As filed with the Securities and Exchange Commission on October ___, 2000
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
BRITTON & KOONTZ CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Mississippi
(State or Other
Jurisdiction of 6021 64-0665423
Incorporation (Primary Standard Industrial (I.R.S. Employer
or Organization) Classification Code Number) Identification Number)
500 Main Street
Natchez, Mississippi 39120
(601) 445-5576
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
------------------------------------
W. Page Ogden
President and Chief Executive Officer
500 Main Street
Natchez, Mississippi 39120
(601) 445-5576
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
------------------------------------
COPIES TO:
VIRGINIA BOULET JEANNE P. BRECKINRIDGE
Phelps Dunbar, L.L.P. Jenkens & Gilchrist, P.C.
400 Poydras Street, 30th Floor 2200 One American Center
New Orleans, Louisiana 70130-3245 600 Congress Avenue
(504) 584-9286 Austin, Texas 78701 - 3215
(202)434-4678
------------------------------------
Approximate date of commencement of proposed sale to the public: upon the
effectiveness of the Merger described in the Registration Statement.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: |_|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount Of
Title Of Each Class Of to be Price Per Offering Registration
Securities To Be Registered Registered Share Price Fee (1)
------------------------------------------------------------------------------
Common Stock, $2.50 par value 368,795 $10.53 $3,882,000 $1,079
============================= =========== ========= =========== ============
(1) The proposed maximum offering price and proposed maximum aggregate offering
price reflect the book value of the common stock of Louisiana Bancshares, Inc.
on June 30, 2000, calculated pursuant to Section 6(b) of the Securities Act of
1933, as amended, and Rule 457(f)(2) under the Securities Act of 1933, as
amended.
------------------------------------
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
October 30, 2000
Dear Fellow Stockholders:
We cordially invite you to attend the special meeting of stockholders
of Britton & Koontz Capital Corporation to be held at the main office of Britton
& Koontz First National Bank, 500 Main Street, Natchez, Mississippi on Tuesday,
November 28, 2000 at 3:30 p.m.
The purpose of the meeting will be to vote on the proposed merger of
Britton & Koontz with Louisiana Bancshares, Inc., the parent company of
Louisiana Bank and Trust Company, which is headquartered in Baton Rouge,
Louisiana. After the merger, Louisiana Bancshares stockholders and Louisiana
Bancshares employees will beneficially own or have options to acquire
approximately 17.4% of the outstanding stock of Britton & Koontz.
The attached joint proxy statement-prospectus contains additional
information regarding the merger agreement and the proposed merger. We encourage
you to read this entire document carefully.
Approval of the merger requires the affirmative vote of a majority of
the outstanding shares of Britton & Koontz common stock. The merger must also be
approved by Louisiana Bancshares stockholders and the United States Comptroller
of the Currency. If approved, we anticipate the merger will become effective by
December 1, 2000.
We hope that you will be able to attend the meeting. Whether or not you
plan to attend, please complete, sign, and date the enclosed proxy card and
return it promptly in the enclosed envelope. If you do not return your card, the
effect will be a vote against the merger.
On behalf of the Board of Directors of Britton & Koontz, we urge you to
vote FOR approval of the merger agreement, and we look forward to seeing you at
the meeting.
Sincerely yours,
/s/ W.J. Feltus III
Chairman of the Board
This joint proxy statement-prospectus is first being mailed to
stockholders on or about October 30, 2000.
<PAGE>
October 30, 2000
Dear Fellow Stockholders:
We cordially invite you to attend the special meeting of stockholders
of Louisiana Bancshares, Inc. to be held at the main office of Louisiana Bank &
Trust Company, 7142 Florida Boulevard, Baton Rouge, Louisiana on Tuesday,
November 28, 2000 at 10:00 a.m.
The purpose of the meeting will be to vote on the proposed merger of
Louisiana Bancshares with and into Britton & Koontz Capital Corporation, the
parent company of Britton & Koontz First National Bank, N.A., which is
headquartered in Natchez, Mississippi. In the merger, you will receive 0.1054 of
a share of Britton & Koontz common stock for each share of Louisiana Bancshares
common stock that you own. In general, you will not recognize federal income tax
gain or loss for the Britton & Koontz common stock that you receive in the
merger.
The attached joint proxy statement-prospectus contains additional
information regarding the merger agreement and the proposed merger of Louisiana
Bancshares with and into Britton & Koontz. We encourage you to read this entire
document carefully. In particular, you are encouraged to read the discussion of
"Risk Factors" beginning on page 11.
Approval of the merger agreement requires the affirmative vote of
two-thirds of the shares present in person or by proxy at the meeting of
Louisiana Bancshares. The merger must also be approved by a majority of the
outstanding shares of Britton & Koontz common stock and by the United States
Comptroller of the Currency. If approved, we anticipate the merger will become
effective by December 1, 2000.
We hope that you will be able to attend the meeting, and the Board of
Directors urges you to vote FOR approval of the merger. Whether or not you plan
to attend, please complete, sign, and date the enclosed proxy card and return it
promptly in the enclosed envelope.
Sincerely yours,
/s/ John Sylvest
President and Chief Executive Officer
You should not return certificates representing shares of Louisiana
Bancshares common stock at this time. You will receive instructions at a later
date regarding the exchange of your Louisiana Bancshares stock certificates.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved or disapproved of the Britton & Koontz common stock to
be issued in the merger or determined if this joint proxy statement-prospectus
is accurate or complete. Any representation to the contrary is a criminal
offense.
