As filed with the Securities and Exchange Commission on June 25, 1996
Registration No. 333-5655
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST HAWAIIAN, INC.
(Exact name of Registrant as specified in its charter)
Delaware 6711 99-0156159
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Identification
organization) Classification Code Number)
Number)
1132 Bishop Street
Honolulu, Hawaii 96813
(808) 525-7000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Howard H. Karr
Executive Vice President and Treasurer
First Hawaiian, Inc.
1132 Bishop Street
Honolulu, Hawaii 96813
(808) 533-7844
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<S> <C> <C> <C>
Howard H. Karr Lee Meyerson, Esq. Richard C. Emery Stephen M. Klein, Esq.
First Hawaiian, Inc. Simpson Thacher & Bartlett ANB Financial Corporation Graham & Dunn
1132 Bishop Street 425 Lexington Avenue 7525 West Canal Street 1420 Fifth Avenue, 33rd Floor
Honolulu, Hawaii 96813 New York, New York 10017 Kennewick, Washington 99336 Seattle, Washington 98101-2390
</TABLE>
Approximate Date of Commencement of Proposed Sale to the Public: As
promptly as practicable after this Registration Statement is declared
effective and upon consummation of the transactions described in the enclosed
Proxy Statement/Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. |_|
<PAGE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
=============================================================================
<PAGE>
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROXY STATEMENT/PROSPECTUS
OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
Form S-4 Item Location in Proxy Statement/Prospectus
- ---------------------------- --------------------------------------
A. Information About the Transaction
1. Forepart of Registration
Statement and Outside
Front Cover Page of
Prospectus . . . . . Forepart of Registration Statement;
Outside Front Cover Page
2. Inside Front and Outside
Back Cover Pages of
Prospectus . . . . . Inside Front Cover Page; Table of
Contents; Available Information;
Incorporation of Certain Documents by
Reference
3. Risk Factors, Ratio of
Earnings to Fixed
Charges, and Other
Information . . . . . Summary
4. Terms of the Transaction. Summary; The Merger; Description of
First Hawaiian Capital Stock;
Comparison of Shareholder Rights
5. Pro Forma Financial
Information . . . . . Not applicable
6. Material Contacts with
the Company Being
Acquired . . . . . . Summary; The Merger; Management and
Operations After the Merger
7. Additional Information
Required for
Reoffering by Persons
and Parties Deemed to
be Underwriters . . . Not Applicable
8. Interests of Named
Experts and Counsel . Not Applicable
9. Disclosure of Commission
Position on
Indemnification for
Securities Act
Liabilities . . . . . Not Applicable
<PAGE>
Form S-4 Item Location in Proxy Statement/Prospectus
- ---------------------------- --------------------------------------
B. Information About the Registrant
10. Information with Respect
to S-3 Registrants . Available Information; Incorporation of
Certain Documents by Reference;
Summary; The Companies
11. Incorporation of Certain
Information by
Reference . . . . . . Available Information; Incorporation of
Certain Documents by Reference
12. Information with Respect
to S-2 or S-3
Registrants . . . . . Not Applicable
13. Incorporation of Certain
Information by
Reference . . . . . . Not Applicable
14. Information with Respect
to Registrants Other
Than S-2 or S-3
Registrants . . . . . Not Applicable
C. Information About the Company Being Acquired
15. Information with Respect
to S-3 Companies . . Not Applicable
16. Information with Respect
to S-2 or S-3
Companies . . . . . . Not Applicable
17. Information with Respect
to Companies Other
than S-2 or S-3
Companies . . . . . . Summary; The Companies; Certain
Information Relating to ANB;
Financial Statements of ANB Financial
Corporation and Subsidiary
D. Voting and Management Information
18. Information if Proxies,
Consents or
Authorizations are to
be Solicited . . . . Available Information; Outside Front
Cover Page; Incorporation of Certain
Documents by Reference; Summary; The
Annual Meeting; The Merger
19. Information if Proxies,
Consents or
Authorizations are not
to be Solicited, or in
an Exchange Offer . . Not Applicable
<PAGE>
<PAGE>
- ----------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
- ----------------------------------------------------------------------------
Subject to Completion,
dated June 25, 1996
ANB FINANCIAL CORPORATION
PROXY STATEMENT
FIRST HAWAIIAN, INC.
PROSPECTUS
This proxy statement/prospectus ("Proxy Statement/Prospectus") is
being furnished to shareholders of ANB Financial Corporation, a Washington
corporation ("ANB"), in connection with the solicitation of proxies by the
Board of Directors of ANB for use at the annual meeting of shareholders of
ANB (including any adjournments or postponements thereof, the "Annual
Meeting") to be held on July 26, 1996.
At the Annual Meeting, in addition to the election of directors,
ANB shareholders will consider and vote on a proposal to approve an Agreement
and Plan of Merger, dated as of February 26, 1996 (the "Merger Agreement"),
among ANB, First Hawaiian, Inc. ("First Hawaiian") and ANB Acquisition
Corporation, a wholly-owned subsidiary of First Hawaiian ("Merger Sub")
formed for the purposes of effecting the merger of Merger Sub with and into
ANB (the "Merger"). As a result of the Merger, ANB will become a wholly-
owned subsidiary of First Hawaiian. See "The Merger".
At the Annual Meeting ANB shareholders will also consider and vote
upon a proposal to elect three directors of ANB to serve three-year terms and
until their successors are elected and have qualified, or until the effective
time of the Merger (the "Effective Time"), as further described herein. See
"Election of Directors".
This Proxy Statement/Prospectus also constitutes a prospectus of
First Hawaiian with respect to up to 700,000 shares of common stock, par
value $5.00 per share, of First Hawaiian (the "First Hawaiian Common Stock")
issuable to holders of common stock, par value $1.00 per share, of ANB (the
"ANB Common Stock") pursuant to the Merger. The First Hawaiian Common Stock
is traded in the over-the-counter market and quoted on the National
Association of Securities Dealers Stock Market National Market System
("Nasdaq National Market") under the symbol "FHWN". On June 21, 1996, the
closing sale price of First Hawaiian Common Stock on the Nasdaq National
Market was $26-3/4 per share.
At the Effective Time, each outstanding share of ANB Common Stock,
other than shares cancelled pursuant to the terms of the Merger Agreement and
shares as to which dissenters' rights under applicable Washington law have
been exercised, will be converted into the right to receive a number of
shares of First Hawaiian Common Stock equal to the Exchange Ratio (as defined
<PAGE>
herein), except that cash will be paid in lieu of fractional shares of First
Hawaiian Common Stock. The Exchange Ratio is subject to possible adjustment
under certain limited circumstances. See "The Merger--Merger Consideration".
First Hawaiian and ANB currently anticipate that the Effective Time
of the Merger will occur at the close of business on or about July 31, 1996,
and that at the Effective Time each share of ANB Common Stock will be converted
into shares of First Hawaiian Common Stock with a market value of approximately
$109.34 (based on an estimated Determination Date Book Value Per Share (as
defined herein) of ANB Common Stock at June 30, 1996, of $49.70). If the
Valuation Price (as defined herein) of First Hawaiian Common Stock at the
Effective Time was $26-3/4 per share (equal to its closing price on June 21,
1996), then the Exchange Ratio would be 4.0875 shares of First Hawaiian Common
Stock for each share of ANB Common Stock. See "The Merger--Merger
Consideration" and "--Effective Time".
If the actual Determination Date Book Value Per Share determined
after the Annual Meeting differs materially from the estimate set forth above,
First Hawaiian and ANB will resolicit the ANB shareholders with respect to
approval of the Merger Agreement in order to provide them with updated pricing
information.
This Proxy Statement/Prospectus and the accompanying form of proxy
are first being mailed to shareholders of ANB on or about June 26, 1996.
This Proxy Statement/Prospectus does not cover any resale of the
shares of First Hawaiian Common Stock to be received by shareholders of ANB
pursuant to the Merger Agreement, and no person is authorized to make any use
of this Proxy Statement/Prospectus in connection with any such resale.
THE SHARES OF FIRST HAWAIIAN COMMON STOCK OFFERED HEREBY ARE
NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/
PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is June 25, 1996.
<PAGE>
This Proxy Statement/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. These documents are
available upon request from: First Hawaiian, Inc., 1132 Bishop Street,
Honolulu, Hawaii 96813 (telephone number (808) 525-7000, Attention: Office
of the Secretary). In order to ensure timely delivery of documents, requests
should be made by ________ __, 1996.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . 7
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . 8
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Condensed Consolidated Financial Data of First Hawaiian, Inc. . . . 20
Condensed Consolidated Financial Data of ANB Financial Corporation . 23
Stock Price and Dividend Information . . . . . . . . . . . . . . . 26
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . 28
THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Date, Time and Place . . . . . . . . . . . . . . . . . . . . . . . 29
Matters To Be Considered at the Annual Meeting . . . . . . . . . . 29
Record Date; Shares Entitled to Vote; Quorum . . . . . . . . . . . 29
Votes Required . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Voting of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 30
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . 31
Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . 31
THE COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
First Hawaiian, Inc. . . . . . . . . . . . . . . . . . . . . . . . 32
ANB Financial Corporation . . . . . . . . . . . . . . . . . . . . . 33
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Background of the Merger . . . . . . . . . . . . . . . . . . . . . 34
Reasons for the Merger; Recommendation of the Board of Directors . 36
Opinions of Financial Advisor . . . . . . . . . . . . . . . . . . . 37
Structure of the Merger . . . . . . . . . . . . . . . . . . . . . . 41
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . 41
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 43
<PAGE>
Conversion of Shares; Procedures for Exchange of Certificates;
Fractional Shares . . . . . . . . . . . . . . . . . . . . . . 43
Representations and Warranties . . . . . . . . . . . . . . . . . . 44
Conduct of Business Pending Merger . . . . . . . . . . . . . . . . 44
No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Conditions to the Consummation of the Merger . . . . . . . . . . . 47
Regulatory Approvals Required . . . . . . . . . . . . . . . . . . . 48
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . 50
Anticipated Accounting Treatment . . . . . . . . . . . . . . . . . 51
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . 52
Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 52
Effect on Employee Benefit and Stock Plans and Compensation . . . . 53
Interests of Certain Persons in the Merger . . . . . . . . . . . . 53
Shareholder Voting Agreements . . . . . . . . . . . . . . . . . . 54
Resale of First Hawaiian Common Stock . . . . . . . . . . . . . . 55
Rights of Dissenting Shareholders . . . . . . . . . . . . . . . . . 55
MANAGEMENT AND OPERATIONS AFTER THE MERGER . . . . . . . . . . . . . . . 57
Directors After the Merger . . . . . . . . . . . . . . . . . . . . 57
Management After the Merger . . . . . . . . . . . . . . . . . . . . 58
Operations After the Merger . . . . . . . . . . . . . . . . . . . . 59
DESCRIPTION OF FIRST HAWAIIAN CAPITAL STOCK . . . . . . . . . . . . . . . 59
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
COMPARISON OF SHAREHOLDER RIGHTS . . . . . . . . . . . . . . . . . . . . 61
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . 61
Voting Rights in Business Combinations . . . . . . . . . . . . . . 62
Amendment of Articles/Certificate of Incorporation . . . . . . . . 62
Business Combinations with Interested Shareholders . . . . . . . . 62
Shareholder Meetings; Action by Written Consent . . . . . . . . . . 64
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Size and Classification of the Board of Directors . . . . . . . . . 65
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . 65
Limitations on Liability and Indemnification . . . . . . . . . . . 65
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 70
CERTAIN INFORMATION RELATING TO ANB . . . . . . . . . . . . . . . . . . . 70
Management's Discussion and Analysis of Financial Condition and
Results of Operations of ANB . . . . . . . . . . . . . . . . . 70
Supervision and Regulation of ANB . . . . . . . . . . . . . . . . . 75
Supervision and Regulation of American National . . . . . . . . . . 77
Dividend History . . . . . . . . . . . . . . . . . . . . . . . . . 81
Market Prices of ANB Common Stock . . . . . . . . . . . . . . . . . 81
Security Ownership of Certain Beneficial Owners and Management . . 82
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 84
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Information With Respect to Nominees and Directors Whose Terms
Continue . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
<PAGE>
Information Regarding the Board of Directors and its Committees . . 87
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . 89
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . 90
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 90
Certain Transactions and Relationships . . . . . . . . . . . . . . 91
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
AVAILABILITY OF ANNUAL DISCLOSURE STATEMENT . . . . . . . . . . . . . . . 92
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
INDEX TO FINANCIAL STATEMENTS OF ANB FINANCIAL
CORPORATION AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . F-1
ANNEXES
Annex I Agreement and Plan of Merger
Annex II Opinion of Ragen MacKenzie Incorporated
Annex III Chapter 23B.13 of the Revised Code of Washington (Rights of
Dissenting Shareholders)
<PAGE>
No person has been authorized to give any information or to make
any representation other than those contained in this Proxy
Statement/Prospectus in connection with the solicitations of proxies or the
offering of securities made hereby and, if given or made, such information or
representation must not be relied upon as having been authorized by First
Hawaiian or ANB. This Proxy Statement/Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction in which it is not lawful to
make any such offer or solicitation or to any person to whom it is not lawful
to make any such offer or solicitation.
Neither the delivery of this Proxy Statement/Prospectus nor any
distribution of securities made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of First
Hawaiian or ANB since the date hereof or that the information herein is
correct as of any time subsequent to the date hereof.
AVAILABLE INFORMATION
First Hawaiian is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Under the
rules and regulations of the Commission, the solicitation of ANB's
shareholders to approve the Merger constitutes an offering of the First
Hawaiian Common Stock to be issued in conjunction with the Merger. First
Hawaiian has filed with the Commission a Registration Statement on Form S-4
(File No. 333-5655) (together with any amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the First Hawaiian Common Stock to be issued to
holders of ANB Common Stock pursuant to the Merger Agreement. The
Registration Statement and the exhibits thereto, as well as the reports,
proxy statements and other information filed by First Hawaiian with the
Commission, can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven
World Trade Center, Suite 1300, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material also can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, copies of the Registration Statement and
related documents may be obtained through the Commission's Internet
address at http://www.sec.gov.
This Proxy Statement/Prospectus constitutes a part of the
Registration Statement. This Proxy Statement/Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits
thereto, a portion of which has been omitted in accordance with the rules
and regulations of the Commission.
Statements contained in this Proxy Statement/Prospectus, or in any
document incorporated in this Proxy Statement/Prospectus by reference, as to
the contents of any contract or other document referred to herein or therein
<PAGE>
are qualified in all respects by reference to the copy of such contract or
other document filed as an exhibit to the Registration Statement or otherwise
incorporated herein by reference.
ANB is not subject to the informational reporting requirements of
the Exchange Act. The information contained in this Proxy Statement/
Prospectus, including the financial statements included herein, will serve as
the 1995 Annual Report to Shareholders of ANB.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by First Hawaiian
(File No. 0-7949) pursuant to the Exchange Act are incorporated by reference
in this Proxy Statement/Prospectus:
A. First Hawaiian's Annual Report on Form 10-K for the year ended
December 31, 1995; and
B. First Hawaiian's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996.
Such incorporation by reference shall not be deemed to incorporate
by reference the information referred to in Item 402(a)(8) of Regulation S-K.
All documents and reports filed by First Hawaiian pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Proxy Statement/Prospectus and prior to the date of the Annual Meeting also
shall be deemed to be incorporated by reference in this Proxy Statement/
Prospectus and to be a part hereof from the dates of filing of such documents
or reports. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement/Prospectus to the extent that
a statement contained herein, or contained in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus incorporates documents by reference which are
not presented herein or delivered herewith. These documents are available upon
request from: First Hawaiian, Inc., 1132 Bishop Street, Honolulu, Hawaii 96813
(telephone number (808) 525-7000, Attention: Office of the Secretary). In
order to ensure timely delivery of documents, requests should be made by
July 19, 1996.
<PAGE>
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement/Prospectus. Reference is made to, and this
summary is qualified in its entirety by, the more detailed information
contained or incorporated by reference in this Proxy Statement/Prospectus and
the annexes hereto. Shareholders are urged to read this Proxy Statement/
Prospectus and the annexes hereto in their entirety.
The Annual Meeting
Date, Time and Place . . . . The Annual Meeting will be held at the
Tri-Cities Country Club, located at 314
Underwood, Kennewick, Washington, at 1:00
p.m., local time, on July 26, 1996.
Matters to be
Considered at the
Annual Meeting . . . . . . At the Annual Meeting, in addition to the
election of directors, holders of ANB Common
Stock will be asked to consider and vote
upon a proposal to approve the Merger
Agreement, attached as Annex I to this Proxy
Statement/ Prospectus, providing for the
Merger of Merger Sub with and into ANB
pursuant to the Merger Agreement. As a
result of the Merger, ANB will become a
wholly-owned subsidiary of First Hawaiian.
Holders of ANB Common Stock also will be
asked to consider and vote upon a proposal
to elect three directors of ANB to serve for
terms of three years and until their
successors are elected and have qualified,
or until the Effective Time. See "The
Annual Meeting--Matters to be Considered at
the Annual Meeting".
As further described below under "Management
and Operations After the Merger", from and
after the Effective Time, the Board of
Directors of ANB will consist of six
members, two of whom will be designated by
the present Board of Directors of ANB, and
the initial Board of Directors of ANB's
subsidiary bank, American National Bank
("American National"), will consist of 10
members, six of whom will be designated by
the present Board of Directors of ANB. In
addition, it is currently expected that
Craig D. Eerkes, the current Chairman of
ANB, will be elected to serve on the Board
<PAGE>
of Directors of First Hawaiian Bank ("FHB"),
a wholly-owned subsidiary of First Hawaiian.
Record Date . . . . . . . . . The record date for the Annual Meeting is
the close of business on June 20, 1996 (the
"Record Date"). See "The Annual Meeting--
Record Date; Shares Entitled to Vote;
Quorum".
Votes Required; Shareholder
Voting Agreements . . . . .
The approval of the Merger Agreement will
require the affirmative vote of the holders
of at least two-thirds of the shares of ANB
Common Stock outstanding on the Record Date.
A failure to vote, either by not returning
the enclosed proxy or by checking the
"Abstain" box on the proxy, will have the
same effect as a vote against approval of
the Merger Agreement. Approval of the
Merger Agreement by the requisite vote of
holders of ANB Common Stock is a condition
to, and required for, consummation of the
Merger. None of the other proposals being
considered at the Annual Meeting must be
approved by holders of ANB Common Stock in
order for the Merger to be consummated.
Certain shareholders of ANB holding an
aggregate of 89,981 shares of ANB Common
Stock, representing approximately 60% of the
shares of ANB Common Stock outstanding as of
the Record Date and entitled to vote at the
Annual Meeting, including each director and
each person who holds more than 5% of the
outstanding ANB Common Stock, have executed
and delivered to First Hawaiian agreements
(collectively, the "Shareholder Voting
Agreements") pursuant to which each such
shareholder has agreed, in his capacity as
such, to vote to approve the Merger
Agreement at the Annual Meeting. See "The
Merger--Shareholder Voting Agreements".
The affirmative vote of the holders of a
majority of the shares of ANB Common Stock
represented at the Annual Meeting and
entitled to vote will be required to elect
directors to ANB's Board.
Holders of record of ANB Common Stock as of
the Record Date are entitled to one vote per
<PAGE>
share on each matter to be voted on at the
Annual Meeting.
See "The Annual Meeting--Votes Required";
"The Merger--Shareholder Voting Agreements";
"Election of Directors".
Security Ownership
of Management . . . . . . . As of the Record Date, the directors and
executive officers of ANB and their
affiliates owned and were entitled to vote
76,211 shares of ANB Common Stock, which
represented approximately 51% of the shares
of ANB Common Stock outstanding on the
Record Date. Each ANB director has entered
into a Shareholder Voting Agreement pursuant
to which such shareholder has agreed to vote
in its capacity as shareholder for approval
of the Merger Agreement at the Annual Meeting.
As of the Record Date, the directors and
executive officers of First Hawaiian did not
own any shares of ANB Common Stock. See
"The Annual Meeting--Votes Required" and
"The Merger--Shareholder Voting Agreements".
The Companies
First Hawaiian, Inc. . . . . First Hawaiian is a bank holding company and
a savings and loan holding company
incorporated under the laws of the State of
Delaware. First Hawaiian, through its
subsidiaries, operates a general commercial
banking business and other businesses
related to banking. First Hawaiian's
principal assets are FHB, a State of Hawaii
chartered bank; Pioneer Federal Savings
Bank, a federally chartered savings bank
("Pioneer"); and First Hawaiian Creditcorp,
Inc. and First Hawaiian Leasing, Inc., each
a financial services loan company. At March
31, 1996, First Hawaiian had consolidated
total assets of $7.4 billion, total deposits
of $5.3 billion and stockholders' equity of
$657.2 million. First Hawaiian's principal
executive offices are located at 1132 Bishop
Street, Honolulu, Hawaii 96813; First
Hawaiian's telephone number is
(808) 525-7000. See "The Companies--First
Hawaiian, Inc.".
ANB Financial
Corporation . . . . . . . . ANB is a bank holding company incorporated
under the laws of the State of Washington.
<PAGE>
ANB provides retail and commercial banking
services through its banking subsidiary,
American National, a national banking
association headquartered in Kennewick,
Washington. At March 31, 1996, ANB had, on
a consolidated basis, $69.4 million in
assets, $61.3 million in deposits and $7.5
million in shareholders' equity. ANB's
principal executive offices are located at
7525 West Canal Drive, Kennewick, Washington
99336; ANB's telephone number is
(509) 735-0451. See "The Companies--ANB
Financial Corporation".
The Merger
Effect of Merger;
Estimated Merger
Consideration. . . . . . . At the Effective Time, Merger Sub will merge
with and into ANB, with ANB continuing as
the surviving corporation in the Merger (the
"Surviving Corporation"). As a result of
the Merger, ANB will become a wholly-owned
subsidiary of First Hawaiian.
At the Effective Time, subject to certain
exceptions described herein with respect to
shares owned by First Hawaiian, ANB or their
respective subsidiaries and shares held by
persons who have taken the steps necessary
under the Revised Code of the State of
Washington (the "RCW") to exercise
dissenters' rights ("Dissenting Shares"),
each outstanding share of ANB Common Stock
will be automatically converted into a
number of fully paid and nonassessable
shares of First Hawaiian Common Stock
determined by dividing (i) the product of
2.2 times the Determination Date Book Value
Per Share (as defined below) of ANB Common
Stock by (ii) the Valuation Price (as
defined below) of First Hawaiian Common
Stock (such quotient, as adjusted as
described herein, the "Exchange Ratio"),
except that cash will be paid in lieu of
fractional shares of First Hawaiian Common
Stock.
The "Determination Date Book Value Per
Share" is defined in the Merger Agreement to
mean (i) the consolidated shareholders'
equity of ANB as of the thirtieth day prior
to the scheduled closing date (the
"Determination Date"), determined in
accordance with generally accepted
<PAGE>
accounting principles, except that there
shall be added to such shareholders' equity
the aggregate of the per share exercise
prices for all shares of ANB Common Stock
issuable upon exercise of outstanding
employee and other stock options, divided by
(ii) the number of shares of ANB Common
Stock outstanding on the Determination Date
on a fully-diluted basis. As described
herein, ANB has agreed in the Merger
Agreement to take certain actions prior to
the Determination Date, including charging
off certain loans, which may have an impact
on the Determination Date Book Value Per Share.
In addition, as further described herein, the
Determination Date Book Value Per Share
shall be subject to further adjustment in
the event that ANB experiences a net loss
during the period from the Determination
Date through the date of the closing of the
Merger (the "Closing Date").
The "Valuation Price" is defined in the
Merger Agreement to mean the average of the
closing prices per share of the First
Hawaiian Common Stock for the fifteen
consecutive trading days commencing on the
Determination Date, as reported in The Wall
Street Journal (the "Average Closing
Price"), provided that if the Average
Closing Price is less than or equal to
$25.50, the Valuation Price shall be $25.50,
and if the Average Closing Price is more
than or equal to $31.16, the Valuation Price
shall be $31.16.
The Exchange Ratio is subject to adjustment
under certain limited circumstances
described herein.
First Hawaiian and ANB currently anticipate
that the Effective Time will occur at the
close of business on or about July 31, 1996,
and have agreed that the Determination Date
will be June 30, 1996. Based on an estimated
Determination Date Book Value Per Share of
$49.70 (after giving effect to the
adjustments described above), each share of
ANB Common Stock would therefore be converted
in the Merger into shares of First Hawaiian
Common Stock with a market value of $109.34
(based on the valuation procedure described
above).
If the Valuation Price of First Hawaiian
Common Stock was $26-3/4 (equal to its closing
price on June 21, 1996), the Exchange Ratio,
based upon the foregoing assumptions,
would therefore be 4.0875.
See "The Merger--Structure of the Merger",
"--Merger Consideration", "--Effective
Time", "--Conversion of Shares; Procedures
for Exchange of Certificates; Fractional
Shares", "--Conduct of Business Pending
Merger" and "--Rights of Dissenting
Shareholders".
<PAGE>
Reasons for the Merger;
Recommendation of
the ANB Board of
Directors . . . . . . . . . The Board of Directors of ANB believes that
the Merger will provide ANB with
substantially greater financial and
technological resources that will enable it
to compete more effectively in its home
market and better serve its customers and
communities. ANB's shareholders will be
able to obtain a premium over book value for
their shares on a tax-deferred basis while
at the same time having the opportunity to
participate in First Hawaiian's future and
to have the benefits of the active trading
market for First Hawaiian Common Stock.
The Board of Directors of ANB believes that
the terms of the Merger are fair to and in
the best interests of its shareholders. The
ANB Board of Directors unanimously adopted
the Merger Agreement and the transactions
contemplated thereby and recommends that the
shareholders of ANB vote to approve the
Merger Agreement.
See "The Merger--Reasons for the Merger;
Recommendation of the ANB Board of
Directors".
Opinions of Financial
Advisor of ANB . . . . . . Ragen MacKenzie Incorporated ("Ragen
MacKenzie") has rendered its written
opinions to the Board of Directors of ANB
that, as of February 26, 1996 (the date the
ANB Board of Directors adopted the Merger
Agreement) and as of the date of this Proxy
Statement/Prospectus, the consideration to
be received in the Merger is fair, from a
financial point of view, to the holders of
ANB Common Stock. A copy of the opinion of
Ragen MacKenzie, dated the date of this
Proxy Statement/Prospectus, is attached to
this Proxy Statement/Prospectus as Annex II.
ANB has agreed to pay fees to Ragen
MacKenzie for its services in connection
with the Merger, a portion of which are
contingent upon consummation of the Merger.
For information regarding the assumptions
made, matters considered and limits of the
<PAGE>
review by Ragen MacKenzie, see "The Merger--
Opinions of Financial Advisor".
Conditions to the
Merger . . . . . . . . . . The obligations of First Hawaiian and ANB to
consummate the Merger are subject to various
conditions, including without limitation,
(i) the accuracy of the representations and
warranties contained in the Merger
Agreement; (ii) compliance with covenants
set forth in the Merger Agreement;
(iii) obtaining the requisite approval of
ANB's shareholders; (iv) obtaining the
requisite regulatory approval from the Board
of Governors of the Federal Reserve System
(the "Federal Reserve Board"), which condition
has already been satisfied; (v) the
effectiveness of the Registration Statement
of which this Proxy Statement/Prospectus is
a part; (vi) receipt of all state securities
laws and "blue sky" permits necessary to
consummate the Merger; (vii) receipt of
third party consents; (viii) receipt of
opinions of counsel, including in respect of
certain federal income tax consequences of
the Merger; and (ix) Dissenting Shares
aggregating less than 10% of the outstanding
shares of ANB Common Stock. See "The
Merger--Conditions to the Consummation of
the Merger"; "--Regulatory Approvals
Required" and "--Certain Federal Income Tax
Consequences".
Termination . . . . . . . . . The Merger Agreement may be terminated at
any time prior to the Effective Time, (i) by
mutual written consent of the parties; (ii)
by either party if the Merger Agreement
shall not have been approved by the holders
of ANB Common Stock at the Annual Meeting;
(iii) by either party if the consent of the
Federal Reserve Board, or any other
governmental authority having jurisdiction
over the transactions set forth in the
Merger Agreement, shall have been denied,
unless First Hawaiian shall have elected to
appeal such denial; (iv) by either party in
the event of a material, uncured breach by
the other party; or (v) by any party not in
default under the Merger Agreement if the
Merger shall not have been consummated on or
before December 31, 1996.
<PAGE>
In addition, if the Average Closing Price
for the fifteen trading day period
commencing on the Determination Date is less
than $25.50, the ANB Board of Directors may
elect to terminate the Merger Agreement,
provided that such termination shall not
become effective if First Hawaiian elects to
increase the Exchange Ratio to the number
specified in the Merger Agreement.
See "The Merger--Merger Consideration" and
"--Termination".
Regulatory Approvals
Required . . . . . . . . . The Merger is subject to prior approval by
the Federal Reserve Board, which was granted
on June 17, 1996. See "The Merger--Regulatory
Approvals Required".
Certain Federal Income
Tax Consequences . . . . . The Merger is intended to be a tax-free
reorganization so that no gain or loss will
be recognized by First Hawaiian or ANB, and
no gain or loss will be recognized by ANB
shareholders, except in respect of cash
received by holders of ANB Common Stock in
lieu of fractional shares of First Hawaiian
Common Stock or pursuant to the exercise of
dissenters' rights. First Hawaiian and ANB
have received the opinions of Simpson
Thacher & Bartlett and of Knight, Vale and
Gregory, Inc., P.S., respectively, to the
effect that, among other things, the Merger
will constitute a reorganization within the
meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the
"Code"). Consummation of the Merger is
conditioned upon delivery of opinions of
counsel, dated as of the Closing Date, to
the same effect. See "The Merger--Certain
Federal Income Tax Consequences".
Anticipated Accounting
Treatment . . . . . . . . . The Merger will be treated as a purchase for
financial accounting purposes. See "The
Merger--Anticipated Accounting Treatment".
<PAGE>
Interests of Certain
Persons in the
Merger . . . . . . . . . . Certain members of ANB's management and
Board of Directors may be deemed to have
interests in the Merger in addition to their
interests as shareholders of ANB generally.
These include, among other things, the
following:
Following the Effective Time, certain
directors and executive officers of ANB are
expected to become directors and executive
officers of the Surviving Corporation and
ANB's current Chairman is expected to become
a director of FHB. In addition, First
Hawaiian and ANB have agreed that six of the
ten directors of American National following
the Effective Time will be current directors
of American National designated by ANB.
Pursuant to the Merger Agreement, all
outstanding employee stock options issued
pursuant to the ANB Financial Corporation
Employee Incentive Stock Option Plan (each,
an "ANB Stock Option") will become
immediately vested and exercisable prior to
the Closing Date and will expire as of the
Effective Time if not exercised prior to
that time.
First Hawaiian has agreed to indemnify, and
maintain directors' and officers' insurance
covering, the directors and officers of ANB
or any of its subsidiaries following the
Merger.
See "The Merger--Effect on Employee Benefit
and Stock Plans", "--Interests of Certain
Persons in the Merger" and "Management and
Operations After the Merger".
Rights of Dissenting
Shareholders . . . . . . . Pursuant to Chapter 23B.13 of the RCW,
holders of ANB Common Stock have the right
to dissent from the Merger and, if they
follow certain procedures and the Merger is
effectuated, to obtain payment of the fair
value of their shares in cash. To exercise
such dissenters' rights, an ANB shareholder
must (i) deliver to ANB, before the vote on
approval of the Merger is taken, written
<PAGE>
notice of intent to demand payment for his
or her shares if the Merger is consummated,
and (ii) not vote in favor of the Merger.
Following consummation of the Merger, First
Hawaiian will send a notice to all ANB
shareholders who have properly perfected
their dissenters' rights (by complying with
(i) and (ii) above). A dissenting
shareholder must also follow the procedures
set forth in the notice, which will contain
instructions for completing the exercise of
dissenters' rights, including that the
dissenting shareholder must (1) make written
demand for payment of the fair value of his
or her shares within the time period
specified in the notice, (2) certify that
beneficial ownership of his or her shares of
ANB Common Stock was acquired before the
date set forth in the notice, and (3)
surrender his or her stock certificates
representing shares of the ANB Common Stock
in the manner set forth in the notice. A
vote against the Merger will not in and of
itself satisfy the applicable requirements
of the RCW; a shareholder who does not
deliver to ANB prior to the Annual Meeting a
written notice of his or her intent to
demand payment of the fair value of the
shares will lose the right to exercise
dissenters' rights. In addition, any
shareholder electing to exercise dissenters'
rights must either vote against the Merger
or abstain from voting. A shareholder's
failure to follow exactly the procedures
specified in the RCW will result in loss of
such shareholder's dissenters' rights.
Accordingly, any of ANB's shareholders
wishing to dissent from the Merger are urged
to read carefully "The Merger--Rights of
Dissenting Shareholders," and the copy of
Chapter 23B.13 of the RCW set forth in
Annex III to this Proxy Statement/
Prospectus.
Management and
Operations After the
Merger . . . . . . . . . . From and after the Effective Time, the Board
of Directors of the Surviving Corporation is
expected to consist of six members. It is
expected that two of such directors will be
the current Chairman of the Board and the
current President and Chief Executive Officer,
<PAGE>
respectively, of ANB. It is also expected
that upon consummation of the Merger the
current Chairman of ANB will be nominated
and elected to the Board of Directors of
FHB. In addition, First Hawaiian and ANB
have agreed that the initial Board of
Directors of American National at the
Effective Time will consist of 10 directors,
of which four will be designated by First
Hawaiian and six will be current directors
of American National designated by ANB.
First Hawaiian currently intends that
following the Merger, First Hawaiian will
continue to operate ANB and American
National as independent subsidiaries
initially retaining their current respective
names. On May 31, 1996, First Hawaiian and
its subsidiaries completed their
acquisitions (the "Branch Purchase
Transactions") of 31 branches of U.S.
Bancorp located in Oregon, Washington and
Idaho, including four branches and a branch
facility located in the State of Washington
to be acquired by Pioneer (the "Washington
Branches"), which were divested by U.S.
Bancorp in connection with its merger with
West One Bancorp. First Hawaiian currently
expects that, at some time after completion
of the Merger, the Washington Branches will
be transferred to American National, which
will then change its name to "Pacific One
Bank, N.A.".
See "The Merger--Interests of Certain
Persons in the Merger" and "Management and
Operations After the Merger".
Comparison of
Shareholder
Rights . . . . . . . . . . The rights of shareholders of ANB currently
are determined by reference to the RCW, the
Amended and Restated Articles of
Incorporation of ANB (the "ANB Charter") and
ANB's Bylaws. At the Effective Time,
shareholders of ANB will become stockholders
of First Hawaiian. Their rights as
stockholders will then be determined by
reference to the Delaware General
Corporation Law (the "DGCL"), the
Certificate of Incorporation of First
Hawaiian (the "First Hawaiian Charter") and
<PAGE>
First Hawaiian's Bylaws. See "Description
of First Hawaiian Capital Stock" and
"Comparison of Shareholder Rights".
<PAGE>
CONDENSED CONSOLIDATED FINANCIAL DATA OF
FIRST HAWAIIAN, INC.
The following table sets forth certain condensed consolidated
historical financial data of First Hawaiian and is based on the consolidated
financial statements of First Hawaiian, including the respective notes
thereto, incorporated by reference in this Proxy Statement/Prospectus and
should be read in conjunction therewith. See "Incorporation of Certain
Documents by Reference". Interim unaudited data for the three months ended
March 31, 1996 and 1995 reflect, in the opinion of management of First
Hawaiian, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the three months
ended March 31, 1996 and 1995 are not necessarily indicative of results which
may be expected for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
As of or For the
Three Months
Ended March 31, As of or For the Year Ended December 31,
--------------------------- ------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------- ------------- ------------- ------------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENTS:
(in thousands)
Total interest income . . $ 135,779 $ 138,594 $ 559,957 $ 475,760 $ 428,931 $ 475,574 $ 517,019
Total interest expense . 59,759 65,841 265,297 179,688 150,709 206,783 264,043
Net interest income . . . 76,020 72,753 294,660 296,072 278,222 268,791 252,976
Provision for loan and
lease losses . . . . . 3,322 3,340 38,107 22,922 13,262 12,812 10,252
Total noninterest income 23,968 22,983 94,878 86,672 79,587 69,597 61,963
Total noninterest
expenses . . . . . . . 67,406 63,345 229,293 248,321 225,442 197,696 184,487
Income before income
taxes and cumulative
effect of a change in
accounting principle . 29,260 29,051 122,138 111,501 119,105 127,880 120,200
Income taxes . . . . . . 9,057 10,281 45,133 38,990 40,898 40,980 38,490
Income before cumulative
effect of change in
accounting principle . 20,203 18,770 77,005 72,511 78,207 86,900 81,710
Cumulative effect of a
change in accounting
principle . . . . . . -- -- -- -- 3,650 -- --
Net income . . . . . . . $ 20,203 $ 18,770 $ 77,005 $ 72,511 $ 81,857 $ 86,900 $ 81,710
--------- --------- --------- --------- --------- --------- ---------
<PAGE>
As of or For the
Three Months
Ended March 31, As of or For the Year Ended December 31,
--------------------------- ------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------- ------------- ------------- ------------- ----------
(unaudited)
COMMON STOCK DATA:
Income per share before
cumulative effect of
a change in
accounting principle . $ .65 $ .59 $ 2.43 $ 2.25 $ 2.41 $ 2.70 $ 2.55
Net income per share . . .65 .59 2.43 2.25 2.52 2.70 2.55
Cash dividends per share .295 .295 1.18 1.18 1.135 1.06 .95
Book value per share (at
period end) . . . . . 21.11 19.95 20.86 19.61 18.69 17.30 15.53
Market price (at period
end) . . . . . . . . . 27.62 24.50 30.00 23.75 24.75 28.75 27.75
Average shares
outstanding (in
thousands) . . . . . . 31,119 32,021 31,735 32,259 32,505 32,225 32,079
BALANCE SHEETS:
(in millions)
Average balances:
Total assets . . . . . $ 7,348 $ 7,599 $ 7,528 $ 7,200 $ 6,755 $ 6,537 $ 6,007
Total earning assets . 6,730 6,949 6,876 6,558 6,106 5,966 5,538
Loans and leases . . . 5,233 5,626 5,461 5,172 4,619 4,358 3,837
Deposits . . . . . . . 5,223 5,154 5,178 5,082 5,069 5,084 5,159
Long-term debt . . . . 247 224 230 213 128 66 62
Stockholders' equity . 653 631 640 618 584 526 470
At period end:
Total assets . . . . . $ 7,427 $ 7,703 $ 7,565 $ 7,535 $ 7,269 $ 6,553 $ 6,511
Loans and leases . . . 5,206 5,714 5,260 5,534 5,067 4,396 4,329
Deposits . . . . . . . 5,287 5,225 5,358 5,152 5,220 5,088 5,337
Long-term debt . . . . 242 228 239 219 222 71 62
Stockholders' equity . 657 638 650 628 608 562 498
<PAGE>
As of or For the
Three Months
Ended March 31, As of or For the Year Ended December 31,
--------------------------- ------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------- ------------- ------------- ------------- ----------
(unaudited)
SELECTED RATIOS:
Return on average: (annualized)
Total assets . . . . . 1.11% 1.00% 1.02% 1.01% 1.21% 1.33% 1.36%
Total stockholders'
equity . . . . . . . . . 12.44 12.07 12.03 11.73 14.01 16.52 17.38
Dividend payout ratio . . 45.38 50.00 48.56 52.44 45.04 39.26 37.25
Average stockholders'
equity to average
total assets . . . . . 8.89 8.30 8.50 8.58 8.65 8.05 7.82
Net interest margin . . . 4.58 4.34 4.36 4.63 4.69 4.62 4.74
At Period End:
Tier 1 leverage ratio 7.94 7.40 7.72 7.51 7.45 7.72 6.80
Risk-based capital
ratios:
Tier 1 . . . . . . . 9.34 9.19 9.03 9.31 9.80 10.49 9.03
Total . . . . . . . 12.21 11.86 11.88 12.06 12.84 11.67 10.17
Allowance for loan
and lease losses to
total loans and
leases . . . . . . . 1.52 1.07 1.50 1.11 1.23 1.28 1.27
Nonperforming assets
to total loans and
leases and other
real estate owned . 1.73 1.16 1.75 1.14 1.44 1.65 .90
Allowance for loan
and lease losses to
nonperforming loans
and leases . . . . . 1.03x 1.07x .95x 1.04x 1.03x .79x 1.49x
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED FINANCIAL DATA OF
ANB FINANCIAL CORPORATION
(In thousands, except ratio and per share data)
The following table sets forth certain condensed consolidated
historical financial data of ANB and is based on the consolidated financial
statements of ANB, including the respective notes thereto, included elsewhere
in this Proxy Statement/Prospectus and should be read in conjunction
therewith. Interim unaudited data for the three months ended March 31, 1996
and 1995 reflect, in the opinion of management of ANB, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the three months ended March 31, 1996
and 1995 are not necessarily indicative of results which may be expected for
any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
As of or For the
Three Months
Ended March 31, As of or For the Year Ended December 31,
--------------------------- -------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------- ------------- ------------- ------------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENTS:
Total interest income . . $ 1,422 $ 1,319 $ 5,626 $ 4,477 $ 4,152 $ 3,757 $ 2,605
Total interest expense . 414 346 1,857 1,034 1,096 1,118 975
Net interest income . . . 1,008 973 3,969 3,443 3,056 2,639 1,630
Provision for loan and
lease losses . . . . . 53 12 157 58 48 18 92
Total noninterest
income . . . . . . . . 202 130 794 824 899 839 531
Total noninterest
expenses . . . . . . . 897 799 3,229 3,151 2,805 2,517 1,655
Income before income
taxes . . . . . . . . 260 292 1,377 1,058 1,102 943 414
Income taxes . . . . . . 87 100 444 360 342 321 132
Net income . . . . . . . 173 192 933 698 760 622 283
<PAGE>
As of or For the
Three Months
Ended March 31, As of or For the Year Ended December 31,
--------------------------- -------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------- ------------- ------------- ------------- ----------
(unaudited)
COMMON STOCK DATA:
Income per share before
cumulative effect of
a change in
accounting principle . $ 1.15 $ 1.28 $ 6.23 $ 4.66 $ 5.57 $ 5.92 $ 3.13
Net income per share . . 1.15 1.28 6.23 4.66 5.57 5.92 3.13
Cash dividends per
share . . . . . . . . -- 2.00 2.00 -- -- -- 1.25
Book value per share at
period end . . . . . . 49.83 43.22 48.94 43.71 39.97 33.47 27.62
Average shares
outstanding (in
thousands) . . . . . . 149,824 149,824 149,824 149,824 138,418 104,932 90,350
BALANCE SHEETS:
Average balances:
Total assets . . . . . $ 69,383 $ 68,909 $ 70,816 $ 67,115 $ 58,915 $ 42,897 $ 28,878
Total earning assets . 64,058 62,189 64,633 58,921 53,029 37,577 24,523
Loans and leases . . . 46,553 35,562 39,500 30,393 26,709 22,723 16,868
Deposits . . . . . . . 61,087 61,196 62,446 59,678 52,297 42,894 25,838
Long-term debt . . . . -- -- -- -- 352 662 --
Shareholders' equity . 7,424 6,670 6,948 6,094 5,644 2,921 2,345
At period end:
Total assets . . . . . 69,363 70,672 73,642 72,087 62,484 55,117 30,617
Loans and leases . . . 47,865 36,894 45,265 34,787 26,901 26,057 18,339
Deposits . . . . . . . 61,276 63,758 65,458 62,336 58,280 50,003 27,898
Long-term debt . . . . -- -- -- -- -- 950 --
Shareholders' equity . 7,466 6,476 7,333 6,549 5,989 3,756 2,458
<PAGE>
As of or For the
Three Months
Ended March 31, As of or For the Year Ended December 31,
--------------------------- -------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------- ------------- ------------- ------------- ----------
(unaudited)
SELECTED RATIOS:
Return on average: (annualized)
Total assets . . . . . 1.00% 1.12% 1.29% 1.04% 1.29% 1.45% 0.98%
Total shareholders'
equity . . . . . . . . 9.32 11.60 13.44 11.13 15.60 19.93 11.79
Dividend payout ratio 0.00 38.78 32.15 0.00 0.00 0.00 38.94
Average shareholders'
equity to average
total assets . . . . 10.70 9.08 9.84 9.08 9.58 0.81 8.12
Net interest margin . . . 6.32 6.28 6.14 5.84 5.76 7.02 6.65
At Period End:
Tier 1 leverage ratio 9.68 8.01 9.06 8.71 7.95 6.84 8.09
Risk-based capital
ratios:
Tier 1 . . . . . . . . 14.16 15.00 13.52 13.62 14.82 12.75 --
Total . . . . . . . . 14.73 15.58 14.09 13.99 16.00 12.26 12.50
Allowance for loan
and lease losses to
total loans and
leases . . . . . . . 0.60% 0.59% 0.80% 0.59% 0.65% 0.58% 0.67%
Nonperforming assets
to total loans and
leases and other
real estate owned . 0.07 0.11 0.20 0.38 0.44 0.54 0.40
Allowance for loan
and lease losses to
nonperforming loans
and leases . . . . . 7.94x 5.24x 2.96x 3.33x 1.48x 1.07x 1.88x
</TABLE>
<PAGE>
STOCK PRICE AND DIVIDEND INFORMATION
The First Hawaiian Common Stock is quoted on the Nasdaq National
Market under the symbol "FHWN". There is no established trading market for
the ANB Common Stock. The table below sets forth, for the calendar quarters
indicated, the high and low sales prices of the First Hawaiian Common Stock
as reported on the Nasdaq National Market, the high and low trading prices of
the ANB Common Stock known to management of ANB and the dividends per share
declared on each of the First Hawaiian Common Stock and the ANB Common Stock
in each such quarter. The market for shares of ANB Common Stock is highly
illiquid and the shares are neither listed on an established exchange nor
quoted on the Nasdaq National Market. Trades of ANB Common Stock are
generally undertaken in private transactions. Thus, management of ANB does
not have knowledge of the prices paid in all transactions involving its
shares and has not necessarily verified the prices indicated in the table
with both parties to the relevant transaction. See "Certain Information
Relating to ANB--Market Prices of ANB Common Stock."
<TABLE>
<CAPTION>
Year Ended First Hawaiian ANB
December 31, Common Stock Common Stock
----------------------- ---------------------------------------- ----------------------------------------
1994 High Low Dividends High Low Dividends
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter . . . . . $27-1/4 $23 $.295 $43 $43 --
Second Quarter . . . . 28-1/2 24-3/4 .295 N/A N/A --
Third Quarter . . . . . 31-1/4 28 .295 46 44 --
Fourth Quarter . . . . 30 27-7/8 .295 N/A N/A --
1995
First Quarter . . . . . $27 $23 $.295 $52 $48 $2.00
Second Quarter . . . . 28 24-1/4 .295 N/A N/A --
Third Quarter . . . . . 31-1/4 24-3/4 .295 N/A N/A --
Fourth Quarter . . . . 30 27-7/8 .295 N/A N/A --
1996
First Quarter . . . . . $30 $26 .295 N/A N/A --
Second Quarter (through
June 21) . . . . . . 29-3/4 26-1/2 .295 N/A N/A --
</TABLE>
<PAGE>
The following table sets forth the closing price per share for First
Hawaiian Common Stock, as reported on the Nasdaq National Market, for ANB
Common Stock and the equivalent per share price for ANB Common Stock on
February 26, 1996, the last full trading day prior to the public announcement
of the execution of the Merger Agreement, and on June 21, 1996, which is the
most recent date for which it was practicable to obtain market price data
prior to the printing of this Proxy Statement/Prospectus. Holders of ANB
Common Stock are urged to obtain current market quotations for shares of
First Hawaiian Common Stock.
<TABLE>
<CAPTION>
February 26, 1996 June 21, 1996
----------------- -----------------
<S> <C> <C>
Closing price per share:
First Hawaiian . . . . . . . . . . . . $29.125 $26.75
ANB <F1> . . . . . . . . . . . . . . . $ 50.00 $50.00
Equivalent pro forma
per share of ANB
Common Stock . . . . . . . . . . . . $107.49<F2> $109.34<F3>
____________________
<FN>
<F1> There are no publicly available quotations of ANB Common Stock.
