SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
Washington, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended MARCH 31, 1996, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
to
COMMISSION FILE NUMBER 0-10967
FIRST MIDWEST BANCORP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3161078
(State or other jurisdiction of (IRS Employer
Identification No.)
incorporation or organization)
300 PARK BLVD., SUITE 405, P.O. BOX 459
ITASCA, ILLINOIS 60143-0459
(Address of principal executive offices) (zip code)
(708) 875-7450
(Registrant's telephone number, including area code)
COMMON STOCK, NO PAR VALUE
PREFERRED SHARE PURCHASE RIGHTS
Securities Registered Pursuant to Section 12(g) of the Act
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [
]
As of May 8, 1996, 13,690,997 shares of the Registrant's $.01 par value
common stock were outstanding, excluding treasury shares. (Refer to
footnote (1) under Item 4 located on page 14 for April, 1996 change made
to par value of common stock.)
Exhibit Index is located on page 15.
FIRST MIDWEST BANCORP, INC.<PAGE>
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Condition . . . . . . . . . . . . . . 3
Consolidated Statements of Income . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 14
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
FIRST MIDWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(Dollar amounts in thousands except per share data)
<CAPTION>
MARCH 31, DECEMBER 31,
1996 (1) 1995 (2)
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 136,908 $ 141,336
Funds sold and other short term investments . . . . . . . . . . . . . . . . . 7,403 7,927
Mortgages held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,919 20,011
Securities available for sale, at market value . . . . . . . . . . . . . . . . 920,639 831,030
Securities held to maturity, at amortized cost (market value of $26,733 and
$27,641 at March 31, 1996 and December 31, 1995, respectively) . . . . . . 26,511 27,527
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,939,500 2,085,604
Reserve for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,076) (29,194)
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,911,424 2,056,410
Premises, furniture and equipment . . . . . . . . . . . . . . . . . . . . . . 46,851 47,108
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . 20,396 24,786
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,160 51,162
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,147,211 $ 3,207,297
LIABILITIES
Demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 349,447 $ 360,895
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,219 251,468
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258,960 262,959
Money market deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282,424 285,058
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,107,927 1,111,678
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,248,977 2,272,058
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610,302 649,821
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,978 12,262
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,169 23,923
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,895,426 2,958,064
STOCKHOLDERS' EQUITY
Preferred stock, no par value: 1,000,000 shares authorized, none issued . . . ---
Common stock, no par value: 20,000,000 shares authorized (3); 14,007,291 shares
issued; 13,689,424 and 13,679,747 outstanding at March 31, 1996 and
December 31, 1995, respectively . . . . . . . . . . . . . . . . . . . . . 23,475 23,475
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 34,368 35,516
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,888 195,853
Unrealized net appreciation (depreciation) on securities, net of tax . . . . . (691) 486
Treasury stock, at cost - 317,867 and 327,544 shares at March 31, 1996
and December 31, 1995, respectively . . . . . . . . . . . . . . . . . . . . (6,255) (6,097)
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . 251,785 249,233
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . $ 3,147,211 $ 3,207,297
See notes to consolidated financial statements.
<FN>
(1) Unaudited
(2) Audited - See December 31, 1995 Form 10-K for Auditor's Report.
(3) Refer to footnote (1) under Item 4 located on page 14 for April, 1996 change made to par value and authorized number of
shares of common stock.
</TABLE>
<TABLE>
FIRST MIDWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share data)
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (1)
1996 1995
<S> <C> <C>
INTEREST INCOME
Loans . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,759 $ 42,347
Securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,805 11,728
Securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 3,966
Funds sold and other short-term investments . . . . . . . . . . . . . . . . . . . . . 196 293
TOTAL INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,183 58,334
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,436 17,585
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,347 11,524
TOTAL INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,783 29,109
NET INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,400 29,225
PROVISION FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859 1,648
Net interest income after provision for loan losses . . . . . . . . . . . . . . . 28,541 27,577
NONINTEREST INCOME
Service charges on deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . 2,338 2,356
Trust and investment management fees . . . . . . . . . . . . . . . . . . . . . . . . 1,623 1,488
Other service charges, commissions and fees . . . . . . . . . . . . . . . . . . . . . 1,387 1,231
Mortgage banking revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 915 547
Security gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 183
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571 602
TOTAL NONINTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,910 6,407
NONINTEREST EXPENSE
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,955 9,960
Retirement and other employee benefits . . . . . . . . . . . . . . . . . . . . . . . 2,550 2,760
Occupancy expense of premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700 1,488
Equipment expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,459 1,518
Computer processing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,590 1,584
FDIC insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 1,182
Acquisition credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (324) -
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,074 5,134
TOTAL NONINTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,153 23,626
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . 12,298 10,358
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,373 3,650
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,925 $ 6,708
NET INCOME PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.58 $ 0.49
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . $ 0.21 $ 0.19
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . 13,696,018 13,518,207
See notes to consolidated financial statements.
<FN>
(1) Unaudited
</TABLE>
<TABLE>
FIRST MIDWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (1)
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,925 $ 6,708
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . 859 1,648
Provision for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 1,522 1,409
Net (accretion) amortization of securities
available for sale premiums and discounts . . . . . . . . . . . . . . . . . (1,378) 701
Net accretion of securities held to maturity premiums and discounts . . . . . (15) (130)
Net gains on securities available for sale transactions . . . . . . . . . . . (76) (183)
Net gains on sales of premises, furniture and equipment . . . . . . . . . . . (28) (12)
Net decrease in deferred income taxes . . . . . . . . . . . . . . . . . . . . (174) (1,161)
Net amortization of purchase accounting adjustments and goodwill . . . . . . 457 358
Changes in operating assets and liabilities:
Net increase in loans held for sale . . . . . . . . . . . . . . . . . . . . (2,908) (2,896)
Net decrease (increase) in accrued interest receivable . . . . . . . . . . 4,390 (2,030)
Net (increase) decrease in other assets . . . . . . . . . . . . . . . . . . (2,672) 5,095
Net (decrease) increase in accrued interest payable . . . . . . . . . . . . (1,284) 403
Net increase in other liabilities . . . . . . . . . . . . . . . . . . . . . 1,420 3,054
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . 8,038 12,964
INVESTING ACTIVITIES
Securities available for sale:
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415,430 71,540
Proceeds from maturities, calls and paydowns . . . . . . . . . . . . . . . . . . 209,700 10,352
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (572,926) (79,302)
Securities held to maturity:
Proceeds from maturities, calls and paydowns . . . . . . . . . . . . . . . . . . 2,707 51,173
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,676) (20,502)
Loans made to customers, net of principal collected . . . . . . . . . . . . . . . . 625 (31,869)
Proceeds from sales of foreclosed real estate . . . . . . . . . . . . . . . . . . . 1,185 1,973
Proceeds from sales of premises, furniture and equipment . . . . . . . . . . . . . 64 38
Purchases of premises, furniture and equipment . . . . . . . . . . . . . . . . . . (1,301) (2,542)
NET CASH USED BY INVESTING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . 53,808 861
FINANCING ACTIVITIES
Net decrease in deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . (23,081) (16,877)
Net (decrease) increase in short-term borrowings . . . . . . . . . . . . . . . . . (39,519) 8,337
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,266) (78)
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,890) (2,320)
Cash dividends paid by acquiree . . . . . . . . . . . . . . . . . . . . . . . . . . - (181)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958 713
NET CASH USED BY FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . (66,798) (10,406)
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . (4,952) 3,419
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 149,263 130,394
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . $ 144,311 $ 133,813
Supplemental disclosures:
Interest paid to depositors and creditors . . . . . . . . . . . . . . . . . . . $ 31,066 $ 28,627
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,402 575
Non-cash transfers to foreclosed real estate from loans . . . . . . . . . . . . 2,350 596
Non-cash transfers to securities available for sale from loans . . . . . . . . . $ 141,164 $ -
See notes to consolidated financial statements.