This joint proxy statement-prospectus is first being mailed to
stockholders on or about October 30, 2000.
<PAGE>
Britton & Koontz Capital Corporation
Natchez, Mississippi
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
November 28, 2000
A special meeting of stockholders of Britton & Koontz Capital
Corporation will be held on Tuesday, November 28, 2000 at 3:30 p.m., on the
second floor of the main office of Britton & Koontz First National Bank, 500
Main Street, Natchez, Mississippi for the following purposes:
1. To vote whether to approve the Agreement and Plan of Merger
dated as of August 25, 2000, between Louisiana Bancshares, Inc. and Britton &
Koontz Capital Corporation, a copy of which is included as Exhibit A to the
attached joint proxy statement-prospectus.
2. To consider and act upon such other business as may
properly come before the special meeting or any adjournment or postponement
thereof.
The board of directors has fixed October 13, 2000 as the record date
for the special meeting. Only stockholders of record of Britton & Koontz Capital
Corporation at the close of business on that date are entitled to receive notice
of and to vote at the special meeting or any adjournments or postponements of
the meeting.
If you do not vote for approval of the merger agreement, you may have
the right to receive the fair value of your Britton & Koontz Capital Corporation
common stock in cash by exercising dissenters' rights under Mississippi law.
Dissenters' rights are described in the attached joint proxy
statement-prospectus. In order to receive cash, however, you must comply with
all of the procedures required by Mississippi law.
By Order of the Board of Directors,
/s/ Albert W. Metcalfe
Secretary
Natchez, Mississippi
October 30, 2000
The Board of Directors of Britton & Koontz Capital Corporation
unanimously recommends that stockholders vote FOR approval of the merger
agreement.
<PAGE>
Louisiana Bancshares, Inc.
Baton Rouge, Louisiana
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
November 28, 2000
A special meeting of stockholders of Louisiana Bancshares, Inc. will be
held on Tuesday, November 28, 2000 at 10:00 a.m., at the main office of
Louisiana Bank & Trust Company, 7142 Florida Boulevard, Baton Rouge, Louisiana
for the following purposes:
1. To consider and vote upon a proposal to approve the
Agreement and Plan of Merger dated as of August 25, 2000, between Louisiana
Bancshares, Inc. and Britton & Koontz Capital Corporation pursuant to which,
among other things, Louisiana Bancshares will merge with and into Britton &
Koontz Capital Corporation and each share of common stock, $0.10 par value per
share, of Louisiana Bancshares will be converted into 0.1054 of a share of
Britton & Koontz Capital Corporation common stock, $2.50 par value per share,
plus cash in lieu of any fractional share as more fully described in the joint
proxy statement-prospectus which follows this notice.
2. To consider and act upon such other business as may
properly come before the special meeting or any adjournment or postponement
thereof.
The board of directors has fixed October 13, 2000 as the record date
for the special meeting. Only stockholders of record of Louisiana Bancshares,
Inc. at the close of business on that date are entitled to receive notice of and
to vote at the special meeting or any adjournments or postponements of the
meeting.
Dissenting stockholders who comply with the procedural requirements of
the Business Corporation Law of Louisiana will be entitled to receive payment of
the fair cash value of their shares if the merger is effected upon approval by
less than eighty per cent of Louisiana Bancshares' total voting power.
By Order of the Board of Directors,
/s/ Ellen C. Sessions
Secretary
Baton Rouge, Louisiana
October 20, 2000
The Board of Directors of Louisiana Bancshares, Inc. unanimously
recommends that stockholders vote FOR approval of the merger agreement.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What am I being asked to vote upon?
A: You are being asked to approve the merger agreement, which provides for the
merger of Louisiana Bancshares, Inc. into Britton & Koontz Capital Corporation.
As a result of this merger, Louisiana Bancshares will no longer exist, and
shares of Louisiana Bancshares common stock will be exchanged for shares of
Britton & Koontz common stock in the manner described in this document. Approval
of the merger requires the affirmative vote of at least two-thirds of the voting
power of Louisiana Bancshares present at the special meeting and a majority of
the outstanding shares of Britton & Koontz common stock.
Q: What should I do now?
A: Just indicate on your proxy card how you want to vote, and sign and mail the
card in the enclosed envelope as soon as possible, so that your shares will be
represented at the special meeting.
NOTE: If you sign and send in your proxy card and do not indicate how
you want to vote, your proxy will be voted in favor of the proposal to approve
and adopt the merger agreement.
Q: If my shares are held in "street name" by my broker, will my broker
vote my shares for me?
A: Your broker will vote your shares of stock on the question of the merger only
if you provide instructions on how to vote. You should instruct your broker on
how to vote your shares, following the directions your broker provides. If you
do not provide instructions to your broker, your shares will not be voted at the
special meeting. In the case of the Britton & Koontz special meeting, the
failure to vote will have the effect of voting against the merger.
Q: Why is Louisiana Bancshares engaging in this transaction with Britton &
Koontz?
A: The board of directors of Louisiana Bancshares believes that this transaction
with Britton & Koontz is in the best interests of Louisiana Bancshares and its
stockholders, and will also provide significant benefits to the customers and
employees of Louisiana Bancshares. We believe that this transaction will better
position Louisiana Bancshares and Britton & Koontz to be a stronger competitor
in East Baton Rouge Parish, Louisiana. To review the background and reasons for
the merger in greater detail, see "Proposed Merger--Background of the Merger"
beginning on page 19.