Accordingly, the amount reflected as the closing price per share of
ANB Common Stock as of February 26, 1996 and June 21, 1996,
respectively, is the average of the prices paid for ANB Common Stock
in the two most recent transactions in ANB Common Stock, both of which
occurred in February 1995.
<F2> Computed by multiplying the closing price per share of First Hawaiian
Common Stock on February 26, 1996 by a 3.6907 Exchange Ratio, which
is based on a Valuation Price equal to such closing price of First
Hawaiian Common Stock and a Determination Date Book Value Per Share
of $48.86 (calculated for this purpose only based on the shareholders'
equity of ANB as of March 31, 1996, as adjusted in accordance with the
definition of Determination Date Book Value Per Share).
<F3> Computed by multiplying the closing price per share of First Hawaiian
Common Stock on June 21, 1996 by a 4.0875 Exchange Ratio (the "Assumed
Exchange Ratio"), which is based on a Valuation Price equal to such
closing price of First Hawaiian Common Stock and a Determination
Date Book Value Per Share of $49.70 (calculated for this purpose only
based on the estimated shareholders' equity of ANB as of
June 30, 1996, as adjusted in accordance with the definition of
Determination Date Book Value Per Share).
</TABLE>
No assurance can be given as to the market price of the First
Hawaiian Common Stock or the book value per share of the ANB Common Stock at
the time the Exchange Ratio is determined, or as to the market price of the
First Hawaiian Common Stock at the time the Merger is consummated or when the
shares of First Hawaiian Common Stock are actually issued to holders of ANB
Common Stock in the Merger.
<PAGE>
COMPARATIVE PER SHARE DATA
(Unaudited)
The following table sets forth unaudited comparative book value,
cash dividends declared and income per share data: (a) on a historical basis
for First Hawaiian and ANB, (b) on a pro forma basis for First Hawaiian
adjusted to give effect to the Merger as if the Merger had occurred at March
31, 1996 and December 31, 1995, respectively, with respect to the
presentation of book value and as if the Merger had occurred at January 1,
1995 in the case of income per share data and (c) on a pro forma equivalent
basis for ANB Common Stock. The information presented is based on the
Assumed Exchange Ratio (calculated as set forth in footnote 3 to the table
on the preceding page) of 4.0875 shares of First Hawaiian Common Stock for
each share of ANB Common Stock. This calculation of the Exchange Ratio is
provided for illustrative purposes only and will likely not be the
Exchange Ratio used for the issuance of First Hawaiian Common Stock in the
Merger. See "Incorporation of Certain Documents by Reference"; "Available
Information"; "The Merger--Merger Consideration"; "--Possible Increase of
Exchange Ratio"; and the consolidated financial statements of ANB included
elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FIRST HAWAIIAN ANB
-------------------------------------- -----------------------------------
Equivalent
Historical Pro Forma Historical Pro Forma<F1>
------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Book Value
March 31, 1996 . . . . . . . . . . . . . . . . $ 21.11 $ 20.72 $ 49.83 $84.69
December 31, 1995 . . . . . . . . . . . . . . . 20.86 20.47 48.94 83.67
Cash Dividends Declared <F2>
First quarter 1996 . . . . . . . . . . . . . . $ .295 $ .295 $ 0 $ 1.19
Year ended December 31, 1995 . . . . . . . . . 1.18 1.18 2.00 4.82
Income Per Share Before Cumulative Effect of a
Change in Accounting Principle
Three months ended March 31, 1996 . . . . . . . $ .65 $ .64 $ 1.15 $ 2.62
Year ended December 31, 1995 . . . . . . . . . 2.43 2.41 6.23 9.85
____________________
<FN>
<F1> The pro forma equivalent per share amounts for ANB Common Stock
represent, in the cases of book value and income before cumulative
effect of a change in accounting principle, the pro forma amounts for
shares of First Hawaiian Common Stock multiplied by 4.0875 (the
Assumed Exchange Ratio) and, in the case of cash dividends declared,
the historical data for shares of First Hawaiian Common Stock
multiplied by 4.0875 (the Assumed Exchange Ratio).
<F2> The First Hawaiian pro forma cash dividends declared represent First
Hawaiian historical dividends.
</TABLE>
<PAGE>
THE ANNUAL MEETING
Date, Time and Place
The Annual Meeting will be held at the Tri-Cities Country Club,
located at 314 Underwood, Kennewick, Washington, at 1:00 p.m., local time, on
July 26, 1996.
Matters To Be Considered at the Annual Meeting
At the Annual Meeting, in addition to the election of directors,
holders of ANB Common Stock will be asked to consider and vote upon a
proposal to approve the Merger Agreement. Holders of ANB Common Stock also
will be asked to consider and vote upon a proposal to elect three directors
to the Board of Directors of ANB to serve for terms of three years and until
their successors are elected and qualified, or until the Effective Time.
Holders of shares of ANB Common Stock entitled to vote at the Annual Meeting
will also be entitled to consider and vote upon such other matters as may
properly be brought before the Annual Meeting.
The Board of Directors of ANB unanimously adopted the Merger
Agreement and the transactions contemplated thereby and recommends a vote FOR
approval of the Merger Agreement. The Board of Directors of ANB also
recommends a vote FOR the election of the proposed slate of directors.
Additional information with respect to the election of directors is
set forth below under the caption "Election of Directors".
Record Date; Shares Entitled to Vote; Quorum
The close of business on June 20, 1996 has been fixed by the Board
of Directors of ANB as the Record Date. Only holders of record of ANB Common
Stock on the Record Date will be entitled to notice of, and to vote at, the
Annual Meeting. On the Record Date, 149,824 shares of ANB Common Stock were
issued and outstanding and held by approximately 162 holders of record.
A majority of the shares of ANB Common Stock outstanding on the
Record Date must be represented in person or by proxy at the Annual Meeting
in order for a quorum to be present for purposes of voting on each of the
matters to be considered at the Annual Meeting.
<PAGE>
Holders of record of ANB Common Stock on the Record Date are
entitled to one vote per share on each matter to be considered at the Annual
Meeting.
Votes Required
The approval of the Merger Agreement will require the affirmative
vote of the holders of record of at least two-thirds of the shares of ANB
Common Stock outstanding on the Record Date. The approval of the Merger
Agreement by the requisite holders of ANB Common Stock is a condition to the
consummation of the Merger. None of the other matters to be considered at
the Annual Meeting must be approved by holders of ANB Common Stock in order
for the Merger to be consummated.
No approval by the shareholders of First Hawaiian is required in
order to approve the Merger Agreement and consummate the Merger.
As of the Record Date, directors and executive officers of ANB and
their affiliates owned and were entitled to vote 76,211 shares of ANB Common
Stock, which represented approximately 51% of the shares of ANB Common Stock
outstanding on the Record Date. Concurrently with the execution and delivery
of the Merger Agreement by ANB, certain holders of ANB Common Stock owning an
aggregate of 89,981 shares of ANB Common Stock, which represented
approximately 60% of the shares of ANB Common Stock outstanding on the Record
Date, including each director and each holder of more than 5% of the
outstanding ANB Common Stock, entered into Shareholder Voting Agreements
pursuant to which each such shareholder has agreed to vote for approval of
the Merger Agreement at the Annual Meeting. As of the Record Date, the
directors and executive officers of First Hawaiian did not own any shares
of ANB Common Stock. See "The Merger--Shareholder Voting Agreements".
The affirmative vote of the holders of a majority of the shares of
ANB Common Stock represented at the Annual Meeting and entitled to vote will
be required to elect ANB directors.
Additional information with respect to beneficial ownership of ANB
Common Stock and more detailed information with respect to beneficial
ownership of ANB Common Stock by ANB directors and executive officers is set
forth below under the captions "Certain Information Relating to ANB--Security
Ownership of Certain Beneficial Owners and Management" and "Election of
Directors".
Voting of Proxies
Shares represented by all properly executed proxies received in
time for the Annual Meeting will be voted at the Annual Meeting in the manner
specified by the holders thereof. Proxies which do not contain voting
instructions will be voted FOR the Merger Agreement and FOR the election of
the directors nominated by the Board of Directors, and in the discretion of
the proxy holders as to any other matter that may properly come before the
Annual Meeting.
<PAGE>
ANB intends to count shares of ANB Common Stock held by
shareholders present in person at the Annual Meeting but not voting, and
shares of ANB Common Stock for which it has received proxies but with respect
to which holders of shares have abstained on any matter, as present at the
Annual Meeting for purposes of determining the presence or absence of a
quorum for the transaction of business.
For voting purposes, only shares voted for approval of the Merger
Agreement and shares represented by a signed proxy which fails to indicate
voting instructions will be counted as voting in favor of the Merger
Agreement. The abstention from voting with respect to approval of the Merger
Agreement by any shareholder who is present in person or by proxy at the
Annual Meeting will have the same effect as a vote against such approval.
Broker non-votes will have the same effect as a vote against approval of the
Merger Agreement. Neither abstentions nor broker non-votes will be
considered votes cast with respect to the election of directors.
Solicitation of Proxies
ANB will bear the cost of the solicitation of proxies from its
shareholders. In addition to solicitation by mail, the directors, officers
and employees of ANB and American National may solicit proxies from ANB's
shareholders by telephone or telegram or in person.
Revocation of Proxies
Any proxy given by a shareholder may be revoked before its exercise by
written notice to the Secretary of ANB, or by a subsequently dated proxy, or
in open meeting before the shareholder vote is taken. The shares represented
by properly executed, unrevoked proxies will be voted in accordance with the
instructions in the proxy.
ANB SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
<PAGE>
THE COMPANIES
First Hawaiian, Inc.
General. First Hawaiian is a holding company incorporated under
the laws of Delaware and registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and as a savings and
loan holding company under the Home Owners' Loan Act, as amended. First
Hawaiian, through its subsidiaries, operates a general commercial banking
business and other businesses related to banking. Its principal assets are
its investments in FHB, Pioneer, First Hawaiian Creditcorp, Inc. and First
Hawaiian Leasing, Inc., all of which are wholly-owned subsidiaries of First
Hawaiian. At March 31, 1996, First Hawaiian had consolidated total assets of
approximately $7.4 billion, total deposits of approximately $5.3 billion and
stockholders' equity of approximately $657.2 million. Based on assets as of
December 31, 1995, First Hawaiian was the second largest bank holding company
headquartered in Hawaii and the 72nd largest bank holding company in the
United States.
The principal executive offices of First Hawaiian are located at
1132 Bishop Street, Honolulu, Hawaii 96813. First Hawaiian's telephone
number is (808) 525-7000.
FHB. FHB, a Hawaii state-chartered bank and the oldest financial
institution in Hawaii, is a full-service bank conducting a general commercial
and consumer banking business and offering trust services. Its banking
activities include receiving demand, savings and time deposits for personal
and commercial accounts; making commercial, agricultural, real estate and
consumer loans; acting as a United States tax depository facility; providing
money transfer and cash management services; selling traveler's checks,
personal money orders, mutual funds and annuities; issuing letters of credit;
handling domestic and foreign collections; providing safe deposit and night
depository facilities; lease financing; and investing in U.S. Treasury
securities and securities of other U.S. government agencies and corporations
and state and municipal securities.
At March 31, 1996, FHB had total deposits of $4.5 billion and total
assets of $6.1 billion. FHB is not a member of the Federal Reserve System.
Its deposits are insured by the Bank Insurance Fund (the "BIF") of the
Federal Deposit Insurance Corporation (the "FDIC").
Pioneer. Pioneer, a federally chartered savings bank headquartered
in Honolulu, Hawaii, also is a subsidiary of First Hawaiian. Pioneer
operates nineteen branch offices located throughout the State of Hawaii and
its deposits are insured by the Savings Association Insurance Fund ("SAIF")
of the FDIC. As of December 31, 1995, Pioneer was the fourth largest SAIF-
insured institution in Hawaii in terms of total assets. First Hawaiian
recently announced its intention to merge Pioneer with and into FHB in 1997.
Other Subsidiaries. The Corporation's other major subsidiaries
include First Hawaiian Creditcorp, Inc., a FDIC-insured financial services
<PAGE>
loan company, and First Hawaiian Leasing, Inc., which is primarily engaged in
commercial equipment and vehicle leasing.
Recent Acquisition. In December 1995, First Hawaiian entered into
the Branch Purchase Transactions, pursuant to which First Hawaiian acquired
31 branches located in the states of Oregon, Washington and Idaho from
certain bank and thrift subsidiaries of U.S. Bancorp. Pursuant to the Branch
Purchase Transactions, which were consummated on May 31, 1996, First Hawaiian
and its subsidiaries purchased certain assets, including approximately $413
million in loans, and assumed certain liabilities, consisting principally of
approximately $687 million in deposits, for a deposit premium of 5.25%
(approximately $36 million) on the deposits assumed. To effect these
acquisitions, First Hawaiian organized a new bank subsidiary under Oregon
law, Pacific One Bank, which acquired the 27 branches located in Oregon and
Idaho. The four Washington Branches were acquired by Pioneer. The Branch
Purchase Transactions were accounted for using the purchase method of
accounting.
ANB Financial Corporation
ANB is a bank holding company organized under the laws of the State
of Washington and registered under the BHCA. At March 31, 1996, on a
consolidated basis, ANB had total assets of approximately $69.4 million,
total deposits of approximately $61.3 million and total shareholders' equity
of approximately $7.5 million. As of such date, ANB was the thirty-ninth
largest bank holding company in the State of Washington in terms of total
deposits.
ANB's sole bank subsidiary is American National, a national banking
association headquartered in Kennewick, Washington.
The principal executive offices of ANB are located at 7525 West
Canal Drive, Kennewick, Washington 99336, and ANB's telephone number is (509)
735-0451.
<PAGE>
THE MERGER
General
The Boards of Directors of ANB, First Hawaiian and Merger Sub have
each approved the Merger and the Merger Agreement, which provides for the
Merger of Merger Sub with and into ANB at the Effective Time, with ANB
continuing as the Surviving Corporation. As a result of the Merger, ANB will
become a wholly-owned subsidiary of First Hawaiian. This section of the
Proxy Statement/Prospectus describes certain aspects of this transaction,
including the principal terms of the Merger Agreement. A copy of the Merger
Agreement is attached to this Proxy Statement/Prospectus as Annex I and is
incorporated herein by reference. The description set forth below of the
terms of the Merger Agreement is qualified in its entirety by reference to
the Merger Agreement, which the shareholders of ANB are urged to read in its
entirety.
Background of the Merger
As part of a strategic planning effort, ANB's management and Board
of Directors undertook a review of the strategic alternatives available to
ANB for the future development of its business and the optimization of
shareholder value. The latest formal session dedicated to strategic planning
took place in December 1995. In connection with this review, ANB retained
Graham & Dunn, P.C. as legal counsel. A number of alternative strategies to
enhance ANB's earnings and competitive position were considered by the Board
of Directors of ANB in connection with this review, including (i) pursuing a
strategy of independence and growth through internal expansion in existing
and adjoining markets, (ii) growing through external expansion using
acquisitions in existing and adjoining markets, (iii) engaging in a public
offering of ANB Common Stock to assist in acquisitions and provide liquidity
to ANB's shareholders as part of the independence strategy and (iv) merging
with or being acquired by a larger institution.
In an attempt to pursue growth in its existing market, ANB
established a de novo branch in Richland, Washington in January 1994 and, in
November 1995, bid on three of the Washington Branches which First Hawaiian
was successful in acquiring. The Board established that without the growth
provided by the acquisition of these Washington Branches an initial public
offering of ANB Common Stock was not practical due to the asset size of ANB.
Potential acquisition targets were identified in five Eastern Washington
communities, two of which were served by the Washington Branches acquired by
Pioneer.
During the past several years, First Hawaiian has sought to expand
its banking operations into markets outside Hawaii and thereby diversify its
earnings base, broaden its access to core deposit sources and develop new
markets in which it could offer and sell banking and other financial products
and services. In furtherance of this strategy, in December 1995, First
Hawaiian successfully bid to acquire the 31 branches being divested in the
Branch Purchase Transactions by U.S. Bancorp in Oregon, Idaho and Washington
<PAGE>
in connection with its recently completed merger with West One Bancorp. At
the time it entered into definitive agreements with U.S. Bancorp for the
Branch Purchase Transactions, First Hawaiian noted publicly that it intended
to use the acquired branches as a platform for further expansion in the
Pacific Northwest, subject to the availability of suitable acquisition
opportunities.
As a result of their mutual interest in acquiring the Washington
Branches, senior management officers of First Hawaiian and ANB had become
generally familiar with the other organization. In January 1996, the
Chairman of First Hawaiian contacted the President and Chief Executive
Officer of ANB to arrange a meeting to discuss First Hawaiian's interest in
acquiring ANB.
On February 8, 1996, Messrs. Eerkes and Emery of ANB met with Mr.
Dods of First Hawaiian. This meeting was followed by a telephone conference
call on February 14, 1996 among Messrs. Eerkes and Emery and Messrs. Dods and
Karr.
Prompted in part by the unprecedented consolidation which occurred
in the banking industry in 1995, the availability of technology that
customers were beginning to demand and the increasing challenges faced by ANB
in competing with larger institutions for market share and acquisition
opportunities, on February 14, 1996, after ANB's unsuccessful bid to acquire
the Washington Branches, the ANB Board of Directors concluded that
shareholder value would be most effectively enhanced through a combination
between ANB and First Hawaiian. Accordingly, the Board of Directors of ANB
authorized Messrs. Eerkes and Emery to enter into negotiations with First
Hawaiian regarding a possible merger transaction.
During the remainder of February 1996 there were a number of
discussions and meetings between other senior officers of the two companies
and counsel for both parties. During this period, the terms of the Merger,
including the Exchange Ratio, were determined through arm's-length
negotiations between ANB and First Hawaiian. Also during this period,
Messrs. Eerkes and Emery remained in contact with individual members of the
Board of Directors of ANB to brief them on the status and progress of
discussions and to obtain the directors' views on various matters.
At a special meeting of ANB's Board of Directors held on February
26, 1996, the ANB Board of Directors, along with its counsel, Graham & Dunn,
P.C., reviewed the Merger Agreement and considered the potential benefit of
the proposed Merger to ANB and its shareholders, taking into account the
financial and valuation analyses of the Merger and the terms of the Merger
Agreement. At such meeting, Ragen MacKenzie presented its written opinion to
the effect that the consideration to be received by the holders of ANB Common
Stock would be fair to the shareholders of ANB from a financial point of
view. At the conclusion of this meeting, after consideration of the various
factors and for the reasons set forth below, the Board of Directors of ANB
unanimously determined that the proposed transaction was fair to and in the
best interest of ANB and its shareholders, and therefore authorized
management to execute and deliver the Merger Agreement and recommended the
<PAGE>
Merger Agreement be submitted to ANB's shareholders for approval. The Merger
Agreement was entered into on February 26, 1996.
Reasons for the Merger; Recommendation of the Board of Directors
ANB. The Board of Directors of ANB believes that the Merger with
First Hawaiian will provide ANB with substantially greater financial and
technological resources that will enable it to compete more effectively in
its home market and better serve its customers and communities. ANB's
shareholders will be able to obtain a premium over book value for their
shares on a tax-deferred basis while at the same time having the opportunity
to participate in First Hawaiian's future and to have the benefits of the
active trading market for First Hawaiian's Common Stock.
In reaching its decision to adopt the Merger Agreement, the Board
of Directors of ANB considered, among other things, (i) information
concerning the financial performance and condition, business operations,
capital levels, asset quality and prospects, including projected future
results, of First Hawaiian and ANB both as separate entities and after giving
effect to the Merger, (ii) current industry, economic and market conditions
and trends, including the likelihood of continuing consolidation and
increasing competition in the banking and financial services industries and
the growing importance of economies of scale to a banking institution's
ability to compete successfully in this changing environment, (iii) the
increasing cost and availability of technology, (iv) the structure of the
transaction, (v) the terms of the Merger Agreement, (vi) the opinion of its
financial advisor described below as to the fairness from a financial point
of view of the consideration to be received by the holders of ANB Common
Stock, (vii) the likelihood of obtaining required regulatory approval, (viii)
the changing legal environment for banking and financial services, (ix) the
impact of the Merger on the depositors, employees and customers served by ANB
and American National, (x) the availability of stock liquidity to ANB
shareholders and (xi) the compatibility of First Hawaiian's plans for ANB
with the strategic plan of ANB. In its decision to adopt the Merger
Agreement and recommend the Merger to its shareholders, the ANB Board of
Directors did not assign any relative or specific weights to the various
factors considered and individual directors may have given differing weights
to different factors.
The Board of Directors of ANB believes that the terms of the Merger
Agreement are fair to and in the best interests of ANB's shareholders. The
ANB Board of Directors has unanimously adopted the Merger Agreement and
recommends that the shareholders of ANB approve the Merger Agreement.
First Hawaiian. As discussed above under "--Background of the
Merger", First Hawaiian has begun to implement a strategy, through the Branch
Purchase Transactions and other steps, of establishing and developing a
competitive banking franchise in the State of Washington and neighboring
states in the Pacific Northwest. The Board of Directors of First Hawaiian
believes that ANB's experience in Washington community banking, as well as
its strong growth and financial performance in recent years, will
<PAGE>
significantly facilitate First Hawaiian's efforts to strengthen and diversify
its new Pacific Northwest banking franchise.
In addition, First Hawaiian's Board of Directors believes that the
acquisition of American National will, depending upon market conditions and
future acquisition opportunities, provide First Hawaiian with an additional
platform upon which to pursue further expansion opportunities in the State of
Washington and to integrate those operations with First Hawaiian's other
banking operations in the Pacific Northwest. As discussed under "Management
and Operations After the Merger--Operations After the Merger", First Hawaiian
anticipates that, at some time after completion of the Merger, it will cause
the Washington Branches acquired by Pioneer in the Branch Purchase
Transactions to be transferred to American National. First Hawaiian will
also evaluate the possibility of merging American National and Pacific One
Bank in order to fully integrate its operations in the Pacific Northwest.
However, First Hawaiian has no present plans in this respect.
Opinions of Financial Advisor
ANB has retained Ragen MacKenzie to act as its financial advisor in
connection with the Merger. On February 26, 1996 and on the date hereof,
Ragen MacKenzie delivered written opinions to the ANB Board of Directors.
The opinions of Ragen MacKenzie state that, based upon and subject to the
factors and assumptions set forth in such written opinions, and as of the
dates of each such opinion, the consideration to be received by the holders
of ANB Common Stock in the Merger (which was determined through arm's-length
negotiations between ANB and First Hawaiian) is fair, from a financial point
of view, to the holders of ANB Common Stock.
The full text of the written opinion of Ragen MacKenzie to the ANB
Board of Directors, dated as of the date of this Proxy Statement/Prospectus,
which sets forth the assumptions made, procedures followed, matters
considered and limits of the review undertaken by Ragen MacKenzie in
connection with the opinion, is attached hereto as Annex II and is
incorporated herein by reference. Holders of shares of ANB Common Stock are
urged to read such opinion in its entirety. The opinions of Ragen MacKenzie
are directed only to the fairness of the consideration to be received by
holders of ANB Common Stock in the Merger and do not constitute
recommendations to any holder of ANB Common Stock as to how to vote at the
Annual Meeting. The summary of the opinion of Ragen MacKenzie set forth
herein is qualified in its entirety by reference to the full text of the
opinion attached as Annex II.
In connection with its opinion dated February 26, 1996, Ragen
MacKenzie reviewed, among other things: (a) the Merger Agreement; (b) draft
financial statements and other information of ANB; (c) publicly available
financial statements and other information of First Hawaiian; (d) certain
internal financial statements, other financial and operating data concerning
ANB, and financial projections prepared by the management of ANB; (e) certain
publicly-available information with respect to Northwest banks and bank
holding companies and the trading markets for their securities; and (f) the
financial terms, to the extent publicly available, of certain comparable
<PAGE>
acquisition transactions in the Northwest that Ragen MacKenzie believed to be
relevant to its inquiry. Ragen MacKenzie also discussed the past and current
operations and financial condition and the prospects of ANB with Mr. Richard
C. Emery, President and CEO of ANB. No limitations were imposed by ANB with
respect to the investigations made or the procedures followed by Ragen
MacKenzie in rendering its opinions. In connection with its opinion dated
the date of this Proxy Statement/Prospectus, Ragen MacKenzie reviewed the
foregoing as well as this Proxy Statement/Prospectus. Ragen MacKenzie also
considered such financial and other factors as it deemed appropriate under
the circumstances and took into account its assessment of general economic,
market and financial conditions and its experience in other transactions, as
well as its experience in securities valuation and its knowledge of the
banking industry generally. Each of Ragen MacKenzie's opinions is
necessarily based upon the conditions as they existed and could be evaluated
on the date thereof and the information made available to Ragen MacKenzie
through the date thereof.
In conducting its review and arriving at its opinions contemplated
under the terms of its engagement by ANB, Ragen MacKenzie relied, without
independent investigation, upon the accuracy and completeness of all
financial and other information provided to it or publicly available and did
not assume any responsibility in any respect for the accuracy, completeness
or reasonableness of, or any obligation to verify, the same or to conduct any
appraisal of assets. Without limiting the generality of the foregoing, Ragen
MacKenzie relied upon the management of ANB as to the reasonableness of the
pro forma financial statements (including the underlying assumptions, the
adjustments giving effect thereto and the allocation of such adjustments) and
the reasonableness and achievability of the financial and operating estimates
(and the assumptions and bases therefor) discussed with Ragen MacKenzie, and
Ragen MacKenzie assumed that such estimates reflected the best currently
available estimates and judgments of the management of ANB and that such
estimates would be realized in the amounts and in the time periods estimated
by the management of ANB. Ragen MacKenzie did not make or obtain any
evaluations or appraisals of the property of ANB or First Hawaiian, nor did
Ragen MacKenzie examine any individual loan files. Ragen MacKenzie was
retained by ANB to express an opinion as to the fairness, from a financial
point of view, to the holders of ANB Common Stock, of the consideration to be
received in the Merger. Ragen MacKenzie was not authorized to and did not
solicit other indications of interest in acquiring ANB. Ragen MacKenzie did
not address ANB's underlying business decision to proceed with the Merger and
did not make any recommendation to the ANB Board of Directors or to the
shareholders of ANB with respect to any approval of the Merger.
With respect to the earnings estimates and financial forecasts
referred to above, Ragen MacKenzie has assumed that they were reasonably
based on the best currently available estimates and judgments of ANB's and
First Hawaiian's managements as to the future financial performance of ANB
and First Hawaiian, respectively. The estimates and financial forecasts were
based on numerous variables and assumptions that are inherently uncertain,
including without limitation factors related to general economic and
competitive conditions. Accordingly, actual results could vary significantly
from those reflected in such estimates. For the purpose of rendering its
<PAGE>
opinion dated as of the date of this Proxy Statement/Prospectus, Ragen
MacKenzie assumed that the valuation of ANB will be at least $16,767,300
(which represents 2.2 times the Determination Date Book Value calculated as
of December 31, 1995).
The following is a summary of the analyses Ragen MacKenzie utilized
in arriving at its opinion as to the fairness of the consideration to be
received by the holders of ANB Common Stock in the Merger that Ragen
MacKenzie delivered to the ANB Board of Directors on February 26, 1996.
Ragen MacKenzie arrived at its ultimate opinion based on the results of all
of the analyses performed assessed as a whole, including the principal
analyses described below, and did not draw any specific conclusions from or
with regard to any one method of analysis.
Peer Group Company Analysis. Using publicly available information,
Ragen MacKenzie compared selected financial information for ANB with similar
information for selected banks and bank holding companies that Ragen
MacKenzie deemed comparable. Such comparable companies included Cascade
Bancorp, Central Bancorporation, Centennial Bancorp, Columbia Bank, Baker
Boyer Bancorp, Northrim and West Coast Bancorp. The reference range
established based on this analysis, of between $10,730,000 and $12,194,000,
or $67.60 and $76.83 per share for ANB Common Stock, does not factor in the
control premium associated with an acquisition. The ANB valuation of at
least $16,767,300, or $105.64 per share, represents a premium of 38% to 56%
to this range.
Comparable Merger and Acquisition Analysis. Ragen MacKenzie
analyzed recent merger and acquisition activity in the banking industry in
similar geographic regions, placing particular emphasis on premiums to book
value. For this analysis, Ragen MacKenzie reviewed eleven transactions or
pending transactions. Excluding high and low data points, this analysis
showed acquisition prices paid that resulted in an average (i) 13.9 multiple
of net income; (ii) 1.9 multiple of book value; and (iii) 16.4% price-to-
assets ratio. While many of these transactions were not directly comparable
due to the differences in size and market capitalization, Ragen MacKenzie did
develop a reference range of between $12,969,000 and $14,481,000, or $81.71
and $91.23 per share for ANB Common Stock.
Discounted Cash Flow Analysis. Using discounted cash flow
analysis, Ragen MacKenzie estimated the present value of the future streams
of after-tax cash flows that ANB could produce through 2006 on a stand-alone
basis, under various circumstances, assuming ANB performed in accordance with
the earnings forecasts of ANB's management described herein as (a) a 5%
Growth Case, and (b) a 10% Growth Case. Ragen MacKenzie estimated the
terminal value for ANB Common Stock at the end of the period by two methods:
(i) applying multiples ranging from 1.4x to 2.2x to ANB's terminal year book
value, and (ii) projecting a perpetual growth rate of the terminal year's
after-tax cash flows. The cash flow streams and terminal values were then
discounted to present values using different discount rates (from 10% to
14%). This discounted cash flow analysis indicated a reference range of
between $11,952,000 and $14,610,000, or $75.30 and $92.05 per share.
<PAGE>
In connection with rendering its opinions to the ANB Board of
Directors, Ragen MacKenzie performed a variety of financial analyses which
are summarized above. Ragen MacKenzie believes that its analyses must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without consideration of all factors and analyses,
could create a misleading view of the analyses and the processes underlying
Ragen MacKenzie's opinions. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not necessarily
susceptible to partial analyses or summary description. With respect to the
comparable company analysis and bank merger and acquisition analysis
summarized above, no public company utilized as a comparison is identical to
ANB and such analyses necessarily involve complex considerations and
judgments concerning the differences in financial and operating
characteristics of the companies and other factors that could affect the
acquisition or the public trading value of the companies concerned.
In performing its analyses, Ragen MacKenzie made numerous
assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the control
of ANB or First Hawaiian. The analyses performed by Ragen MacKenzie are not
necessarily indicative of actual values, which may be significantly more or
less favorable than suggested by such analyses. Such analyses were prepared
solely as part of Ragen MacKenzie's analysis of the fairness of the
consideration to be received by holders of ANB Common Stock in the Merger and
were presented to the ANB Board of Directors in connection with the delivery
of Ragen MacKenzie's opinions. The analyses do not purport to be appraisals
or to reflect the prices at which a company might actually be sold. In
addition, as described above, Ragen MacKenzie's opinion and presentation to
the ANB Board of Directors was one of many factors taken into consideration
by the ANB Board of Directors in making its determination to adopt the Merger
Agreement. Consequently, the Ragen MacKenzie analyses described above should
not be viewed as determinative of the opinion of the ANB Board of Directors
with respect to the value of First Hawaiian or of whether the ANB Board of
Directors would have been willing to agree to a different exchange ratio.
The ANB Board of Directors retained Ragen MacKenzie based upon
Ragen MacKenzie's reputation, experience and expertise. Ragen MacKenzie is a
regionally recognized investment banking and advisory firm. Ragen MacKenzie,
as part of its investment banking and advisory business, is continually
engaged in the valuation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, and valuations for
estate, corporate and other purposes.
Pursuant to a letter agreement dated February 19, 1996 between ANB
and Ragen MacKenzie, ANB has agreed to pay Ragen MacKenzie fees as follows:
(i) $10,000, payable at the signing of the letter agreement (which has been
paid) and (ii) $40,000, contingent upon and payable at the closing of the
Merger.
<PAGE>
Structure of the Merger
Subject to the terms and conditions of the Merger Agreement and in
accordance with the RCW, at the Effective Time, Merger Sub will merge with
and into ANB. ANB will be the Surviving Corporation in the Merger, will
continue its corporate existence under Washington law under the name "ANB
Financial Corporation" and will become a wholly-owned direct subsidiary of
First Hawaiian. At the Effective Time, the separate corporate existence of
Merger Sub will terminate. The ANB Charter, as in effect immediately prior
to the Effective Time, will be the articles of incorporation of the Surviving
Corporation, and the Bylaws of ANB, as in effect immediately prior to the
Effective Time, will be the bylaws of the Surviving Corporation.
Merger Consideration
Conversion of Common Stock. Upon consummation of the Merger,
except as described below, each outstanding share of ANB Common Stock, other
than shares held in ANB's treasury or held by First Hawaiian or any wholly-
owned subsidiary of First Hawaiian or ANB (except for shares held by First
Hawaiian or any of its subsidiaries in a fiduciary or custodial capacity on
behalf of persons other than ANB or American National ("Trust Account
Shares") and shares acquired by First Hawaiian or any of its subsidiaries in
respect of debts previously contracted ("DPC Shares")), which will be
cancelled, and Dissenting Shares (see "--Rights of Dissenting Shareholders"
below), will be automatically converted into a number of fully paid and
nonassessable shares of First Hawaiian Common Stock equal to the Exchange
Ratio, which is defined as the quotient obtained by dividing (x) 2.2 times
the Determination Date Book Value Per Share by (y) the Valuation Price,
provided that such quotient is subject to adjustment in certain limited
circumstances described below under "--Adjustment of Exchange Ratio".
The "Determination Date Book Value Per Share" is defined in the
Merger Agreement to mean (i) the consolidated shareholders' equity of ANB as
of the thirtieth day prior to the scheduled Closing Date (the "Determination
Date"), determined in accordance with generally accepted accounting
principles, except that there shall be added to such shareholders' equity the
aggregate of the per share exercise prices for all shares of ANB Common Stock
issuable upon exercise of outstanding employee and other stock options,
divided by (ii) the number of shares of ANB Common Stock outstanding on the
Determination Date on a fully-diluted basis. As further described herein,
ANB has agreed in the Merger Agreement to take certain actions prior to the
Determination Date, including charging off certain loans, which may have an
impact on the Determination Date Book Value (see "--Conduct of Business
Pending Merger"). In addition, as further described herein, the
Determination Date Book Value Per Share shall be subject to further
adjustment in the event that ANB experiences a net loss during the period
from the Determination Date through the Closing Date.
The "Valuation Price" is defined in the Merger Agreement to mean
the average of the closing prices per share of First Hawaiian Common Stock
for the fifteen consecutive trading days commencing on the Determination
Date, as reported in The Wall Street Journal (the "Average Closing Price"),
<PAGE>
provided that if the Average Closing Price is less than or equal to $25.50,
the Valuation Price shall be $25.50, and if the Average Closing Price is more
than or equal to $31.16, the Valuation Price shall be $31.16.
Hawaiian and ANB currently anticipate that the Determination Date
will be June 30, 1996, and estimate that the Determination Date Book Value
Per Share will be $49.70. If the Valuation Price of First Hawaiian Common
Stock were $26-3/4 (equal to its closing price on June 21, 1996), then the
Exchange Ratio, based upon the foregoing assumptions, would be 4.0875.
Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted into one validly
issued, fully-paid and nonassessable share of common stock, par value $1 per
share, of the Surviving Corporation.
Determination and Adjustment of Determination Date Book Value Per
Share. The Merger Agreement provides that the Determination Date Book Value
Per Share shall be initially determined by ANB, which determination shall be
subject to review and objection by First Hawaiian and its auditors in
accordance with the procedures in the Merger Agreement. In the event that
the parties are unable to agree on the Determination Date Book Value Per
Share within two business days of any objection by First Hawaiian, the
Determination Date Book Value Per Share shall be finally determined by a firm
of nationally recognized public accountants selected by the parties.
Adjustment of Exchange Ratio. The Merger Agreement provides that
the Exchange Ratio is subject to adjustment in the following circumstances:
(a) In the event that ANB experiences a net loss during the period
from the Determination Date to the Closing Date, the Determination Date
Book Value Per Share, as determined as described above, shall be reduced
on the Closing Date by the amount of such net loss and the Exchange
Ratio shall be recalculated after giving effect to such reduction.
(b) If the Average Closing Price of First Hawaiian Common Stock is
less than $25.50, and as a result thereof the Board of Directors of ANB
notifies First Hawaiian of its intention to terminate the Merger
Agreement (see "--Termination" below), First Hawaiian has the option to
increase the Exchange Ratio to equal the quotient (rounded to the
nearest one-thousandth) obtained by dividing (x) $25.50 times the
Exchange Ratio then in effect by (y) the Average Closing Price. If
First Hawaiian does not exercise this option, the Merger Agreement will
terminate.
(c) The Exchange Ratio is subject to customary anti-dilution
adjustments in the event of the issuance by First Hawaiian of any stock
dividends or the subdivision, combination or reclassification of the
First Hawaiian Common Stock.
The Exchange Ratio was determined through arm's-length negotiations
between First Hawaiian and ANB.
Treatment of Stock Options. At least sixty days prior to the
Closing Date, each ANB Stock Option that is outstanding as of the date of the
Merger Agreement shall become vested and fully exercisable. Shares of ANB
Common Stock issued upon exercise of such ANB Stock Options will be converted
into shares of First Hawaiian Common Stock as set forth above (except that
any holder of such shares of ANB Common Stock who has taken the necessary
<PAGE>
steps under Chapter 23B.13 of the RCW to exercise dissenters' rights, as
described under "--Rights of Dissenting Shareholders" below, will not have
his or her shares converted). ANB Stock Options that are not exercised prior
to the Effective Time will terminate at the Effective Time. See "--Effect on
Employee Benefit and Stock Plans and Compensation".
Effective Time
The Effective Time will be the time of the filing of properly
executed articles of merger (the "Articles of Merger") with the Secretary of
State of the State of Washington or at such later time as is specified in the
Articles of Merger. The Merger Agreement may be terminated by either party
if, among other reasons, the Merger shall not have been consummated on or
before December 31, 1996. See "--Conditions to the Consummation of the
Merger" and "--Termination" below.
First Hawaiian and ANB currently anticipate that the Effective
Time will occur at the close of business on or about July 31, 1996.
Conversion of Shares; Procedures for Exchange of Certificates; Fractional
Shares
The conversion of ANB Common Stock into First Hawaiian Common Stock
will occur automatically at the Effective Time. As soon as practicable after
the Effective Time, FHB or another bank or trust company designated by First
Hawaiian, in its capacity as exchange agent (the "Exchange Agent"), will send
a transmittal form to each former ANB shareholder whose shares have been
converted. The transmittal form will contain instructions with respect to
the surrender of certificates previously representing ANB Common Stock to be
exchanged for First Hawaiian Common Stock.
ANB SHAREHOLDERS SHOULD NOT FORWARD ANB COMMON STOCK CERTIFICATES
TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. ANB
SHAREHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
After the Effective Time, each certificate that previously
represented shares of ANB Common Stock will represent only the First Hawaiian
Common Stock into which such shares were converted in the Merger and the
right to receive cash in lieu of fractional shares of First Hawaiian Common
Stock as described below.
Holders of certificates previously representing ANB Common Stock
will not be paid dividends or distributions declared following the Effective
Time on the First Hawaiian Common Stock and paid prior to the time of
surrender of such certificates or cash in lieu of fractional shares of First
Hawaiian Common Stock, until such certificates are surrendered to the
Exchange Agent for exchange. When such certificates are surrendered, any
cash to be paid in lieu of fractional shares of First Hawaiian Common Stock
or in respect of unpaid dividends will be paid without interest.
Holders of record of shares of ANB Common Stock immediately prior
to the Effective Time will be entitled, at and after the Effective Time, to
vote the number of shares of First Hawaiian Common Stock into which their
shares of ANB Common Stock were converted in the Merger, regardless of
<PAGE>
whether the certificates formerly representing such shares of ANB Common
Stock have been surrendered in exchange for certificates evidencing First
Hawaiian Common Stock.
All shares of First Hawaiian Common Stock issued upon conversion of
shares of ANB Common Stock (including any cash paid in lieu of any fractional
shares of First Hawaiian Common Stock) will be deemed to have been issued (or
paid) in full satisfaction of all rights pertaining to such shares of ANB
Common Stock.
No fractional shares of First Hawaiian Common Stock will be issued
to any ANB shareholder upon surrender of certificates previously representing
ANB Common Stock. For each fractional share that would otherwise be issued,
First Hawaiian will pay by check an amount equal to the product obtained by
multiplying the fractional share interest to which such holder would
otherwise be entitled by the Valuation Price.
Representations and Warranties
The Merger Agreement contains customary mutual representations and
warranties relating to, among other things, (a) corporate organization and
similar corporate matters; (b) the capital structures of each of ANB and
First Hawaiian; (c) the authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters; (d) the absence
of consents, approvals, orders, resolutions or forebearances required from a
governmental authority or third party; (e) the accuracy of information
contained in documents filed by First Hawaiian with the Commission, documents
filed by ANB with certain regulatory bodies and documents provided by ANB to
First Hawaiian; (f) the accuracy of information supplied by each of First
Hawaiian and ANB in connection with the Registration Statement, this Proxy
Statement/Prospectus and any applications submitted for regulatory approval;
(g) compliance with applicable laws; (h) the absence of material litigation;
(i) the absence of certain material changes or events since December 31,
1995; (j) required shareholder votes; and (k) brokers' and finders' fees. In
addition, the Merger Agreement contains customary representations and
warranties made by ANB relating to, among other things, (a) filing of tax
returns and payment of taxes; (b) contracts relating to certain employment,
consulting and benefits matters; (c) retirement and other employee plans and
matters relating to the Employee Retirement Income Security Act of 1974, as
amended; (d) subsidiaries; (e) title to properties; (f) absence of certain
material contracts; (g) absence of collective bargaining agreements and/or
labor disputes; (h) environmental matters; (i) absence of damage to mortgaged
properties; (j) deposit insurance; and (k) ownership of intellectual property
rights and licenses.
Conduct of Business Pending Merger
Pursuant to the Merger Agreement, First Hawaiian and ANB have each
agreed to take certain actions and use their respective reasonable best
efforts to cause the consummation of the Merger. In addition, ANB has
agreed, among other things, to carry on its businesses in the usual, regular
and ordinary course in substantially the same manner as conducted prior to
<PAGE>
the execution of the Merger Agreement and that neither it nor any of its
subsidiaries may, without the prior written consent of First Hawaiian and
Merger Sub:
(i) amend or propose to amend its articles of incorporation or
bylaws;
(ii) declare or pay any dividend or make any other distribution
in respect of its capital stock, except that any wholly-owned subsidiary
of ANB may declare and pay cash dividends, without restriction, to ANB
or any of its wholly-owned subsidiaries;
(iii) issue, reissue, sell or acquire shares of its capital stock,
other equity securities or voting debt or rights, options or warrants to
acquire any such securities, except that (a) ANB and its subsidiaries
may issue shares pursuant to the terms of any employee stock options
that were issued and outstanding as of the date of the Merger Agreement
and (b) wholly-owned subsidiaries of ANB may issue shares of capital
stock to ANB or any of its wholly-owned subsidiaries;
(iv) subdivide, combine, aggregate in any way or reclassify any
shares of its capital stock or redeem or repurchase any shares of such
capital stock;
(v) merge or consolidate with any other corporation, or convey
to another person, firm or corporation or encumber a material part of
its assets or capital stock or acquire all or substantially all the
assets of another person, firm or corporation, except pursuant to the
Merger;
(vi) enter into, amend or terminate any material contract,
arrangement or commitment, except as required by the Merger Agreement;
(vii) enter into, adopt, amend (except as required by law or the
Merger Agreement) or terminate any pension, retirement, profit sharing,
bonus, incentive, welfare benefit or any other employee benefit or
compensation plan or any agreement, arrangement, plan or policy between
ANB or any of its subsidiaries and one or more of their respective
directors, officers or employees;
(viii) increase in any manner the compensation or fringe benefits
of any director, officer or employee or pay any benefit not required by
any arrangement in effect on the date of the Merger Agreement;
(ix) enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or
employee of ANB or any of its subsidiaries of compensation or benefits
contingent upon the occurrence of the transactions contemplated by the
Merger Agreement;
(x) incur any indebtedness for borrowed money in excess of
$100,000, or assume, guarantee, endorse or otherwise become responsible
<PAGE>
for the obligations of any other individual or entity, other than
deposit liabilities and assumptions, endorsements and guarantees,
letters of credit, Federal Home Loan Bank borrowings, and Fed Funds
borrowings incurred or assumed in the ordinary course of American
National's banking business consistent with past practice;
(xi) make any investment in the capital stock or securities of
any other person, except for obligations of, or guaranteed by, the
United States of America and certain specified obligations set forth in
the schedules attached to the Merger Agreement; or
(xii) enter into any new line of business, materially change
lending, investment, liability management and other material management
policies, or incur or commit to incur any capital expenditures in excess
of $100,000 in the aggregate.
In addition, ANB agreed to take the following actions on or prior
to the Closing Date:
(i) amend the articles of association of American National to
eliminate provisions limiting shareholder nominations to the Board of
Directors of American National and provisions requiring ownership of
shares of American National by directors of American National and to
provide for board actions through telephonic meetings or by unanimous
written consent;
(ii) terminate deferred compensation agreements with Richard C.
Emery and Richard L. Peenstra;
(iii) cause American National to charge off certain specified loans;
(iv) cause American National's allowance for loan losses, as of the
Determination Date and after giving effect to the foregoing actions, to
be no less than 0.6% of the total loans of American National as of such
date (or such higher percentage as may be required pursuant to the rules
and regulations of the Office of the Comptroller of the Currency
("OCC")); and
(v) engage a qualified consultant to examine certain loan files of
American National, and make any increases to ANB's allowance for loan
losses that are designated by such consultant (provided that such
increases shall not exceed $136,000 in the aggregate).
No Solicitation
ANB has agreed in the Merger Agreement that neither ANB nor any of
its subsidiaries, officers or directors will solicit, initiate, endorse,
encourage, facilitate or participate in any negotiation or other proposals or
inquiries (including furnishing any nonpublic information concerning the
business, properties or assets of ANB or its subsidiaries) regarding an
acquisition of the shares or assets of ANB or its subsidiaries (an
"Acquisition Proposal"); provided, however, that the foregoing will not
<PAGE>
prohibit ANB from taking the following actions to the extent that the Board
of Directors of ANB has concluded in good faith, based on the written advice
of counsel, that such actions are required to prevent the ANB Board from
breaching its fiduciary duties to its shareholders under Washington law: (i)
furnishing information concerning ANB or American National to a person who
has made an unsolicited Acquisition Proposal pursuant to a confidentiality
agreement substantially similar to the confidentiality agreement entered
into with First Hawaiian, or (ii) engaging or entering into discussions or
negotiations with such person. ANB further agreed that in the event of
receiving such an Acquisition Proposal, it will furnish First Hawaiian with a
copy of such written proposal and a summary of the terms and conditions by
with such proposal was received.
Conditions to the Consummation of the Merger
Each party's obligation to effect the Merger is subject to various
conditions which include, in addition to other customary closing conditions,
the following:
(i) the truthfulness of representations and warranties, and
compliance with covenants in the Merger Agreement;
(ii) the Merger Agreement shall have been approved by the holders
of ANB Common Stock;
(iii) all necessary governmental approvals for the Merger,
including that of the Federal Reserve Board, shall have been obtained,
no proceedings challenging such approvals shall have been initiated, and
any waiting periods imposed by any governmental entity with respect to
the Merger shall have expired;
(iv) there shall not be pending any injunction or restraining
order, or proceedings for such injunction or restraining order,
prohibiting the consummation of the Merger, nor shall the Merger be
illegal under any applicable law;
(v) the Registration Statement shall have become effective and
no stop order suspending the Registration Statement shall have been
initiated or threatened;
(vi) all state securities laws and "blue sky" permits shall have
been obtained; and
(vii) such party shall have received an opinion of counsel to the
other party with respect to certain customary legal matters and shall
have received an opinion of its tax counsel dated as of the Closing Date
that (A) the Merger will be treated for federal income tax purposes as a
"reorganization" within the meaning of Section 368 of the Code and (B)
no gain or loss will be recognized for federal income tax purposes by
shareholders of ANB upon the exchange in the Merger of shares of ANB
Common Stock for shares of First Hawaiian Common Stock (except to the
<PAGE>
extent of any cash received in lieu of fractional shares) (see "--
Certain Federal Income Tax Consequences").
