock are entitled under the
Articles of Incorporation to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes.
(9) No Preemptive Rights. Holders of shares of 1992 Preferred
Stock have no preemptive rights.
D. Of the 5,000,000 shares of authorized no par value per share
Preferred Stock, 1,000,000 shares shall constitute a separate series of
Preferred Stock with the voting powers and the preferences and rights
hereinafter set forth.
(1) Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock"). The number of shares constituting the Series A Preferred
Stock may be increased or decreased by resolution of the Board of Directors
further amending the Articles of Incorporation; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
(2) Dividends and Distributions
(a) Subject to the rights of the holders of any
shares of stock ranking prior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, par value $5.00 per share (the "Common Stock"), of
the Corporation, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $1 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. If the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding prior to such event.
(b) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (a) of
this Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock); provided
that, if no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
(3) Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. If the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other
Articles of Amendment creating a series of Preferred Stock or any similar stock,
or by law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preferred Stock as provided in
Paragraph (2) are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (a) of
this Paragraph (4), purchase or otherwise acquire such shares at such time and
in such manner.
(5) Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Articles of Amendment creating a
series of Preferred Stock or any similar stock or as otherwise required by law.
(6) Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (b) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (a) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(7) Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
If the Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(8) No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
(9) Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
(10) Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
ARTICLE IV
DIRECTORS
A. The Board of Directors shall consist of not less than three nor more
than thirty persons, the exact number of which shall be as designated in the
By-laws, or, if not so designated, as shall be elected from time to time by the
shareholders.
B. Any director absent from a meeting of the Board of Directors or a
committee thereof may be represented by any other director, who may cast the
vote of the absent director according to the written instructions, general or
special, of the absent director.
ARTICLE V
VOTE REQUIRED FOR CORPORATE ACTION
The affirmative vote of the holders of two-thirds of the voting power
present or represented by proxy at a meeting of shareholders shall be required
to amend these Articles of Incorporation and shall be necessary to constitute
shareholder approval whenever such approval is required by law for a merger,
consolidation, sale of assets or dissolution.
ARTICLE VI
INDEMNIFICATION
The Corporation shall have the power to indemnify its present and
former officers, directors, employees and agents, and directors, officers,
employees and agents of other corporations or entities to the extent set forth
in or contemplated or authorized by the By-laws. No amendment limiting the right
to indemnification shall affect the entitlement of any person to indemnification
whose claim thereto results from conduct occurring prior to the date of such
amendment.
ARTICLE VII
REVERSION
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, which are not claimed by the shareholders entitled thereto
within one year after the dividend or redemption price became payable or the
shares became issuable, despite reasonable efforts by the Corporation to pay the
dividend or redemption price or deliver the certificates for the shares to such
shareholders within such time, shall, at the expiration of such time, revert in
full ownership to the Corporation, and the Corporation's obligation to pay such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided that the Board of Directors may, at any time, for any
reason satisfactory to it, but need not, authorize (1) payment of the amount of
any cash or property dividend or redemption price or (2) issuance of any shares,
ownership of which has reverted to the Corporation pursuant to this Article VII,
to the entity who or which would be entitled thereto had such reversion not
occurred.
ARTICLE VIII
SPECIAL MEETINGS OF SHAREHOLDERS
At any time, upon the written request of any shareholder or
shareholders holding in the aggregate a majority of the total voting power, the
Secretary of the Corporation shall call a special meeting of shareholders to be
held at the registered office at such time as the Secretary may fix, not less
than fifteen nor more than sixty days after the actual receipt of the request.
Such requests must state the specific purpose or purposes of the special meeting
and the business to be conducted thereat shall be limited to such purpose or
purposes. Except as provided in this Article VIII, no shareholder or
shareholders shall have power to call or cause to be called a special meeting of
shareholders.
ARTICLE IX
LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
A. No director or officer of the Corporation shall be liable to the
Corporation or its shareholders for monetary damages for breach of his fiduciary
duty as a director or officer, provided that the foregoing provision shall not
eliminate or limit the liability of a director or officer for (a) any breach of
his duty of loyalty to the Corporation or its shareholders; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (c) liability for unlawful distributions of the Corporation's
assets to, or redemption or repurchase of the Corporation's shares from
shareholders of the Corporation, under and to the extent provided in La. R.S.
12:92D; or (d) any transaction from which he derived an improper personal
benefit.
B. The Board of Directors may (a) cause the Corporation to enter into
contracts with directors and officers providing for the limitation of liability
set forth in this Article IX to the fullest extent permitted by law, (b) adopt
by-laws or resolutions, or cause the Corporation to enter into contracts,
providing for indemnification of directors and officers of the Corporation and
other persons, and (c) cause the Corporation to exercise the powers set forth in
R.S. 12:83F, notwithstanding that some or all of the members of the Board of
Directors acting with respect to the foregoing may be parties to such contracts,
or beneficiaries of such by-laws or resolutions of the exercise of such powers.
C. Notwithstanding any other provisions of these Articles of
Incorporation, the affirmative vote of at least 80% of the total voting power
shall be required to amend or repeal this Article IX, and any amendment or
repeal of this Article IX shall not adversely affect any elimination or
limitation of liability of a director or officer of the Corporation under this
Article IX with respect to any action or inaction occurring prior to the time of
such amendment or repeal.
Exhibit 3.2
AMENDED AND RESTATED BY-LAWS
OF
FIRST COMMERCE CORPORATION
FEBRUARY 26, 1996
SECTION 1. OFFICES
1.1. Principal Office. The principal office shall be located at 210
Baronne Street, New Orleans, Louisiana.
1.2. Additional Offices. The Corporation may have such offices at such
other places as the Board of Directors or President and Chief Executive Officer
may from time to time determine or the business of the Corporation may require.
SECTION 2. SHAREHOLDERS' MEETINGS
2.1. Time, Place, Presiding Officer and Secretary. Unless otherwise
required by law or these By-laws, all meetings of shareholders shall be held in
the Board Room at the Corporation's principal office or at such other place,
within or without the State of Louisiana, as may be designated by the Board of
Directors. At every shareholders meeting, the President and Chief Executive
Officer or, in his absence, the Chairman of the Board, shall preside, and the
Secretary, or in his absence the appointee of the presiding officer at the
meeting, shall act as Secretary of the meeting.
2.2. Annual Meeting. An annual meeting of the shareholders shall be
held on the third Monday of April in each year, or if such day is a legal
holiday, then on the next succeeding day not a legal holiday, at 9:00 A.M.,
local time, or on such other date or at such other time as the Board of
Directors shall designate, for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting. If no annual shareholders' meeting is held for a period of eighteen
months, any shareholder may call such meeting to be held at the registered
office of the Corporation as shown on the records of the Secretary of State of
Louisiana.
2.3. Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by law or the Articles of
Incorporation, may be called by the Board of Directors or the President and
Chief Executive Officer. At any time, upon the written request of a majority of
the Board of Directors or of any shareholder or shareholders holding in the
aggregate a majority of the total voting power, the Secretary shall call a
special meeting of shareholders to be held at the registered office of the
Corporation at such time as the Secretary may fix, not less than fifteen nor
more than sixty days after the actual receipt of the request. Such request shall
state the purposes of the proposed special meeting, and the business conducted
at such special meeting shall be limited to the purposes stated in such request.
2.4. Notice of Meetings. Except as otherwise provided by law, the
authorized person or persons calling a shareholders' meeting shall cause written
notice of the time, place and purpose of the meeting to be given to all
shareholders entitled to vote at such meeting at least ten days and not more
than sixty days prior to the day fixed for the meeting. Notice of the annual
meeting need not state the purpose thereof, unless action is to be taken at the
meeting as to which notice is required by law or these By-laws. Notice of a
special meeting shall state the purpose or purposes thereof, and the business
conducted at any special meeting shall be limited to the purposes stated in the
notice.
2.5. List of Shareholders. At every meeting of shareholders, a list of
shareholders entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of transfers of
shares, showing the number and class of shares held by each such shareholder on
the record date for the meeting, shall be produced on the request of any
shareholder.
2.6. Quorum. Except as otherwise provided by law or the Articles of
Incorporation, the presence, in person or by proxy, of the holders of a majority
of the total voting power shall constitute a quorum at all meetings of the
shareholders.
2.7. Withdrawal. The shareholders present or represented at a duly
organized meeting shall constitute a quorum and may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum as fixed in Section 2.6 hereof, or the refusal of any
shareholders present to vote.
2.8. Voting; Judges of Election. Each shareholder shall have one vote
for each share of stock having voting power registered in his name on the books
of the Corporation on the record date for the determination of shareholders
entitled to vote. When a quorum is present at any meeting, the vote of the
holders of a majority of the voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of law or the Articles of Incorporation,
a different vote is required, in which case such express provision shall govern
and control the decision of such question. Directors shall be elected by
plurality vote.
The Board or the President and Chief Executive Officer may at any time
appoint two or more persons to serve as Judges of Election at any shareholders
meeting to act as judges and tellers with respect to all votes by ballot at such
meeting. If any Judge is absent or refuses to act, and his office is not filled
by the Board, the President and Chief Executive Officer or the presiding officer
at the meeting may appoint a Judge or Judges.
2.9. Proxies. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such shareholder and bearing
a date not more than eleven months prior to the meeting, unless such instrument
validly provides for some other definite period; provided, however, that no
proxy shall be valid for longer than three years. The aforesaid proxy need not
be a shareholder of the Corporation.
2.10. Adjournments; Postponements; Cancellation. Adjournments of any
annual or special meeting of shareholders may be taken without new notice being
given unless a new record date is fixed for the adjourned meeting, but any
meeting at which directors are to be elected shall be adjourned only from day to
day until such directors shall have been elected. Any previously scheduled
shareholders meeting may be postponed, and any special meeting of shareholders
may be canceled, by resolution of the Board upon public notice given prior to
the date previously scheduled for such meeting, except as may otherwise be
required by law or the Articles of Incorporation.
2.11. Lack of Quorum. If a meeting cannot be organized because a quorum
has not attended, those present may adjourn the meeting to such time and place
as they may determine, subject, however, to the provisions of Section 2.10
hereof. In the case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less than a quorum as
fixed in Section 2.6 hereof, shall nevertheless constitute a quorum for the
purpose of electing directors.
2.12 Nature of Business.
A. Except as otherwise provided in Section 3.6 of these
By-Laws or required by applicable law, the only items of business which shall be
conducted at any meeting of shareholders shall (i) have been specified in the
written notice of the meeting given in accordance with Section 2.4 of these
By-Laws, (ii) be brought before the meeting at the direction of the Board or the
presiding officer of the meeting, (iii) have been submitted to the Corporation
in compliance with Rule 14a-8 under the Securities Exchange Act of 1934, to the
extent and only to the extent that such rule requires that such proposal be
submitted to shareholders notwithstanding the provisions of these By-laws or
(iv) in the case of annual meetings of shareholders, be brought in accordance
with the provisions of this Section 2.12.
B. Any shareholder of record on the record date for an annual
meeting of shareholders and who shall continue to be entitled to vote thereat
may propose an item or items at the meeting only if written notice of such
shareholder's intent to propose such item or items has been given, either by
personal delivery or by United States mail, postage prepaid, to the Secretary of
the Corporation not less than 90 nor more than 120 days prior to the anniversary
of the immediately preceding annual meeting; provided, however, that if the
annual meeting is called for a date that is not within thirty days before or
after such anniversary date, notice by the shareholder in order to be timely
must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the annual meeting was
mailed or public disclosure of the date of the annual meeting was made,
whichever first occurs.
C. Each such notice shall set forth (a) the name and address
of the shareholder who intends to propose an item or items of business at the
meeting, (b) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose the item or items of business
specified in the notice, (c) a description of all arrangements or understandings
between the shareholder and any other person or persons (naming such person or
persons) pursuant to which the item or items of business is to be made by the
shareholder, and (d) such other information regarding each item of business
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the item of business been proposed, or intended to be proposed,
by the Board.
D. The presiding officer at the meeting may refuse to
acknowledge any proposed item of business not in compliance with the foregoing
procedure.
E. Anything to the contrary in these By-laws notwithstanding,
no item of business may be conducted at a shareholders meeting that is not
permitted by law.
SECTION 3. DIRECTORS
3.1. Number. The number of authorized directors shall be twenty-five;
provided that if after proxy materials for any annual meeting of shareholders
are mailed to shareholders any person named therein to be nominated at the
direction of the Board of Directors becomes unable or unwilling to serve, the
foregoing number of authorized directors shall be automatically reduced by a
number equal to the number of such persons; and provided further that upon the
consummation of any transaction involving the acquisition by the Corporation,
directly or indirectly, of another financial institution ("Target Company"),
where the acquisition agreement with respect thereto provides that designees of
the Target Company shall become members of the Board of Directors, the number of
authorized directors shall be increased automatically by the number of such
designees.
3.2. General Powers; Election. All of the corporate powers shall be
vested in, and the business and affairs of the Corporation shall be managed by,
the Board of Directors. The Board of Directors may exercise all such powers of
the Corporation and do all such lawful acts and things which are not by law, the
Articles of Incorporation or these By-laws directed or required to be done by
the President and Chief Executive Officer or the shareholders. Directors shall
be elected at the annual meeting of shareholders and shall hold office for one
year or until their successors are chosen and have qualified.
3.3. Vacancies. Except as otherwise provided in the Articles of
Incorporation or these By-laws, (a) the office of a director shall become vacant
if he dies, resigns, or is removed from office, and (b) the Board of Directors
may declare vacant the office of a director if (i) he is interdicted or
adjudicated an incompetent, (ii) an action is filed by or against him, or any
entity of which he is employed as his principal business activity, under the
bankruptcy laws of the United States, (iii) in the sole opinion of the Board of
Directors he becomes incapacitated by illness or other infirmity so that he is
unable to perform his duties for a period of six months or longer, or (iv) he
ceases at any time to have the qualifications required by law, the Articles of
Incorporation or these By-laws. The remaining directors may, by a majority vote,
fill any vacancy on the Board of Directors (including any vacancy resulting from
an increase in the authorized number of directors, or from the failure of the
shareholders to elect the full number of authorized directors) for an unexpired
term; provided that the shareholders shall have the right at any special meeting
called for such purpose prior to action by the Board of Directors to fill the
vacancy.
3.4. Eligibility for Nomination or Election. No person shall be
eligible for nomination or election as a director who:
(1) shall have attained the age of 72 years, provided that any
person who on April 16, 1990 was a director of the Corporation may continue to
be nominated and elected, or
(2) while a director of the Corporation was absent during his
annual term of office from more than one-third of the aggregate number of
meetings of the Board of Directors and Committees of which he was a member,
unless the failure to so attend resulted from illness or other reason determined
by the Executive Committee of the Corporation to excuse such failure to attend;
provided that nothing herein shall be deemed to be in derogation of the power of
the Board of Directors to declare the office of a director vacant as provided in
Section 3.3(b).
3.5 Chairman of the Board. At the first meeting of each newly-elected
Board of Directors, or at such other time when there shall be a vacancy, the
Board of Directors shall elect one of its members as Chairman of the Board to
serve at the pleasure of the Board of Directors. The Chairman of the Board
shall, if present, open and close all meetings of the Board of Directors and the
shareholders, shall preside at all meetings of the Board of Directors in the
absence of the President and Chief Executive Officer, shall be authorized to
call special meetings of the Board of Directors as provided in Section 4.4, and
shall have such other powers and duties as may be prescribed by the Board of
Directors. The Board of Directors may determine the compensation of the Chairman
of the Board, except that if the Chairman of the Board is also an officer of the
Corporation, his compensation as such shall be determined in the same manner as
provided in these By-laws for officers of the Corporation other than the
President and Chief Executive Officer.
3.6. Shareholder Nomination of Director Candidates.
A. Nominations for the election of Directors may be made by
the Board or a nominating committee thereof or by any shareholder entitled to
vote in the election of Directors generally. However, any such shareholder may
nominate one or more persons for election as Directors at a meeting only if
written notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by mail, to the
Secretary of the Corporation (i) with respect to an election to be held at an
annual meeting of shareholders, not less than 90 nor more than 120 days prior to
the anniversary of the immediately preceding annual meeting, provided, however,
that if the annual meeting is called for a date that is not within 30 days
before or after such anniversary, notice by the shareholder in order to be
timely must be so received not later than the close of business on the tenth day
following the date on which notice of the date of the annual meeting was mailed
or public disclosure of the date of the annual meeting was made, whichever first
occurs, and (ii) with respect to an election to be held at a special meeting of
shareholders for the election of Directors, not later than the close of business
on the tenth day following the date on which notice of such meeting is first
given to shareholders.
B. Each such shareholder notice shall set forth (a) the name
and address of the shareholder who intends to make the nomination and of the
person or persons to be nominated, (b) a representation that the shareholder is
a holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice, (c) a description of all arrangements
or understandings between the shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder, (d) such other information
regarding each nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or intended
to be nominated, by the Board, and (e) the consent of each nominee to serve as a
Director of the Corporation, if so elected.
C. The presiding officer at the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
<PAGE>
SECTION 4. MEETINGS OF THE BOARD OF DIRECTORS
4.1. Place of Meetings. The meetings of the Board of Directors shall be
held in the Board Room at the Corporation's principal office or at such other
place within or without the State of Louisiana as the Board of Directors may
from time to time appoint or as may be fixed in the notice of a special meeting
given pursuant to Section 4.4 hereof.
4.2. Annual Meeting. The first meeting of each newly- elected Board of
Directors shall be held following and on the same day as the annual
shareholders' meeting in the Board Room at the Corporation's principal office or
at such other place as the Board of Directors may determine, and no notice of
such first meeting shall be necessary to the newly-elected directors in order
legally to constitute the meeting.
4.3. Regular Meeting; Notice. Regular meetings of the Board of
Directors shall be held at 1:00 P.M., New Orleans time, on the third Monday of
February, May, August, November and December, but the Board may at any regular
or special meeting change the date of any next succeeding regular meeting.
Notice of regular meetings of the Board of Directors shall not be required.
4.4. Special Meetings; Notice. Special meetings of the Board of
Directors may be called by the Authorized Person on two days notice given to
each director, either personally or by telephone, mail or telegram. Special
meetings shall be called by the Authorized Person in like manner and on like
notice on the written request of a majority of the Board of Directors and, if
the Authorized Person fails or refuses or is unable to call a special meeting
within twenty-four hours of such request, then a majority of the Board of
Directors may call the special meeting on two days notice given to each
director. As used in this Section 4.4, the term "Authorized Person" shall mean
the President and Chief Executive Officer or, in the event of a vacancy in the
position of President and Chief Executive Officer or the incapacity for an
extended period of time, by reason of illness or injury, of the person serving
as President and Chief Executive officer to perform the duties of his office for
an extended period, the Chairman of the Board.
4.5. Quorum: Adjournments. A majority of the Board of Directors shall
be necessary to constitute a quorum for the transaction of business, and except
as otherwise provided by law or these By-laws, the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the Board of Directors. If a quorum is not present at any meeting of the Board
of Directors, the directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
4.6. Withdrawal. If a quorum is present when a meeting of the Board of
Directors or a committee thereof is convened, the directors present may continue
to do business, taking action by vote of a majority of a quorum, until
adjournment, notwithstanding the withdrawal of enough directors to leave less
than a quorum, or the refusal of any director present to vote.
4.7. Action by Consent. Any action which may be taken at a meeting of
the Board of Directors or any committee thereof may be taken by a consent in
writing signed by all of the directors or by all members of the committee, as
the case may be, and filed with the records of proceedings of the Board of
Directors or committee.
4.8. Meeting by Telephone or Similar Communications. Members of the
Board of Directors may participate at and be present at any meeting of the Board
of Directors or any committee thereof by means of conference telephone or
similar communications equipment if all persons participating in such meeting
can hear and communicate with each other. Participation in a meeting pursuant to
this Section 4.8 shall constitute presence in person at such meeting, except
where a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or commenced.
4.9. Compensation. Directors who are not salaried officers of the
Corporation or any of its subsidiaries shall be entitled to such compensation
for their services as directors, and all directors shall be entitled to such
reimbursement for any reasonable expenses incurred in attending meetings of the
Board of Directors or any committee thereof, as may from time to time be
determined by the Board of Directors.
SECTION 5. COMMITTEES OF THE BOARD OF DIRECTORS
5.1. Designation. The Board of Directors may designate one or more
committees, each committee to consist of not less than three directors of the
Corporation (and one or more directors may be named as alternate members to
replace any absent or disqualified regular members), which, to the extent
provided by resolution of the Board of Directors or these By-laws, shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation. The members of each committee shall be
nominated by the President and Chief Executive Officer and approved by the Board
of Directors, and, in a similar manner, one of the members of each committee
shall be selected as its Chairman, who shall be authorized to call all meetings
of such committee, to preside at all such meetings and to appoint a Secretary
(who may be an officer of the Corporation or any of its subsidiaries) to keep
regular minutes of its meetings and report the same to the Board of Directors
when required. Such committee or committees shall have such name or names as may
be stated in these By-laws, or as may be determined, from time to time, by the
Board of Directors. Any vacancy occurring in any such committee shall be filled
in the same manner as appointments are made, but the President and Chief
Executive Officer may designate another director to serve on the committee
pending action by the Board of Directors. Each such committee shall hold office
during the term of the Board of Directors constituting it, unless otherwise
ordered by the Board of Directors.
5.2. Executive Committee. The Executive Committee, one of the members
of which shall be the President and Chief Executive Officer, shall meet as
necessary in order to perform the duties provided for in this Section 5.2. The
functions of the Executive Committee shall be to:
(a) Exercise any of the powers of the Board of Directors not
otherwise delegated to it under these By-laws or a resolution of the Board of
Directors, by the unanimous consent of its members, when it is determined by
such unanimous consent that because of the nature of the particular situation it
is not possible or practical to convene the full Board of Directors.
(b) Make recommendations to the Board of Directors concerning
special projects or policies including, but not limited to, acquisition
situations, dividend policies and stock splits.
(c) Perform an initial evaluation of all candidates for
membership to the Boards of Directors of the Corporation and its banking
subsidiaries.
(d) Approve, and adopt resolutions granting authority to
officers of the Corporation to enter into, perform and enforce, agreements on
behalf of the Corporation related to the acquisition of failed or failing
financial institutions or affiliates thereof, or to the acquisition of any
financial institution or other entity where the consideration to be paid to the
shareholders of such entity does not exceed the greater of one million shares of
the common stock of the Corporation, or the market value of one million shares
of the common stock of the Corporation determined as of the close of business on
the day before the date of adoption of the resolutions with respect to such
acquisition.
(e) (i) Review and approve any and all proposed employment or
employment related contracts between the Corporation or a subsidiary of the
Corporation and an employee of any financial institution or other entity
proposed to be acquired by the Corporation or a subsidiary of the Corporation;
and (ii) propose or review, and approve, contracts between the Corporation and
any executive officer of the Corporation providing for employment protection of
the executive upon any change of control of the Corporation.
(f) Assure that plans for the succession of senior management
personnel have been developed by the President and Chief Executive Officer.
5.3. Audit Committee. The Audit Committee shall be chosen from those
directors who are not officers of the Corporation or any of its subsidiaries.
The functions of the Audit Committee shall be to:
(a) Make recommendations to the Board of Directors concerning
the selection or retention of the Corporation's independent auditors.
(b) Consult with the chosen independent auditors with regard
to the plan of the audit.
(c) Consult with the chief internal auditor directly on any
matter the Committee or the chief internal auditor deems appropriate in
connection with carrying out their functions.
(d) Determine the compensation of the senior internal auditing
personnel and approve the termination of any member of the internal auditing
staff.
(e) Review (i) the results of audits of the Corporation by its
independent auditors and the Federal Reserve Board, and (ii) the report of the
Examining Committees of the subsidiaries of the Corporation regarding their
reviews of the scope and results of internal audits and the results of
regulatory examinations.
(f) Discuss with the Corporation's management its responses to
the reports and recommendations emanating from internal and external audits.
(g) Report to the Board of Directors concerning the results of
its reviews.
5.4 Compensation Committee. The Compensation Committee shall be chosen
from those directors who are both (i) "disinterested persons" within the meaning
of Rule 16b-3 of the Securities and Exchange Commission, as amended from time to
time, and (ii) "outside directors" of the Corporation within the meaning of
Section 162(m)(4)(c)(i) of the Internal Revenue Code, as amended from time to
time. The functions of the Compensation Committee shall be to
(a) Determine from time to time the compensation of the
President and Chief Executive Officer and of any other officer whose salary and
bonus would exceed 80% of the salary and bonus of the President and Chief
Executive Officer.
(b) Review the evaluations of the Corporation's senior
management conducted by the President and Chief Executive Officer.
(c) Except as provided in Section 5.2(e), review and approve
any and all proposed employment or employment related contracts between the
Corporation or a subsidiary of the Corporation and an employee or prospective
employee of the Corporation or a subsidiary of the Corporation.
(d) Administer the Corporation's stock option plan and 1992
Stock Incentive Plan, with the powers and responsibilities provided for in such
plans.
<PAGE>
SECTION 6. NOTICES
6.1. Form of Delivery. Whenever under the provisions of law, the
Articles of Incorporation or these By-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice
unless otherwise specifically provided in the Articles of Incorporation or these
By-laws, but said notice may be given by mail, addressed to such director or
shareholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid. Such notices shall be deemed to be given at the time
they are deposited in the United States mail. Notice to a director pursuant to
Section 4.4 hereof may also be given personally or by telephone or telegram sent
to his address as it appears on the records of the Corporation.
6.2. Waiver. Whenever any notice is required to be given by law, the
Articles of Incorporation or these By-laws, a waiver thereof in writing signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. In addition, notice
shall be deemed to have been given to, or waived by, any shareholder or director
who attends a meeting of shareholders or directors in person, or is represented
at such meeting by proxy, without protesting at the commencement of the meeting
the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 7. OFFICERS
7.1. Designations. The officers of the Corporation shall be a President
and Chief Executive Officer, a Secretary and a Treasurer, and may be one or more
of the following: Senior Executive Vice President, Executive Vice President,
Senior Vice President, Vice President, Assistant Secretary and Assistant
Treasurer. Any two offices may be held by the same person, provided that no
person holding more than one office may sign, in more than one capacity, any
certificate or other instrument required by law to be signed by two officers. No
officer other than the President and Chief Executive Officer need be a director.