<FN>
(1) Unaudited
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim consolidated financial statements of
First Midwest Bancorp, Inc. ("First Midwest") have been prepared in
accordance with generally accepted accounting principals and with the
rules and regulations of the Securities and Exchange Commission for
interim financial reporting. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principals for complete financial statements. The preparation of
financial statements requires Management to make estimates and assumptions
that affect the recorded amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
recorded period. Actual results could differ from those estimates. In
addition, certain reclassifications have been made to the 1995 data to
conform to the 1996 presentation. For further information with respect to
significant accounting policies followed by First Midwest in the
preparation of its consolidated financial statements, refer to First
Midwest's Annual Report on Form 10-K for the ended December 31, 1995.
On December 20, 1995, First Midwest acquired CF Bancorp, Inc. ("CF"),
whose principal subsidiary was Citizens Federal Savings Bank ("Citizens
Federal"), in a transaction accounted for as a pooling of interests.
Accordingly, prior period financial statements and other financial
disclosures have been restated as if the combining companies had been
consolidated for all periods presented.
2. ACQUISITION
Pursuant to the acquisition of CF on December 20, 1995, each share of
common stock of CF was converted into 1.4545 shares of First Midwest, with
1,339,989 First Midwest shares being issued to CF stockholders.
Coincident with the acquisition, First Midwest recorded $4,887 in
acquisition-related costs consisting of $4,339 in acquisition expenses and
$548 in provisions for loan losses incident to conforming Citizens
Federal's credit policies to First Midwest's. The acquisition expenses,
certain of which are nondeductible for income tax purposes, were recorded
through the establishment of a reserve which is comprised of the following
components for the dates indicated:
<TABLE>
March 31, December 20,
Acquisition Reserve: 1996 1995
<S> <C> <C>
Executive severance agreements $ 923 $ 1,290
Employee severance 416 545
Outplacement and other employee costs 112 275
Bad debt reserve recapture 992 992
Investment advisor fees - 410
Legal, accounting and other professional fees 197 827
$ 2,640 $ 4,339
</TABLE>
During the first quarter of 1996, the acquisition reserve was reduced by
$1,699 as a result of $1,375 in acquisition related expenses being paid
out and $324 of the reserve being reversed. The reversal was primarily
related to lesser severance being paid to former Citizens Federal
executives and employees who resigned or accepted reduced payouts during
the first quarter of 1996.
The bad debt reserve recapture totaling $992 in the above table represents
the after-tax cost incident to Citizens Federal's converting from a thrift
institution to a national bank. Upon conversion, the institution becomes
subject to recapture of all or a portion of its bad debt reserve and would
be required to immediately record, for financial accounting purposes, a
current or deferred tax liability for the amount of recaptured taxes for
which liabilities previously have not been recorded. Citizens Federal's
conversion from a thrift to a national bank, as contemplated by the
acquisition contract and as currently planned, will take place in 1996
prior to its merger with the Bank. In late 1995, legislation was
introduced in Congress under which pre-1988 bad debt reserves of thrifts
would not be subject to recapture upon conversion to a national bank. The
legislation was a part of the budget reconciliation bill which was vetoed
by President Clinton in December, 1995. The bad debt legislation is
currently under consideration as part of both the House and Senate health
care reform bills. The likelihood of passage of the thrift bad debt tax
relief legislation is unknown at this time and is difficult to predict
because the outcome of the health care reform rests largely on the
reconciliation of several controversial provisions. Importantly,
enactment of the thrift bad debt relief legislation would eliminate the
need for the bad debt reserve recapture portion of the acquisition
expenses and permit its reversal.
Additional information with respect to the components of the acquisition
reserve can be found in First Midwest's Annual Report on Form 10-K for the
year ended December 31, 1995 in Footnote 2 located on page 47.
3. SECURITIES
SECURITIES AVAILABLE FOR SALE - The amortized cost and market value of
securities available for sale at March 31, 1996 and December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
Securities Available for Sale
March 31, 1996 December 31, 1995
Gross Gross Gross Gross
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities . . $ 115,835 $ 62 $ (177) $ 115,720 $188,854 $ 803 $ - $ 189,657
U.S. Agency securities . . . 276,888 137 (1,285) 275,740 266,534 620 (279) 266,875
Mortgage-backed securities . 524,050 2,733 (2,537) 524,246 369,888 876 (1,248) 369,516
Other securities . . . . . . 4,931 2 - 4,933 4,958 24 - 4,982
Total . . . . . . . . . . $ 921,704 $ 2,934 $(3,999) $ 920,639 $830,234 $ 2,323 $(1,527) $ 831,030
</TABLE>
SECURITIES HELD TO MATURITY - The amortized cost and market value of
securities held to maturity at March 31, 1996 and December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Securities Held to Maturity
March 31, 1996 December 31, 1995
Gross Gross Gross Gross
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities . . $ 902 $ 4 $ - $ 906 $ 828 $ 8 $ - $ 836
State and
municipal securities . . . 14,301 227 (35) 14,493 14,403 320 (241) 14,482
Other securities . . . . . . 11,308 26 - 11,334 12,296 27 - 12,323
Total . . . . . . . . . . $ 26,511 $ 257 $ (35) $ 26,733 $ 27,527 $ 355 $ (241) $ 27,641
</TABLE>
4. LOANS
The following table provides the book value of loans, by major
classification, as of the dates indicated:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
Commercial and industrial . . . . . . . . . . . . . . . . . . . . . $ 585,138 $ 525,210
Agricultural . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,055 32,111
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567,540 568,344
Real estate - 1-4 family . . . . . . . . . . . . . . . . . . . . . 186,204 325,056
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . 446,079 422,073
Real estate - construction . . . . . . . . . . . . . . . . . . . . 112,576 98,688
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,908 17,122
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,939,500 $ 2,085,604
</TABLE>
During the first quarter of 1996, First Midwest securitized approximately
$140,000 in 1-4 family real estate loans, retaining such assets in its
securities available for sale portfolio as mortgage-backed securities.
5. RESERVE FOR LOAN LOSSES/IMPAIRED LOANS
Transactions in the reserve for loan losses for the quarters ended March
31, 1996 and 1995 are summarized below:
<TABLE>
<CAPTION>
Quarters ended
March 31,
1996 1995
<S> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . $ 29,194 $ 25,154
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . 859 1,648
Loans charged-off . . . . . . . . . . . . . . . . . . . . . . . . . . (2,670) (1,979)
Recoveries of loans previously charged-off . . . . . . . . . . . . . . 693 447
Net loans charged-off . . . . . . . . . . . . . . . . . . . . . . . (1,977) (1,532)
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . $ 28,076 $ 25,270
</TABLE>
The recorded investment in loans considered impaired at March 31, 1996, as
defined by Financial Accounting Standards Board Statement No. 114, was
$17,476 of which $9,709 have collateral values equal to or greater than
the recorded investment in such loans; the $7,767 balance of impaired
loans have collateral values less than the recorded investment in such
loans for which a specific loan loss reserve of $2,200 is maintained. For
the three months ended March 31, 1996, the average recorded investment in
impaired loans was approximately $17,700.
6. CONTINGENT LIABILITIES AND OTHER MATTERS
There are certain legal proceedings pending against First Midwest and its
Affiliates in the ordinary course of business at March 31, 1996. In
assessing these proceedings, including the advise of counsel, First
Midwest believes that liabilities arising from these proceedings, if any,
would not have a material adverse effect on the consolidated financial
condition of First Midwest.