In addition, First Hawaiian's obligation to effect the Merger is
subject to the following additional conditions (any of which may be waived by
First Hawaiian):
(i) in approving the Merger, no governmental authority shall have
imposed a condition which First Hawaiian reasonably determines to be
materially burdensome to First Hawaiian or the Surviving Corporation or
which First Hawaiian reasonably believes would so adversely impact the
economic benefits of the Merger so as to render it inadvisable to
proceed with the Merger;
(ii) ANB shall have obtained the consent or approval of each person
whose consent or approval is required in order to permit the succession
of the Surviving Corporation, pursuant to the Merger, to certain
obligations, rights or interests of ANB or its subsidiaries, and First
Hawaiian shall have received certain third party consents specified in
the Merger Agreement;
(iii) ANB shall have delivered the resignations of all directors of
ANB and American National, other than those directors designated by
First Hawaiian to remain in office after the Effective Time; and
(iv) the number of shares of ANB Common Stock which may in
accordance with the RCW be Dissenting Shares shall be less than 10% of
the total number of shares of ANB Common Stock.
Regulatory Approvals Required
The Merger is subject to the prior approval of the Federal Reserve
Board under Section 3 of the BHCA. First Hawaiian filed an application for
such approval with the Federal Reserve Board on April 19, 1996, and such
approval was granted on June 17, 1996.
<PAGE>
Certain Federal Income Tax Consequences
The following describes the principal federal income tax
consequences of the Merger under the Code, assuming that the Merger is
consummated as contemplated herein. This discussion is based on current laws
and interpretations thereof, which are subject to change. The discussion
assumes that the ANB Common Stock exchanged by each holder in the Merger is
held as a capital asset as of the Effective Time and does not take into
account rules that may apply to holders of ANB Common Stock ("ANB
Shareholders") that are subject to special treatment under the Code
(including, without limitation, insurance companies, dealers in securities,
certain retirement plans, financial institutions, tax exempt organizations,
shareholders who acquired shares pursuant to the exercise of an employee
stock option or otherwise as compensation or foreign persons). Moreover, the
discussion does not address state, local or foreign tax consequences.
Consequently, each ANB Shareholder should consult his or her own tax advisor
as to the specific tax consequences of the Merger to that shareholder.
Tax Opinions. The obligations of First Hawaiian and ANB to
consummate the Merger are subject to the receipt of the opinions dated as of
the Closing Date of tax counsel outlined below, unless waived. Neither First
Hawaiian nor ANB has requested or will request an advance ruling from the
Internal Revenue Service (the "IRS") as to the tax consequences of the
Merger.
Simpson Thacher & Bartlett, counsel to First Hawaiian, and Knight,
Vale and Gregory, Inc., P.S., tax counsel to ANB, have advised First
Hawaiian and ANB, respectively, that, in the opinion of each of Simpson
Thacher & Bartlett and Knight, Vale and Gregory, Inc., P.S., based on
certain customary representations and assumptions referred to in such
opinions, (i) the Merger will be treated for federal income tax purposes
as a "reorganization" within the meaning of Section 368 of the Code and
(ii) no income, gain or loss will be recognized for federal income tax
purposes by ANB Shareholders upon the exchange in the Merger of shares
of ANB Common Stock for shares of First Hawaiian Common Stock (except
to the extent of any cash received in lieu of fractional shares).
Cash Received in Lieu of Fractional Shares. An ANB Shareholder who
receives cash in the Merger in lieu of a fractional share interest in First
Hawaiian Common Stock will be treated for federal income tax purposes as
receiving such fractional share interest and then redeeming it for cash.
Such an ANB Shareholder will recognize gain or loss as of the Effective Time,
in an amount equal to the difference between the amount of cash received and
the portion of the shareholder's adjusted tax basis in the shares of ANB
Common Stock allocable to the fractional share interest. Any gain or loss
will be capital gain or loss and will be long-term capital gain or loss if
the holding period for the fractional share interest deemed to be received
and then redeemed is more than one year.
<PAGE>
Cash Received by ANB Shareholders Who Exercise Dissenters' Rights.
A holder of ANB Common Stock who exercises dissenters' rights and who
receives cash in exchange for such holder's shares will be treated as having
received such payment in redemption of such shares. In general, the holder
will recognize capital gain or loss measured by the difference between the
amount of cash received and the holder's adjusted tax basis for the shares.
If, however, the holder owns (either actually or constructively under the
constructive ownership rules of Section 318 of the Code) any First Hawaiian
Common Stock immediately after the Merger, the cash payment made to such
holder could, in certain circumstances, be treated as dividend income. Under
the constructive ownership rules of the Code, a holder generally may be
considered to own stock that is owned by certain related individuals or
entities, as well as stock that the holder (or related individuals or
entities) has the right to acquire by exercising an option or converting a
convertible security. Each holder who contemplates exercising dissenters'
rights should consult such holder's own tax advisor as to the possibility
that any payment to such holder will be treated as dividend income. See
"--Rights of Dissenting Shareholders".
Tax Basis and Holding Period of First Hawaiian Common Stock. The
tax basis of the shares of First Hawaiian Common Stock received by the ANB
Shareholders will be the same as the tax basis of their ANB Common Stock
exchanged therefor (reduced by any amount allocable to a fractional share
interest for which cash is received). The holding period of the First
Hawaiian Common Stock in the hands of the ANB Shareholders will include the
holding period of their ANB Common Stock exchanged therefor.
Anticipated Accounting Treatment
The Merger will be accounted for by First Hawaiian under the
"purchase" method of accounting in accordance with generally accepted
accounting principles. Accordingly, First Hawaiian will allocate the
aggregate consideration paid in connection with the Merger to assets acquired
from ANB based on the estimated net fair values of such assets at the
Effective Time. Any portion of the purchase price that exceeds the
estimated net fair value of the assets acquired will be recorded as
goodwill, which will be amortized over no more than 25 years. The
results of operations of ANB will be included in the results of
operations of First Hawaiian only after the Effective Time.
Termination
The Merger Agreement may be terminated at any time prior to the
Effective Time: (i) by mutual consent of the parties; (ii) by either party
if the Merger Agreement shall not have been approved by the holders of ANB
Common Stock at the Annual Meeting; (iii) by either party if the consent of
the Federal Reserve Board, or any other governmental authority having
jurisdiction over the transactions set forth in the Merger Agreement, shall
have been denied, unless First Hawaiian shall have timely elected to appeal
such denial; (iv) by either party in the event of a material, uncured breach
by the other party; or (v) by any party not in default under the Merger
<PAGE>
Agreement if the Merger shall not have been consummated on or before
December 31, 1996.
In addition, if the Average Closing Price of First Hawaiian Common
Stock for the fifteen trading-day period commencing on the Determination Date
is less than $25.50, the ANB Board of Directors may elect to terminate the
Merger Agreement, provided that such termination shall not become effective
if First Hawaiian elects to increase the Exchange Ratio to the number
specified in the Merger Agreement. See "--Merger Consideration". In
determining whether to elect to terminate the Merger Agreement in these
circumstances, the ANB Board of Directors will take into account, consistent
with its fiduciary duties, all relevant facts and circumstances existing at
the time, including, without limitation, the market for financial institution
stocks in general, the relative value of First Hawaiian Common Stock in the
market and the advice of its financial advisors and legal counsel. By
approving the Merger Agreement, shareholders of ANB would be permitting ANB's
Board of Directors to determine, in the exercise of its fiduciary duties, to
proceed with the Merger even though the per-share consideration to be
received by such shareholders would be less than 2.2 times the Determination
Date Book Value Per Share because the Average Closing Price was less than
$25.50.
In the event of termination of the Merger Agreement by any party,
the Merger Agreement will become void and there will be no liability or
obligation on the part of First Hawaiian or ANB or their respective officers
or directors, other than under certain specified provisions of the Merger
Agreement dealing with brokers' and finders' fees, indemnification,
confidentiality agreements, expenses, liabilities or damages incurred as a
result of any intentional misrepresentation or intentional breach of the
Merger Agreement by a party and certain termination payments as set forth
below. See "--Fees and Expenses".
Amendment and Waiver
The Merger Agreement may be amended by an instrument in writing
signed on behalf of each party at any time (except that after the Merger
Agreement shall have been approved by the shareholders of ANB, no amendment
may be entered into that by law requires further approval by such
shareholders unless such further approval is obtained). Any party may, by an
instrument in writing signed on behalf of such party, waive compliance by any
other party with any term or provision of the Merger Agreement that such
other party was or is obligated to comply with or perform.
Fees and Expenses
First Hawaiian and ANB will each pay their own expenses in
connection with the Merger Agreement and the transaction contemplated
thereby, except that (a) ANB will pay all expenses incurred in connection
with obtaining the approval of the Merger Agreement by the shareholders of
ANB, including the costs of distributing this Proxy Statement/Prospectus and
of soliciting proxies and (b) First Hawaiian will pay all Commission filing
<PAGE>
fees and will bear the costs of obtaining approval of the Merger from banking
regulators.
If the Board of Directors of ANB (i) withdraws or modifies in a
manner reasonably expected to be adverse to First Hawaiian its recommendation
of the Merger, (ii) approves or recommends an alternative Acquisition
Proposal or (iii) terminates the Merger Agreement (other than as a result of
a breach by First Hawaiian or Merger Sub) after the receipt by ANB of an
Acquisition Proposal but prior to issuing its recommendation of the Merger at
the Annual Meeting, ANB will be required to pay First Hawaiian the greater of
(a) $150,000 or (b) one percent of the fair market value of the consideration
offered by the acquiror in the transaction that is the subject of the
Acquisition Proposal.
If the Merger Agreement is terminated because required regulatory
approval of the Merger is not obtained, First Hawaiian will be required to
pay ANB $100,000.
Effect on Employee Benefit and Stock Plans and Compensation
Early Vesting of Stock Options. At least sixty days prior to the
Closing Date, ANB will cause each ANB Stock Option (i) to become fully vested
and exercisable prior to the Closing Date and (ii) to terminate as of the
Effective Time, so that no ANB Stock Options are outstanding at such time.
Shares of ANB Common Stock acquired through the exercise of ANB Stock Options
prior to the Effective Date will be converted into First Hawaiian Common
Stock at the Exchange Ratio, unless the holder of such shares properly
exercises his or her right to dissent from the Merger. See "--Merger
Consideration" and "--Rights of Dissenting Shareholders".
Termination of Certain Deferred Compensation Agreements. Prior to
the Effective Time, ANB will terminate deferred compensation agreements
between ANB and each of Richard C. Emery and Richard L. Peenstra.
Interests of Certain Persons in the Merger
Certain members of the Boards of Directors and management of ANB
may be deemed to have certain interests in the Merger in addition to their
interests generally as shareholders of ANB. The Board of Directors of ANB
was aware of these interests and considered them, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby.
Indemnification. The Merger Agreement provides that First Hawaiian
will maintain all rights of indemnification existing in favor of the
directors, officers and employees of ANB to the fullest extent that ANB would
have been permitted to maintain such rights under Washington law and the ANB
Charter and By-Laws with respect to any action or omission occurring at or
prior to the Effective Time, including any actions or omissions which arise
out of, or relate to, the transactions contemplated by the Merger Agreement.
The Merger Agreement also provides that First Hawaiian will obtain directors'
<PAGE>
and officers' liability insurance on such parties for a period of three years
following the Effective Time, on terms no less advantageous than those
contained in policies currently maintained by ANB; provided that if the
annual premium payments for such insurance exceed 125% of the annual premiums
paid by ANB as of the date of the Merger Agreement, First Hawaiian is
required to use its best efforts to obtain the maximum coverage available at
an annual premium equal to 125% of such annual premium.
Directors. It is expected that the current Chairman of the Board
and the current President and Chief Executive Officer, respectively, of ANB
will become members of the Board of Directors of the Surviving Corporation as
of the Effective Time. The remaining four members of the Board are expected
to be current directors or members of senior management of First Hawaiian.
It also is expected that the current Chairman of ANB will be nominated and
elected as a director of FHB by First Hawaiian. In addition, First Hawaiian
has agreed with ANB that six of the ten directors of American National as of
the Effective Time may be designated by American National from the current
directors of American National. The remaining four directors of American
National will be designated by First Hawaiian. See "Management and
Operations After the Merger".
Early Vesting of Stock Options. Pursuant to the Merger Agreement
and the terms of the option agreements ANB Stock Options which were issued
and outstanding as of the date of the Merger Agreement will become fully
vested and exercisable prior to the Closing Date. See "--Effect on Employee
Benefit and Stock Plans".
Shareholder Voting Agreements
Concurrently with the execution and delivery of the Merger
Agreement, and as a condition and inducement thereto, certain shareholders of
ANB entered into Shareholder Voting Agreements pursuant to which each such
shareholder agreed to vote in favor of approving the Merger and approving and
adopting the Merger Agreement at the Annual Meeting. The Shareholder Voting
Agreements provide that if the shares that are the subject of any Shareholder
Voting Agreement are sold, the shareholder will obtain from the purchaser of
such shares an agreement in the same form as such Shareholder Voting
Agreement. The Shareholder Voting Agreements provide that nothing contained
therein shall limit the ability of any member of the Board of Directors of
ANB to vote in such person's capacity as director of ANB or to exercise his
or her fiduciary responsibilities in such capacity.
Ten shareholders, including all directors and all holders of
greater than 5% of the outstanding ANB Common Stock, owning in the aggregate
89,981 shares of ANB Common Stock, or 60% of the shares of ANB Common Stock
issued and outstanding as of the Record Date, have executed Shareholder
Voting Agreements.
<PAGE>
Resale of First Hawaiian Common Stock
The First Hawaiian Common Stock issued pursuant to the Merger will
not be subject to any restrictions on transfer arising under the Securities
Act, except for shares issued to any ANB Shareholder who may be deemed to be
an "affiliate" of First Hawaiian or ANB for purposes of Rule 145 under the
Securities Act. It is expected that each shareholder who may be deemed to be
an affiliate will enter into an agreement with First Hawaiian providing that
such affiliate will not transfer any First Hawaiian Common Stock received in
the Merger except in compliance with the Securities Act. This Proxy
Statement/Prospectus does not cover resales of First Hawaiian Common Stock
received by any person who may be deemed to be such an affiliate of First
Hawaiian or ANB.
Rights of Dissenting Shareholders
Holders of ANB Common Stock who so desire are entitled to relief as
dissenting shareholders under Chapter 23B.13 of the RCW ("Chapter 23B.13").
Failure to comply precisely with all of the provisions of Chapter 23B.13 will
result in the loss of dissenters' rights. The following summary is qualified
in its entirety by reference to Chapter 23B.13, the full text of which is
reprinted in its entirety as Annex III to this Proxy Statement/Prospectus.
An ANB shareholder who is entitled to vote at the Annual Meeting
and who wishes to be eligible for payment for his or her shares pursuant to
Chapter 23B.13 (a "Dissenting Payment") must:
(a) deliver to ANB, before the vote on the Merger Agreement is
taken at the Annual Meeting, written notice of such shareholder's intent
to demand payment for his or her shares if the Merger is effected; and
(b) not vote his or her shares in favor of the Merger and the
Merger Agreement.
A shareholder will be eligible for a Dissenting Payment only if he
or she dissents with respect to all of the shares of ANB Common Stock
beneficially owned by such shareholder.
Any written notice of intent to demand payment pursuant to clause
(a) of the immediately preceding paragraph should be mailed or delivered to
ANB Financial Corporation, 7525 West Canal Drive, Kennewick, Washington
99336, Attention: R. C. Emery. Because the written demand must be delivered
before the shareholder vote on the Merger Agreement, it is recommended,
although not required, that a shareholder using the mails use certified or
registered mail, return receipt requested (to confirm that timely delivery
has been made) and send such notice in a manner that ensures it will be
received by ANB prior to the Annual Meeting.
If the Merger Agreement is approved, ANB will send written notice
of such approval (within 10 days after the Annual Meeting) to each of the
shareholders who has satisfied the two conditions described above (a
"Dissenters' Notice"). Such notice will include the following:
<PAGE>
(a) an address to which shareholders must send demand for payment;
(b) instructions as to where and when certificates for
certificated shares of ANB Common Stock must be surrendered and
deposited;
(c) a statement to holders of uncertificated shares as to the
extent that the transfer of such shares will be restricted after the
holder's demand for payment is received by ANB;
(d) a form for demanding payment that requires the shareholder to
certify whether he or she acquired beneficial ownership of his or her
shares of ANB Common Stock prior to February 27, 1996, which was the
date on which the Merger was announced;
(e) a date as to when the above-described payment demand must be
received by ANB; and
(f) a copy of Chapter 23B.13.
To retain eligibility for a Dissenting Payment, an ANB Shareholder
that has complied with the requirements of Chapter 23B.13 must submit a
demand for payment, provide the certificate of ownership described in
paragraph (d) in the immediately preceding paragraph and deposit his or her
share certificates in accordance with the Dissenters' Notice. If the
shareholder fails to take each of these actions by the date specified in the
Dissenters' Notice, he or she will not qualify for a Dissenting Payment.
Within thirty days of the later of the Effective Time and timely
receipt of a properly completed demand for payment, accompanied by all other
required documents as set forth above, ANB will pay to each dissenter the
amount that ANB estimates to be the fair value of the dissenter's shares,
plus accrued interest from the effective date of the corporate action until
the date of the payment. Such payment will be accompanied by the most recent
interim and annual financial statements of ANB, a statement as to how ANB
estimated the fair value of the shares and how interest was calculated, a
statement describing the right to demand further payment if the dissenter
disagrees with the estimate of fair value and another copy of Chapter 23B.13.
With respect to shares acquired by a dissenting shareholder who was not a
beneficial owner of shares of ANB Common Stock prior to February 27, 1996
("After Acquired Shares"), ANB may condition payment upon such shareholder's
acceptance of ANB's fair value determination.
If a dissenter disagrees with ANB's estimate of fair value, he or
she may notify ANB, within 30 days of the dissenter's receipt of ANB's
payment or offer of payment of fair value, of his or her own estimate of fair
value. A dissenting shareholder may retain ANB's fair value payment
notwithstanding his or her provision of such notice (except in the case of
holders of After Acquired Shares, if ANB chooses to condition payment as
described above). Failure to provide such notice causes the dissenting
shareholder to forfeit the right to any additional payment.
<PAGE>
If ANB and any dissenter fail to agree upon the fair value of
shares of ANB Common Stock, ANB shall, within 60 days of ANB's receipt of any
demand for payment, commence a court proceeding to fix the fair value of the
dissenter's shares. The proceeding shall be commenced in the superior court
of the county in which ANB's principal office is located. All dissenters
whose demands remain unsettled shall be made parties to the action and shall
be served with a copy of the petition by registered or certified mail or by
publication. If ANB fails to institute such action, it must pay the amount
specified in the dissenter's demand for additional payment.
If an action is instituted by ANB, the court may appoint one or
more appraisers to receive evidence and make a recommendation to the court on
the question of fair value. Each dissenter made party to the proceeding
shall be entitled to judgment for the amount, if any, by which the court
finds the fair value of the dissenters' shares, plus interest, exceeds the
amount paid by ANB. Costs of a dissenters' rights proceeding generally are
assessed against ANB, but the court may assess costs against any dissenter
whose demand for payment was arbitrary, vexatious or not in good faith.
Attorneys' and experts' fees may be assessed in such amounts as the court
finds equitable.
Upon consummation of the Merger, dissenting shareholders will cease
to have any of the rights of a shareholder of ANB except the right to be paid
the "fair value" of their shares in accordance with Chapter 23B.13. The
right of a dissenting shareholder to payment shall terminate if (a) the
proposed transaction is abandoned or rescinded, (b) a court having
jurisdiction permanently enjoins or sets aside the transaction or (c) such
shareholder's demand for payment is withdrawn with the written consent of
ANB.
BECAUSE A PROXY CARD WHICH DOES NOT CONTAIN VOTING INSTRUCTIONS
WILL, UNLESS REVOKED, BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT, AN ANB
SHAREHOLDER WHO WISHES TO EXERCISE DISSENTERS' RIGHTS MUST EITHER (A) VOTE
AGAINST APPROVAL OF THE MERGER AGREEMENT AT THE ANNUAL MEETING, (B) NOT SIGN
AND RETURN HIS OR HER PROXY CARD OR (C) VOTE AGAINST, OR ABSTAIN FROM VOTING
ON, THE APPROVAL OF THE MERGER AGREEMENT IF HE OR SHE DOES SIGN AND RETURN
THE PROXY CARD.
It is a condition to the consummation of the Merger Agreement that
less than 10 percent of the shares of ANB Common Stock shall have qualified
for a Dissenting Payment under the provisions of Chapter 23B.13. See
"--Conditions to the Consummation of the Merger".
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Directors After the Merger
The Merger Agreement provides that from and after the Effective
Time, the Board of Directors of the Surviving Corporation will consist of the
directors of Merger Sub immediately prior to the Effective Time. It is
expected that First Hawaiian, as sole shareholder of Merger Sub, will take
<PAGE>
all necessary action to cause the following persons to become directors of
Merger Sub immediately prior to the Effective Time, so that such persons will
become directors of the Surviving Corporation from and after the Effective
Time:
Current Title
Name and Affiliation
-------------------- --------------------------------------------
Walter A. Dods, Jr. Chairman and Chief Executive
Officer and director of First
Hawaiian
Craig D. Eerkes Chairman of the Board and director
of ANB
Richard C. Emery President and Chief Executive
Officer and director of ANB
Howard H. Karr Executive Vice President
and Treasurer of First
Hawaiian
John K. Tsui President and director of First Hawaiian
Richard C. Williamson President and Chief Executive
Officer of Pacific One Bank
In addition, First Hawaiian and ANB have agreed that the initial
Board of Directors of American National at the Effective Time will consist of
ten directors, of which four will be designated by First Hawaiian and six
will be current directors of American National designated by ANB. It is
currently expected that Messrs. Dods, Karr, Tsui and Williamson will be the
four directors designated by First Hawaiian and that the six directors
designated by ANB will be Messrs. Eerkes and Emery, as well as Messrs.
Russell J. Dean, Leonard Dietrich, Neal Smiley and George Yoshino.
The Merger will have no effect on the composition of the Board of
Directors of First Hawaiian or on the boards of directors of any of its
existing subsidiaries, except that it is expected that upon consummation of
the Merger Mr. Eerkes will be nominated and elected to the Board of Directors
of FHB by First Hawaiian.
Management After the Merger
The Merger Agreement provides that from and after the Effective
Time, the officers of the Surviving Corporation will consist of the officers
of Merger Sub immediately prior to the Effective Time. It is expected that
First Hawaiian, as sole shareholder of Merger Sub, will take all necessary
action to cause the following persons to become officers of Merger Sub
immediately prior to the Effective Time, so that such persons will become
officers of the Surviving Corporation from and after the Effective Time:
<PAGE>
Office of
Name Surviving Corporation
----------------------- ---------------------------------------
Walter A. Dods, Jr. Chairman and Chief Executive
Officer
John K. Tsui Vice Chairman
Richard C. Williamson Vice Chairman
Richard C. Emery President
Howard H. Karr Vice President, Treasurer
and Chief Financial Officer
As of the date hereof, neither First Hawaiian nor ANB is aware of
any material relationship between First Hawaiian or its directors or
executive officers and ANB or its directors or executive officers, except as
contemplated by the Merger Agreement or as described herein or in the
documents incorporated by reference herein. In the ordinary course of
business and from time to time, First Hawaiian may do business with ANB,
First Hawaiian may enter into banking transactions with certain of ANB's
directors, executive officers and their affiliates, ANB may do business with
First Hawaiian, and ANB may enter into banking transactions with certain of
First Hawaiian's directors, officers and their affiliates.
Operations After the Merger
First Hawaiian currently intends that for a period of time
following the Merger, First Hawaiian will continue to operate ANB and
American National as independent subsidiaries retaining their current
respective names. First Hawaiian currently expects that some time after
completion of the Merger and the Branch Purchase Transactions, the Washington
Branches will be acquired by American National, which will then change its
name to Pacific One Bank, N.A.
DESCRIPTION OF FIRST HAWAIIAN CAPITAL STOCK
The following summary does not purport to be complete and is
subject in all respects to the applicable provisions of the DGCL, the First
Hawaiian Charter and the Bylaws of First Hawaiian.
The following description of the First Hawaiian capital stock
should be read carefully by holders of ANB Common Stock since, at the
Effective Time, each issued and outstanding share of ANB Common Stock will be
converted into a number of fully paid and nonassessable shares of First
Hawaiian Common Stock as determined by the Exchange Ratio. See "The Merger--
Merger Consideration".
<PAGE>
First Hawaiian is currently authorized to issue up to 50,000,000
shares of preferred stock, par value $5.00 per share (the "First Hawaiian
Preferred Stock") and 100,000,000 shares of First Hawaiian Common Stock. As
of the Record Date, 31,127,897 shares of First Hawaiian Common Stock were
issued and outstanding and 1,414,900 were held in treasury. As of the Record
Date, there were options outstanding under First Hawaiian's Stock Incentive
Plan to purchase approximately 615,165 shares of First Hawaiian Common Stock,
all of which shares were issuable solely out of First Hawaiian's treasury.
As of the Record Date, no shares of First Hawaiian Preferred Stock were
issued or outstanding.
Preferred Stock
Under the First Hawaiian Charter, the Board of Directors of First
Hawaiian is authorized to fix, by resolution, the designation of each series
of Preferred Stock and the voting rights, preferences as to dividends and in
liquidation, conversion and other rights, qualifications, limitations and
restrictions thereof.
In connection with the initial authorization of the First Hawaiian
Preferred Stock, the Board of Directors represented to stockholders of First
Hawaiian that, without the prior approval of the stockholders, it will not
issue shares of First Hawaiian Preferred Stock (i) for any defensive or
antitakeover purpose; (ii) to implement any stockholder's rights plan; or
(iii) with features intended to make any attempted acquisition of First
Hawaiian more difficult or costly, and that no First Hawaiian Preferred Stock
will be issued to any individual or group for the purpose of creating a block
of voting power to support management on a controversial issue. The
determination of whether any particular Board action complies with the
foregoing representations will involve questions of fact as to, among other
things, the effect of and the Board's reasons for taking such action.
Accordingly, a court's determination as to the applicability of the foregoing
provisions to a particular Board action would be dependent upon the facts and
circumstances relating to such action.
Common Stock
Holders of First Hawaiian Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors of First
Hawaiian, out of funds legally available for dividends.
Holders of shares of First Hawaiian Common Stock are entitled to
one vote per share on each matter presented for a vote, including the
election of directors. Holders of shares of First Hawaiian Common Stock have
noncumulative voting rights.
In the event of any liquidation, dissolution or winding up of First
Hawaiian, whether voluntary or involuntary, the holders of First Hawaiian
Common Stock are entitled to receive pro rata any assets distributable in
respect of shares of First Hawaiian Common Stock held by them, after payment
of all obligations of First Hawaiian and after satisfaction of the
<PAGE>
liquidation preferences of any First Hawaiian Preferred Stock that may be
outstanding at the time of such liquidation, dissolution or winding up.
Holders of First Hawaiian Preferred Stock and First Hawaiian Common
Stock have preemptive rights to subscribe for additional authorized shares of
any capital stock of First Hawaiian, unless the stockholders' action
authorizing an additional issue otherwise provides or the stock is being
issued pursuant to a merger with, or acquisition of, another corporation,
bank or trust company, to the extent deemed proper by the Board of Directors
of First Hawaiian. The current holders of First Hawaiian Common Stock have
waived their preemptive rights to acquire 20,049 shares of First Hawaiian
Common Stock reserved for issuance under First Hawaiian's Incentive Plan for
Key Executives and 200,000 shares of First Hawaiian Common Stock which may be
used in possible financing programs.
The issued and outstanding shares of First Hawaiian Common Stock
are, and the shares to be issued in the Merger will be, when so issued, fully
paid and nonassessable. Shares of First Hawaiian Common Stock are not
convertible into shares of any other class of capital stock, nor do they have
any redemption provisions.
American Stock Transfer and Trust Company is the transfer agent,
registrar and dividend disbursement agent for the First Hawaiian Common
Stock.
COMPARISON OF SHAREHOLDER RIGHTS
The following is a summary of material differences between the
rights of holders of First Hawaiian Common Stock and the rights of holders of
ANB Common Stock. The rights of holders of ANB Common Stock are determined
by reference to the laws of Washington (the state in which ANB is
incorporated), the ANB Charter and ANB's Bylaws. Upon conversion of shares
of ANB Common Stock into shares of First Hawaiian Common Stock pursuant to
the Merger Agreement, the rights of former ANB shareholders in such First
Hawaiian Common Stock will be determined by reference to the laws of Delaware
(the state in which First Hawaiian is incorporated), the First Hawaiian
Charter and First Hawaiian's Bylaws. The summary set forth below does not
purport to be complete discussion of, and is qualified in its entirety by
reference to, the governing law, charter and bylaws of each corporation.
Preemptive Rights
Shareholders of ANB Common Stock do not have preemptive rights to
acquire additional shares offered for sale by ANB. The First Hawaiian
Charter provides holders of First Hawaiian Common Stock with such preemptive
rights, as further described under "Description of First Hawaiian Capital
Stock".
<PAGE>
Voting Rights in Business Combinations
The RCW provides that two-thirds of the outstanding voting shares
entitled to vote must vote to approve mergers, consolidations, share
exchanges, dissolutions and sales of all or substantially all of the
corporation's assets. The DGCL requires the affirmative vote of a majority
of the outstanding shares of the corporation entitled to vote to approve
mergers, consolidations, dissolutions and sales of all or substantially all
assets of a corporation.
The RCW provides that no vote of the shareholders of a surviving
corporation is required to approve a merger if (i) the articles of
incorporation of the surviving corporation will not differ in any manner
other than any such amendments which could be adopted by the Board of
Directors without shareholder approval, (ii) each shareholder of the
surviving corporation prior to the merger shall hold the same number of
identical shares, (iii) the number of voting shares outstanding after the
merger plus the shares issuable pursuant to the merger will not exceed the
total number of voting shares authorized by the surviving corporation prior
to the merger, and (iv) the number of participating shares immediately after
the merger plus the number of participating shares issuable pursuant to the
merger will not exceed the total number of participating shares prior to the
merger.
The DGCL provides that no vote of the stockholders of a surviving
corporation is required to approve a merger if (i) the merger agreement does
not amend the certificate of incorporation of the surviving corporation, (ii)
each outstanding share prior to the merger will be either an outstanding
share or a treasury share after the merger and (iii) either no shares of
common stock of the surviving corporation are to be issued in the merger or
the number of shares so issued plus the number of shares of common stock into
which any securities to be issued are to be converted does not exceed 20% of
the surviving corporation's common stock outstanding prior to the merger.
Amendment of Articles/Certificate of Incorporation
Pursuant to the RCW, and subject to certain limited exceptions,
two-thirds of the voting shares of ANB must approve any amendment to the ANB
Charter.
Pursuant to the DGCL, a majority of the outstanding voting shares
of First Hawaiian is required to approve any amendment to the First Hawaiian
Charter.
Business Combinations with Interested Shareholders
The ANB Charter provides that if a merger, consolidation, share
exchange, dissolution or sale of all or substantially all of ANB's assets
involves a transaction between ANB, or any subsidiary thereof, and an
"interested shareholder" as defined below (an "Interested Shareholder
<PAGE>
Transaction"), the Interested Shareholder Transaction generally must be
approved as follows:
(a) by approval of two-thirds of the outstanding shares, not
including shares held by interested shareholders (except for purposes of
determining a quorum);
(b) by approval of a majority of ANB's Board of Directors, not
including directors who are directors or officers of, or have a material
financial interest in, or were nominated as a director in connection
with certain arrangements with, an interested shareholder; or
(c) by a determination of a majority of ANB's Board of Directors
(not including those directors set forth in (b) above) that the fair
market value of the consideration to be received by noninterested
shareholders for shares of any class of which shares are owned by any
interested shareholder is not less than the highest fair market value of
the consideration paid by any interested shareholder in acquiring the
shares of the same class within twenty-four months of the proposed
transaction.
The ANB Charter defines an "interested shareholder" as any person or
group of affiliated persons who beneficially owns 20% or more of the
outstanding voting shares of the corporation, provided that an interested
shareholder shall not be a person who, in good faith, is an agent, bank,
broker, nominee or trustee of another person who is not an interested
shareholder.
Section 203 of the DGCL provides that, subject to certain
specified exceptions, a corporation shall not engage in any business
combination with any interested stockholder (as defined below) for a period
of three years following the time that such stockholder became an interested
stockholder, unless
(a) prior to such time the board of directors of the corporation
approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder;
(b) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock outstanding at the
time the transaction commenced, excluding for purposes of determining
the number of shares outstanding those shares owned by (i) by persons
who are directors and also officers and (ii) employee stock option plans
in which employee participants do not have the right to determine
confidentially whether shares held will be tendered in a tender or
exchange offer; or
(c) at or subsequent to the time on which the business combination
is approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of the outstanding voting stock which is not owned by
the interested stockholder.
<PAGE>
The DGCL defines an "interested stockholder" as any person that (i)
is the beneficial owner of 15% or more of the outstanding voting stock of the
corporation or (ii) is an affiliate or associate of the corporation and was
beneficial owner of 15% or more of the outstanding voting stock of the
corporation at any time within the three-year period immediately prior to the
date on which it is determined whether such stockholder is "interested",
provided that the term interested stockholder generally shall not include any
person (a) who owned shares in excess of the 15% limitation prior to December
23, 1987 and continued to own such shares or (b) whose ownership of shares in
excess of the 15% limitation is the result of action taken by the
corporation, so long as such person does not later acquire additional shares
of the corporation except through further action of the corporation.
Shareholder Meetings; Action by Written Consent
The RCW and ANB's Bylaws provide that special meetings of
shareholders may be called by the Board of Directors or at least ten percent
of the voting shares outstanding. ANB's Bylaws further provide that a
special meeting may be called by any officer of ANB. The First Hawaiian
Charter provides that a special meeting of stockholders may be called by the
Board of Directors, the Chairman of the Board, the President or stockholders
representing not less than 25% of the capital stock of First Hawaiian.
The RCW requires unanimous consent for written consent in lieu of a
shareholder meeting. Under each of the DGCL and the First Hawaiian Charter,
written consent in lieu of a stockholder meeting is authorized if the same
number of consents as the number of votes necessary to authorize action at a
meeting are obtained.
Dividends
Under the RCW, a board of directors has the power to declare and
pay dividends in property or securities unless (i) such corporation is or
would be thereby made insolvent or (ii) the corporation's total assets would
be less than the sum of its liabilities plus, unless the charter permits
otherwise, the amount that would be needed to satisfy preferential rights of
shareholders if the corporation were to be dissolved at the time of such
distribution.
Under the DGCL, a board of directors is generally permitted to
declare and pay dividends out of surplus or out of net profits for the
current and/or preceding fiscal year, provided that such dividends will not
reduce capital below the amount of capital represented by all classes of
issued and outstanding stock having a preference upon the distribution of
assets. Also, under the DGCL, a corporation may generally redeem or purchase
its shares if such redemption or purchase would not impair the capital of the
corporation.
<PAGE>
Size and Classification of the Board of Directors
The ANB Charter provides that the size of the ANB Board of
Directors shall be determined by a resolution approved by at least two-thirds
of the existing ANB Board, provided that the ANB Board shall consist of not
fewer than six or more than twelve directors. Each of the First Hawaiian
Charter and the First Hawaiian Bylaws provides that the size of the Board of
Directors of First Hawaiian shall be fixed each year by the stockholders at
their annual meeting, provided that the number of directors shall be (i) not
less than three nor more than fifteen and (ii) an integral multiple of three.
Both the ANB Charter and the First Hawaiian Charter provide that
the Board of Directors may appoint candidates to fill vacancies on the Board
of Directors.
Each of the ANB Charter and the First Hawaiian Charter and First
Hawaiian Bylaws provides for the classification of the Board of Directors
into three classes, with directors serving staggered three-year terms.
The provisions in the First Hawaiian Bylaws regarding the size and
classification of the First Hawaiian Board may be amended only by the
affirmative vote of shareholders holding three-fourths of the shares entitled
to vote.
Removal of Directors
The ANB Charter provides that no director may be removed from
office without cause except by two-thirds vote of the shares then entitled to
vote at an election of directors. "Cause" for removal exists if the ANB
Board has reasonable ground to believe that ANB has suffered or will suffer
substantial injury as a result of the gross negligence or dishonesty of the
director whose removal is proposed.
Under the DGCL, directors of First Hawaiian cannot be removed from
office without cause. Pursuant to First Hawaiian's Bylaws, shareholders of
First Hawaiian may, at any special meeting, remove any director for cause by
majority vote. The First Hawaiian Bylaws define "cause" as malfeasance in
office, harassment of other directors or of the officers or employees of
First Hawaiian, or other conduct which, in the opinion of a majority of the
First Hawaiian Board, is inimical or prejudicial to the interests of First
Hawaiian.
Limitations on Liability and Indemnification
The RCW authorizes a corporation to include provisions in its
articles of incorporation that eliminate or limit the personal liability of
its directors to the corporation or its shareholders for monetary damages
regarding conduct as a director, provided that such provisions do not limit
such liability for acts or omissions that involve intentional misconduct by a
director or a knowing violation of law by a director, for unlawful
distributions or for any transaction in which the director will personally
<PAGE>
receive a benefit in money, property or services to which the director is not
legally entitled.
The RCW provides that, unless limited by the corporation's articles
of incorporation, a corporation shall indemnify a director or officer who was
wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the director or officer was a party because such person
was a director or officer of the corporation against reasonable expenses
incurred by the director or officer in connection with the proceeding. It
also states that, unless the corporation's articles of incorporation provide
otherwise, a director or officer may apply to a court for indemnification.
A corporation may, pursuant to the RCW, indemnify an individual who
was made party to a proceeding because the individual is or was a director,
officer, employee or agent against liability incurred in the proceeding if
(a) the person acted in good faith, (b) in the case of conduct in the
individual's official capacity with the corporation, that the individual's
conduct was in the corporation's best interests, or, in all other cases, that
the individual's conduct was at least not opposed to the corporation's best
interests, and (c) in the case of a criminal proceeding, the individual had
no reason to believe his or her conduct was unlawful. However, a corporation
may not indemnify such person in connection with a derivative action in which
such person was adjudged liable to the corporation, or in connection with any
other proceeding charging improper personal benefit to such person, whether
or not involving action in such person's official capacity, in which such
person was adjudged liable on the basis that he or she improperly received a
personal benefit. Moreover, the RCW limits indemnification in derivative
proceedings to reasonable expenses incurred in connection with such
proceeding.
Pursuant to the RCW, indemnification (in such circumstances set
forth above) must be approved by either (i) the board of directors by
majority vote of a quorum consisting of directors not parties to the
proceeding at issue, (ii) if a quorum cannot be obtained under "(i)", by
majority vote of a committee designated by the board of directors, which
shall consist of two or more directors who are not parties to the proceeding,
(iii) by special legal counsel or (iv) by a majority of disinterested
shareholders. Alternatively, authorization for broader indemnification may
be provided pursuant to the articles of incorporation, a bylaw adopted or
ratified by the shareholders or a resolution adopted or ratified, before or
after the event, by the shareholders.
The RCW also provides that any indemnification of a director in a
derivative action must be reported to the shareholders in writing.
The RCW authorizes corporations to purchase and maintain insurance
on behalf of an individual who is or was a director, officer, employee or
agent of such corporation or who, while serving in such capacity with the
corporation, is or was serving, at the request of the corporation, in a
similar capacity with another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
liability asserted against, or incurred by, the individual in that capacity
<PAGE>
or arising from the individual's status in such capacity, whether or not the
corporation would have the power to indemnify the individual for such
liability.
Pursuant to the ANB Charter, a director of ANB shall not be
personally liable to ANB or its shareholders for monetary damages arising
from any conduct as director, except that this limitation on liability shall
not apply to (i) acts or omission involving intentional misconduct by the
director or a knowing violation of law by the director, (ii) conduct that
violates Section 23A.08.450 of the Washington Business Corporation Act
(Section 23A.08.450, which addressed liability for unlawful distributions,
has since been recodified at Section 23B.08.310 of the RCW) or (iii) any
transaction from which the director will personally receive a benefit in
money, property or services to which the director is not legally entitled.
These limitations are subject to further amendment of the Washington Business
Corporation Act. Any repeal or modification of the indemnity provisions in
the ANB Charter shall not adversely affect any right or protection of a
director of ANB existing at the time of such repeal or modification.
The Bylaws of ANB provide that its directors or officers have the
right to contribution from ANB in actions where ANB is jointly liable. The
amount that ANB must contribute is determined by the relative fault of the
parties and certain equitable considerations. If a claim is made against ANB
in connection with an action brought against a director or officer, ANB must
be notified of the action and is entitled to participate in the action at its
own expense. The ANB Bylaws provide that if ANB assumes its own defense in
such proceedings, the officer or director must bear the expenses of retaining
his or her own counsel unless a conflict of interest exists between the
interests of ANB and the officer or director. Neither ANB nor the officer or
director may settle such an action without the other's written consent to the
settlement.
The ANB Bylaws also set forth the procedural requirements for
enforcing indemnification rights. A director or officer is presumed to be
entitled to indemnification upon submitting a written claim to ANB. ANB must
advance funds to cover certain expenses within 10 days of receiving the
written claim. The Bylaws of ANB further provide that if ANB does not pay
the claim within 60 days, the officer or director may bring suit against ANB
to recover unpaid amounts of the claim.
Pursuant to the ANB Bylaws, employees and agents of ANB may be
indemnified to the same extent as officers and directors at the discretion of
the ANB Board of Directors.
Pursuant to the DGCL, a corporation may indemnify any person in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than a derivative action by or in the right of such corporation), by reason
of the fact that such person is or was a director, officer, employee or agent
of such corporation, or is serving at the request of such corporation in such
capacity for another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
<PAGE>
and amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding, if such person acted in good faith and
in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of such corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.
The DGCL also permits indemnification by a corporation under
similar circumstances against expenses (including attorneys' fees) actually
and reasonably incurred by such persons in connection with the defense or
settlement of a derivative action or suit, if such person acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of such corporation, except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to such corporation, unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
To the extent that such person has been successful on the merits or
otherwise in defense of any action, suit or proceeding set forth above or any
claim, issue or matter therein, the DGCL requires the corporation to
indemnify such person against expenses (including attorneys' fees) actually
and reasonably incurred in connection therewith. Furthermore, the DGCL
provides that any indemnification to be made (unless ordered by the court)
must be authorized by (i) a majority vote of the directors who are not
parties to such action, suit or proceeding, even if such majority constitutes
less than a quorum, (ii) if there are no disinterested directors, or if the
disinterested directors so direct, by independent legal counsel in a written
opinion or (iii) by the stockholders.
The DGCL also provides that the indemnification described above
shall not be deemed exclusive of other indemnification that may be granted by
a corporation pursuant to its Bylaws, disinterested directors' vote,
stockholders' vote, agreement or otherwise.
In addition, the DGCL provides corporations with the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation in a similar capacity for another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against, and incurred by, him or her in any such
capacity, or arising out of his or her status as such, whether or not such
corporation would have the power to indemnify him or her against such
liability as described above.
The First Hawaiian Charter provides that, to the fullest extent
permitted by the DGCL as from time to time in effect, no director of First
Hawaiian shall be personally liable to First Hawaiian or its stockholders for
monetary damages for breach of fiduciary duty as a director.
<PAGE>
The First Hawaiian Bylaws provide that, to the extent permitted by
Delaware law as from time to time in effect, First Hawaiian shall indemnify
any person in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(whether or not a derivative action by or in the right of First Hawaiian) by
reason of the fact that such person is or was a director, officer, employee
or agent of First Hawaiian, or is serving at the request of First Hawaiian in
such capacity for another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed
to, the best interests of First Hawaiian, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct
was unlawful.
First Hawaiian's Bylaws require indemnification under circumstances
similar to those set forth above against expenses (including attorneys' fees)
actually and reasonably incurred by such persons in connection with the
defense or settlement of a derivative action or suit, if such person acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of First Hawaiian, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to such corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall
deem proper.
Pursuant to First Hawaiian's Bylaws, any indemnification made
pursuant to the indemnification provisions of First Hawaiian's Bylaws shall
be made only upon the authorization of (i) the Board of Directors of First
Hawaiian by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, (ii) if such a quorum is not
obtainable, or, even if such a quorum is obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel or (iii) by
the stockholders.
First Hawaiian's Bylaws also provide that indemnification
specifically provided for shall not be deemed exclusive of any other rights
to which those seeking indemnification may be entitled under any bylaw,
agreement, vote of disinterested directors, vote of the stockholders or
otherwise, both as to such person's official capacity and as to action in
another capacity while holding office. Moreover, First Hawaiian's Bylaws
provide that indemnification generally shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall enure to the
benefit of the heirs, executors and administrators of such a person.
In addition, First Hawaiian's Bylaws provide that First Hawaiian
may purchase and maintain insurance on behalf of any person who is or was an
director, officer, employee or agent of First Hawaiian, or is serving at the
request of First Hawaiian in such capacity for another corporation,
<PAGE>
partnership, joint venture, trust or other enterprise, against any liability
asserted against, and incurred by, such person in such capacity or arising
out of such capacity, whether or not First Hawaiian would have the power to
indemnify such person against liability under the provisions of Article 11 of
First Hawaiian's Bylaws or of Section 145 of the DGCL, as amended.
Dissenters' Rights
Under Washington law, dissenters' rights are generally available in
the case of mergers, consolidations, share exchanges, the sale of all or
substantially all of the assets of the corporation, reverse stock splits or
any other transaction set forth in the corporation's articles of
incorporation or bylaws or board resolutions. For a further description of
dissenters' rights available to shareholders of ANB, see "The Merger-Rights
of Dissenting Shareholders" and Annex VI.
The DGCL provides for appraisal rights only in the case of mergers
and consolidations. In addition, the DGCL does not provide for appraisal
rights in a stock-for-stock merger if the stock received is listed on a
national securities exchange, held by more than 2,000 shareholders or if
stockholders are not entitled to vote on such a merger pursuant to the
certificate of incorporation.
CERTAIN INFORMATION RELATING TO ANB
Management's Discussion and Analysis of Financial Condition
and Results of Operations of ANB
The following discussion of ANB's consolidated financial condition
and results of operations is intended to be read in conjunction with, and is
qualified in its entirety by reference to, the selected consolidated
financial and other data, the consolidated financial statements and related
notes included elsewhere in this Prospectus/Proxy Statement.
Quarters ended March 31, 1996 and 1995
Overview. ANB had total assets of $69.4 million as of March 31,
1996, representing a 1.84% decrease over total assets of $70.7 million as of
March 31, 1995. This decrease in part was a result of the Hanford Federal
Reservation and Department of Energy work force reductions which had a
negative effect on the Tri-Cities economy, reducing the growth opportunity of
American National during that period, and generally reducing commercial bank
deposits in the Tri-Cities area by over $6 million. American National's bank
deposits declined $2,482,000 from March 31, 1995 to the same date in 1996. In
addition, expenses incurred in connection with the Merger during the first
quarter totaled $35,000 after tax, which decreased ANB's after-tax earnings.
Noninterest bearing deposits increased by more than $967,000 and earning assets
decreased by approximately $840,000 at March 31, 1996 compared to the same
date in 1995.
Net Income. For the quarters ended March 31, 1996 and 1995, ANB's
net income was $173,000 and $192,000 respectively. This decrease of $19,000
is attributed primarily to the expenses associated with the Merger.
<PAGE>
Operating income before expenses relating to the Merger increased 8.97% from
the first quarter of 1996 compared to the same period in 1995.
Net Interest Income. For the quarter ended March 31, 1996,
total interest income increased by $103,000 from $1,319,000 for the quarter
ended March 31, 1995 to $1,422,000 for the quarter ended March 31, 1996 and
net interest income increased $35,000 from $973,000 to $1,008,000. For
the same period, yields on loans decreased by .54%, yields on investments
increased by .20%, the overall yield on earning assets increased by .38%, and
the interest cost of deposits which funded earning assets increased by .33%.
The net interest margin in the first quarter of 1996 remained at the same
percentage (6.32%) and increased in dollars by $35,700 over the comparable
period in 1995.