7.2. Appointment of Certain Officers. At the first meeting of each
newly-elected Board of Directors, or at such other time when there shall be a
vacancy, the Board of Directors shall select one of its members as President and
Chief Executive Officer, and shall also select a Secretary and a Treasurer, each
of whom shall serve for one year or until his successor is elected and has
qualified.
7.3. Appointment of Other Officers. As soon as practicable after his
selection, the President and Chief Executive Officer may appoint one or more of
each of the following officers: Senior Executive Vice President, Executive Vice
President, Senior Vice President, Vice President, Assistant Secretary and
Assistant Treasurer, and shall reasonably inform the Board of Directors of such
appointees and of terminations and resignations. The President and Chief
Executive Officer may also appoint such other officers, employees and agents of
the Corporation as he may deem necessary; or he may vest the authority to
appoint any such other officers, employees and agents in such other of the
officers of the Corporation as he deems appropriate, subject in all cases to his
direction. Subject to these By-laws, all of the officers, employees and agents
of the Corporation shall hold their offices or positions at the pleasure of the
Board of Directors or the President and Chief Executive Officer.
7.4. Compensation. The salary and any bonus of the President and Chief
Executive Officer shall be fixed by the Compensation Committee. The salaries and
bonuses of all other officers and employees of the Corporation shall be fixed
from time to time by the President and Chief Executive Officer, except that no
officer or employee may be paid a salary and bonus in excess of 80% of the
salary and bonus of the President and Chief Executive Officer without the
approval of the Compensation Committee. No officer shall be prevented from
receiving such salary or bonus by reason of the fact that he is also a director
of the Corporation.
7.5. Employment Contracts. The Corporation is prohibited from entering
into any employment or employment related contracts without the prior review and
approval of such contracts by the Executive Committee, in the case of contracts
of the type specified in Section 5.2(e), or the Compensation Committee in the
case of contracts of the type specified in Section 5.4(d).
7.6. Removal. Any officer or employee of the Corporation may be
removed, with or without cause, at any time by the action of the Board of
Directors or the President and Chief Executive Officer, but such removal shall
not prejudice the contract rights, if any, of the person so removed. Any vacancy
occurring in any office of the Corporation other than his own may be filled by
the President and Chief Executive Officer.
7.7. Duties and Powers of Officers. The duties and powers of the
officers of the Corporation shall be as provided in these By-laws, or as
provided for pursuant to these By-laws, or as shall be specified from time to
time by the President and Chief Executive Officer, or (except to the extent
inconsistent with these By-laws, or with any provision made pursuant hereto)
shall be those customarily exercised by corporate officers holding such offices.
7.8. The President and Chief Executive Officer. The President and Chief
Executive Officer shall be the chief executive officer of the Corporation and,
subject to the direction of the Board of Directors, shall have general charge of
the business, affairs and property of the Corporation and general supervision
over its officers, employees, and agents. In general, he shall perform all
duties incident to the office of President, and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He may delegate
any of his authority to any other officer of the Corporation, and he or any
other officer of the Corporation appointed or designated by him may execute
bonds, notes and other evidences of indebtedness, mortgages, contracts, leases,
agreements and other instruments except where such documents are required by law
to be otherwise signed and executed, and except where the signing and execution
thereof shall be exclusively delegated to some other officer or employee of the
Corporation by the Board of Directors. He shall preside at all meetings of
shareholders and of the Board of Directors. He shall have the authority to vote
all shares owned by the Corporation in any other corporation (including but not
limited to any subsidiary of the Corporation) and to otherwise exercise all of
the rights afforded shareholders of such other corporations, in whatever manner
he may, in his discretion, deem in the best interest of the Corporation. He may
give general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature. Whenever the consent of the
Corporation is required under the Articles of Incorporation or Association or
By-laws of any affiliate of the Corporation, such consent may be given by him or
any officer of the Corporation designated by him, and the giving of such consent
shall constitute the consent of the Corporation. He may cause the Corporation or
any subsidiary of the corporation to engage in any business activity permitted
to bank holding companies and their subsidiaries, and may form or cause to be
formed subsidiary corporations or other entities to engage in such business.
7.9. The Secretary. The Secretary shall have such duties and powers as
those customarily exercised by persons holding the office of Secretary and,
except as otherwise provided by law or these By-laws, such duties and powers as
shall be specified from time to time by the President and Chief Executive
Officer.
7.10. The Assistant Secretary. The Assistant Secretary, if any (or, in
the event there be more than one, the Assistant Secretaries in the order
determined by the President and Chief Executive Officer, or in the absence of
any designation, then in the order of their appointment), shall, in the absence
of the Secretary or, in the event of his inability or refusal to act, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as these By- laws or the President and Chief
Executive Officer may from time to time prescribe.
7.11. The Treasurer. Except as otherwise provided by law or these
By-laws, the Treasurer shall have such duties and powers as shall be specified
from time to time by the President and Chief Executive Officer.
7.12. The Assistant Treasurer. The Assistant Treasurer, if any (or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the President and Chief Executive Officer, or in the absence of any
designation, then in order of their appointment), shall, in the absence of the
Treasurer or, in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Treasurer, and shall perform such other
duties and have such other powers as the President and Chief Executive Officer
may from time to time prescribe.
<PAGE>
SECTION 8. STOCK
8.1. Certificates. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the President and Chief Executive
Officer and the Treasurer or the Secretary or an Assistant Secretary of the
Corporation evidencing the number and class (and series, if any) of shares owned
by him, containing such information as required by law and bearing the seal of
the Corporation, if any. If any stock certificate is manually signed by a
transfer agent or registrar other than the Corporation itself or an employee of
the Corporation, the signature of any such officer may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
8.2. Missing Certificates. The President and Chief Executive Officer or
the Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the President and Chief Executive Officer or the Board of
Directors may, in their discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as he or it shall require and/or to give a bond in such sum as he or it may deem
appropriate as indemnity against any claim that may be made against the
Corporation or any other person with respect to the certificate claimed to have
been lost, stolen or destroyed.
8.3. Registration of Transfers. Upon surrender to the Corporation or
any transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, to cancel the old certificate and to record the
transaction upon its books.
SECTION 9. DETERMINATION OF SHAREHOLDERS
9.1. Record Date. In order that the Corporation may determine
shareholders entitled to notice of and to vote at a meeting of shareholders or
any adjournment thereof, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any right in respect of
any exchange, conversion or exchange of shares, or to participate in a
reclassification of stock, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors may fix in advance a record
date for determination of shareholders for such purpose, such date to be not
more than sixty days and, if fixed for the purpose of determining shareholders
entitled to notice of and to vote at a meeting, not less than ten days, prior to
the date on which the action requiring the determination of shareholders is to
be taken. Except as the Board of Directors may provide otherwise, if no record
date is fixed for the purpose of determining shareholders (a) entitled to notice
of and to vote at a meeting, the close of business on the day before the notice
of the meeting is mailed, or, if notice is waived, the close of business on the
day before the meeting, shall be the record date for such purpose, or (b) for
any other purpose, the close of business on the day on which the Board of
Directors adopts the resolution relating thereto shall be the record date for
such purpose. A determination of shareholders of record entitled to notice of or
to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
9.2. Registered Shareholders. Except as otherwise required by law, the
Corporation and its directors, officers and agents, shall be entitled to
recognize and treat a person registered on its books as the owner of shares, as
the owner in fact thereof for all purposes, and as the person exclusively
entitled to have and to exercise all rights and privileges incident to the
ownership of such shares, and the rights under this Section 9.2 shall not be
affected by any actual or constructive notice which the Corporation, or any of
its directors, officers, employees or agents, may have to the contrary.
SECTION 10. MISCELLANEOUS
10.1. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors or the President and Chief Executive Officer
may from time to time designate.
10.2. Investment Accounts. The President and Chief Executive Officer
and such officers as he may from time to time designate are hereby authorized
and empowered to open and close accounts for the Corporation with any person,
partnership, or other entity for the purpose of the purchase and sale of
securities of whatever type.
10.3. Other Accounts. The President and Chief Executive Officer and
such officer or officers as he may from time to time designate are authorized
and empowered to open and close one or more accounts of any type or types with
any one or more banks, savings and loan associations, or other institutions and
to make deposits to, transfers to or from, and withdrawals from, such accounts,
and to take any and all other actions with respect thereto as they in their sole
discretion shall deem necessary or advisable.
10.4. Purchase and Sale of Investment Securities. The President and
Chief Executive Officer and such officer or officers as he may from time to time
designate are hereby authorized and empowered to purchase and sell, for and on
behalf of the Corporation, any securities issued by any corporation, partnership
or other entity, in such amounts and for such consideration as the President and
Chief Executive Officer or other designated officer or officers shall determine,
except that the President and Chief Executive Officer and such designated
officer or officers shall have no authority to sell any shares of the capital
stock of any subsidiary of the Corporation owned by the Corporation other than
to the Corporation or to another wholly-owned subsidiary of the Corporation.
10.5 Lending and Borrowing Funds. The Chief Executive Officer and such
officers as he may from time to time designate shall have the authority to loan
and borrow funds on behalf of the Corporation in such amounts and on such terms,
including the pledge of assets, as they shall deem appropriate in furtherance of
the business of the Corporation, and, in connection with the foregoing and the
investment of proceeds of borrowings shall have the authority to sign, execute,
acknowledge, verify, deliver or accept on behalf of the Corporation all
agreements, contracts, loan agreements, indentures, mortgages, security
instruments, satisfactions, settlements, powers of attorney, undertakings and
other instruments or documents in connection with the extension or repayment of
any lines of credit and/or the making or repayment of any loans and investments.
10.6. Fiscal Year. The fiscal year shall be the calendar year until
determined otherwise by the Board of Directors.
10.7. Seal. The corporate seal shall have inscribed thereon the name of
this Corporation, the year of its organization and the words "Corporate Seal,
Louisiana." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced. Failure to affix the corporate
seal shall not, however, affect the validity of any instrument.
10.8. Gender. All pronouns and variations thereof used in these By-laws
shall be deemed to refer to the masculine, feminine or neuter gender, singular
or plural, as the identity of the person, persons, entity or entities referred
to requires.
SECTION 11. INDEMNIFICATION
11.1. Definitions. As used in this Section the following terms shall
have the meanings set out below:
(a) "Board" - the Board of Directors of the Corporation.
(b) "Claim" - any threatened or pending or completed claim,
action, suit, or proceeding, whether civil, criminal, administrative or
investigative and whether made judicially or extra-judicially, or any separate
issue or matter therein, as the context requires.
(c) "Determining Body" - (i) those members of the Board who
are not named as parties to the Claim for which indemnification is being sought
("Impartial Directors"), if there are at least three Impartial Directors, or
(ii) a committee of at least three directors appointed by the Board (regardless
whether the members of the Board of Directors voting on such appointment are
Impartial Directors) and composed of Impartial Directors or (iii) if there are
fewer than three Impartial Directors or if the Board of Directors or the
committee appointed pursuant to clause (ii) of this paragraph so directs
(regardless whether the members thereof are Impartial Directors), independent
legal counsel, which may be the regular outside counsel of the Corporation.
(d) "Disbursing Officer" - the Chief Executive Officer of the
Corporation or, if the Chief Executive Officer is a party to the Claim for which
indemnification is being sought, any officer not a party to such Claim who is
designated by the Chief Executive Officer to be the Disbursing Officer with
respect to indemnification requests related to the Claim, which designation
shall be made promptly after receipt of the initial request for indemnification
with respect to such Claim.
(e) "Expenses" - any expenses or costs (including, without
limitation, attorney's fees, judgments, punitive or exemplary damages, fines and
amounts paid in settlement).
(f) "Indemnitee" - each person who is or was a director or
officer of the Corporation or the spouse of such person.
<PAGE>
11.2. Indemnity.
(a) To the extent such Expenses exceed the sum of amounts paid
or due under or pursuant to (i) policies of liability insurance maintained by
the Corporation, (ii) policies of liability insurance maintained by or on behalf
of the Indemnitee, and (iii) provisions for indemnification in the by-laws,
resolutions or other instruments of any entity other than the Corporation, the
Corporation shall indemnify Indemnitee against any Expenses actually and
reasonably incurred by him (as they are incurred) in connection with any Claim
either against him or as to which he is involved solely as a witness or person
required to give evidence, by reason of his position
(i) as a director or officer of the Corporation,
(ii) as a director or officer of any subsidiary of
the Corporation or as a fiduciary with respect to any employee benefit plan of
the Corporation,
(iii) as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other for profit or
not for profit entity or enterprise, if such position is or was held at the
request of the Corporation, or
(iv) as the spouse of any person who is or was a
director or officer of the Corporation with respect to any Claim involving the
spouse arising by reason of such person's position as described in clauses (i),
(ii) or (iii),
whether relating to service in such position before or after the effective date
of this Section, if he (i) is successful in his defense of the Claim on the
merits or otherwise or (ii) has been found by the Determining Body (acting in
good faith) to have met the Standard of Conduct; provided that (A) the amount
otherwise payable by the Corporation may be reduced by the Determining Body to
such amount as it deems proper if it determines that the Claim involved the
receipt of a personal benefit by Indemnitee, and (B) no indemnification shall be
made in respect of any Claim as to which Indemnitee shall have been adjudged by
a court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable for willful or intentional misconduct in the performance of his duty
to the Corporation or to have obtained an improper personal benefit, unless, and
only to the extent that, a court shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
(b) The Standard of Conduct is met when the conduct by an
Indemnitee with respect to which a Claim is asserted was conduct that he
reasonably believed to be in, or not opposed to, the best interest of the
Corporation, and, in the case of a criminal action or proceeding, that he had no
reasonable cause to believe was unlawful. The termination of any Claim by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim
as to which he may be indemnified hereunder, Indemnitee shall notify the Chief
Executive Officer of the Corporation of the Claim and whether he intends to seek
indemnification hereunder. If such notice indicates that Indemnitee does so
intend, the Chief Executive Officer shall promptly advise the Board thereof and
notify the Board that the establishment of the Determining Body with respect to
the Claim will be a matter presented at the next regularly scheduled meeting of
the Board. After the Determining Body has been established the Chief Executive
Officer shall inform the Indemnitee thereof and Indemnitee shall immediately
provide the Determining Body with all facts relevant to the Claim known to him.
Within 60 days of the receipt of such information, together with such additional
information as the Determining Body may request of Indemnitee, the Determining
Body shall determine, and shall advise Indemnitee of its determination, whether
Indemnitee has met the Standard of Conduct. The Determining Body may extend such
sixty-day period by no more than an additional sixty days.
(d) Indemnitee shall promptly inform the Determining Body upon
his becoming aware of any relevant facts not therefore provided by him to the
Determining Body, unless the Determining Body has obtained such facts by other
means. If, after determining that the Standard of Conduct has been met, the
Determining Body obtains facts of which it was not aware at the time it made
such determination, the Determining Body on its own motion, after notifying the
Indemnitee and providing him an opportunity to be heard, may, on the basis of
such facts, revoke such determination, provided that in the absence of actual
fraud by Indemnitee no such revocation may be made later than thirty days after
final disposition of the Claim.
(e) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
(i) If Indemnitee has, in the good faith judgment of
the Determining Body, met the Standard of Conduct, the Corporation may, in its
sole discretion after notice to Indemnitee, assume all responsibility for the
defense of the Claim, and, in any event, the Corporation and the Indemnitee each
shall keep the other informed as to the progress of the defense, including
prompt disclosure of any proposals for settlement; provided that if the
Corporation is a party to the Claim and Indemnitee reasonably determines that
there is a conflict between the positions of the Corporation and Indemnitee with
respect to the Claim, then Indemnitee shall be entitled to conduct his defense,
with counsel of his choice; and provided further that Indemnitee shall in any
event be entitled at his expense to employ counsel chosen by him to participate
in the defense of the Claim; and
(ii) The Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the Corporation (A)
proposes a settlement acceptable to the person asserting the Claim, or (B)
believes a settlement proposed by the person asserting the Claim should be
accepted, it shall inform Indemnitee of the terms thereof and shall fix a
reasonable date by which Indemnitee shall respond. If Indemnitee agrees to such
terms, he shall execute such documents as shall be necessary to effect the
settlement. If he does not agree he may proceed with the defense of the Claim in
any manner he chooses, but if he is not successful on the merits or otherwise,
the Corporation's obligation to indemnify him for any Expenses incurred
following his disagreement shall be limited to the lesser of (A) the total
Expenses incurred by him following his decision not to agree to such proposed
settlement or (B) the amount the Corporation would have paid pursuant to the
terms of the proposed settlement. If, however, the proposed settlement would
impose upon Indemnitee any requirement to act or refrain from acting that would
materially interfere with the conduct of his affairs, Indemnitee may refuse such
settlement and proceed with the defense of the Claim, if he so desires, at the
Corporation's expense without regard to the limitations imposed by the preceding
sentence. In no event, however, shall the Corporation be obligated to indemnify
Indemnitee for any amount paid in a settlement that the Corporation has not
approved.
(f) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to conduct the defense
of the Claim, and to make all decisions with respect thereto, with counsel of
his choice; provided that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the Corporation has not
approved.
(g) After notifying the Corporation of the existence of a
Claim, Indemnitee may from time to time request the Corporation to pay the
Expenses (other than judgments, fines, penalties or amounts paid in settlement)
that he incurs in pursuing a defense of the Claim prior to the time that the
Determining Body determines whether the Standard of Conduct has been met. If the
Disbursing Officer believes the amount requested to be reasonable, he shall pay
to Indemnitee the amount requested (regardless of Indemnitee's apparent ability
to repay such amount) upon receipt of an undertaking by or on behalf of
Indemnitee to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation under the circumstances. If
the Disbursing Officer does not believe such amount to be reasonable, the
Corporation shall pay the amount deemed by him to be reasonable and Indemnitee
may apply directly to the Determining Body for the remainder of the amount
requested.
(h) After it has been determined that the Standard of Conduct
was met, for so long as and to the extent that the Corporation is required to
indemnify Indemnitee under this Agreement, the provisions of Paragraph (g) shall
continue to apply with respect to Expenses incurred after such time except that
(i) no undertaking shall be required of Indemnitee and (ii) the Disbursing
Officer shall pay to Indemnitee such amount of any fines, penalties or judgments
against him which have become final as the Corporation is obligated to indemnify
him.
(i) Any determination by the Corporation with respect to
settlements of a Claim shall be made by the Determining Body.
(j) The Corporation and Indemnitee shall keep confidential, to
the extent permitted by law and their fiduciary obligations, all facts and
determinations provided or made pursuant to or arising out of the operation of
this Agreement, and the Corporation and Indemnitee shall instruct it or his
agents and employees to do likewise.
11.3. Enforcement.
(a) The rights provided by this Section shall be enforceable
by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights
under this Section Indemnitee shall be entitled to recover from the Corporation,
and shall be indemnified by the Corporation against, any and all Expenses
actually and reasonably incurred by him in connection with such proceeding but
only if he prevails therein. If it shall be determined that Indemnitee is
entitled to receive part but not all of the relief sought, then the Indemnitee
shall be entitled to be reimbursed for all Expenses incurred by him in
connection with such judicial adjudication if the amount to which he is
determined to be entitled exceeds 50% of the amount of his claim. Otherwise, the
Expenses incurred by Indemnitee in connection with such judicial adjudication
shall be appropriately prorated.
(c) In any judicial proceeding described in this subsection,
the Corporation shall bear the burden of proving that Indemnitee is not entitled
to any Expenses sought with respect to any Claim.
11.4. Saving Clause. If any provision of this Section is determined by
a court having jurisdiction over the matter to require the Corporation to do or
refrain from doing any act that is in violation of applicable law, the court
shall be empowered to modify or reform such provision so that, as modified or
reformed, such provision provides the maximum indemnification permitted by law,
and such provision, as so modified or reformed, and the balance of this Section,
shall be applied in accordance with their terms. Without limiting the generality
of the foregoing, if any portion of this Section shall be invalidated on any
ground, the Corporation shall nevertheless indemnify an Indemnitee to the full
extent permitted by any applicable portion of this Section that shall not have
been invalidated and to the full extent permitted by law with respect to that
portion that has been invalidated.
11.5. Non-Exclusivity.
(a) The indemnification and advancement of Expenses provided
by or granted pursuant to this Section shall not be deemed exclusive of any
other rights to which Indemnitee is or may become entitled under any statute,
article of incorporation, by-law, authorization of shareholders or directors,
agreement, or otherwise.
(b) It is the intent of the Corporation by this Section to
indemnify and hold harmless Indemnitee to the fullest extent permitted by law,
so that if applicable law would permit the Corporation to provide broader
indemnification rights than are currently permitted, the Corporation shall
indemnify and hold harmless Indemnitee to the fullest extent permitted by
applicable law notwithstanding that the other terms of this Section would
provide for lesser indemnification.
11.6. Successors and Assigns. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
11.7. Indemnification of Other Persons.
(a) The Corporation may indemnify any person not covered by
Sections 11.1 through 11.6 to the extent provided in a resolution of the Board
or a separate Section of these By-laws.
(b) Section 11 of these By-laws as in effect immediately prior
to the adoption of this Section 11.7 shall remain in effect with respect to
persons not covered by Section 11.1 through 11.6 to the extent necessary to
satisfy the Corporation's contractual obligations entered into prior to such
date to provide indemnification to directors and officers of corporations or
banks acquired by the Corporation.
(c) Nothing in this Section 11 shall obligate the Corporation
to indemnify or advance expenses to any person who was a director, officer or
agent of any corporation merged into this Corporation or otherwise acquired by
this Corporation. Any such person's right to indemnification or advancement of
expenses, if any, shall consist of those rights contained in the agreement
relating to such merger or acquisition.
SECTION 12. AMENDMENTS
These By-laws may be amended or repealed or new By-laws may be adopted
by the Board of Directors at any meeting of the Board of Directors if notice of
such action is contained in the notice of such meeting; provided, however, that
no notice shall be necessary for any proposed amendment adopted at any regular
or special meeting of the Board of Directors by a vote of more than
three-fourths of the directors then in office. By-laws adopted or amended by the
Board of Directors may be amended or repealed at any meeting of the shareholders
if notice of such proposed action is contained in the notice of such meeting.
By-laws amended or repealed by the shareholders may be amended, repealed or
readopted by the Board of Directors.
<PAGE>
APPENDIX
Section 11 of the By-laws as in effect immediately prior to the
adoption of current Section 11:
The Corporation shall indemnify its officers and directors, and may
indemnify its former officers, former directors, present or former employees and
agents, and directors, officers, employees and agents of other organizations,
and may procure insurance on behalf of such persons against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement to the full
extent permitted by Section 83 of the Louisiana Business Corporation Law, as
heretofore or hereafter amended.
For purposes of this Section, the "Corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person
entitled to be indemnified by the constituent corporation shall stand in the
same position with respect to the indemnification from the resulting or
surviving corporation as he would have with respect to such constituent if its
separate existence had continued; provided, however, that with respect to any
such constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which becomes effective on or after
October 1, 1987, this Section 11 shall permit, but shall not require, the
Corporation to indemnify the officers and directors thereof for acts in their
capacities as such prior to such consolidation or merger to the full extent
permitted by Section 83 of the Louisiana Business Corporation Law, as heretofore
or hereafter amended.
FIRST COMMERCE CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
Rights Agreement
Dated as of February 27, 1996
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 7
Section 4. Form of Right Certificates 11
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates 13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 14
Section 8. Cancellation and Destruction of
Right Certificates 17
Section 9. Availability of Preferred Shares 17
Section 10. Preferred Shares Record Date 19
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights 19
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 34
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 35
Section 14. Fractional Rights and Fractional Shares 37
Section 15. Rights of Action 40
Section 16. Agreement of Right Holders 40
Section 17. Right Certificate Holder Not Deemed a
Stockholder 41
Section 18. Concerning the Rights Agent 42
<PAGE>
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 43
Section 20. Duties of Rights Agent 45
Section 21. Change of Rights Agent 48
Section 22. Issuance of New Right Certificates 50
Section 23. Redemption 51
Section 24. Exchange 52
Section 25. Notice of Certain Events 55
Section 26. Notices 57
Section 27. Supplements and Amendments 58
Section 28. Successors 58
Section 29. Benefits of this Agreement 59
Section 30. Severability 59
Section 31. Governing Law 59
Section 32. Counterparts 59
Section 33. Descriptive Headings 60
Signatures 61
Exhibit A - Form of Articles of Amendment
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred
Shares
<PAGE>
Agreement, dated as of February 27, 1996, between First
Commerce Corporation, a Louisiana corporation (the "Company"), and First Chicago
Trust Company of New York (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on March 11,
1996 (the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 10% or more of the Common Shares
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 10% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 10% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person". Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., New York, New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York, New York time, on
the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $5.00 per share, of the
Company. "Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(i) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(j) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, no par value, of the Company having the rights
and preferences set forth in the Form of Articles of Amendment attached to this
Agreement as Exhibit A.
(k) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(l) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(m) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
3. Issue of Right Certificates. (a) Until the earlier of (i)
the tenth day after the Shares Acquisition Date or (ii) the tenth business day
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of Common Shares aggregating 10% or
more of the then outstanding Common Shares (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(a) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(b) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph) (c) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between First
Commerce Corporation and First Chicago Trust Company of New York, dated
as of February 27, 1996 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of First Commerce Corporation.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. First Commerce Corporation will mail to
the holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As described in the
Rights Agreement, Rights issued to any Person who becomes an Acquiring
Person (as defined in the Rights Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredth of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the number of such
one one-hundredth of a Preferred Share and the Purchase Price shall be subject
to adjustment as provided herein.
5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredth
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on March 11, 2006 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(a) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall initially
be $105.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(b) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing such number of one one-hundredth of a Preferred
Share as are to be purchased (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate.
(c) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
9. Availability of Preferred Shares. The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
10. Preferred Shares Record Date. Each person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or,
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(i) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-hundredth of
a Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of Common
Shares of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-hundredth of a Preferred
Share for which a Right is then exercisable and dividing that product by (y) 50%
of the then current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person or any
Associate or Affiliate of such Acquiring Person (including, without limitation,
any Rights issued in respect of any Common Shares that are beneficially owned by
any Acquiring Person at the time such Acquiring Person becomes an Acquiring
Person) shall be void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Agreement. No Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
(ii) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but unissued to permit
the exercise in full of the Rights in accordance with the foregoing subparagraph
(ii), the Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights. In the event
the Company shall, after good faith effort, be unable to take all such action as
may be necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price of
the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(i) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one onehundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredth of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredth of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredth of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredth of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredth of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredth
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredth of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredth of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, at any time after a Person
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one one-hundredth
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of such other Person (including the Company as successor thereto
or as the surviving corporation) as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredth
of a Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then current per share market price of the Common
Shares of such other Person (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or transfer; (ii) the
issuer of such Common Shares shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such issuer; and (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(a) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(b) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust powers of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of the State of New York (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of New York), in good standing, having an office in the State of New York,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million or (b) an affiliate of such
a corporation. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
(a) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.