<PAGE>
Q: What happens as the market price of Britton & Koontz common stock
fluctuates?
A: Since the conversion ratio is fixed and since the market value of Britton &
Koontz common stock will fluctuate before and after the closing of the merger,
the value of the Britton & Koontz common stock that Louisiana Bancshares
stockholders will receive in the merger will fluctuate as well and could
increase or decrease. Louisiana Bancshares stockholders are urged to obtain
current market prices for shares of Britton & Koontz common stock.
Q: What are the tax consequences of the merger to me, a stockholder of
Louisiana Bancshares?
A: The proposed transaction will constitute a tax-free reorganization for
federal income tax purposes. The exchange of shares of Louisiana Bancshares
common stock for shares of Britton & Koontz common stock generally will be
tax-free for federal income tax purposes. You will, however, have to pay taxes
on any cash received for fractional shares or cash received upon the exercise of
dissenter's rights. Tax matters are complicated, and the tax consequences of the
proposed transaction to you will depend on the facts of your particular
situation. To review the tax consequences to you in greater detail, see
"Proposed Merger--Material Tax Consequences of the Merger" beginning on page 43.
Q: What risks should I, a stockholder of Louisiana Bancshares, consider in
making my decision about how to vote?
A: You should review the "Risk Factors" beginning on page 11. You should
also review the factors considered by Louisiana Bancshares' Board of Directors.
See "Proposed Merger--Background of the Merger" and "Reasons for the Merger and
Recommendations of the Boards of Directors" beginning on page 19.
Q: When is the merger expected to be completed?
A: We are working to complete the transaction as quickly as possible following
receipt of all necessary regulatory and stockholder approvals. We currently
anticipate that this transaction will be completed in the fourth quarter of
2000, although no assurance can be made that the required approvals will be
obtained or that this timetable will be met.
Immediately following completion of the merger of Louisiana Bancshares
with and into Britton & Koontz, Louisiana Bank will merge with and into Britton
& Koontz First National Bank, a wholly owned subsidiary of Britton & Koontz. In
addition, Mr. R. Andrew Patty II and Vinod K. Thukral, Ph.D., two directors of
Louisiana Bancshares, will be appointed to the board of directors of Britton &
Koontz and will serve until its next annual meeting of stockholders, and
Louisiana Bancshares will receive appropriate representation on the board of
directors of Britton & Koontz First National Bank.
<PAGE>
Q: Should I send in my Louisiana Bancshares stock certificates now?
A: No. If the merger is completed, we will send all Louisiana Bancshares
stockholders written instructions for exchanging Louisiana Bancshares common
stock certificates for Britton & Koontz common stock certificates.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you would like additional copies of this document, or if you would
like to ask any questions about the merger, you should contact:
Britton & Koontz stockholders: W. Page Ogden, Britton & Koontz First
National Bank, 500 Main Street, Natchez, Mississippi 39120, telephone (601) 445-
5576.
Louisiana Bancshares stockholders: John Sylvest, Louisiana Bank & Trust
Company, 7142 Florida Blvd., Baton Rouge, Louisiana 70806, telephone (225) 924-
0984.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS Page
SUMMARY .........................................................................................................1
Information About the Stockholders' Meetings.............................................................1
What You Will Receive in the Merger......................................................................1
Outstanding Stock Options of Louisiana Bancshares, Inc. to be Converted..................................1
Management and Operations after the Merger...............................................................1
The Boards of Directors Recommend Stockholder Approval...................................................2
Basis for the Terms of the Merger........................................................................2
Opinion of Britton & Koontz Capital Corporation Financial Advisor........................................2
Opinion of Louisiana Bancshares Financial Advisor........................................................3
Quorum and Vote Required at the Louisiana Bancshares Special Meeting.....................................3
Quorum and Vote Required at the Britton & Koontz Special Meeting.........................................3
Conditions to the Merger and Amendment of the Merger Agreement...........................................3
Interests of Certain Persons in the Merger that May be Different from Yours..............................4
Employee Benefits of Louisiana Bancshares Employees after the Merger.....................................5
Material Tax Consequences of the Merger..................................................................5
Dissenter's Rights (or Rights of Appraisal) You Will Have as a Result of the Merger......................5
Differences in Rights of Louisiana Bancshares Stockholders after the Merger..............................5
Accounting Treatment of the Merger.......................................................................6
Selected Financial Information of Britton & Koontz.......................................................7
Selected Financial Information of Louisiana Bancshares...................................................8
Pro Forma Combined Selected Financial Information (Unaudited)............................................9
Comparative Per Share Information (Unaudited)............................................................9
RISK FACTORS.....................................................................................................11
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS..................................................................13
THE PARTIES TO THE MERGER........................................................................................14
Britton & Koontz Capital Corporation....................................................................14
Louisiana Bancshares, Inc...............................................................................15
SPECIAL MEETING INFORMATION......................................................................................15
Solicitation and Revocation of Proxies..................................................................16
Record Date; Quorum and Vote Required...................................................................17
Recommendations of the Boards of Directors of Britton & Koontz and Louisiana
Bancshares.....................................................................................18
PROPOSED MERGER..................................................................................................18
General ...............................................................................................18
Background of the Merger................................................................................19
i
<PAGE>
Reasons for the Merger and Recommendations of the Boards of Directors...................................20
Terms of the Merger.....................................................................................30
Closing Date and Effective Date of the Merger...........................................................31
Employee Benefits of Louisiana Bancshares Employees after the Merger....................................31
Surrender and Exchange of Stock Certificates............................................................32