During the second quarter of 1995 settlement discussions were initiated
arising out of litigation brought by First Midwest relating to a claim
against its fidelity bond insurance carrier. Incident thereto the carrier
informally communicated a settlement offer which was rejected by First
Midwest. A bench trial commenced on February 26, 1996 with First Midwest
presenting its case over the ensuing five days with the trial being
continued to late June, 1996 when the insurance carrier will present its
defense. Neither the outcome of the trial nor the possibility of
settlement can be reasonably quantified or determined at this time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion presented below provides an analysis of First Midwest's
results of operations and financial condition for three months ended March
31, 1996 as compared to the same period in 1995. Management's discussion
and analysis should be read in conjunction with the consolidated financial
statements and accompanying notes presented elsewhere in this report as
well as First Midwest's 1995 Annual Report on Form 10-K. Results of
operations for the three month period ended March 31, 1996 are not
necessarily indicative of results to be expected for the full year of
1996.
The consolidated financial information for all periods presented herein
have been restated to include First Midwest's 1995 acquisition of CF
Bancorp, Inc. accounted for as a pooling of interests. All financial
information is presented in thousands of dollars, except per share data.
ACQUISITION
On December 20, 1995, First Midwest consummated the acquisition of CF
Bancorp, Inc. ("CF"), the holding company for Citizens Federal Savings
Bank ("Citizens Federal"). Pursuant to the acquisition, each share of
common stock of CF was converted into 1.4545 shares of First Midwest,
resulting in 1,339,989 First Midwest shares being issued to CF
stockholders. Citizens Federal, with assets of $220 million and offices
in Davenport and Bettendorf, Iowa, is currently planned to be converted to
a national bank and merged into First Midwest Bank, N.A. in 1996.
SUMMARY OF PERFORMANCE
Net Income
Net income for the first quarter of 1996 increased to $7,925 , or $.58 per
share from $6,708, or $.49 per share in the first quarter of 1995,
representing an increase of 18% on a per share basis.
Presented in the table below is an income statement analysis comparing the
change in the components of net income for the periods ended March 31,
1996 and 1995. The increase or decrease in each category is further
detailed in the discussion and analysis that follows.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Change
1996 1995 $ %
<S> <C> <C> <C> <C>
Net interest income (tax equivalent) . . . . . . . . . . . . . . $ 30,026 $ 29,515 $ 511 1.7%
Provision for loan losses . . . . . . . . . . . . . . . . . . . . 859 1,648 (789) (47.9)
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . 6,910 6,407 503 7.9
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . 23,153 23,626 (473) (2.0)
Income before income taxes . . . . . . . . . . . . . . . . . . . 12,924 10,648 2,276
Income tax expense/tax equivalent adjustment . . . . . . . . . . 4,999 3,940 1,059 26.9
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,925 $ 6,708 $ 1,217 18.1%
Net Income per share . . . . . . . . . . . . . . . . . . . . . . $ 0.58 $ 0.49 $ 0.09 18.4%
</TABLE>
Return on Average Assets and Stockholders' Equity
Return on average assets was 1.02% for the first quarter of 1996 as
compared to 0.89% for the same quarter in 1995. Return on average
stockholders' equity for the first quarter of 1996 was 12.66%, as compared
to 12.67% for the 1995 quarter.
NET INTEREST INCOME
Net interest income on a tax equivalent totaled $30,026 for the first
quarter of 1996, representing an increase of $511 over the year ago
quarter totaling $29,515. As shown in the Volumes/Rate Analysis located
on page 11, the increase in net interest income is comprised of $1,185 in
interest income, net of $674 in interest expense. Interest income
increased as a result of volume growth, with average interest earning
assets totaling $2,922,622 for the first quarter of 1996 as compared to
$2,864,443 for the same quarter 1995, for an increase of $58,219.
Loans increased by $160 million and represented 71% of total earning
assets for the first quarter of 1996 as compared to 67% for the 1995
quarter. Interest income on loans increased by $3,860 due to the volume
growth as average interest rates were unchanged between periods.
Securities held to maturity declined by $202 million in the first quarter
of 1996 as compared to 1995 resulting primarily from a December, 1995
reclassification to the available for sale portfolio. The
reclassification stemmed from both a Financial Accounting Standards Board-
allowed redesignation between securities classifications and to conforming
CF's acquired securities portfolio to First Midwest's. The total
securities portfolio, including held to maturity and available for sale
securities, declined by $124 million and represented 28% of earning assets
for 1996 as compared to 33% in 1995. Such decline reduced interest income
by $3,142 in the first quarter of 1996 as compared to 1995 and reflects a
redeployment of available funds into higher-yielding loans.
Funds sold and other short-term investments, representing the smallest
component of earning assets, increased by $21 million in the first quarter
of 1996, resulting in increased interest income of $467.
The $674 increase in interest expense resulted from increases in both
volumes of and rates on interest bearing liabilities. The most
significant changes occurred in higher volumes and rates on money market
and time deposits, which were partly offset by lower volumes and rates on
short-term borrowings. New product offerings resulted in the growth in
deposits, with certain new money market deposits being tied to the prime
rate while the time deposit promotions offered high introductory interest
rates. Short-term borrowing balances declined with discretionary funding
needs, the rates on which dropped commensurate with short-term market
interest rates.
The net interest margin declined by five basis points for the first
quarter of 1996 to 4.13% from 4.18% in 1995. As shown in the Volume/Rate
Analysis, although interest rates on average earning assets decreased by
seven basis points from 8.30% in 1995 to 8.23% in 1996, rates on average
interest bearing liabilities increased by three basis points, resulting in
a cost of funds of 4.77% in 1996 as compared to 4.74% in 1995. The
decline in the yield on average earning assets resulted primarily from the
securities available for sale portfolio, and is reflective of the
relatively short effective duration of First Midwest's securities
portfolio which approximates 1.8 years as of March 31, 1996. The average
interest rate on interest bearing liabilities increased due to higher
rates on money market and time deposits, due to the new product offerings
at higher rates previously described.
VOLUME/RATE ANALYSIS
The table below summarizes the changes in average interest-earning assets
and interest-bearing liabilities as well as the average rates earned and
paid on these assets and liabilities, respectively, for the quarters ended
March 31, 1996 and 1995. The table also details the increase and decrease
in income and expense for each major category of assets and liabilities
and analyzes the extent to which such variances are attributable to volume
and rate changes.
<TABLE>
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
AVERAGE INTEREST
AVERAGE BALANCES RATES EARNED/PAID
BASIS
INCREASE POINTS
1996 1995 (DECREASE) 1996 1995 INC/(DEC)
<S> <C> <C> <C> <C> <C> <C>
Funds sold and other
short-term investments . . . . . . $ 37,624 16,319 21,305 8.12% 7.28% 0.84%
Securities available for sale . . . . 785,134 706,664 78,470 6.28 6.73 (0.45)
Securities held to maturity . . . . . 26,971 228,984 (202,013) 7.80 7.42 0.38
Loans, net of unearned discount (1) . 2,072,933 1,912,476 160,457 8.98 8.99 (0.01)
Total interest-earning assets (1) . $2,922,662 2,864,443 58,219 8.23 % 8.30% (0.07)%
Savings deposits . . . . . . . . . . $ 247,121 276,994 (29,873) 2.13 2.16 (0.03)
NOW accounts . . . . . . . . . . . . 261,473 283,829 (22,356) 2.32 2.38 (0.06)
Money market deposits . . . . . . . . 278,943 228,580 50,363 3.67 3.18 0.49
Time deposits . . . . . . . . . . . . 1,115,611 976,636 138,975 5.79 5.26 0.53
Short-term borrowings . . . . . . . . 610,245 723,124 (112,879) 5.50 6.46 (0.96)
Total interest-bearing liabilities $2,513,393 2,489,163 24,230 4.77% 4.74% 0.03%
Net interest margin/income (1) . . 4.13% 4.18% (0.05)%
<FN>
(1) Interest income and yields are presented on a tax-equivalent basis.