(a) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(b) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exchange
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(c) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(a) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard, Suite 4660
Jersey City, New Jersey 07310
Attention: Tenders and Exchange Administrator
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights.
28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Louisiana and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
FIRST COMMERCE CORPORATION
Attest:
By /s/ MICHAEL A. FLICK By /s/ IAN ARNOF
__________________________ _______________________________
Name: Michael A. Flick Name: Ian Arnof
Title: Secretary Title: President and
Chief Executive Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
Attest:
By ___________________________ By ______________________________
Title: Title:
<PAGE>
Exhibit A
FORM
of
ARTICLES OF AMENDMENT
DESIGNATING THE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
FIRST COMMERCE CORPORATION
(Pursuant to Section 12:33 of the
Louisiana Business Corporation Law)
__________________
First Commerce Corporation, a corporation organized and
existing under the Business Corporation Law of the State of Louisiana
(hereinafter called the "Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation amending the
Articles of Incorporation of the Corporation as provided in Section 12:33 of the
Business Corporation Law at a meeting duly called and held on ___________, 1996:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Articles of
Incorporation, the Board of Directors hereby amends the Articles of
Incorporation to create a series of Preferred Stock, no par value (the
"Preferred Stock"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:
Series A Junior Participating Preferred Stock:
34. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be _________________. Such number of shares may be increased
or decreased by resolution of the Board of Directors further amending
the Articles of Incorporation; provided, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
35. Dividends and Distributions.
(a) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar stock) ranking
prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, par value $5.00 per share
(the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph
(A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
36. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock shall
entitle the holder thereof to 100 votes on all matters submitted to a
vote of the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other
Articles of Amendment creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
37. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay
dividends, or make any other distributions, on any shares
of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay
dividends, or make any other distributions, on any shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or
otherwise acquire for consideration shares of any stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or
otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
38. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Articles of Amendment creating a
series of Preferred Stock or any similar stock or as otherwise required by law.
39. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
40. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
41. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
42. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
43. Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, these Articles of Amendment are executed
on behalf of the Corporation by its President and attested by its Secretary this
___ day of ___________, 1996.
_________________________
President
Attest:
________________________
Secretary
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER MARCH 11, 2006 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
Right Certificate
FIRST COMMERCE CORPORATION
This certifies that ________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of February 27, 1996 (the
"Rights Agreement"), between First Commerce Corporation, a Louisiana corporation
(the "Company"), and First Chicago Trust Company of New York (the "Rights
Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
New York, New York time, on March 11, 2006 at the principal office of the
Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, no par value (the "Preferred Shares"), of the
Company, at a purchase price of $105.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredth
of a Preferred Share which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase Price
as of February 27, 1996, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredth of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Stock, par value $5.00 per
share.
No fractional Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ______________, 1996.
ATTEST: FIRST COMMERCE CORPORATION
_________________________ By ________________________________
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By ____________________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ________________, ___________
_____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- --------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_____________________________
Signature
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: FIRST COMMERCE CORPORATION
The undersigned hereby irrevocably elects to exercise ____
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates
for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:____________________, ______________
___________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
_______________________________________________________________________________
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature _________________________________
_______________________________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 26, 1996, the Board of Directors of First Commerce
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $5.00
per share (the "Common Shares"), of the Company. The dividend is payable on
March 11, 1996 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, no
par value (the "Preferred Shares"), of the Company at a price of $105.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 10% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 10% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on March 11, 2006 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then-current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredth of a Preferred Share issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Shares or a
stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one Common
Share, or one one-hundredth of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to such time as any person becomes an
Acquiring Person, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time on such basis
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated __________, 1996. A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT between First Commerce Corporation (the "Company") and
_________________ (the "Executive"), dated as of the ___ day of _______, 1996.
1. Certain Definitions. (a) "Effective Date" means the first date
during the Change of Control Period on which a Change of Control occurs, except
that if the Executive's employment with the Company is terminated prior to such
date at the request of a third party who has taken steps reasonably calculated
to effect a Change of Control or otherwise in connection with or anticipation of
a Change of Control, then "Effective Date" means the date immediately prior to
the date of such termination.
(b) "Change of Control Period" means the period commencing on
the date hereof and ending on the third anniversary of the date hereof;
provided, however, that on each annual anniversary of the date hereof (the
"Renewal Date"), unless previously terminated, such period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company notifies the
Executive that such period shall not be so extended.
2. Change of Control. "Change of Control" means
(a) The acquisition by any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "34 Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 under the 34 Act) of 40% or more of either (i) the
Company's then outstanding common stock ("Outstanding Stock") or (ii) the
combined voting power of its then outstanding voting securities entitled to vote
generally in the election of directors ("Outstanding Voting Securities") other
than any acquisition (i) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled by it or (ii) by
any entity pursuant to a transaction which complies with Section 2(c)(i), (ii)
or (iii); or
(b) Individuals who as of the date hereof constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof; provided, however, that any individual becoming a director subsequent
to the date hereof whose election or nomination was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as a member of the Incumbent Board unless his or her initial
assumption of office occurs as a result of an actual or threatened contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation,
share exchange or sale or other disposition of all or substantially all of the
Company's assets (a "Combination") unless immediately thereafter (i) all or
substantially all of the beneficial owners of the Outstanding Stock and
Outstanding Voting Securities immediately prior to such Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Combination
(including, without limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of its assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Combination of the Outstanding Stock and
Outstanding Voting Securities, as the case may be, (ii) no Person (excluding any
entity resulting from such Combination or any employee benefit plan (or related
trust) of the Company or such resulting entity) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the resulting entity or the combined voting power of the then
outstanding voting securities of such entity except to the extent that such
ownership existed prior to the Combination and (iii) at least a majority of the
members of the board of directors of the resulting entity were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Combination; or
<PAGE>
(d) Approval by the shareholders of the Company's complete
liquidation or dissolution.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
Company's employ subject to the provisions of this Agreement, for the period
commencing on the Effective Date and ending on the second anniversary of such
date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. During the Employment
Period, (i) (A) the Executive's position, authority, duties and responsibilities
("Role") shall be commensurate with an executive capacity and substantially
comparable to the position, authority, duties and responsibilities of financial
institution executives generally having salaries approximately the same as
Executive's Annual Base Salary, as defined herein, and (B) his services shall be
performed at the location where he was employed immediately preceding the
Effective Date or any office or location within the State of Louisiana during
the thirteen-month period beginning on the Effective Date and less than 35 miles
from the location where he was employed immediately preceding the Effective Date
thereafter, provided that in the case of any relocation, the Company shall pay
all of Executive's expenses reasonably related to such relocation, including
cost of maintaining two residences, and any further relocation required or
necessary to comply with this Section 4; and
(ii) excluding any periods of vacation and sick leave
to which he is entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the Company's business and affairs, and to
use his reasonable best efforts to perform faithfully and efficiently the
responsibilities assigned to him hereunder. It shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of his
responsibilities. To the extent that any such activities have been conducted by
the Executive prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
subsequent thereto shall not thereafter be deemed to interfere with the
performance of his responsibilities.
(b) Compensation During the Employment Period. (i) Base
Salary. During the Employment Period the Executive shall receive an annual base
salary ("Annual Base Salary"), paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary
which has been earned but deferred, to him by the Company and its affiliates in
respect of the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than 12 months after the last salary increase awarded
to the Executive prior to the Effective Date and thereafter at least annually.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive hereunder. Annual Base Salary shall not be reduced
after any such increase and the term "Annual Base Salary" as used herein shall
refer to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliates" shall include any entity controlled by, controlling or under common
control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal
to his highest target bonus as fixed by the Compensation Committee of the
Company during the last three full fiscal years prior to the Effective Date
(annualized if the Executive was not employed by the Company for the whole of
such fiscal year) (the "Recent Annual Bonus"), to be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer its
receipt.
(iii) Incentive, Savings and Retirement Plans. The
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs ("Programs") applicable
generally to other peer executives of the Company and its affiliates, but in no
event shall such Programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliates for him under such Programs as in effect at any time during the
180-day period immediately preceding the Effective Date or if more favorable to
him, those provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliates.
(iv) Welfare Benefit Plans. The Executive and/or his
family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit Programs provided by the Company and
its affiliates (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance Programs) to the extent applicable generally to other peer executives
of the Company and its affiliates, but in no event shall such Programs provide
him with benefits which are less favorable, in the aggregate, than the most
favorable of such Programs in effect for him at any time during the 180-day
period immediately preceding the Effective Date or, if more favorable to him,
those provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliates.
(v) Expenses. The Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by him in
accordance with the most favorable policies, practices and procedures
("Policies") of the Company and its affiliates in effect for the Executive at
any time during the 180-day period immediately preceding the Effective Date or,
if more favorable to him, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliates.
(vi) Fringe Benefits. The Executive shall be entitled
to fringe benefits in accordance with the most favorable Policies of the Company
and its affiliates in effect for the Executive at any time during the 180-day
period immediately preceding the Effective Date or, if more favorable to him, as
in effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliates.
(vii) Office and Support Staff. The Executive shall
be entitled to an office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other assistance, at least
substantially comparable to the most favorable of the foregoing provided to the
Executive by the Company and its affiliates at any time during the 180-day
period immediately preceding the Effective Date or, if more favorable to him, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliates.
(viii) Vacation. The Executive shall be entitled to
paid vacation in accordance with the most favorable Policies of the Company and
its affiliates as in effect for him at any time during the 180-day period
immediately preceding the Effective Date or, if more favorable to him, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliates.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon his death during the Employment
Period. If the Company determines in good faith that his Disability has occurred
during the Employment Period it may give him written notice in accordance with
Section 12(b) of its intention to terminate his employment. In such event, his
employment shall terminate effective on the 30th day after receipt of such
notice (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, he shall not have returned to full-time performance of his
duties. "Disability" means the absence of the Executive from his duties with the
Company on a full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or his legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. "Cause" means
(i) Executive's willful and continued failure to
perform substantially his duties (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to him by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that he has not substantially
performed his duties, or
(ii) Executive's willful engaging in illegal conduct
or gross misconduct.
No act or failure to act, on the Executive's part shall be considered "willful"
unless it is done, or omitted to be done, by him in bad faith or without
reasonable belief that his action or omission was in the Company's best
interests. Any act, or failure to act, based upon authority given pursuant to a
resolution of the Board or instructions of the Chief Executive Officer or a
senior officer of the Company or the advice of counsel for the Company shall be
conclusively presumed to be in good faith and in the Company's best interests.
The cessation of Executive's employment shall not be deemed to be for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the vote of not less than three-quarters of the entire
membership of the Board at a meeting called and held for such purpose (after
reasonable notice is provided to the Executive and he is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the
Board's good faith opinion, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. "Good Reason" means:
(i) assignments to him that in any material respect
are inconsistent with or result in a diminution of his Role as contemplated by
Section 4(a), excluding an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring him to be based at any
office or location other than as provided in Section 4(a)(i)(B) or to travel on
Company business to a substantially greater extent than reasonably required for
the performance of his duties;
(iv) any purported termination by the Company of his
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c).
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall create a rebuttable presumption that "Good Reason"
exists. Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the 30-day period immediately
following the first anniversary of the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination for Cause or for
Good Reason shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b). "Notice of Termination" means a
written notice which (i) indicates the specific termination provision hereof
relied upon, (ii) to the extent applicable, sets forth in reasonable detail the
circumstances claimed to provide a basis for termination under the provision so
indicated and (iii) if the Date of Termination is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than thirty days after the giving of such notice). The failure by the notifying
party to set forth in the Notice of Termination any circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
such party from asserting such circumstance in enforcing its or his rights
hereunder.
(e) Date of Termination. "Date of Termination" means in the
case of (i) a termination for Cause or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) a termination by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination and (iii) a
termination by reason of death or Disability, the date of Executive's death or
the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) his Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the product of
(x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has been earned but
deferred (and annualized for any fiscal year consisting of less than twelve full
months or during which he was employed for less than twelve full months), for
the most recently completed fiscal year during the Employment Period, if any
(such higher amount being referred to as the "Highest Annual Bonus") and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365 and
(3) any compensation previously deferred by him (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (1),
(2), and (3) being hereinafter referred to as the "Accrued Obligations"); and
B. the product of (1) three and (2) the sum
of (x) the Annual Base Salary and (y) the Highest Annual Bonus, except that in
the case in which the termination is for "Good Reason" solely by virtue of the
last sentence of Section 5(c) the lump sum payment shall consist of 50% of the
foregoing, and the remaining 50% shall be paid in a lump sum on the first
anniversary of the Date of Termination, provided that Executive has complied
with Section 10(b).
(ii) the Executive shall immediately become fully
100% vested under the Company's qualified defined benefit retirement plan and
benefits restoration plan (together, the "Retirement Plan"), and any excess or
supplemental retirement plan in which the Executive participates as if his
employment continued for three years after the Date of Termination assuming for
this purpose that his compensation in each of the three years is that required
by Section 4(b)(i) and (ii);
(iii) for three years after the Date of Termination,
or such longer period as may be provided by the terms of the appropriate
Program, the Company shall continue benefits to the Executive and/or his family
at least equal to those which would have been provided to them in accordance
with the Programs described in Section 4(b)(iv) if his employment had not been
terminated or, if more favorable to him, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliates and their families, provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility; and provided
further that if the application of this sentence would result in material
adverse tax consequences to the Company, the Company may, in lieu thereof, make
cash payments to the Executive sufficient to allow him to obtain equivalent
coverage for himself and his family (including to the extent necessary the
election of COBRA coverage and the maintenance of duplicate coverage during any
pre-existing condition exclusion), and any additional cash payments necessary so
that Executive will receive the full pre-tax benefit of the cash payments in
lieu of coverage. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such
Programs the Executive shall be considered to have remained employed until three
years after the Date of Termination and to have retired on the last day of such
period;
(iv) for a period ending on the earlier of one year
from the Date of Termination or Executive's obtaining other full-time permanent
employment, the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services that are reasonable in scope and cost in
relation to his position; provided that this subparagraph shall not apply if
Executive's termination was solely for "Good Reason" under the last sentence of
Section 5(c).
(v) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which he is eligible to receive
under any Program or contract or agreement of the Company and its affiliates
(such other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Termination for Death or Disability. If during the
Employment Period, the Executive's employment is terminated by reason of his
death or Disability, this Agreement shall terminate without further obligations,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term "Other Benefits" as used in this Section 6(b) shall
include, without limitation, benefits at least equal to the most favorable
benefits provided by the Company and affiliates to peer executives of the
Company and such affiliates or their estates, beneficiaries or families, as the
case may be, under such Programs relating to death benefits, if any, as in
effect with respect to other peer executives at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable, as in
effect on the date of his death with respect to other peer executives of the
Company and its affiliates and their beneficiaries.
(c) Cause; Other than for Good Reason. If the Executive's
employment is terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by him,
and (z) Other Benefits, in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates employment during the Employment Period other
than for Good Reason, this Agreement shall terminate without further obligations
to the Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination.
7. Non-exclusivity of Rights. Nothing herein shall prevent or limit the
Executive's continuing or future participation in any Program provided by the
Company or any of its affiliates and for which he may qualify, nor, subject to
Section 12(f), shall anything herein limit or otherwise affect such rights as he
may have under any contract or agreement with the Company or any of its
affiliates. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any Program of or any contract or agreement
with the Company or any of its affiliates at or subsequent to the Date of
Termination shall be payable in accordance with such Program or contract or
agreement except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for herein and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to him under any of the
provisions hereof and such amounts shall not be reduced whether or not he
obtains other employment. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision hereof or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code"); provided that if in
connection with any dispute in which it is finally determined by a court that
the position of Executive is wholly without merit, Executive shall be required
to reimburse the Company for Executive's legal fees and expenses so paid by the
Company.
9. Certain Additional Payments by the Company.
(a) Anything herein to the contrary notwithstanding and except
as set forth below, if it is determined that any payment or distribution by the
Company to or for Executive's benefit (whether paid or payable or distributed or
distributable pursuant to the terms hereof or otherwise, but determined without
regard to any additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by him of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment, equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required, the amount thereof and the assumptions to
be used in arriving at such determination, shall be made by Arthur Andersen LLP
or such other certified public accounting firm as may be designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. If the Accounting Firm is serving
as accountant or auditor for the Person effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the parties. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that have not been made should
have been made ("Underpayment"). If the Company exhausts its remedies pursuant
to Section 9(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service ("IRS") that, if successful, would require
a Gross-Up Payment. Such notification shall be given as soon as practicable but
no later than ten business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which he gives such notice (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall, with respect to such claim:
(i) give the Company any information reasonably
requested relating to it,
(ii) take such action in connection with contesting
it as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to it
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest it, and
(iv) permit the Company to participate in any
proceedings relating to it;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the IRS in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to him, on an interest-free basis and shall indemnify and hold him
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the IRS or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), he becomes entitled to receive
any refund with respect to such claim, he shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
he is not entitled to any refund with respect to such claim and the Company does
not notify him in writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
10. Other Obligations of Executive. (a) The Executive shall hold in a
fiduciary capacity for the Company's benefit all secret or confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective businesses, which shall have been obtained by him during
his employment and which shall not be or become public knowledge (other than by
acts by the Executive or his representatives in violation of this Agreement).
After termination of his employment with the Company, he shall not, without the
Company's prior written consent or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive
hereunder.
(b) If Executive terminates his employment solely for "Good
Reason" under the last sentence of Section 5(c), the Company shall not be
obligated to make the lump sum payment that would otherwise be due under Section
6(a)(i)(B) if, during the one-year period following the Date of Termination,
Executive becomes a management official of any banking institution that has a
main or full-service banking office in any Parish in the State of Louisiana in
which the Company has its main or a full-service banking office; provided that
this Section 10(b) shall not be applicable (i) if the Company has not at all
times during such period complied with all of its obligations under this
Agreement or, (ii) if at the time Executive became a management official of a
banking institution such institution at that time did not have a main or
full-service banking office in any Parish in the State of Louisiana in which the
Company has its main or a full-service banking office, or (iii) if Executive's
duties with such institution does not give him authority with respect to that
portion of such institution's business being conducted in Louisiana.
11. Successors. (a) This Agreement is personal to the Executive and
without the Company's prior written consent shall not be assignable by him
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business and/or assets to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used herein, "Company" means the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Louisiana, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
If to the Company:
First Commerce Corporation
210 Baronne Street
New Orleans, LA 70130
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other provision.
(d) The Company may withhold from any amounts payable
hereunder such taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or to assert any right he or it may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c) of this Agreement,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date, this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the day and year first above written.
[Executive]
____________________________________
FIRST COMMERCE CORPORATION
By _______________________________
EXHIBIT 11
Statement Re: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
(dollars in thousands except per share data) Year Ended December 31
--------------------------------------------------
1995 1994 1993
---------------- ---------------- --------------
Primary earnings per share
- -----------------------------------------------------------------
<S> <C> <C> <C>
Weighted average number of common shares
outstanding 37,732,633 37,596,872 37,329,875
Shares from assumed exercise of options,
net of treasury stock method 165,634 157,051 239,017
---------- ---------- ----------
37,898,267 37,753,923 37,568,892
========== ========== ==========
Net income $75,951 $80,227 $113,025
Less preferred dividend requirements 4,325 4,347 4,348
---------- ---------- -----------
Income applicable to common shares $71,626 $75,880 $108,677
========== ========== ===========
Per common share $1.89 $2.01 $2.89
Fully diluted earnings per share
- -----------------------------------------------------------------
Weighted average number of shares
outstanding, net of shares held in treasury 37,732,633 37,596,872 37,329,875
Shares from assumed exercise of options,
net of treasury stock method 210,153 158,147 221,106
Shares from assumed conversion of dilutive
convertible notes and debentures:
Preferred stock 2,772,251 2,793,283 2,794,085
Convertible debentures - - 3,216,618
---------- ---------- ----------
40,715,037 40,548,302 43,561,684
========== ========== ==========
Income applicable to common shares $71,626 $75,880 $108,677
Expenses that would not have been incurred
if assumed conversions occurred:
Preferred dividend requirements 4,325 4,347 4,348
Interest expense, net of tax - - 6,962
---------- ---------- -----------
Income applicable to common shares plus
expenses that would not have been incurred
if assumed conversions occurred $75,951 $80,227 $119,987
========== ========== ===========
Per common share $1.87 $1.98 $2.75
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
(dollars in thousands except per share data) 1995 1994 % Change
<S> <C> <C> <C>
INCOME DATA
Net income $ 75,951 $ 80,227 (5)%
Operating income 83,369 108,477 (23)%
Net interest income (FTE) 349,317 330,056 6%
PER COMMON SHARE DATA
Net income - primary $ 1.89 $ 2.01 (6)%
Net income - fully diluted 1.87 1.98 (6)%
Operating income - primary 2.09 2.76 (24)%
Operating income - fully diluted 2.05 2.64 (22)%
Book value (end of period) 17.86 14.19 26 %
Tangible book value (end of period) 17.32 13.75 26 %
Cash dividends 1.25 1.10 14 %
AVERAGE BALANCE SHEET DATA
Securities $2,831,943 $3,356,825 (16)%
Loans and leases (a) 4,542,678 3,678,298 23 %
Earning assets 7,464,065 7,189,322 4 %
Total assets 8,141,194 7,827,303 4 %
Deposits 6,703,077 6,447,897 4 %
Stockholders' equity 687,533 623,169 10 %
KEY RATIOS
Return on average assets
-Net income .93% 1.02%
-Operating income 1.02% 1.39%
Return on average total equity
Net income 11.05% 12.87%
Operating income 12.13% 17.41%
Return on average common equity
Net income 11.41% 13.47%
Operating income 12.59% 18.49%
Net interest margin 4.68% 4.59%
Efficiency ratio 67.36% 65.92%
Overhead ratio 2.49% 2.39%
Allowance for loan losses to loans and leases (a) 1.48% 1.72%
Equity ratio 8.59% 7.45%
Leverage ratio 8.16% 8.20%
(a) Net of unearned income.
Prior period financial information presented in this Annual Report has been
restated for 1995 acquisitions accounted for as poolings-of-interests.
</TABLE>
GRAPHS
(1) Net Interest Income (FTE) (millions)
The graph inserted shows net interest income (FTE) from 1991 to 1995. Net
interest income (FTE) is net interest income which has been adjusted by
increasing tax-exempt income to a level that would yield the same after tax
income had that income been subject to taxation. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
-----------------------------------------------------------------
Bar Millions 254.3 305.5 322.9 330.1 349.3
(2) Noninterest Income (millions)
Excluding Nonrecurring Items
The graph inserted shows noninterest income excluding nonrecurring
items from 1991 to 1995. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
-----------------------------------------------------------------
Bar Millions 103 118 126 135 148
(3) Operating Expense (millions)
Excluding Nonrecurring Items
The graph inserted shows operating expense excluding nonrecurring
items from 1991 to 1995. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
-----------------------------------------------------------------
Bar Millions 239 260 280 301 312
(4) Loans as a Percent of Deposits (At End of Period)
The graph inserted shows loans as a percent of deposits (at end of period)
from 1991 to 1995. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
-----------------------------------------------------------------
Bar % 60.35 48.02 50.34 57.05 67.77
FINANCIAL REVIEW
GLOSSARY
TERMS
BASIS POINT--The equivalent of one one-hundredth of one percent (.01%). This
unit is generally used to measure movements in interest yields and rates.
CORE DEPOSITS--All domestic deposits, excluding time deposits of $100,000 and
over. The most important and traditionally stable source of funds for the
company.
EARNING ASSETS--Assets that generate interest and related fee income, such as
loans and investments.
EARNINGS PER SHARE-PRIMARY--Net income, less preferred dividends, divided by the
weighted average number of common shares and equivalent shares outstanding.
FULLY DILUTED--Earnings per share reflecting the dilutive effect of all
contingently issuable shares.
INTEREST-FREE FUNDS--Noninterest-bearing liabilities plus stockholders' equity,
net of nonearning assets. This represents the portion of earning assets being
funded by noninterest-bearing funds.
INTEREST RATE SENSITIVITY--The sensitivity of net interest income to changes
in the level of market interest rates. The sensitivity results from differences
between the times at which assets and liabilities can be repriced when market
rates change.
LIQUIDITY--The ability of an entity to meet its cash flow requirements,
including withdrawals of deposits and funding of loan commitments. It is
measured by the ability to quickly convert assets into cash with minimal
exposure to interest rate risk, by the size and stability of the core deposit
base and by additional borrowing capacity within the money markets.
NET CHARGE-OFFS--The amount of loans written off as uncollectible, net of any
recoveries on loans previously written off.
NET INTEREST INCOME--The excess of interest income and fees on earning assets
over interest expense on interest-bearing liabilities.
NET INTEREST INCOME (FTE)--Net interest income which has been adjusted by
increasing tax-exempt income to a level that would yield the same after tax
income had that income been subject to taxation.
RISK-WEIGHTED ASSETS--The total of assets and off-balance sheet items which
have been weighted to reflect the credit risk of the asset.
TIER 1 CAPITAL--The sum of stockholders' equity and minority interest, less
goodwill and other intangibles, excluding net unrealized gains or losses on
available for sale securities.
TOTAL CAPITAL--Tier 1 capital plus the allowance for loan losses and
subordinated debt, subject to limitations.
RATIOS
COST OF FUNDS--Interest expense as a percent of average interest-bearing
liabilities plus interest-free funds.
DIVIDEND PAYOUT RATIO--Cash dividends per common share paid as a percent of
net income per share.
EFFICIENCY RATIO--Operating expense as a percent of net interest income
(FTE) plus other income, exclusive of securities transactions.
EQUITY RATIO--Stockholders' equity as a percent of total assets.
LEVERAGE RATIO--Tier 1 capital as a percent of average adjusted assets.
NET INTEREST MARGIN--Net interest income (FTE) as a percent of average
earning assets.