Payment of Expenses Relating to the Merger..............................................................33
Representations and Warranties in the Merger Agreement..................................................33
Conditions to the Merger; Waiver of Those Conditions....................................................34
Regulatory and Other Required Approvals.................................................................35
Business of Louisiana Bancshares Pending the Merger.....................................................35
Termination of the Merger Agreement.....................................................................36
Management and Operations after the Merger..............................................................37
Certain Differences in Rights of Stockholders...........................................................37
Description of Britton & Koontz's common stock..........................................................41
Interests of Certain Persons in the Merger..............................................................42
Material Tax Consequences of the Merger.................................................................43
Resale of Britton & Koontz Common Stock.................................................................44
Rights of Dissenting Stockholders.......................................................................44
Accounting Treatment of the Merger......................................................................51
PRO FORMA FINANCIAL INFORMATION..................................................................................51
INFORMATION ABOUT LOUISIANA BANCSHARES...........................................................................61
Principal Business......................................................................................61
Louisiana Bank..........................................................................................61
Competition.............................................................................................62
Supervision and Regulation..............................................................................62
Employees...............................................................................................64
Properties..............................................................................................64
Legal Proceedings.......................................................................................64
Market Prices and Dividends.............................................................................64
Management and Principal Shareholders...................................................................65
Management's Discussion and Analysis of Financial Condition and Results of Operations
..............................................................................................67
INFORMATION ABOUT BRITTON & KOONTZ...............................................................................82
Incorporation of Certain Documents by Reference.........................................................82
Regulatory Considerations...............................................................................83
Members of the Board of Directors.......................................................................85
Meetings and Committees of the Board of Directors.......................................................87
Compensation of Directors...............................................................................88
Stock Ownership of Directors, Officers and Principal Stockholders.......................................88
Executive Officers......................................................................................91
ii
<PAGE>
Executive Compensation..................................................................................91
Salary Committee Interlocks and Insider Participation in Compensation Decisions.........................94
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND INDEBTEDNESS.....................................................94
OTHER MATTERS....................................................................................................95
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..........................................................95
PROPOSALS OF STOCKHOLDERS........................................................................................96
VALIDITY OF SHARES AND LEGAL MATTERS.............................................................................96
EXPERTS ........................................................................................................96
IMPORTANT NOTICE FOR LOUISIANA BANCSHARES STOCKHOLDERS...........................................................97
HOW TO OBTAIN ADDITIONAL INFORMATION.............................................................................97
FINANCIAL STATEMENTS OF LOUISIANA BANCSHARES....................................................................F-1
APPENDIX A
MERGER AGREEMENT.......................................................................................A-1
APPENDIX B
OPINION OF MERCER CAPITAL CORPORATION..................................................................B-1
APPENDIX C
OPINION OF NATIONAL CAPITAL CORPORATION................................................................C-1
APPENDIX D
CERTAIN PROVISIONS OF MISSISSIPPI LAW RELATED TO DISSENTERS'
RIGHTS........................................................................................D-1
APPENDIX E
CERTAIN PROVISIONS OF LOUISIANA LAW RELATED TO DISSENTERS'
RIGHTS........................................................................................E-1
iii
<PAGE>
</TABLE>
SUMMARY
We have prepared this summary to assist you, the stockholders of
Britton & Koontz and Louisiana Bancshares, in your review of this joint proxy
statement-prospectus. It is necessarily general and abbreviated, and it is not
intended to be a complete explanation of all of the matters covered in this
joint proxy statement-prospectus. To understand the merger and the issuance of
shares of Britton & Koontz common stock, please see the more complete and
detailed information in the sections that follow this summary, as well as the
appendices and the documents incorporated herein by reference. We urge you to
read all of these documents in their entirety prior to voting at the special
meetings of Britton & Koontz and Louisiana Bancshares.
Information About the Stockholders' Meetings
A special meeting of the stockholders of Britton & Koontz will be held
on November 28, 2000 at 3:30 p.m., and a special meeting of the stockholders of
Louisiana Bancshares will be held on the same day, November 28, 2000 at 10:00
a.m. The Britton & Koontz special meeting will be held at the main office of
Britton & Koontz First National Bank, 500 Main Street, Natchez, Mississippi. The
Louisiana Bancshares special meeting will be held at the main office of
Louisiana Bank & Trust Company, 7142 Florida Boulevard, Baton Rouge, Louisiana.
What You Will Receive in the Merger
At the meetings, you, the stockholders of Britton & Koontz and
Louisiana Bancshares, will vote upon the merger agreement. If you approve the
merger agreement and the other conditions to completing the merger are
satisfied, we would anticipate that the merger would be consummated on December
1, 2000 or on such later date to be chosen by Britton & Koontz and Louisiana
Bancshares.
Stockholders of Louisiana Bancshares, other than those who exercise and
perfect dissenters' rights under Louisiana law, will receive for each share of
Louisiana Bancshares common stock 0.1054 of a share of fully-paid,
non-assessable and registered common stock of Britton & Koontz. Louisiana
Bancshares stockholders who would otherwise receive a fraction of a share of
Britton & Koontz common stock will receive cash instead of that fractional
share.