</TABLE>
<TABLE>
INTEREST INCREASE/(DECREASE) IN
INCOME/EXPENSE INTEREST INCOME/EXPENSE DUE TO:
INCREASE
1996 1995 (DECREASE) VOLUME RATE TOTAL
<S> <C> <C> <C> <C> <C> <C>
Funds sold and other
short-term investments . . . . . . . . . . . $ 760 293 467 $ 427 40 467
Securities available for sale . . . . . . . . . 12,251 11,728 523 1,133 (610) 523
Securities held to maturity . . . . . . . . . . 523 4,188 (3,665) (3,934) 269 (3,665)
Loans, net of unearned discount (1) . . . . . . 46,275 42,415 3,860 3,582 278 3,860
Total interest-earning assets (1) . . . . . . $ 59,809 58,624 1,185 1,208 (23) 1,185
Savings deposits . . . . . . . . . . . . . . . $ 1,309 1,475 (166) (159) (7) (166)
NOW accounts . . . . . . . . . . . . . . . . . 1,511 1,663 (152) (129) (23) (152)
Money market deposits . . . . . . . . . . . . . 2,548 1,792 756 432 324 756
Time deposits . . . . . . . . . . . . . . . . . 16,067 12,655 3,412 1,914 1,498 3,412
Short-term borrowings . . . . . . . . . . . . . 8,348 11,524 (3,176) (1,665) (1,511) (3,176)
Total interest-bearing liabilities . . . . . $ 29,783 29,109 674 $ 393 281 674
Net Interest margin/income (1) . . . . . . . $ 30,026 29,515 511 $ 814 (303) 511
<FN>
(1) Interest income and yields are presented on a tax-equivalent basis.
</TABLE>
NONINTEREST INCOME
Noninterest income totaled $6,910 for the quarter ended March 31, 1996, as
compared to $6,407 for the same quarter in 1995. Exclusive of net
security gains which totaled $76 for the first quarter of 1996 as compared
to $183 for the same quarter of 1995, noninterest income increased by
$610. The largest component of this increase was $368 in mortgage banking
revenues resulting from growth in real estate loan originations which
totaled $58,000 in the 1996 quarter as compared to $34,000 for the same
quarter in 1995. Other service charges, commissions and fees contributed
$156 of the increase primarily due to revenues on merchants fees on credit
card sales and annuity sales revenues. Growth in new trust business
resulted in an increase in trust income of $135, while decreases between
quarters were realized in service charges on deposits accounts totaling
$18 and other income totaling $31.
NONINTEREST EXPENSE
Noninterest expense totaled $23,153 for the quarter ended March 31, 1996,
decreasing by $473 from $23,626 for the same quarter 1995. The largest
component of the decline in expense was FDIC insurance premiums, which
decreased by $1,033 in the first quarter of 1996 as compared to the like
1995 period, reflective of a reduced premium assessment to approximately
.04 cents per $100 of deposits in 1996 as compared to .23 cents per $100
of deposits in 1995. Retirement and other employee benefits expense
decreased by $210 primarily as a result of the Company's 1995
restructuring initiative, and foreclosed real estate expense decreased by
$216 due to a $3.3 million reduction in principal balances of foreclosed
property held from period to period. An acquisition credit of $324 was
recorded in the first quarter of 1996 due to forfeited severance resulting
from voluntary resignations during the first quarter of 1996 at Citizens
Federal. Note 2 to the consolidated financial statements provides
additional information with respect to acquisition expenses/credits.
In part offsetting the impact of the above referenced expense reductions
was an increase in occupancy expenses of $212 in the first quarter of 1996
resulting from rental expense incurred on a new operations center which
began in mid-1995. Additionally, other expenses increased by $940, $260
of which was due to insurance expense and reflects the affect of a one-
time credit recorded in the 1995 quarter, and $230 of which resulted from
legal and professional fees primarily related to the litigation referred
to in note 6 to the consolidated financial statements. Also incurred were
increases totaling $110 in repossession expense and $90 in advertising and
promotions, with the remaining $250 increase in other expense spread among
various categories of miscellaneous expense.
INCOME TAX EXPENSE
Income tax expense totaled $4,373 for the first quarter of 1996,
increasing from $3,650 for the same period in 1995 and reflects effective
income tax rates of 35.6% and 35.2%, respectively.
NONPERFORMING ASSETS AND 90 DAY PAST DUE LOANS
At March 31, 1996, nonperforming assets totaled $25,170 and loans past due
90 days or more and still accruing totaled $8,206. The following table
summarizes nonperforming assets and loans past due 90 days or more and
still accruing, as of the close of the last five calendar quarters:
<TABLE>
<CAPTION>
Nonperforming Assets and 1996 1995
90 Day Past Due Loans March 31 Dec. 31 Sept. 30 June 30 March 31
<S> <C> <C> <C> <C> <C>
Nonaccrual loans . . . . . . . . . . . . . . . $ 11,428 $ 11,219 $ 9,208 $ 11,924 $ 12,558
Renegotiated loans . . . . . . . . . . . . . . 7,963 7,917 7,942 7,779 7,704
Total nonperforming loans . . . . . . . . . 19,391 19,136 17,150 19,703 20,262
Foreclosed real estate . . . . . . . . . . . . 5,779 4,752 5,664 7,746 9,089
Total nonperforming assets . . . . . . . . . $ 25,170 $ 23,888 $ 22,814 $ 27,449 $ 29,351
% of total loans plus foreclosed real estate 1.29% 1.13% 1.11% 1.36% 1.51%
90 Day past due loans accruing interest . . . . $ 8,206 $ 3,626 $ 8,676 $ 3,800 $ 5,980
</TABLE>
The $1,027 increase in foreclosed real estate is primarily due to the
addition of a commercial property totaling $1,500, which was partially
offset by dispositions in 1-4 family properties of approximately $500.
First Midwest's disclosure with respect to impaired loans is
contained in note 5 to the consolidated financial statements,
located on page 8.
PROVISION AND RESERVE FOR LOAN LOSSES
Transactions in the reserve for loan losses during the three months ended
March 31, 1996 and 1995 are summarized in the following table:
<TABLE>
<CAPTION>
Three months ended
March 31,
1996 1995
<S> <C> <C>
Balance at beginning period . . . . . . . . . . . . . . . . . . . . . . . $ 29,194 $ 25,154
Provision for loan process . . . . . . . . . . . . . . . . . . . . . . 859 1,648
Loans charged of . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,670) (1,979)
Recoveries of loans previously charged-off . . . . . . . . . . . . . . 693 447
Net loans charged-off . . . . . . . . . . . . . . . . . . . . . . . (1,977) (1,532)
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,076 $ 25,270
</TABLE>
The provision for loan losses charged to operating expense for the first
quarter of 1996 totaled $859 as compared to $1,648 for the same quarter in
1995. Loans charged off, net of recoveries, for the quarter totaled
$1,977, or .38% of average loans in 1996 as compared to $1,532, or .33% in
1995. The level of the provision for loan losses charged to operating
expense in any given period is dependent upon many factors, including loan
growth and changes in the composition of the loan portfolio, net charge-
off levels, delinquencies, collateral values, and Management's assessment
of current and prospective economic conditions in First Midwest's primary
market areas.