Noninterest Income and Expense. Noninterest income increased in
the first quarter of 1996 by $72,000 from $130,000 for the quarter ended
March 31, 1995 to $202,000 for the quarter ended March 31, 1996. During the
first quarter of 1995, losses were taken in the investment portfolio totaling
$58,000 which increased the spread as compared to the same period in 1996.
Noninterest expense for the quarter ended March 31, 1996 increased $98,000
compared to the quarter ended March 31, 1995.
Years Ended December 31, 1995 and 1994
Overview. ANB's 1995 results demonstrated an improved trend of
profitability over 1994, with net income reaching $933,000 for the year ended
December 31, 1995. Total assets increased 2.16% to $73,642,000 at December 31,
1995 compared to $72,087,000 at December 31, 1994.
Net Income. For the years ended December 31, 1995 and 1994, ANB's
net income was $933,000 and $698,000, respectively. Income increased
$235,000, or 33%, in 1995 compared to 1994. ANB's increased net income in
1995 was due largely to several events, one of which was the opening of the
Richland Branch in January of 1994. Although the Richland Branch had
negative earnings in 1994, by December 31, 1995 it had grown to a deposit
base of over $9 million which allowed it to be a positive contributor to
profits in 1995. In addition, in 1995, American National also concentrated
on an internal restructuring, which included the closing of the West Richland
Branch, the deposits of which are now serviced by the new Richland Branch,
and the reduction of staff by almost 20%. The results of these efforts
increased earnings per share from $4.66 per share in 1994 to $6.23 in 1995.
Net Interest Income. For the year ended December 31, 1995,
total interest income increased $1,149,000 over 1994. For the same period,
yields on loans increased by .2%, yields on investments increased by 1.02%,
the overall yield on earning assets increased by 1.0%, and the interest cost
of deposits which funded earning assets increased by .78%. The net interest
margin for the year ended December 31, 1995 increased 1.22% from 1994 to 6.14%
and increased in dollars by $526,000 over the comparable period in 1994.
Noninterest Income and Expense. Noninterest income decreased at
December 31, 1995 by $30,000 from $824,000 at December 31, 1994 to $794,000
at December 31, 1995. Noninterest expense for the year ended December 31,
<PAGE>
1995 increased $78,000 to $3,229,000 at December 31, 1995 compared to
$3,151,000 at December 31, 1994.
Loan Portfolio
Types of Loans. The following table sets forth the composition of
American National's loan portfolio by type of loan as of the date indicated.
The composition of loans at March 31, 1996 and at December 31, 1995 and 1994,
respectively, was as follows:
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------
At March 31, 1996 1995 1994
-------------------------- -------------------------- ---------------------------
Amount % of Total Amount % of Total Amount % of Total
------------ ------------ ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial & Agricultural . . . . . . . . $ 8,552 17.87% $ 7,722 17.06% $ 6,357 18.27%
Construction-Real Estate . . . . . . . . 230 0.48 1,138 2.51 685 1.97
1-4 Family Real Estate . . . . . . . . . 16,802 35.10 16,508 36.47 12,004 34.51
Non Residential Real Estate . . . . . . . 11,022 23.03 8,992 19.87 7,981 22.94
Consumer . . . . . . . . . . . . . . . . 11,259 23.52 10,905 24.09 7,760 22.31
-------- ------ -------- ------ -------- ------
Total Loans . . . . . . . . . . . . . . . $ 47,865 100.00% $ 45,265 100.00% $ 34,787 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
Risk Elements. The following table states, at March 31, 1996 and
at December 31, 1995 and 1994, non-accrual and past due loans:
<TABLE>
<CAPTION>
At December 31,
----------------------------------
At March 31, 1996 1995 1994
----------------- ---------------- ----------------
(in thousands)
<S> <C> <C> <C>
Non-accrual loans . . . . . . . . . . . . . . . . $36 $51 $6
Accruing loans past due 90 days or more . . . . . $11 $41 $0
</TABLE>
Non-Performing Loans. Accrual of interest on loans is discontinued
when reasonable doubt exists as to the collectibility of the loan or the
unpaid interest, or when payment of principal or interest is contractually 90
days past due, unless the loan is well secured and in the process of
collection. Upon such discontinuance, the loan is placed on nonaccrual
<PAGE>
status and any accrued but unpaid interest is charged against income in that
period. Accrual of interest is resumed only when the borrower demonstrates
an ability to make scheduled payments of both principal and interest.
Interest income on non-accrual loans that would have been recorded
in the period ended March 31, 1996 and for the period ended December 31, 1995,
had those loans performed in accordance with their original terms, was
insignificant.
At March 31, 1996, there were no commitments to lend additional
funds to borrowers whose loans were classified as non-accrual. ANB is not
aware of any loans that continue to accrue interest at March 31, 1996 that
management reasonably expects will have a materially negative impact on
future operating results, or any material credits as to which management is
aware of any information which causes it to have doubts as to the ability of
the borrowers to comply with the terms of such credits.
Summary of Loan Loss Experience
Analysis of Allowance for Loan Losses. American National maintains
its allowance for loan losses at a level sufficient to provide for estimated
loan losses based on evaluating known and inherent risks in its loan
portfolio. Management determines the adequacy of the allowance based on
reviews of individual credits, recent loss experience, current economic
conditions, the risk characteristics of classified loans, and other pertinent
factors. Credits deemed uncollectible are charged to the allowance.
Provisions for credit losses and recoveries on loans previously charged off
are added to the allowance. The following is an analysis of the activity in
the allowance for loan losses for the period ended March 31, 1996 and the years
ended December 31, 1995 and 1994:
<PAGE>
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31, For the Year Ended December 31,
-----------------------------------------
1996 1995 1994
------------------- ------------------- ------------------
(in thousands)
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . . . $ 272 $ 200 $ 175
Chargeoffs:
Commercial and Agricultural . . . . . . . . . . . . . . . . . 27 49 35
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . 15 58 73
------- ------- -------
42 107 108
------- ------- -------
Recoveries:
Commercial and Agricultural . . . . . . . . . . . . . . . . . 3 18 44
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4 31
------- ------- -------
3 22 75
------- ------- -------
Net (charge-offs) recoveries . . . . . . . . . . . . . . . . . . (39) (85) (33)
Provision charged to operations . . . . . . . . . . . . . . . . . 53 157 58
------- ------- -------
Balance at end of period . . . . . . . . . . . . . . . . . . . . $ 286 $ 272 $ 200
------- ------- -------
Ratio of net (charge-offs) recoveries to average outstanding
during period . . . . . . . . . . . . . . . . . . . . . . . . .08% .22% .11%
Average loans outstanding during the period . . . . . . . . . . . $46,553 $39,500 $30,393
</TABLE>
Allocation of the Allowance for Loan Losses. The following is a
breakdown of the allowance for loan losses for March 31, 1996 and for
December 31, 1995 and 1994:
<PAGE>
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------
At March 31, 1996 1995 1994
-------------------------- -------------------------- ---------------------------
% of Total % of Total % of Total
Amount Allowances Amount Allowances Amount Allowances
------------ ------------ ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial & Agricultural . . . . . . . . $115 40.00% $108 40.00% $ 80 40.00%
Construction-Real Estate . . . . . . . . 14 5.00 14 5.00 10 5.00
1-4 Family Real Estate . . . . . . . . . 14 5.00 14 5.00 10 5.00
Non Residential Real Estate . . . . . . . 14 5.00 14 5.00 10 5.00
Consumer . . . . . . . . . . . . . . . . 129 45.00 122 45.00 90 45.00
---- ------ ---- ------ ---- ------
Total Allowance . . . . . . . . . . . . . $286 100.00% $272 100.00% $200 100.00%
==== ====== ==== ====== ==== ======
</TABLE>
Historical net charge-offs are not necessarily accurate predictors
of future losses since net charge-offs vary from period to period due to
economic conditions and other factors that cannot be accurately measured.
Therefore, an evaluation based on historical loss experience of individual
loan categories is only one of the many factors considered by management in
evaluating the adequacy of the overall allocation and in determining the
amount of the provision for possible credit losses. The relative percentage
of the allowance allocated to specific loan types is based on management's
judgment and is not materially different from prior periods. At March 31,
1996 and December 31, 1995, the total of the allocation for possible credit
losses was, in management's opinion, adequate to provide for future losses.
Supervision and Regulation of ANB
General. As a bank holding company, ANB is subject to the BHCA,
which places ANB under the supervision of the Federal Reserve Board. In
general, the BHCA limits the business of bank holding companies to owning or
controlling banks and engaging in other activities related to banking.
Certain recent legislation designed to expand interstate branching and relax
federal restrictions on interstate banking will continue to be phased in over
the next two years and may expand opportunities for bank holding companies.
See "--Supervision and Regulation of American National--Interstate Banking
and Branching".
<PAGE>
Holding Company Structure.
Federal Reserve Board Regulation. ANB must obtain the approval of
the Federal Reserve Board: (1) before acquiring direct or indirect ownership
or control of any voting shares of any bank if, after such acquisition, it
would own or control, directly or indirectly, more than 5 percent of the
voting shares of such bank; (2) before merging or consolidating with another
bank holding company; and (3) before acquiring substantially all of the
assets of any additional banks. Until September 1995, the BHCA also
prohibited the acquisition by ANB of any such interest in any bank or bank
holding company located in a state other than Washington unless the laws of
the state in which such bank was located expressly authorized such
acquisition. Now, subject to certain state laws, such as age and contingency
laws, a bank holding company that is adequately capitalized and adequately
managed may acquire the assets of an out-of-state bank without regard to
whether such transaction is prohibited by the laws of any state.
ANB is required by the BHCA to file annual and quarterly reports
and such other reports as may be required from time to time by the Federal
Reserve Board. In addition, the Federal Reserve Board performs periodic
examinations of ANB and American National.
Holding Company Control of Nonbanks. With certain exceptions, the
BHCA prohibits bank holding companies from acquiring direct or indirect
ownership or control of voting shares in any company which is not a bank or a
bank holding company unless the Federal Reserve Board determines that the
activities of such company are so closely related to banking or managing or
controlling banks as to be a proper incident thereto. In making such
determinations, the Federal Reserve Board considers whether the performance
of such activities by a bank holding company would offer advantages to the
public that would outweigh possible adverse effects. For example, the
Federal Reserve Board has by regulation determined activities such as
operating an industrial loan company, industrial bank, savings association,
mortgage company, finance company, trust company, credit card company or
factoring company, performing certain data processing operations and
providing investment and financial advice are so closely related to banking
as to be a proper incident thereto within the meaning of the BHCA. On the
other hand, activities such as real estate brokerage and syndication, land
development, property management and underwriting of life insurance not
related to credit transactions are not so closely related to banking as to be
a proper incident thereto within the meaning of the BHCA. In the future, the
Federal Reserve Board may from time to time add to or delete from the list of
activities permissible for bank holding companies.
Transactions With Affiliates. ANB and American National are
affiliates within the meaning of the Federal Reserve Act and "covered
transactions" between affiliates are subject to certain restrictions.
Covered transactions include, subject to specific exceptions, loans by banks
to nonbank affiliates, investments by banks in securities issued by such an
affiliate, the taking of such securities as collateral and the purchase of
assets by a bank from such an affiliate. ANB and American National are also
<PAGE>
subject to certain restrictions with respect to engaging in the underwriting,
public sale and distribution of securities.
Tie-In Arrangements. ANB and American National are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, sale or lease of property or furnishing of services. For example,
with certain exceptions, neither ANB nor American National may condition an
extension of credit to a customer on either (1) a requirement that the
customer obtain additional services provided by it or (2) an agreement by the
customer to refrain from obtaining other services provided by a competitor.
State Law Restrictions. As a corporation chartered under the laws
of the State of Washington, ANB is also subject to certain limitations and
restrictions as provided under applicable Washington law.
Control Transactions. The Change in Bank Control Act of 1978, as
amended, prohibits a person or group of persons from acquiring "control" of a
bank holding company unless the Federal Reserve Board has been given 60 days'
prior written notice of the proposed acquisition and, within that time
period, the Federal Reserve Board has not issued a notice disapproving the
proposed acquisition or extending for up to another 30 days the period during
which such a disapproval may be issued. An acquisition may be made before
the expiration of the disapproval period if the Federal Reserve Board issues
written notice of its intent not to disapprove the action. Under a
rebuttable presumption established by the Federal Reserve Board, the
acquisition of 10 percent or more of a class of voting stock of a bank
holding company with a class of securities registered under Section 12 of the
Exchange Act would, under the circumstances set forth in the presumption,
constitute the acquisition of control.
In addition, any "company" would be required to obtain the approval
of the Federal Reserve Board under the BHCA before acquiring 25 percent (5
percent if the company is a bank holding company) or more of the outstanding
shares of ANB, or otherwise obtain control over ANB.
Supervision and Regulation of American National
General. Despite some recent legislative initiatives to reduce
regulatory burdens, banking remains a highly regulated industry. Legislation
enacted from time to time may increase the cost of doing business, limit or
expand permissible activities or affect the competitive balance between banks
and other financial and nonfinancial institutions.
Some of the significant areas of bank regulation are generally
discussed below.
Regulation of National Banks. American National, as a national
banking association, is subject to primary regulation and examination by the
OCC. It is also subject to regulation by the Federal Reserve Board and by
the FDIC. Federal statutes and regulations which govern American National's
operations relate to matters such as required reserves against deposits,
investments, loans, mergers and consolidations, borrowings, issuance of
<PAGE>
securities, payment of dividends, establishment of branches and other aspects
of operations. In addition, the National Bank Act restricts American
National to performing commercial banking business and engaging in activities
deemed to be incidental to the business of banking and provides that American
National may not invest in equity securities, except in its fiduciary
capacity. Moreover, the OCC has authority to prohibit a national bank from
engaging in what is considered to be an unsafe and unsound business practice.
Regulation of Management. Federal law: (1) sets forth
circumstances under which officers or directors of a bank may be removed by
the institution's primary federal supervisory agency, (2) places restraints
on lending by a bank to its executive officers, directors, principal
shareholders and their related interests and (3) prohibits management
personnel of a bank from serving as a director or in other management
positions of another financial institution whose assets exceed a specified
amount or which has an office within a specified geographic area.
Interstate Banking and Branching. The Interstate Act will, over
the next two years, permit nationwide interstate banking and branching. This
legislation generally authorizes interstate banking and relaxes federal law
restrictions on interstate branching. Individual states have the authority
to "opt out" of certain of these provisions. The Interstate Act currently
allows states to enact "opting-in" legislation that (1) permits interstate
mergers within their own borders before June 1, 1997 and (2) permits out-of-
state banks to establish de novo branches within the state. As of September
29, 1995, bank holding companies may purchase banks in any state and states
may not prohibit such purchases. Additionally, beginning June 1, 1997, banks
will be permitted to merge with banks in other states as long as the home
state of each merging bank has not opted out. The Interstate Act requires
regulators to consult with community organizations before permitting an
interstate institution to close a branch in a low-income area.
Effective June 6, 1996, the State of Washington enacted "opting-in"
legislation generally permitting interstate mergers, subject to certain
restrictions. Given that Washington State has permitted interstate banking
for a number of years, this legislation is not expected to have a profound
impact on banking in Washington.
Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"). As required by FDICIA, numerous regulations have been adopted by
federal bank regulatory agencies, including the following: (1) federal bank
regulatory authorities have established five different capital levels for
banks and, as a general matter, enable banks with higher capital levels to
engage in a broader range of activities; (2) the Federal Reserve Board has
issued regulations requiring standardized disclosures with respect to
interest paid on deposits; (3) the FDIC has imposed restrictions on the
acceptance of brokered deposits by weaker banks; (4) the FDIC has implemented
risk-based deposit insurance premiums; and (5) the FDIC has issued
regulations requiring state chartered banks to comply with certain
restrictions with respect to equity investments and activities in which the
banks act as a principal.
<PAGE>
FDICIA recapitalized the BIF and required the FDIC to maintain the
BIF and SAIF at 1.25% of insured deposits by increasing deposit insurance
premiums as necessary to maintain such ratio. FDICIA also required federal
bank regulatory authorities to prescribe, by December 1, 1993, (1) non-
capital standards of safety and soundness; (2) operational and managerial
standards for banks; (3) asset and earnings standards for banks and bank
holding companies addressing such areas as classified assets, capital and
stock price; and (4) standards for compensation of executive officers and
directors of banks. However, this provision was later modified to allow
federal regulatory agencies to implement these standards through either
guidelines or regulations.
Capital Adequacy Requirements. The Federal Reserve Board, the
FDIC, and the OCC (collectively, the "Federal Banking Agencies") have
established uniform capital requirements for all commercial banks. Bank
holding companies, such as ANB, are subject to similar capital requirements.
Failure to achieve and maintain adequate capital levels may give rise to
supervisory action through the issuance of a capital directive to ensure the
maintenance of required capital levels. In addition, banks are required to
meet certain guidelines concerning the maintenance of an adequate allowance
for loan and lease losses.
The Federal Banking Agencies' "risk-based" capital guidelines are
intended to make regulatory capital requirements more sensitive to
differences in risk profiles among banking organizations. The risk-based
ratio is determined by allocating assets and specified off-balance sheet
commitments into several categories, with more capital being required for the
categories perceived as representing greater risk. The risk weights assigned
to assets and credit equivalent amounts of off-balance sheet items are based
primarily on credit risk. Other types of exposure, such as interest rate,
liquidity and funding risks, as well as asset quality problems, are not
factored into the risk-based ratio. Such risks, however, are taken into
account in determining a final assessment of an organization's capital
adequacy. Banks and bank holding companies are required to achieve a minimum
total risk-based capital ratio of 8% and a minimum Tier 1 risk-based capital
ratio of 4%.
The Federal Banking Agencies also have adopted leverage ratio
standards that require commercial banks to maintain a minimum ratio of core
capital to total assets (the "Leverage Ratio") of 3%. Any institution
operating at or near this level is expected to have well-diversified risk,
including no undue interest rate risk exposure, excellent asset quality, high
liquidity and good earnings, and in general, to be a strong banking
organization without any supervisory, financial or operational weaknesses or
deficiencies. Any institution experiencing or anticipating significant
growth is expected to maintain capital ratios, including tangible capital
positions, well above the minimum levels (e.g., an additional cushion of at
least 100 to 200 basis points, depending upon the particular circumstances
and risk profile).
Regulations adopted by the Federal Banking Agencies pursuant to
FDICIA require the OCC and other Federal Banking Agencies to take "prompt
<PAGE>
corrective action" when a bank fails to meet its capital requirements. The
regulations establish and define five capital levels at which an institution
is deemed to be "well-capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." In order to be "well-capitalized," an institution must
maintain at least 10% total risk-based capital, 6% Tier 1 risk-based capital,
and a 5% Leverage Ratio. In order to be "adequately capitalized" an
institution must have at least 8% total risk-based capital, 4% Tier 1 risk-
based capital and a 4% Leverage Ratio. Increasingly severe restrictions are
imposed on the payment of dividends and management fees, asset growth and
other aspects of the operations of institutions that fall below the category
of being adequately capitalized. Undercapitalized institutions are required
to develop and implement capital plans acceptable to the appropriate Federal
Banking Agency. Such plans must require that any company that controls the
undercapitalized institution must provide certain guarantees that the
institution will comply with the plan until it is adequately capitalized. As
of December 31, 1995, neither ANB nor American National were subject to any
regulatory order, agreement or directive to meet and maintain a specific
capital level for any capital measure.
In August of 1995, each of the Federal Banking Agencies adopted a
final rule implementing the portion of Section 305 of FDICIA that requires
the banking agencies to revise their risk-based capital standards to ensure
that those standards take adequate account of interest rate risk. Effective
September 1, 1995, when evaluating the capital adequacy of a bank, the
Federal Banking Agencies' examiners will consider exposure to declines in the
economic value of the bank's capital due to changes in interest rates. A
bank may be required to hold additional capital for interest rate risk if it
has a significant exposure or a weak interest rate risk management process.
Concurrent with the publication of this final rule, the Federal Banking
Agencies proposed for comment a joint policy statement describing the process
the Federal Banking Agencies will use to measure and assess a bank's interest
rate risk. As indicated by both the final rule and the joint policy
statement, the Federal Banking Agencies intend, through a future proposed
rule, to incorporate explicit minimum requirements for interest rate risk
into their risk-based capital standards. Although the Federal Banking
Agencies have indicated that they anticipate any proposed capital requirement
would be based on the measurement framework described in the joint policy
statement, neither the likelihood that the Federal Banking Agencies will in
fact propose such a rule nor the actual requirements or standards established
by any such rule can be predicted at this time. Furthermore, any impact the
Federal Banking Agency activities discussed above may have on ANB or American
National cannot be predicted at this time.
FDIC Insurance. Generally, customer deposit accounts in banks are
insured by the FDIC for up to a maximum amount of $100,000. The FDIC has
adopted a risk-based insurance assessment system. Under this system,
depository institutions (such as American National) with BIF-insured deposits
are required to pay an assessment to the BIF ranging from $0 to $.27 per $100
of deposits based on the institution's risk classification. Banks at the
zero assessment rate will pay the statutory minimum of $2,000 per year for
<PAGE>
deposit insurance. The assessment range is significantly higher for SAIF-
insured deposits.
The risk classification is based on an assignment of the
institution by the FDIC to one of three capital groups and to one of three
supervisory subgroups. The capital groups are "well capitalized",
"adequately capitalized", and "undercapitalized". The three supervisory
subgroups are Group "A" (for financially sound institutions with only a few
minor weaknesses), Group "B" (for those institutions with weaknesses which,
if uncorrected, could cause substantial deterioration of the institution and
increases risk to the deposit insurance fund) and Group "C" (for those
institutions with a substantial probability of loss to the fund absent
effective corrective action).
Dividend History
American National first paid dividends in 1989 in the amount of
$1.00 per share. A dividend in the amount of $1.25 per share was paid in
1990. ANB was formed in 1990 and it paid a dividend in 1991 in the amount of
$1.25 per share. In May of 1992, American National acquired the two local
branches of First Interstate Bank. That transaction required additional
capital and, to meet that need, ANB suspended dividends until sufficient
capital was raised through a limited stock offering and retained profits to
meet regulatory and internal guidelines. The most recent dividend paid by
ANB was in 1995 in the amount of $2.00 per share.
Market Prices of ANB Common Stock
The most recent significant volume of transactions in ANB Common
Stock took place in the second quarter of 1993. At that time, ANB conducted
an intrastate stock offering of 37,500 shares of ANB Common Stock at a
purchase price of $40.00 per share. That offering was completely subscribed
for within a 60-day period and was structured at a multiple of 1.146 of the
resulting book value upon completion of the sale. Since the offering,
relatively few shares of ANB Common Stock have been sold. ANB has recorded
stock transactions in the aggregate of 775 shares of ANB Common Stock since
May 30, 1993. The individual sale prices ranged from 1.08 times the prior
year-end book value to 1.2 times prior year-end book value. During the last
half of 1993, 300 shares were traded at prices ranging from $36.00 to $40.00;
four sales were recorded in 1994 at prices ranging from $43.00 to $46.00; and
two sales occurred in February, 1995 at prices ranging from $48.00 to $52.00.
The ANB Common Stock is neither listed on an established exchange or quoted
on the Nasdaq National Market and trades of ANB Common Stock are generally
undertaken in private transactions. The foregoing information regarding the
trading prices for ANB Common Stock is based on information provided to
management of ANB and has not necessarily been verified with both parties to
the applicable transactions.
<PAGE>
Security Ownership of Certain Beneficial Owners
and Management
The following table sets forth information concerning beneficial
owners of ANB Common Stock as of March 31, 1996 by (i) the only persons known
to ANB to have beneficial ownership of more than five percent of the
outstanding shares of ANB Common Stock and (ii) all executive officers and
directors of ANB as a group.
<PAGE>
<TABLE>
<S> <C> <C>
5% Shareholders
Russell J. Dean 14,970 9.99%
7525 West Canal Dr. Kennewick, WA
99336
Leonard Dietrich 11,259 7.51%
7525 West Canal Dr. Kennewick, WA
99336
Craig D. Eerkes 12,271 8.19%
7525 West Canal Dr. Kennewick, WA
99336
Richard C. Emery 10,155<F1> 6.55%
7525 West Canal Dr. Kennewick, WA
99336
George Grant 14,970 9.99%
4220 W. Riverhaven
Pasco, WA 99301
Neal Smiley 9,235 6.16%
7525 West Canal Dr. Kennewick, WA
99336
George Yoshino 14,970 9.99%
7525 West Canal Dr.
Kennewick, WA 99336
All directors and executive officers
as a group (11 persons) 84,611<F2> 53.48%
____________________
<FN>
<F1> Includes 155 shares held in an IRA account for the benefit of Mr.
Emery and 5,000 shares which may be acquired within 60 days by the
exercise of stock options.
<F2> Includes 8,400 shares which may be acquired within 60 days by the
exercise of stock options.
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
In addition to approving the Merger, ANB's shareholders will be
asked to elect three directors to serve for a three-year term and until their
successors are elected and qualified, or until the Merger is consummated.
General
The ANB Charter provides that the number of directors must fall
within a range of six and twelve, the exact number to be determined by an
affirmative vote of at least two-thirds of the total number of directors then
in office. The Articles also provide that the Board of Directors may fill
vacancies created on the Board, provided that the number of directors
increased between shareholder meetings shall not exceed two.
Directors are elected for a term of three years and until their
successors have been elected and qualified. The ANB Charter requires that
the terms of the directors be staggered such that approximately one-third of
the directors are elected each year. Accordingly, the Board of Directors has
nominated Messrs. Eerkes, Faurholt and Grant for election as directors for
three-year terms to expire in 1999. If either Messrs. Eerkes, Faurholt or
Grant should refuse or be unable to serve, proxies will be voted for such
persons as shall be designated by the Board of Directors to replace any such
nominee. The Board of Directors presently has no knowledge that any of the
nominees will refuse or be unable to serve.
Other nominations, if any, may be made only in accordance with the
prior notice provisions contained in ANB's Bylaws.
Information With Respect to Nominees and Directors
Whose Terms Continue
The following tables set forth certain information with respect to
the nominees for director and for directors whose terms continue. The table
includes their ages, their principal occupations during the past five years,
and the year first elected or appointed a director of ANB or its predecessor.
The table also indicates the number of shares of ANB Common Stock beneficially
owned by each individual on March 31, 1996 and the percentage of ANB Common
Stock outstanding on that date that the individual's holdings represented.
Nominees for Director for Three Year Term Expiring 1999
<PAGE>
<TABLE>
<CAPTION>
Shares of ANB Common Stock and
Principal Occupation of Director Percentage of Class Beneficially
Name, Age and Tenure as Director During Last Five Years Owned on March 31, 1996
-------------------------------- -------------------------------- --------------------------------
<S> <C> <C>
Craig D. Eerkes (45), director President, Tri-City Oil Company 12,271
since 1982 (8.19%)
Harvey Faurholt (54), director Attorney 3,200<F1>
since 1982 (2.14%)
Ron Grant (47), director since Vice President, George Grant 2,320<F2>
1992 Construction Company (1.55%)
____________________
<FN>
<F1> Includes 1,900 shares held in the Horton Wilkins profit sharing trust
for the benefit of Mr. Faurholt.
<F2> Includes 820 shares held by Sirejab Partnership, of which Mr. Grant is
the managing partner.
</TABLE>
The Board of Directors recommends that you vote FOR the nominees to
be elected as directors.
<PAGE>
Directors With Term Expiring in 1997
<TABLE>
<CAPTION>
Shares of ANB Common Stock and
Principal Occupation of Director Percentage of Class Beneficially
Name, Age and Tenure as Director During Last Five Years Owned on March 31, 1996
-------------------------------- ------------------------------- --------------------------------
<S> <C> <C>
Richard C. Emery (55), director President and CEO ANB and 10,155<F1>
since 1982 American National (6.55%)
Neal Smiley (69), director since Vice President, Conover Insurance 9,235
1982 (6.16%)
George Yoshino (67), director President, Century 21 Products, 14,950
since 1982 Inc. (9.98%)
____________________
<FN>
<F1> Includes 155 shares held in an IRA account for the benefit of Mr.
Emery and 5,000 shares which may be acquired within 60 days by the
exercise of stock options.
</TABLE>
<PAGE>
Directors With Term Expiring in 1998
<TABLE>
<CAPTION>
Shares of ANB Common Stock and
Principal Occupation of Director Percentage of Class Beneficially
Name, Age and Tenure as Director During Last Five Years Owned on March 31, 1996
-------------------------------- -------------------------------- --------------------------------
<S> <C> <C>
Russell J. Dean (54), director President, Russ Dean Ford, Inc. 14,970
since 1982 (9.99%)
Leonard Dietrich (49), director President, Basin Disposal, Inc. 11,259
since 1991 (7.51%)
Joe G. Vincent (66), director Retired 1,651
since 1982 (1.10%)
</TABLE>
Information Regarding the Board of Directors and its Committees
The following sets forth information concerning the Board of
Directors and Committees of ANB during the fiscal year ended December 31,
1995.
Board of Directors. ANB held 14 Board meetings in 1995. Each
director attended at least 75 percent of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees on which he served.
Certain Committees of the Board of Directors. ANB's Board of
Directors has established an Audit Committee and a Compensation Committee.
The full ANB Board performs those functions typically performed by a
nominating committee.
Audit Committee. The main function of the Audit Committee includes
reviewing the plan, scope and audit results of the independent auditors, as
well as reviewing and approving the services of the independent auditors.
The Audit Committee reviews or causes to be reviewed the reports of bank
regulatory authorities and reports its conclusions to the Board of Directors.
The Audit Committee also reviews procedures with respect to ANB's records and
business practices, and reviews the adequacy and implementation of the
internal auditing, accounting and financial controls. The Audit Committee
held one meeting in 1995. For fiscal 1995, the Audit Committee consisted of
Messrs. Eerkes (Chairman), Emery, Faurholt, Grant and Smiley.
Compensation Committee. The Compensation Committee met once during
1995 for the purpose of setting executive officer compensation and reviewing
other officer and employee compensation and benefits, and for reviewing and
<PAGE>
recommending to the full Board stock option grants for executive officers.
The Compensation Committee consisted of Messrs. Eerkes (Chairman), Dean,
Emery, Vincent and Yoshino. Mr. Emery did not participate in any actions
taken by the Compensation Committee or the Board regarding his compensation.
Compensation of Directors. ANB and American National have
established a program by which each director receives $400 compensation for
each meeting attended and each non-employee director receives $150
compensation for each committee meeting attended.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of certain information
concerning compensation awarded to or paid by ANB for services rendered in
all capacities during the year ended 1995 to ANB's Chief Executive Officer,
the only employee of ANB whose annual salary and bonus exceeded $100,000
during those periods.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------------- --------------------------
Awards Payouts
Other Annual ------------ ------------
Name and Salary Bonus Compensation LTIP All Other
Principal Position Year <F1> <F2> <F3> Options Payouts Compensation
------------------ ----- ------------- --------- ---------------- ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Emery, 1995 $101,600 $11,001 $0 0 0 $3,131<F4>
President and CEO of ANB
and American National
____________________
<FN>
<F1> Includes directors fees paid to Mr. Emery in the fiscal year 1995 in
the amount of $5,600.
<F2> The amount appearing in this column reflects the bonus paid pursuant
to ANB incentive programs described below.
<F3> The named executive did not receive any perquisites or other personal
benefits in an aggregate amount equal to or exceeding the lesser of
(i) $50,000 or (ii) 10 percent of the executive's annual salary and
bonus for the year.
<F4> Includes contributions and credits paid by ANB for the benefit of Mr.
Emery under the combined 401(k) Profit Sharing Plan in the amount of
$56,927 for the fiscal year 1995.
</TABLE>
Stock Options
Options Granted in the Last Fiscal Year. No stock options were
granted during the 1995 fiscal year to the executive officer named in the
Summary Compensation Table.
Aggregated Option Exercises and Fiscal Year-End Value Table. The
following table sets forth certain information concerning exercises of stock
options pursuant to stock option plans by the named executive officer during
the year ended December 31, 1995 and stock options held at year end.
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Year End Option Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money Options at
Shares Options at December 31, 1995 December 31, 1995 <F1>
Acquired on Value ------------------------------ --------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------- ------------ ------------ ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Emery N/A N/A 2,000 3,000 $158,680<F2> $238,020<F2>
____________________
<FN>
<F1> According to the terms of the option agreement, all unexercised
options vest upon a change of control. In accordance with the
Merger Agreement, Mr. Emery intends to exercise all 5,000 options
before the consummation of the Merger.
<F2> Calculated based on an assumed per share value of ANB Common Stock
equal to the assumed pro forma equivalent per share value as of
June 21, 1996 of $109.34 (see "Summary--Stock Price and Dividend
Information") less the per share exercise price of Mr. Emery's
options of $30.00.
</TABLE>
Employment Agreements
Neither ANB nor American National has entered into employment
agreements with any of their respective executive officers.
Employee Benefit Plans
ANB Stock Option Plan. The directors of ANB adopted and the
shareholders approved the ANB Financial Corporation Employee Incentive Stock
Option Plan (the "Plan") for the purpose of providing additional incentives
to key employees of ANB, American National and any future subsidiaries. An
aggregate of 15,000 shares of authorized but unissued ANB Common Stock have
been reserved under the Plan for grant to such key employees.
The Plan provides for the issuance of options which qualify as
"incentive stock options" within the meaning of Section 422A of the Internal
Revenue Code. The exercise price of incentive options granted thereunder
shall not be less than 100% of the fair market value of the shares on the
date of grant of the options. All options granted under the Plan will expire
not more than ten years from the date of the grant.
On December 19, 1991, the Board of Directors of ANB approved the
grant of options to purchase a total of 5,000 shares to the President and
Chief Executive Officer, Richard C. Emery. On that and subsequent dates, an
additional 3,900 options have been granted to other key employees of ANB or
American National.
<PAGE>
ANB Employee Benefit Plan (401(k)). ANB and American National have
adopted a Profit Sharing Savings 401(k) Plan (the "401(k) Plan") which is
intended to qualify under the provisions of Section 401(k) of the Code.
Participants may elect to contribute, through salary deferrals, up to 15% of
their compensation. In addition, voluntary contributions may be made by a
participant until the participant's retirement date in an amount not to
exceed 10% of the participant's total earnings from ANB or American National
for the period of time the participant actually participated in the 401(k)
Plan. Contributions in the case of each individual may be subject to
limitations contained in the Code. Annually, ANB and American National
approve a profit sharing contribution on a discretionary basis which is added
to the 401(k) Plan.
ANB Incentive and Bonus Plans. ANB annually provides incentive
programs to individual participating employees. A participating employee may
be awarded incentive compensation if he or she meets individual targets or
goals or certain corporate targets are achieved.
Certain Transactions and Relationships
Most of ANB's directors and executive officers and their immediate
families are also customers of American National. It is anticipated that
such individuals will continue to be customers of American National in the
future. All customer and deposit transactions between American National and
its directors or executive officers and immediate family members were made in
the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and, in the opinion of management, did not
involve more than normal risk of collectibility or present other unfavorable
features.
AUDITORS
The financial statements included in First Hawaiian's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by Coopers
& Lybrand, L.L.P., independent public accountants, whose report thereon is
incorporated herein by reference to First Hawaiian's Annual Report on Form
10-K for the year ended December 31, 1995.
Knight, Vale and Gregory, Inc., P.S., independent auditors,
performed the audit of the consolidated financial statements for ANB and its
wholly-owned subsidiary, American National, for the year ended December 31,
1995. Representatives of Knight, Vale and Gregory will be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire. They also will be available to respond to appropriate questions.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought
before the shareholders at the Annual Meeting. However, if other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the proxy to vote the proxy in accordance with the
recommendation of management on such matters.
At the Annual Meeting, management will report on ANB's business
and ANB's shareholders will have the opportunity to ask questions.
<PAGE>
AVAILABILITY OF ANNUAL DISCLOSURE STATEMENT
The OCC has adopted regulations requiring all national banks (or
their parent holding companies) to prepare and make available to
shareholders, depositors and the general public an Annual Financial
Disclosure Statement, which contains certain specified information concerning
the financial condition of America National and ANB. All requests for the
disclosure statement should be directed to John Monroe, Secretary, ANB
Financial Corporation, 7525 West Canal Drive, Kennewick, Washington 99336;
(509) 735-0451.
LEGAL OPINIONS
The legality of the shares of First Hawaiian Common Stock to be
issued to holders of ANB Common Stock pursuant to the Merger will be passed
upon for First Hawaiian by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), New York, New York.
Certain federal income tax matters related to the Merger will be
passed upon for First Hawaiian by Simpson Thacher & Bartlett, New York,
New York, and for ANB by Knight, Vale and Gregory, Inc., P.S.
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
OF ANB FINANCIAL CORPORATION AND SUBSIDIARY
Independent Auditor's Report F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Income F-5
Consolidated Statements of Changes in Shareholders'
Equity F-7
Consolidated Statements of Cash Flows F-9
Notes to Financial Statements F-13
<PAGE>
Independent Auditors' Report
The Board of Directors
ANB Financial Corporation and Subsidiary
Kennewick, Washington
We have audited the accompanying consolidated balance sheets of ANB Financial
Corporation and Subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years then ended. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ANB
Financial Corporation and Subsidiary as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the method of accounting
for impaired loans was changed effective January 1, 1995, to conform with
Statement of Financial Accounting Standards Nos. 114 and 118.
/s/ KNIGHT, VALE & GREGORY, INC., P.S.
Tacoma, Washington
January 19, 1996
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
(Dollars in Thousands)
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
March 31, December 31,
1996 1995 1994
----------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
Assets
Cash and due from banks (Note 3) $ 1,749 $ 4,338 $ 5,067
Interest bearing deposits in banks 5,658 -- 480
Securities available for sale
(Note 4) 10,899 20,738 11,532
Securities held to maturity
(Note 4) -- -- 16,474
Loans (Note 5) 47,865 45,265 34,787
Less allowance for possible
credit losses (Note 5) 286 272 200
Net loans 47,579 44,993 34,587
Premises and equipment (Note 6) 2,137 2,132 2,334
Foreclosed real estate -- -- 121
Accrued interest receivable 430 505 487
Intangible assets 745 762 829
Other assets 166 174 176
Total assets $69,363 $73,642 $72,087
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Demand $18,687 $20,626 $19,756
Savings, NOW and money market 23,197 22,568 28,553
Time (Note 7) 19,392 22,264 14,027
Total deposits 61,276 65,458 62,336
Short-term borrowings (Note 8) -- 140 2,900
Accrued interest payable 323 293 123
Other liabilities 298 418 179
Total liabilities 61,897 66,309 65,538<PAGE>
Commitments and Contingencies
(Note 11) -- -- --
Shareholders' Equity
Preferred stock, no par value;
100,000 shares authorized;
none issued -- -- --
Common stock, par value
$1; 500,000 shares authorized;
149,824 shares issued
and outstanding 150 150 150
Surplus 3,769 3,769 3,769
Retained earnings (Note 14) 3,574 3,401 2,768
Unrealized gains (losses) on
securities for sale, net
of tax of ($14) in 1996, $7
in 1995 and ($71) in 1994 (27) 13 (138)
Total shareholders' equity 7,466 7,333 6,549
Total liabilities and
shareholders' equity $69,363 $73,642 $72,087
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
(Dollars in Thousands, Except Per Share Amounts)
ANB Financial Corporation and Subsidiary
Three Months Ended March 31, 1996 and 1995
and Years Ended December 31, 1995 and 1994
Three Months Ended Years Ended
March 31, December 31,
-------------------- ---------------------
1996 1995 1995 1994
--------- ---------- ---------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Interest Income
Loans $ 1,164 $ 936 $ 4,117 $ 3,087
Federal funds sold and
deposits in banks 32 14 45 133
Securities available for sale 226 140 522 509
Securities held to maturity -- 229 942 748
Total interest income 1,422 1,319 5,626 4,477
Interest Expense
Deposits 413 339 1,625 1,032
Short-term borrowings 1 7 32 2
Total interest expense 414 346 1,657 1,034
Net interest income 1,008 973 3,969 3,443
Provision for Possible Credit
Losses (Note 5) 53 12 157 58
Net interest income after
provision for possible
credit losses 955 961 3,812 3,385
Non-Interest Income
Service charges on deposit
accounts 115 132 517 518
Origination fees on mortgage
loans brokered -- 8 21 90
Gain (loss) on sale of
securities 7 (58) (51) (32)
<PAGE>
Gain on sale of loans 25 -- 38 96
Gain (loss) on sale of
fixed assets -- (1) 71 --
Other non-interest income 55 49 198 152
Total non-interest
income 202 130 794 824
Non-Interest Expenses
Salaries 355 336 1,381 1,324
Employee benefits (Note 9) 59 59 206 197
Occupancy 46 48 180 181
Furniture and equipment 59 65 289 278
Other non-interest expenses 378 291 1,173 1,171
Total non-interest expenses 897 799 3,229 3,151
Income before income taxes 260 292 1,377 1,058
Income Taxes (Note 10) 87 100 444 360
Net Income $ 173 $ 192 $ 933 $ 698
Earnings Per Share Data
Average number of common
shares outstanding 149,824 149,824 149,824 149,824
Net income per common share $ 1.15 $ 1.28 $ 6.23 $ 4.66
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
(Dollars in Thousands)
ANB Financial Corporation and Subsidiary
Three Months Ended March 31, 1996 and 1995
and Years Ended December 31, 1995 and 1994
Unrealized
Gains
(Losses)
on
Securities
Common Retained Available
Stock Surplus Earnings for Sale Total
------- ------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994 $150 $3,769 $2,070 $ -- $5,989
Net income -- -- 698 -- 698
Change in unrealized gains
(losses) on securities
available for sale,
net of tax -- -- -- (138) (138)
Balance at December 31,
1994 150 3,769 2,768 (138) 6,549
Net income -- -- 933 -- 933
Dividends paid ($2.00 per
share) -- -- (300) -- (300)
Change in unrealized gains
(losses) on securities
available for sale,
net of tax -- -- -- 151 151
Balance at December 31, 1995 150 3,769 3,401 13 7,333
Net income (unaudited) -- -- 173 -- 173
<PAGE>
Change in unrealized gains
(losses) on securities
available for sale,
net of tax (unaudited) -- -- -- (40) (40)
Balance at March 31, 1996
(unaudited) $150 $3,769 $3,574 ($27) $7,466
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(Dollars in Thousands)
ANB Financial Corporation and Subsidiary
Three Months Ended March 31, 1996 and 1995
and Years Ended December 31, 1995 and 1994
Three Months Ended Years Ended
March 31, December 31,
------------------ ---------------------
1996 1995 1995 1994
-------- -------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Cash Flows From Operating
Activities
Net income $ 173 $ 192 $ 933 $ 698
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 53 12 157 58
Depreciation and
amortization 57 56 223 210
Deferred Federal income
taxes 4 10 40 60
Amortization of
intangible assets 17 17 67 67
Gain on sale of loans (25) -- (38) (96)
Gain on sale of premises
and equipment -- -- (71) --
(Gain) loss on sale of
investments (7) 58 51 32
(Increase) decrease in
accrued interest
receivable 75 (23) (18) (97)
Increase in accrued
interest payable 30 38 170 30
Other 67 115 74 132
Net cash provided by
operating activities 444 475 1,588 1,094
<PAGE>
Cash Flows From Investing Activities
Net (increase) decrease in
interest bearing deposits
in banks (5,658) 380 480 1,682
Net (increase) decrease in
Federal funds sold -- (2,920) -- 2,500
Purchases of securities
available for sale -- (2,000) (6,945) (7,589)
Purchases of securities
held to maturity -- -- -- (5,382)
Proceeds from maturities
of securities available
for sale and held to
maturity 1,100 500 6,421 5,459
Proceeds from sales
of securities available
for sale 8,516 4,492 7,989 3,871
Net increase in loans (2,896) (2,212) (10,950) (9,825)
Proceeds from sales of
loans 279 -- 524 1,927
Proceeds from sales of
premises and equipment -- -- 258 --
Additions to premises and
equipment (55) (80) (178) (602)
Additions to foreclosed
real estate -- -- -- (121)
Other 3 14 22 80
Net cash provided by
(used in) investing
activities 1,289 (1,826) (2,379) (8,000)
Cash Flows from Financing
Activities
Net increase (decrease)
in deposits (4,182) 1,313 3,122 6,056
Increase (decrease)
in short-term borrowings (140) (2,900) (2,760) 2,900
Dividends paid -- (300) (300) --
Net cash provided by
(used in) financial
activities (4,322) (1,887) 62 8,956
Net change in cash and
due from banks (2,589) (3,238) (729) 2,050
<PAGE>
Cash and Due from Banks
Beginning of period 4,338 5,067 5,067 3,017
End of period $1,749 $1,829 $4,338 $5,067
</TABLE>
(continued)
See notes to consolidated financial statements.<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(concluded) (Dollars in Thousands)
ANB Financial Corporation and Subsidiary
Three Months Ended March 31, 1996 and 1995
and Years Ended December 31, 1995 and 1994
Three Months Ended Years Ended
March 31, December 31,
------------------ -------------------
1996 1995 1995 1994
-------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Supplemental Disclosures of Cash
Flow Information
Cash payments for:
Interest $ 384 $ 308 $ 1,487 $ 1,004
Income taxes 137 72 340 205
Supplemental Disclosures of
Non-Cash Investing Activities
Unrealized gains (losses) on
securities available for
sale, net of tax ($ 40) $ 103 $ 151 ($ 138)
Financed sale of foreclosed
real estate -- 121 121 --
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
All amounts shown as of and for the periods ended March 31, 1996 and 1995 are
unaudited.
Note 1 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of ANB Financial
Corporation (the Company) and its wholly owned subsidiary, American National
Bank (the Bank). All significant intercompany transactions and balances have
been eliminated.
Nature of Operations
The Bank operates four branches in the greater Tri-Cities area. Its primary
source of revenue is providing loans to customers, who are predominately
small and middle-market businesses and middle-income individuals.
Financial Statement Presentation
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as
of the date of the balance sheet, and revenues and expenses for the period.
Actual results could differ significantly from those estimates.
Securities Held to Maturity
Debt securities for which the Company has the positive intent and ability to
hold to maturity are reported at cost, adjusted for amortization of premiums
and accretion of discounts, which are recognized in interest income over the
period to maturity.
Securities Available for Sale
Securities classified as available for sale consist of debt and certain
equity securities the Company intends to hold for an indefinite period of
time, but not necessarily to maturity. Securities available for sale are
reported at fair value. Unrealized gains and losses, net of the related
deferred tax effect, are reported as a net amount in a separate component of
shareholders' equity. Realized gains and losses on securities available for
sale, determined using the specific identification method, are included in
earnings. Amortization of premiums and accretion of discounts are recognized
in interest income over the period to maturity.
<PAGE>
Declines in the fair value of individual securities held to maturity and
available for sale below their cost that are other than temporary result in
writedowns of the individual securities to their fair value. Such writedowns
are included in earnings as realized losses.
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 1 - Summary of Significant Accounting Policies (continued)
Loans
Loans are stated at the amount of unpaid principal, reduced by an allowance for
possible credit losses. Interest on loans is accrued daily based on the
principal amount outstanding.
The accrual of interest on impaired loans is discontinued when, in management's
opinion, the borrower may be unable to meet payments as they become due. When
interest accrual is discontinued, all unpaid accrued interest is reversed
against current income. Interest income is subsequently recognized only to the
extent cash payments are received.
It is the Company's policy to defer loan origination and commitment fees and
certain direct loan origination costs, and to amortize the net amount as an
adjustment of the related loan's yield over the contractual life of the loan.
Allowance for Possible Credit Losses
The allowance for possible credit losses is increased by provisions charged to
operations and reduced by loans charged off, net of recoveries. The allowance
is based on management's periodic evaluation of potential losses in the loan
portfolio after consideration of historical loss experience, adverse situations
that may affect the borrowers' ability to repay, the estimated value of any
underlying collateral, economic conditions, and other risks inherent in the
portfolio.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation, which
is computed on a straight-line method over the estimated useful lives of the
assets. Gains or losses on dispositions are reflected in earnings.
Foreclosed Real Estate
Real estate properties acquired through, or in lieu of, foreclosure are to be
sold and recorded at the lower of the recorded amount of the loan, or the fair
value of the properties less estimated costs of disposal. Any writedown to
fair value at the time of transfer to foreclosed real estate is charged to the
allowance for possible credit losses. Properties are evaluated regularly to
ensure that the recorded amounts are supported by their current fair values,
and that valuation allowances to reduce the carrying amounts to fair value less
estimated costs to dispose are recorded as necessary. Additions to or
reductions from valuation allowances are recorded in income.