Outstanding Stock Options of Louisiana Bancshares, Inc. to be Converted
There are currently outstanding options for Louisiana Bancshares
directors and officers to acquire 447,099 additional shares of Louisiana
Bancshares common stock. Each option that is not exercised prior to the merger
will be converted into an option to purchase 0.1054 of a share of Britton &
Koontz common stock.
Management and Operations after the Merger
o Louisiana Bancshares will cease to exist after the merger.
o The business of Louisiana Bancshares will be conducted through Britton &
Koontz after the merger.
1
<PAGE>
o Louisiana Bank will be merged into Britton & Koontz First National Bank.
o Two current Louisiana Bancshares directors - Mr. R. Andrew Patty, II and
Vinod K. Thukral, Ph.D. - will be appointed as directors of Britton &
Koontz and Britton & Koontz First National Bank.
The Boards of Directors Recommend Stockholder Approval
The boards of directors of both Britton & Koontz and Louisiana
Bancshares have unanimously approved the merger agreement and each board
believes that the merger is in the best interests of its stockholders. The
Britton & Koontz and Louisiana Bancshares boards recommend that you vote FOR
approval of the merger agreement.
Basis for the Terms of the Merger
Britton & Koontz and Louisiana Bancshares directors considered a number
of factors in approving the terms of the merger, including:
o the historical growth and value of Britton & Koontz common stock;
o information concerning the financial condition, results of operations and
prospects of Britton & Koontz and Louisiana Bancshares;
o professional evaluations by National Capital Corporation and Mercer Capital
Corporation of the economic fairness of the price to the Louisiana
Bancshares and Britton & Koontz stockholders;
o the anticipated tax-free nature of the merger to Louisiana Bancshares
stockholders for federal income tax purposes;
o the financial terms of other recent business combinations in the banking
industry;
o possible economic benefits to be derived by the combination; and
o in the case of Louisiana Bancshares, the treatment to be accorded to
Louisiana Bancshares employees under the terms of the merger.
Opinion of Britton & Koontz Capital Corporation Financial Advisor
Mercer Capital Corporation, a financial valuation consulting firm, has
rendered an opinion to the Britton & Koontz board of directors that the terms of
the merger are fair, from a financial point of view, to the stockholders of
Britton & Koontz. The opinion is based on and subject to the procedures, matters
and limitations described in it and other matters that Mercer Capital considered
relevant. The fairness opinion of Mercer Capital is attached to this joint proxy
statement-prospectus as Appendix B. We urge all Britton & Koontz stockholders to
read
2
<PAGE>
the entire opinion, which includes a description of the procedures followed,
matters considered and limitations on the reviews undertaken by Mercer Capital.
Opinion of Louisiana Bancshares Financial Advisor
National Capital Corporation, an investment banking and financial
advisory firm, has rendered an opinion to the Louisiana Bancshares board of
directors that the terms of the merger are fair, from a financial point of view,
to the stockholders of Louisiana Bancshares. The opinion is based on and subject
to the procedures, matters and limitations described in it and other matters
that National Capital considered relevant. The fairness opinion of National
Capital is attached to this joint proxy statement-prospectus as Appendix C. We
urge all Louisiana Bancshares stockholders to read the entire opinion, which
includes a description of the procedures followed, matters considered and
limitations on the reviews undertaken by National Capital.
Quorum and Vote Required at the Louisiana Bancshares Special Meeting.
You can vote at the Louisiana Bancshares special meeting if you were
the record owner of Louisiana Bancshares common stock at the close of business
on October 13, 2000. On that date, there were 3,051,907 shares of Louisiana
Bancshares common stock outstanding and entitled to vote. You can cast one vote
for each share of Louisiana Bancshares common stock that you owned of record on
that date. In order to approve the merger agreement, the holders of two-thirds
of the voting power of Louisiana Bancshares present at the special meeting must
vote in favor of the merger agreement. As of October 13, 2000, Louisiana
Bancshares' directors and executive officers held approximately 35.2% of the
outstanding shares of Louisiana Bancshares common stock entitled to vote at the
Louisiana Bancshares special meeting.
Quorum and Vote Required at the Britton & Koontz Special Meeting
You can vote at the Britton & Koontz special meeting if you were the
record owner of Britton & Koontz common stock at the close of business on
October 13, 2000. You can cast one vote for each share of Britton & Koontz
common stock you owned of record on that date. The merger requires the approval
of the holders of a majority of the outstanding shares of Britton & Koontz
common stock. As of October 13, 2000, Britton & Koontz directors and executive
officers held 27.9% of the outstanding shares of Britton & Koontz common stock
entitled to vote at the Britton & Koontz special meeting. We expect the Britton
& Koontz directors and officers to vote their shares for approval of the merger
agreement.
Conditions to the Merger and Amendment of the Merger Agreement
The merger is subject to certain conditions that must be met in order
for the merger to be consummated:
3
<PAGE>
o approval of the merger agreement by the required vote of the stockholders
of Britton & Koontz and Louisiana Bancshares;
o approval of the merger by the Comptroller of the Currency, without imposing
conditions to the approval that are unacceptable to Britton & Koontz;
o the merger qualifying as a pooling of interests; and
o the merger qualifying as a tax-free reorganization.