At March 31, 1996, the reserve for loan losses totaled $28,076, or 1.45%
of loans, a level which is considered adequate in relation to the risk of
future losses within the loan portfolio. The reserve is comprised of
three parts: allocated for specific impaired loans, $2,200; allocated for
general segments of unimpaired loans, $9,143; and unallocated, $16,733.
That part of the reserve allocated for specific impaired loans is
discussed in note 5 to the consolidated financial statements located on
page 8. That part of the reserve allocated for general unimpaired loan
segments represents First Midwest's best judgment as to potential loss
exposure based upon both historical loss trends as well as loan ratings
and qualitative evaluations of such segments. The unallocated portion of
the reserve is that part not allocated to either a specific loan on which
loss is anticipated or allocated to general segments of the unimpaired
loan portfolio.
CAPITAL ANALYSIS
The table below compares First Midwest's capital structure to the minimum
capital ratios required by its primary regulator, the Federal Reserve
Board ("FRB"). Also provided is a comparison of capital ratios for First
Midwest's national banking subsidiary, First Midwest Bank, N.A., to its
primary regulator, the Office of the Comptroller of the Currency ("OCC").
Both First Midwest and First Midwest Bank, N.A. are subject to the minimum
capital ratios defined by banking regulators pursuant to the FDIC
Improvement Act ("FDICIA") and have capital measurements well in excess of
the minimums required by their respective bank regulatory authorities to
be considered "well-capitalized" which is the highest capital category
established under the FDICIA.
CAPITAL MEASUREMENTS - FRB/OCC
<TABLE>
<CAPTION>
As of March 31, 1996
Bank Holding Company National Bank Minimum
Minimum Minimum Well-
First Required Required Capitalized
Midwest FRB FMB, N.A. OCC FDICIA
<S> <C> <C> <C> <C> <C>
Tier 1 capital to risk-based assets . . . . . . . . 10.81% 4.00% 8.83% 4.00% 6.00%
Total capital to risk-based assets . . . . . . . . 12.06% 8.00% 10.07% 8.00% 10.00%
Leverage ratio . . . . . . . . . . . . . . . . . . 7.61% 3.00% 6.28% 3.00% 5.00%
</TABLE>
Citizens Federal's primary regulator is the Office of Thrift Supervisions
("OTS"). As of March 31, 1996, Citizens Federal exceeded all applicable
capital ratio requirements of the OTS.
First Midwest believes that it has a responsibility to reward its
stockholders with a meaningful current return on their investment and, as
part of the Company's dividend policy, First Midwest's Board of Directors
reviews the Company's dividend payout ratio periodically to ensure that it
is consistent with internal capital guidelines and industry standards. As
a result of such review, in February, 1996, First Midwest's Board of
Directors authorized a quarterly dividend increase to $0.21 per share
representing a 10.5% increase over the previous quarterly dividend of
$0.19. As of March 31, 1996, the dividend payout ratio was 35.3% based on
net income from operations for the trailing four quarters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At First Midwest's Annual Meeting of Shareholders held on April 16, 1996,
the following matters were submitted to vote:
<TABLE>
Number of Shares Voted:
For Against Abstain
<S> <C> <C> <C>
- Approving two proposals to amend
the Company's Restated Certificate
of Incorporation (1) . . . . . . . . . . . . . . . . . . . . . . 9,887,000(2) 1,169,000 137,000
- Approving a proposal to amend
the Company's 1989 Omnibus
Stock and Incentive Plan (3) . . . . . . . . . . . . . . . . . . 8,515,000(4) 1,479,000 217,000
- Election of four directors . . . . . . . . . . . . . . . . . . . . . ---(5) --- ---
<FN>
(1) The proposals to amend the Company's Restated Certificate of Incorporation increased the number of
shares of Common Stock which the Company is authorized to issue from 20 million to 30 million and
changed the par value per share of such stock from no stated par value to a par value of $0.01. A
copy of the approved Restated Certificate of Incorporation is provided herein as Exhibit 3.
(2) Represents 72.3% of shares outstanding.
(3) The proposal to amend the Company's 1989 Omnibus Stock and Incentive Plan is fully described in the
Company's Proxy Statement filed with the Securities and Exchange Commission on March 8, 1996.
(4) Represents 76.1% of shares voted.
(5) Each of the four directors received votes in favor of at least 94% of shares voted.
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See Exhibit Index appearing on page 15.
(b) Form 8-K - On January 4, 1996 First Midwest filed a report on
Form 8-K announcing the consummation of the acquisition of CF
Bancorp, Inc. on December 20, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
First Midwest Bancorp, Inc.
Date: May 14, 1996 DONALD J. SWISTOWICZ
Donald J. Swistowicz
Executive Vice President*
* Duly authorized to sign on behalf of the Registrant.
EXHIBIT INDEX
<TABLE>
Exhibit Sequential
Number Description of Documents Page Number
<C> <C> <C>
3 Restated Articles of Incorporation, as amended 16
27 Financial Data Schedule 26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 136908
<INT-BEARING-DEPOSITS> 3968
<FED-FUNDS-SOLD> 3435
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 920639
<INVESTMENTS-CARRYING> 26511
<INVESTMENTS-MARKET> 26733
<LOANS> 1939500
<ALLOWANCE> 28076
<TOTAL-ASSETS> 3147211
<DEPOSITS> 2248977
<SHORT-TERM> 610302
<LIABILITIES-OTHER> 36147
<LONG-TERM> 0
<COMMON> 23475
0
0
<OTHER-SE> 228310
<TOTAL-LIABILITIES-AND-EQUITY> 3147211
<INTEREST-LOAN> 46759
<INTEREST-INVEST> 12228
<INTEREST-OTHER> 196
<INTEREST-TOTAL> 59183
<INTEREST-DEPOSIT> 21436
<INTEREST-EXPENSE> 29783
<INTEREST-INCOME-NET> 29400
<LOAN-LOSSES> 859
<SECURITIES-GAINS> 76
<EXPENSE-OTHER> 23153
<INCOME-PRETAX> 12298
<INCOME-PRE-EXTRAORDINARY> 7925
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7925
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.58
<YIELD-ACTUAL> 4.13
<LOANS-NON> 11428
<LOANS-PAST> 8206
<LOANS-TROUBLED> 7963
<LOANS-PROBLEM> 11581
<ALLOWANCE-OPEN> 29194
<CHARGE-OFFS> 2670
<RECOVERIES> 693
<ALLOWANCE-CLOSE> 28076
<ALLOWANCE-DOMESTIC> 11343
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 16733
</TABLE>
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION OF
FIRST MIDWEST BANCORP, INC.
ARTICLE FIRST. Name.
The name of the Corporation is FIRST MIDWEST BANCORP, INC.
ARTICLE SECOND. Registered Agent.
The registered office of the Corporation in the State of Delaware is located
at 306 South State Street, in the City of Dover, County of Kent. The name of
its registered agent at such address is United States Corporation Company.
ARTICLE THIRD. Purpose.
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE FOURTH. Authorized Stock
The total number of shares of stock which the Corporation shall have authority
to issue is Thirty-One Million (31,000,000) shares, of which One Million
(1,000,000) shares shall be shares of Preferred Stock without par value
(hereinafter sometimes referred to as "Preferred Stock"), and Thirty Million
(30,000,000) shares shall be shares of Common Stock, $0.01 par value per share
(hereinafter sometimes referred to as "Common Stock").