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 1 - Summary of Significant Accounting Policies (continued)
Income Taxes
Deferred tax assets and liabilities are reflected at currently enacted income
tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
The Bank provides for income taxes on a separate return basis and remits to the
Company amounts currently payable.
Cash and Cash Equivalents
The Company considers all amounts due from depository institutions to be cash
equivalents.
Net Income Per Share
Net income per share of common stock has been computed on the basis of the
weighted average number of shares of common stock outstanding.
Fair Values of Financial Instruments
The following methods and assumptions were used in estimating the fair values
of financial instruments as disclosed herein:
Cash and Short-Term Instruments
The carrying amounts of cash and short-term instruments approximate
their fair value.
Securities Available for Sale and Held to Maturity
Fair values for securities, excluding restricted equity securities,
are based on quoted market prices. The carrying values of
restricted equity securities approximate fair values.
Loans
For variable rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying
values. Fair values for fixed rate loans are estimated using
discounted cash flow analyses, using interest rates currently being
offered for loans with similar terms to borrowers of similar credit
quality. Fair values of loans held for sale are based on their
estimated market prices. Fair values for impaired loans are
estimated using discounted cash flow analyses or underlying
collateral values, where applicable.
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 1 - Summary of Significant Accounting Policies (concluded)
Fair Values of Financial Instruments (concluded)
Deposit Liabilities
The fair values disclosed for demand deposits are, by definition,
equal to the amount payable on demand at the reporting date (that is,
their carrying amounts). The carrying amounts of variable rate,
fixed term money market accounts and certificates of deposit
approximate their fair values at the reporting date. Fair values
for fixed rate certificates of deposit are estimated using a
discounted cash flow calculation based on interest rates currently
being offered on similar certificates.
Short-Term Borrowings
The carrying amounts of federal funds purchased and other short-term
borrowings maturing within 90 days approximate their fair values.
Fair values of other short-term borrowings are estimated using
discounted cash flow analyses based on the current incremental
borrowing rates for similar types of borrowing arrangements.
Accrued Interest
The carrying amounts of accrued interest approximate their fair
values.
Off-Balance-Sheet Instruments
The fair value of off-balance-sheet lending commitments approximates
the recorded amounts of the related fees charged for similar
agreements.
Note 2 - Accounting Changes
Effective January 1, 1995, the Company adopted SFAS No. 114, Accounting by
Creditors for Impairment of a Loan, as amended by SFAS No. 118. Under these
standards, impairment occurs when it is probable a creditor will not be able to
collect all amounts due under a loan agreement. Impaired loans are to be
measured based on the present value of expected future cash flows, discounted
at the loan's effective interest rate, or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if the loan
is collateral dependent. Changes in these values will be reflected in income
and as adjustments to the allowance for possible credit losses. The effect of
adoption on the Company's 1995 financial position and results of operations was
insignificant.
In November 1995, the Financial Accounting Standards Board issued Statement No.
123, Accounting for Stock-Based Compensation, which established financial
accounting and reporting standards for stock-based employee compensation plans.
SFAS No. 123 specifies a fair value based method of accounting for stock-based
compensation plans and encourages (but does not require) entities to adopt that
method in place of the provisions of APB Opinion 25, Accounting for Stock
<PAGE>
Issued to Employees. The Company has not yet determined which method of
accounting will be used, or what impact the adoption of the accounting
requirements of SFAS No. 123 might have on the Company's results of operations.
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 3 - Restricted Assets
Federal Reserve Board regulations require that the Company maintain certain
minimum reserve balances on deposit with the Federal Reserve Bank. The average
amounts of such balances for the three months ended March 31, 1996 and for the
years ended December 31, 1995 and 1994 were approximately $668,000, $577,000,
and $633,000, respectively.
Note 4 - Debt and Equity Securities
In December 1995, the Company transferred securities with an amortized cost of
$13,304,000 from the held to maturity category to the available for sale
category under one-time reassessment guidelines issued by the FASB. The
related unrealized loss associated with this transfer was $81,000, which is
included in the "unrealized gains (losses) on securities available for sale,
net of tax" component of shareholders' equity.
Debt and equity securities have been classified according to management's
intent. The carrying amount of securities and the approximate fair values at
March 31, 1996, December 31, 1995 and 1994 are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Securities Available for Sale
March 31, 1996
U.S. Government and agency
securities $ 9,207 $ 17 ($ 60) $ 9,164
Other securities 1,256 4 (2) 1,258
Equity securities 477 -- -- 477
$10,940 $ 21 ($ 62) 10,899
December 31, 1995
U.S. Government and
agency securities $17,096 $ 147 ($ 173) $17,070
State and municipal
securities 1,887 51 (4) 1,934
Other securities 1,258 7 (8) 1,257
Equity securities 477 -- -- 477
$20,718 $205 ($ 185) $20,738
December 31, 1994
U.S. Government and
agency securities $10,727 $ -- ($ 209) $10,518
Other securities 556 -- -- 556
Equity securities 458 -- -- 458
$11,741 $ -- ($ 209) 11,532
</TABLE>
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 4 - Debt and Equity Securities (concluded)
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Securities Held to Maturity
December 31, 1994
U.S. Government and
agency securities $11,761 $ 2 ($ 564) $11,199
State and municipal
securities 1,887 8 (142) 1,753
Other securities 2,826 1 (26) 2,801
$16,474 $ 11 ($732) 15,753
</TABLE>
Gross realized gains and gross realized losses on sales of securities available
for sale for the three months ended March 31, 1996 and 1995 and for the years
ended December 31, 1995 and 1994 were (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Years Ended
March 31, December 31,
------------------ -------------------
1996 1995 1995 1994
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Gross Realized Gains
U.S. Government and agency
securities $ 82 $ -- $ 6 $ 8
State and municipal
securities 32 -- -- --
Gross Realized Losses
U.S. Government and
agency securities $ 82 $ 58 $ 57 $ 40
State and municipal
securities 25 -- -- --
</TABLE>
The scheduled maturities of debt securities available for sale at March 31,
1996 and December 31, 1995 are as follows (dollars in thousands):
<PAGE>
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
Amortized Fair Amortized Fair
Cost Value Cost Value
-------------- ------ ----------------- -------
<S> <C> <C> <C> <C>
Due in one year or less $2,104 $ 2,100 $ 2,106 $ 2,100
Due from one year to five
years 4,846 4,856 10,967 11,015
Due from five to ten years 606 594 2,524 2,550
Due after ten years 2,907 2,872 4,644 4,596
$10,463 $10,422 $20,241 $20,261
</TABLE>
Securities carried at approximately $1,490,000 at March 31, 1996, $1,250,000 at
December 31, 1995, and $783,000 at December 31, 1994 were pledged to secure
public deposits and for other purposes required or permitted by law.
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 5 - Loans
Loans at March 31, 1996 and December 31, 1995 and 1994 consist of the following
(dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31, 1996
----------------- -----------------------------
1996 1995 1994
----------------- ----------------- ----------
<S> <C> <C> <C>
Commercial and agricultural $ 8,552 $ 7,722 $ 6,357
Real estate:
Construction 230 1,138 685
1-4 family residential 16,802 16,508 12,004
Nonresidential 11,022 8,992 7,981
Consumer 11,259 10,905 7,760
Total loans $ 47,865 $ 45,265 34,787
</TABLE>
Changes in the allowance for possible credit losses for the three months ended
March 31, 1996 and 1995 and for the years ended December 31, 1995 and 1994 are
as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Years Ended
March 31, December 31,
------------------- --------------------
1996 1995 1995 1994
-------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Balance at beginning of period $ 272 $ 200 $ 200 $ 175
Provision for possible credit
losses 53 12 157 58
Charge-offs (42) (6) (107) (108)
Recoveries 3 14 22 75
Net (charge-offs) recoveries (39) 8 (85) (33)
Balance at end of period $ 286 $ 220 $ 272 $ 200
</TABLE>
The recorded investment in impaired loans was $36,000 at March 31, 1996 and
$51,000 at December 31, 1995. No allocation of the allowance for possible
credit losses was considered necessary. The average recorded investment in
impaired loans during the three months ended March 31, 1996 was $44,000 and
during the year ended December 31, 1995 was $18,000. Interest income
recognized on impaired loans, which was collected in cash, was insignificant in
1996 and 1995.
Loans on which the accrual of interest had been discontinued totaled $6,000 at
December 31, 1994. The difference between the interest income which would have
been accrued if such loans had performed in accordance with original terms and
the interest income recognized on these loans is immaterial.
At March 31, 1996 and December 31, 1995, there were no commitments to lend
additional funds to borrowers whose loans were impaired. Loans over 90 days
past due and still accruing interest were $11,000 at March 31, 1996 and $41,000
at December 31, 1995. There were no loans over 90 days past due still accruing
interest at December 31, 1994.
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 5 - Loans (concluded)
Maturity and repricing for the Company's portfolio at March 31, 1996 and
December 31, 1995 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Fixed Rate Floating Rate
Maturing In Repricing In Total
---------------- ------------------- -------------
<S> <C> <C> <C>
March 31, 1996
0 - 91 days $ 356 $ 12,462 $ 12,818
91 - 365 days 1,692 -- 1,692
1 year through 5 years 12,729 -- 12,729
Over 5 years 20,590 -- 20,590
$ 35,367 $ 12,462 $ 47,829
Loans on which the accrual
of interest has been
discontinued 36
$ 47,865
December 31, 1995
0 - 90 days $ 370 $ 11,347 $ 11,717
91 - 365 days 1,340 -- 1,340
1 year through 5 years 12,338 -- 12,338
Over 5 years 19,819 -- 19,819
$ 33,867 $ 11,347 $ 45,214
Loans on which the accrual
of interest has been
discontinued 51
$ 45,265
</TABLE>
Certain related parties of the Company, principally directors of the Company
and their associates, were loan customers of the Company in the ordinary course
of business during 1996, 1995, and 1994. Total loans outstanding at March 31,
1996, December 31, 1995, and December 31, 1994 to key officers and directors
were $188,000, $332,000, and $381,000, respectively. New loans made and
repayments received in 1996 were $419,000 and $563,000, respectively, and in
1995 were $469,000 and $518,000, respectively.
Government guaranteed loans serviced for others are not included in the
accompanying balance sheets. The unpaid principal balances of guaranteed loans
serviced for others were $3,097,000, $2,592,000, and $2,916,000 at March 31,
1996, December 31, 1995 and December 31, 1994, respectively.
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 6 - Premises and Equipment
The components of premises and equipment at March 31, 1996 and December 31,
1995 and 1994 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31, 1996
---------- ------------------------------
1996 1995 1994
---------- ------------------ ---------
<S> <C> <C> <C>
Land $ 214 $ 214 $ 266
Premises and improvements 1,755 1,723 1,887
Equipment, furniture and fixtures 1,105 1,140 998
Total cost 3,074 3,077 3,151
Less accumulated depreciation
and amortization 937 945 817
Total premises and equipment $2,137 $2,132 $2,334
</TABLE>
Certain equipment and premises are leased under operating leases. Rental
expense for leased premises and equipment was $8,000 and $9,000 for the three
months ended March 31, 1996 and 1995, respectively, and $75,000 and $60,000
for the years ended December 31, 1995 and 1994, respectively.
Minimum net rental commitments under noncancelable leases having an original or
remaining term of more than one year were as follows at December 31, 1995
(dollars in thousands):
<TABLE>
<CAPTION>
Premises Equipment Total
---------- --------- ----------
<S> <C> <C> <C>
1996 $10 $22 $32
1997 10 22 32
1998 10 22 32
1999 10 10 20
2000 10 -- 10
Thereafter 18 -- 18
Total minimum payments required $68 $76 $144
</TABLE>
Certain leases contain renewal options from five to ten years and escalation
clauses based on increases in property taxes and other costs.
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 7 - Deposits
The aggregate amount of short-term jumbo certificates of deposit, each with a
minimum denomination of $100,000, was approximately $6,583,000 at March 31,
1996, and $9,456,000 and $4,748,000 at December 31, 1995 and 1994,
respectively.
At March 31, 1996 and December 31, 1995, the scheduled maturities of
certificates of deposit are as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
-------------- ------------------
1996 1995
-------------- ------------------
<S> <C> <C>
0 - 90 days $ 9,706 $10,165
91 - 365 days 8,216 10,330
1 year through 5 years 1,470 1,769
$19,392 $22,264
</TABLE>
Note 8 - Short-Term Borrowings
The Company has borrowing lines available of $2,000,000 with Key Bank
(unsecured) and $7,200,000 with the Federal Home Loan Bank of Seattle (secured
by assets of the Company). Overnight borrowings under the Federal Home Loan
Bank line totaled $140,000 at December 31, 1995 and $2,900,000 at December 31,
1994. There were no borrowings at March 31, 1996.
Note 9 - Employee Benefits
The Company has a combined 401(k) and Profit Sharing Plan which covers
substantially all employees who have completed one year or more of service.
Contributions to the Profit Sharing Plan are made at the discretion of the
Board of Directors. Contributions for the combined 401(k) and Profit Sharing
Plan for the three months ended March 31, 1996 and 1995 were $16,000 and
$14,000, respectively, and for the years ended December 31, 1995 and 1994 were
$57,000 and $36,000, respectively.
Note 10 - Income Taxes
Income taxes are comprised of the following for the three months ended March
31, 1996 and 1995 and for the years ended December 31, 1995 and 1994 (dollars
in thousands):
<TABLE>
<CAPTION>
Three Months Ended Years Ended
March 31, December 31,
-------------------- ---------------------
1996 1995 1995 1994
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Current $83 $90 $404 $300
Deferred 4 10 40 60
Total income taxes $87 $100 $444 $360
</TABLE>
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 10 - Income Taxes (continued)
The following is a reconciliation between the statutory and the effective
federal income tax rate for the three months ended March 31, 1996 and 1995 and
for the years ended December 31, 1995 and 1994 (dollars in thousands):
Three Months Ended March 31
<TABLE>
<CAPTION>
Percent Percent
1996 of Pre-tax 1995 of Pre-tax
Amount Income Amount Income
---------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Income tax at statutory rates $ 88 34.0% $ 99 34.0%
Increase (decrease) resulting
from:
Tax-exempt income (7) (2.7) (9) (3.1)
Other 6 2.2 10 3.4
Total income tax expense $ 87 33.5 $100 34.3%
Years Ended December 31
</TABLE>
<TABLE>
<CAPTION>
Percent Percent
1995 of Pre-tax 1994 of Pre-tax
Amount Income Amount Income
---------- ----------- ------ -------------
<S> <C> <C> <C> <C>
Income tax at statutory rates $468 34.0 $360 34.0%
Increase (decrease) resulting
from:
Tax-exempt income (32) (2.4) (24) (2.3)
Other 8 0.6 24 2.3
Total income tax expense $444 32.2 $360 34.0%
</TABLE>
Net deferred tax liabilities consist of the following components at March 31,
1996 and December 31, 1995 and 1994 (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995 1994
------------- ------------ --------
<S> <C> <C> <C>
Deferred Tax Assets
Allowance for possible credit
losses $72 $67 $42
Unrealized depreciation on
securities available for sale 14 -- 71
Total deferred tax assets 86 67 113
</TABLE>
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 10 - Income Taxes (concluded)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995 1994
------------- ------------ ----------
<S> <C> <C> <C>
Deferred Tax Liabilities
Accumulated Depreciation $ 93 $ 88 $ 61
Deferred income 122 118 80
Unrealized appreciation
on securities available
for sale -- 7 --
Total deferred tax
liabilities 215 213 141
Net deferred tax liabilities $129 $146 $ 28
</TABLE>
Note 11 - Commitments and Contingencies
Financial Instruments with Off-Balance-Sheet Risk
The Company is party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. These instruments involve, to varying degrees, elements of
credit risk in excess of the amount recognized in the balance sheets.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Company uses the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments. A
summary of the commitments is as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995 1994
------------- ------------ ------------
<S> <C> <C> <C>
Commitments to extend credit:
Real estate secured $ 576 $ 314 $ 509
Credit card lines 2,652 2,654 2,804
Other 2,380 1,948 2,671
Total commitments to
extend credit 5,608 4,916 5,984
Standby letters of credit 170 170 150
$5,778 $5,086 $6,134
</TABLE>
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 11 - Commitments and Contingencies (concluded)
Financial Instruments with Off-Balance-Sheet Risk (concluded)
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Since many
of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
Company's experience has been that approximately 65% of loan commitments are
drawn upon by customers. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained,
if deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the party. Collateral held varies, but may
include accounts receivable, crops, livestock, inventory, property and
equipment, residential real estate, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held
varies as specified above, and is required in instances where the Company deems
necessary.
Concentrations of Credit Risk
All of the Company's loans and commitments to extend credit have been granted
to customers in the Company's market area. The concentrations of credit by
type of loan are set forth in Note 5.
Investments in state and municipal securities involve governmental entities
within Washington State. The distribution of commitments to extend credit
approximates the distribution of loans outstanding. Standby letters of credit
were granted primarily to commercial borrowers. The Company, as a matter of
practice, generally does not extend credit to any single borrower or group of
related borrowers in excess of $650,000.
Note 12 - Stock Options
The Company has granted to certain key employees options to purchase shares of
its common stock. During 1995, options to purchase 500 shares were granted at
$55 per share. At March 31, 1996 and December 31, 1995, options to purchase a
total of 8,900 shares were outstanding with 3,300 exercisable at March 31, 1996
and 3,100 exercisable at December 31, 1995 at prices ranging from $30 to $55.
The options expire December 2001 to September 2005. At December 31, 1994,
options to purchase 2,150 shares were exercisable at prices ranging from $30 to
$40. During 1996, 1995 and 1994, no options were exercised.
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 13 - Condensed Financial Information - Parent Company Only
<TABLE>
<CAPTION>
Condensed Balance Sheets
(Dollars in Thousands)
March 31, December 31,
1996 1995 1994
------------ ------------ ----------
<S> <C> <C> <C>
Assets
Cash $ 56 $ 110 $ 109
Investment in subsidiary 7,436 7,255 6,479
Receivable from subsidiary -- -- 72
Total assets $7,492 $7,365 $6,660
Liabilities and Shareholders' Equity
Other liabilities $ 26 $ 45 $ 111
Shareholders' equity 7,466 7,320 6,549
Total liabilities and
shareholders' equity $7,492 $7,365 $6,660
</TABLE>
<TABLE>
<CAPTION>
Condensed Statements of Income
(Dollars in Thousands)
Three Months Ended Years Ended
March 31, December 31,
------------------ -----------------
1996 1995 1995 1994
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Dividend from Subsidiary $ -- $300 $300 $ --
Operating Expenses (56) -- (4) (5)
Income Tax Benefit 21 300 -- 2
Income (loss) before equity
in undistributed income of
subsidiary (35) -- 296 (3)
Equity in Undistributed Income
of Subsidiary 208 (108) 637 701
Net income $173 $192 $933 $698
</TABLE>
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 13 - Condensed Financial Information - Parent Company Only (concluded)
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows
(Dollars in Thousands)
Three Months Ended Years Ended
March 31, December 31,
------------------- ------------------
1996 1995 1995 1994
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net income $173 $192 $933 $698
Adjustments to reconcile net
income to net cash provided
by operating activities:
Amortization -- -- -- 4
Equity in undistributed
income of subsidiary (208) 108 (637) (701)
(Increase) decrease in
receivable from
subsidiary -- -- 71 (52)
Increase (decrease) in
other liabilities (19) -- (66) 66
Decrease in other assets -- -- -- 28
Net cash provided by (used in)
operating activities (54) 300 301 43
Cash Flows from Financing
Activities
Dividends paid -- (300) (300) --
Net change in cash (54) -- 1 43
Cash
Beginning of period 110 109 109 66
End of periods $ 56 $109 $110 $109
</TABLE>
<PAGE>
Note 14 - Regulatory Matters
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory -- and possibly additional discretionary -- actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines on the
regulatory framework for prompt corrective action, the Bank must meet specific
capital adequacy guidelines that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital classification is also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 14 - Regulatory Matters (continued)
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Tier 1 capital (as defined in the regulations) to total average
assets (as defined), and minimum ratios of Tier 1 and total capital (as
defined) to risk-weighted assets (as defined). Under the regulatory framework
for prompt corrective action, the Bank must maintain minimum Tier 1 leverage,
Tier 1 risk-based, and total risk-based ratios as set forth in the table.
As of March 31, 1996 and December 31, 1995, the most recent notification from
the Bank's regulator categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-
based, and Tier 1 leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institution's category.
The Bank's actual capital amounts and ratios are also presented in the table
(dollars in thousands).
<TABLE>
<CAPTION>
To be Well
Capitalized
Under Prompt
Corrective
Capital Adequacy Action
Purposes Provisions
Actual ---------------- ---------------
Amount Ratio Amount Ratio Amount Ratio
--------- ------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1996
Tier 1 capital
(to average assets) $6,719 9.68% $2,775 4.00 $3,469 5.00%
Tier 1 capital
(to risk-weighted
assets) 6,719 14.16 1,899 4.00 2,848 6.00
Total capital
(to risk-weighted
assets) 6,991 14.73 3,797 8.00 4,747 10.00
December 31, 1995
Tier 1 capital
(to average assets) $6,493 9.06% $2,867 4.00% $3,584 5.00%
Tier 1 capital
(to risk-weighted
assets) 6,493 13.52 1,920 4.00 2,880 6.00
Total capital
(to risk-weighted
assets) 6,765 14.09 3,841 8.00 4,801 10.00
December 31, 1994
Tier 1 capital
(to average assets) $5,858 8.71% $2,801 4.00% $3,501 5.00%
Tier 1 capital
(to risk-weighted
assets) 5,858 13.52 1,732 4.00 2,598 6.00
Total capital
(to risk-weighted
assets) 6,058 13.99 3,464 8.00 4,330 10.00
</TABLE>
(continued)
<PAGE>
Notes to Financial Statements
ANB Financial Corporation and Subsidiary
March 31, 1996 and December 31, 1995 and 1994
Note 14 - Regulatory Matters (concluded)
Management believes, as of March 31, 1996 and December 31, 1995, that the Bank
meets all capital requirements to which it is subject.
The Bank, as a National Bank, is subject to dividend restrictions set forth by
the Comptroller of the Currency. Under such restrictions, the Bank may not,
without prior approval, declare dividends in excess of the sum of the current
year's earnings (as defined) plus the retained earnings (as defined) from the
prior two years. The dividends that the Bank could declare without regulatory
approval amounted to approximately $2,001,000 as of December 31, 1995.
Note 15 - Fair Values of Financial Instruments
The estimated fair values of the Bank's financial instruments at December 31,
1995 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
------------- ------------
<S> <C> <C>
Financial Assets
Cash and due from banks $ 4,338 $ 4,338
Securities available for sale 20,738 20,738
Loans receivable, net 44,993 45,296
Accrued interest receivable 505 505
Financial Liabilities
Deposits $65,458 $65,498
Short-term borrowings 140 140
Accrued interest payable 293 293
</TABLE>
Note 16-Potential Merger (Unaudited)
On February 26, 1996, the Board of Directors approved a merger agreement with
First Hawaiian, Inc. under which First Hawaiian would acquire the shares of
the Company's common stock in exchange for shares of its common stock. The
merger is subject to the approval of the Company's shareholders and banking
regulators, and is expected to close in the last half of 1996.
<PAGE>
<PAGE>
FIRST HAWAIIAN, INC.
AND
ANB FINANCIAL CORPORATION
Annexes to Proxy
Statement/Prospectus
I. Agreement and Plan of Merger
II. Opinion of Ragen MacKenzie Incorporated
III. Chapter 23B.13 of the Revised Code of
Washington (Rights of Dissenting
Shareholders)
<PAGE>
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
dated as of February 26, 1996
among
FIRST HAWAIIAN, INC.,
ANB ACQUISITION CORPORATION
and
ANB FINANCIAL CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time of the Merger . . . . . . . . . . 2
1.3 Corporate Organization . . . . . . . . . . . . . 2
(a) Articles of Incorporation . . . . . . . 2
(b) By-Laws . . . . . . . . . . . . . . . . 2
(c) Board of Directors and Officers of
Surviving Corporation . . . . . . . . 2
1.4 Effect of the Merger on the Securities of the
Constituent Corporations . . . . . . . . . . . 2
(a) Company Common Stock . . . . . . . . . . 2
(b) Certain Definitions . . . . . . . . . . 3
(c) Cancellation of Treasury Stock and
FHI-Owned Stock, etc. . . . . . . . . 3
(d) Options. . . . . . . . . . . . . . . . . 3
(e) Sub Common Stock . . . . . . . . . . . . 4
(f) FHI Common Stock . . . . . . . . . . . . 4
(g) Anti-Dilution . . . . . . . . . . . . . 4
(h) Dissenting Stock . . . . . . . . . . . . 4
(i) Determination of Determination Date
Book Value Per Share . . . . . . . . 4
(j) Adjustment of Determination Date Book
Value Per Share . . . . . . . . . . . 5
1.5 Exchange of Certificates . . . . . . . . . . . . 5
(a) Exchange Agent . . . . . . . . . . . . . . 5
(b) Exchange Procedures . . . . . . . . . . . . 5
(c) Distributions with Respect to Unexchanged
Shares; Voting . . . . . . . . . . . . . . 6
(d) No Further Ownership Rights in Company
Common Stock . . . . . . . . . . . . . . 6
(e) No Fractional Shares . . . . . . . . . . . 6
(f) Termination of Exchange Fund . . . . . . . 7
(g) No Liability . . . . . . . . . . . . . . . 7
ARTICLE II
THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Closing Date . . . . . . . . . . . . . . . . . . 7
2.2 Procedure . . . . . . . . . . . . . . . . . . . 7
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . . . . . . 8
3.1 Organization, Etc. . . . . . . . . . . . . . . 8
3.2 Non-Contravention; Binding Effect . . . . . . . 8
3.3 No Consent . . . . . . . . . . . . . . . . . . . 8
3.4 Compliance with Laws . . . . . . . . . . . . . . 9
3.5 Capitalization . . . . . . . . . . . . . . . . . 9
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . 10
3.7 Charter Documents; Management . . . . . . . . . 10
3.8 Financial Statements and Reports . . . . . . . . 11
3.9 Properties . . . . . . . . . . . . . . . . . . . 11
3.10 Absence of Certain Changes . . . . . . . . . . . 12
3.11 Material Contracts . . . . . . . . . . . . . . . 13
3.12 Litigation . . . . . . . . . . . . . . . . . . . 14
3.13 Regulatory Applications . . . . . . . . . . . . 14
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . 14
3.15 Employee Benefit Plans; ERISA . . . . . . . . . 15
3.16 Labor Relations . . . . . . . . . . . . . . . . 17
3.17 Employment and Similar Agreements;
Obligations Upon Change in Control . . . . . . . 17
3.18 Broker's and Finder's Fees . . . . . . . . . . . 18
3.19 Hazardous Materials . . . . . . . . . . . . . . 18
3.20 Damage to Mortgaged Properties . . . . . . . . . . 18
3.21 Shareholder Approval . . . . . . . . . . . . . . 19
3.22 Deposit Accounts . . . . . . . . . . . . . . . . 19
3.23 Trademarks, Etc. . . . . . . . . . . . . . . . 19
3.24 Disclosure . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FHI AND SUB . . . . . . . . . . . . . 19
4.1 Organization, Etc. . . . . . . . . . . . . . . 19
4.2 Non-Contravention; Binding Effect . . . . . . . 20
4.3 No Consent . . . . . . . . . . . . . . . . . . . 20
4.4 Compliance with Laws . . . . . . . . . . . . . . 21
4.5 Capitalization . . . . . . . . . . . . . . . . . 21
4.6 Charter Documents . . . . . . . . . . . . . . . 22
4.7 SEC Documents . . . . . . . . . . . . . . . . . 22
4.8 Absence of Certain Changes . . . . . . . . . . . 23
4.9 Litigation . . . . . . . . . . . . . . . . . . . 23
4.10 Regulatory Applications . . . . . . . . . . . . 23
4.11 Broker's and Finder's Fees . . . . . . . . . . . 23
4.12 Shareholder Approval . . . . . . . . . . . . . . 23
ARTICLE V
COVENANTS OF FHI, SUB AND COMPANY . . . . . . . . . . . . . . . . . . 23
5.1 Covenants by FHI, Sub and Company . . . . . . 23
(a) Filings and Approvals . . . . . . . . 23
(b) Registration Statement . . . . . . . . 24
(c) Reasonable Best Efforts . . . . . . . 24
(d) Access . . . . . . . . . . . . . . . . 25
<PAGE>
5.2 Affirmative Covenants of Company . . . . . . . 25
(a) Conduct of Business . . . . . . . . . 25
(b) Delivery of Financial Statements . . . 25
(c) Meeting of Shareholders . . . . . . . 25
(d) Proxy Statement . . . . . . . . . . . 25
5.3 Negative Covenants of Company . . . . . . . . 26
(a) Charter . . . . . . . . . . . . . . . 26
(b) Dividends . . . . . . . . . . . . . . 26
(c) Issuance of Securities . . . . . . . . 26
(d) Reclassifications or Repurchases . . . 26
(e) Business Combinations . . . . . . . . 26
(f) Contracts; Employee Matters . . . . . 26
(g) Indebtedness . . . . . . . . . . . . . 27
(h) Investments . . . . . . . . . . . . . 27
(i) Business Practices . . . . . . . . . . 27
5.4 Notification . . . . . . . . . . . . . . . . . 27
5.5 No Shopping . . . . . . . . . . . . . . . . . 27
5.6 Indemnification . . . . . . . . . . . . . . . 28
5.7 Employees . . . . . . . . . . . . . . . . . . 29
5.8 Affiliates . . . . . . . . . . . . . . . . . . 29
5.9 Additional Covenants of Company . . . . . . . 30
ARTICLE VI
CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Conditions to Company's Obligation to Close . . . 31
(a) Continued Accuracy of Representations
and Warranties; Performance of
Covenants . . . . . . . . . . . . . . 31
(b) Regulatory Approvals . . . . . . . . . 31
(c) Shareholder Approval . . . . . . . . . . 31
(d) No Injunction . . . . . . . . . . . . . 31
(e) Opinions of Counsel . . . . . . . . . . 31
(f) No Resolution Amendments . . . . . . . . 32
(g) Effectiveness of Registration
Statement . . . . . . . . . . . . . . 32
(h) Blue-Sky Permits . . . . . . . . . . . 32
(i) Tax Opinion . . . . . . . . . . . . . . 32
6.2 Conditions to FHI's and Sub's Obligation to
Close . . . . . . . . . . . . . . . . . . . . 32
(a) Continued Accuracy of Representations
and Warranties; Performance of
Covenants . . . . . . . . . . . . . . 32
(b) Regulatory Approvals . . . . . . . . . 33
(c) Shareholder Approval . . . . . . . . . 33
(d) No Injunction . . . . . . . . . . . . 33
(e) Opinions of Counsel . . . . . . . . . 33
<PAGE>
(f) No Resolution Amendments . . . . . . . 33
(g) Consents Under Agreements . . . . . . 33
(h) Good Standing and Tax Certificates . . 33
(i) Resignation of Certain Directors . . 33
(j) Effectiveness of Registration
Statement . . . . . . . . . . . . . . 34
(k) Blue-Sky Permits . . . . . . . . . . 34
(l) Tax Opinion . . . . . . . . . . . . . 34
(m) Dissenting Stock . . . . . . . . . . . 34
ARTICLE VII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1 Termination . . . . . . . . . . . . . . . . . . 34
(a) Mutual Consent . . . . . . . . . . . . . 34
(b) No Shareholder Approval . . . . . . . . 34
(c) Regulatory Denials or Refusals . . . . . 34
(d) Company Breach . . . . . . . . . . . . . 35
(e) FHI or Sub Breach . . . . . . . . . . . 35
(f) Delay . . . . . . . . . . . . . . . . . 35
(g) Possible Adjustment . . . . . . . . . . 35
7.2 Effect of Termination . . . . . . . . . . . . . 35
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Notices . . . . . . . . . . . . . . . . . . . . 36
8.2 Governing Law . . . . . . . . . . . . . . . . . 37
8.3 Entire Agreement . . . . . . . . . . . . . . . . 37
8.4 Amendments and Waivers . . . . . . . . . . . . . 37
8.5 Counterparts . . . . . . . . . . . . . . . . . . 37
8.6 Interpretation of Agreement . . . . . . . . . . 38
8.7 Nonsurvival of Representations and Covenants . . 38
8.8 Fees and Expenses . . . . . . . . . . . . . . . 38
8.9 Definitions . . . . . . . . . . . . . . . . . . 39
8.10 Attorneys' Fees . . . . . . . . . . . . . . . . 39
8.11 Publicity . . . . . . . . . . . . . . . . . . . 39
8.12 Assignment . . . . . . . . . . . . . . . . . . . 39
8.13 Further Action . . . . . . . . . . . . . . . . . 40
8.14 Third Party . . . . . . . . . . . . . . . . . . 40
8.15 Gender; Number . . . . . . . . . . . . . . . . . 40
8.16 Schedules . . . . . . . . . . . . . . . . . . . 40
EXHIBITS<F1>
Exhibit A-1 . . . . . . . . . . . . . Parties to Voting Agreement
Exhibit A-2 . . . . . . . . . . . . . . . Form of Voting Agreement
Exhibit B . . . . . . . . . . . . . . . . . . Affiliate Agreement
Exhibit C . . . . . . . . . Form of Opinion of FHI General Counsel
Exhibit D . . . . . . . . . . . Form of Opinion of Counsel to FHI
Exhibit E . . . . . . . . . Form of Opinion of Counsel to Company
____________________
[FN]
<F1> The Exhibits to the Merger Agreement are excluded here and are
included in the copy of the Merger Agreement attached as an Exhibit
to the Registration Statement of which this Proxy
Statement/Prospectus is a part.
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 26th day of February,
1996 (this "Agreement"), among FIRST HAWAIIAN, INC., a Delaware corporation
("FHI"), ANB ACQUISITION CORPORATION, a Washington corporation and a direct
wholly-owned subsidiary of FHI ("Sub"), and ANB FINANCIAL CORPORATION, a
Washington corporation ("Company").
WHEREAS the board of directors of each of FHI, Sub and Company has
adopted resolutions approving this Agreement pursuant to which Sub shall be
merged with and into Company and Company shall become a wholly-owned direct
subsidiary of FHI (the "Merger");
WHEREAS the board of directors of each of FHI, Sub and Company has
determined that the Merger is consistent with, and in furtherance of, their
respective business strategies and goals;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for using the "purchase" accounting method;
WHEREAS, concurrently with the execution and delivery of this
Agreement, each of the shareholders of Company listed in Exhibit A-1 hereto has
entered into a Shareholder Voting Agreement in the form attached as Exhibit A-2
hereto pursuant to which such shareholder agreed to vote the shares of capital
stock of Company such shareholder owns or otherwise has the power to vote in
favor of approval of this Agreement and the Merger at any meeting of the
shareholders of Company held to consider and vote on such matters; and
WHEREAS FHI, Sub and Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth herein, at the Effective Time (as defined in Section 1.2), Sub shall be
merged with and into Company in accordance with Title 23B of the Revised Code
of Washington (the "RCW"). The separate existence of Sub shall thereupon cease
and Company shall be the surviving corporation in the Merger (the "Surviving
Corporation"). The Merger shall have the effects set forth in RCW
Section 23B.11.060.
<PAGE>
1.2 Effective Time of the Merger. The Merger shall become effective
when properly executed articles of merger (the "Articles of Merger") are duly
filed with the Secretary of State of the State of Washington in accordance with
RCW Title 23B; provided, however, that, by mutual consent, the Articles of
Merger may provide for a later time of effectiveness of the Merger. When used
in this Agreement, the term "Effective Time" shall mean the date and time at
which the Articles of Merger are so filed (or such later time as is so provided
in the Articles of Merger).
1.3 Corporate Organization.
(a) Articles of Incorporation. The articles of incorporation of
Company, as in effect at the Effective Time, shall be the articles of
incorporation of the Surviving Corporation after the Effective Time unless and
until amended in accordance with its terms and as provided by law.
(b) By-Laws. The by-laws of Company, as in effect at the Effective
Time, shall be the by-laws of the Surviving Corporation unless and until
amended in accordance with their terms, the articles of incorporation of the
Surviving Corporation and as provided by law.
(c) Board of Directors and Officers of Surviving Corporation. The
board of directors of the Surviving Corporation shall consist of the directors
of Sub immediately prior to the Effective Time, who shall serve until their
respective successors are duly elected and qualified. The officers of Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation until their respective successors are duly elected and/or appointed
and qualified in the manner provided in the articles of incorporation and
by-laws of the Surviving Corporation, or as otherwise provided by law.
1.4 Effect of the Merger on the Securities of the Constituent
Corporations. As of the Effective Time, by virtue of the Merger and without
any action on the part of the holder of (i) any shares of common stock, par
value $1.00 per share, of Company ("Company Common Stock") or any other shares
of capital stock of Company or (ii) any shares of capital stock of Sub:
(a) Company Common Stock. Subject to Sections 1.5(e) and 7.1(g),
each share of Company Common Stock issued and outstanding at the Effective Time
(other than (i) shares of Company Common Stock to be cancelled pursuant to
Section 1.4(c) and (ii) shares of Company Common Stock held by any holder who
shall have taken the necessary steps under RCW Title 23B to exercise
dissenters' rights with respect to the Merger and demand payment for such
shares of Company Common Stock and who is otherwise entitled to such payment
under RCW Title 23B ("Dissenting Stock")) shall be converted into the number of
shares of Common Stock, par value $5.00 per share, of FHI ("FHI Common Stock")
determined by dividing (x) the product of (A) the Determination Date Book Value
Per Share and (B) 2.2 by (y) the Valuation Price (the quotient, as adjusted, if
applicable, pursuant to Sections 1.4(g), 1.4(j) and 7.1(g), being referred to
herein as the "Exchange Ratio"). The shares of FHI Common Stock so issuable
and any cash in lieu of fractional shares payable pursuant to Section 1.5(e)
shall be hereinafter referred to as the "Merger Consideration." From and after
the Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each certificate previously representing any such shares shall
thereafter represent the shares of FHI Common Stock into which such shares of
Company Common Stock have been converted. Certificates previously representing
shares of Company Common Stock shall be exchanged for certificates representing
<PAGE>
whole shares of FHI Common Stock issued in consideration therefor upon the
surrender of such Company Common Stock certificates in accordance with Section
1.5, without interest.
(b) Certain Definitions. For purposes of this Agreement, the
following terms shall have the definitions indicated:
(i) "Average Closing Price" shall mean the average of the closing
prices per share of the FHI Common Stock reported on the NASDAQ National
Market System for the fifteen consecutive trading days commencing on (and
including) the Determination Date, as such closing prices are reported in
The Wall Street Journal.
(ii) "Determination Date" shall mean the 30th day preceding the
scheduled Closing Date.
(iii) "Determination Date Book Value Per Share" shall mean (A) the
consolidated stockholders' equity of Company as of the Determination Date,
which shall be determined in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with the accounting
principles and practices (including the application of fiscal year-end
procedures) used by Company in determining the consolidated stockholders'
equity of Company as of December 31, 1995, as reflected on the audited
consolidated balance sheet of Company referred to in Section 3.8, provided
that there shall be added to such stockholders' equity the aggregate of
the per share exercise prices for all shares of Company Common Stock
issuable upon exercise of Company Stock Options (as defined in Section
1.4(d)) outstanding as of the Determination Date divided by (B) the number
of shares of Company Common Stock outstanding as of the Determination Date
on a fully diluted basis. The Determination Date Book Value shall be
finally determined by the parties in accordance with the procedures set
forth in Section 1.4(i) and shall be subject to adjustment pursuant to
Section 1.4(j).
(iv) "Valuation Price" shall mean the Average Closing Price;
provided, however, that if the Average Closing Price is less than or equal
to $25.50, the Valuation Price shall be $25.50, and if the Average Closing
Price is more than or equal to $31.16, the Valuation Price shall be
$31.16.
(c) Cancellation of Treasury Stock and FHI-Owned Stock, etc. Except
as otherwise provided herein, each share of Company Common Stock which is
issued and outstanding immediately prior to the Effective Time and owned by FHI
or any direct or indirect wholly-owned subsidiary (as defined in Section 8.9)
of FHI (other than shares held by FHI or any such subsidiary in a fiduciary or
custodial capacity on behalf of persons other than Company or its subsidiaries
and other than shares acquired by FHI or any subsidiary of FHI in respect of
debts previously contracted), or which is held in the treasury of Company or by
any of its wholly-owned subsidiaries, shall be cancelled and retired and no FHI
Common Stock or other consideration shall be delivered in exchange therefor.
(d) Options. At least sixty days prior to the Closing Date, Company
shall cause the Board of Directors or Committee administering the ANB Financial
Corporation Employee Incentive Plan (i) to cause each outstanding stock option
to purchase shares of Company Common Stock (each, a "Company Stock Option")
issued thereunder that is not vested and fully exercisable to become vested and
become fully exercisable prior to the Closing Date and (ii) to cause each
<PAGE>
Company Stock Option to terminate prior to the Effective Time, so that as of
the Effective Time no Company Stock Options are outstanding.
(e) Sub Common Stock. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully-paid and nonassessable share of common stock,
par value $1.00 per share, of the Surviving Corporation.
(f) FHI Common Stock. Each share of FHI Common Stock issued and
outstanding at the Effective Time shall remain issued and outstanding and shall
not be altered or changed by the Merger.
(g) Anti-Dilution. If FHI shall, at any time before the Effective
Time, (i) issue a dividend in shares of FHI Common Stock, (ii) combine the
outstanding shares of FHI Common Stock into a smaller number of shares, (iii)
subdivide the outstanding shares of FHI Common Stock or (iv) reclassify the FHI
Common Stock, then, in any such event (each, an "Adjustment Event"), the number
of shares of FHI Common Stock to be delivered to Company shareholders who are
entitled to receive shares of FHI Common Stock in exchange for shares of
Company Common Stock pursuant to this Article I shall be adjusted so that each
shareholder shall be entitled to receive such number of shares of FHI Common
Stock as such shareholder would have been entitled to receive as a result of
the Adjustment Event if the Effective Time had occurred immediately prior to
the happening of such Adjustment Event and appropriate and proportionate
adjustment shall be made to the calculations and number of shares of FHI Common
Stock to be issued as set forth in Section 1.4(a) and as set forth in
Section 1.4(d).
(h) Dissenting Stock. Notwithstanding the foregoing provisions or
any other provision of this Agreement to the contrary, Dissenting Stock shall
not be converted into the right to receive the Merger Consideration at or after
the Effective Time unless and until the holder of such Dissenting Stock
withdraws his or her assertion of dissenters' rights and demand for payment
with the consent of Company, if required, or becomes ineligible for payment for
such shares. If a holder of Dissenting Stock shall withdraw in writing his or
her demand for such payment with the consent of Company, if required, or shall
become ineligible for such payment (through failure to comply with the
applicable provisions of RCW Title 23B or otherwise), then, as of the later of
the Effective Time or the occurrence of such event, such holder's Dissenting
Stock shall be automatically converted into and represent the right to receive
the Merger Consideration (without interest thereon). Company shall give FHI
prompt notice of any demands for payment, withdrawals of such demands and any
other instruments served pursuant to RCW Ch. 23B.13 that are received by
Company. Company shall not voluntarily make any payment with respect to any
demands for payments and shall not, except with the prior written consent of
FHI, settle or offer to settle any such demands. Each holder of Dissenting
Stock shall have only such rights and remedies as are granted to such holder
under RCW Ch. 23B.13. Dissenting Stock shall not, after the Effective Time, be
entitled to vote for any purpose or be entitled to the payment of dividends or
other distributions (except dividends or other distributions payable to
shareholders of record prior to the Effective Time).
(i) Determination of Determination Date Book Value Per Share.
Within five business days after the Determination Date, Company shall deliver
to FHI its determination of the Determination Date Book Value Per Share. FHI
and its independent accountants, Coopers & Lybrand, shall have access to the
workpapers of Company and its independent accountants, Knight Vale and Gregory
<PAGE>
Inc., P.S., relating to the determination of the Determination Date Book Value
Per Share. Unless FHI notifies Company in writing within five business days
after receipt of Company's determination of the Determination Date Book Value
Per Share that it objects to such determination, specifying the basis for such
objection, Company's determination, as so delivered to FHI, shall be binding
upon the parties. If Company and FHI are unable to agree upon the
Determination Date Book Value Per Share within two business days after FHI's
written objection to Company's determination, the controversy shall be referred
to a nationally recognized independent public accounting firm selected by FHI
and reasonably acceptable to Company for a final determination thereof. Such
determination shall be binding upon the parties absent manifest error.
(j) Adjustment of Determination Date Book Value Per Share. To the
extent that Company experiences a net loss (as determined in accordance with
GAAP applied on a basis consistent with the accounting principles and practices
used by Company in preparing its audited consolidated income statement for the
fiscal year ended December 31, 1995 and as reasonably agreed to by FHI) during
the period commencing on the Determination Date and ending on the Closing Date,
the Determination Date Book Value Per Share as determined pursuant to Section
1.4(i) shall be reduced by the amount of such net loss and the Exchange Ratio
shall be recalculated after giving effect to such reduction. During the period
from the Determination Date through the Closing Date, Company shall provide FHI
and its independent accountants with such access to its financial records and
the workpapers of Company and its independent accountants as shall be
reasonably requested by FHI in order to review and agree with Company's
determination of net loss.
1.5 Exchange of Certificates.
(a) Exchange Agent. From and after the Effective Time, FHI shall
deposit, or shall cause to be deposited, with First Hawaiian Bank or such other
bank or trust company to be designated by FHI (the "Exchange Agent"), for the
benefit of the holders of certificates which immediately prior to the Effective
Time evidenced shares of Company Common Stock (the "Company Certificates"), for
exchange in accordance with this Article I, certificates representing the
shares of FHI Common Stock and cash in lieu of fractional shares (such cash and
certificates for shares of FHI Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Sections 1.4 and 1.5(e), respectively, in
exchange for such shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of
shares of Company Common Stock immediately prior to the Effective Time whose
shares were converted into shares of FHI Common Stock pursuant to Section 1.4,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon delivery of the Company Certificates to the Exchange Agent, and which
shall be in such form and have such other provisions as FHI may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Company Certificates in exchange for certificates representing shares of FHI
Common Stock. Upon surrender of a Company Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Company Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of FHI Common
Stock that such holder has the right to receive in respect of the Company
Certificate surrendered pursuant to the provisions of this Article I (after
<PAGE>
taking into account all shares of Company Common Stock then held by such
holder), and the Company Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of shares of Company Common
Stock which is not registered in the transfer records of Company, a certificate
representing the proper number of shares of FHI Common Stock may be issued to a
transferee if the Company Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 1.5, each Company Certificate shall be deemed at any time after the
Effective Time to represent only the shares of FHI Common Stock into which the
shares of Company Common Stock represented by such Company Certificate have
been converted as provided in this Article I and the right to receive upon such
surrender cash in lieu of any fractional shares of FHI Common Stock as
contemplated by this Section 1.5.
(c) Distributions with Respect to Unexchanged Shares; Voting. No
dividends or other distributions declared or made following the Effective Time
with respect to shares of FHI Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Company
Certificate with respect to the shares of FHI Common Stock represented thereby,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 1.5(e), until the holder of such Company Certificate
shall surrender such Company Certificate in accordance with this Article I.
Subject to the effect of applicable laws, following surrender of any such
Company Certificate, there shall be paid to the holder of the certificates
representing whole shares of FHI Common Stock issued in exchange therefor,
without interest, (A) at the time of such surrender, the amount of any cash
payable with respect to a fractional share of FHI Common Stock to which such
holder is entitled pursuant to Section 1.5(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore
paid (but withheld pursuant to the immediately preceding sentence) with respect
to such whole shares of FHI Common Stock, and (B) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of FHI Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of FHI Common Stock issued upon conversion of shares of Company Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
1.5(c) or 1.5(e)) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock, subject, however,
to FHI's obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared or made by
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement on or prior to the Effective Time and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of FHI of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Company Certificates are presented to FHI for any reason, they shall be
cancelled and exchanged as provided herein.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of FHI Common Stock shall be issued upon the
surrender for exchange of Company Certificates evidencing shares of Company
Common Stock, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a shareholder of FHI.