NET INTEREST SPREAD--The yield on earning assets less the cost of interest-
bearing liabilities.
OVERHEAD RATIO--Operating expense less other income, exclusive of securities
transactions, as a percent of average earning assets.
RETURN ON ASSETS--Net income as a percent of average total assets.
RETURN ON EQUITY--Net income as a percent of average total equity.
RISK-BASED CAPITAL RATIOS--Equity measurements used by regulatory agencies
to gauge capital adequacy. The ratios are tier 1 capital as a percent of risk-
weighted assets (minimum 4.0%) and total capital as a percent of risk-
weighted assets (minimum 8.0%).
YIELD ON EARNING ASSETS--Interest income (FTE) as a percent of average
earning assets.
<PAGE>
1995 IN REVIEW
First Commerce Corporation's (FCC's) net income for 1995 was $76.0
million, versus $80.2 million in 1994. Excluding after tax losses on securities
transactions, operating income was $83.4 million in 1995 and $108.5 million in
1994. The primary reasons for the decline in operating income were $23.3
million in net merger-related and process innovation charges and a $41.0
million increase in the provision for loan losses. Fully diluted earnings per
share were $1.87 in 1995 and $1.98 in 1994.
(5) Operating Income (millions)
The graph inserted shows operating income from 1991 to 1995. The plot
points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
--------------------------------------------------------------------------
Bar Millions 42.694 84.8 113.291 108.477 83.369
During 1995, FCC acquired five Louisiana financial institutions, adding
$1.5 billion of assets and 34 banking offices. The acquisitions of First
Bancshares, Inc. (First), Lakeside Bancshares, Inc. (Lakeside), Peoples
Bancshares, Inc. (Peoples) and Central Corporation (Central) were accounted for
as poolings-of-interests. Accordingly, all prior period financial information
has been restated to reflect the effect of these mergers. The acquisition of
City Bancorp, Inc. (City) was accounted for as a purchase. The acquisition of
Central marked FCC's entry into the north Louisiana market; the remaining
acquisitions expanded FCC's presence in its current markets.
Charges related to these mergers, net of a gain on required
divestitures, totaled $19.1 million in 1995. The majority of these charges
related to elimination of excess facilities and equipment, severance for
employees whose jobs were eliminated, expenses incurred to complete the
mergers, and conversion of customer accounts.
Process innovation charges totaled $4.2 million in 1995. These
costs primarily reflected write-downs related to branch closures plus
severance expense for employees whose jobs were eliminated through
re-engineering.
The provision for loan losses was $30.6 million for 1995, compared to
a negative $10.4 million in 1994. The increase primarily resulted from
continued growth in loans. Additionally, $10.0 million of the 1995
provision was in response to a $10.0 million charge-off related to the New
Orleans land-based casino project.
Earnings in 1995 were positively impacted by continued revenue
improvements and moderate expense growth, excluding merger-related and process
innovation charges. Net interest income grew 6% in 1995, primarily due to 23%
growth in average loans. Increased business volumes were the principal cause of
the 10% increase in other income, excluding securities transactions and the
gain on divestitures. Operating expense, excluding the above-mentioned charges,
grew a moderate 3% from 1994 to 1995.
As interest rates rose in 1994 and early 1995, FCC took the opportunity
to restructure a portion of its securities portfolio. Securities sold totaled
$1.8 billion in 1994 and $740 million in 1995; the proceeds from these sales
were primarily reinvested in higher-yielding securities. After tax losses of
$28.2 million and $7.4 million for 1994 and 1995, respectively, were
recognized on these sales.
<PAGE>
The nonperforming assets and allowance ratios ended 1995 at 1.17% and
1.48%, respectively, compared to .58% and 1.72%, respectively, one year ago.
Net charge-offs were .59% of average loans for 1995, versus .11% in 1994. The
deterioration in asset quality measures from 1994 reflected, among other things,
1994's extremely low ratios when compared to historical levels for FCC and the
banking industry as a whole, plus weakness in the gaming industry.
A more detailed review of FCC's financial condition and earnings for
1995 follows, with comparisons to 1994 and 1993. This review should be read in
conjunction with the Consolidated Financial Statements and Notes which follow
this Financial Review. A glossary is included on page 15 to aid in
understanding terminology used in this Financial Review.
EARNINGS ANALYSIS
Net Interest Income
Net interest income, fully taxable equivalent (FTE), was $349.3
million in 1995, an increase of $19.3 million, or 6%, compared to 1994. The
net interest margin was 4.68% for 1995, nine basis points higher than in 1994.
Improvements in net interest income and the net interest margin reflected
loan growth and higher yields on both loans and securities.
Economic activity in Louisiana continued to drive loan growth in 1995.
Average loans increased 23% during 1995, resulting in a more favorable mix of
earning assets. Loans increased as a percent of average earning assets to 61% in
1995 from 51% last year. Loan growth was primarily funded by a reduction in
securities. Average securities fell 16% in 1995 and were 38% of average
earning assets, compared to 47% in 1994. Loan growth is expected to continue
into 1996.
Higher yields on loans and securities were related to the rise in
interest rates which began in 1994's second quarter and continued into early
1995. The yield on average loans rose 31 basis points in 1995, reflecting
higher-yielding new loans, plus repricing of existing floating rate loans. The
109 basis point increase in the securities yield from 1994 to 1995 reflected
FCC's active management of the portfolio during the period of rising interest
rates.
Average earning assets rose 4% in 1995. This growth was supported by a
5% increase in average interest-bearing deposits. The most significant growth
was in time deposits of $100,000 and over, mainly due to a rise in public funds
deposits.
These positive factors were partially offset by a twelve basis point
decline in the net interest spread during 1995. This drop primarily reflected
higher deposit costs as customers shifted into higher-yielding deposit products.
An offsetting factor to the narrower net interest spread was the value of
interest-free funds in the higher rate environment. Interest-free funds were
21% of average earning assets in both 1995 and 1994.
From 1993 to 1994, net interest income rose 2%, while the net interest
margin was one basis point higher. The primary causes of these improvements were
growth in average loans and average interest-free funds, partially offset by a
narrower net interest spread. Average loans grew 14% in 1994, and were 51% of
average earning assets, compared to 46% in 1993. During 1994, average
interest-free funds rose 10% and funded 21% of average earning assets, compared
to 19% in the prior year. The seven basis point decline in the net interest
spread was due to the impact of changes in the interest rate environment.
Table 1 presents the average balance sheets, net interest income (FTE)
and interest rates for 1995, 1994 and 1993. Table 2 provides the components of
changes in net interest income.
(6) Net Interest Income (FTE) (millions)
The graph inserted shows net interest income (FTE) from 1991 to 1995. Net
interest income (FTE) is net interest income which has been adjusted by
increasing tax-exempt income to a level that would yield the same after tax
income had that income been subject to taxation. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
------------------------------------------------------------------------
Bar Millions 254.3 305.5 322.9 330.1 349.3
<PAGE>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME (FTE)(F1)
AND INTEREST RATES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
Average Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases (F2) $4,542,678 $412,839 9.09% $3,678,298 $322,934 8.78% $3,213,885 $294,240 9.16%
Securities
Taxable 2,733,630 176,391 6.45 3,247,721 172,687 5.32 3,338,894 177,634 5.32
Tax-exempt 98,313 10,062 10.23 109,104 11,628 10.66 122,034 14,286 11.71
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 2,831,943 186,453 6.58 3,356,825 184,315 5.49 3,460,928 191,920 5.55
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks 867 46 5.30 9,468 380 4.01 90,571 3,009 3.32
Foreign banks (F3) - - - 28,636 972 3.39 194,580 6,645 3.42
Federal funds sold and securities
purchased under resale agreements 74,109 4,376 5.90 113,593 5,070 4.46 82,119 2,352 2.86
Trading account securities 14,468 753 5.20 2,502 173 6.92 2,886 147 5.09
- -----------------------------------------------------------------------------------------------------------------------------------
Total money market investments 89,444 5,175 5.79 154,199 6,595 4.28 370,156 12,153 3.28
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 7,464,065 $604,467 8.10% 7,189,322 $513,844 7.15% 7,044,969 $498,313 7.07%
- -----------------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Other assets (F4) 752,546 716,441 722,530
Allowance for loan losses (75,417) (78,460) (90,279)
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $8,141,194 $7,827,303 $7,677,220
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $1,023,939 $ 19,379 1.89% $1,017,052 $ 15,392 1.51% $1,053,281 $ 15,923 1.51%
Money market investment deposits 723,768 19,662 2.72 809,918 16,236 2.00 862,284 18,620 2.16
Savings and other consumer time
deposits 2,802,907 131,528 4.69 2,683,289 97,146 3.62 2,686,323 96,965 3.61
Time deposits $100,000 and over 732,788 40,373 5.51 509,696 20,069 3.94 450,396 16,359 3.63
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 5,283,402 210,942 3.99 5,019,955 148,843 2.97 5,052,284 147,867 2.93
- -----------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 558,136 33,015 5.92 586,483 23,633 4.03 540,615 15,384 2.85
Long-term debt 89,739 11,193 12.47 90,315 11,312 12.53 99,961 12,212 12.22
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 5,931,277 $255,150 4.30% 5,696,753 $183,788 3.23% 5,692,860 $175,463 3.08%
- -----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,419,675 1,427,942 1,332,639
Other liabilities 102,709 79,439 78,547
Stockholders' equity 687,533 623,169 573,174
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders'
equity $8,141,194 $7,827,303 $7,677,220
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income (FTE) (F1)
and margin $349,317 4.68% $330,056 4.59% $322,850 4.58%
Net earning assets and spread $1,532,788 3.80% $1,492,569 3.92% $1,352,109 3.99%
- -----------------------------------------------------------------------------------------------------------------------------------
Total cost of funds 3.42% 2.56% 2.49%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Based on a 35% tax rate.
(F2) Net of unearned income, prior to deduction of allowance for loan losses
and including nonaccrual loans.
(F3) Principally foreign branches of foreign and domestic banks; other foreign
assets and revenues are insignificant and have therefore not been
separately disclosed in this schedule.
(F4) Includes mark-to-market adjustment on securities available for sale for
years subsequent to 1993.
<PAGE>
TABLE 2. SUMMARY OF CHANGES IN NET INTEREST INCOME (FTE)(F1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1995 Compared to 1994 1994 Compared to 1993
- ---------------------------------------------------------------------------------------------------------------------------
Total Due to Due to Total Due to Due to
Increase Change in Change in Increase Change in Change in
(in thousands) (Decrease) Volume Rate (Decrease) Volume Rate
- ---------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS
<S> <C> <C> <C> <C> <C> <C>
Loans and leases $89,905 $78,208 $11,697 $28,694 $41,159 $(12,465)
Securities
Taxable 3,704 (29,820) 33,524 (4,947) (4,848) (99)
Tax-exempt (1,566) (1,117) (449) (2,658) (1,440) (1,218)
- ---------------------------------------------------------------------------------------------------------------------------
Total securities 2,138 (30,937) 33,075 (7,605) (6,288) (1,317)
- ---------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks (334) (427) 93 (2,629) (3,149) 520
Foreign banks (972) (486) (486) (5,673) (5,633) (40)
Federal funds sold and securities purchased
under resale agreements (694) (2,057) 1,363 2,718 1,106 1,612
Trading account securities 580 633 (53) 26 (21) 47
- ---------------------------------------------------------------------------------------------------------------------------
Total money market investments (1,420) (2,337) 917 (5,558) (7,697) 2,139
- ---------------------------------------------------------------------------------------------------------------------------
Total interest income $90,623 $44,934 $45,689 $15,531 $27,174 $(11,643)
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 3,987 $ 105 $ 3,882 $ (531) $ (548) $ 17
Money market investment deposits 3,426 (1,868) 5,294 (2,384) (1,094) (1,290)
Savings and other consumer time deposits 34,382 4,498 29,884 181 (110) 291
Time deposits $100,000 and over 20,304 10,618 9,686 3,710 2,264 1,446
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 62,099 13,353 48,746 976 512 464
- ---------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 9,382 (1,192) 10,574 8,249 1,397 6,852
Long-term debt (119) (72) (47) (900) (1,202) 302
- ---------------------------------------------------------------------------------------------------------------------------
Total interest expense $71,362 $12,089 $ 59,273 $ 8,325 $ 707 $ 7,618
- ---------------------------------------------------------------------------------------------------------------------------
Change in net interest income (FTE) $19,261 $32,845 $(13,584) $ 7,206 $26,467 $(19,261)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Based on a 35% tax rate.
Provision for Loan Losses
The provision for loan losses was $30.6 million in 1995, compared to
negative provisions in 1994 and 1993 of $10.4 million and $2.4 million,
respectively. Continued loan growth was the principal driver of the return to a
positive provision. Additionally, 1995's provision included $10.0 million in
response to a $10.0 million charge-off related to the closure of the
temporary New Orleans land-based casino and suspension of construction on the
permanent casino during 1995's fourth quarter.
For discussion of the allowance for loan losses, net charge-offs and
nonperforming assets, see the Credit Risk Management section of this Financial
Review.
(7) Provision for Loan Losses (millions)
The graph inserted shows the provision for loan losses from 1991 to 1995.
The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
-------------------------------------------------------------------------
Bar Millions 51.238 29.086 (2.424) (10.418) 30.60
Other Income
Other income, excluding securities transactions, was $151.3 million in
1995, compared to $134.6 million in 1994. Other income in 1995 included a $3.1
million gain on the required divestiture of two Lakeside branches. Excluding
this gain, other income rose 10% from 1994 to 1995. There were improvements in
all categories, with credit card fee income, service charges on deposits and
automated teller machine (ATM) fee income experiencing the largest growth.
<PAGE>
Credit card fee income rose $4.1 million, or 13%, in 1995 from $30.5
million in 1994. Service charges on deposits increased $3.7 million, or 7%, to
$59.5 million in 1995. The increase in both categories was primarily the
result of higher volumes of transactions and accounts. Additional ATMs in
service and FCC's success in promoting this alternate delivery channel were the
main causes of the $2.6 million rise in ATM fee income to $8.4 million in 1995.
At year-end 1995, FCC had 359 ATMs.
TABLE 3. OPERATING EXPENSE
- -----------------------------------------------------------------------------
(in thousands) 1995 1994 1993
- -----------------------------------------------------------------------------
Salary expense $135,156 $132,836 $121,351
Employee benefits 30,052 29,104 28,254
- -----------------------------------------------------------------------------
Total personnel expense 165,208 161,940 149,605
Net occupancy expense 21,720 20,902 20,147
Equipment expense 24,717 20,901 17,507
Professional fees 16,298 16,321 14,362
FDIC insurance expense 8,665 14,413 14,510
Other operating expense 74,217 66,427 63,832
- -----------------------------------------------------------------------------
Total before merger-related
and process innovation charges 310,825 300,904 279,963
Merger-related charges 22,205 2,794 1,785
Process innovation charges 4,174 2,613 -
- -----------------------------------------------------------------------------
Total operating expense $337,204 $306,311 $281,748
- -----------------------------------------------------------------------------
Other income, excluding securities transactions, increased 7% from
1993 to 1994 largely due to increases in ATM, credit card and trust fee
income. ATM fee income rose $3.5 million, mainly due to a new usage
charge for non-customers, plus additional ATMs in service. Credit card and
trust fee income grew $2.7 million and $2.5 million, respectively, primarily
reflecting higher business volumes. Broker/dealer revenue declined $1.4 million
from 1993, reflecting decreased sales volumes of mutual funds in unfavorable
market conditions.
Securities transactions resulted in pretax net losses of $11.4 million
in 1995, $43.5 million in 1994 and $344,000 in 1993. These transactions are more
fully described in the Securities section of this Financial Review.
Operating Expense
Operating expense was $337.2 million in 1995, compared to $306.3 million
in 1994. The largest components of 1995's $22.2 million in merger-related
charges were $8.1 million for excess facilities and equipment, $6.4 million for
severance, $3.5 million for expenses incurred to complete the mergers, and $2.2
million for conversion of customer accounts. 1995's operating expense also
included $4.2 million in process innovation charges, mainly write-downs
associated with branch closures plus severance expense related to jobs
eliminated through re-engineering. Merger-related and process innovation
charges incurred in 1994 totaled $2.8 million and $2.6 million, respectively.
Table 3 shows the components of operating expense for the past three years,
after adjusting for these charges.
<PAGE>
Excluding the above-mentioned charges in both years, operating expense
increased a moderate 3%, or $9.9 million, in 1995. The most significant
increases were in equipment, personnel and other operating expenses. The
acquisition of City, which was accounted for as a purchase transaction,
contributed approximately $2.0 million to the increase.
Equipment expense increased $3.8 million, or 18%, primarily due to
higher depreciation related to FCC's investment in new sales and service
technology. Personnel expense rose only 2%, or $3.3 million, reflecting annual
merit raises, partially offset by a 3% decrease in the average number of
employees. The rise in other operating expense was mainly due to increases in
advertising, communications and credit card expenses of $3.0 million, $1.5
million and $1.2 million, respectively. FDIC insurance premium expense fell
$5.7 million in 1995 as strengthened FDIC reserves resulted in a reduction
in the FDIC insurance premium rate.
From 1993 to 1994, operating expense, excluding one-time charges, rose
7%, primarily due to higher personnel, equipment and professional fees expenses.
An 8% increase in personnel expense was mainly due to annual raises and higher
staffing levels. Higher equipment and professional fees expenses of
19% and 14%, respectively, were mainly related to costs associated with FCC's
strategic and customer service initiatives.
Effective January 1, 1996, the rate paid by the banks for deposit
insurance to the Bank Insurance Fund (BIF) has been reduced to zero.
Approximately 85% of FCC's deposits are insured by the BIF. Legislation is
pending regarding a special one-time assessment of approximately $.87 per $100
of deposits insured by the Savings Association Insurance Fund (SAIF). FCC has
approximately $1.0 billion in SAIF-insured deposits.
FCC monitors the efficiency ratio as one measure of its success at
increasing revenues, while controlling expense growth. Excluding one-time
charges, the efficiency ratio was 63% in 1995, compared to 65% in 1994. The
process innovation and other strategic initiatives undertaken by FCC over the
last three years, post-merger efficiencies and reduced FDIC insurance costs are
expected to drive continued improvements in this ratio.
Income Taxes
Income tax expense was $39.5 million in 1995, $38.6 million in 1994 and
$49.5 million in 1993. The changes in income tax expense resulted primarily from
changes in pretax income and nondeductible merger-related expenses. FCC's
effective tax rate was 34% for 1995, 32% for 1994 and 30% for 1993. These
effective rates are lower than the 35% federal statutory tax rate, primarily
because of tax-exempt interest income received from the financing of state and
local governments. The lower rate in 1993 reflects one-time credit adjustments
to income tax expense in that year. Louisiana does not assess an income tax
on commercial banks; rather, banks pay property tax based on the value of
their capital stock in lieu of income and franchise taxes.
For additional information on FCC's effective tax rates and the
composition of changes in income tax expense for all periods, see Note 19.
<PAGE>
TABLE 4. LOANS AND LEASES OUTSTANDING BY TYPE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 31
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans to individuals - residential mortgages $ 975,331 $ 753,127 $ 649,571 $ 486,788 $ 486,705
Loans to individuals - other 1,435,165 1,161,246 947,024 731,092 681,632
Commercial, financial and agricultural 1,020,477 822,833 589,856 584,873 719,926
Real estate - commercial mortgages 769,019 656,294 659,422 568,909 493,862
Real estate - construction and other 198,672 119,235 123,510 120,407 131,499
Credit card loans 617,824 509,076 465,425 464,146 481,723
Other 113,308 124,900 144,395 132,004 96,494
Unearned income (7,070) (17,472) (27,497) (33,491) (38,564)
- ---------------------------------------------------------------------------------------------------------------------------
Total loans and leases, net of unearned income $5,122,726 $4,129,239 $3,551,706 $3,054,728 $3,053,277
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL CONDITION ANALYSIS
LOANS
Total loans increased $993 million, or 24%, to $5.1 billion at December
31, 1995. Average loans grew 23% in 1995 following growth of 14% during 1994. As
shown in Table 4, loan growth reflected continued strong demand across all
sectors of the portfolio. Loan growth is expected to continue into 1996.
The pie chart on page 23 presents data on the loan portfolio by
borrower's industry, excluding consumer loans. Note 6 contains additional
information on loan concentrations. Table 5 provides information on the
maturities and rate sensitivities by loan type.
CONSUMER LOANS include loans to individuals and credit card loans. Loans
to individuals continue to be the largest segment of the loan portfolio at 47%
of total loans. Loans to individuals were $2.4 billion at the end of 1995 and
were 26% higher than at the prior year-end. Residential mortgage loans, indirect
automobile loans and education loans contributed significantly to the
increase in 1995. As of December 31, 1995, credit card loans were $618
million, or 12% of total loans, and were 21% higher than at 1994's year-end.
This increase reflects selective promotional campaigns, plus the impact of FCC's
expansion of its credit card services to the military. In 1996 FCC will continue
implementing its contract with the military, which is expected to generate
additional growth in credit card outstandings.
TABLE 5. LOAN MATURITIES AND RATE SENSITIVITIES BY TYPE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 31, 1995
Maturing
- ------------------------------------------------------------------------------------------------------------------
Within One to After
(in thousands) One Year Five Years Five Years Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed
Loans to individuals - residential mortgages $ 58,369 $ 303,339 $537,441 $ 899,149
Loans to individuals - other 101,196 921,404 40,837 1,063,437
Commercial, financial and agricultural 263,062 205,358 39,160 507,580
Real estate - commercial mortgages 89,015 314,571 124,860 528,446
Real estate - construction and other 40,795 57,435 14,495 112,725
Credit card loans 389,444 - - 389,444
Other 46,570 28,214 14,779 89,563
- ------------------------------------------------------------------------------------------------------------------
Total fixed loans and leases 988,451 1,830,321 771,572 3,590,344
- ------------------------------------------------------------------------------------------------------------------
Floating
Loans to individuals - residential mortgages 54,760 14,570 6,852 76,182
Loans to individuals - other 49,896 320,105 1,727 371,728
Commercial, financial and agricultural 352,201 130,747 29,949 512,897
Real estate - commercial mortgages 83,770 93,002 63,801 240,573
Real estate - construction and other 51,613 22,576 11,758 85,947
Credit card loans 228,380 - - 228,380
Other 14,962 8,686 97 23,745
- ------------------------------------------------------------------------------------------------------------------
Total floating loans and leases 835,582 589,686 114,184 1,539,452
- ------------------------------------------------------------------------------------------------------------------
Total loans and leases $1,824,033 $2,420,007 $885,756 $5,129,796
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMMERCIAL LOANS were $1.0 billion, or 20% of total loans, at the end of
1995 and were up 24% from December 31, 1994. The growth in commercial loans was
in virtually all industry segments and reflected increased economic activity in
Louisiana. The commercial loan portfolio is diversified among a wide array of
industries. The three largest industries were services with $264 million,
manufacturing with $131 million and wholesale trade with $119 million. At
year-end 1995, loans to the gaming industry were $69 million, or 1% of total
loans. Additionally, unfunded commitments to extend credit to gaming industry
borrowers totaled $41 million at December 31, 1995. The future of the gaming
industry in Louisiana is unclear; the voters of Louisiana may be given the
opportunity to eliminate certain or all types of gaming in the state. The
probability or outcome of any such vote and its impact on FCC's gaming-related
credits cannot be predicted.
REAL ESTATE LOANS are comprised of loans secured by commercial
properties, construction and land development loans and loans secured by
multi-family properties and farmland. Real estate loans rose 25% during 1995 and
were $968 million, or 19% of total loans, at December 31, 1995. Commercial
real estate loans are the largest component of real estate loans and were
$769 million at year-end 1995, or 15% of total loans. This compares to $656
million, or 16% of total loans, at year-end 1994. Approximately 34% of these
properties are owner-occupied. Construction and land development loans were
$147 million, or 3% of total loans, at year-end 1995, compared to $71 million
at year-end 1994.
(8) Loans and Leases average, net of unearned income (billions)
The graph inserted shows average loans and leases, net of unearned income,
from 1991 to 1995. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
--------------------------------------------------------------------
Bar Billions 3.063 2.966 3.214 3.678 4.543
(9) Loan portfolio by Industry
(excluding consumer loans)
The pie chart inserted presents data on the loan portfolio by borrowers'
industry, excluding consumer loans as of December 31, 1995. The plot
points are (in percentages):
Borrowers Industry Amount
-------------------------------------------------------
Health 9.9%
Other Services 16.6%
Insurance 0.6%
Agriculture, Forestry & Fishing 2.2%
Finance 7.7%
Real Estate 12.9%
Construction 6.3%
Mining 7.3%
Manufacturing 8.8%
Retail 7.5%
Wholesale 7.2%
Transportation 7.7%
Other 1.6%
Professional 3.7%
SECURITIES
The securities portfolio totaled $2.6 billion at December 31, 1995,
compared to $2.7 billion at December 31, 1994. Average securities were
$2.8 billion in 1995 and $3.4 billion in 1994. Funds from the maturities of
some securities were not reinvested but were used to fund the significant
loan growth experienced over the last two years. It is expected that this
trend will continue through 1996.
Notes 4 and 5 contain additional information on securities held to
maturity and available for sale.
<PAGE>
Portfolio Management
As part of its securities portfolio management strategy, all of FCC's
securities have been classified as available for sale. A significant factor in
this decision is the desire to maintain flexibility to actively manage the
portfolio in response to market conditions and funding requirements.
In response to rising interest rates in 1994 and early 1995, FCC
restructured a portion of its securities portfolio. Securities sold totaled $1.8
billion in 1994 and $740 million in 1995; the proceeds from these sales were
primarily reinvested in higher-yielding securities. The average yield on the
portfolio rose 109 basis points from 1994 to 1995. After tax losses of $28.2
million and $7.4 million for 1994 and 1995, respectively, were recognized on
these sales.
Securities Available for Sale
As of December 31, 1995, 100% of FCC's securities portfolio was
classified as available for sale, compared to 95% at year-end 1994. Improving
bond prices and FCC's active portfolio management caused a significant change in
the market values of these securities during 1995. An unrealized gain, net of
tax, increased stockholders' equity $33.6 million at December 31, 1995. At
December 31, 1994, stockholders' equity was reduced $73.9 million by an
unrealized loss, net of tax.