PART I - PREFERRED STOCK
The Board of Directors is expressly authorized to adopt, from time to
time, a resolution or resolutions providing for the issue of Preferred
Stock in one or more series, to fix the number of shares in each such
series and to fix the designations and the powers, preferences and
relative, optional or other special rights, and the qualifications,
limitations and restrictions thereof, of each such series. The
authority of the Board of Directors with respect to each such series
shall include a determination of the following (which may vary as
between the different series of Preferred Stock):
(a) The number of shares constituting the series and the distinctive
designation of the series;
(b) The dividend rate on the shares of the series, the conditions and
dates upon which dividends thereon shall be payable, the extent,
if any, to which dividends thereon shall be cumulative, and the
relative rights of preference, if any, of payment of dividends
thereon;
(c) Whether or not the shares of the series are redeemable and, if
redeemable, including whether such shares shall be redeemable for
cash, property or rights or any combination thereof and the times
during which such shares shall be redeemable and the amount per
share payable in case of redemption, which amount may, but need
not, vary according to the time and circumstances of such action;
(d) The amount payable in respect of the shares of the series, in the
event of any liquidation, dissolution or winding up of the
Corporation, which amount may, but need not, vary according to the
time or circumstances of such action, and the relative rights of
preference, if any, of payment of such amount;
(e) Any requirement as to a sinking fund for the shares of the series,
or any requirement as to the redemption, purchase or other
retirement by the Corporation of the shares of the series;
(f) The right, if any, to exchange or convert shares of the series
into shares of any other series or class of stock of the
Corporation and the rate or basis, time, manner and condition of
exchange or conversion;<PAGE>
(g) The voting rights, if any, to which the holders of shares of the
series shall be entitled; and
(h) Any other term, condition or provision [not involving any further
participation in the assets or profits of the Corporation other
than as permitted and provided for pursuant to the provisions of
paragraphs (b), (c), (d), (e) and (f) of this Part I] with respect
to the series as the Board of Directors may deem advisable and as
shall not be inconsistent with the provisions of this Article
Fourth.
PART II - COMMON STOCK
(a) Dividends. Subject to any rights to receive dividends to which
the holders of any outstanding Preferred Stock may be entitled,
the holders of the Common Stock shall be entitled to receive
dividends, if and when declared payable from time to time by the
Board of Directors from any funds legally available therefore.
(b) Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and other
liabilities of the Corporation and the preferential amounts to
which the holders of any outstanding Preferred Stock shall be
entitled, the holders of the Common Stock shall be entitled to
share ratably in the remaining assets of the Corporation. The
merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it, or a
sale of all or substantially all of the assets of the Corporation,
or any purchase or redemption of shares of stock of the
Corporation of any class, shall not be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this
paragraph (b).
(c) Voting. Each outstanding share of Common Stock of the Corporation
shall entitle the holder thereof to one vote, and, except as
otherwise stated or expressed in a resolution or resolutions
adopted by the Board of Directors providing for the issue of any
Preferred stock or as otherwise provided by law, the exclusive
voting power for all purposes shall be vested in the holders of
Common Stock.
PART III - GENERAL PROVISIONS
(a) No Stockholder Consents in Lieu of Voting. No action required to
be taken or which may be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting,
and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
(b) Right to Call Special Meetings. Special meetings of the
stockholders of the Corporation may be called only by the Board of
Directors or the Chairman of the Board of Directors or President
of the Corporation; provided, however, that, notwithstanding the
foregoing, a special meeting of stockholders may be called by the
holders of at least 51% of the voting power of the then
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (the "Voting Stock")
solely for the purpose of removing a director or directors for
cause [it being understood that, for purposes of this paragraph
(b), each share of the Voting Stock shall have the number of votes
granted to it pursuant to this Article Fourth].
(c) Removal of Directors. No director may be removed from office
except for cause; provided, that, in addition to any affirmative
vote required by law or any other provision of this Restated
Certificate of Incorporation, the removal of any director shall
require the affirmative vote of the holders of at least 67% of the
voting power of the then outstanding Voting Stock [it being
understood that, for purposes of this paragraph (c), each share of
the Voting Stock shall have the number of votes granted to it
pursuant to this Article Fourth], and such affirmative vote shall
be required notwithstanding the fact that a lesser percentage may
be specified by law or in any agreement with any national
securities exchange or otherwise.
(d) Advance Notice of Stockholder Proposals. At any annual or special
meeting of stockholders, proposals by stockholders and persons
nominated by stockholders for election as directors shall be
considered only if advance notice thereof has been timely given as
provided herein by a stockholder of record as of the time of such
notice who is entitled to vote at the meeting and such proposals
or nominations are otherwise proper for consideration under
applicable law and this Restated Certificate of Incorporation and
the By-laws of the Corporation. Notice of any proposal to be
presented by any stockholder or of the name of any person to be
nominated by any stockholder for election as a director of the
Corporation at any meeting of stockholders shall be delivered to
the Secretary of the Corporation at its principal executive office
not less than 120 nor more than 180 days prior to the date of the
meeting; provided, however, that if the date of the meeting is
first publicly announced or disclosed (in a public filing or
otherwise) less than 130 days prior to the date of the meeting,
such advance notice shall be given not more than 10 days after
such date is first so announced or disclosed. Public notice shall
be deemed to have been given more than 130 days in advance of the
annual meeting if the Corporation shall have previously disclosed,
in the By-laws or otherwise, that the annual meeting in each year
is to be held on a determinable date, unless and until the Board
determines to hold the meeting on a different date. Any
stockholder who gives notice of any such proposal shall deliver
therewith the text of the proposal to be presented and a brief
written statement of the reasons why such stockholder favors the
proposal and setting forth such stockholder's name and address,
the number and class of all shares of each class of stock of the
Corporation beneficially owned by such stockholder and any
material interest of such stockholder in the proposal (other than
as a stockholder). Any stockholder desiring to nominate any
person for election as a director of the Corporation shall deliver
with such notice a statement in writing setting forth the name of
the person to be nominated, the number and class of all shares of
each class of stock of the Corporation beneficially owned by such
person, the information regarding any such person required by
paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted
by the Securities and Exchange Commission (or the corresponding
provisions of any regulation subsequently adopted by the
Securities and Exchange Commission applicable to this
Corporation), such person's signed consent to serve as a director
of the Corporation if elected, such stockholder's name and address
and the number and class of all shares of each class of stock of
the Corporation beneficially owned by such stockholder. As used
herein, shares "beneficially owned" shall mean all shares as to
which such person, together with such person's affiliates and
associates (as defined in Rule 12b-2 under the Securities Exchange
Act of 1934), may be deemed to beneficially own pursuant to Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, as well
as all shares as to which such person, together with such person's
affiliates and associates, has the right to become the beneficial
owner pursuant to any agreement or understanding, or upon the
exercise of warrants, options or rights to convert or exchange
(whether such rights are exercisable immediately or only after the
passage of time or the occurrence of conditions). The person
presiding at the meeting, in addition to making any other
determinations that may be appropriate to the conduct of the
meeting, shall determine whether such notice has been duly given
and shall direct that proposals and nominees not be considered if
such notice has not been given.
ARTICLE FIFTH. Board of Directors.
(a) The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors.
(b) The number of directors constituting the Board of Directors of the
Corporation shall be such number, not fewer than three nor more than
twenty, as shall be fixed from time to time by resolution of the Board
of Directors adopted by the affirmative vote of at least a majority of
all members thereof.
(c) The Board of Directors shall be and is divided into three classes, Class
I, Class II and Class III, which shall be as nearly equal in number as
possible. Each director shall serve for a term ending on the date of
the third annual meeting of stockholders of the Corporation following
the annual meeting at which such director was elected; provided,
however, that (1) each director in Class I elected at the annual meeting
of stockholders in 1985 shall hold office until the annual meeting of
stockholders in 1986, (2) each director in Class II elected at the
annual meeting of stockholders in 1985 shall hold office until the
annual meeting of stockholders in 1987, and (3) each director in Class
III elected at the annual meeting of stockholders in 1985 shall hold
office until the annual meeting of stockholders in 1988.