<PAGE>
(ii) Notwithstanding anything to the contrary contained in this
Agreement, each holder of shares of Company Common Stock exchanged pursuant to
this Article I who would otherwise have been entitled to receive a fraction of
a share of FHI Common Stock (after taking into account all shares of Company
Common Stock of such holder) shall receive, in lieu thereof, a cash payment
determined by multiplying the Valuation Price by the fraction of a share of FHI
Common Stock which such holder would otherwise be entitled to receive pursuant
to Section 1.4.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of Company for six months after
the Effective Time shall be delivered to FHI, upon demand, and any shareholders
of Company who have not theretofore complied with this Article I shall
thereafter look only to FHI for payment of their claim for shares of FHI Common
Stock, any cash in lieu of fractional shares of FHI Common Stock and any
dividends or distributions with respect to shares of FHI Common Stock.
(g) No Liability. Neither FHI, Sub, Company, the Surviving
Corporation nor the Exchange Agent shall be liable to any holder of Company
Certificates for shares of FHI Common Stock (or dividends or distributions with
respect thereto) or cash in lieu of fractional shares thereof delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing shares of Company Common Stock
shall not have been surrendered prior to five years after the Effective Time
(or immediately prior to such earlier date on which any shares of FHI Common
Stock, any cash in lieu of fractional shares of FHI Common Stock or any
dividends or distributions with respect to FHI Common Stock in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Authority (as defined below)), any such shares, cash, dividends or
distributions in respect of such certificate shall, to the extent permitted by
applicable law, become the property of FHI, free and clear of all claims or
interest of any person previously entitled thereto.
ARTICLE II
THE CLOSING
2.1 Closing Date. Subject to Article VII, the closing (the
"Closing") of the transactions contemplated by this Agreement shall take place
on a date to which FHI, Sub and Company may agree (the "Closing Date");
provided, however, that in the absence of an agreement by the parties to the
contrary such Closing Date shall be the thirtieth business day after the later
to occur of satisfaction or waiver of the conditions to Closing set forth in
Article VI (excluding such conditions that by their terms cannot be satisfied
until the Closing Date).
2.2 Procedure. The Closing shall be held at the offices of FHI in
Honolulu, Hawaii, or at such other place as to which the parties hereto shall
agree. On the Closing Date and subject to the terms and conditions provided
herein, the Articles of Merger shall be filed with the Secretary of State of
the State of Washington.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as otherwise disclosed to FHI in a schedule dated as of the
date hereof and delivered concurrently with the execution of this Agreement
(the "Company Schedule"), Company represents and warrants to FHI as follows:
3.1 Organization, Etc.
(a) Company is duly incorporated, validly existing and in good
standing under the laws of the State of Washington. Company has all requisite
power and authority to own, lease and operate its properties and to carry on
its businesses as now conducted and is qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which such
qualification is necessary under applicable law, except to the extent that the
failure to be so qualified and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect (as defined in Section 8.9).
(b) Company is a duly registered bank holding company under the Bank
Holding Company Act of 1956, as amended, and the rules and regulations
promulgated thereunder (the "BHC Act"). American National Bank, a national
banking association ("Company Bank"), is duly organized, validly existing and
in good standing under the National Bank Act, as amended. Company has no
subsidiaries other than Company Bank. Company Bank has no subsidiaries.
3.2 Non-Contravention; Binding Effect. Company has all requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of this Agreement by the shareholders of Company, to consummate the
transactions contemplated hereby and to perform its obligations hereunder.
This Agreement has been duly and validly authorized, executed and delivered by
Company and constitutes the valid and legally binding obligation of Company,
enforceable against Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally or general equitable principles.
Neither the execution and delivery of this Agreement by Company, nor the
consummation by it of the transactions contemplated hereby, nor compliance by
it with any of the provisions hereof will (i) conflict with or result in a
breach of any provision of Company's articles of incorporation or by-laws or
the charter or organizational documents of any of its subsidiaries; or (ii)
subject to obtaining the approvals of third parties referred to in Section 3.3,
conflict with or constitute or result in the breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
loss of any material benefit under, or the creation of any lien, charge or
encumbrance upon any property or assets of Company or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture, license, agreement, lease or
other instrument, contract or obligation to which Company or any of its
subsidiaries is a party or by which any of their properties or assets may be
bound, except for such breaches, defaults, rights of termination, cancellation
or acceleration, losses of benefits, liens, charges or encumbrances as would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; or (iii) subject to obtaining the requisite Regulatory
Approvals (as defined in Section 5.1), violate any order, writ, injunction,
decree, permit, statute, law, ordinance, rule or regulation applicable to
Company or any of its subsidiaries or any of their respective properties or
assets.
3.3 No Consent. Except as set forth in Section 3.3 of the Company
Schedule, no consents, approvals, orders, resolutions or forebearances, by or
from, and no registrations, declarations or filings with, any governmental or
<PAGE>
regulatory agency, authority, corporation, board, commission, department or
other governmental instrumentality (a "Governmental Authority") or any other
third party, are required in order for Company or its subsidiaries to enter
into this Agreement, to consummate the transactions contemplated hereby or to
perform their obligations hereunder.
3.4 Compliance with Laws.
(a) Company and each of its subsidiaries has conducted its business
in compliance with all statutes, laws, rules, regulations, ordinances, permits,
reporting and licensing requirements and orders applicable to its business or
properties or any of its employees, the breach or violation of which could,
individually or in the aggregate, have a Material Adverse Effect. Company
holds all permits, authorizations, licenses, variances, exemptions, orders and
approvals of all Governmental Authorities which are material to the business of
Company and its subsidiaries taken as a whole, and all such permits,
authorizations, licenses, variances, exemptions, orders and approvals are in
full force and effect and, to the best of its knowledge, no suspension or
cancellation of any of them is pending or threatened.
(b) Neither Company nor any subsidiary thereof has received any
notification from any Governmental Authority asserting that Company or such
subsidiary is not in compliance with any of the statutes, regulations or
ordinances that such Governmental Authority enforces, except for such
noncompliance as would not reasonably be expected to have, individually or in
aggregate, a Material Adverse Effect. Neither Company nor any subsidiary
thereof is party to or the subject of any supervisory agreement, memorandum of
understanding, cease-and-desist order, consent decree, assistance agreement or
any similar agreement or arrangement with any Governmental Authority with
respect to its assets, capital, operations or business (nor has Company or any
of its subsidiaries adopted any board resolutions or made any written
commitments with respect to any of the foregoing at the request of any
Governmental Authority), and neither Company nor any of its subsidiaries has
been advised by any Governmental Authority that it contemplates issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such supervisory agreement, memorandum of understanding, cease-and-desist
order, consent decree, assistance agreement or similar agreement or arrangement
or any such board resolutions or written commitments. Except for routine
examinations by federal or state Governmental Authorities charged with the
supervision or regulation of bank holding companies and national banking
associations, to the best knowledge of Company, no investigation by any
Governmental Authority is pending or threatened against Company or any
subsidiary or, in the reasonable judgment of Company, probable of assertion
after the date hereof which would reasonably be expected to have a Material
Adverse Effect.
3.5 Capitalization.
(a) As of the date hereof, the authorized capital of Company
consists of 100,000 shares of preferred stock, no par value, and 500,000 shares
of Company Common Stock. As of the date hereof, no shares of preferred stock
of Company are issued and outstanding, 149,824 shares of Company Common Stock
are issued and outstanding and 14,900 shares of Company Common Stock are
reserved for issuance pursuant to Company Stock Options, of which Company Stock
Options 8,900 have been granted and are outstanding on the date hereof. As of
the date hereof, no shares of Company Common Stock are owned beneficially or of
record by Company as treasury stock or by its subsidiaries.
<PAGE>
(b) As of the date hereof, no bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which shareholders may
vote ("Voting Debt") are issued or outstanding with respect to Company.
(c) All of the issued and outstanding shares of Company Common Stock
have been duly and validly authorized and issued, are fully paid and
nonassessable and were not issued in violation of any preemptive rights of
shareholders of Company. Except as set forth in Section 3.5(a) or in Section
3.5 of the Company Schedule, there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements or commitments
obligating Company to issue, transfer from the treasury, deliver or sell any
additional shares of Company's capital stock or Voting Debt or to grant, extend
or enter into any such option, right, warrant, convertible security, commitment
or agreement, and no unissued shares of Company Common Stock are subject to any
preemptive rights of shareholders of Company. There are no outstanding
contractual obligations of Company to repurchase, redeem or otherwise acquire
any outstanding shares of capital stock of or other ownership interest in
Company. Except as set forth in Section 3.5 of the Company Schedule, as of the
date of this Agreement, no person held of record, or to the best knowledge of
Company, beneficially, 5% or more of the outstanding shares of Company Common
Stock.
3.6 Subsidiaries. Section 3.6 of the Company Schedule shows all of
the authorized, issued and outstanding shares of capital stock of, and other
equity and ownership interests in, Company Bank. Except as shown in Section
3.6 of the Company Schedule, Company owns directly or indirectly all of the
outstanding capital stock of, and all other equity or ownership interests in,
Company Bank, free and clear of all liens, charges and encumbrances, and no
Voting Debt of Company Bank is outstanding. There are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements, commitments or rights to subscribe for or purchase from Company, or
any plans, contracts or commitments providing for the issuance of, or the
granting or extending of rights to acquire, (i) any capital stock of or other
ownership interest in, or Voting Debt of Company Bank, or (ii) any securities,
options, rights, warrants, convertible securities or other such security
convertible into or exchangeable for any capital stock of or other ownership
interest in or Voting Debt of Company Bank. There are no outstanding
contractual obligations of Company to repurchase, redeem or otherwise acquire
any outstanding shares of capital stock of or other ownership interest in
Company Bank. All of the outstanding shares of the capital stock of Company
Bank have been duly and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive rights. Company has no direct
or indirect equity interest in any other firm, corporation, savings
association, partnership, joint venture or business enterprise other than as
are listed in Section 3.6 of the Company Schedule.
3.7 Charter Documents; Management.
(a) The copies of the articles of incorporation and by-laws of
Company, and the charter and by-laws or other organizational documents of
Company Bank (and any amendments thereto), delivered to FHI prior to the date
of this Agreement are true and complete copies, and such articles of
incorporation, charters, by-laws and other organizational documents are in full
force and effect.
<PAGE>
(b) The name and title or position of each officer or director as of
the date hereof of Company and Company Bank are disclosed in Section 3.7(b) of
the Company Schedule.
3.8 Financial Statements and Reports.
(a) Company has previously furnished to FHI true and complete copies
of the audited consolidated balance sheets of Company and its subsidiaries as
of December 31, 1994 and 1995 and the related statements of income, changes in
stockholders' equity and cash flows for the fiscal years ended December 31,
1993 through 1995 inclusive, accompanied by the audit report of Knight Vale and
Gregory Inc., P.S., independent public accountants of Company.
(b) All of the financial statements of Company referred to above
were (and in the case of financial statements provided to FHI after the date
hereof pursuant to Section 5.2(b) will be) prepared in accordance with GAAP
applied on a consistent basis for the periods involved and fairly present (or
will fairly present) the financial condition of Company and its subsidiaries as
of the dates thereof and the consolidated results of their operations, changes
in stockholders' equity and cash flows for the periods then ended, subject in
the case of interim statements to normal recurring year-end adjustments none of
which are expected to be material. Company and its subsidiaries have no
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) that are not fully reflected or reserved against in the balance
sheet as of December 31, 1995 included in such financial statements, except for
liabilities and obligations disclosed in Section 3.8(b) of the Company Schedule
or incurred after the date of this Agreement in the ordinary course of business
consistent with past practice and not in violation of this Agreement.
(c) No report or other document filed by Company or any subsidiary
since January 1, 1992 with the Office of the Comptroller of the Currency
("OCC"), the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or the Federal Deposit Insurance Corporation (the "FDIC") under
applicable federal, state, territorial or foreign laws or regulations, as of
the date thereof, contained or, in the case of filings made after the date
hereof, will contain any untrue statement of a material fact or omitted, or in
the case of filings made after the date hereof will omit, to state a material
fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Since January 1, 1992 each of Company and its subsidiaries has
filed and after the date of this Agreement will file in a timely manner all
required filings with the OCC, the Federal Reserve Board, the FDIC and all
other appropriate Governmental Authorities, and all such filings complied and
will comply as to form in all material respects with the regulatory
requirements applicable thereto.
3.9 Properties.
(a) Company or a subsidiary thereof has good and marketable title to
all properties and assets owned and used in the business of Company and its
subsidiaries, including the real properties reflected in Company's audited
consolidated balance sheet for the year ended December 31, 1995 (except to the
extent any such owned properties or assets have been disposed of since such
date in the ordinary course of business and such dispositions, individually or
in the aggregate, are not material), free and clear of all liens, claims,
charges, security interests or other encumbrances, other than liens, claims,
charges, security interests and encumbrances which do not individually or in
<PAGE>
the aggregate materially and adversely affect the use and enjoyment of the
properties or assets subject thereto or business operations at such properties.
(b) Section 3.9(b) of the Company Schedule lists all of the offices
and branches maintained and operated by Company and its subsidiaries, including
the address or description thereof and whether it is held in fee or leasehold.
Except as shown in Section 3.9(b) of the Company Schedule, neither Company nor
any of its subsidiaries maintains any other office or conducts business at any
other location.
(c) All properties and assets held by Company or a subsidiary
thereof under lease are held under valid instruments, enforceable in accordance
with their terms, except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally or general equitable principles. As of the date hereof, there is no
default (or event or circumstance which, with the giving of notice or lapse of
time, would constitute such a default) by the lessee or, to the knowledge of
Company, the lessor under any such lease.
(d) Company and its subsidiaries are insured with reputable
insurers, in such amounts as have been disclosed to FHI and against all risks
normally insured against by corporations or organizations in similar lines of
business, and all insurance policies and bonds maintained by Company and each
of its subsidiaries as of the date hereof are listed in Section 3.9(d) of the
Company Schedule and are in full force and effect. As of the date hereof,
neither Company nor any of its subsidiaries has received any notice of
cancellation or material amendment of any insurance policy or bond or is in
default under any such policy or bond, no coverage thereunder is being
disputed, and all claims thereunder have been filed in timely fashion.
(e) Neither Company nor any subsidiary has outstanding any
commitment for capital expenditures, except as disclosed in Section 3.9(e) of
the Company Schedule.
3.10 Absence of Certain Changes. Except as set forth in Section
3.10 of the Company Schedule, since December 31, 1995, Company and its
subsidiaries have conducted their businesses in the ordinary course, consistent
with past practice (except as expressly required to perform their obligations
under this Agreement), and there has not been since December 31, 1995:
(a) Any change or event that has had or could reasonably be expected
to have, together with all other such changes and events, a Material Adverse
Effect; or
(b) Any amendment to the articles of incorporation or by-laws or
organizational documents of Company or of any of its subsidiaries; or
(c) Any declaration, setting aside or payment of any dividend
(whether in cash, stock or other property) or any other distribution in respect
of the capital stock of Company or its subsidiaries (other than dividends paid
on the capital stock of wholly-owned subsidiaries of Company); or
(d) Any issuance, reissuance, sale or acquisition of (or agreement
to issue, reissue, sell or acquire) shares of capital stock, other equity
securities or rights, options or warrants to acquire any such shares of stock
or other equity securities of Company or any of its subsidiaries; or
<PAGE>
(e) Any subdivision, combination, aggregation or reclassification of
any shares of capital stock or redemption or repurchase of any shares of such
capital stock of Company or any of its subsidiaries; or
(f) Any merger or consolidation (or agreement to merge or
consolidate) with any other corporation, or conveyance to any other person,
firm or corporation, or encumbrance of (or agreement to convey or encumber) a
material part of Company's assets or the assets of any of its subsidiaries, or
the acquisition (or agreement to acquire) of all or substantially all of the
assets of another person, firm or corporation; or
(g) Entry into any material contract, arrangement or commitment
except in the ordinary course of the respective businesses of Company and its
subsidiaries consistent with their past practices; or
(h) Implementation of any pension, retirement, profit sharing,
bonus, welfare benefit or similar plan or arrangement or the material amendment
of any existing plan or arrangement, other than as required by law; or
(i) Incurrence of any indebtedness for borrowed money in excess of
$100,000, whether or not in the ordinary course of business, or any assumption,
guarantee or endorsement of any obligation of any other individual or entity,
except, in any such case, for deposit liabilities and assumptions, guarantees,
letters of credit, endorsements, Federal Home Loan Bank borrowings, and Fed
Funds borrowings incurred or entered into by Company Bank in the ordinary
course of its banking business consistent with past practice; or
(j) Any change by Company or its subsidiaries in accounting
principles or methods, except as required by the Financial Accounting Standards
Board ("FASB") or regulations promulgated by the OCC with respect to financial
statements filed with it; or
(k) Any increase in compensation payable or any agreement to
increase compensation payable by Company or any of its subsidiaries to any of
their respective directors, officers, employees or agents, other than normal
cost-of-living and regularly scheduled increases to non-executive employees of
Company and its subsidiaries; or
(l) Entry into any agreement to (i) do any of the foregoing other
than as expressly provided herein or (ii) take any action which, if taken prior
to the date hereof, would have made any representation or warranty contained in
this Article III untrue or incorrect.
3.11 Material Contracts.
(a) Except as disclosed in Section 3.11 of the Company Schedule,
neither Company nor any of its subsidiaries is a party to any oral or written
(i) agreement not terminable on 60 days' or less notice involving the payment
of more than $100,000 per annum, (ii) joint venture agreement, or (iii)
noncompetition or similar agreement that restricts Company or its subsidiaries
from engaging in a line of business.
(b) Neither Company nor any subsidiary is in default under any
contract, agreement, indenture, mortgage, deed of trust, loan instrument,
commitment, arrangement, lease, insurance policy or other instrument to which
it is a party or by which its respective properties or assets may be bound or
subject or under which it or its respective business, properties or assets
<PAGE>
receive benefits, except for any such defaults which would not, individually or
in the aggregate for all such defaults, have a Material Adverse Effect, and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default.
3.12 Litigation. There are no suits, claims, actions or proceedings
against or affecting Company or any of its subsidiaries pending or, to the best
of knowledge of Company, threatened, or, in the reasonable judgment of Company,
probable of assertion, which could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, or which could restrict Company
or any subsidiary thereof from engaging in a line of business, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against Company or any subsidiary which could have a
Material Adverse Effect or which could restrict Company or any subsidiary from
engaging in a line of business.
3.13 Regulatory Applications. The information relating to Company
and its subsidiaries provided by Company for inclusion in any applications
filed for Regulatory Approvals, and in the proxy statement relating to the
approval of this Agreement and the Merger by Company's shareholders and any
amendment or supplement thereto (the "Proxy Statement"), shall comply in all
material respects with relevant laws and regulations and will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
3.14 Taxes.
(a) Definitions. For purposes of this Section 3.14, the following
definitions shall apply:
(i) The term "Group" shall mean, individually and collectively,
Company and each other corporation that is a member of the affiliated
group of corporations within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended (the "Code"), of which Company is the
common parent.
(ii) The term "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or other additions that may become
payable in respect thereof, imposed by any federal, territorial, state,
local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes (including, but
not limited to, federal income taxes and state franchise and income
taxes), payroll and employee withholding taxes, unemployment insurance
taxes and social security taxes, sales and use taxes, ad valorem taxes,
excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation (the "PBGC") premiums and other governmental
charges, backup withholding taxes, and other obligations of the same or of
a similar nature to any of the foregoing, which the Group, Company or any
of its subsidiaries is required to pay, withhold or collect.
(iii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating
to, or required to be filed in connection with, any Taxes.
<PAGE>
(b) Company and each of its subsidiaries is, has been and will be a
member of the Group for all taxable periods before the Closing Date. The Group
has timely filed all Returns required to be filed, and the information
contained in each such Return is complete and accurate, except in such respects
as would not have a Material Adverse Effect.
(c) The Group has paid all Taxes required to be paid in respect of
the periods covered by such Returns, and the Group has no liability for such
Taxes (and, to the best knowledge of Company, there is no potential liability
in respect of deductions, costs or other allowances taken for federal income
tax purposes likely to be disallowed in any audit by the Internal Revenue
Service) in excess of the amounts so paid or reserves so established.
(d) The Group is not delinquent in the payment of any Taxes, and it
has not requested any extension of time within which to file any Returns that
have not since been filed, with the exception of the 1995 consolidated federal
income tax return Form 1120, and no deficiencies for any Taxes have been
claimed, proposed or assessed. There are no outstanding extensions of time for
the assessment of any Taxes payable by the Group.
(e) There are no pending or, to the best of Company's knowledge,
threatened, tax audits, investigations, or claims for or relating to any
liability in respect of Taxes, except any such audits, investigations or claims
that, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and there are no matters under discussion with
any taxing authorities with respect to Taxes that are likely to result in a tax
liability, except such as could not reasonably be expected to have a Material
Adverse Effect.
(f) As of the date hereof, the Group's federal income tax Returns
have been audited and closed by the Internal Revenue Service or the applicable
statute of limitations has expired for all taxable periods through the year
ended December 31, 1991 and its State of Washington franchise and income tax
Returns have been audited and closed by the Department of Revenue of the State
of Washington or the applicable statute of limitations has expired for all
taxable periods through the period ended December 31, 1992.
(g) The Group is not a party to any safe harbor lease within the
meaning of Section 168(f)(8) of the Code, as in effect prior to amendment by
the Tax Equity and Fiscal Responsibility Act of 1982. No member of the Group
is a "consenting corporation" under Section 341(f) of the Code.
3.15 Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 3.15(a) of the Company Schedule
and as of the date hereof, neither Company nor any subsidiary is a party to or
has or could have any liability or obligation with respect to (i) any "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (ii) any profit sharing,
pension, deferred compensation, bonus, stock option, stock purchase, severance,
retainer, consulting, health, welfare or incentive plan or agreement, including
any post-employment benefits, (iii) any material plan or policy providing for
"fringe benefits" to its employees, including but not limited to vacation, paid
holidays, personal leave, employee discount, educational benefit or similar
programs or (iv) any employment agreement (individually a "Benefit Plan", and
collectively the "Benefit Plans").
<PAGE>
(b) Company has heretofore delivered to FHI correct and complete
copies of (A) the Benefit Plans, (B) any employment, consulting or termination
agreements with respect to current or former employees of Company or any
subsidiary to the extent any liability or obligation remains thereunder, (C)
the two most recent Internal Revenue Service determination letters relating to
each of its employee pension benefit plans, as defined in Section 3(2) of ERISA
(the "Employee Pension Benefit Plans") for which such letters of determination
were obtained, (D) to the extent required to be filed, the two most recent
Annual Reports (Form 5500 Series) and accompanying schedules of each Benefit
Plan, as filed with the Internal Revenue Service, (E) any summary plan
descriptions relating to any Benefit Plan, (F) if applicable, the most recent
audited financial statements of each of its Employee Pension Benefit Plans and
(G) the two most recent actuarial valuation reports for each of its Employee
Pension Benefit Plans for which such reports were prepared.
(c) Company and each subsidiary has received, with respect to each
of the Employee Pension Benefit Plans which is intended to qualify under
Section 401(a) of the Code, a favorable determination letter issued by the
Internal Revenue Service, and no events, actions or failures to act have
occurred which would adversely affect the qualification of any such Employee
Pension Benefit Plan. Neither Company, any subsidiary nor any entity which is
part of a group which includes Company or any subsidiary and which is treated
as a single employer under Section 414 of the Code (a "Controlled Group
Member") contributes to a "multiemployer plan", as defined in Section
4001(a)(3) of ERISA, or had a complete or partial withdrawal from any such
multiemployer plan, the liability for which remains unsatisfied. Each of the
Benefit Plans has been administered in all material respects in accordance with
its terms, the requirements of ERISA and any other applicable law.
(d) All reports and information required to be filed with the United
States Department of Labor, Internal Revenue Service or PBGC or distributed to
plan participants and their beneficiaries, which if not timely filed or
distributed would result in any liability to Company or any subsidiary with
respect to any Benefit Plan, have been timely filed or distributed. With
respect to each Benefit Plan for which an Annual Report had been filed, no
change has occurred with respect to the matters covered by the most recent
Annual Report since the date thereof which would result in any liability to
Company or any subsidiary.
(e) None of the Employee Pension Benefit Plans (or any pension plan
maintained by a Controlled Group Member) which is subject to Title IV of ERISA
have (A) completely or partially terminated or (B) been the subject of a
"reportable event" as defined in Section 4043 of ERISA, if any such event would
result in any liability to Company or any subsidiary.
(f) No proceedings by the PBGC to terminate pursuant to Subtitle C
of Title IV of ERISA any Employee Pension Benefit Plan of Company (or any
pension plan maintained by a Controlled Group Member) have been instituted or
threatened. No material liability under Title IV of ERISA has been incurred by
Company or any subsidiary with respect to an Employee Pension Benefit Plan (or
any pension plan maintained by a Controlled Group Member). None of the
Employee Pension Benefit Plans (or any pension plan of a Controlled Group
Member) which is a defined benefit pension plan has incurred any "accumulated
funding deficiency" (whether or not waived), as that term is defined in Section
412 of the Code, and the fair market value of the assets held to fund each such
plan equals or exceeds the actuarial present value (based on the actuarial
assumptions used by the actuary of the plan for purposes of determining the
<PAGE>
contributions for such plan) of all accrued benefits, both vested and
nonvested, under such plan.
(g) All contributions for all periods ending prior to the Closing
Date (including periods from the first day of the current plan year to the
Closing Date) will be made prior to the Closing Date by Company or one of its
subsidiaries, as applicable, in accordance with past practice.
(h) There have been no "prohibited transactions" (as such term is
defined in Section 4975 of the Code or in Part 4 of Subtitle B of Title I of
ERISA) with respect to any Benefit Plan as to which Company or any subsidiary
may have any liability. No penalty or tax for which Company or any of its
subsidiaries may be liable has been imposed under Section 502(i) of ERISA or
Section 4975 of the Code.
(i) There are no pending, or to the best knowledge of Company
threatened, claims by or on behalf of any Benefit Plan, by any employee or
beneficiary covered under any such Benefit Plan which allege a breach of
fiduciary duties or violations of other applicable state or federal law which
may result in liability on the part of Company or any subsidiary or result in
any decrease in the assets of any Benefit Plan under ERISA or any other law,
nor, to Company's best knowledge, is there any basis for any such claim.
Company will notify FHI in writing of any such threatened or pending claims
arising after the date hereof but before the Effective Time.
(j) Neither Company nor any subsidiary has any obligation to
provide, or liability with respect to, any post-retirement benefits for any
current or former employee under any "welfare benefit plan" as defined in
Section 3(1) of ERISA.
(k) All expenses and liabilities relating to all of the Benefit
Plans described in Section 3.16(k) of the Company Schedule have been, and will
on the Closing Date be, fully and properly accrued on Company's books and
records, to the extent required by GAAP.
3.16 Labor Relations. Neither Company nor any of its subsidiaries
is a party to any collective bargaining agreement. Since December 31, 1990, no
material labor dispute, strike or other work stoppage has occurred, is
continuing or, to the knowledge of Company, has been threatened with respect to
Company or any of its subsidiaries, and, to the knowledge of Company, no union
organizing, certification or election activities have taken place with respect
to Company or any of its subsidiaries.
3.17 Employment and Similar Agreements; Obligations Upon Change in
Control. Except as disclosed in Section 3.17 of the Company Schedule, there
are no employment, consulting, severance or indemnification agreements or
understandings of legal effect ("Employee Agreements") between Company or any
of its subsidiaries, on the one hand, and any director, officer or employee of
Company or of any of its subsidiaries or any other party, on the other hand.
Except as set forth in Section 3.17 of the Company Schedule, there are no such
Employee Agreements (i) under which any of the transactions contemplated by
this Agreement will require any payment by Company or any of its subsidiaries,
or by FHI, Sub or Surviving Corporation, to any director, officer or employee
of Company or of any of its subsidiaries, or any other party, or (ii) under
which there will occur any acceleration or change in the award, grant, vesting
or determination of options, warrants, rights, severance payments, or other
contingent obligations of any nature whatsoever of Company or any of its
<PAGE>
subsidiaries in favor of any such parties, or under which the value of any
benefits will be calculated on the basis of any of the transactions
contemplated by this Agreement.
3.18 Broker's and Finder's Fees. Except for payments to Ragen
MacKenzie Incorporated, which has been engaged by Company as its financial
advisor and investment banker (pursuant to an agreement, a copy of which has
been delivered to FHI), neither Company nor any of its subsidiaries has any
liability to any broker, finder or similar agent, nor has any of them agreed to
pay any brokerage fee, finder's fee or commission with respect hereto or to the
transactions contemplated hereby.
3.19 Hazardous Materials.
(a) Except as shown in Section 3.19 of the Company Schedule,
Hazardous Materials have not been deposited or disposed of in, on or under, or
released, emitted or discharged from, any of Company's or any of its
subsidiaries' properties during the time when Company or such subsidiary owned
the property. Except as shown in Section 3.19 of the Company Schedule, neither
Company nor any of its subsidiaries has any knowledge or information that any
prior owners, occupants or operators of any such properties ever deposited,
disposed of, or allowed to be deposited or disposed of in, on or under or
released, emitted or discharged from, such properties, any Hazardous Material,
or that any prior or present owners, occupants or operators of any properties
in which any of Company or Company's subsidiaries hold a security interest,
mortgage or other lien or interest, deposited or disposed of in, on or under or
handled or processed on, or released, emitted or discharged from, such
properties, any Hazardous Material. "Hazardous Material" shall mean any
substance, chemical, waste or other material which is listed, defined or
otherwise identified as hazardous, toxic or dangerous under any applicable law,
regulation or order of any Governmental Authority, as well as any petroleum,
petroleum product or by-product, crude oil, natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel, and "source," "special
nuclear," and "by-product" material as defined in the Atomic Energy Act of
1985, 42 U.S.C. Section 3011 et seq.
(b) Neither Company nor any of its subsidiaries nor, to the best
knowledge of Company, any of its or their borrowers is in violation (either
directly, including as a successor-in-interest in connection with the
realization of properties serving as collateral, or indirectly, as a collateral
interest holder) of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental laws, except to the extent that such
violations, individually or in the aggregate, could not be reasonably expected
to have a Material Adverse Effect, nor has Company or any of its subsidiaries
or, to the best knowledge of Company, any of its or their borrowers, received
notice from any Governmental Authority of any such violation or of any remedial
investigation or action which could reasonably be expected to have a Material
Adverse Effect.
3.20 Damage to Mortgaged Properties. Except as set forth in
Section 3.20 of the Company Schedule, none of the properties securing
outstanding loans held or serviced by Company or any of its subsidiaries has
suffered material damage or casualty loss not covered in full by an insurance
policy written by a reputable insurer whose claims paying capacity has not been
impaired, nor has Company or any of its subsidiaries funded any loan
commitments or granted any forebearances with respect to loans secured by
properties that are not fully insured against casualty losses on customary
<PAGE>
terms by a reputable insurer whose claims paying capacity has not been
impaired. Except as set forth in Section 3.20 of the Company Schedule, all
outstanding single-family residential mortgage loans originated or serviced by
Company are insured in amounts and by insurers that meet the requirements of
the Federal Home Loan Mortgage Corporation or the Federal National Mortgage
Association for resale in secondary market transactions, and none of the
mortgagors for such loans has advised Company or any of its subsidiaries that
the hazard or casualty insurance policy on such mortgaged property has not been
or will not be renewed and that such mortgagor is unable to obtain a substitute
or replacement policy in accordance with the terms of such mortgage.
3.21 Shareholder Approval. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock is required to
approve this Agreement and approve the Merger. No other vote of the
shareholders of Company is required by law, the articles of incorporation or
by-laws of Company or otherwise to adopt this Agreement and approve the Merger
and the other transactions contemplated hereby.
3.22 Deposit Accounts. The deposits of Company Bank are insured by
the Bank Insurance Fund ("BIF") of the FDIC in accordance with the provisions
of the Federal Deposit Insurance Act, as amended (the "FDI Act"). Company Bank
has paid all regular premiums and special assessments and filed all reports
required under the FDI Act and its predecessor statutes, except where any such
failures to do so, alone or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
3.23 Trademarks, Etc. Each of Company and its subsidiaries owns or
possesses the right, free of the claims of any third party, to use all
trademarks, service marks, trade names, copyrights, patents and licenses
currently used by it in the conduct of its business, except where the failure
to so own or possess the right would not, individually or in the aggregate,
cause a Material Adverse Effect. To the knowledge of Company, no product or
service offered by Company or its subsidiaries infringes any rights of any
other person, and neither Company nor any subsidiary has received written or
oral notice of any claim of such infringement.
3.24 Disclosure. No written statement, certificate, schedule, list
or other written information furnished by or on behalf of Company or any
subsidiary to FHI prior to the date hereof contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FHI AND SUB
Except as otherwise disclosed to Company in a schedule dated as of
the date hereof and delivered concurrently with the execution of this Agreement
(the "FHI Schedule"), each of FHI and Sub represents and warrants to Company as
follows:
4.1 Organization, Etc.
(a) Each of FHI and its subsidiaries, including Sub, is duly
incorporated or organized, validly existing and in good standing under the
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jurisdiction of its incorporation or organization. Each of FHI and its
subsidiaries, including Sub, has all requisite power and authority to own,
lease and operate its properties and to carry on its businesses as now
conducted and is qualified to do business as a foreign corporation and in good
standing in each jurisdiction in which such qualification is necessary under
applicable law, except to the extent that the failure to be so qualified and in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) FHI is a duly registered bank holding company pursuant to the
BHC Act and a duly registered savings and loan holding company under Section 10
of the Home Owners' Loan Act, as amended. First Hawaiian Bank, a wholly-owned
subsidiary of FHI, is a banking corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Hawaii. Pioneer
Federal Savings Bank ("Pioneer"), a wholly-owned subsidiary of FHI, is a
federally chartered savings bank duly organized, validly existing and in good
standing under the laws of the United States. The deposit accounts of First
Hawaiian Bank and Pioneer are insured by the BIF and the Savings Association
Insurance Fund of the FDIC, respectively, to the fullest extent permitted under
applicable law.
4.2 Non-Contravention; Binding Effect. Each of FHI and Sub has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly and validly authorized, executed and
delivered by each of FHI and Sub and constitutes the valid and legally binding
obligation of each of FHI and Sub, enforceable against each of FHI and Sub in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally, or general equitable principles. Neither the execution and delivery
of this Agreement nor the consummation by each of FHI and Sub of the
transactions contemplated hereby, nor compliance by each of FHI and Sub with
any of the provisions hereof will (i) conflict with or result in a breach of
any provision of FHI's or Sub's articles of incorporation or by-laws or the
charter or organization documents of any of FHI's subsidiaries, or (ii) subject
to obtaining the approvals of third parties referred to in Section 4.3,
conflict with or constitute or result in the breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
loss of any material benefit under, or the creation of any lien, charge or
encumbrance upon any property or assets each of FHI or any of its subsidiaries,
including Sub, pursuant to, any note, bond, mortgage or indenture, or license,
agreement, lease or other instrument or obligation to which FHI or any of its
subsidiaries, including Sub, is a party or by which any of their properties or
assets may be bound, except for such breaches, defaults, rights of termination,
cancellation or acceleration or losses of benefit and such liens, charges and
encumbrances as would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, or (iii) subject to obtaining the
requisite Regulatory Approvals (as defined in Section 5.1), violate any order,
writ, injunction, decree, statute, rule or regulation applicable to FHI or any
of its subsidiaries, including Sub, or any of their respective properties or
assets.
4.3 No Consent. Except as set forth in Section 4.3 of the FHI
Schedule, no consents, approvals, orders, resolutions or forebearances by or
from any Governmental Authority or any other third party are required in order
for FHI or its subsidiaries, including Sub, to enter into this Agreement, to
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consummate the transactions contemplated hereby and to perform their
obligations hereunder.
4.4 Compliance with Laws.
(a) Each of FHI and its subsidiaries has conducted its business in
compliance with all statutes, laws, rules, regulations, ordinances, permits,
reporting and licensing requirements and orders applicable to its business or
properties or any of its employees, the breach or violation of which could,
individually or in the aggregate, have a Material Adverse Effect. Each of FHI
and its subsidiaries holds all permits, authorizations, licenses, variances,
exemptions, orders and approvals of all Governmental Authorities which are
material to the business of FHI and its subsidiaries taken as a whole, and all
such permits, authorizations, licenses, variances, exemptions, orders and
approvals are in full force and effect and, to the best of FHI's knowledge, no
suspension or cancellation of any of them is pending or threatened.
(b) Neither FHI nor any subsidiary thereof has received any
notification from any Governmental Authority asserting that FHI or such
subsidiary is not in compliance with any of the statutes, regulations or
ordinances that such Governmental Authority enforces, except for such
noncompliance as would not reasonably be expected to have, individually or in
aggregate, a Material Adverse Effect. Except as set forth in Section 4.4 of
the FHI Schedule, neither FHI nor any subsidiary thereof is party to or the
subject of any supervisory agreement, memorandum of understanding,
cease-and-desist order, consent decree, assistance agreement or any similar
agreement or arrangement with any Governmental Authority with respect to its
assets, capital, operations or business (nor has FHI or any of its subsidiaries
adopted any board resolutions or made any written commitments with respect to
any of the foregoing at the request of any Governmental Authority), and neither
FHI nor any of its subsidiaries has been advised by any Governmental Authority
that it contemplates issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such supervisory agreement,
memorandum of understanding, cease-and-desist order, consent decree, assistance
agreement or similar agreement or arrangement or any such board resolutions or
written commitments. Except for routine examinations by federal or state
Governmental Authorities charged with the supervision or regulation of bank
holding companies, banks and savings associations, to the best knowledge of
FHI, no investigation by any Governmental Authority is pending or threatened
against FHI or any subsidiary or, in the reasonable judgment of FHI, probable
of assertion after the date hereof which would reasonably be expected to have a
Material Adverse Effect.
4.5 Capitalization.
(a) As of the date hereof, the authorized capital of FHI consists of
100,000,000 shares of FHI Common Stock. As of the date hereof, 31,117,863
shares of FHI Common Stock are issued and outstanding and 997,825 shares of FHI
Common Stock are reserved for issuance pursuant to employee stock options, of
which options 481,156 have been granted and are outstanding on the date of this
Agreement. As of the date hereof, 1,424,934 shares of FHI Common Stock are
held by FHI as treasury stock.
(b) As of the date hereof, no Voting Debt of FHI is issued or
outstanding.
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(c) All of the issued and outstanding shares of FHI Common Stock
have been, and all of the shares of FHI Common Stock issued upon conversion of
shares of Company Common Stock pursuant to Article I, when issued, will be,
duly and validly authorized and issued, are fully paid and nonassessable and
were not issued in violation of any preemptive rights of shareholders of FHI.
Except as set forth in Section 4.5(a) or in Section 4.5 of the FHI Schedule,
there are no outstanding subscriptions, options, rights, warrants, convertible
securities or other agreements or commitments obligating FHI to issue, transfer
from the treasury, deliver or sell any additional shares of FHI's capital stock
or Voting Debt or to grant, extend or enter into any such option, right,
warrant, convertible security, commitment or agreement, and no unissued shares
of FHI Common Stock are subject to any preemptive rights of shareholders of FHI
other than the preemptive rights set forth in Article Ninth of the certificate
of incorporation of FHI. There are no outstanding contractual obligations of
FHI to repurchase, redeem or otherwise acquire any outstanding shares of
capital stock of or other ownership interest in FHI.
4.6 Charter Documents. The copies of the certificate of
incorporation and by-laws of FHI delivered to Company prior to the date of this
Agreement, are true and complete copies, and such certificate of incorporation
and by-laws are in full force and effect.
4.7 SEC Documents. FHI has made available to Company a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by FHI with the SEC (other than reports filed pursuant to
Section 13(d) or 13(g) of the Exchange Act) since December 31, 1994 (as such
documents have since the time of their filing been amended, the "FHI SEC
Documents"), which are all the documents (other than preliminary material and
reports required pursuant to Section 13(d) or Section 13(g) of the Securities
Exchange Act of 1934 (the "Exchange Act")) that FHI was required to file with
the SEC since such date. As of their respective dates of filing with the SEC,
the FHI SEC Documents complied in all material respects with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such FHI SEC Documents, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of FHI included in the FHI SEC Documents complied as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present in all material respects
the consolidated financial position of FHI and its consolidated subsidiaries as
at the dates thereof and the consolidated results of operations, changes in
stockholders' equity and cash flows of such companies for the periods then
ended. All material agreements, contracts and other documents required to be
filed as exhibits to any of the FHI SEC Documents have been so filed. FHI and
its subsidiaries have no liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which are not fully reflected or reserved
against in the balance sheet as of December 31, 1994 included in the FHI SEC
Filings, except for liabilities and obligations incurred since such date in the
ordinary course of business consistent with past practice and not in violation
of this Agreement.
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4.8 Absence of Certain Changes. Except as set forth in Section 4.8
of the FHI Schedule, since December 31, 1994, FHI and its subsidiaries have
conducted their businesses in the ordinary course, consistent with past
practice (except as expressly required to perform their obligations under this
Agreement), and there has not been since December 31, 1994 any change or event
that has had or could reasonably be expected to have, together with all other
such changes and events, a Material Adverse Effect.
4.9 Litigation. There are no suits, claims, actions or proceedings
against or affecting FHI or any of its subsidiaries pending or, to the best of
knowledge of FHI, threatened, or, in the reasonable judgment of FHI, probable
of assertion, which could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, or which could restrict FHI or any
subsidiary thereof from engaging in a line of business, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against FHI or any subsidiary which could have a
Material Adverse Effect or which could restrict FHI or any subsidiary from
engaging in a line of business.
4.10 Regulatory Applications. The information relating to FHI and
its subsidiaries, including Sub, provided by FHI and Sub for inclusion in any
applications filed for Regulatory Approvals and in the Proxy Statement (as
hereinafter defined) shall comply in all material respects with relevant laws
and regulations and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
4.11 Broker's and Finder's Fees. Neither FHI nor any of its
subsidiaries, including Sub, has any liability to any broker, finder or similar
agent, nor has any of them agreed to pay any brokerage fee, finder's fee or
commission, with respect hereto or to the transactions contemplated hereby.
4.12 Shareholder Approval. No vote of the shareholders of FHI is
required by the General Corporation Law of the State of Delaware, the
certificate of incorporation or by-laws of FHI or otherwise to adopt this
Agreement and approve the Merger and the other transactions contemplated
hereby. Sub has obtained all required corporate and shareholder approvals of
this Agreement and the Merger.
ARTICLE V
COVENANTS OF FHI, SUB AND COMPANY
5.1 Covenants by FHI, Sub and Company. FHI, Sub and Company shall
each:
(a) Filings and Approvals. Cooperate with the other parties in the
preparation and filing, as soon as practicable, of (i) all applications
necessary to obtain all consents, approvals, orders, resolutions or
forebearances by or from any Governmental Authorities necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement (collectively, the "Regulatory Approvals") and (ii) all other
documents necessary to obtain any other approvals and consents required to
consummate the Merger. Without limiting the generality of the foregoing, (i)
FHI and Sub, as applicable, shall provide draft copies of all required
applications to Company for review (other than any portions thereof for which
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FHI or Sub has or will request confidential treatment from the applicable
regulatory authority), (ii) Company shall provide draft copies of the Proxy
Statement, and any amendments or supplements thereto, to FHI and Sub for their
review a reasonable time prior to the mailing thereof to shareholders of
Company, and (iii) FHI, Sub and Company shall promptly apprise each other of
all communications with Governmental Authorities regarding the transactions
provided for herein and related applications and proceedings.
(b) Registration Statement.
(i) Cooperate in the preparation of a registration statement on Form
S-4 (the "Registration Statement") to be filed by FHI with the SEC in
connection with the issuance of shares of FHI Common Stock in the Merger. Each
of FHI, Sub and Company shall use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. FHI also shall use
all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Company shall furnish to FHI all information concerning
Company, its subsidiaries, officers, directors and shareholders as may be
reasonably requested in connection with the foregoing.
(ii) Each of FHI, Sub and Company agrees, as to itself and its
subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Registration Statement will, at
the time the Registration Statement and each amendment thereto, if any, becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. Each of FHI, Sub and
Company agrees that the Registration Statement (except, in the case of Company,
with respect to portions thereof prepared by FHI, and except, in the case of
FHI, with respect to portions thereof prepared by Company) will comply as to
form in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC thereunder.
(iii) FHI will advise Company, promptly after FHI receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of the shares of FHI Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
(c) Reasonable Best Efforts. Subject to the terms and conditions
hereof, use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. Such reasonable
best efforts shall include, without limitation, (i) using reasonable best
efforts to obtain all necessary consents, approvals or waivers from third
parties and Governmental Authorities necessary for the consummation of the
transactions contemplated by this Agreement, and (ii) subject to Section
7.1(c), opposing vigorously any litigation or administrative proceeding or
directive relating to this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse court or agency
order.
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(d) Access. During normal business hours and upon reasonable prior
notice, afford to the other parties to this Agreement and their counsel,
accountants or any other persons selected by such party full access to all its
properties, permit such persons to inspect and make copies of all stock
records, minute books, books of account, contracts, commitments and other
records, and furnish to such persons such counterpart originals or certified or
other copies of such documents or such information with respect to its
businesses and affairs as the other parties to this Agreement may from time to
time reasonably request and that the party requested to provide such
information may provide without violation of applicable law or regulation or
jeopardy to any attorney-client or similar privilege to which FHI, Sub or
Company, as the case may be, may otherwise be entitled as against third parties
other than FHI, Sub or Company; provided, however, that all information
concerning FHI, its subsidiaries (including Sub), Company and its subsidiaries
thus obtained shall be subject to the Confidentiality Agreement, dated February
15, 1996 (the "Confidentiality Agreement"), between FHI and Company.
5.2 Affirmative Covenants of Company. Company shall, and shall
cause its subsidiaries to:
(a) Conduct of Business. From and after the date of this Agreement,
(i) conduct its affairs only in the ordinary course of business consistent with
past practice, and use all reasonable efforts to preserve intact its business
organization, keep available the services of its present officers and employees
and preserve its relationships and goodwill with all persons having business
dealings with it, and (ii) maintain its and its subsidiaries' books of account
and records in accordance with GAAP applied on a basis consistent with those
principles used in preparing the financial statements heretofore delivered to
FHI and Sub, except as required by changes in applicable accounting rules and
concurred in by Company's independent public accountants.
(b) Delivery of Financial Statements. Deliver to FHI and Sub as
soon as they become available true and complete copies of any report or
statement mailed by it to shareholders or, to the extent permitted by law,
filed with Governmental Authorities subsequent to the date hereof and prior to
the Effective Time. In addition, Company shall furnish to FHI and Sub the
regularly prepared monthly financial statements of Company and its
subsidiaries.
(c) Meeting of Shareholders. Duly call a meeting of its
shareholders for the purpose of obtaining the approval of the shareholders to
the Merger, this Agreement, and all other matters necessary to consummate the
transactions contemplated by this Agreement, which meeting shall be held as
soon as practicable after the date hereof. In connection with such meeting,
the Board of Directors of Company, subject to the fiduciary duties of the
directors (determined after consultation with outside counsel to Company) based
on the information available to them at that time, shall recommend approval of
the transactions contemplated by this Agreement and indicate the determination
by the Board of Directors that the Merger is in the best interests of the
shareholders, shall not withdraw such recommendation and shall not recommend
approval of any tender offer, exchange offer, merger, consolidation, purchase
of substantial assets, recapitalization or similar transaction proposed by any
other party.
(d) Proxy Statement. Promptly prepare and, after consultation with
and review by FHI and Sub, mail to shareholders of Company the Proxy Statement.
Company represents, warrants and agrees that the Proxy Statement shall not,
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(i) on the date it is first mailed to Company's shareholders, and (ii) on the
date of the meeting of shareholders with respect to the approval of this
Agreement and the Merger, contain any statement which, at the time and in light
of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not false
or misleading or necessary to correct any statement in any earlier
communication which has become false or misleading.
5.3 Negative Covenants of Company. From the date hereof until the
Effective Time, except with the prior consent of FHI and Sub, neither Company
nor any of its subsidiaries shall:
(a) Charter. Amend or propose to amend its articles of
incorporation or charter or by-laws.