At December 31, 1995, 94% of total available for sale securities were
obligations of the U.S. government or its agencies. The average expected life,
which considers projected paydowns, of the portfolio was 2.9 years and the
average duration was 2.3 years. Table 6 presents detailed information on the
maturities and yields of securities available for sale.
FCC's mortgage-backed securities are either direct issues or
collateralized by direct issues of U.S. agencies. Approximately 44% of
mortgage-backed securities are floating rate. At December 31, 1995, the weighted
average contractual maturity of mortgage-backed securities was 22 years,
compared to an average expected life of 4.5 years. The average duration of FCC's
mortgage-backed securities was 3.4 years. Prepayment rates on mortgage-backed
securities may differ from expected, due to changes in interest rates and other
economic conditions.
Securities Held to Maturity
FCC had no securities held to maturity at year-end 1995, compared to
$151 million at December 31, 1994. The decline reflects maturities of
securities, plus a reclassification of $58 million of securities from held to
maturity to available for sale. In 1995's fourth quarter, the FASB permitted a
one-time opportunity to reassess the classification of all securities and, if
appropriate, move securities out of the held to maturity category.
TABLE 6. SECURITIES AVAILABLE FOR SALE -- MATURITIES AND YIELDS(F1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) Maturity
Total Carrying
Within 1 Year 1-5 Years 5-10 Years After 10 Years Value
- -----------------------------------------------------------------------------------------------------------------------------------
FTE FTE FTE FTE FTE
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U. S. Treasury securities $365,635 5.81% $1,148,377 6.80% $ - -% $ - -% $1,514,012 6.57%
U. S. agency securities
Mortgage-backed agencies - fixed - - 94,264 6.94 21,607 6.39 389,529 6.42 505,400 6.52
Mortgage-backed agencies - floating - - - - 702 6.39 396,498 6.45 397,200 6.45
U. S. agency notes - fixed - - 35,207 8.03 - - - - 35,207 8.03
Obligations of states and
political subdivisions 6,112 7.85 18,460 9.52 25,674 9.92 53,099 10.97 103,345 10.26
Other debt securities 8,747 6.17 3,413 7.12 - - - - 12,160 6.43
Equity securities 996 5.00 - - - - 31,447 3.35 32,443 3.40
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities available for sale $381,490 5.85% $1,299,721 6.88% $47,983 8.28% $870,573 6.60% $2,599,767 6.67%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Fully taxable equivalent based on a 35% tax rate. Maturities are based on
the contractual maturities of the securities.
TABLE 7. AVERAGE DEPOSITS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand deposits $1,410,211 21.04% $1,417,239 21.98% $1,313,723 20.58%
NOW account deposits 1,023,939 15.28 1,017,052 15.77 1,053,281 16.50
Money market investment deposits 723,768 10.80 809,918 12.56 862,284 13.50
Savings deposits 770,384 11.49 851,071 13.20 859,745 13.47
Other consumer time deposits 2,041,762 30.45 1,842,668 28.58 1,848,117 28.94
- --------------------------------------------------------------------------------------------------------------
Total core deposits 5,970,064 89.06 5,937,948 92.09 5,937,150 92.99
Time deposits $100,000 and over 733,013 10.94 509,949 7.91 447,773 7.01
- --------------------------------------------------------------------------------------------------------------
Total average deposits $6,703,077 100.00% $6,447,897 100.00% $6,384,923 100.00%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Money Market Investments
Money market investments include interest-bearing deposits in other
banks, federal funds sold, securities purchased under agreements to resell and
trading account securities. Money market investments serve as a short-term
investment alternative and are available to meet liquidity needs.
Money market investments averaged $89 million for 1995, compared to $154
million in 1994. As a percent of average earning assets, money market assets
were 1% in 1995 and 2% in the prior year.
Deposits
Deposits were $7.0 billion as of December 31, 1995. Average deposits
were $6.7 billion in 1995, a 4% increase over 1994. This increase was primarily
attributable to higher public funds deposits of $100,000 and over, reflecting
FCC's renewed interest in that market during 1995. As shown in Table 7, core
deposits increased 1% in 1995, and were 89% of total deposits. There was a shift
in the components of core deposits as customers moved into higher-yielding
deposit products. Table 8 shows the maturities of time deposits of $100,000 and
over.
Short-Term Borrowings
Short-term borrowings averaged $558 million in 1995, down 5% from 1994.
As a percent of average earning assets, short-term borrowings were 7% in 1995
and 8% in 1994. Note 10 contains additional information on short-term
borrowings.
Asset/Liability Management
The objective of FCC's asset/liability management is to maximize net
interest income while maintaining acceptable levels of risk from changes in
interest rates and, also, balancing liquidity and capital needs. FCC monitors
opportunities and risks so that appropriate actions can be taken by management
to meet this objective. Actions considered include purchases and sales of
securities to alter maturities and yields of the portfolio, changes in the
mix and level of earning assets and funding sources, and the use of
off-balance sheet interest rate risk products such as swaps, swaptions, caps
and floors.
Interest Rate Risk
Interest rate risk is the potential impact on net interest income of
changes in interest rates. FCC uses a number of methods to measure interest rate
risk, including gap analysis, net interest income simulation and monitoring the
fair values of assets and liabilities.
TABLE 8. MATURITIES OF TIME DEPOSITS $100,000 AND OVER
- -------------------------------------------------------
(in thousands) December 31, 1995
- -------------------------------------------------------
Within three months $364,970
Three to six months 137,716
Six to twelve months 143,682
After twelve months 101,244
- -------------------------------------------------------
Total $747,612
- -------------------------------------------------------
<PAGE>
TABLE 9. INTEREST RATE SENSITIVITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
By Repricing Dates at December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 After Noninterest-
(dollars in millions) Days Days Days Days 1 Year Bearing Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Securities $ 185 $ 207 $401 $164 $1,643 $ - $2,600
Loans and leases, net of unearned income 1,565 364 356 638 2,200 - 5,123
Money market investments 54 - - - - - 54
Other assets - - - - - 754 754
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $1,804 $ 571 $757 $802 $3,843 $ 754 $8,531
- ---------------------------------------------------------------------------------------------------------------------------
SOURCES OF FUNDS
Money market deposits $ 191 $ - $ - $ - $1,730 $ - $1,921
Consumer time deposits 859 442 415 497 591 - 2,804
Time deposits $100,000 and over 185 181 138 143 101 - 748
Short-term borrowings 501 60 25 50 - - 636
Long-term debt - - - - 88 - 88
Noninterest-bearing deposits - - - - - 1,482 1,482
Other liabilities - - - - - 119 119
Stockholders' equity - - - - - 733 733
- ---------------------------------------------------------------------------------------------------------------------------
Total sources of funds $1,736 $ 683 $578 $690 $2,510 $ 2,334 $8,531
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST RATE CONTRACTS $ - $(110) $(46) $156 $ - $ -
INTEREST RATE SENSITIVITY GAP $ 68 $(222) $133 $268 $1,333 $(1,580)
CUMULATIVE INTEREST RATE SENSITIVITY GAP $ 68 $(154) $(21) $247 $1,580 $ -
CUMULATIVE INTEREST RATE SENSITIVITY GAP
AS A PERCENT OF TOTAL ASSETS .80% (1.81)% (.25)% 2.90% 18.52%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The simplest measure of FCC's interest rate risk is gap analysis, which
details the maturity or repricing mismatches for assets and liabilities
within certain time periods. Gap analysis has several limitations, including the
fact that it is a point in time measurement. Also, it does not consider the
impact of potential changes in interest rate levels or spreads. Table 9
demonstrates FCC's static gap position as of December 31, 1995.
Given the limitations of gap analysis, simulation of net interest income
under various interest rate scenarios is FCC's primary tool for measuring
interest rate risk. Management reviews simulation results to better understand
FCC's interest rate risk and to develop strategies for managing this risk.
Simulation incorporates management's expectations regarding such factors as
loan and deposit growth, pricing and mix, prepayment rates and spreads between
various interest rates. At year-end 1995, FCC's actual sensitivity was
well within its established guideline limits that net interest income should
decline by no more than 10% over a 12-month period in response to a gradual 250
basis point change in interest rates.
The third measure captures interest rate risk by analyzing the effect of
sudden 100 and 250 basis point movements of interest rates on the fair values of
FCC's assets and liabilities. Fair values are estimated based on the calculated
present value of expected future cash flows.
<PAGE>
TABLE 10. INTEREST RATE CONTRACTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average Rate
- -----------------------------------------------------------------------------------------------------------------------------------
Receive Pay Floating
Notional Maturity Fixed Floating Strike Rate Reset Liability
(dollars in thousands) Amount Date Rate Rate Rate Index Frequency Hedged
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amortizing interest rate
swaps $193,605 February 1996 4.35% 5.91% -% LIBOR Quarterly Certificates of Deposit
Interest rate caps 300,000 August - November 1996 - - 7.55 LIBOR Quarterly Short-term borrowings
Interest rate caps 50,000 November 1996 - - 7.73 LIBOR Semi-Annually Short-term borrowings
- -----------------------------------------------------------------------------------------------------------------------------------
Total at December 31, 1995 $543,605 4.35% 5.91% 7.58%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 11. CHANGES IN INTEREST RATE CONTRACTS (NOTIONAL AMOUNTS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Option Amortizing
Based Generic Interest Callable
(in thousands) Instruments Swaps Rate Swaps Swaps Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $450,000 $ 110,000 $200,000 $ 50,000 $ 810,000
Purchases - 400,000 - - 400,000
Amortization - - (6,395) - (6,395)
Maturities (100,000) (10,000) - - (110,000)
Terminations - (500,000) - (50,000) (550,000)
- --------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 $350,000 $ - $193,605 $ - $ 543,605
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Off-Balance Sheet Instruments
In the normal course of business, FCC is a party to various financial
instruments which are not carried on the balance sheet. However, income and
expenses related to these instruments are reflected in the financial statements.
FCC uses these instruments to meet the financing needs of its customers and to
help manage its exposure to interest rate fluctuations. These off-balance sheet
instruments include commitments to extend credit, letters of credit, securities
lent, foreign exchange contracts and interest rate contracts. Note 15 provides
additional information for off-balance sheet instruments.
FCC uses interest rate contracts to manage interest rate risk. Table
10 summarizes FCC's interest rate contracts at December 31, 1995. Table 11
summarizes the activity, by notional amount, for all interest rate contracts
during 1995, while Table 12 presents their impact on net interest income.
FCC had amortizing interest rate swaps with a notional amount of $194
million as of December 31, 1995. These contracts were purchased to convert
certificates of deposit from fixed rate into floating rate at a time when
interest rates were declining. However, as rates began to rise during 1994,
these swaps began to increase FCC's deposit costs. At year-end 1995, the
estimated fair value of these contracts was a loss of $1.3 million. The notional
amount of these contracts amortizes in relation to movements in interest rates.
Declining rates caused these contracts to fully amortize in February 1996; these
swaps will reduce net interest income only $293,000 in 1996.
TABLE 12. ANALYSIS OF INTEREST INCOME (EXPENSE)
FROM INTEREST RATE CONTRACTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Option Amortizing
Year Ended December 31, 1995 Based Generic Interest Callable
(in thousands) Instruments Swaps Rate Swaps Swaps Total
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income $ 611 $256 $(3,382) $(561) $(3,076)
Amortization (1,390) - - - (1,390)
- ----------------------------------------------------------------------------------------
Net interest income $ (779) $256 $(3,382) $(561) $(4,466)
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
At December 31, 1995, FCC had $350 million of graduated interest rate
caps which mature between August and November of 1996. A purchased cap requires
the payment of a premium for the right to receive payments when a floating rate
index rises above a strike rate during the life of the contract. FCC's
caps were purchased to hedge against increases in the cost of short-term
borrowings. However, since interest rates have fallen since the caps were
purchased, it is unlikely that LIBOR, the index, will rise above the
strike rate for the remainder of the caps' lives. As of December 31,1995, the
unamortized premium on these caps was $1.2 million and their estimated fair
value was negligible.
During 1995, FCC terminated its generic and callable swap portfolios and
is amortizing the associated deferred loss, which was $440,000 at year-end.
The fair value of interest rate contracts at any given date represents
the estimated amount FCC would receive or pay to terminate the contracts. The
negative estimated fair value of FCC's interest rate contracts at year-end 1995
was mitigated by the fair values of the offsetting balance sheet liabilities
matched against these contracts. The fair values of interest rate contracts
fluctuate depending upon the remaining maturities of the contracts and the
financial markets' expectations regarding future interest rate levels.
Liquidity
Liquidity is provided by a stable base of funding sources, especially
core deposits, and an adequate level of assets readily convertible into cash.
These sources of liquidity are needed to meet cash requirements for deposit
withdrawals and the funding of loans.
FCC's core deposits, money market investments and securities available
for sale provided a more than adequate level of liquidity in 1995. Other
potential sources of liquidity are assets available for securitization,
commercial paper issued by the Parent Company and lines of credit
maintained with major banks totaling $55 million. No commercial paper was issued
in 1995, and the lines of credit were unused.
TABLE 13. RISK-BASED CAPITAL AND CAPITAL RATIOS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
December 31
- -----------------------------------------------------------------------------------------------------------
(dollars in thousands) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 1 capital $ 679,003 $ 651,080 $ 603,563 $ 490,920 $ 313,028
Tier 2 capital 149,769 138,995 132,371 133,029 143,958
- -----------------------------------------------------------------------------------------------------------
Total capital $ 828,772 $ 790,075 $ 735,934 $ 623,949 $ 456,986
- -----------------------------------------------------------------------------------------------------------
Risk-weighted assets $5,343,946 $4,452,537 $3,872,240 $3,457,555 $3,456,018
- -----------------------------------------------------------------------------------------------------------
Ratios at end of year
Tier 1 capital 12.71% 14.62% 15.59% 14.20% 9.06%
Total capital 15.51% 17.74% 19.01% 18.05% 13.22%
Equity ratio 8.59% 7.45% 7.74% 6.79% 5.25%
Tangible equity ratio 8.37% 7.26% 7.54% 6.55% 4.95%
Leverage ratio 8.16% 8.20% 7.70% 6.78% 5.11%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Capital and Dividends
At December 31, 1995, total stockholders' equity was 8.59% of total
assets, compared to 7.45% one year ago. The increase was primarily related to
the $33.6 million net unrealized gain on securities available for sale at
year-end 1995, compared to a $73.9 million net unrealized loss at December 31,
1994. The regulatory leverage ratio, which excludes the net unrealized gain
or loss on securities available for sale, was 8.16% at year-end 1995 and 8.20%
at December 31, 1994. Table 13 presents FCC's risk-based and other capital
ratios for the past five years. All ratios remain well above regulatory
minimums.
(10) Stockholders' Equity
as a percentage of year-end assets
The graph inserted shows stockholders' equity as a percentage of year-end
assets from 1991 to 1995. The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
--------------------------------------------------------------------
Bar % 5.25 6.79 7.74 7.45 8.59
Regulators have established a capital-based supervisory system for all
insured financial institutions. This system categorizes a financial
institution's capital position into one of five classifications ranging from
well-capitalized to critically under-capitalized. For an institution to qualify
as well-capitalized, Tier 1, Total and leverage capital ratios must be at least
6%, 10% and 5%, respectively. At December 31, 1995, each of FCC's banking
subsidiaries was well-capitalized as defined by regulators.
(11) Leverage Ratio
The graph inserted shows stockholders' equity plus minority interest plus
qualifying long-term debt less intangible assets divided by the latest
quarter's average total assets less intangible assets from 1991 to 1995.
The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
----------------------------------------------------------------------
Bar % 5.11 6.78 7.70 8.20 8.16
FCC increased its common stock cash dividend 17% in the fourth
quarter of 1995 and paid $1.25 per share for the full year. The Parent Company's
sources of funds to pay cash dividends on its common and preferred stock are its
net working capital and the dividends it receives from the banks. At December
31, 1995, the Parent Company had net working capital of $77 million. Also, the
Parent Company could receive dividends from the banks without prior regulatory
approval of $43 million after December 31, 1995, plus the banks' adjusted net
profits for 1996.
Credit Risk Management
FCC manages its credit risk by diversifying its loan portfolio,
maintaining credit underwriting standards which emphasize cash flows and
repayment ability, providing an adequate allowance for loan losses and
continually reviewing loans through the independent loan review process.
Portfolio diversification reduces credit risk by minimizing the impact on the
portfolio if weaknesses develop in certain segments of the economy. Credit
underwriting standards ensure that loans are properly structured and
collateralized. An adequate allowance for loan losses provides for losses
inherent in the loan portfolio. The loan review process identifies and monitors
potentially weak or deteriorating credits.
Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, restructured loans
and foreclosed assets. As shown in Table 14, nonperforming assets totaled
$59.8 million at year-end 1995, compared to $24.1 million at December 31,
1994. The year-end 1995 total is comprised of $53.4 million of nonperforming
loans and $6.5 million of foreclosed assets. As a percent of loans and
foreclosed assets, nonperforming assets were 1.17% at year-end, compared to
.58% one year ago. Asset quality measures remain at acceptable levels, although
they did deteriorate from 1994's historically low levels. Changes in the level
of total loans, the mix of the loan portfolio and economic conditions are the
primary factors influencing the future levels of nonperforming assets.
<PAGE>
Nonperforming loans rose $37.5 million in 1995. Approximately $14
million of the increase was in gaming-industry loans placed on non-accrual
status, while an additional $11 million was related to one borrower in a service
industry. Nonperforming real estate loans and continued loan growth also
contributed to the increase. 58% of nonperforming loans were contractually
current or no more than 30 days past due at the end of 1995.
Foreclosed assets, which include unused bank premises, fell $1.8 million
from year-end 1994. Property sales were the principal cause of the decline.
During 1995, $3.7 million in unused bank premises related to branch closures
were added to foreclosed assets.
Loans and leases past due 90 days or more and not on non-accrual status
were $20.7 million at December 31, 1995, or .40% of total loans. Included were
$10.5 million in government-guaranteed student loans plus $7.0 million of
credit card loans, which are charged-off within 180 days of becoming past due.
Effective January 1, 1995, FCC adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan", as amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures." Adoption
did not have a material impact on the consolidated financial statements. At
December 31, 1995, loans considered to be impaired totaled $49.0 million, of
which $18.1 million required a total impairment allowance of $4.7 million.
Impaired loans are included in nonaccrual loans.
TABLE 14. NONPERFORMING ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 31
- ---------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans by type
Loans to individuals - residential mortgages $ 6,897 $ 5,164 $ 6,366 $ 9,921 $ 10,422
Loans to individuals - other 335 815 1,148 1,396 2,162
Commercial, financial and agricultural 27,610 1,222 5,383 8,964 16,948
Real estate - commercial mortgages 15,455 8,282 20,844 26,666 28,869
Real estate - construction and other 3,064 340 430 615 3,125
Other - - - 608 1,185
Restructured loans - - - - 637
- ---------------------------------------------------------------------------------------------------------------------------
53,361 15,823 34,171 48,170 63,348
- ---------------------------------------------------------------------------------------------------------------------------
Foreclosed assets
Other real estate 6,671 12,062 19,333 44,368 57,161
Other foreclosed assets 532 151 144 184 440
Allowance for losses on foreclosed assets (733) (3,898) (5,918) (9,120) (4,255)
- ---------------------------------------------------------------------------------------------------------------------------
6,470 8,315 13,559 35,432 53,346
- ---------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $59,831 $24,138 $47,730 $83,602 $116,694
- ---------------------------------------------------------------------------------------------------------------------------
Loans past due 90 days or more and not on nonaccrual status $20,668 $12,215 $15,742 $15,057 $ 15,638
- ---------------------------------------------------------------------------------------------------------------------------
End of year ratios
Nonperforming assets as a percent of loans and leases
plus foreclosed assets (F1) 1.17% .58% 1.34% 2.71% 3.76%
Allowance for loan losses as a percent of nonperforming loans 142.14% 449.04% 250.52% 194.54% 134.55%
Loans and leases past due 90 days or more and not on
nonaccrual status as a percent of loans and leases (F1) .40% .30% .44% .49% .51%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Net of unearned income.
<PAGE>
Watch List
FCC's watch list includes loans which, for management purposes, have
been identified as requiring a higher level of monitoring due to risk. FCC's
watch list includes both performing and nonperforming loans, as well as
foreclosed assets. The majority of watch list loans are classified as
performing, because they do not have characteristics resulting in uncertainty
about the borrower's ability to pay principal and interest in accordance with
the original terms of the loans.
The watch list consists of classifications, identified as Type 1
through Type 4. Types 1, 2 and 3 generally parallel the regulatory
classifications of loss, doubtful and substandard, respectively. Type 4
generally parallels the regulatory classification of Other Assets Especially
Mentioned. These loans require monitoring due to conditions which, if not
corrected, could increase credit risk.
(12) Nonperforming Assets (millions)
The graph inserted shows nonperforming assets from 1991 to 1995.
The plot points are:
Graph
Type Denominations 1991 1992 1993 1994 1995
--------------------------------------------------------------------------
Bar Millions 116.694 83.602 47.73 24.138 59.831
Table 15 presents watch list loans and foreclosed assets for the past
five years. Information for prior years has not been restated for acquisitions
due to inconsistencies in methodology. As of December 31, 1995, watch list loans
and foreclosed assets were $190 million, or 3.71% of total loans and foreclosed
assets, compared to 3.32% last year. The increase was mostly in the Type 3, or
substandard, classification and primarily reflected the impact of acquisitions,
continued loan growth and the addition of $14 million in gaming-industry loans.
<PAGE>
TABLE 15. WATCH LIST (F1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
(dollars in thousands) Type 1 Type 2 Type 3 Type 4 Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1995 $ - $ 4,521 $119,639 $66,296 $190,456
December 31, 1994 $ - $ 834 $ 51,269 $55,420 $107,523
December 31, 1993 $ - $ 2,275 $106,009 $62,582 $170,866
December 31, 1992 $ - $ 6,489 $150,093 $62,096 $218,678
December 31, 1991 $ - $10,197 $212,286 $94,708 $317,191
As A Percent Of Total Loans And Foreclosed Assets Type 1 Type 2 Type 3 Type 4 Total
- ------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1995 -% .09% 2.33% 1.29% 3.71%
December 31, 1994 -% .03% 1.58% 1.71% 3.32%
December 31, 1993 -% .08% 3.95% 2.33% 6.37%
December 31, 1992 -% .29% 6.59% 2.73% 9.61%
December 31, 1991 -% .44% 9.10% 4.06% 13.60%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Information for prior periods has not been restated for the 1995
poolings-of-interests acquisitions due to inconsistencies in methodology.
TABLE 16. SUMMARY OF LOAN AND LEASE LOSS EXPERIENCE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $71,052 $ 85,604 $96,658 $85,232 $71,998
Allowance acquired in bank purchases 1,142 - - - -
Provision charged to expense 30,600 (10,418) (2,424) 29,086 51,238
Loans and leases charged to the allowance
Loans to individuals - residential mortgages 401 332 889 2,187 5,434
Loans to individuals - other 8,055 3,635 3,537 5,163 7,338
Commercial, financial and agricultural 13,509 947 3,125 5,812 13,410
Real estate - commercial mortgages 416 198 1,389 3,782 5,825
Real estate - construction and other 9 7 131 395 944
Credit card loans 15,561 11,120 11,433 13,770 14,633
Other 9 - 41 83 474
- ---------------------------------------------------------------------------------------------------------------------------
Total charge-offs 37,960 16,239 20,545 31,192 48,058
- ---------------------------------------------------------------------------------------------------------------------------
Recoveries on loans and leases previously charged
to the allowance
Loans to individuals - residential mortgages 731 1,218 1,127 1,204 869
Loans to individuals - other 2,831 2,431 2,405 2,260 2,277
Commercial, financial and agricultural 2,946 3,848 3,209 3,191 4,287
Real estate - commercial mortgages 656 1,005 1,719 1,459 679
Real estate - construction and other 465 561 432 113 256
Credit card loans 3,326 2,987 2,619 2,181 1,653
Other 56 55 404 178 33
- ---------------------------------------------------------------------------------------------------------------------------
Total recoveries 11,011 12,105 11,915 10,586 10,054
- ---------------------------------------------------------------------------------------------------------------------------
Net charge-offs 26,949 4,134 8,630 20,606 38,004
- ---------------------------------------------------------------------------------------------------------------------------
Balance at end of year $75,845 $ 71,052 $85,604 $93,712 $85,232
- ---------------------------------------------------------------------------------------------------------------------------
Gross charge-offs as a percent of average loans and
leases (F1) .84% .44% .64% 1.05% 1.57%
Recoveries as a percent of gross charge-offs 29.01% 74.54% 57.99% 33.94% 20.92%
Net charge-offs as a percent of average loans and
leases (F1) .59% .11% .27% .69% 1.24%
Allowance for loan losses as a percent of loans and
leases (F1) at end of year 1.48% 1.72% 2.41% 3.07% 2.79%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Net of unearned income.
TABLE 17. ALLOWANCE FOR LOAN LOSSES (F1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
December 31
- ------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------
Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans to individuals 19.20% 46.99% 29.32% 46.17% 22.92% 44.62% 18.03% 39.44% 27.36% 37.79%
Commercial, financial
and agricultural 21.42 19.89 19.32 19.84 18.50 16.48 24.71 18.94 15.34 23.28
Real estate 20.51 18.86 13.12 18.70 24.46 21.87 25.10 22.32 25.45 20.23
Credit card 19.84 12.05 19.10 12.28 18.57 13.00 16.27 15.03 14.35 15.58
Other .27 2.21 .61 3.01 2.41 4.03 5.57 4.27 4.28 3.12
Unallocated 18.76 - 18.53 - 13.14 - 10.32 - 13.22 -
- ------------------------------------------------------------------------------------------------------------------------------
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Information for prior periods has not been restated for the 1995
poolings-of-interests acquisitions due to inconsistencies in methodology.
(13) Allowance for loan losses
as a % of year-end net loans and leases
Graph
Type Denominations 1991 1992 1993 1994 1995
----------------------------------------------------------------------
Bar % 2.80 3.07 2.41 1.72 1.48
Allowance for Loan Losses
The allowance for loan losses was $75.8 million, or 126% of nonperform
ing assets, as of December 31, 1995, a $4.8 million increase since December 31,
1994. As a percent of loans and leases, the allowance was 1.48% at the
end of 1995, compared to 1.72% at year-end 1994. Management believes that the
allowance is adequate to cover losses inherent in the loan portfolio. Table 16
presents the activity in the allowance for loan losses for the past five years.