(d) In the event of any increase or decrease in the authorized number of
directors, (1) each director then serving as such shall nevertheless
continue as a director of the class of which he or she is a member until
the expiration of his or her current term, or his or her prior death,
retirement, resignation, or removal, and (2) the newly created or
eliminated directorships resulting from such increase or decrease shall
be apportioned by the Board of Directors among the three classes of
directors so as to maintain such classes as nearly equal in number as
possible.
(e) Notwithstanding any of the foregoing provisions of this Article Fifth,
each director shall serve until his or her successor is elected and
qualified or until his or her death, retirement, resignation or removal.
Should a vacancy occur or be created, whether arising through death,
retirement, resignation or removal of a director or through an increase
in the number of directors of any class, such vacancy shall be filled by
a majority vote of the remaining directors of all classes then in office
although less than a quorum, or by the sole remaining director. A
director so elected to fill a vacancy shall serve for the remainder of
the then present term of office of the class in which the vacancy shall
have occurred or shall have been created.
(f) Notwithstanding any of the foregoing provisions of this Article Fifth,
whenever the holders of any outstanding class or series of Preferred
Stock shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms of this Restated
Certificate of Incorporation and of the resolution of the Board of
Directors providing for the issue of such class or series of Preferred
Stocked applicable thereto, and such directors so elected shall not be
divided into classes pursuant to this Article Fifth, unless expressly
provided by such terms.
(g) The Board of Directors, by resolution adopted by the affirmative vote of
at least a majority of all members thereof, shall have concurrent power
with the stockholders to adopt, amend or repeal the By-laws of the
Corporation; provided, however, that the By-laws of the Corporation
shall not be adopted, amended or repealed by the stockholders except by
the affirmative vote of the holders of at least 67% of the voting power
of the then outstanding Voting Stock, voting together as a single class
[it being understood that, for purposes of this paragraph (h), each
share of the Voting Stock shall have the number of votes granted to it
pursuant to Article Fourth hereof], and such affirmative vote shall be
required notwithstanding the fact that a lesser percentage may be
specified by law or in any agreement with any national securities
exchange or otherwise.
(h) Wherever the term "Board of Directors" is used in this Restated
Certificate of Incorporation, such term shall mean the Board of
Directors of the Corporation; provided, however, that, to the extent any
committee of directors of the Corporation is lawfully entitled to
exercise the powers of the Board of Directors, such committee, to the
extent provided by resolution of the Board of Directors or the By-laws,
may exercise any power or authority of the Board of Directors under this
Restated Certificate of Incorporation in the management of the business
and affairs of the Corporation.
(i) The books of the Corporation (subject to the provisions of the laws of
the State of Delaware) may be kept outside of the State of Delaware at
such places as may be from time to time designated by the Board of
Directors. Elections of directors need not be by ballot unless the By-
laws so provide.
(j) No Director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a Director, except to the extent that such
exemption from liability or limitation thereof is not permitted under
the General Corporation Law of the State of Delaware, as it may be in
effect from time to time. No amendment to or repeal of this paragraph
(k) shall apply to or have any effect on the liability or alleged
liability of any Director of the Corporation for or with respect to any
acts or omissions of such Director occurring prior to such amendment or
repeal.
ARTICLE SIXTH. Indemnification.
Without limiting in any manner any power of the Corporation conferred by
statute, each person who is or was a director or officer of the Corporation
shall be indemnified by the Corporation to the full extent permitted by the
General Corporation Law of the State of Delaware, as it may be in effect from
time to time, against any liability, cost or expense incurred by him in his
capacity as a director or officer or arising out of his status as a director
or officer.
ARTICLE SEVENTH. Certain Business Combinations.
(a) Higher Vote for Certain Business Combinations.
In addition to any affirmative vote required by law or any other
provision of this Restated Certificate of Incorporation, and except as
otherwise expressly provided in paragraph (b) of this Article Seventh:
(1) Any merger or consolidation of the Corporation or any Subsidiary
with (A) any Interested Stockholder or (B) any other corporation
(whether or not itself an Interested Stockholder) which is, or
after such merger or consolidation would be, an Affiliate of an
Interested Stockholder; or
(2) Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or
with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary
having an aggregate Fair Market Value of $5 million or more; or
(3) The issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate Fair Market value of $5 million or more; or
(4) The adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(5) Any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or
any other transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate share of
the outstanding shares of any class of equity or convertible
securities of the Corporation or any Subsidiary which is directly
or indirectly owned by any Interested Stockholder or any Affiliate
of any Interested Stockholder;
shall require the affirmative vote of the holders of at least 80% of the
voting power of the then outstanding Voting Stock, voting together as a
single class [it being understood that, for purposes of this paragraph
(a), each share of the Voting Stock shall have the number of votes
granted to it pursuant to Article Fourth hereof]. Such affirmative vote
shall be required notwithstanding the fact that no vote may be required,
or that a lesser percentage may be specified, by law or in any agreement
with any national securities exchange or otherwise. The term "Business
Combination", as used in this Article Seventh, means any transaction
which is referred to in any one or more of clauses (1) through (5) of
this paragraph (a).
(b) When Higher Vote is Not Required.
The provisions of paragraph (a) of this Article Seventh shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is
required by law or any other provision of this Restated Certificate of
Incorporation or the By-laws of the Corporation, if all the conditions
specified in either subparagraph (b) (1) or (2) below are met:
(1) Approval by Disinterested Directors.
Such Business Combination shall have been approved by a majority
of the Disinterested Directors.
(2) Price and Procedure Requirements.
All of the following conditions shall have been met:
(A) The aggregate amount of the cash and the Fair Market value
as of the date of the consummation of such Business
Combination of consideration other than cash to be received
per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest of the
following:
(i) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Stockholder involved for any shares of Common Stock
acquired by it (I) within the two-year period ending
on the date of the first public announcement of the
proposal of such Business Combination (the
"Announcement Date") or (II) in the transaction in
which it became an Interested Stockholder, whichever
is higher;
(ii) (if applicable) an amount which bears the same or a
greater percentage relationship to the Fair Market
Value per share of Common Stock on the Announcement
Date or on the date on which the Interested
Stockholder involved became an Interested Stockholder
(such latter date is referred to in this Article
Seventh as the "Determination Date"), whichever is
higher, as the highest per share price determined
under subparagraph (b)(2)(A)(i) bears to the Fair
Market Value per share of Common Stock on the first
day within the two-year period ending on the
Announcement Date on which such Interested Stockholder
acquired beneficial ownership of any share of Common
Stock; and
(iii) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date,
whichever is higher.
(B) The aggregate amount of the cash and the Fair Market Value
as of the date of the consummation of such Business
Combination of consideration other than cash to be received
per share by holders of shares of any class of outstanding
Voting Stock, other than Common Stock, shall be at least
equal to the highest of the following [it being intended
that the requirements of this subparagraph (b)(2)(B) shall
be required to be met with respect to each class of
outstanding Voting Stock, other than Common Stock, whether
or not the Interested Stockholder involved has previously
acquired any shares of such class of Voting Stock]:
(i) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Stockholder involved for any share of such class of
Voting Stock acquired by it (I) with the two-year
period ending on the Announcement Date or (II) in the
transaction in which it became an Interested
Stockholder, whichever is higher;
(ii) (if applicable) the highest preferential amount per
share to which the holders of shares of such class of
Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
(iii) (if applicable) an amount which bears the same or a
greater percentage relationship to the Fair Market
Value per share of such class of Voting Stock on the
Announcement Date or on the Determination Date,
whichever is higher, as the highest per share price
determined under subparagraph (b)(2)(B)(i) bears to
the Fair Market Value per share of such class of
Voting Stock on the first day within two year period
ending on the Announcement Date on which the
Interested Stockholder involved acquired beneficial
ownership of any share of such class of Voting Stock;
and
(iv) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher.