The merger may not be consummated until at least 15 days after approval
of the merger by the U.S. Comptroller of the Currency. Britton & Koontz and
Louisiana Bancshares now anticipate that, if all approvals are received, the
merger will be consummated on December 1, 2000.
Nearly all of the conditions to consummation of the merger may be
waived at any time by the party for whose benefit they were created, except that
the requirement of stockholder and regulatory approvals may not be waived. Also,
the merger agreement may be amended or supplemented at any time by written
agreement of Britton & Koontz and Louisiana Bancshares. Any material change to
the merger agreement after the date of the meetings however, would require a
re-solicitation of the stockholders of Britton & Koontz and Louisiana Bancshares
for the purpose of voting on the changed merger agreement. In addition, the
merger agreement may be terminated, either before or after stockholder approval,
under certain circumstances.
Interests of Certain Persons in the Merger that May be Different from Yours
The executive officers and directors of Louisiana Bancshares have
interests in the merger that are in addition to their interests as stockholders
of Louisiana Bancshares. These interests include, among others:
o that R. Andrew Patty, II and Vinod K. Thukral, Ph.D., or two other
Louisiana Bancshares directors, will become directors of Britton & Koontz
after the merger;
o the continuation of certain employee benefits for employees of Louisiana
Bancshares who become employees of Britton & Koontz;
o the acceleration of stock options of the president of Louisiana Bancshares
and some of its other executive officers as a result of the merger;
o the fact that certain executive officers of Louisiana Bank will receive
bonuses at the end of fiscal year 2001 in addition to any bonuses that they
otherwise qualify for as officers of Britton & Koontz, if they are still
employed by Britton & Koontz;
o John S. Sylvest, President of Louisiana Bancshares, will receive certain
benefits including, without limitation, a cash payment equal to
approximately $188,500, pursuant to a severance agreement between Mr.
Sylvest and Louisiana Bank; and
4
<PAGE>
o the indemnification by Britton & Koontz of officers and directors of
Louisiana Bancshares for certain liabilities following the merger.
Employee Benefits of Louisiana Bancshares Employees after the Merger
Britton & Koontz has agreed to offer to all Louisiana Bancshares
employees who become Britton & Koontz employees the same employee benefits as
those offered by Britton & Koontz to its employees. Britton & Koontz will also
give Louisiana Bancshares employees full credit for their years of service with
Louisiana Bancshares, for both eligibility and vesting, to the extent permitted
under the terms of the applicable plans.
Material Tax Consequences of the Merger
Louisiana Bancshares stockholders generally will not recognize gain or
loss for federal income tax purposes for shares of Britton & Koontz common stock
they receive in the merger. Phelps Dunbar, L.L.P., counsel to Britton & Koontz,
has issued an opinion to this effect. Louisiana Bancshares stockholders will,
however, be taxed on cash received instead of any fractional share. Further, any
Louisiana Bancshares stockholder who perfects dissenter's rights under Louisiana
law, as described in the next section, will be taxed on cash received for his or
her Louisiana Bancshares common stock.
Tax laws are complex, and the tax consequences of the merger may vary
depending upon your individual circumstances or tax status. For these reasons,
we recommend that you consult your tax advisor concerning the federal and any
applicable state, local or other tax consequences of the merger to you.
Dissenter's Rights (or Rights of Appraisal) You Will Have as a Result of the
Merger
If the merger is closed, both Britton & Koontz and Louisiana Bancshares
stockholders will be entitled to dissenter's rights or rights of appraisal. If
you perfect your dissenter's rights, or rights of appraisal, you will be
entitled to receive the fair value of your shares of stock in cash as provided
under Mississippi law (for Britton & Koontz stockholders) and Louisiana law (for
Louisiana Bancshares stockholders). Appendices D and E include the relevant
provisions of Mississippi and Louisiana law regarding dissenter's rights, or
rights of appraisal. For more information, see the information beginning on page
44.
Differences in Rights of Louisiana Bancshares Stockholders after the Merger
Louisiana Bancshares stockholders who receive shares of Britton &
Koontz common stock in the merger will become Britton & Koontz stockholders.
Their rights as stockholders then will be governed by Britton & Koontz's
articles of incorporation and Britton & Koontz's bylaws, as well as Mississippi
law. The rights of Britton & Koontz stockholders are different in certain
respects from the rights of Louisiana Bancshares stockholders. Those differences
are described in this joint proxy statement-prospectus.
5
<PAGE>
Accounting Treatment of the Merger
The parties intend the merger to be treated as a pooling-of-interests
for financial accounting purposes. A number of things could prevent the merger
from qualifying for this accounting treatment. For example, if the cash Britton
& Koontz would be required to pay in the merger, including cash paid to
dissenters, were more than 10% of the value of the Louisiana Bancshares common
stock to be exchanged, then the merger would not qualify as a pooling-of-
interests. In such a case, Britton & Koontz will abandon the merger.
6
<PAGE>
Selected Financial Information of Britton & Koontz
The following table sets forth certain consolidated financial
information of Britton & Koontz based on the consolidated financial statements
and related notes of Britton & Koontz contained in its annual report on Form 10-
KSB for the year ended December 31, 1999 and in its quarterly report on Form
10-QSB for the six-month period ended June 30, 2000, copies of which accompany
this joint proxy statement-prospectus. Information for the six- month periods
ended June 30, 2000 and 1999 is unaudited.