The allocation of the allowance for loan losses is included in Table 17.
Net charge-offs were $26.9 million in 1995, compared to $4.1 million in
1994. Net charge-offs were .59% of average loans in 1995, compared to .11% in
the prior year. The increase reflects the impact of continued loan growth and
$11.8 million in gaming-industry loans charged-off. Additionally, the level of
net charge-offs in 1994 was significantly lower than typical historical levels
for FCC and the banking industry as FCC experienced significant recoveries
related to prior years' charge-offs.
Fair Value of Financial
Instruments
Note 16 provides information regarding the fair values of financial
instruments as of December 31, 1995 and 1994.
The differences between fair values and book values were primarily
caused by differences between contractual and market interest rates at the
respective year-ends. Fluctuations in fair values will occur as interest rates
change.
Fourth Quarter Results
FCC's net income for the fourth quarter of 1995 was $6.9 million,
compared to $11.1 million for the same period in 1994. Results for both periods
reflected several significant items. The fourth quarter of 1995 was impacted by
merger-related and process innovation charges of $18.7 million, plus a higher
provision for loan losses. 1994's fourth quarter included an $18.3 million
pretax loss on securities transactions related to FCC's portfolio restructuring,
plus $5.3 million in merger-related and process innovation charges.
Net interest income (FTE) was $87.6 million for the fourth quarter of
1995, up 2% from last year. The main cause of the increase was a 26% rise in
average loans. The net interest margin was 4.54%, compared to 4.67% in 1994's
same period. The decline was primarily related to higher deposit costs.
The provision for loan losses was $19.8 million in 1995's fourth
quarter, compared to a negative $.8 million in the fourth quarter of 1994.
Continued loan growth was the primary cause of the return to a positive
provision. Additionally, 1995's fourth quarter provision included $10.0
million in response to a $10.0 million charge-off related to the New Orleans
land-based casino closure.
Other income, excluding securities transactions, was 11% higher than
1994's fourth quarter with increases in all categories. Excluding merger-relat
ed and process innovation charges, operating expense was $77.3 million in 1995's
fourth quarter, down 2% from the fourth quarter of 1994. Lower FDIC insurance
expense and personnel costs were the main causes of the decline. The efficiency
ratio, excluding one-time charges, was 62% for the fourth quarter.
Selected Quarterly Data compares certain quarterly financial information
for 1995 and 1994.
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(dollars in thousands except per share data) Years Ended December 31
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average Balance Sheet Data
Total assets $ 8,141,194 $ 7,827,303 $ 7,677,220 $ 7,092,876 $ 5,935,485
Earning assets 7,464,065 7,189,322 7,044,969 6,517,378 5,405,684
Loans and leases (F1) 4,542,678 3,678,298 3,213,885 2,965,851 3,062,718
Securities 2,831,943 3,356,825 3,460,928 3,130,061 1,871,052
Deposits 6,703,077 6,447,897 6,384,923 6,176,537 5,074,724
Long-term debt 89,739 90,315 99,961 106,893 110,605
Stockholders' equity 687,533 623,169 573,174 444,886 314,072
- ------------------------------------------------------------------------------------------------------------------------------------
Income Statement Data
Total interest income $ 598,494 $ 507,293 $ 491,386 $ 503,731 $ 507,319
Net interest income 343,344 323,505 315,923 297,727 245,341
Net interest income (FTE) 349,317 330,056 322,850 305,516 254,346
Provision for loan losses 30,600 (10,418) (2,424) 29,086 51,238
Other income (exclusive of securities transactions) 151,279 134,648 126,278 118,057 102,768
Securities transactions (11,413) (43,461) (344) 1,309 1,231
Operating expense 337,204 306,311 281,748 262,061 239,476
Operating income 83,369 108,477 113,291 84,790 42,682
Net income 75,951 80,227 113,025 85,654 43,494
- ------------------------------------------------------------------------------------------------------------------------------------
Key Ratios
Return on average assets .93% 1.02% 1.47% 1.21% .73%
Return on average total equity 11.05% 12.87% 19.72% 19.25% 13.85%
Return on average common equity 11.41% 13.47% 21.18% 21.19% 13.85%
Operating return on average assets 1.02% 1.39% 1.48% 1.20% .72%
Operating return on average total equity 12.13% 17.41% 19.77% 19.06% 13.59%
Operating return on average common equity 12.59% 18.49% 21.23% 20.97% 13.59%
Net interest margin 4.68% 4.59% 4.58% 4.69% 4.71%
Efficiency ratio 67.36% 65.92% 62.73% 61.87% 67.06%
Overhead ratio 2.49% 2.39% 2.21% 2.21% 2.53%
Average loans to average deposits 67.77% 57.05% 50.34% 48.02% 60.35%
Allowance for loan losses to loans and leases (F1) 1.48% 1.72% 2.41% 3.07% 2.79%
Nonperforming assets to loans and leases (F1) plus
foreclosed assets 1.17% .58% 1.34% 2.71% 3.76%
Allowance for loan losses to nonperforming loans 142.14% 449.04% 250.52% 194.54% 134.55%
Equity ratio 8.59% 7.45% 7.74% 6.79% 5.25%
Leverage ratio 8.16% 8.20% 7.70% 6.78% 5.11%
- ------------------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data
Earnings Per Common Share
Net income-primary $ 1.89 $ 2.01 $ 2.89 $ 2.32 $ 1.31
Operating income-primary $ 2.09 $ 2.76 $ 2.90 $ 2.30 $ 1.28
Net income-fully diluted $ 1.87 $ 1.98 $ 2.75 $ 2.27 $ 1.31
Operating income-fully diluted $ 2.05 $ 2.64 $ 2.76 $ 2.24 $ 1.28
Common Dividends
Cash dividends $ 1.25 $ 1.10 $ .85 $ .70 $ .64
Dividend payout ratio 66.14% 54.73% 29.51% 30.17% 48.85%
Book Values (end of period)
Book value $ 17.86 $ 14.19 $ 15.00 $ 12.59 $ 10.49
Tangible book value $ 17.32 $ 13.75 $ 14.54 $ 12.04 $ 9.84
Common Stock Data
High stock price $ 34.50 $ 30.00 $ 32.20 $ 27.86 $ 18.14
Low stock price $ 22.00 $ 21.75 $ 23.90 $ 16.94 $ 7.20
Closing stock price $ 32.00 $ 22.00 $ 25.13 $ 25.60 $ 17.20
Trading volume 22,399,572 30,234,732 19,562,420 26,741,915 10,667,309
Number of stockholders (end of period) 9,951 9,359 9,360 8,470 8,726
Average Shares Outstanding (in thousands)
Primary 37,898 37,754 37,569 35,166 33,246
Fully diluted 40,715 40,548 43,562 41,005 33,246
Number of Employees (end of period) 4,211 4,376 4,373 3,960 3,624
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Net of unearned income.
(F2) Periods prior to 1991 have not been restated for the 1995
poolings-of-interests with Peoples and Lakeside since the effect would be
immaterial.
<TABLE>
<CAPTION>
Years Ended December 31 (F2) Growth Rates
1990 1989 1988 1987 1986 1985 Five-Year Ten-Year
<S> <C> <C> <C> <C> <C> <C> <C>
$5,282,064 $4,959,469 $4,581,773 $4,230,490 $4,295,191 $3,505,317 9.04 % 8.79%
4,852,542 4,390,862 4,064,357 3,739,372 3,783,917 3,054,421 8.99 % 9.35%
2,914,691 2,704,734 2,507,015 2,307,142 2,319,686 1,876,350 9.28 % 9.24%
1,471,977 1,208,199 1,118,104 919,976 907,895 731,191 13.98 % 14.50%
4,268,772 4,007,804 3,687,645 3,343,401 3,365,961 2,705,720 9.44 % 9.50%
111,359 112,365 113,965 111,040 115,336 67,641 (4.23)% 2.87%
287,657 277,204 266,073 260,205 266,825 245,641 19.04 % 10.84%
$ 486,453 $ 466,396 $ 368,945 $ 351,353 $ 373,356 $ 338,810 4.23 % 5.85%
199,192 184,126 173,510 160,359 156,724 140,146 11.90 % 9.37%
208,722 194,037 184,246 175,246 179,281 162,333 10.85 % 7.96%
53,100 33,648 33,126 28,992 48,606 19,856 N/A N/A
86,985 76,850 71,049 63,839 58,622 48,403 11.70 % 12.07%
55 (875) (941) 1,367 496 1,165 N/A N/A
198,874 186,557 176,677 168,536 175,462 141,091 11.14 % 9.10%
26,725 30,917 26,434 22,868 5,919 27,850 25.55 % 11.59%
26,761 30,339 25,813 23,688 6,187 28,479 23.20 % 10.31%
.51% .61% .56% .56% .14% .81%
9.30% 10.94% 9.70% 9.10% 2.32% 11.59%
9.22% 10.96% 9.60% 8.92% 1.34% 11.54%
.51% .62% .58% .54% .14% .79%
9.29% 11.15% 9.93% 8.79% 2.22% 11.34%
9.20% 11.19% 9.85% 8.57% 1.23% 11.27%
4.30% 4.42% 4.53% 4.69% 4.74% 5.31%
67.25% 68.87% 69.21% 70.49% 73.75% 66.95%
2.31% 2.50% 2.60% 2.80% 3.09% 3.03%
68.28% 67.49% 67.98% 69.01% 68.92% 69.35%
2.31% 1.84% 1.98% 2.02% 2.02% 1.86%
4.18% 3.39% 4.19% 4.26% 4.70% 3.52%
82.73% 121.23% 66.08% 58.65% 49.20% 58.01%
5.17% 5.26% 5.46% 5.82% 5.79% 5.92%
4.84% 5.19% 5.27% 5.53% 5.33% 6.17%
$ .81 $ .90 $ .76 $ .69 $ .11 $ .90 18.47 % 7.70%
$ .81 $ .92 $ .78 $ .66 $ .10 $ .88 18.21 % 7.59%
$ .81 $ .90 $ .76 $ .69 $ .11 $ .90 20.87 % 9.16%
$ .81 $ .92 $ .78 $ .66 $ .10 $ .88 20.41 % 8.95%
$ .64 $ .64 $ .64 $ .64 $ .64 $ .64 14.33 % 6.92%
79.01% 71.11% 84.21% 92.75% 581.82% 71.11%
$ 9.34 $ 9.75 $ 9.28 $ 8.98 $ 8.90 $ 9.33
$ 8.58 $ 8.94 $ 8.46 $ 7.97 $ 7.69 $ 7.93
$ 12.54 $ 12.74 $ 10.54 $ 10.80 $ 13.60 $ 15.60
$ 6.66 $ 9.27 $ 7.86 $ 7.40 $ 7.40 $ 11.06
$ 7.46 $ 12.40 $ 9.74 $ 8.00 $ 7.86 $ 11.74
5,968,360 3,651,604 4,173,330 4,674,623 8,045,740 4,676,329
8,972 8,491 8,505 8,732 8,438 8,667
31,035 30,810 30,597 30,552 30,510 30,487
31,035 30,810 30,597 30,552 30,510 30,487
3,114 3,100 2,888 2,861 2,905 3,239
</TABLE>
SELECTED QUARTERLY DATA
<TABLE>
<CAPTION>
(dollars in thousands except per share data) 1995 Quarters
- ---------------------------------------------------------------------------------------------------------------------------
4th 3rd 2nd 1st
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income $ 86,086 $ 87,039 $ 85,959 $ 84,260
Provision for loan losses 19,808 4,659 2,971 3,162
Other income (exclusive of securities transactions) 38,674 40,522 37,088 34,995
Securities transactions 1,868 5 36 (13,322)
Operating expense 95,635 81,043 79,624 80,902
Income tax expense 4,268 14,493 13,317 7,377
- ---------------------------------------------------------------------------------------------------------------------------
Net income 6,917 27,371 27,171 14,492
Preferred dividend requirements 1,066 1,086 1,086 1,087
- ---------------------------------------------------------------------------------------------------------------------------
Income applicable to common shares $ 5,851 $ 26,285 $ 26,085 $ 13,405
- ---------------------------------------------------------------------------------------------------------------------------
Per common share data
Primary $ .15 $ .69 $ .69 $ .36
Fully diluted $ .15 $ .66 $ .66 $ .36
Dividends $ .35 $ .30 $ .30 $ .30
Common stock data(F1)
High stock price $ 33.75 $ 34.50 $ 29.75 $ 27.25
Low stock price $ 30.63 $ 29.25 $ 24.00 $ 22.00
Closing stock price $ 32.00 $ 31.50 $ 29.50 $ 25.00
Trading volume 5,046,101 6,815,541 4,711,340 5,826,590
- ---------------------------------------------------------------------------------------------------------------------------
1994 Quarters
- ---------------------------------------------------------------------------------------------------------------------------
4th 3rd 2nd 1st
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income $ 83,905 $ 81,879 $ 78,455 $ 79,266
Provision for loan losses (829) (2,175) (4,407) (3,007)
Other income (exclusive of securities transactions) 34,686 33,051 33,409 33,502
Securities transactions (18,326) (19,603) (6,797) 1,265
Operating expense 84,582 75,893 74,320 71,516
Income tax expense 5,376 6,840 11,524 14,832
- ---------------------------------------------------------------------------------------------------------------------------
Net income 11,136 14,769 23,630 30,692
Preferred dividend requirements 1,086 1,087 1,087 1,087
- ---------------------------------------------------------------------------------------------------------------------------
Income applicable to common shares $ 10,050 $ 13,682 $ 22,543 $ 29,605
- ---------------------------------------------------------------------------------------------------------------------------
Per common share data
Primary $ .27 $ .36 $ .60 $ .78
Fully diluted $ .27 $ .36 $ .58 $ .74
Dividends $ .30 $ .30 $ .25 $ .25
Common stock data(a)
High stock price $ 26.76 $ 28.75 $ 30.00 $ 28.50
Low stock price $ 21.75 $ 25.75 $ 23.50 $ 24.00
Closing stock price $ 22.00 $ 26.75 $ 28.25 $ 24.00
Trading volume 5,723,897 4,857,105 7,313,633 12,340,097
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(F1) Common and preferred stocks are traded in the over-the-counter market and
are listed on the NASDAQ Stock Market. All closing prices represent
closing sales prices as reported on the NASDAQ Stock Market.
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(dollars in thousands) December 31
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 497,268 $ 472,142
Interest-bearing deposits in other banks 788 4,330
Securities:
Held to maturity (fair value $144,776) - 150,713
Available for sale, at fair value 2,599,767 2,582,348
Trading account securities 19,630 8,970
Federal funds sold and securities purchased under resale agreements 33,900 156,030
Loans and leases, net of unearned income of $7,070 and $17,472, respectively 5,122,726 4,129,239
Allowance for loan losses (75,845) (71,052)
- ---------------------------------------------------------------------------------------------------------------------------
Net loans and leases 5,046,881 4,058,187
- ---------------------------------------------------------------------------------------------------------------------------
Premises and equipment 165,813 153,339
Accrued interest receivable 95,787 71,219
Other assets 70,973 309,262
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $8,530,807 $7,966,540
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Noninterest-bearing deposits $1,481,795 $1,471,925
Interest-bearing deposits 5,472,606 5,225,475
- ---------------------------------------------------------------------------------------------------------------------------
Total deposits 6,954,401 6,697,400
- ---------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 635,728 500,568
Accrued interest payable 41,952 25,684
Accounts payable and other accrued liabilities 77,331 59,184
Long-term debt 88,346 90,145
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 7,797,758 7,372,981
- ---------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized Series 1992, 7.25% cumulative
convertible, $25 stated value
Issued-- 2,348,806 and 2,398,170 shares, respectively 58,720 59,954
Common stock, $5 par value
Authorized -- 100,000,000 shares
Issued-- 38,281,519 and 37,629,195 shares, respectively 191,408 188,146
Capital surplus 125,405 112,238
Retained earnings 337,782 307,701
Treasury stock-- 471,403 common shares, at cost (12,727) -
Unearned restricted stock compensation (1,123) (592)
Net unrealized gain (loss) on securities available for sale 33,584 (73,888)
- ---------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 733,049 593,559
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $8,530,807 $7,966,540
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these Consolidated Balance Sheets.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(dollars in thousands except per share data) Years Ended December 31
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $ 410,039 $ 320,319 $ 291,751
Interest on tax-exempt securities 7,066 8,040 9,953
Interest and dividends on taxable securities 176,222 172,348 177,540
Interest on money market investments 5,167 6,586 12,142
- ----------------------------------------------------------------------------------------------------------------------------
Total interest income 598,494 507,293 491,386
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 210,942 148,843 147,867
Interest on short-term borrowings 33,015 23,633 15,384
Interest on long-term debt 11,193 11,312 12,212
- ----------------------------------------------------------------------------------------------------------------------------
Total interest expense 255,150 183,788 175,463
- ----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 343,344 323,505 315,923
PROVISION FOR LOAN LOSSES 30,600 (10,418) (2,424)
- ----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 312,744 333,923 318,347
- ----------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Deposit fees and service charges 59,515 55,845 55,624
Credit card fee income 34,516 30,457 27,723
Trust fee income 17,163 15,853 13,326
ATM fee income 8,393 5,829 2,328
Broker/dealer revenue 8,198 7,386 8,800
Other operating revenue 23,494 19,278 18,477
Securities transactions (11,413) (43,461) (344)
- ----------------------------------------------------------------------------------------------------------------------------
Total other income 139,866 91,187 125,934
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSE
Salary expense 139,285 136,177 121,351
Employee benefits 33,855 29,343 28,254
- ----------------------------------------------------------------------------------------------------------------------------
Total personnel expense 173,140 165,520 149,605
Net occupancy expense 22,027 20,902 20,287
Equipment expense 26,652 20,901 17,507
Professional fees 19,336 16,538 14,375
FDIC insurance expense 8,665 14,413 14,510
Other operating expense 87,384 68,037 65,464
- ----------------------------------------------------------------------------------------------------------------------------
Total operating expense 337,204 306,311 281,748
- ----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX EXPENSE 115,406 118,799 162,533
INCOME TAX EXPENSE 39,455 38,572 49,508
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME 75,951 80,227 113,025
PREFERRED DIVIDEND REQUIREMENTS 4,325 4,347 4,348
- ----------------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON SHARES $ 71,626 $ 75,880 $ 108,677
- ----------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Primary $ 1.89 $ 2.01 $ 2.89
Fully diluted $ 1.87 $ 1.98 $ 2.75
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 37,898,267 37,753,923 37,568,892
Fully diluted 40,715,037 40,548,302 43,561,684
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these Consolidated Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Net
Unrealized
Unearned Gain (Loss) on
Restricted Securities
Preferred Common Capital Retained Treasury Stock Available
(dollars in thousands, except per share data) Stock Stock Surplus Earnings Stock Compensation for Sale Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $59,991 $ 97,758 $126,358 $132,223 $ - $ (606) $ - $415,724
- ------------------------------------------------------------------------------------------------------------------------------------
Poolings of interests - 63,307 (22,033) 71,916 - - - 113,190
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 (Restated) 59,991 161,065 104,325 204,139 - (606) - 528,914
Net income - - - 113,025 - - - 113,025
Cash dividends:
Preferred stock ($1.8125 per share) - - - (4,348) - - - (4,348)
Common stock ($.85 per share) - - - (20,985) - - - (20,985)
Pooled acquisitions - - - (3,095) - - - (3,095)
Stock split effected in the form of
a 25% dividend - 24,780 - (24,844) - - - (64)
Conversion of preferred stock (12) 2 10 - - - - -
FANB debt conversion - 329 301 - - - - 630
Exercise of stock options, net of
shares surrendered - 493 942 - - - - 1,435
Issuances to plans - 727 4,312 - - - - 5,039
Restricted stock activity - 98 588 - - (211) - 475
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 59,979 187,494 110,478 263,892 - (817) - 621,026
- ------------------------------------------------------------------------------------------------------------------------------------
Net income - - - 80,227 - - - 80,227
Cash dividends:
Preferred stock ($1.8125 per share) - - - (4,347) - - - (4,347)
Common stock ($1.10 per share) - - - (28,782) - - - (28,782)
Pooled acquisitions - - - (3,254) - - - (3,254)
Conversion of preferred stock (25) 6 19 - - - - -
Exercise of stock options, net of
shares surrendered - 323 558 - - - - 881
Issuances to plans - 292 1,124 (35) - - - 1,381
Restricted stock activity - 31 59 - - 225 - 315
Net unrealized (loss) on
securities available for sale - - - - - - (73,888) (73,888)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 59,954 188,146 112,238 307,701 - (592) (73,888) 593,559
- ------------------------------------------------------------------------------------------------------------------------------------
Net income - - - 75,951 - - - 75,951
Cash dividends:
Preferred stock ($1.8125 per share) - - - (4,325) - - - (4,325)
Common stock ($1.25 per share) - - - (39,611) - - - (39,611)
Pooled acquisitions - - - (1,846) - - - (1,846)
Conversion of preferred stock (1,234) 287 947 - - - - -
Exercise of stock options, net of
shares surrendered - 223 583 - - - - 806
Sales to plans - - 324 (88) 1,033 - - 1,269
Restricted stock activity - 172 400 - - (531) - 41
Issuance and repurchase of 516,100
shares in acquisition - 2,580 10,913 - (13,760) - - (267)
Change in net unrealized gain (loss) on
securities available for sale - - - - - - 107,472 107,472
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $58,720 $191,408 $125,405 $337,782 $(12,727) $(1,123) $ 33,584 $733,049
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these Consolidated Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(dollars in thousands) Years Ended December 31
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 75,951 $ 80,227 $ 113,025
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 30,600 (10,418) (2,424)
Depreciation and amortization 23,427 18,313 15,146
Amortization of intangibles 2,870 2,296 3,140
Deferred income tax (benefit) expense (9,124) 7,580 (8,569)
Net loss from securities transactions 11,413 43,461 344
Net (gain) on loan sales (1,121) (546) (122)
Gain on branch divestitures (3,054) - -
(Increase) decrease in trading account securities (10,660) (8,488) 1,894
(Increase) decrease in accrued interest receivable (24,362) (5,595) 520
(Increase) decrease in other assets 9,612 (2,029) (23,295)
Increase in accrued interest payable 16,105 6,161 394
Increase (decrease) in accounts payable and other accrued liabilities 18,219 (6,211) 14,898
Other, net 1,334 (135) 1,950
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 141,210 124,616 116,901
- ---------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net decrease in interest-bearing deposits in other banks 3,542 51,092 328,264
Proceeds from sales of securities held to maturity and held for sale - 3,625 506,024
Proceeds from maturities/calls of securities held to maturity and held for sale 80,036 798,801 1,228,485
Purchases of securities held to maturity and held for sale (32,879) (19,359) (1,948,800)
Proceeds from sales of securities available for sale 765,867 1,683,863 -
Proceeds from maturities/calls of securities available for sale 306,118 329,779 -
Purchases of securities available for sale (625,446) (2,202,954) -
Net (increase) decrease in federal funds sold and
securities purchased under resale agreements 126,680 (64,871) 23,070
Proceeds from sales of loans 137,888 162,891 16,230
Net (increase) in loans (1,142,703) (747,582) (432,592)
Net cash acquired (paid) in acquisitions 3,858 (1,194) -
Divestiture of branches (4,897) - -
Purchases of premises and equipment (46,966) (34,602) (23,452)
Proceeds from sales of foreclosed assets 12,161 10,080 21,405
Other, net 485 1,839 1,578
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH (USED) BY INVESTING ACTIVITIES (416,256) (28,592) (279,788)
- ---------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, NOW accounts,
money market accounts and savings accounts (30,543) (125,827) 116,283
Net increase (decrease) in time deposits 250,928 282,987 (105,798)
Net increase (decrease) in short-term borrowings 135,235 (200,396) 198,630
Payments on long-term debt (1,874) (2,462) (13,193)
Proceeds from sales of common stock 825 1,840 5,385
Cash dividends (41,672) (33,835) (26,972)
Treasury stock acquired, net of sales (12,727) - -
Other, net - 131 -
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 300,172 (77,562) 174,335
- ---------------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 25,126 18,462 11,448
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 472,142 453,680 442,232
- ---------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 497,268 $ 472,142 $ 453,680
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
Business, Summary of Significant Accounting
Policies and Recent Pronouncements
Business
First Commerce Corporation (FCC) is a multi-bank holding company
headquartered in New Orleans, Louisiana. Through its six banks (collectively
"the Banks") located in Louisiana, FCC offers complete banking and related
financial services to commercial and consumer customers in the Gulf South,
primarily Louisiana and southern Mississippi. The Banks account for
substantially all of the assets and net income of FCC. FCC and the Banks are
subject to the regulation and supervision of certain federal and state agencies
and undergo periodic examinations by those regulatory authorities.
Summary of Significant Accounting Policies
Use of Estimates
The accounting and reporting policies of FCC and its subsidiaries conform
with generally accepted accounting principles and with general practices within
the financial services industry. In preparing the consolidated financial
statements, FCC is required to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.
Basis of Presentation
The consolidated financial statements include the accounts of FCC and its
subsidiaries. All significant intercompany balances and transactions have been
eliminated. Prior year financial statements have been restated to include the
accounts of business combinations accounted for as poolings-of-interests, unless
immaterial. Business combinations accounted for as purchases are included from
the respective dates of acquisition. Certain prior years' amounts have been
reclassified to conform with current year financial statement presentation.
Securities
Securities are classified as either trading, held to maturity or
available for sale. Management determines the classification of securities when
they are purchased and reevaluates this classification periodically.
Trading account securities are bought and held principally for resale in
the near term. They are carried at fair value with realized and unrealized gains
or losses reflected in other operating revenue. Interest and dividend income on
trading account securities is included in interest income on money market
investments.
Securities which FCC has the ability and positive intent to hold to
maturity are classified as securities held to maturity. They are stated at
amortized cost.
Securities which may be sold in response to changes in interest rates,
liquidity needs or asset/liability management strategies are classified as
securities available for sale. These securities are carried at fair value, with
net unrealized gains or losses excluded from earnings and shown as a separate
component of stockholders' equity, net of the related tax effect.
Realized gains and losses on securities either held to maturity or
available for sale are computed based on the specific identification method and
are reported as a separate component of other income. Amortization of premium
and accretion of discount are computed using the interest method.