(C) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as the Interested
Stockholder involved has previously paid for shares of such
class of Voting Stock. If such Interested Stockholder has
paid for shares of any class of Voting Stock with varying
forms of consideration, the form of consideration for such
class of Voting Stock shall be either cash or the form used
to acquire the largest number of shares of such class of
Voting Stock previously acquired by it. The prices
determined in accordance with subparagraphs (b)(2)(A) and
(b)(2)(B) shall be subject to appropriate adjustment in the
event of any stock dividend, stock split, combination of
shares or similar event.
(D) After the Interested Stockholder involved has become an
Interested Stockholder and prior to the consummation of such
Business Combination: (i) there shall have been (I) no
reduction in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the
Disinterested Directors, and (II) an increase in such annual
rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the
Disinterested Directors; and (ii) such Interested
Stockholder shall not have become the beneficial owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder
becoming an Interested Stockholder.
(E) After the Interested Stockholder involved has become an
Interested Stockholder, such Interested Stockholder shall
not have received the benefit, directly or indirectly
(except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection
with such Business Combination or otherwise.
(F) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of
the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
public stockholders of the Corporation at least 30 days
prior to the consummation of such Business Combination
(whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent
provisions).
(c) Certain Definitions.
For purposes of this Restated Certificate of Incorporation:
(1) The term "person" means any individual, firm, corporation or other
entity.
(2) The term "Interested Stockholder" means any person (other than the
Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who or
which:
(A) is the beneficial owner, directly or indirectly, of 5% or
more of the voting power of the outstanding Voting Stock; or
(B) is an Affiliate of the Corporation and at any time within
the two-year period ending on the date in question was the
beneficial owner, directly or indirectly, of 5% or more of
the voting power of the then outstanding Voting Stock; or
(C) is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two-year
period ending on the date in question beneficially owned by
any Interested Stockholder, if such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933, as amended.
(3) A person shall be a "beneficial owner" of any Voting Stock:
(A) which such person or any of his or its Affiliates or
Associates beneficially owns, directly or indirectly, or
(B) which such person or any of his or its Affiliates or
Associates has (i) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting
or disposing of any shares of Voting Stock.
(4) For purposes of determining whether a person is an Interested
Stockholder pursuant to subparagraph (c)(2), the number of shares
of Voting Stock deemed to be outstanding shall include shares deem
owned through application of subparagraph (c)(3) but shall not
include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
The phrase "Interested Stockholder involved" means, in respect of
any Business Combination, the Interested Stockholder that, or
whose Affiliate, is a party to or otherwise involved (other than
merely as a stockholder of the Corporation) in such Business
Combination.
(5) The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in
effect on March 1, 1985.
(6) The term "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by
the corporation; provided, however, that, for purposes of the
definition of Interested Stockholder set forth in subparagraph
(c)(2), the term "Subsidiary" shall mean only a corporation of
which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
(7) The term "Disinterested Director" means, in respect of any
Business Combination, any member of the Board of Directors who is
unaffiliated with the Interested Stockholder involved in such
Business Combination and who was a member of the Board of
Directors prior to the time that such Interested Stockholder
became an Interested Stockholder, and any successor of a
Disinterested Director who is unaffiliated with such Interested
Stockholder and who is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on the
Board of Directors.
(8) The term "Fair Market Value" means: (A) in the case of stock, the
highest closing sale price during the 30-day period ending on the
date in question of a share of such stock on the Composite Tape
for New York Stock Exchange-Listed Stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange,
or, if such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day
period ending on the date in question on the National Association
of Securities Dealers, Inc. Automated Quotations System or any
system then in use, or if no such quotations are available, the
fair market value on the date in question of a share of such stock
as determined by the Board of Directors in good faith; and (B) in
the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by
the Board of Directors in good faith.
(9) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be
received", as used in subparagraphs (b)(2)(A) and (b)(2)(B), shall
include the shares of any Common Stock and the shares of any other
class of outstanding Voting Stock retained by the holders of such
shares.
(d) Certain Powers of the Board of Directors.
A majority of the Board of Directors shall have the power and duty to
determine, for purposes of this Article Seventh, on the basis of
information known to them after reasonable inquiry, (1) whether a person
is an Interested Stockholder, (2) the number of shares of Voting Stock
beneficially owned by any person, (3) whether a person is an Affiliate
or Associate of another, and (4) whether the assets which are the
subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation
or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $5 million or more. A majority of the Board of
Directors shall have the further power to interpret all of the terms and
provisions of this Article Seventh.
(e) No Effect on Fiduciary Obligations of Interested Stockholders.
Nothing contained in this Article Seventh shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
ARTICLE EIGHTH. Considerations for Board of Directors in Evaluation of
Certain Acquisition Proposals.
In connection with the exercise of its judgment in determining what is in the
best interests of the Corporation and its stockholders when evaluating a
proposal by another person or persons to make a tender or exchange offer for
any equity security of the Corporation or any Subsidiary, to merge or
consolidate with the Corporation or any Subsidiary or to purchase or otherwise
acquire all or substantially all of the assets of the Corporation or any
Subsidiary, the Board of Directors of the Corporation shall, in addition to
considering the adequacy of the amount to be paid in connection with any such
transaction, consider all of the following factors and any other factors which
it deems relevant: (a) the social and economic effects of the transaction on
the Corporation and its Subsidiaries, the employees, depositors, loan and
other customers and creditors or the Corporation and its Subsidiaries and the
other elements of the communities in which the Corporation and its
Subsidiaries operate or are located; (b) the business and financial condition
and earnings prospects of the acquiring person or persons, including, but not
limited to, debt service and other existing or likely financial obligations of
the acquiring person or persons, and the possible effect of such conditions
upon the Corporation and its Subsidiaries and the other elements of the
communities in which the Corporation and its
Subsidiaries operate or are located; and (c) the competence, experience, and
integrity of the acquiring person or persons and its or their management.
ARTICLE NINTH. Perpetual Existence.
The Corporation shall have perpetual existence.
ARTICLE TENTH. Amendments and Repeal.
(a) Notwithstanding the fact that a lesser percentage vote for the amendment
or repeal of this Restated Certificate of Incorporation shall be
specified by law or in any agreement with any national securities
exchange or otherwise, and in addition to any affirmative vote required
by law or any other provision of this Restated Certificate of
Incorporation, the provisions of this Article Tenth and of Articles
Fourth through Ninth hereof may not be amended or repealed in any
respect, unless such action is approved by the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding
Voting Stock, voting together as a single class [it being understood
that, for purposes of this paragraph (a), each share of the Voting Stock
shall have the number of votes granted to it pursuant to Article Fourth
hereof]; provided, however, that the foregoing provisions of this
paragraph (a) shall not be applicable to any particular proposal to
amend or repeal any provision of this Restated Certificate of
Incorporation, and such proposed amendment or repeal shall require only
such affirmative vote as is required by law or any other provision of
this Restated Certificate of Incorporation or the By-laws of the
Corporation, if such proposed amendment or repeal shall have been
approved by resolution of the Board of Directors adopted by the
affirmative vote of at least 80% of all members thereof.
(b) Subject to paragraph (a) of this Article Tenth, the Corporation reserves
the right to amend, alter, change or repeal any provision of this
Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by the laws of the State of Delaware, and all rights and
powers conferred herein upon stockholders and directors are granted
subject to this reservation. All references herein to "this Restated
Certificate of Incorporation" shall be deemed to encompass this Restated
Certificate of Incorporation, as the same shall be amended from time to
time.