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
----------------------------------------------------------------- ---------------------------
1999 1998 1997 1996 1995 2000 1999
--------- --------- ---------- ------------ ----------- ------------- ------------
(In thousands, except per share amounts) (Unaudited)
Income Statement Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income............. $ 8,245 $ 7,257 $ 6,888 $ 6,354 $ 6,053 $ 4,590 $ 4,011
Provision for loan losses....... 275 162 160 50 175 160 90
--------- --------- ----------- ------------ ----------- ------------- -----------
Net interest income after
provision for loan losses....... $ 7,970 $ 7,095 $ 6,728 $ 6,304 $ 5,878 $ 4,430 $ 3,921
Noninterest income.............. 1,718 1,496 1,445 1,377 1,327 964 855
Noninterest expense............. 6,354 5,103 4,566 4,788 4,109 3,544 3,004
--------- --------- ----------- ------------ ----------- ------------- -----------
Income before taxes............. 3,334 3,488 3,607 2,893 3,096 1,850 1,772
Income taxes.................... 1,114 1,156 1,209 861 966 618 610
--------- --------- ----------- ------------ ----------- ------------- -----------
Net income...................... 2,220 2,332 2,398 2,032 2,130 1,232 1,162
Balance Sheet Data:
Total assets.................... $ 208,854 $ 173,573 $ 162,057 $ 151,303 $ 151,787 $217,358 $ 184,077
Securities-held to maturity..... 46,553 30,724 38,728 43,412 46,794 55,726 32,292
Securities-available for sale... 6,213 13,111 5,229 1,198 1,199 6,354 1,910,644
Net loans....................... 139,141 118,285 106,156 95,322 91,999 156,977 127,768
Total deposits.................. 166,317 143,186 133,481 126,440 128,567 189,474 152,695
Stockholders' equity............ 20,152 19,249 17,982 16,521 15,371 20,669 19,699
Per Share Data:
Net income(1)................... $ 1.26 $ 1.32 $ 1.36 $ 1.15 $ 1.21 $ 0.70 $ 0.66
Book value ..................... 11.40 10.89 10.18 9.36 8.71 11.79 11.15
Dividends....................... 0.60 0.59 0.56 0.50 0.48 0.30 0.30
Average shares outstanding...... 1,767,064 1,767,064 1,766,007 1,764,288 1,759,796 1,760,166 1,767,064
Performance Ratios:
Return on average assets........ 1.16% 1.36% 1.53% 1.33% 1.40% 1.11% 1.27%
Return on average equity........ 11.11% 12.34% 13.67% 12.53% 14.25% 11.96% 11.77%
Efficiency ratio(2)............. 63.77% 58.30% 54.79% 61.94% 55.67% 63.81% 61.74%
Net interest margin............. 4.64% 4.49% 4.66% 4.39% 4.22% 4.42% 4.69%
Asset Quality Ratios(3):
Nonperforming assets to
total loans and other real
estate.......................... 0.59% 0.64% 0.32% 0.72% 0.82% 0.58% 0.49%
Net charge-offs to average
loans........................... 0.14% 0.08% 0.10% 0.10% 0.22% 0.01% 0.05%
Allowance for loan losses to
total loans..................... 0.60% 0.63% 0.63% 0.65% 0.78% 0.63% 0.61%
Allowance for loan losses to
nonperforming loans(4).......... 116.54% 111.45% 248.79% 100.97% 143.29% 115.52% 139.66%
Capital Ratios:
Tier 1 leverage ratio........... 9.41% 11.23% 11.26% 10.96% 10.14% 8.51% 10.38%
Tier 1 risk-based capital ratio. 14.60% 16.62% 18.53% 18.76% 18.06% 13.16% 15.79%
Total risk-based capital ratio.. 15.25% 17.26% 19.22% 19.47% 18.91% 13.83% 16.44%
</TABLE>
(1) Net income per share is based upon the average number of common shares
outstanding during the period.
(2) Calculated by dividing total noninterest expenses by net interest income
plus noninterest income, excluding securities gains or losses.
(3) At period end, except net charge-offs to average loans.
(4) Nonperforming loans consist of nonaccrual loans and loans contractually
past due 90 days or more.
7
<PAGE>
Selected Financial Information of Louisiana Bancshares
The following table sets forth certain consolidated financial
information of Louisiana Bancshares. This information should be read in
conjunction with Louisiana Bancshares' financial statements, the notes thereto,
and its Management's Discussion and Analysis of Financial Condition and Results
of Operations for the years ended December 31, 1999 and 1998 and for the
six-month periods ended June 30, 2000 and 1999 included in this joint proxy
statement-prospectus. Information for the six-month periods ended June 30, 2000
and 1999 is unaudited.