(b) Dividends. Declare or pay any dividend (whether in cash, stock
or other property) or make any other distribution in respect of its capital
stock, except that any wholly-owned subsidiary of Company may declare and pay
cash dividends, without restriction, to Company or any of its wholly-owned
subsidiaries.
(c) Issuance of Securities. Issue, reissue, sell or acquire (or
agree to issue, reissue, sell or acquire) shares of its capital stock, other
equity securities or Voting Debt or rights, options or warrants to acquire any
such shares of stock or other equity securities or Voting Debt, except that (i)
Company and its subsidiaries may issue shares pursuant to the terms of any
Company Stock Options that were issued and outstanding on the date of this
Agreement and (ii) wholly-owned subsidiaries of Company may issue shares of
capital stock to Company or any of its wholly-owned subsidiaries.
(d) Reclassifications or Repurchases. Subdivide, combine, aggregate
in any way or reclassify any shares of its capital stock or redeem or
repurchase any shares of such capital stock.
(e) Business Combinations. Merge or consolidate (or agree to merge
or consolidate) with any other corporation, or convey to another person, firm
or corporation or encumber (or agree to convey or encumber), in one transaction
or a series of transactions, a material part of its assets or capital stock of
its subsidiaries, or acquire (or agree to acquire) all or substantially all the
assets of another person, firm or corporation, except pursuant to the Merger.
(f) Contracts; Employee Matters. (i) Enter into, amend or terminate
any material contract, arrangement, or commitment, except as required by the
terms of this Agreement; enter into, adopt, amend (except as required by law or
this Agreement) or terminate any pension, retirement, profit sharing, bonus,
incentive, welfare benefit or any other employee benefit or compensation plan
or any agreement, arrangement, plan or policy between Company or any of its
subsidiaries and one or more of their respective directors, officers or
employees; (ii) increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any plan
and arrangement in effect on the date of this Agreement, or enter into any
contract, commitment or arrangement to do any of the foregoing; or (iii) enter
into or renew any contract, agreement, commitment or arrangement providing for
the payment to any director, officer or employee of Company or any of its
subsidiaries of compensation or benefits contingent, or the terms of which are
<PAGE>
materially altered, upon the occurrence of any of the transactions contemplated
by this Agreement.
(g) Indebtedness. Incur any indebtedness for borrowed money in
excess of $100,000, or assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual or entity, other than
deposit liabilities and assumptions, endorsements and guarantees, letters of
credit, Federal Home Loan Bank borrowings, and Fed Funds borrowings incurred or
assumed in the ordinary course of Company Bank's banking business consistent
with past practice.
(h) Investments. Make any investment in the capital stock or
securities (excluding notes issued by borrowers in respect of loans made by
Company and its subsidiaries in the ordinary course of business) of any other
person; except for (i) direct obligations of the United States of America,
(ii) obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest, and
(iii) indebtedness described in Section 5.3(g).
(i) Business Practices. (i) Enter into any new line of business;
(ii) materially change its lending, investment, liability management and other
material management policies; or (iii) incur or commit to incur any capital
expenditures in excess of $100,000 in the aggregate for all such expenditures
from the date hereof through and including the Closing Date, or any obligations
or liabilities in connection therewith, other than capital expenditures
disclosed in Section 5.3(i) of the Company Schedule.
5.4 Notification. Each party to this Agreement shall notify the
other party promptly after becoming aware of the occurrence of, or the
impending or threatened occurrence of, any event that would constitute a breach
on its part of any obligation under this Agreement or the occurrence of any
event that would cause any representation or warranty made by it herein to be
false or misleading, or if it becomes a party or is threatened with becoming a
party to any legal or equitable proceeding or governmental investigation or
upon the occurrence of any event that would result in a change in the
circumstances of either party described in the representations and warranties
contained herein.
5.5 No Shopping. Neither Company nor any subsidiary thereof shall,
directly or indirectly, through any officer, director or agent or otherwise,
solicit, initiate, endorse, encourage, facilitate or participate in any
negotiation in respect of or cooperate with (including by way of furnishing any
nonpublic information concerning the business, properties or assets of Company,
or any subsidiary thereof) any Acquisition Proposal (as hereinafter defined);
provided, however, that the foregoing shall not prohibit Company from (i)
furnishing information concerning Company and its subsidiaries, to a person who
has made an unsolicited Acquisition Proposal pursuant to a confidentiality
agreement substantially similar to the Confidentiality Agreement, (ii) engaging
in discussions or negotiations with such a person, or (iii) following receipt
of such an unsolicited Acquisition Proposal, failing to make or withdrawing or
modifying the recommendation of Company's Board of Directors referred to in
Section 5.2(c), but in each case referred to in clauses (i) through (iii)
Company may take such actions only to the extent that the Board of Directors of
Company shall have concluded in good faith based on the written advice of
outside counsel that such action is required to prevent the Board of Directors
of Company from breaching its fiduciary duties to the shareholders of Company
under Washington law. Company will notify FHI promptly by telephone, and
<PAGE>
thereafter promptly confirm such notification in writing, if any such
information is requested from, or any Acquisition Proposal or inquiry with
respect to any Acquisition Proposal is received by, Company or any subsidiary
thereof, and shall furnish FHI with a copy of any written Acquisition Proposal
received by Company and a summary of the material terms of any oral Acquisition
Proposal so received, including the identity of the person making the proposal.
The term "Acquisition Proposal" means any proposal for, or any communication
which may reasonably be expected to lead to a proposal for, a merger or other
business combination involving Company or for the acquisition of a substantial
equity interest in, or a substantial portion of the assets of, Company or any
subsidiary thereof.
5.6 Indemnification.
(a) FHI shall indemnify and hold harmless each present and former
director, officer, or employee of Company or any of its subsidiaries (each, an
"Indemnified Party" and, collectively, the "Indemnified Parties"), to the
fullest extent that Company would have been permitted under RCW Title 23B and
its articles of incorporation or charter and by-laws as in effect on the date
hereof, against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, and liabilities and amounts paid in
settlement (to the extent FHI consents to such settlement) in connection with
any threatened, pending or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
whether formal or informal, arising out of or pertaining to any action or
omission occurring prior to or as of the Effective Time, including, without
limitation, any which arise out of or relate to the transactions contemplated
by this Agreement. In the event of any such claim, action, suit, proceeding or
investigation, the Indemnified Party or Indemnified Parties, as applicable,
shall provide prompt written notice thereof to FHI. FHI shall have the right
to assume or participate in the defense of any such claim, action, suit,
proceeding or investigation at its own expense; provided, however, that FHI
shall not be liable for any settlement effected without its written consent
(which will not be unreasonably withheld). In the event that FHI fails to
timely assume the defense of such claim, action, suit, proceeding or
investigation, the Indemnified Parties or an Indemnified Party, as applicable,
shall have the right to appoint counsel of their own choosing; provided,
however, that FHI shall not be obligated pursuant to this Section 5.6 to pay
the fees and disbursements of more than one counsel for all Indemnified Parties
in any single action, except to the extent that, in the opinion of counsel for
the Indemnified Parties, two or more of such Indemnified Parties have
conflicting interests in the defense of such action which would make joint
representation of such Indemnified Parties inappropriate under applicable rules
of professional responsibility. Expenses incurred in defending such claim,
action, suit, proceeding or investigation shall be paid by FHI in advance of
final disposition of the same upon receipt of an undertaking by or on behalf of
such director, officer or employee to repay such amount unless it shall
ultimately be determined that the person is entitled to be indemnified by FHI
as authorized in this section.
(b) The obligations of FHI pursuant to, and the other provisions of,
this Section 5.6 shall survive the consummation of the Merger and is intended
to benefit each of the Indemnified Parties and shall be binding upon all
successors and assigns of FHI. Anything in this Section 5.6 to the contrary
notwithstanding, FHI shall not have any obligation under this Section to
indemnify any Indemnified Party against any losses, claims, damages or
<PAGE>
liabilities that are finally judicially determined to have resulted primarily
from such Indemnified Party's own willful misconduct or gross negligence.
(c) FHI shall use all reasonable efforts to provide directors' and
officers' liability insurance covering each person who was an officer or
director of Company or any subsidiary prior to the Effective Time for a period
of three years after the Effective Time, providing coverage not materially less
favorable to such persons than that provided to such persons under Company's
existing liability insurance policies, as in effect on the date of this
Agreement; provided, however, that FHI shall not be obligated to make annual
premium payments for such insurance in excess of 125% of the annual premiums
paid as of the date hereof by Company for such insurance (the "Maximum Premium
Amount"). If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Premium Amount, FHI shall
use its best efforts to maintain the most advantageous policies of directors'
and officers' insurance obtainable for an annual premium equal to the Maximum
Premium Amount.
(d) In the event that FHI or any of its successors or assigns shall
consolidate with or merge into any other person or transfer all or
substantially all of its properties or assets to any person, proper provisions
shall be made so that the successor or assign shall assume the obligations of
FHI set forth in this Section 5.6.
(e) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 5.6 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors or otherwise. FHI shall pay all expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 5.6.
5.7 Employees. It is the current intention of FHI that all existing
employees of Company Bank and its subsidiaries shall be offered the opportunity
to continue employment with Company Bank and its subsidiaries after the
Effective Time at substantially equivalent salaries as those currently paid by
Company Bank. During the two years following the Effective Time, all employees
who remain employees of the Surviving Corporation after the Effective Time
shall be eligible to participate in a package of employee benefit plans
equivalent to the package of employee benefits to be offered to FHI's other
financial institution subsidiaries located in Oregon, Washington and Idaho, and
which in the aggregate is reasonably competitive in the banking industry in
Central Washington. Employees of Company and its subsidiaries who remain in
the employ of the Surviving Corporation and its subsidiaries after the
Effective Time shall receive full credit for all purposes under such employee
benefit plans, except for the purposes of the accrual of benefits other than
vacation and sick leave benefits, for the lesser of the length of service prior
to the Effective Time with Company or any of its subsidiaries to the extent
such service would be recognized under such employee benefit plans if such
service was with FHI or its subsidiaries and the length of service that would
be recognized under similar employee benefit plans of Company and its
subsidiaries.
5.8 Affiliates. At least 40 days prior to the Closing Date, Company
shall deliver to FHI a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the shareholders of Company,
"affiliates" of Company for purposes of Rule 145 under the Securities Act.
<PAGE>
Each of FHI and Company shall use all reasonable efforts to cause each person
named in the letter delivered by Company to deliver to FHI at least 30 days
prior to the Closing Date a written agreement, substantially in the form
attached as Exhibit B.
5.9 Additional Covenants of Company. In order to induce FHI and Sub
to enter into this Agreement, Company hereby makes the following additional
agreements in favor of FHI and Sub:
(a) On or prior to the Closing Date, Company shall take, and shall
cause Company Bank to take, such actions as are necessary to (a) amend the
articles of association of Company Bank to (i) eliminate any provisions which
require prior notice to or approval of the OCC of shareholder nominations to
the Board of Directors of Company Bank or which otherwise restrict the ability
of the shareholders of Company Bank to nominate members of the Board of
Directors of Company Bank, (ii) eliminate provisions requiring ownership of
shares of Company Bank by directors of Company Bank, and (iii) provide for the
taking of board actions through telephonic meetings or by unanimous written
consent and (b) cause the foregoing amendments to the articles of association
of Company Bank, as well as all other amendments to the articles of association
of Company Bank previously adopted by Company Bank, to be filed by Company Bank
with the OCC as required by applicable regulations.
(b) As soon as practicable after the date hereof, and in any event
prior to the Effective Time, Company shall terminate each of the Deferred
Compensation Agreements between Company and Richard C. Emery and between
Company and Richard L. Peenstra.
(c) As soon as practicable and in any event prior to the
Determination Date, Company shall cause Company Bank to charge off each of the
following loans made by Company Bank which as of the date hereof are identified
by the following loan numbers: Loan Numbers 1803212, 1802446 and 1940923,
respectively, and Loan Numbers 1935253 and 1936228, respectively.
(d) Company shall, after giving effect to the foregoing actions,
cause Company Bank's allowance for loan losses as of the Determination Date to
be no less than 0.6% of the total loans of Company Bank as of such date, or
such higher percentage of total loans as would be required pursuant to all
applicable regulations and guidelines of the OCC.
(e) Prior to the Determination Date, FHI and Company shall engage a
consultant qualified in loan examination and classification, which consultant
will be designated by FHI and reasonably acceptable to Company, to conduct and
complete an examination of the loan files and other information relating to the
loans extended to Brubaker Farms in order to determine the appropriate loan
classification for such loans. If such consultant determines that any such
loan should be classified as "substandard," "doubtful" or "loss" in accordance
with applicable regulatory standards, then, as of the Determination Date, after
giving effect to all of the foregoing provisions, Company's allowance for loan
losses shall be increased by the amount designated by such consultant (but not
by more than $136,000). Company shall provide such consultant with all
information reasonably requested by consultant in connection with such
examination. Prior to the Determination Date, Company shall reimburse FHI for
all costs and expenses of the foregoing examination.
<PAGE>
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Company's Obligation to Close. The obligation of
Company to consummate the transactions contemplated by this Agreement and to
effect the Merger is subject to the satisfaction or waiver on or before the
Closing Date of all the following conditions:
(a) Continued Accuracy of Representations and Warranties;
Performance of Covenants. All representations and warranties of FHI and Sub
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except as to those given as of a specified date, which shall be true and
correct in all material respects as of such date); FHI and Sub shall each have
performed and satisfied in all material respects all covenants and conditions
required by this Agreement to be performed and satisfied by it at or prior to
the Closing Date; and there shall have been delivered to Company on the Closing
Date a certificate executed by a duly authorized officer of each of FHI and Sub
certifying compliance with the provisions of this Section 6.1(a).
(b) Regulatory Approvals. Other than the filing of the Articles of
Merger with the Secretary of State of the State of Washington, all Regulatory
Approvals necessary for consummation of the transactions contemplated by this
Agreement shall have been obtained; such approvals shall be in effect and no
proceedings shall have been initiated or threatened challenging or questioning
such approvals by any governmental agency with jurisdiction thereof; all
applicable waiting periods with respect to such approvals shall have expired,
and all conditions and requirements prescribed by law or otherwise imposed in
connection with such Regulatory Approvals shall have been satisfied.
(c) Shareholder Approval. The holders of two-thirds of the
outstanding shares of Company Common Stock shall have approved this Agreement
and the Merger.
(d) No Injunction. There shall not be pending any temporary
restraining or preliminary or permanent injunction, order or decree of a court
or other Governmental Authority of competent jurisdiction restraining or
prohibiting consummation of the transactions contemplated hereby, nor shall any
Governmental Authority have commenced or threatened any proceedings to issue or
obtain any such temporary restraining or preliminary or permanent injunction,
order or decree. No law, rule or regulation shall have been adopted by any
Governmental Authority having jurisdiction over FHI, Sub or Company or any of
their respective subsidiaries challenging or seeking to restrain, materially
limit or prohibit the consummation of the transactions contemplated hereby or
the ownership by FHI of Company or Company Bank.
(e) Opinions of Counsel. Company shall have received the following
opinions, each addressed to Company and dated the Closing Date:
(i) an opinion of Thomas P. Huber, Esq., General Counsel of FHI,
substantially in the form of Exhibit C hereto;
(ii) an opinion of Simpson Thacher & Bartlett, counsel to FHI,
substantially in the form of Exhibit D hereto; and
(iii) an opinion of Preston Gates & Ellis, counsel to Sub, in form
and substance reasonably satisfactory to Company, with respect to the due
<PAGE>
incorporation of Sub, and the authorization and enforceability of this
Agreement under Washington law (but not addressing the enforceability of
the choice of law provisions of this Agreement).
(f) No Resolution Amendments. Neither the Board of Directors of FHI
nor any committee thereof shall have amended or modified the resolutions
approving this Agreement, the Merger and the transaction contemplated hereby
and shall not have adopted any resolutions inconsistent with such resolutions.
(g) Effectiveness of Registration Statement. The Registration
Statement shall have become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC
or any other Regulatory Authority.
(h) Blue-Sky Permits. FHI shall have received all state securities
laws and "blue sky" permits necessary to consummate the Merger.
(i) Tax Opinion. Company shall have received an opinion from tax
counsel to Company reasonably acceptable to the parties to the effect that (i)
the Merger constitutes a reorganization under Section 368 of the Code, and (ii)
no gain or loss will be recognized by the shareholders of Company who receive
shares of FHI Common Stock in exchange for their shares of Company Common
Stock, except that gain or loss may be recognized as to cash received in lieu
of fractional share interests; in rendering its opinion, tax counsel to Company
reasonably acceptable to the parties may require and rely upon representations
and agreements contained in certificates of officers of FHI, Sub, Company and
others.
6.2 Conditions to FHI's and Sub's Obligation to Close. The
obligation of FHI and Sub to consummate the Merger is subject to the
satisfaction or waiver on or before the Closing Date (or as otherwise provided
below) of all of the following conditions:
(a) Continued Accuracy of Representations and Warranties;
Performance of Covenants. All representations and warranties of Company
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except as to those given as of a specified date, which shall be true and
correct in all material respects as of such date); Company shall have performed
and satisfied in all material respects all covenants and conditions required by
this Agreement to be performed and satisfied by it at or prior to the Closing
Date; and there shall have been delivered to FHI and Sub on the Closing Date a
certificate executed by a duly authorized officer of Company certifying
compliance with the provisions of this Section 6.2(a).
(b) Regulatory Approvals. Except for the filing of the Articles of
Merger with the Secretary of State of the State of Washington, all Regulatory
Approvals for the transactions contemplated by this Agreement shall have been
obtained without the imposition of any conditions (including any requirement
that FHI commit to divest branches or assets) which FHI reasonably determines
to be materially burdensome upon the conduct of the business of FHI or the
Surviving Corporation or which would so adversely impact the economic and
business benefits of the Merger to FHI or Surviving Corporation as to render it
inadvisable in the reasonable judgment of FHI to proceed with the Merger; such
approvals shall be in full force and effect and no proceedings shall have been
<PAGE>
instituted or threatened seeking the modification or revocation thereof; all
applicable waiting periods with respect to such approvals shall have expired;
and all conditions and requirements prescribed by law or otherwise imposed in
connection with the Regulatory Approvals shall have been satisfied.
(c) Shareholder Approval. Company shall have furnished FHI and Sub
with a certified copy of resolutions duly adopted by the holders of two-thirds
of the outstanding shares of Company Common Stock entitled to vote thereon
approving this Agreement and the Merger; such resolutions shall be in full
force and effect and shall not have been modified, rescinded or annulled.
(d) No Injunction. There shall not be pending any temporary
restraining order, preliminary or permanent injunction, order or decree of a
court or other Governmental Authority of competent jurisdiction restraining or
prohibiting consummation of the transactions contemplated hereby, nor shall any
Governmental Authority have commenced or threatened any proceedings to issue or
obtain any such temporary restraining order, preliminary or permanent
injunction, order or decree. No law, rule or regulation shall have been
adopted by any Governmental Authority having jurisdiction over FHI, Sub or
Company or any of their respective subsidiaries challenging or seeking to
restrain, materially limit or prohibit the consummation of the transactions
contemplated hereby or the ownership by FHI of Company or Company Bank.
(e) Opinions of Counsel. FHI and Sub shall have received an opinion
of Graham & Dunn, P.C., counsel to Company, substantially in the form of
Exhibit E hereto.
(f) No Resolution Amendments. Neither the Board of Directors of
Company nor any committee thereof shall have amended or modified the
resolutions approving this Agreement, the Merger and the transaction
contemplated hereby and shall not have adopted any resolutions inconsistent
with such resolutions.
(g) Consents Under Agreements. Company shall have obtained the
consent or approval (in addition to the Regulatory Approvals referred to in
Section 6.2(b)) of each person whose consent or approval is required in order
to permit the succession of the Surviving Corporation pursuant to the Merger to
any obligation, right or interest of Company or its subsidiaries under any
loan, credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those the failure of which to obtain would not
have a Material Adverse Effect on the Surviving Corporation or its
subsidiaries. FHI shall have obtained the consents referred to in Section 4.3
of the FHI Schedule.
(h) Good Standing and Tax Certificates. Company shall have
delivered (i) a certificate dated not more than ten days prior to the Closing
Date from the appropriate Governmental Authorities to the effect that each of
Company and Company Bank is in good standing under the jurisdiction of its
incorporation or organization, (ii) a certificate dated not more than ten days
prior to the Closing Date from the appropriate Governmental Authorities to the
effect that Company is qualified to do business in the State of Washington, and
(iii) a certificate dated not more than ten days prior to the Closing Date from
the Department of Revenue of the State of Washington as to the tax status of
Company in such state.
(i) Resignation of Certain Directors. Company shall have delivered
the resignations of all directors of Company and Company Bank other than those
<PAGE>
as may be designated by FHI prior to the Closing Date to remain in office after
the Effective Time, which resignations shall be effective as of the Effective
Time.
(j) Effectiveness of Registration Statement. The Registration
Statement shall have become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC
or any other Regulatory Authority.
(k) Blue-Sky Permits. FHI shall have received all state securities
laws and "blue sky" permits necessary to consummate the Merger.
(l) Tax Opinion. FHI shall have received an opinion from Simpson
Thacher & Bartlett to the effect that (i) the Merger constitutes a
reorganization under Section 368 of the Code, and (ii) no gain or loss will be
recognized by the shareholders of Company who receive shares of FHI Common
Stock in exchange for their shares of Company Common Stock, except that gain or
loss may be recognized as to cash received in lieu of fractional share
interests; in rendering its opinion, Simpson Thacher & Bartlett may require and
rely upon representations and agreements contained in certificates of officers
of FHI, Sub, Company and others.
(m) Dissenting Stock. The number of shares of Company Common Stock
which may (in accordance with the applicable provisions of RCW Title 23B) be
Dissenting Stock shall be less than 10% of the total number of shares of
Company Common Stock.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement and the obligations of the parties
hereunder may be terminated:
(a) Mutual Consent. By mutual written consent of the parties at any
time prior to the Effective Time, whether or not this Agreement or the Merger
has theretofore been approved by the shareholders of Company;
(b) No Shareholder Approval. By either party one business day
following the failure of two-thirds of the shareholders of Company to approve
this Agreement and the Merger as required by RCW Title 23B at a meeting of
Company shareholders duly called, noticed and held for the purpose of voting
upon this Agreement and the Merger or at any adjournment or postponement
thereof;
(c) Regulatory Denials or Refusals. By either party after the
expiration of 30 days after the Federal Reserve Board or any other Governmental
Authority having jurisdiction over any of the transactions set forth herein, in
writing denies or refuses to grant any approval, consent, qualification or
ruling required to be obtained under applicable law in order to consummate the
Merger, unless prior to the expiration of such 30-day period FHI elects to
appeal such denial or refusal or to petition for reconsideration thereof, in
which case such 30-day period shall not be deemed to have run while such appeal
or petition for reconsideration is being actively pursued by FHI; provided,
however, that during the 30-day period following any such denial or refusal,
<PAGE>
the parties shall consult in good faith as to whether any such appeal or
petition for reconsideration should be pursued;
(d) Company Breach. Immediately upon the expiration of 30 days from
the date that FHI or Sub has given notice to Company of Company's material
misrepresentation in respect of, or material breach of, or failure in any
material respect to satisfy, any condition, warranty, representation or
agreement herein, unless such misrepresentation, breach or failure has been
fully and completely corrected or cured prior to the expiration of such 30-day
period;
(e) FHI or Sub Breach. Immediately upon the expiration of 30 days
from the date that Company has given notice to each of FHI and Sub of either
FHI's or Sub's (as the case may be) material misrepresentation in respect of,
or material breach of, or failure in any material respect to satisfy, any
condition, warranty, representation or agreement contained herein, unless such
misrepresentation, breach or failure has been fully and completely corrected or
cured prior to the expiration of such 30-day period;
(f) Delay. Immediately by a party hereto that is not in default
hereunder, if the Closing has not occurred on or before December 31, 1996; or
(g) Possible Adjustment. By Company, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, at any
time during the three-day period commencing at the end of the fifteen trading-
day period commencing on the Determination Date, if the Average Closing Price
is less than $25.50; subject, however, to the following three sentences. If
Company elects to exercise its termination right pursuant to the immediately
preceding sentence, it shall on the date of such election give written notice
to FHI which notice shall specify that Company has elected to exercise its
termination right; provided, however, that such notice of election to terminate
may be withdrawn at any time within the aforementioned three-day period.
During the three-day period commencing with its actual receipt of such notice,
FHI shall have the option to elect to increase the Exchange Ratio to equal the
quotient (rounded to the nearest one thousandth) obtained by dividing (x) the
product of (A) $25.50 and (B) the Exchange Ratio then in effect, by (y) the
Average Closing Price. If FHI makes an election contemplated by the preceding
sentence within such three-day period, it shall give prompt written notice to
Company of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 7.1(g) and this
Agreement shall remain in effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified) and any references in this
Agreement to the "Exchange Ratio" shall thereafter be deemed to refer to the
revised Exchange Ratio as adjusted pursuant to this Section 7.1(g).
7.2 Effect of Termination. In the event of a termination under
Section 7.1, this Agreement shall become void, and there shall be no liability
on the part of either party or any of such party's directors, officers,
employees or agents to the other party or such other party's shareholders;
provided, however, that the obligations of Sections 5.6 and 8.8 shall survive
the termination of this Agreement; and provided, further, that a termination
under Section 7.1 shall not relieve any party of any liability for any
intentional breach of this Agreement or for any intentional misrepresentation
hereunder or be deemed to constitute a waiver of any remedy available for such
breach or misrepresentation. In such event, the prevailing party shall be
entitled to reasonable attorneys' fees and expenses in addition to any other
damages to which it may otherwise be entitled under applicable law.
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed or telexed or sent by a recognized next-day delivery or courier
service, by certified or registered mail (return receipt requested, postage
prepaid), or by telecopy or telefacsimile transmission as set forth below, or
pursuant to such other instructions as may be designated in writing by the
party to receive such notice.
(a) If to FHI or to Sub, to
First Hawaiian, Inc.
1132 Bishop Street, 25th Floor
Honolulu, Hawaii 96813
Attention: Howard H. Karr
Executive Vice President and Treasurer
Telecopy No.: (808) 533-7844
with copies to
First Hawaiian, Inc.
1132 Bishop Street, 25th Floor
Honolulu, Hawaii 96813
Attention: Thomas P. Huber
Senior Vice President and General
Counsel
Telecopy No.: (808) 533-7844
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson, Esq.
Telecopy No.: (212) 455-3675
(b) If to Company, to
ANB Financial Corporation
7525 West Canal Drive
Kennewick, Washington 99336
Attention: Richard C. Emery
President and Chief Executive Officer
Telecopy No.: (509) 735-1301
with a copy to
Graham & Dunn, P.C.
1420 Fifth Avenue, 33rd Floor
Seattle, Washington 98101
Attention: Stephen M. Klein, Esq.
Telecopy No.: (206) 340-9599
<PAGE>
Such notice or other communication shall be deemed duly given (a) on the date
of delivery if delivered personally, telegraphed, telexed or sent by telecopy
or telefacsimile transmission, upon confirmation of receipt, (b) on the second
business day following the date of dispatch from within the United States, if
sent by a recognized next-day delivery or courier service, or (c) on the fourth
business day following the date of deposit in the United States mails if
delivered by certified or registered mail, return receipt requested, postage
prepaid.
8.2 Governing Law. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the laws of
the State of Hawaii, without regard to provisions regarding choice of law
thereof.
8.3 Entire Agreement. The parties intend that the terms of this
Agreement (including the documents and instruments referred to herein and all
schedules and exhibits hereto) (a) shall be the final expression of their
agreement with respect to the subject matter hereof and may not be contradicted
by evidence of any prior or contemporaneous agreement, except as provided
below, (b) shall constitute the complete and exclusive statement of its terms
and that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding involving this Agreement and (c)
constitutes the entire agreement between the parties and supersedes all prior
negotiations, undertakings, representations and agreements, both written and
oral, of the parties hereto, save and except the Shareholder Voting Agreements
and the Confidentiality Agreement, which shall remain effective in accordance
with their respective terms after the execution and delivery of this Agreement.
The parties hereby acknowledge that, except as hereinafter agreed to in
writing, no party shall have the right to acquire or shall be deemed to have
acquired shares of common stock of the other party pursuant to the Merger until
consummation thereof.
8.4 Amendments and Waivers. This Agreement may be amended by the
parties hereto at any time before or after approval hereof by the shareholders
of Company but, after any such approval, no amendment shall be made which by
law requires approval of the shareholders of Company, without the further
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. By an
instrument in writing, any party may waive compliance by any other party with
any term or provision of this Agreement that such other party was or is
obligated to comply with or perform; provided, however, that such waiver shall
not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy or power hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy or power provided herein or by law or in equity. The waiver by any
party of the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
8.5 Counterparts. This Agreement may be executed in counterparts,
all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
<PAGE>
8.6 Interpretation of Agreement. The article, section and other
headings and the table of contents used in this Agreement are for reference
purposes only and shall not constitute a part hereof or affect in any way the
meaning or interpretation of this Agreement. The term "person" shall include
any individual, partnership, joint venture, corporation, trust or
unincorporated organization, any other business entity and any government or
any department or agency thereof, whether acting in an individual, fiduciary or
other capacity. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available. The phrases "the date of this Agreement", "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to February 26, 1996. Whenever the words "hereof,"
"herein", "hereunder", "in this Agreement" and other words of similar import
are used in this Agreement, they refer to this Agreement as a whole and not to
any particular Section or other subdivision. Whenever the context so requires,
the use of the singular shall be deemed to include the plural and vice versa.
8.7 Nonsurvival of Representations and Covenants. None of the
representations, warranties, covenants, agreements and conditions of the
parties in this Agreement or in any instrument of transfer or other document
delivered in connection with the transactions contemplated by this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants and agreements, shall survive the Effective Time, and
neither party, nor any of its directors, officers, employees or shareholders
shall be under any liability whatsoever with respect to such representations,
warranties, conditions and covenants, other than Section 5.6 and other
covenants and agreements that by their terms apply or are to be performed in
whole or in part after the Effective Time.
8.8 Fees and Expenses.
(a) In the event that the Board of Directors of Company shall (i)
withdraw or modify in a manner reasonably expected to be adverse to FHI or Sub
the approval or recommendation by such Board of Directors of this Agreement or
the Merger, (ii) approve or recommend any alternative Acquisition Proposal or
(iii) this Agreement is terminated (other than pursuant to Section 7.1(e))
after an alternative Acquisition Proposal has been received by Company and
prior to the issuance of the recommendation of this Agreement and the Merger at
the meeting of shareholders of the Company referred to in Section 5.2, then
within three business days after the occurrence of any such event, Company
shall pay to FHI, in immediately available funds, the greater of $150,000 or
one percent (1.00%) of the fair market value of the aggregate consideration to
be paid by the acquiror in the transaction which is the subject of the
alternative Acquisition Proposal to an account designated by FHI prior to the
time such payment is due.
(b) In the event this Agreement is terminated pursuant to Section
7.1(c), FHI shall pay to Company a termination fee in the amount of $100,000.
(c) Subject to Section 7.2, the parties agree that fees and
out-of-pocket expenses incurred by the parties in connection with the
transactions contemplated by this Agreement shall be paid as follows:
<PAGE>
(i) Fees and disbursements of counsel, consultants, accountants
and other professionals shall be paid by the party employing such person;
(ii) Company shall bear its own expenses in connection with
obtaining approval of the transactions contemplated hereby by its shareholders,
including the expense of preparing and distributing the Proxy Statement and all
proxy solicitation costs;
(iii) All SEC filing fees and the costs of obtaining approvals
from federal and state banking regulators shall be borne by FHI; and
(iv) All other fees and out-of-pocket expenses incurred in
connection with the transactions contemplated hereby shall be paid by the party
incurring such expenses.
For purposes of this Section 8.8, the terms "costs", "disbursements",
"fees" and "expenses" do not include damages that may otherwise be recoverable
by any party as a result of the breach of this Agreement by any other party.
8.9 Definitions.
(a) The term "Material Adverse Effect" shall mean a material adverse
effect on (a) the business, assets, operations, property, condition (financial
or otherwise), or prospects of (i) Company and its subsidiaries taken as a
whole, (ii) FHI and its subsidiaries taken as a whole, or (iii) the Surviving
Corporation and its subsidiaries taken as a whole, as the case may be, or (b)
the ability of (i) Company, any of Company's subsidiaries or any shareholder of
Company that is a signatory to a Shareholder Voting Agreement, or (ii) FHI or
any of its subsidiaries, as the case may be, to perform its obligations and
consummate the transactions under this Agreement or the Shareholder Voting
Agreements, as the case may be.
(b) The term "subsidiary" shall mean, when used in reference to an
entity, any corporation or other entity, a majority of the outstanding voting
securities of which are owned directly or indirectly by such entity. Ownership
through fiduciary trust or similar arrangements shall not constitute ownership
of stock for purposes of this definition.
(c) Reference to the "knowledge" or "best knowledge" of Company
herein shall mean facts and other information which the President or any Vice
President of Company or Company Bank actually know as a result of the
performance by them of their duties as officers of Company and Company Bank and
diligent inquiry by such officers of those persons in the employ of Company or
its subsidiaries having responsibility for the subject matter referred to.
8.10 Attorneys' Fees. If any legal action is brought for the
enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with this Agreement, the prevailing parties shall be
entitled to recover reasonable attorneys' fees and other costs incurred in such
action or proceeding in addition to any other relief to which it may be
entitled.
8.11 Publicity. The parties hereto will consult with each other
with regard to the terms and substance of any press releases, announcements or
other public statements with respect to the transactions contemplated hereby.
To the extent practicable, each party shall provide the proposed text of any
such press release, announcement or public statement to the other party prior
<PAGE>
to its publication and shall permit such other party a reasonable period to
provide comments thereon.
8.12 Assignment. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by any party without the prior written consent of the other party, and
any attempt to make any such assignment without such consent shall be null and
void.
8.13 Further Action. The parties hereto each agree to execute and
deliver such documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable, and not inconsistent
herewith, in order to consummate expeditiously the transactions contemplated by
this Agreement.
8.14 Third Party. Except as expressly provided in this Agreement,
each party intends that this Agreement shall not benefit or create any right or
cause of action in any person other than the parties to this Agreement.
8.15 Gender; Number. Whenever the context of this Agreement
requires, the masculine gender shall include the feminine or neuter, and the
singular number shall include the plural.
8.16 Schedules. Information contained on the FHI Schedule or
Company Schedule shall not imply that such information is material or otherwise
required to be included thereon.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of
February 26, 1996.
FIRST HAWAIIAN, INC.
By: /s/ Howard H. Karr
Name: Howard H. Karr
Title: Executive Vice President
and Treasurer
Attest:
/s/ Thomas P. Huber
Name: Thomas P. Huber
Title: Senior Vice President
ANB ACQUISITION CORPORATION
By: /s/ Howard H. Karr
Name: Howard H. Karr
Title: President
Attest:
/s/ Thomas P. Huber
Name: Thomas P. Huber
Title: Secretary
ANB FINANCIAL CORPORATION
By: /s/ Craig D. Eerkes
Name: Craig D. Eerkes
Title: Chairman of the Board
Attest:
/s/ Richard C. Emery
Name: Richard C. Emery
Title: President & CEO
<PAGE>
<PAGE>
Annex II
June 25, 1996
Board of Directors
ANB Financial Corporation
7525 West Canal Drive
Kennewick, Washington 99336
Members of the Board:
You have requested our opinion as investment bankers as to the fairness, from a
financial point of view, to the shareholders of ANB Financial Corporation (the
"Company") of the consideration to be received in the merger (the "Merger") of
the Company, First Hawaiian, Inc. ("FHI"), and ANB Acquisition Corporation, a
wholly-owned subsidiary of FHI ("Sub"), pursuant to the Agreement and Plan of
Merger, dated as of February 26, 1996 (the "Merger Agreement"). The Merger
Agreement provides, among other things, that each outstanding share of common
stock of the Company will be converted into shares of common stock, par value
$5.00 per share, of FHI based on an exchange ratio, as defined in the Merger
Agreement (the "Exchange Ratio"). For the purpose of rendering this opinion,
we have assumed that the valuation of the Company used for purposes of
calculating the Exchange Ratio will be at least $16,767,300 (which represents
2.2 times the Determination Date Book Value calculated as of December 31,
1995).
For purposes of the opinion set forth herein, we have:
a) analyzed financial statements and other information of the Company;
b) analyzed publicly available financial statements and other
information of FHI;
c) analyzed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
d) analyzed certain financial projections prepared by the management of
the Company;
e) discussed the past and current operations and financial condition and
the prospects of the Company with Mr. R.C. Emery, President and CEO
of the Company;
f) compared the financial performance of the Company with that of
certain other comparable publicly-traded companies;
g) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
h) participated in certain discussions and negotiations among
representatives of the Company and FHI and their legal advisors;
i) reviewed the Merger Agreement;
j) reviewed the Proxy Statement/Prospectus; and
<PAGE>
k) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections supplied to us, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of the Company. We have not made any independent valuation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company, nor have we
been furnished with any such evaluations or appraisals. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof.
We have acted exclusively for the Board of Directors of the Company in
rendering this fairness opinion and will receive a fee for our services.
It is understood that this letter is directed to the Board of Directors of the
Company and does not constitute a recommendation to any shareholder of the
Company as to how such shareholder should vote at the shareholder's meeting
held in connection with the Merger Agreement.
Based upon and subject to the foregoing, we are of the opinion that, as of the
date hereof, the consideration to be received in the Merger is fair, from a
financial point of view, to the holders of the common stock of the Company.
Very truly yours,
RAGEN MACKENZIE INCORPORATED
By: /s/ Christopher R. Purrier
__________________________
Christopher R. Purrier
Managing Director,
Corporate Finance
<PAGE>
<PAGE>
ANNEX III
TITLE 23B -- WASHINGTON BUSINESS CORPORATION ACT
CHAPTER 23B.13 -- DISSENTERS' RIGHTS
Section 23B.13.010 Definitions
As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and in
the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value," with respect to a dissenter's shares, means the value
of the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
Section 23B.13.020 Right to dissent
(1) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by RCW 23B.11.030,
23B.11.080, or the articles of incorporation and the shareholder is entitled to
vote on the merger, or (ii) if the corporation is a subsidiary that is merged
with its parent under RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
<PAGE>
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one year after the date of sale;
(d) An amendment of the articles of incorporation that materially
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under RCW
23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply with
the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any
one of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation.
<PAGE>
Section 23B.13.030 Dissent by nominees and beneficial owners
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in the shareholder's name only if the shareholder
dissents with respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of each person on
whose behalf the shareholder asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which the dissenter dissents and the dissenter's other shares were registered
in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.
Section 23B.13.200 Notice of dissenters' rights
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert
dissenters' rights under this chapter and be accompanied by a copy of this
chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020
is taken without a vote of shareholders, the corporation, within ten days after
the effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in RCW 23B.13.220.
<PAGE>
Section 23B.13.210 Notice of intent to demand payment
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must (a) deliver to the corporation before
the vote is taken written notice of the shareholder's intent to demand payment
for the shareholder's shares if the proposed action is effected, and (b) not
vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)
of this section is not entitled to payment for the shareholder's shares under
this chapter.
Section 23B.13.220 Dissenters' notice
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the
effective date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of the
shares before that date;
(d) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days after
the date the notice in subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of this chapter.
<PAGE>
Section 23B.13.230 Duty to demand payment
(1) A shareholder sent a dissenters' notice described in RCW 23B.13.220
must demand payment, certify whether the shareholder acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to RCW 23B.13.220(2)(c), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (1) of this section retains all other
rights of a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's shares
under this chapter.
Section 23B.13.240 Share restrictions
(1) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is effected or the restriction is released under RCW
23B.13.260.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until the
effective date of the proposed corporate action.
Section 23B.13.250 Payment
(1) Except as provided in RCW 23B.13.270, within thirty days of the later
of the effective date of the proposed corporate action, or the date the payment
demand is received, the corporation shall pay each dissenter who complied with
RCW 23B.13.230 the amount the corporation estimates to be the fair value of the
shareholder's shares, plus accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
<PAGE>
Section 23B.13.260 Failure to take action
(1) If the corporation does not effect the proposed action within sixty
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release any transfer restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment
demand procedure.
Section 23B.13.270 After-acquired shares
(1) A corporation may elect to withhold payment required by RCW
23B.13.250 from a dissenter unless the dissenter was the beneficial owner of
the shares before the date set forth in the dissenters' notice as the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280.
Section 23B.13.280 Procedure if shareholder dissatisfied with payment or offer
(1) A dissenter may notify the corporation in writing of the dissenter's
own estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250
or offered under RCW 23B.13.270 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within sixty days after the date set for demanding
payment.
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within thirty days after the
corporation made or offered payment for the dissenter's shares.
<PAGE>
Section 23B.13.300 Court action
(1) If a demand for payment under RCW 23B.13.280 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the superior court
of the county where a corporation's principal office, or, if none in this
state, its registered office, is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(3) The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unsettled, parties to the proceeding as in
an action against their shares and all parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the
corporation, complied with the provisions of this chapter. If the court
determines that such shareholder has not complied with the provisions of this
chapter, the shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to it. The
dissenters are entitled to the same discovery rights as parties in other civil
proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under RCW 23B.13.270.
Section 23B.13.310 Court costs and counsel fees
(1) The court in a proceeding commenced under RCW 23B.13.300 shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court. The court shall assess the
costs against the corporation, except that the court may assess the costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or
not in good faith in demanding payment under RCW 23B.13.280.
<PAGE>
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280; or
(b) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that
the fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Pursuant to the Delaware General Corporate Law ("DGCL"), a
corporation may indemnify any person in connection with any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than a derivative action by or in the
right of such corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of such corporation, or is serving at the
request of such corporation in such capacity for another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding, if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of such
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
The DGCL also permits indemnification by a corporation under
similar circumstances against expenses (including attorneys' fees) actually and
reasonably incurred by such persons in connection with the defense or
settlement of a derivative action or suit, if such person acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of such corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to such corporation, unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
To the extent that such person has been successful on the
merits or otherwise in defense of any action, suit or proceeding set forth
above or any claim, issue or matter therein, the DGCL requires the corporation
to indemnify such person against expenses (including attorneys' fees) actually
and reasonably incurred in connection therewith. Furthermore, the DGCL
provides that any indemnification to be made (unless ordered by the court) must
be authorized by (i) a majority vote of the directors who are not parties to
such action, suit or proceeding, even if such majority constitutes less than a
quorum, (ii) if there are no disinterested directors, or if the disinterested
directors so direct, by independent legal counsel in a written opinion or (iii)
by the stockholders.
<PAGE>
The DGCL also provides that the indemnification described above
shall not be deemed exclusive of other indemnification that may be granted by
a corporation pursuant to its Bylaws, disinterested directors' vote,
stockholders' vote, agreement or otherwise.
In addition, the DGCL provides corporations with the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation in a similar capacity for another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against, and incurred by, him or her in any such capacity,
or arising out of his or her status as such, whether or not such corporation
would have the power to indemnify him or her against such liability as
described above.
The Certificate of Incorporation, as amended, of First
Hawaiian, Inc. (the "Registrant") provides that, to the fullest extent
permitted by the DGCL as from time to time in effect, no director of the
Registrant shall be personally liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director.
<PAGE>
The Registrant's Bylaws provide that, to the extent permitted
by Delaware law as from time to time in effect, the Registrant shall indemnify
any person in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(whether or not a derivative action by or in the right of the Registrant) by
reason of the fact that such person is or was a director, officer, employee or
agent of the Registrant, or is serving at the request of the Registrant in such
capacity for another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding, if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Registrant, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The Registrant's Bylaws require indemnification under
circumstances similar to those set forth above against expenses (including
attorneys' fees) actually and reasonably incurred by such persons in connection
with the defense or settlement of a derivative action or suit, if such person
acted in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the Registrant, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to such corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
Pursuant to the Registrant's Bylaws, any indemnification made
pursuant to the indemnification provisions of the Registrant's Bylaws shall be
made only upon the authorization of (i) the Board of Directors of the
Registrant by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, (ii) if such a quorum is not
obtainable, or, even if such a quorum is obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel or (iii) by
the stockholders.
The Registrant's Bylaws also provide that indemnification
specifically provided for shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any bylaw, agreement,
vote of disinterested directors, vote of the stockholders or otherwise, both as
to such person's official capacity and as to action in another capacity while
holding office. Moreover, the Registrant's Bylaws provide that indemnification
generally shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
In addition, the Registrant's Bylaws provide that the
Registrant may purchase and maintain insurance on behalf of any person who is
or was an director, officer, employee or agent of the Registrant, or is serving
at the request of the Registrant in such capacity for another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against, and incurred by, such person in such capacity or arising out
of such capacity, whether or not the Registrant would have the power to
indemnify such person against liability under the provisions of Article 11 of
the Registrant's Bylaws or of Section 145 of the DGCL, as amended.
<PAGE>
Item 21. Exhibits and Financial Statement Schedules.
Exhibits
*2.1 Agreement and Plan of Merger, dated as of February 26, 1996, among
First Hawaiian, Inc., ANB Financial Corporation and ANB Acquisition
Corporation
4.1 Certificate of Incorporation of First Hawaiian, Inc. as amended
through May 9, 1996 (incorporated by reference to Exhibit 3 of
Registrant's Quarterly Report on Form 10-Q, for the quarter
ended March 31, 1996)
4.2 Bylaws of First Hawaiian, Inc. (incorporated by reference to Exhibit 3
of Registrant's Annual Report on Form 10-K for the year ended December
31, 1987) (Commission file number 0-7949)
5 Opinion of Simpson Thacher & Bartlett regarding the legality of
securities being registered
8.1 Opinion of Simpson Thacher & Bartlett as to tax matters
8.2 Opinion of Knight, Vale & Gregory, Inc., P.S. as to tax matters
8.3 Opinion of Knight, Vale & Gregory, Inc., P.S. as to tax matters
discussed in the Proxy Statement/Prospectus
23.1 Consent of Coopers & Lybrand L.L.P. as to financial statements of First
Hawaiian, Inc.
23.2 Consent of Simpson Thacher & Bartlett (contained in exhibits 5 and
8.1)
23.3 Consent of Knight, Vale & Gregory Inc., P.S. (contained in exhibits
8.2 and 8.3)
23.4 Consent of Ragen MacKenzie Incorporated (contained in Annex II to the
Proxy Statement/Prospectus)
*24 Powers of Attorney
99.1 Chairman's Letter to Shareholders of ANB Financial Corporation
99.2 Notice of Annual Meeting of Shareholders of ANB Financial Corporation
99.3 Form of Proxy for the Annual Meeting of Shareholders of ANB Financial
Corporation
99.4 Opinion of Ragen MacKenzie Incorporated (included as Annex II to the
Proxy Statement/Prospectus)
_____________
* Previously filed.
<PAGE>
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to
section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes as
follows: That prior to any public reoffering of the
securities registered hereunder through use of a
prospectus which is a part of this registration
statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable
registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to
the information called for by the other Items of the
applicable form.
(2) The registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph immediately
preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is
used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not
be used until such amendment is effective, and that,
for purposes of determining any liability under the
Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
<PAGE>
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11 or 13 of
this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the registration statement through the date of responding
to the request.
(f) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Honolulu, State of
Hawaii, on June 24, 1996.
FIRST HAWAIIAN, INC.
By /s/ Howard H. Karr
Howard H. Karr, Executive
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment has been signed by the following persons in the capacities
and on the dates indicated.
Signature Title Date
*
Walter A. Dods, Jr. Chairman, Chief Executive Officer June 24, 1996
and Director (Principal executive
officer)
*
John W. A. Buyers Director June 24, 1996
*
John C. Couch Director June 24, 1996
*
Julia Ann Frohlich Director June 24, 1996
*
Paul Mullin Ganley Director June 24, 1996
*
David M. Haig Director June 24, 1996
*
John A. Hoag Director June 24, 1996
*
Bert T. Kobayashi, Jr. Director June 24, 1996
*
Richard T. Mamiya Director June 24, 1996
*
Fujio Matsuda Director June 24, 1996
*
Roderick F. McPhee Director June 24, 1996
<PAGE>
*
George P. Shea, Jr. Director June 24, 1996
*
John K. Tsui President and Director June 24, 1996
*
Fred C. Weyand Director June 24, 1996
*
Robert C. Wo Director June 24, 1996
/s/ Howard H. Karr Executive Vice President June 24, 1996
Howard H. Karr and Treasurer
(Principal financial and
accounting officer)
_______________
* Howard H. Karr hereby signs this Amendment on June 24, 1996,
on behalf of each of the above-named Directors and Officers of
the Registrant above whose typed names asterisks appear, pursuant to
powers of attorney duly executed by such Directors and Officers and
filed with the Securities and Exchange Commission as exhibits to this
Registration Statement.