Loans
Loans are stated at the principal amounts outstanding net of unearned
income. Interest on loans and accretion of unearned income are computed by
methods which approximate a level rate of return on recorded principal. Loan
origination fees and costs are deferred and amortized as an adjustment to the
related loan yield. For commercial and consumer loans, the amortization period
is the actual life of the loans; for residential mortgage loans, it is the
expected average life of the loan. Loan origination costs on credit card loans
are not deferred due to the immaterial effect on the financial statements.
Annual credit card fees are recognized on a straight-line basis over the related
twelve-month period.
<PAGE>
Nonperforming Loans
Nonperforming loans consist of nonaccrual loans and restructured loans.
Loans past due 90 days or more are considered to be performing until placed on
nonaccrual status. Loans are placed on nonaccrual status when, in the opinion of
management, there is sufficient uncertainty as to timely collection of interest
or principal. Any accrued interest is usually reversed when a loan is placed on
nonaccrual status. Generally, any payments received on nonaccrual loans are
first applied to reduce outstanding principal amounts. Loans are not
reclassified as accruing until interest and principal payments are brought
current and future payments are reasonably assured. Delinquent credit card loans
are charged-off within 180 days.
Effective January 1, 1995, FCC adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan", as amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures." These standards
require the measurement of impairment on certain loans based on the present
value of expected future cash flows discounted at the loan's effective interest
rate or the fair value of the loan's collateral, if the loan is collateral
dependent. Adoption of these standards did not have a material impact on the
consolidated financial statements.
Allowance for Loan Losses
The allowance for loan losses represents management's best estimate of
potential losses in the loan portfolio. This estimate is based on an ongoing
evaluation of the portfolio. Factors considered include significant changes in
the character of the portfolio, loan concentrations, current year charge-offs,
historic charge-off ratios, trends in portfolio volumes, delinquencies,
nonaccruals and economic conditions. Ultimate losses may vary from the current
estimates. These estimates are reviewed periodically and, as adjustments become
necessary, they are reflected in current operations.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation and amortization are computed primarily using the
straight-line method over the estimated useful lives of the assets, and over the
shorter of the lease terms or the estimated lives of leasehold improvements.
Additions to premises and equipment and major replacements or improvements are
capitalized. Gains and losses on dispositions, maintenance, repairs and minor
replacements are reflected in current operations.
Foreclosed Assets
Foreclosed assets, which include unused bank premises, are reported in
other assets and are recorded at estimated fair value, less estimated selling
costs. At foreclosure, the reduction of the carrying amount to fair value is
charged to the allowance for loan losses. Any subsequent writedowns and revenues
and expenses associated with foreclosed assets prior to sale are included in
nonperforming assets expense.
Intangible Assets
The unamortized cost of intangible assets is included in other assets.
Goodwill, the excess of cost over net assets of acquired subsidiaries, is
amortized on a straight-line basis over periods ranging from 5 to 20 years.
Other intangible assets, such as premiums on purchased loans and deposits, are
amortized using the straight-line method over the periods benefited.
Income Taxes
FCC and its subsidiaries file a consolidated federal income tax return.
FCC accounts for income taxes using the asset and liability method. Under this
method, deferred tax assets and liabilities are based on the temporary
differences between the financial reporting basis and tax basis of FCC's assets
and liabilities at enacted tax rates expected to be in effect when such amounts
are realized or settled.
<PAGE>
Interest Rate Contracts
FCC uses interest rate swaps and option based instruments such as caps,
collars and floors to manage its interest rate exposure. These interest rate
contracts are typically entered into as hedges against interest rate risk on
specific assets and liabilities. Revenues or expenses on interest rate contracts
are recognized over the lives of the agreements as adjustments to interest
income or expense of the asset or liability hedged. Related fees and any
premiums paid or received are deferred and amortized over the lives of the
agreements. Any realized gains and losses resulting from early termination of
interest rate contracts are deferred and amortized to the earlier of the
maturity date of the hedged asset or liability, or the original expiration date
of the contract. If the asset or liability being hedged is disposed of, any
unrealized or deferred gain or loss on the related interest rate contract is
included in determining the gain or loss from the disposition. Interest rate
contracts not qualifying for deferral accounting are recorded at fair value. Any
changes in the fair value are recognized in other income.
Earnings Per Common Share
Primary earnings per share is computed by dividing income applicable to
common shares (net income less preferred stock dividends) by the weighted
average number of common shares outstanding plus any dilutive common stock
equivalents. Fully diluted earnings per share is computed using average common
shares outstanding and equivalents. Common stock equivalents are increased by
the assumed conversion of convertible debentures and preferred stock into common
stock as of the beginning of the period, unless antidilutive. Income for fully
diluted earnings per share is adjusted for interest expense related to the
debentures, net of the related income tax effect, and preferred stock dividends.
Statements of Cash Flows
FCC considers only cash on hand and noninterest-bearing amounts due
from banks to be cash equivalents.
Other
Assets held by the Banks in fiduciary capacities are not assets of
the Banks and are not included in the consolidated balance sheets. Generally,
certain minor sources of income are recorded on a cash basis, which does not
differ materially from the accrual basis.
Recent Pronouncements
In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles to be held and used be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Additionally, long-lived assets and certain identifiable
intangible assets to be disposed of are required to be reported at the lower of
carrying amount or fair value, less selling costs. SFAS No. 121 is effective for
fiscal years beginning after December 15, 1995. The adoption of this statement
will not have a material impact on the consolidated financial statements.
The FASB issued SFAS No. 122, "Accounting for Mortgage Servicing Rights,
an amendment of FASB Statement No. 65" in May 1995. SFAS No. 122 provides
guidance for recognition of mortgage servicing rights (MSRs) as an asset when
mortgage loans are sold or securitized with servicing rights retained. This
statement also requires that MSRs be assessed for impairment based on their fair
value. SFAS No. 122 is to be applied prospectively in fiscal years beginning
after December 15, 1995. Adoption of this statement will not have a material
impact on the consolidated financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation." This statement provides accounting and reporting
standards for stock-based employee compensation plans and also applies to equity
instruments issued to acquire goods and services from nonemployees. SFAS No.
123 defines a fair value based method of accounting for employee stock options
or similar equity instruments. Entities may either adopt that accounting method
or may elect to continue the accounting treatment outlined in APB Opinion No.
25, "Accounting for Stock Issued to Employees." Entities electing to continue
following Opinion No. 25 are required to make pro forma disclosures of net
income and earnings per share, as if the fair value based method had been
adopted. SFAS No. 123 is effective for fiscal years beginning after December 15,
1995. FCC expects to continue following Opinion No. 25; adoption of this
statement will not have a material impact on the consolidated financial
statements.
<PAGE>
NOTE 2
Acquisitions
During 1995 FCC acquired five Louisiana financial institutions. FCC's
acquisitions of First Bancshares, Inc. (First), Lakeside Bancshares, Inc.
(Lakeside), Peoples Bancshares, Inc. (Peoples) and Central Corporation (Central)
were accounted for as poolings-of-interests. The acquisition of City Bancorp,
Inc. (City) was accounted for as a purchase. The following table shows the
merger date and number of FCC common shares issued for each of the pooled
companies:
Assets
Acquired
Date (millions) Shares
- --------------------------------------------------------------------------------
First February 17, 1995 $246 2,705,537
Lakeside August 3, 1995 $130 984,021
Peoples October 2, 1995 $172 956,184
Central October 20, 1995 $830 6,790,939
- --------------------------------------------------------------------------------
FCC acquired City on February 17, 1995 in exchange for 516,100 shares of
FCC common stock. FCC repurchased an equal number of shares of its common stock.
City's assets were $79 million at December 31, 1994. The results of operations
of City, which are not material, are included in the financial statements from
the acquisition date.
FCC's consolidated financial statements have been restated to give effect
to the four poolings-of-interests occurring in 1995. The following components of
the results of operations have been restated for 1994 and 1993 as follows (in
thousands, except per share amounts):
FCC As
Originally Reported FCC Restated
- --------------------------------------------------------------------------------
1994 1993 1994 1993
- --------------------------------------------------------------------------------
Net interest income $256,261 $250,010 $323,505 $315,923
Other income $ 66,885 $102,421 $ 91,187 $125,934
Net income $ 63,684 $ 95,214 $ 80,227 $113,025
Earnings per common share
Primary $ 2.25 $ 3.48 $ 2.01 $ 2.89
Fully diluted $ 2.19 $ 3.18 $ 1.98 $ 2.75
- --------------------------------------------------------------------------------
FCC's operating expenses for 1995 include $22.2 million in pretax
merger-related expenses. The majority of these expenses related to the
retirement of excess facilities and equipment, severance costs, expenses
incurred to complete the mergers, and conversion of customer accounts.
Additionally, other income reflects a pretax $3.1 million premium on the
divestiture of two Lakeside branches.
On October 5, 1994, FCC acquired Wolcott Mortgage Group, Inc. (Wolcott),
a mortgage company which originates and sells residential mortgages. The
acquisition was accounted for as a purchase.
Effective January 1, 1994, FCC acquired First Acadiana National
Bancshares, Inc. (FANB) in exchange for 1,290,145 shares of FCC common stock.
The acquisition was accounted for as a pooling-of-interests. All 1993 financial
information reported reflects the pooling-of-interests with FANB. Financial
information prior to 1993 was not restated since the effect would be immaterial.
NOTE 3
Restrictions on Cash and Due from Banks
The Banks are required to maintain average reserve balances with the
Federal Reserve Bank based on a percentage of deposits. Average balances
maintained for such purposes were $50,426,000 and $81,566,000 during 1995 and
1994, respectively.
<PAGE>
NOTE 4
Securities Held to Maturity
During the fourth quarter of 1995, the FASB permitted a one-time
opportunity for institutions to reassess the classification of all securities
and, if appropriate, move securities out of the held to maturity category
without calling into question the intent to hold other debt securities to
maturity in the future. As a result, FCC reclassified $58.1 million of
securities with a net unrealized gain of $529,000 from held to maturity to
available for sale.
An analysis of securities held to maturity as of December 31, 1994
follows (in thousands):
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
- --------------------------------------------------------------------------------
December 31, 1994
- --------------------------------------------------------------------------------
U. S. Treasury
securities $ 45,834 $ - $(2,521) $43,313
Obligations of
U.S. agencies
and corporations
Mortgage-backed
securities 779 25 - 804
Notes 66,740 - (3,102) 63,638
Obligations of states
and political subdivisions 11,285 115 (136) 11,264
Other debt securities 16,828 1 (319) 16,510
Equity securities 9,247 - - 9,247
- --------------------------------------------------------------------------------
Total securities
held to maturity $150,713 $141 $(6,078) $144,776
- --------------------------------------------------------------------------------
NOTE 5
Securities Available for Sale
An analysis of securities available for sale follows (in thousands):
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
- --------------------------------------------------------------------------------
December 31, 1995
- --------------------------------------------------------------------------------
U. S. Treasury
securities $1,481,963 $32,153 $ (104) $1,514,012
Obligations of U. S.
agencies and
corporations
Mortgage-backed
securities 901,934 5,442 (4,776) 902,600
Notes 33,720 1,487 - 35,207
Obligations of states
and political
subdivisions 91,592 11,778 (25) 103,345
Other debt securities 12,069 99 (8) 12,160
Equity securities 26,822 5,621 - 32,443
- -------------------------------------------------------------------------------
Total securities
available
for sale $2,548,100 $56,580 $ (4,913) $2,599,767
- -------------------------------------------------------------------------------
December 31, 1994
- -------------------------------------------------------------------------------
U. S. Treasury
securities $1,334,282 $ 167 $ (32,761) $1,301,688
Obligations of U. S.
agencies and
corporations
Mortgage-backed
securities 1,125,907 215 (85,381) 1,040,741
Notes 118,063 4 (387) 117,680
Obligations of states
and political
subdivisions 97,083 6,896 (1,792) 102,187
Other debt securities 6,922 - (5) 6,917
Equity securities 13,717 - (582) 13,135
- --------------------------------------------------------------------------------
Total securities
available
for sale $2,695,974 $ 7,282 $ (120,908) $2,582,348
- --------------------------------------------------------------------------------
<PAGE>
The amortized cost and fair value of securities available for sale by
maturity are shown below (in thousands):
Amortized Fair
Cost Value
- --------------------------------------------------------------------------------
December 31, 1995
- --------------------------------------------------------------------------------
Within one year $ 380,889 $ 381,490
One to five years 1,264,788 1,299,721
Five to ten years 45,503 47,983
After ten years 856,920 870,573
- --------------------------------------------------------------------------------
Total securities
available for sale $2,548,100 $2,599,767
- --------------------------------------------------------------------------------
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
penalties. Maturities of mortgage-backed securities are classified by
contractual maturity dates.
Gross gains of $3.1 million and $3.2 million and gross losses of $14.0
million and $46.1 million were realized on sales and calls of securities
available for sale in 1995 and 1994, respectively.
Securities with carrying values of $1.39 billion and $1.09 billion at
December 31, 1995 and 1994, respectively, were pledged to secure public and
trust deposits, and for other purposes.
NOTE 6
Loans and Leases
The composition of loans and leases follows (in thousands):
December 31
- -----------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------
Residential mortgages $ 975,331 19.01% $ 753,127 18.16%
Automobile 790,318 15.41 658,684 15.89
Education 331,825 6.47 239,319 5.77
Other loans
to individuals 313,022 6.10 263,243 6.35
- -----------------------------------------------------------------------
Loans to
individuals 2,410,496 46.99 1,914,373 46.17
- -----------------------------------------------------------------------
Services 263,731 5.14 229,091 5.53
Manufacturing 131,491 2.56 76,018 1.83
Wholesale trade 119,450 2.33 80,059 1.93
Mining 106,482 2.08 104,041 2.50
Other commercial,
financial and
agricultural loans 399,323 7.78 333,624 8.05
- ---------------------------------------------------------------------
Commercial,
financial and
agricultural loans 1,020,477 19.89 822,833 19.84
- ---------------------------------------------------------------------
Commercial
real estate 769,019 14.99 656,294 15.82
Construction and
land development 146,640 2.86 71,213 1.72
Other real estate loans 52,032 1.01 48,022 1.16
- ---------------------------------------------------------------------
Real estate loans 967,691 18.86 775,529 18.70
- ---------------------------------------------------------------------
Credit card loans 617,824 12.05 509,076 12.28
Other loans and leases 113,308 2.21 124,900 3.01
Unearned income (7,070) - (17,472) -
- ---------------------------------------------------------------------
Loans and leases,
net of unearned
income $5,122,726 100.00% $4,129,239 100.00%
- ---------------------------------------------------------------------
<PAGE>
In the ordinary course of business, the Banks make loans to directors
and executive officers of FCC and its subsidiaries and to their associates. In
the opinion of management, related party loans are made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unrelated parties and do not involve more
than normal risks of collectibility. An analysis of changes in such loans during
1995 follows (in thousands):
- ---------------------------------------------------------------------
1995
- ---------------------------------------------------------------------
Beginning balance $ 137,972
Additions 176,316
Repayments (206,547)
Increase due to change in related parties 10,060
- ---------------------------------------------------------------------
Ending balance $ 117,801
- ---------------------------------------------------------------------
NOTE 7
Allowance for Loan Losses
A summary analysis of changes in the allowance for loan losses follows
(in thousands):
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
Balance at beginning of year $ 71,052 $ 85,604 $ 96,658
Allowance acquired
in bank purchases 1,142 - -
Provision charged to expense 30,600 (10,418) (2,424)
Loans and leases charged
to the allowance (37,960) (16,239) (20,545)
Recoveries on loans and
leases previously charged
to the allowance 11,011 12,105 11,915
- ---------------------------------------------------------------------
Net charge-offs (26,949) (4,134) (8,630)
- ---------------------------------------------------------------------
Balance at end of year $ 75,845 $ 71,052 $85,604
- ---------------------------------------------------------------------
NOTE 8
Nonperforming Loans and Foreclosed Assets
The following is a summary of nonperforming loans and foreclosed assets
(in thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
Nonaccrual loans $53,361 $15,823
- ---------------------------------------------------------------------
Foreclosed assets
Other real estate $ 6,671 $12,062
Other foreclosed assets 532 151
Allowance for losses on foreclosed
assets (733) (3,898)
- ---------------------------------------------------------------------
Total foreclosed assets $ 6,470 $ 8,315
- ---------------------------------------------------------------------
The amount of interest income that would have been recorded on
nonperforming loans if they had been classified as performing was $6,534,000 in
1995, $2,016,000 in 1994 and $5,066,000 in 1993. Interest income recognized on
nonperforming loans was $3,125,000, $306,000 and $248,000 for 1995, 1994 and
1993, respectively. Additionally, interest of $1,404,000 was recovered on loans
previously on nonaccrual, but not on nonaccrual status in 1995.
The activity in the allowance for losses on foreclosed assets was as
follows (in thousands):
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
Balance at beginning of year $ 3,898 $ 5,918 $9,120
Allowance provisions 538 678 2,958
Sales and dispositions (3,703) (2,698) (6,160)
- ---------------------------------------------------------------------
Net change (3,165) (2,020) (3,202)
- ---------------------------------------------------------------------
Balance at end of year $ 733 $ 3,898 $ 5,918
- ---------------------------------------------------------------------
A loan is considered to be impaired when, based on current information
and events, it is probable that FCC will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Impaired loans are
carried on nonaccrual status. As of December 31, 1995, loans considered to be
impaired under SFAS No. 114 totaled $49.0 million, of which $18.1 million
required a total impairment allowance of $4.7 million. The remaining $30.9
million of impaired loans do not require an allowance under the provisions of
SFAS No. 114. During 1995, impaired loans averaged $28.3 million. Generally, any
interest payments received on impaired loans are first applied to reduce
outstanding principal amounts. Interest income recognized on impaired loans was
$3,008,000 for 1995.
<PAGE>
NOTE 9
Premises and Equipment
An analysis of premises and equipment by asset classification follows
(in thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
Land $ 25,734 $ 27,736
Buildings 96,261 96,872
Leasehold improvements 25,124 23,104
Furniture, fixtures and equipment 145,998 122,020
Capitalized leased equipment 1,994 1,801
Construction in progress 13,798 10,435
- ---------------------------------------------------------------------
308,909 281,968
Accumulated depreciation
and amortization (143,096) (128,629)
- ---------------------------------------------------------------------
$ 165,813 $ 153,339
- ---------------------------------------------------------------------
At December 31, 1995, the Banks and a service subsidiary were obligated
under a number of noncancelable operating leases. Certain of the leases have
escalation clauses and renewal options. Total rental expense, net of immaterial
sublease rentals, was $7,524,000, $7,369,000 and $7,415,000 for 1995, 1994 and
1993, respectively.
As of December 31, 1995, the future minimum rentals under noncancelable
operating leases having an initial lease term in excess of one year were as
follows (in thousands):
- ---------------------------------------------------------------------
1996 $ 8,149
1997 6,665
1998 6,119
1999 5,736
2000 5,242
Later years 49,699
- ---------------------------------------------------------------------
$81,610
- ---------------------------------------------------------------------
NOTE 10
Short-Term Borrowings
An analysis of short-term borrowings follows (in thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
Federal funds purchased
and securities sold under
agreements to repurchase $450,300 $490,830
Other short-term borrowings 185,428 9,738
- ---------------------------------------------------------------------
Total $635,728 $500,568
- ---------------------------------------------------------------------
Information regarding federal funds purchased and securities sold under
agreements to repurchase follows (dollars in thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
Average interest rate
on December 31 5.15% 5.27%
- ---------------------------------------------------------------------
Year-to-date averages
Interest rate 5.92% 4.03%
Balance $458,212 $580,585
- ---------------------------------------------------------------------
Maximum amount outstanding
at any month-end during
the year $628,754 $655,815
- ---------------------------------------------------------------------
FCC maintains lines of credit with several large banks, totaling $55
million at December 31, 1995, to support the issuance of commercial paper and
pays fees to maintain these lines. No lines of credit were in use at December
31, 1995, 1994 or 1993.
<PAGE>
NOTE 11
Long-Term Debt
Long-term debt consisted of (in thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
First Commerce Corporation
12 3/4% convertible debentures,
due in December 2000; unsecured (a)
Series A $26,846 $26,846
Series B 56,012 56,492
- ---------------------------------------------------------------------
82,858 83,338
- ---------------------------------------------------------------------
Subsidiaries
9% mortgage note payable, due in
installments, balance due
in November 1996 5,212 5,295
Obligations under capitalized leases, due
in installments through August 2003 276 999
Other - 513
- ---------------------------------------------------------------------
Total long-term debt $88,346 $90,145
- ---------------------------------------------------------------------
(a) At December 31, 1995, approximately $14,102,000 was held by directors and
executive officers of FCC.
Annual principal repayment requirements for the years 1996 through 2000 are
as follows (in thousands):
Parent Subsidiaries Total
- ---------------------------------------------------------------------
1996 $ - $5,236 $ 5,236
1997 - 27 27
1998 - 30 30
1999 - 33 33
2000 $82,858 $ 37 $ 82,895
- ---------------------------------------------------------------------
FCC is required to redeem Series B Debentures at the principal amount
upon the death of the original holder; Series A Debentures allow redemption upon
the death of the original holder at the option of the holder's estate. At the
option of the holder, each of the Series A or B Debentures may be converted into
FCC common stock at the conversion price of $26.67 principal amount for one
share of stock.
Total cash payments for interest expense on long-term debt, short-term
borrowings and deposits were $238,882,000, $177,803,000 and $175,070,000 in
1995, 1994 and 1993, respectively.
NOTE 12
Employee Benefit Plans
Retirement Plan - FCC maintains a defined benefit pension plan covering
substantially all employees who have attained age 21 and completed one year of
employment. Benefits are based on years of service and the employee's highest
five years of defined compensation during the last 10 years of service. FCC's
funding policy is to contribute annually the maximum that can be deducted for
federal income tax purposes.
FCC also maintains a nonqualified restoration plan for certain officers
whose defined benefits under the qualified pension plan exceed limits imposed by
federal tax law.
The following table sets forth the plans' funded status (in thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
Projected benefit obligation
Vested benefits $ (75,582) $(58,340)
Nonvested benefits (2,369) (2,014)
- ---------------------------------------------------------------------
Accumulated benefit obligation (77,951) (60,354)
Effect of projected future
compensation levels (28,996) (19,806)
- ---------------------------------------------------------------------
Projected benefit obligation (106,947) (80,160)
Plan assets at fair value 84,843 72,657
- ---------------------------------------------------------------------
Projected benefit obligation in excess
of plan assets (22,104) (7,503)
Unrecognized net loss due to
past experience different from
assumptions made 16,591 4,797
Unrecognized prior service cost 457 655
Unrecognized net assets being recognized
over 15 years (3,945) (4,698)
- ---------------------------------------------------------------------
Unfunded accrued pension cost included
in other accrued liabilities $ (9,001)$ (6,749)
- ---------------------------------------------------------------------
<PAGE>
The plans' assets at December 31, 1995, consisted primarily of U.S.
government securities, corporate bonds and common stocks.
Net periodic pension cost included the following components
(in thousands):
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
Service cost-benefits earned
during the period $ 3,591 $ 3,852 $ 2,937
Interest cost on projected
benefit obligation 5,946 5,527 4,986
Loss (return) on plan assets (14,383) 1,255 (6,296)
Other components, net 8,056 (8,185) (534)
- ---------------------------------------------------------------------
Net periodic pension cost $ 3,210 $ 2,449 $ 1,093
- ---------------------------------------------------------------------
In determining the plans' funded status, the weighted average discount
rate assumed was 6.5% at December 31, 1995, 7.5% at December 31, 1994 and 7% at
December 31, 1993. The rate of increase in future salary levels was 5.5% in each
of the three years. The expected long-term rate of return on assets was 8% in
1995, and 8.5% in 1994 and 1993.
Tax-Deferred Savings Plan - Substantially all of FCC's full-time
employees are covered under a tax-deferred savings plan. Employees may
voluntarily contribute up to a maximum of 15% of eligible compensation, with the
limit depending upon salary level. FCC matches 50% of each employees
contribution up to a maximum employer contribution of 2 1\2% of eligible
compensation. Matching contributions are in the form of FCC common stock and are
vested at 25% per year with full vesting after four years. Employer
contributions were $2,357,000, $2,040,000 and $2,075,000 in 1995, 1994 and 1993,
respectively.
Prior to acquisition by FCC, Central and Lakeside maintained employee
stock ownership plans (ESOPs). Company contributions to the ESOPs have been
discontinued and the plans are being terminated. Upon termination, the assets of
the Central ESOP will be distributed to the participants; the Lakeside ESOP will
be combined with FCC's tax-deferred savings plan. Company contributions relating
to the ESOPs were $800,000, $970,000 and $875,000 in 1995, 1994 and 1993,
respectively.
Postretirement and Postemployment Benefits - FCC provides medical and
life insurance coverage for specified groups of employees who retired in prior
years. Postemployment benefits have also been provided to specified groups of
former or inactive employees subsequent to their employment but before
retirement. Given the current structure of FCC's postretirement and
postemployment benefit programs, these programs do not have a material impact on
the financial condition or results of operations of FCC.
NOTE 13
Stockholders' Equity
As disclosed in Note 2, 11,436,681 and 1,290,145 shares of FCC common
stock, net of shares reacquired, were issued for various acquisitions during
1995 and 1994, respectively.
Each share of FCC's preferred stock can be converted into 1.1646 shares
of common stock and provides for cumulative quarterly dividends calculated on
the basis of a $25.00 stated value at 7 1\4% per annum. The preferred stock is
redeemable at FCC's option, at $25.00 per share plus accrued and unpaid
dividends, on or after January 1, 1997.
FCC's stock incentive plan permits the granting of stock options, stock
appreciation rights (SARs), stock awards, restricted stock and performance
shares. The plan covers up to 10% of the outstanding shares of FCC common stock.
Stock options and SARs are granted at market value at the date of grant.
The Compensation Committee (Committee) determines the term of each, and the time
or times during its term when it becomes exercisable. Neither may be
exercised during the six-month period immediately following the date of
grant. SARs entitle the holder to receive, in the form of cash the increase in
the fair market value of the stock from the date of grant to the date of
exercise. Compensation expense is recognized in connection with SARs based
on the current market value of the stock and was $3.0 million in 1995. No
compensation expense was recognized in 1994 or 1993 related to SARs. There is
no compensation expense recorded in connection with stock options.