/s/ Howard H. Karr
Howard H. Karr
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
*2.1 Agreement and Plan of Merger, dated as of February 26, 1996, among
First Hawaiian, Inc., ANB Financial Corporation and ANB Acquisition
Corporation
4.1 Certificate of Incorporation of First Hawaiian, Inc., as amended
through May 9, 1996 (incorporated by reference to Exhibit 3 of
Registrant's Quarterly Report on Form 10-Q, for the quarter ended
March 31, 1996)
4.2 Bylaws of First Hawaiian, Inc. (incorporated by reference to Exhibit 3
of Registrant's Annual Report on Form 10-K for the year ended December
31, 1987) (Commission file number 0-7949)
5 Opinion of Simpson Thacher & Bartlett regarding the legality of
securities being registered
8.1 Opinion of Simpson Thacher & Bartlett as to tax matters
8.2 Opinion of Knight, Vale & Gregory, Inc., P.S. as to tax matters
8.3 Opinion of Knight, Vale & Gregory, Inc., P.S. regarding tax matters
discussed in the Proxy Statement/Prospectus
23.1 Consent of Coopers & Lybrand L.L.P. as to financial statements of
First Hawaiian, Inc.
23.2 Consent of Simpson Thacher & Bartlett (contained in exhibits 5 and
8.1)
23.3 Consent of Knight, Vale & Gregory Inc., P.S. (contained in exhibits
8.2 and 8.3)
23.4 Consent of Ragen MacKenzie Incorporated (contained in Annex II to the
Proxy Statement/Prospectus)
*24 Powers of Attorney
99.1 Chairman's Letter to Shareholders of ANB Financial Corporation
99.2 Notice of Annual Meeting of Shareholders of ANB Financial Corporation
99.3 Form of Proxy for the Annual Meeting of Shareholders of ANB Financial
Corporation
99.4 Opinion of Ragen MacKenzie Incorporated (included as Annex II to the
Proxy Statement/Prospectus)
__________________
* Previously filed.
Exhibit 5
Simpson Thacher & Bartlett
A Partnership Which Includes Professional Corporations
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
June 24, 1996
First Hawaiian, Inc.
1132 Bishop Street
Honolulu, Hawaii 96813
Dear Sirs:
We have acted as counsel to First Hawaiian, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-4 of the Company (the "Registration Statement"), being filed today with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the proposed issuance of shares of common stock, par value
$5.00 per share ("Common Stock"), of the Company, in connection with the
Agreement and Plan of Merger, dated as of February 26, 1996 (the "Merger
Agreement"), among the Company, ANB Acquisition Corporation ("Merger Sub") and
ANB Financial Corporation ("ANB"). Following an annual meeting of shareholders
of ANB at which such shareholders will be asked, among other things, to vote to
approve the Merger Agreement, and subject to receipt of such shareholder
approval of the Merger Agreement and satisfaction or waiver of the other
conditions to the Merger set forth in the Merger Agreement, Merger Sub will be
merged with and into ANB (the "Merger") and ANB will become a wholly-owned
subsidiary of the Company, and each outstanding share of common stock of ANB
will be converted into shares of Common Stock (in the aggregate, the "Shares")
based on the exchange ratio set forth in the Merger Agreement, all as more
fully described in the Registration Statement.
<PAGE>
We have examined, and have relied as to matters of fact upon, the
above described documents and upon originals or copies, certified or otherwise
identified to our satisfaction, of corporate records, agreements, documents and
other instruments, and have made such other and further investigations, as we
have deemed relevant and necessary as a basis for the opinion hereinafter set
forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, we are of the opinion that the Shares
have been duly authorized and, when issued in accordance with the terms of the
Merger Agreement, will be validly issued, fully paid and nonassessable.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the federal law of the
United States and the Delaware General Corporation Law.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to this firm under the caption
"Legal Opinions" in the Registration Statement.
Very truly yours,
/s/ Simpson Thacher & Bartlett
Exhibit 8.1
SIMPSON THACHER & BARTLETT
A Partnership Which Includes Professional Corporations
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
June 24, 1996
Re: Merger pursuant to the Agreement and Plan of
Merger, dated as of February 26, 1996, by and among
First Hawaiian, Inc., ANB Acquisition Corporation
and ANB Financial Corporation.
First Hawaiian, Inc.
1132 Bishop Street, 25th Floor
Honolulu, Hawaii 96813
Ladies and Gentlemen:
You have requested our opinion with respect to certain United
States ("U.S.") federal income tax consequences of the proposed transaction in
which ANB Acquisition Corporation ("Acquisition Sub") will merge (the "Merger")
with and into ANB Financial Corporation ("ANB"). All capitalized terms used
but not defined herein shall have the meaning ascribed to such terms in the
Agreement and Plan of Merger, dated as of February 26, 1996, by and among First
Hawaiian, Inc. ("FHI"), Acquisition Sub and ANB, as amended through the date
hereof (the "Merger Agreement").
ANB is a corporation duly organized and existing in good standing
under the laws of the state of Washington. The capital structure of ANB, as of
February 26, 1996, is described in Section 3.5 of the Merger Agreement.
FHI is a corporation duly organized and existing in good standing
under the laws of Delaware. Acquisition Sub is a corporation duly organized
and existing in good standing under the laws of the state of Washington. The
capital structure of FHI, as of February 26, 1996, is described in Section 4.5
of the Merger Agreement. Acquisition Sub is a direct, wholly owned subsidiary
of FHI.
<PAGE>
Upon receipt of all required approvals and the expiration of all
required waiting periods, and upon the satisfaction or waiver of all other
conditions precedent set forth in the Merger Agreement, the Merger will be
effected as set forth in the following summary:
(i) Acquisition Sub will merge with and into ANB under the
laws of the state of Washington, with ANB being the surviving entity.
(ii) As a result of the Merger, ANB will become a direct,
wholly owned subsidiary of FHI.
(iii) Subject to certain exceptions set forth in the Merger
Agreement, each holder of the outstanding common stock of ANB ("ANB
Common Stock") (other than FHI or any wholly owned subsidiary of the
FHI) (each an "ANB Shareholder") will receive, for each share of ANB
Common Stock held by such ANB Shareholder, the number of shares of FHI
Common Stock determined pursuant to Section 1.4(a) of the Merger
Agreement.
(iv) No fractional shares of FHI Common Stock will be issued in
the Merger. Instead, the fractional share interests in FHI Common Stock
that would otherwise be received by ANB Shareholders will be paid for in
cash as provided in Section 1.5(e) of the Merger Agreement.
In acting as counsel to FHI in connection with the Merger, we
have, in preparing our opinion, as hereinafter set forth, participated in the
preparation of the Merger Agreement and the preparation and filing with the
Securities and Exchange Commission of a Proxy Statement of ANB and the
Prospectus of FHI relating to the proposed Merger and to the shares of FHI
Common Stock to be issued to ANB Shareholders in the Merger pursuant to the
Merger Agreement (the "Proxy Statement/Prospectus").
You have requested that we render the opinions set forth below.
In rendering such opinions, we have assumed with your consent that the Merger
will be effected in accordance with the Merger Agreement and that the letters
of representation that each of FHI and ANB (which letters are attached hereto
as Exhibits A and B, respectively) have provided to us and to Knight, Vale &
Gregory, Inc., P.S., counsel to ANB, will be true as of the Effective Time. We
have examined the documents referred to above and the originals, or copies
certified or otherwise identified to our satisfaction, of such records,
<PAGE>
documents, certificates or other instruments and made such other inquiries as
in our judgment are necessary or appropriate to enable us to render the
opinions set forth below. We have not, however, undertaken any independent
investigation of any factual matter set forth in any of the foregoing.
If the Merger is effected on a factual basis different from that
contemplated above, any or all of the opinions expressed herein may be
inapplicable. Further, our opinion is based on the Internal Revenue Code of
1986, as amended (the "Code"), the Treasury regulations promulgated thereunder,
administrative interpretations, and judicial precedents, all as of the date
hereof. If there is any subsequent change in the applicable law or
regulations, or if there are subsequently any new administrative or judicial
interpretations of the law or regulations, any or all of the opinions expressed
herein may become inapplicable.
Subject to the foregoing and to the qualifications and
limitations set forth herein, and assuming that the Merger is consummated in
accordance with the Merger Agreement (and the exhibits thereto) and the laws of
the state of Washington and as described in the Proxy Statement/Prospectus, we
are of the opinion that for U.S. federal income tax purposes:
1. The Merger will be treated for U.S. federal income tax
purposes as a reorganization within the meaning of section 368(a) of the Code,
and FHI, Acquisition Sub and ANB will each be a party to that reorganization
within the meaning of section 368(b) of the Code.
2. No income, gain or loss will be recognized for U.S.
federal income tax purposes by FHI, Acquisition Sub or ANB.
3. No income, gain or loss will be recognized for U.S.
federal income tax purposes by the ANB Shareholders who exchange, pursuant to
the Merger, shares of their ANB Common Stock for shares of FHI Common Stock
(except to the extent of any cash received in lieu of fractional share
interests of FHI Common Stock).
<PAGE>
We express our opinion herein only as to those matters
specifically set forth above and no opinion should be inferred as to the tax
consequences of the Merger under any state, local or foreign law, or with
respect to any other areas of U.S. federal taxation. This opinion has been
delivered to you as required under Section 6.2(l) of the Merger Agreement and
we hereby consent to the filing of this opinion as an exhibit to the Proxy
Statement/Prospectus and to the use of our name under the captions "The
Merger - Certain Federal Income Tax Consequences" and "Legal Opinions" in the
Proxy Statement/Prospectus.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
Exhibit A
[First Hawaiian, Inc. Letterhead]
June 21, 1996
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Dear Sirs:
In connection with your rendering an opinion to First Hawaiian,
Inc. ("FHI") with respect to certain United States federal income tax
consequences of the merger (the "Merger") described in the Agreement and Plan
of Merger among FHI, ANB Acquisition Corporation ("Acquisition Sub") and ANB
Financial Corporation (the "Company") dated as of February 26, 1996 (the
"Agreement"), FHI hereby makes the following representations to you (which
representations you may assume will remain true as of the Effective Time of the
Merger). (Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Agreement.)
1. The fair market value of FHI Common Stock received by
each shareholder of the Company will be approximately equal to the fair market
value of the Company Common Stock surrendered in the exchange.
2. To the best of the knowledge of the management of FHI,
there is no plan or intention by the directors or officers of the Company or by
shareholders of the Company who own 5 percent or more of the Company's stock
and there is no plan or intention on the part of the remaining shareholders of
the Company to sell, exchange, or otherwise dispose of a number of shares of
FHI Common Stock received in the Merger that would reduce the Company
shareholders' ownership of FHI Common Stock to a number of shares having a
value, as of the Effective Time of the Merger, of less than 50 percent of the
value of all of the formerly outstanding stock of the Company as of the
Effective Time. For purposes of this representation, shares of Company stock
exchanged for cash or other property, surrendered by dissenters or exchanged
for cash in lieu of fractional shares of FHI Common Stock will be treated as
outstanding stock of the Company as of the Effective Time of the Merger.
Moreover, shares of Company stock and shares of FHI stock held by shareholders
of the Company and otherwise sold, redeemed, or disposed of prior or subsequent
to the Merger will be considered in making this representation.
3. To the best of the knowledge of the management of FHI,
following the Merger, the Company will hold at least 90 percent of the fair
market value of its net assets and at least 70 percent of the fair market value
of its gross assets and at least 90 percent of the fair market value of
Acquisition Sub's net assets and at least 70 percent of the fair market value
of Acquisition Sub's gross assets held immediately prior to the Merger. For
purposes of this representation, amounts paid by the Company or Acquisition Sub
to dissenters, amounts paid by the Company or Acquisition Sub to shareholders
who receive cash or other property, amounts used by the Company or Acquisition
Sub to pay reorganization expenses, and all redemptions and distributions
<PAGE>
(except for regular, normal dividends) made by the Company will be included as
assets of the Company or Acquisition Sub, respectively, immediately prior to
the Merger.
4. Prior to the Merger, FHI will own at least 80 percent of
the total combined voting power of all classes of Acquisition Sub stock
entitled to vote and at least 80 percent of the total number of shares of all
other classes of Acquisition Sub stock.
5. FHI has no plan or intention to cause the Company to
issue additional shares of its stock that would result in FHI failing to own
at least 80 percent of the total combined voting power of all classes of the
Company stock entitled to vote and at least 80 percent of the total number of
shares of all other classes of the Company stock.
6. FHI has no plan or intention to redeem or otherwise
reacquire any of its stock to be issued in the Merger.
7. FHI has no plan or intention to liquidate the Company, to
cause the Company to merge with or into another corporation following the
Merger, to sell or otherwise dispose of any of the stock of the Company
acquired in the Merger except for transfers of such stock to a corporation with
respect to which the Parent owns at least 80 percent of the total combined
voting power of all classes of stock entitled to vote and at least 80 percent
of the total number of shares of all other classes of stock, or to cause the
Company to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Acquisition Sub, except for dispositions made in the
ordinary course of business or transfers of assets to a corporation with
respect to which the Company owns at least 80 percent of the total combined
voting power of all classes of stock entitled to vote and at least 80 percent
of the total number of shares of all other classes of stock.
8. Acquisition Sub will have no liabilities assumed by the
Company, and will not transfer to the Company any assets subject to liabilities
in the Merger.
9. Following the Merger, the Company will continue its
historic business or use a significant portion of Company's business assets in
a business.
10. FHI, Acquisition Sub, the Company and the shareholders of
the Company will pay their respective expenses, if any, incurred in connection
with the Merger.
11. There is no intercorporate indebtedness existing between
FHI and the Company or between Acquisition Sub and the Company that was issued,
acquired or will be settled at a discount.
12. In the Merger, shares of the Company Common Stock
representing ownership of at least 80 percent of the total combined voting
power of all classes of Company stock entitled to vote and at least 80 percent
of the total number of shares of all other classes of Company stock will be
exchanged solely for voting stock of FHI. For purposes of this representation,
shares of Company stock exchanged for cash or other property originating with
<PAGE>
FHI will be treated as outstanding stock of the Company on the date of the
Merger.
13. To the best of the knowledge of the management of FHI, at
the Effective Time of the Merger, the Company will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in the Company that, if exercised or
converted, would affect FHI's acquisition or retention of ownership of at least
80 percent of the total combined voting power of all classes of Company stock
entitled to vote and at least 80 percent of the total number of shares of all
other classes of Company stock.
14. FHI does not own, nor has it owned during the past five
years, any shares of stock of the Company.
15. Neither FHI nor Acquisition Sub are investment companies
as defined in section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
16. To the best of the knowledge of the management of FHI, on
the date of the Merger, the fair market value of the assets of the Company will
exceed the sum of its liabilities, plus the amount of liabilities, if any, to
which the assets are subject.
17. To the best of the knowledge of the management of FHI,
the Company is not under the jurisdiction of a court in a title 11 or similar
case within the meaning of section 368(a)(3)(A) of the Internal Revenue Code.
18. FHI will acquire the Company Common Stock solely in
exchange for FHI Common Stock, which has unrestricted voting rights. No debt
relating to the Company Common Stock being transferred to FHI is being assumed
by FHI. FHI will not take any of the Company Common Stock to be received by it
in the Merger subject to any indebtedness.
19. The payment of cash in lieu of fractional shares of FHI
Common Stock is not separately bargained for consideration and represents a
mere mechanical rounding off of the fractional share interests. The total cash
consideration that will be paid in the Merger to the shareholders of the
Company instead of issuing fractional shares of FHI Common Stock will not
exceed [5]% of the total consideration that will be issued in the Merger to the
shareholders of the Company in exchange for their shares of the Company Common
Stock. No shareholder of the Company will receive cash in an amount equal to
or greater than the value of one full share of FHI Common Stock with respect to
the shares of FHI Common Stock to be received.
20. Acquisition Sub was formed by FHI solely in order to take
part in the Merger and will engage in no business activities other than those
necessary to effectuate the Merger.
21. None of the compensation received by any shareholder-
employees of the Company will be separate consideration for, or allocable to,
any of their shares of the Company stock; none of the shares of FHI Common
Stock received by any shareholder-employees will be separate consideration for,
or allocable to, any employment agreement; and the compensation paid to any
shareholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's-length for
similar services.
<PAGE>
22. The foregoing representations will be true and accurate
as of the effective time of the Merger. FHI agrees to promptly notify Simpson
Thacher & Bartlett in writing to the extent that it has or obtains knowledge or
information indicating that any of the foregoing representations cease to be
true and accurate at any time through the effective time of the Merger.
Sincerely,
FIRST HAWAIIAN, INC.
/s/ Howard H. Karr
Howard H. Karr<PAGE>
Exhibit B
ANB Financial Corporation
7525 West Canal Drive
Kennewick, WA 99336
June 24, 1996
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Dear Sirs:
In connection with your rendering an opinion to First Hawaiian,
Inc. ("FHI") with respect to certain United States federal income tax
consequences of the merger (the "Merger") described in the Agreement and Plan
of Merger among FHI, ANB Acquisition Corporation ("Acquisition Sub") and the
ANB Financial Corporation (the "Company") dated as of February 26, 1996 (the
"Agreement"), the Company hereby makes the following representations to you
(which representations you may assume will remain true as of the Effective Time
of the Merger). (Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Agreement.)
1. The fair market value of FHI Common Stock received by
each shareholder of the Company will be approximately equal to the fair market
value of the Company Common Stock surrendered in the exchange.
2. There is no plan or intention by the directors or officers
of the Company or by shareholders of the Company who own 5 percent or more of
the Company's stock, and, to the best of the knowledge of the officers and
directors of the Company, there is no plan or intention on the part of the
remaining shareholders of the Company to sell, exchange, or otherwise dispose
of a number of shares of FHI Common Stock received in the Merger that would
reduce the Company shareholders' ownership of FHI Common Stock to a number of
shares having a value, as of the Effective Time of the Merger, of less than 50
percent of the value of all of the formerly outstanding stock of the Company as
of the Effective Time. For purposes of this representation, shares of Company
stock exchanged for cash or other property, surrendered by dissenters or
exchanged for cash in lieu of fractional shares of FHI Common Stock will be
treated as outstanding stock of the Company as of the Effective Time of the
Merger. Moreover, shares of Company stock and shares of FHI stock held by
shareholders of the Company and otherwise sold, redeemed, or disposed of prior
or subsequent to the Merger will be considered in making this representation.
3. Immediately following the Merger, the Company will hold at
least 90 percent of the fair market value of its net assets and at least 70
percent of the fair market value of its gross assets held immediately prior to
the Merger. For purposes of this representation, amounts paid by the Company
to shareholders who receive cash or other property, amounts used by the Company
to pay reorganization expenses, and all redemptions and distributions (except
for regular, normal dividends) made by the Company will be included as assets
of the Company immediately prior to the Merger.
4. To the best of the knowledge of the management of the
Company, prior to the Merger, FHI will own at least 80 percent of the total
<PAGE>
combined voting power of all classes of Acquisition Sub stock entitled to vote
and at least 80 percent of the total number of shares of all other classes of
Acquisition Sub stock.
5. The current officers and directors of the Company have no
plan or intention for the Company to issue additional shares of stock of the
Company that would result in FHI failing to own at least 80 percent of the
total combined voting power of all classes of the Company stock entitled to
vote and at least 80 percent of the total number of shares of all other classes
of the Company stock.
6. To the best of the knowledge of the management of the
Company, FHI has no plan or intention to redeem or otherwise reacquire any of
its stock to be issued in the Merger.
7. To the best of the knowledge of the management of the
Company, FHI has no plan or intention to liquidate the Company, to cause the
Company to merge with or into another corporation following the Merger, to sell
or otherwise dispose of any of the stock of the Company acquired in the Merger
except for transfers of such stock to a corporation with respect to which the
Parent owns at least 80 percent of the total combined voting power of all
classes of stock entitled to vote and at least 80 percent of the total number
of shares of all other classes of stock, or to cause the Company to sell or
otherwise dispose of any of its assets or of any of the assets acquired from
Acquisition Sub, except for dispositions made in the ordinary course of
business or transfers of assets to a corporation with respect to which the
Company owns at least 80 percent of the total combined voting,power of all
classes of stock entitled to vote and at least 80 percent of the total number
of shares of all other classes of stock.
8. To the best of the knowledge of the management of the
Company, Acquisition Sub will have no liabilities assumed by the Company, and
will not transfer to the Company any assets subject to liabilities in the
Merger.
9. To the best of the knowledge of the management of the
Company, following the Merger, the Company will continue its historic business
or use a significant portion of Company's business assets in a business.
10. FHI, Acquisition Sub, the Company and the shareholders of
the Company will pay their respective expenses, if any, incurred in connection
with the Merger.
11. There is no intercorporate indebtedness existing between
FHI and the Company or between Acquisition Sub and the Company that was issued,
acquired or will be settled at a discount.
12. In the Merger, shares of Company stock representing
ownership of at least 80 percent of the total combined voting power of all
classes of the Company's stock entitled to vote and at least 80 percent of the
total number of shares of all other classes of Company stock will be exchanged
solely for voting stock of FHI. For purposes of this representation, shares of
Company stock exchanged for cash or other property originating with FHI will be
treated as outstanding stock of the Company on the date of the Merger.
13. At the Effective Time of the Merger, the Company will not
have outstanding any warrants, options, convertible securities, or any other
<PAGE>
type of right pursuant to which any person could acquire stock in the Company
that, if exercised or converted, would affect FHI's acquisition or retention of
ownership of at least 80 percent of the total combined voting power of all
classes of Company stock entitled to vote and at least 80 percent of the total
number of shares of all other classes of Company stock.
14. To the best of the knowledge of the management of the
Company, FHI does not own, nor has it owned during the past five years, any
shares of stock of the Company.
15. The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
16. On the date of the Merger, the fair market value of the
assets of the Company will exceed the sum of its liabilities, plus the amount
of liabilities, if any, to which the assets are subject.
17. The Company is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of section 368(a)(3)(A) of the
Internal Revenue Code.
18. The payment of cash in lieu of fractional shares of
Acquisition stock is not separately bargained for consideration and represents
a mere mechanical rounding off of the fractional share interests. The total
cash consideration that will be paid in the Merger to the shareholders of the
Company instead of issuing fractional shares of FHI Common Stock will not
exceed 5% of the total consideration that will be issued in the Merger to the
shareholders of the Company in exchange for their shares of Company Common
Stock. No shareholders of the Company will receive cash in an amount equal to
or greater than the value of one full share of FHI Common Stock.
19. None of the compensation received by any shareholder-
employees of the Company will be separate consideration for, or allocable to,
any of their shares of the stock of the Company; none of the shares of FHI
Common Stock received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
20. The foregoing representations will be true and accurate as
of the Effective Time of the Merger. The Company agrees to promptly notify
Simpson Thacher & Bartlett in writing to the extent that it has or obtains
knowledge or information indicating that any of the foregoing representations
cease to be true and accurate at any time through the Effective Time of the
Merger.
Sincerely,
ANB Financial Corporation
By: /s/ Richard C. Emery
Richard C. Emery
President & CEO
Exhibit 8.2
June 21, 1996
ANB Financial Corporation
7525 West Canal Drive
Kennewick, WA 99336
RE: Agreement and Plan of Merger dated as of February 26, 1996 among First
Hawaiian, Inc., ANB Acquisition Corporation, and ANB Financial
Corporation
Gentlemen:
We have been asked to render an opinion regarding the Federal income tax
consequences of the proposed merger ("Merger") of ANB Acquisition Corporation
("Sub") with and into ANB Financial Corporation ("Company"), pursuant to the
terms of the Agreement and Plan of Merger dated as of February 26, 1996 among
First Hawaiian, Inc. ("FHI"), Sub and Company ("Agreement"), as described in
the Registration Statement on Form S-4 to be filed by FHI with the Securities
and Exchange Commission.
In connection with this opinion, we have examined and are familiar with copies
identified to our satisfaction of the Agreement including schedules and
exhibits, the Registration Statement and such other documents as we have deemed
necessary or appropriate in order to enable us to render this opinion. In our
examination, we have assumed the authenticity of all copies of documents
submitted to us and the legal capacity of all natural persons executing the
originals of said documents. We have also relied upon certain written
representations of management of FHI and Company, which are attached to this
opinion.
In rendering our opinion, we have considered the applicable provisions of the
Internal Revenue Code of 1986 as amended ("Code"), Treasury Regulations and
relevant Proposed Regulations, pertinent judicial authorities, rulings of the
Internal Revenue Service and other relevant authorities.
Based upon the foregoing, it is our opinion that the Merger will constitute a
tax-free reorganization under Code Sections 368(a)(1)(A) and 368(a)(2)(E), and
that FHI, Company and Sub will each be a party to the reorganization pursuant
to Code Section 368(b). As a tax-free reorganization, the Merger will have the
following Federal income tax consequences for Company and Company's
stockholders:
1. Under Code Section 354(a)(1), no gain or loss will be recognized by
holders of the common stock of Company who exchange such shares for the
common stock of FHI pursuant to the Merger, except that gain or loss
will be recognized on the receipt of cash in lieu of fractional shares
of FHI stock and gain or loss will be recognized by a holder who
exercises dissenter's rights and receives cash in exchange for such
holder's shares. Any cash received by a stockholder of Company will be
<PAGE>
treated as received in exchange for said stockholder's shares or
fraction thereof and not as a dividend. Any gain or loss recognized as
a result of the receipt of such cash will be capital gain or loss equal
to the difference between the cash received and the stockholder's basis
of such shares or fraction thereof, subject to the limitations of Code
Section 302 and provided that the shares of Company surrendered were
capital assets in the hands of the stockholder at the time of
surrender.
2. The tax basis of the shares of FHI common stock received by each
stockholder of Company will equal the tax basis of such stockholder's
shares of Company common stock (less any amount allocated to fractional
shares for which cash is received) exchanged in the Merger.
3. The holding period for the shares of FHI common stock received by each
stockholder of Company will include the holding period for the shares
of Company of such stockholder exchanged in the Merger.
4. Company, FHI and Sub each will not recognize gain or loss as a result
of the Merger.
Except as set forth above, we express no opinion as to the tax consequences to
any party, whether Federal, state or local taxes, of the Merger or of any
transactions related to the Merger or contemplated by the Agreement. This
opinion is being furnished to you in connection with the Merger and for your
benefit in connection therewith and may not be used or relied upon for any
other purpose (except for inclusion in the Registration Statement on Form S-4),
and may not be circulated, quoted, or otherwise referred to for any other
purpose without our express written consent.
Very truly yours,
Knight, Vale & Gregory, Inc., P. S.
/s/ Knight, Vale & Gregory, Inc., P. S.
By /s/ Landon J. Brazier
Landon J. Brazier, Shareholder
Attachments<PAGE>
[First Hawaiian, Inc. Letterhead]
June 21, 1996
Knight, Vale & Gregory, Inc., P.S.
1145 Broadway Plaza, Suite 900
Tacoma, WA 98402
Re: Agreement and Plan of Merger among First Hawaiian, Inc.,
ANB Acquisition Corporation, and ANB Financial Corporation
Gentlemen:
In connection with the proposed merger ("Merger") of ANB
Acquisition Corporation ("Sub") with and into ANB Financial Corporation
("Company"), pursuant to the terms of the Agreement and Plan of Merger dated as
of February 26, 1996, among First Hawaiian, Inc. ("FHI"), Sub and Company
("Agreement"), you will render opinions regarding the Federal income tax
consequences to Company and its stockholders.
In connection with such opinions, and recognizing that you will
rely on this letter in rendering said opinions, the undersigned, a duly
authorized officer of FHI and acting as such, hereby certifies that, to the
best knowledge of the management of FHI, the facts relating to the Merger as
described in the Agreement and in the prospectus included as part of the
Registration Statement on Form S-4 to be filed with the Securities and Exchange
Commission, including attachments thereto, are true, correct and complete in
all material respects. The undersigned further certifies, to the best
knowledge of the management of FHI, to the following as of the date hereof.
Insofar as such certification pertains to any person (including Company) other
than FHI, such certification is only as to the knowledge of the undersigned
without specific inquiry.
1. The Merger will be consummated in compliance with the
material terms of the Agreement, and none of the material terms and conditions
therein have been waived or modified and FHI has no plan or intention to waive
or modify further any such material condition.
2. The ratio for the exchange of shares of stock of Company
for common stock of FHI in the Merger was negotiated through arm's-length
bargaining. Accordingly, the fair market value of the FHI common stock to be
received by Company stockholders in the Merger will be approximately equal to
the fair market value of the Company stock surrendered by such stockholders in
exchange therefor.
3. To the best of the knowledge of the management of FHI,
there is no plan or intention by any stockholder of Company to sell, exchange,
transfer by gift or otherwise dispose of any of the shares of common stock of
FHI to be received by them in the Merger. In addition, the management of FHI
is not aware of any transfers of Company stock by any holders thereof prior to
the Effective Time which were made in contemplation of the Merger.
<PAGE>
4. Stockholders of Company holding at least 80% of the common
stock will exchange their common stock solely for common stock of FHI pursuant
to the Merger.
5. To the best of the knowledge of the management of FHI,
immediately following the Merger, Company will retain at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by it immediately prior to the Merger. For this purpose,
amounts used to pay dissenters, for fractional shares or to pay reorganization
expenses, and all other redemptions and distributions (except for regular,
normal dividends) made by Company immediately prior to the Merger will be
considered as assets held by Company immediately prior to the Merger. The
management of FHI is not aware of Company having redeemed any of its stock,
having made any distribution with respect to any of its stock or having
disposed of any of its assets in anticipation of or as part of a plan for the
acquisition of Company by FHI.
6. Prior to the Merger, FHI will own 100% of the outstanding
common stock of Sub, and Sub will have no other classes of stock outstanding.
7. FHI has no plan or intention to cause Company after the
Merger to issue additional shares of the stock of Company that would result in
FHI losing control of Company (control defined as ownership of at least 80% of
the common stock and at least 80% of all other classes of stock of Company).
8. FHI has no plan or intention to reacquire any of its stock
issued in the Merger.
9. FHI has no plan or intention after the Merger to liquidate
Company, to merge Company into another corporation to make any extraordinary
distribution in respect of its stock in Company, to sell or otherwise dispose
of the stock of Company except for the transfers of such stock to a corporation
with respect to which the Parent owns at least 80% of the total combined voting
power of all classes of stock entitled to vote and at least 80% of the total
number of shares of all other classes of stock, or to cause Company to sell or
dispose of any of its assets except for dispositions made in the ordinary
course of business or transfers to a corporation controlled by Company.
10. To the best of the knowledge of the management of FHI, no
liabilities of any person other than Company will be assumed by Company or FHI
in the Merger, and none of the shares of Company to be surrendered in exchange
for FHI common stock in the Merger will be subject to any liabilities.
11. Immediately after the Merger, FHI intends to cause Company
to continue the historic business of Company or use a significant portion of
the historic business assets of Company in a business.
12. FHI, Sub and Company will pay their respective expenses
incurred in connection with the Merger. Neither FHI nor Sub will pay any of
the expenses of the stockholders of Company incurred in connection with the
Merger.
13. To the best of the knowledge of the management of FHI, on
the date of the Merger, the fair market value of the assets of Company will
exceed the sum of its liabilities.
<PAGE>
14. No stock of Sub will be issued in the Merger, and any
assets of Sub will be transferred to Company pursuant to the Merger.
15. The stock of FHI exchanged for common stock of Company in
the Merger will be newly issued or treasury stock pursuant to the Agreement.
None of the stock of FHI exchanged will be stock previously transferred to Sub.
16. The payment of cash in lieu of fractional shares of stock
of FHI was not separately bargained for consideration, and its being made for
the sole purpose of saving FHI the expense and inconvenience of issuing
fractional shares.
17. None of the compensation received by any stockholder-
employee of Company pursuant to any employment, consulting or similar
arrangement is or will be separate consideration for, or allocable to, any of
his/her share of Company stock. None of the shares of common stock of FHI
received by any stockholder-employee of Company pursuant to the Merger is or
will be separate consideration for, or allocable to, any such employment,
consulting or similar arrangement. The compensation paid to any stockholder-
employee of Company pursuant to any such employment, consulting or similar
arrangement is or will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
This letter is being furnished to you solely for your benefit and
for use in rendering your opinions and is not to be used, circulated, quoted or
otherwise referred to for any other purposes (other than inclusion in your
opinions) without the express written consent of FHI. All of the foregoing
certifications are true to the best knowledge of the management of FHI.
Very truly yours,
FIRST HAWAIIAN, INC.
/s/ Howard H. Karr
Howard H. Karr<PAGE>
[ANB Financial Corp. Letterhead]
April 18, 1996
Knight, Vale & Gregory, Inc., P.S.
1145 Broadway Plaza, Suite 900
Tacoma, WA 98402
RE: Agreement and Plan of Merger among First Hawaiian, Inc., ANB Acquisition
Corporation, and ANB Financial Corporation.
Gentlemen:
In connection with the proposed merger ("Merger") of ANB Acquisition
Corporation ("Sub") with and into ANB Financial Corporation ("Company"),
pursuant to the terms of the Agreement and Plan of Merger dated as of February
26, 1996, among First Hawaiian, Inc. ("FHI"), Sub and Company ("Agreement"),
you will render opinions regarding the Federal Income Tax consequences to
Company and its stockholders.
In connection with such opinions, and recognizing that you will rely on this
letter in rendering said opinions, the undersigned, a duly authorized officer
of Company and acting as such, hereby certifies that, to the best knowledge of
the management of Company, the facts relating to the Merger as described in the
Agreement and in the prospectus included as part of the Registration Statement
on Form S-4 to be filed with the Securities and Exchange Commission, including
attachments thereto, are true, correct and complete in all material respects.
The undersigned further certifies, to the best knowledge of the management of
Company, to the following as of the date hereof. Insofar as such certification
pertains to any person (including FHI and Sub) other than Company, such
certification is only as to the knowledge of the undersigned without specific
inquiry.
1. The Merger will be consummated in compliance with the material terms of
the Agreement, and none of the material terms and conditions therein
have been waived or modified and Company has no plan or intention to
waive or modify further any such material condition.
2. The ratio for the exchange of shares of stock of Company for common
stock of FHI in the Merger was negotiated through arm's length
bargaining. Accordingly, the fair market value of the FHI common stock
to be received by Company stockholders in the Merger will be
approximately equal to the fair market value of the Company stock
surrendered by such stockholders in exchange therefor.
3. The management of Company knows of no plan or intention by any
stockholder of Company to sell, exchange, transfer by gift or otherwise
dispose of any of the shares of common stock of FHI to be received by
them in the Merger. In addition, the management of Company is not aware
of any transfers of Company stock by any holders thereof prior to the
Effective Time which were made in contemplation of the Merger.
<PAGE>
4. Stockholders of Company holding at least 80% of the common stock will
exchange their common stock solely for common stock of FHI pursuant to
the Merger.
5. Immediately following the Merger, Company will retain at least 90% of
the fair market value of the net assets and at least 70% of the fair
market value of the gross assets held by it immediately prior to the
Merger. For this purpose, amounts used to pay dissenters, for
fractional shares or to pay reorganization expenses, and all other
redemptions and distributions (except for regular, normal dividends)
made by Company immediately prior to the Merger will be considered as
assets held by Company immediately prior to the Merger. Company has not
redeemed any of its stock, made any distribution with respect to any of
its stock, or disposed of any of its assets in anticipation of or as
part of a plan for the acquisition of Company by FHI.
6. No liabilities of any person other than Company will be assumed by
Company or FHI in the Merger, and none of the shares of Company to be
surrendered in exchange for FHI common stock in the Merger will be
subject to any liabilities.
7. Immediately after the Merger, Company intends to continue its historic
business, or use a significant portion of its historic business assets
in a business.
8. Company, FHI and Sub will pay their respective expenses incurred in
connection with the Merger. None of Company, FHI or Sub will pay any of
the expenses of the stockholders of Company incurred in connection with
the Merger.
9. On the date of the Merger, the fair market value of the assets of
Company will exceed the sum of its liabilities.
10. No stock of Sub will be issued in the Merger, and any assets of Sub will
be transferred to Company pursuant to the Merger.
11. The payment of cash in lieu of fractional shares of stock of FHI was not
separately bargained for consideration, and its being made for the sole
purpose of saving FHI the expense and inconvenience of issuing
fractional shares.
12. None of the compensation received by any stockholder-employee of Company
pursuant to any employment, consulting or similar arrangement is or will
be separate consideration for, or allocable to, any of his shares of
Company stock. None of the shares of common stock of FHI received by
any stockholder-employee of Company pursuant to the Merger are or will
be separate consideration for, or allocable to, any such employment,
consulting or similar arrangement. The compensation paid to any
stockholder-employee of Company pursuant to any such employment,
consulting or similar arrangement is or will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
This letter is being furnished to you solely for your benefit and for use in
rendering your opinions and is not to be used, circulated, quoted or otherwise
referred to for any other purpose (other than inclusion in your opinions)
<PAGE>
without the express written consent of Company. All of the foregoing
certifications are true to the best knowledge of the management of Company.
Very truly yours,
/s/ Richard C. Emery
Name
President & CEO
Title
April 26, 1996
Date
Exhibit 8.3
June 21, 1996
ANB Financial Corporation
7525 West Canal Drive
Kennewick, WA 99336
First Hawaiian, Inc.
1132 Bishop St., 25th Floor
Honolulu, HI 96813
RE: First Hawaiian, Inc. and ANB Financial Corporation
Registration Statement on Form S-4
Gentlemen:
We have acted as Tax Counsel to ANB Financial Corporation in connection with
the proposed merger ("Merger") of ANB Acquisition Corporation ("Sub") with and
into ANB Financial Corporation ("Company"), pursuant to the terms of the
Agreement and Plan of Merger dated as of February 26, 1996 among First
Hawaiian, Inc. ("FHI"), Sub and Company ("Agreement") as described in the
Registration Statement on Form S-4 to be filed by FHI with the Securities and
Exchange Commission. This opinion is being rendered pursuant to the
requirements of Item 21(a) of Form S-4 under the Securities Act of 1933, as
amended.
In connection with this opinion, we have examined and are familiar with copies
identified to our satisfaction of the Agreement including schedules and
exhibits, the Registration Statement and such other documents as we have deemed
necessary or appropriate in order to enable us to render this opinion. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. We have also relied upon certain
written representations of management of Company and FHI, which are attached to
this opinion.
Based upon and subject to the foregoing, the discussion contained in the
prospectus included as part of the Registration Statement ("Prospectus") under
the caption "Certain Federal Income Tax Consequences," except as otherwise
indicated, expresses our opinion as to the material Federal income tax
consequences applicable to holders of Company common stock and to Company, FHI
and Sub. You should be aware, however, that the discussion under the caption
"Certain Federal Income Tax Consequences" in the Prospectus represents our
conclusions as to the application of existing law to the instant transactions.
There can be no assurance that contrary positions may not be taken by the
Internal Revenue Service.
This opinion is furnished to you solely for use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as an
<PAGE>
exhibit to the Registration Statement. We also consent to the references to
Knight, Vale & Gregory, Inc., P. S. under the heading "Certain Federal Income
Tax Consequences" in the Registration Statement and the Prospectus.
Very truly yours,
Knight, Vale & Gregory, Inc., P. S.
/s/ Knight, Vale & Gregory, Inc., P. S.
By /s/ Landon J. Brazier
Landon J. Brazier, Shareholder
Attachments
EXHIBIT 23.1
[Letterhead of Coopers & Lybrand L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
(No. 333-5655) of First Hawaiian, Inc. on Form S-4 (the "Registration
Statement"), of our report dated January 17, 1996, on our audits of the
consolidated financial statements of First Hawaiian, Inc. as of December 31,
1995 and 1994, and for the years ended December 31, 1995, 1994 and 1993, which
report is included in the 1995 Annual Report on Form 10-K, incorporated by
reference in the Registration Statement. We also consent to the reference to
our firm under the caption "Auditors".
/s/ Coopers & Lybrand L.L.P.
Honolulu, Hawaii
June 21, 1996
Exhibit 99.1
ANB FINANCIAL CORPORATION
7525 West Canal Drive
Kennewick, Washington 99336
June 25, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of ANB Financial Corporation ("ANB"), which will be held at the
Tri-Cities Country Club, located at 314 Underwood, Kennewick, Washington, at
1:00 p.m., local time, on July 26, 1996.
At the Annual Meeting, in addition to the election of directors,
shareholders will be asked to approve an Agreement and Plan of Merger, dated
as of February 26, 1996 (the "Merger Agreement"), among ANB, First Hawaiian,
Inc. ("First Hawaiian") and ANB Acquisition Corporation, a wholly-owned
subsidiary of First Hawaiian, pursuant to which ANB Acquisition Corporation
will merge with and into ANB (the "Merger"). As a result of the merger, ANB
will become a wholly-owned subsidiary of First Hawaiian, and each share of
common stock of ANB will be converted into shares of First Hawaiian common
stock with a market value equal to 2.2 times the adjusted book value of ANB's
common stock, determined as of the thirtieth day prior to the merger in
accordance with the terms set forth in the Merger Agreement.
The proposed Merger, including the method for determining the number
of shares of First Hawaiian common stock issuable to shareholders of ANB in the
Merger, is described in detail in the accompanying Proxy Statement/Prospectus
and its annexes. Please read all of these materials carefully.
The Merger will provide ANB with substantially greater financial and
technological resources that will enable it to compete more effectively in its
home market and better serve its customers and communities. ANB's shareholders
will be able to obtain a premium for their shares on a tax-deferred basis while
at the same time having the opportunity to participate in First Hawaiian's
future and to have the benefits of the active trading market for First
Hawaiian's common stock.
THE ANB BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF ANB AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD HAS
UNANIMOUSLY ADOPTED THE MERGER AGREEMENT AND RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE MERGER AGREEMENT AT THE ANNUAL MEETING.
At the Annual Meeting you will also be asked to consider and vote
upon the election of directors to serve on the ANB Board of Directors for terms
of three years, or until the effective time of the Merger. As described in the
accompanying Proxy Statement/Prospectus, if the Merger is consummated, the
Board of Directors of the surviving corporation immediately following the
Merger will consist of six members, two of whom will be designated by the
present ANB Board of Directors and the Board of Directors of American National
Bank will consist of 10 members, six of whom will be designated by ANB from
American National Bank's current Board of Directors. In addition, it is
currently expected that upon consummation of the Merger, Craig D. Eerkes will
<PAGE>
be elected to serve on the Board of Directors of First Hawaiian's principal
banking subsidiary, First Hawaiian Bank.
THE ANB BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF ANB
VOTE FOR THE PROPOSED SLATE OF DIRECTORS.
Because of the significance of these matters to ANB, your
participation in the Annual Meeting, in person or by proxy, is especially
important. We hope you will be able to attend the meeting. However, whether
or not you anticipate attending in person, we urge you to complete, sign and
return the enclosed proxy card promptly to ensure that your shares will be
represented at the Annual Meeting. Please note that an affirmative vote of 2/3
of the outstanding shares of ANB common stock is required to approve the
Merger. Accordingly, an abstention or failure to vote will have the same
effect as a vote against the Merger Agreement. If you do attend the Annual
Meeting, you will, of course, be entitled to revoke your proxy and vote in
person.
Thank you and we look forward to seeing you at the meeting.
Sincerely,
Craig D. Eerkes Richard C. Emery
Chairman of the Board President and CEO
Exhibit 99.2
ANB FINANCIAL CORPORATION
7525 West Canal Drive
Kennewick, Washington 99336
(509) 735-0451
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on July 26, 1996
The annual meeting of shareholders (including any adjournment or
postponement, the "Annual Meeting") of ANB FINANCIAL CORPORATION ("ANB") will
be held at the Tri-Cities Country Club, located at 314 Underwood, Kennewick,
Washington, at 1:00 p.m., local time, on July 26, 1996, to consider the
following matters:
I. the approval of the Agreement and Plan of Merger, dated as of
February 26, 1996 (the "Merger Agreement"), by and among ANB, First
Hawaiian, Inc. ("First Hawaiian") and ANB Acquisition Corporation, a
wholly-owned subsidiary of First Hawaiian ("Merger Sub"), pursuant to
which Merger Sub will merge with and into ANB (the "Merger"), upon the
terms and subject to the conditions set forth in the Merger Agreement, as
more fully described in the enclosed Proxy Statement/Prospectus;
(2) the election of three directors to serve for terms of three
years and until their successors are elected and qualified, or until the
effective time of the Merger, as more fully described in the enclosed
Proxy Statement/Prospectus; and
(3) the transaction of such other business as may properly be
brought before the Annual Meeting.
Pursuant to the Bylaws of ANB, the Board of Directors has fixed the
close of business on June 20, 1996 as the time for determining shareholders of
record entitled to notice of, and to vote at, the Annual Meeting.
Shareholders of ANB are entitled to assert dissenters' rights under
Chapter 23B.13 of the Revised Code of Washington in connection with approval of
the Merger Agreement, as more fully described in the enclosed Proxy
Statement/Prospectus.
Each share of the common stock of ANB will entitle the holder thereof
to one vote on each matter which may properly come before the Annual Meeting.
By order of the Board of Directors,
John Monroe
Secretary
June 25, 1996
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PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. IF YOU ATTEND
THE ANNUAL MEETING,YOU MAY VOTE IN PERSON EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD
Exhibit 99.3
ANB FINANCIAL CORPORATION
Annual Meeting of Shareholders -- July 26, 1996 at 1:00 p.m., Local Time
This Proxy is Solicited on Behalf of the Board of Directors
P R O X Y
The undersigned shareholder of ANB Financial Corporation ("ANB") hereby
appoints Craig D. Eerkes and Richard C. Emery, the proxies of the undersigned
(each with power of substitution and with power to act alone and with all
powers the undersigned would possess if personally present) to vote at the
Annual Meeting of Shareholders of ANB to be held on July 26, 1996, and at
any adjournment or postponement thereof (the "Meeting"), all the shares of
Common Stock of ANB which the undersigned would be entitled to vote on the
following proposals more fully described in the Proxy Statement/Prospectus
dated June 25, 1996 for the Meeting in the manner specified and in the
discretion of the named proxies or any other business that may properly come
before the Meeting.
Please indicate on the reverse side of this card how your stock is to be voted.
Unless you specifically direct otherwise, the shares represented by this proxy
will be voted "FOR" proposals (1) and (2). Unless each of proposal (1) and
proposal (2) are approved by the shareholders of ANB, neither proposal will be
adopted.
/ SEE REVERSE SIDE /
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* FOLD AND DETACH HERE *
ANNUAL MEETING
OF
ANB FINANCIAL CORPORATION
Friday, July 26, 1996
Tri-Cities Country Club
1:00 p.m.
314 Underwood
Kennewick, Washington 99336
* Your vote is important to us. Please detach the above proxy, sign the
card and insert it in the enclosed envelope at your earliest convenience.
* If you intend to attend the meeting, please place an "X" in the
appropriate box on the above proxy card.
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/X/ Please mark your
vote as in this
example.
1. Approval of the Agreement and Plan FOR AGAINST ABSTAIN
of Merger dated as of February 26, /_/ /_/ /_/
1996, relating to the acquisition of
ANB by First Hawaiian, Inc. and the
merger of ANB Acquisition
Corporation, a wholly-owned
subsidiary of First Hawaiian, Inc.,
with and into ANB.
I plan to attend the Yes No
Annual Meeting /_/ /_/
2. Approval of the election of Craig D. FOR AGAINST ABSTAIN
Eerkes, Harvey Faurholt and Ron /_/ /_/ /_/
Grant to the Board of Directors of
ANB, each for a three-year term
expiring in 1999.
(Note: To withhold authority to vote for any individual
nominee, cross out that nominee's name appearing above)
NOTE: Your signature should appear as your name appears hereon. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Please sign, date and return the proxy card promptly using the enclosed
envelope.
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Signature(s) Date
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FOLD AND DETACH HERE
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