<PAGE>
The following table summarizes the activity related to stock options and
SARs:
- ---------------------------------------------------------------------
Options SARs
- ---------------------------------------------------------------------
Number of Price Number Price
Shares Per Share of Shares Per Share
- -----------------------------------------------------------------------
Outstanding
Dec. 31, 1992 576,114 $ 9.13-$21.07 - -
Granted 76,736 $28.20-$30.80 - -
Exercised (168,555) $ 9.13-$21.07 - -
Canceled (4,245) $10.44-$28.20 - -
- -----------------------------------------------------------------------
Outstanding
Dec. 31, 1993 480,050 $ 9.27-$30.80 - -
Granted 79,978 $27.50 239,935 $27.50
Exercised (81,067) $ 9.27-$28.20 - -
Canceled (19,390) $ 9.27-$28.20 (7,569) $27.50
- -----------------------------------------------------------------------
Outstanding
Dec. 31, 1994 459,571 $ 9.27-$30.80 232,366 $27.50
Granted 331,174 $26.25-$32.00 992,579 $26.25-$32.00
Exercised (44,561) $10.40-$28.20 (1,891) $27.50
Canceled (19,454) $10.44-$32.00 (36,114) $26.25-$32.00
- -----------------------------------------------------------------------
Outstanding
Dec. 31, 1995 726,730 $10.40-$32.00 1,186,940 $26.25-$32.00
- -----------------------------------------------------------------------
Exercisable at
Dec. 31, 1995 296,699 53,625
- -----------------------------------------------------------------------
Shares of restricted stock are issued subject to risk of forfeiture
during a vesting period. Restrictions related to these shares and the
restriction term are determined by the Committee. Restrictions are
generally related to the attainment of specified performance criteria over
the restriction period. Holders of restricted stock receive dividends and
have the right to vote the shares. FCC recorded ($111,000), $315,000 and
$944,000 in compensation expense in 1995, 1994 and 1993, respectively, related
to restricted shares. A summary of changes in restricted stock follows:
- ---------------------------------------------------------------------
Number of Shares
- ---------------------------------------------------------------------
Outstanding, December 31, 1992 98,668
Granted 47,814
Earned and issued unrestricted (82,293)
Canceled (16,375)
- ---------------------------------------------------------------------
Outstanding, December 31, 1993 47,814
Granted 9,792
Canceled (3,554)
- ---------------------------------------------------------------------
Outstanding, December 31, 1994 54,052
Granted 34,175
- ---------------------------------------------------------------------
Outstanding, December 31, 1995 88,227
- ---------------------------------------------------------------------
Performance shares were granted in conjunction with the 1994 and 1995
restricted stock grants, equal to 50% of restricted shares. These shares may be
earned based on certain performance criteria. Recipients of performance share
awards do not receive dividends or have voting rights. No compensation
expense was recorded in 1995 or 1994 related to performance shares.
At December 31, 1995, there were 1,449,023 shares reserved for issuance
under the FCC Dividend and Interest Reinvestment and Stock Purchase Plan and
764,821 shares reserved for issuance under the tax-deferred savings plan.
NOTE 14
Dividend and Loan Restrictions
The primary source of funds for the dividends paid by FCC to its
stockholders is dividends from the Banks. The payment of dividends by national
banks is regulated by the Comptroller of the Currency. The payment of dividends
by state banks in Louisiana that are members of the Federal Reserve system
is regulated by the Louisiana Commissioner of Financial Institutions and the
Federal Reserve Board. The amount of retained earnings that could be paid to
FCC after December 31, 1995 without prior approval was approximately
$43,464,000, plus an amount equal to the Banks' net income for 1996. The parent
company's net working capital is another source for the payment of dividends.
Net working capital was $77,240,000, as of December 31, 1995.
Under Section 23A of the Federal Reserve Act, the Banks are limited in
the amounts they may loan to certain of their affiliates, including FCC. Loans
to a single covered affiliate may not exceed 10% and loans to all covered
affiliates may not exceed 20% of an individual bank's capital, as defined in
applicable Federal Reserve Board regulations. Such loans must be collateralized
by assets with market values of 100% to 130% of loan amounts, depending upon the
nature of the collateral.
<PAGE>
NOTE 15
Off-Balance Sheet Financial Instruments
In the normal course of business, FCC is a party to various financial
instruments which are not carried on the balance sheet. FCC utilizes these
instruments to meet the financing needs of its customers and to help manage its
exposure to interest rate fluctuations. These financial instruments include
commitments to extend credit, letters of credit, securities lent, interest rate
contracts and foreign exchange contracts.
Commitments to extend credit and lines of credit are agreements to lend
funds to a customer at a future date, generally having fixed expiration or
other termination clauses and specified interest rates and purposes. For
their credit card customers, the Banks have the right to change or
terminate any terms or conditions of the credit card accounts at any time.
Since commitments and unused lines of credit may expire without being drawn
upon, the unfunded amounts do not necessarily represent future funding
requirements.
Standby letters of credit obligate the Banks to pay third parties if the
Banks' customers fail to perform under agreements with those third parties.
Commercial letters of credit are used to finance contracts for the shipment of
goods from seller to buyer.
The credit risk associated with commitments to extend credit and letters
of credit is essentially the same as that involved in extending loans to
customers and is subject to FCC's credit policies. Collateral requirements are
based on the creditworthiness of the customer.
Foreign exchange contracts are commitments to purchase or deliver
foreign currency at a specified exchange rate. These contracts are used as
commercial service products. Market risk associated with these contracts is
generally minimized by offsetting transactions.
Securities lending involves lending securities owned by FCC and its
customers to third parties. Credit risk arises in these transactions through the
possible failure of the borrower to return the securities. To minimize this
risk, the creditworthiness of the borrower is monitored, and collateral with a
market value at least equal to 102% of the market value of the securities lent
is obtained.
FCC enters into interest rate contracts with the objective of partially
insulating net interest income from changes in interest rates. Primary among the
financial instruments used are swaps, caps and cap corridors. The notional
amounts on these contracts do not represent an amount at risk but are used only
as the basis for determining the cash flows related to these contracts. Credit
risk associated with these contracts is minimized by requiring the same credit
approval process as is required for lending, by monitoring credit exposure and
counterparty creditworthiness, and by dealing in the national market with highly
rated counterparties.
Interest rate swaps are agreements to exchange interest payments
computed on notional amounts. Under an index amortizing swap contract, the
notional amount amortizes based upon the level of the specified index. Interest
rate caps and floors are contracts in which a counterparty pays or receives
a cash payment from another counterparty as an index rises above or falls
below a predetermined level. A cap corridor is the simultaneous purchase and
sale of a cap; the cap sold is for a higher rate than the one purchased.
A summary of off-balance sheet financial instruments follows (in
thousands):
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
Commitments to extend credit for loans
and leases (excluding credit card plans) $1,224,478 $1,074,254
Commitments to extend credit for credit
card plans $2,236,656 $1,448,546
Commercial letters of credit $ 3,966 $ 3,729
Financial letters of credit $ 77,005 $ 58,561
Performance letters of credit $ 20,954 $ 17,203
Mortgage loans sold with recourse $ - $ 2,402
Foreign exchange contracts
Commitments to purchase $ 1,020 $ 580
Commitments to sell $ 1,057 $ 660
Securities lent $ 105,605 $ -
Securities borrowed $ 28 $ -
Forward commitments to sell mortgages $ 4,896 $ -
When-issued securities
Commitments to purchase $ 150 $ 50
Commitments to sell $ 110 $ 50
Interest rate contracts (F1)
Generic and callable swaps $ - $ 160,000
Amortizing interest rate swaps $ 193,605 $ 200,000
Caps $ 350,000 $ 350,000
Cap corridors $ - $ 100,000
- ---------------------------------------------------------------------
(F1) Notional principal amounts.
<PAGE>
NOTE 16
Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires the disclosure of fair value information about certain on and
off-balance sheet financial instruments where it is practicable to estimate
that value. Because many of FCC's financial instruments lack a readily
available trading market, fair values for such instruments are based on
significant estimations and present value calculations. The use of different
assumptions and estimation methods could significantly affect fair value
amounts disclosed. In addition, reasonable comparability between financial
institutions may not be possible due to the wide range of permitted
valuation techniques and numerous estimates involved.
Fair value estimates do not consider the value of future business or the
value of assets and liabilities that are not considered financial instruments.
In addition, the tax ramifications related to the unrealized gains and
losses have not been considered in the estimates. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value
of FCC.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument.
Cash and short-term investments - For cash and due from banks and money
market investments, the carrying amount is a reasonable estimate of fair value.
Securities - Fair values of securities held to maturity and available
for sale are based on quoted market prices, where available. If quoted market
prices are not available, fair values are based on quoted prices of comparable
securities.
Loans - The fair value of loans, except for credit card loans, was
calculated by discounting scheduled principal and interest payments to maturity
using estimates of December 31, 1995 and 1994 rates. For credit card loans, cash
flows and maturities were estimated based on historical experience using an
average yield adjusted for servicing costs and credit losses.
Deposits - SFAS No. 107 requires that deposits without stated
maturities, such as noninterest-bearing demand deposits, money market accounts
and savings accounts, have a fair value equal to the amount payable on demand
(carrying amount). Deposits with stated maturities were valued using a present
value of contractual cash flows with a discount rate approximating current
market rates for deposits of similar remaining maturities.
Short-term borrowings - The fair value of short-term borrowings is their
carrying amount.
Long-term debt - The fair value of long-term debt was estimated from
dealer quotes.
Off-balance sheet financial instruments - The fair values of interest
rate contracts were obtained from dealer quotes. These values represent the
estimated amount that FCC would receive or pay to terminate the contracts,
taking into account current interest rates and, when appropriate, the current
creditworthiness of the counterparties. The fair values of other off-balance
sheet financial instruments are not material.
The estimated fair values of FCC's financial instruments follows (in
thousands):
December 31, 1995 December 31, 1994
- --------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- --------------------------------------------------------------------------------
On-balance sheet financial assets
Cash and
short-term
investments $ 551,586 $ 551,586 $ 641,472 $ 641,472
Securities
available for
sale $2,599,767 $2,599,767 $2,582,348 $2,582,348
Securities held
to maturity $ - $ - $ 150,713 $ 144,776
Loans, net of
unearned
income and
the allowance
for loan losses $5,046,881 $5,033,231 $4,058,187 $4,009,847
On-balance sheet financial liabilities
Noninterest-bearing
deposits $1,481,795 $1,481,795 $1,471,925 $1,471,925
Interest-bearing
deposits $5,472,606 $5,508,463 $5,225,475 $5,197,204
Short-term
borrowings $ 635,728 $ 635,728 $ 500,568 $ 500,568
Long-term debt $ 88,346 $ 128,739 $ 90,145 $ 108,452
Off-balance sheet financial instruments
Generic and
callable swaps $ - $ - $ - $ (5,509)
Amortizing interest
rate swaps $ - $ (1,270) $ - $ (12,914)
Caps $ 1,196 $ - $ 2,586 $ 4,958
Cap corridors $ - $ - $ - $ 488
- ---------------------------------------------------------------------
<PAGE>
NOTE 17
Contingencies
FCC and its subsidiaries have been named as defendants in various legal
actions arising from normal business activities in which damages in various
amounts are claimed. The amount, if any, of ultimate liability with respect to
such matters cannot be determined. However, after consulting with legal counsel,
management believes any such liability will not have a material effect on FCC's
consolidated financial condition or results of operations.
NOTE 18
Other Operating Expense
The composition of other operating expense follows (in thousands):
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
Advertising and marketing $15,108 $11,122 $10,079
Computer-related services 12,745 9,207 8,306
Stationery and supplies 10,540 9,037 8,636
Taxes, licenses and other fees 8,339 8,285 6,457
Miscellaneous losses 7,504 2,161 1,844
Postage 7,389 6,392 6,534
Communications 6,471 5,007 4,741
Credit card expense 5,036 3,875 3,804
Travel and entertainment 3,901 3,266 2,982
Armored car, courier and freight 3,569 2,938 2,544
Nonperforming assets expense 1,053 1,083 2,554
Other 5,729 5,664 6,983
- ---------------------------------------------------------------------
Total $87,384 $68,037 $65,464
- ---------------------------------------------------------------------
NOTE 19
Income Taxes
The components of income tax expense in the consolidated statements of
income for the years ended December 31, 1995, 1994 and 1993 were as follows:
- --------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
Current $48,579 $30,992 $58,077
Deferred (9,124) 7,580 (8,569)
- --------------------------------------------------------------------------------
Total $39,455 $38,572 $49,508
- --------------------------------------------------------------------------------
Income tax expense related to state and foreign income taxes are
included above and were insignificant in all years presented. Income tax
benefits related to securities transactions were $3,995,000 in 1995, $15,211,000
in 1994 and $78,000 in 1993.
Total income tax expense for 1995, 1994 and 1993 was different from
the amount computed by applying the statutory federal income tax rates to pretax
income as follows (in percentages):
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
Federal income tax expense 35.00% 35.00% 35.00%
Increase (decrease) resulting from:
Benefits attributable to
tax-exempt interest (3.26) (3.32) (2.69)
Deferred taxes no longer needed - - (2.39)
Effect of change in tax rate
on beginning deferred items - - (.28)
Effect of adopting SFAS 109 - - .44
Nondeductible expenses 2.40 .84 .47
Other items, net .05 (.05) (.10)
- ---------------------------------------------------------------------
Actual income tax expense 34.19% 32.47% 30.45%
- ---------------------------------------------------------------------
Cash payments for federal income tax liabilities were $37.08 million,
$41.38 million and $47.31 million for 1995, 1994 and 1993, respectively. FCC had
a current income tax payable of $6.88 million on December 31, 1995 and a current
income tax receivable of $2.88 million on December 31, 1994.
<PAGE>
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. There was a net deferred
asset of $9.89 million and $58.10 million on December 31, 1995 and 1994,
respectively. The major temporary differences which created deferred tax
assets and liabilities as of December 31, 1995 and 1994 are as follows (in
thousands):
December 31, 1995
- ---------------------------------------------------------------------
Deferred Deferred
Tax Tax
Assets Liabilities
- ---------------------------------------------------------------------
Allowance for loan losses $25,267 $ -
Employee benefits 3,051 -
Amortization of intangibles 2,605 -
Nonaccrual loan interest 1,462 -
Allowance for losses on foreclosed assets 340 -
Unrealized gain on securities
available for sale - 18,084
Accrued liabilities - 4,132
Accumulated depreciation - 3,999
Bond accretion - 2,890
Other 8,999 2,730
- ---------------------------------------------------------------------
Total deferred taxes $41,724 $31,835
- ---------------------------------------------------------------------
December 31, 1994
- ---------------------------------------------------------------------
Deferred Deferred
Tax Tax
Assets Liabilities
- ---------------------------------------------------------------------
Allowance for loan losses $23,768 $ -
Employee benefits 2,017 -
Amortization of intangibles 3,039 -
Nonaccrual loan interest 1,350 -
Allowance for losses on
foreclosed assets 1,387 -
Unrealized loss on securities
available for sale 39,736 -
Accrued liabilities - 5,149
Accumulated depreciation - 5,010
Bond accretion - 3,347
Other 2,409 2,097
- ---------------------------------------------------------------------
Total deferred taxes $73,706 $15,603
- ---------------------------------------------------------------------
NOTE 20
Condensed Parent Company Only - Financial Information
Condensed Balance Sheets (in thousands)
December 31
- ---------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------
ASSETS
Interest-bearing deposits in
subsidiary banks (F1)
Cash and due from banks $ 80,370 $ 98,392
Time deposits 138 2,148
Loan receivable, net of unearned income - 975
Investments in subsidiaries at equity (F1)
Banks 721,575 561,802
Nonbanks 7,109 7,181
- ---------------------------------------------------------------------
728,684 568,983
Other assets 28,351 23,726
- ---------------------------------------------------------------------
Total assets $837,543 $694,224
- ---------------------------------------------------------------------
LIABILITIES
Payables to subsidiaries (F1) $ 1,764 $ 3,751
Long-term debt 82,858 83,338
Other Liabilities 19,872 13,576
- ---------------------------------------------------------------------
Total liabilities 104,494 100,665
STOCKHOLDERS' EQUITY 733,049 593,559
- ---------------------------------------------------------------------
Total liabilities and stockholders' equity $837,543 $694,224
- ---------------------------------------------------------------------
(F1) Eliminated in consolidation, except for goodwill and other intangibles.
<PAGE>
Condensed Statements of Income (in thousands)
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
INCOME
Interest and dividends
on securities $ 354 $ 860 $ 322
Interest on receivables from
subsidiaries (a) 5,513 1,734 1,798
Dividends from subsidiaries (a) 46,861 95,775 29,818
Other income 23 25 288
- ---------------------------------------------------------------------
52,751 98,394 32,226
- ---------------------------------------------------------------------
EXPENSES
Interest on debt to nonbank
subsidiaries 79 165 183
Interest on debt to nonaffiliates 10,625 10,748 11,635
Other 7,621 2,298 1,561
- ---------------------------------------------------------------------
18,325 13,211 13,379
- ---------------------------------------------------------------------
Income before income taxes and
equity in undistributed earnings
of subsidiaries 34,426 85,183 18,847
Income tax benefit (3,954) (3,574) (13,529)
- ---------------------------------------------------------------------
38,380 88,757 32,376
Equity in undistributed earnings
of subsidiaries (a) 37,571 (8,530) 80,649
- ---------------------------------------------------------------------
NET INCOME 75,951 80,227 113,025
PREFERRED DIVIDEND
REQUIREMENTS 4,325 4,347 4,348
- ---------------------------------------------------------------------
INCOME APPLICABLE TO
COMMON SHARES $71,626 $75,880 $108,677
- ---------------------------------------------------------------------
(a) Eliminated in consolidation.
Statements of Cash Flows (in thousands)
Years Ended December 31
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 75,951 $80,227 $113,025
Adjustments to reconcile net
income to net cash provided
by operating activities
Equity in undistributed earnings
of subsidiaries (a) (37,571) 8,530 (80,649)
Deferred income tax
(benefit) (1,332) (183) (13,394)
Decrease in interest payable (4) (37) (87)
Decrease in other assets 1,443 1,133 1,344
Increase (decrease) in
other liabilities 3,351 1,035 (403)
Other 41 (313) 1,309
- ---------------------------------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 41,879 90,392 21,145
- ---------------------------------------------------------------------
INVESTING ACTIVITIES
Investment in subsidiaries (F1) (5,100) (5,000) 3,000
Proceeds from maturity of
interest-bearing time deposits (F1) 2,010 237 313
Decrease (increase) in loans 975 (975) -
Purchase of securities (1,611) (12,817) (85,000)
Proceeds from sales of securities 375 20,000 85,796
Principal collected on advances (F1) 134,536 77,409 86,708
Advances originated or acquired (F1) (136,524) (80,755) (81,289)
- ---------------------------------------------------------------------
NET CASH (USED) PROVIDED
BY INVESTING ACTIVITIES (5,339) (1,901) 9,528
- ---------------------------------------------------------------------
FINANCING ACTIVITIES
Net (decrease) in commercial paper - - (500)
Payments on long-term debt (968) (2,117) (12,870)
(Decrease) in other
short-term borrowings (20) (20) -
Proceeds from sales of
common stock 825 1,840 5,385
Cash Dividends (41,672) (33,835) (26,972)
Treasury stock acquired,
net of issuances (12,727) - -
Other - - 102
- ---------------------------------------------------------------------
NET CASH (USED) BY
FINANCING ACTIVITIES (54,562) (34,132) (34,855)
- ---------------------------------------------------------------------
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (18,022) 54,359 (4,182)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 98,392 44,033 48,215
- ---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 80,370 $98,392 $ 44,033
- ---------------------------------------------------------------------
(F1) Eliminated in consolidation.
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of First Commerce Corporation is responsible for the
preparation of the financial statements, related financial data and other
information in this annual report. The financial statements are prepared in
accordance with generally accepted accounting principles and include some
amounts that are necessarily based on management's informed estimates and
judgements, with consideration given to materiality. All financial information
contained in this annual report is consistent with that in the financial
statements.
Management fulfills its responsibility for the integrity, objectivity,
consistency and fair presentation of the financial statements and financial
information through an accounting system and related internal accounting
controls that are designed to provide reasonable assurance that assets are
safeguarded and that transactions are authorized and recorded in accordance with
established policies and procedures. The concept of reasonable assurance is
based on the recognition that the cost of a system of internal accounting
controls should not exceed the related benefits. As an integral part of the
system of internal accounting controls, First Commerce Corporation has a
professional staff of internal auditors who monitor compliance with and assess
the effectiveness of the system of internal accounting controls and coordinate
audit coverage with the independent public accountants.
The Audit Committee of the Board of Directors, composed solely of
outside directors, meets periodically with management, the internal auditors and
the independent public accountants to review matters relating to financial
reporting, internal accounting control and the nature, extent and results of the
audit effort. The independent public accountants and internal auditors have
direct access to the Audit Committee with or without management present.
The financial statements have been examined by Arthur Andersen LLP,
independent public accountants, who render an independent professional opinion
on the financial statements prepared by management. Their appointment was
recommended by the Audit Committee and approved by the Board of Directors.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders
and Board of Directors of
First Commerce Corporation:
We have audited the consolidated balance sheets of FIRST COMMERCE
CORPORATION (a Louisiana corporation) and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of First Commerce
Corporation and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
January 15, 1996
EXHIBIT 21
SUBSIDIARIES* OF FIRST COMMERCE CORPORATION
First National Bank of Commerce - New Orleans
First Money, Inc.
Wolcott Mortgage Group, Inc.
Marquis Investments, Inc.
Baronne Street Properties, Inc.
City National Bank of Baton Rouge
Central Bank - Monroe
Central Company, Inc.
The First National Bank of Lafayette
Rapides Bank & Trust Company in Alexandria
The First National Bank of Lake Charles
First Commerce Service Corporation
First Commerce Community Development Corporation
First Commerce Capital, Inc.
- ------------------
*All incorporated or organized in Louisiana.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this Form 10-K into
First Commerce Corporation's previously filed Registration Statement File Nos.
2-97152, 33-28002, 33-50150 and 33-57035 on Forms S-8 and Registration File No.
33-13128 on Form S-3.
/s/ ARTHUR ANDERSEN LLP
New Orleans, Louisiana, ARTHUR ANDERSEN LLP
March 21, 1996
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas C. Jaeger and Thomas L. Callicutt,
Jr., or either of them, his or her true and lawful attorney-in-fact and agent,
with full power of substitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign on his or her behalf First
Commerce Corporation's Annual Report on Form 10-K for the year ended December
31, 1995.
Hereby executed by the following persons in the capacities indicated
on the 8th day of March, 1996.
--- -------
IAN ARNOF /s/ IAN ARNOF
President and Chief Executive Officer
and Director
HERMAN MOYSE, JR /s/ HERMAN MOYSE, JR
Chairman of the Board
THOMAS C. JAEGER /s/ THOMAS C. JAEGER
Executive Vice President
and Chief Financial Officer
THOMAS L. CALLICUTT, JR. /s/ THOMAS L. CALLICUTT, JR.
Senior Vice President, Controller and
Principal Accounting Officer
JAMES J. BAILEY III /s/ JAMES J. BAILEY III
Board Member
JOHN W. BARTON /s/ JOHN W. BARTON
Board Member
SYDNEY J. BESTHOFF III /s/ SYDNEY J. BESTHOFF III
Board Member
ROBERT H. BOLTON
Board Member
MARY ELLEN CHAVANNE /s/ MARY ELLEN CHAVANNE
Board Member
FRANCES B. DAVIS /s/ FRANCES B. DAVIS
Board Member
ROBERT C. CUDD III /s/ ROBERT C. CUDD III
Board Member
LAURANCE EUSTIS, JR. /s/ LAURANCE EUSTIS, JR.
Board Member
WILLIAM P. FULLER /s/ WILLIAM P. FULLER
Board Member
ARTHUR HOLLINS III /s/ ARTHUR HOLLINS III
Board Member
F. BEN JAMES, JR. /s/ F. BEN JAMES, JR.
Board Member
ERIK F. JOHNSEN /s/ ERIK F. JOHNSEN
Board Member
J. MERRICK JONES, JR. /s/ J. MERRICK JONES, JR.
Board Member
EDWIN LUPBERGER /s/ EDWIN LUPBERGER
Board Member
HUGH G. MCDONALD, JR. /s/ HUGH G. MCDONALD, JR.
Board Member
SAUL A. MINTZ /s/ SAUL A. MINTZ
Board Member
O. MILES POLLARD, JR. /s/ O. MILES POLLARD, JR.
Board Member
G. FRANK PURVIS, JR. /s/ G. FRANK PURVIS, JR.
Board Member
THOMAS H. SCOTT /s/ THOMAS H. SCOTT
Board Member
EDWARD M. SIMMONS /s/ EDWARD M. SIMMONS
Board Member
H. LEIGHTON STEWARD /s/ H. LEIGHTON STEWARD
Board Member
JOSEPH B. STOREY
Board Member
ROBERT A. WEIGLE /s/ ROBERT A. WEIGLE
Board Member
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<CASH> 497,268 472,142
<INT-BEARING-DEPOSITS> 788 4,330
<FED-FUNDS-SOLD> 33,900 156,030
<TRADING-ASSETS> 19,630 8,970
<INVESTMENTS-HELD-FOR-SALE> 2,599,767 2,582,348
<INVESTMENTS-CARRYING> 0 150,713
<INVESTMENTS-MARKET> 0 144,776
<LOANS> 5,122,726 4,129,239
<ALLOWANCE> 75,845 71,052
<TOTAL-ASSETS> 8,530,807 7,966,540
<DEPOSITS> 6,954,401 6,697,400
<SHORT-TERM> 635,728 500,568
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0 0
58,720 59,954
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<INTEREST-TOTAL> 598,494 507,293
<INTEREST-DEPOSIT> 210,942 148,843
<INTEREST-EXPENSE> 255,150 183,788
<INTEREST-INCOME-NET> 343,344 323,505
<LOAN-LOSSES> 30,600 (10,418)
<SECURITIES-GAINS> (11,413) (43,461)
<EXPENSE-OTHER> 337,204 306,311
<INCOME-PRETAX> 115,406 118,799
<INCOME-PRE-EXTRAORDINARY> 75,951 80,227
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<ALLOWANCE-OPEN> 71,052 85,604
<CHARGE-OFFS> (37,960) (16,239)
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