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
-------------------------------------------------------------- -------------------------
1999 1998 1997 1996 1995 2000 1999
Income Statement Data: --------- --------- --------- ------------ ----------- --------- ---------
(In thousands, except per share amounts) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income............. $ 1,783 $ 1,663 $ 1,362 $ 1,121 $ 1,099 $ 912 $ 854
Provisions for loan losses...... 12 9 (234) (192) (285) 6 6
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provisions for loan losses...... 1,771 1,654 1,596 1,313 1,384 906 848
Noninterest income.............. 170 155 142 128 114 74 94
Noninterest expense............. 1,424 1,333 1,243 1,168 1,112 749 721
--------- --------- --------- --------- --------- --------- ---------
Income before taxes............. 517 476 495 273 386 231 221
Income taxes.................... 176 138 203 83 97 74 77
--------- --------- --------- ---------- --------- --------- ---------
Net income...................... 341 338 292 190 289 157 144
Balance Sheet Data:
Total Assets.................... $43,048 $40,829 $31,861 $25,931 $22,838 $42,427 $41,069
Securities-held to maturity..... 214 320 550 560 701 155 175
Securities-available for sale... 2,222 253 626 2,038 2,701 2,707 741
Net loans....................... 29,691 29,343 26,448 18,477 13,536 30,698 29,027
Total deposits.................. 32,069 31,870 28,462 23,034 20,073 34,184 33,087
Stockholders' equity............ 3,726 3,396 3,050 2,755 2,580 3,882 3,539
Per share data:
Net income(1)................... $0.11 $0.11 $0.10 $0.06 $0.09 $0.05 $0.05
Book value ..................... 1.22 1.11 1.00 0.90 0.85 1.27 1.16
Dividends....................... - - - - - - -
Average shares outstanding...... 3,051,907 3,051,907 3,045,700 3,045,700 3,045,700 3,051,907 3,051,907
Performance ratios:
Return on average assets........ 0.86% 0.88% 1.28% 0.86% 1.28% 0.77% 0.74%
Return on average equity........ 10.01% 10.06% 13.13% 7.59% 11.57% 8.59% 8.79%
Efficiency ratio (2)............ 72.91% 73.31% 82.65% 93.51% 91.67% 75.96% 75.42%
Net interest margin............. 4.14% 4.26% 4.35% 4.30% 4.73% 4.42% 4.29%
Asset Quality Ratios(3):
Nonperforming assets to
total loans and other real
estate.......................... 1.12% 0.08% 0.84% 0.98% 1.33% 0.77% 0.30%
Net charge-offs to average
loans........................... 0.04% 0.20% 0.07% 0.00% 0.00% 0.14% 0.00%
Allowance for loan losses to
total loans..................... 1.06% 1.06% 1.33% 3.07% 4.14% 0.90% 1.09%
Allowance for loan losses to
nonperforming loans(4).......... 92.73% 1305.34% 156.44% 307.04% 299.65% 114.70% 357.26%
Capital Ratios(5):
Tier 1 leverage ratio........... 8.90% 8.50% 9.30% 10.60% 11.60% 9.63% 8.65%
Tier 1 risk-based capital ratio. 13.90% 12.50% 12.70% 15.60% 18.80% 13.70% 12.87%
Total risk-based capital ratio.. 15.10% 13.70% 14.00% 16.90% 20.00% 14.69% 14.06%
</TABLE>
(1) Net income per share is based upon the average number of common shares
outstanding during the period.
(2) Calculated by dividing total noninterest expenses by net interest income
plus noninterest income, excluding securities gains or losses.
(3) At period end, except net charge-offs to average loans.
(4) Nonperforming loans consist of nonaccrual loans and loans contractually
past due 90 days or more.
(5) Capital ratios are calculated according to Federal Reserve Board guidelines.
8
<PAGE>
Pro Forma Combined Selected Financial Information (Unaudited)
The following table sets forth certain unaudited pro forma combined
selected financial information for Britton & Koontz, assuming that the merger
had been closed at the beginning of each period. The pro forma information is
presented for information purposes only. The results shown are not necessarily
indicative of the actual results that might have occurred if the merger had been
completed at the beginning of the periods presented. Also, this information is
not necessarily indicative of results that might be achieved in the future if
the merger is completed. See "Pro Forma Financial Information" contained
elsewhere in this joint proxy statement- prospectus.
<TABLE>
<CAPTION>
Twelve Months Ended December 31,
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
(In thousands, except per share amounts)
Net interest income..................................................... $10,028 $8,920 $8,250
Income from continuing operations....................................... $2,561 $2,670 $2,690
Per common share:
Income from continuing operations:
Basic............................................................. $1.23 $1.28 $1.29
Diluted........................................................... $1.22 $1.27 $1.28
Cash dividends........................................................ $0.60 $0.59 $0.56
Book value............................................................ $11.55 $10.83 $10.05
SELECTED PERIOD-END BALANCES:
Debt.................................................................... $26,332 $13,016 $6,859
Total assets............................................................ $251,902 $214,402 $193,918
</TABLE>
Comparative Per Share Information (Unaudited)
The following table shows certain comparative per share data relating
to net income, cash dividends and book value. The equivalent pro forma
information is based on an exchange ratio of 0.1054 of a share of Britton &
Koontz common stock for each share of Louisiana Bancshares common stock
exchanged in the merger.
We present the pro forma and equivalent pro forma data for your
information only. It does not necessarily indicate the results of operations or
combined financial position that would have resulted had Britton & Koontz and
Louisiana Bancshares completed the merger at the times indicated; and it does
not necessarily indicate what future results of operations or combined financial
position will be.
You should read the information shown below in conjunction with the
historical consolidated financial statements of Britton & Koontz and Louisiana
Bancshares and the notes provided with them. See "How to Obtain Additional
Information" and "Certain Information Concerning Louisiana Bancshares --
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
9
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Britton & Louisiana
Koontz (with Bancshares
Britton Louisiana Louisiana Pro Forma
& Koontz Bancshares Bancshares) Equivalent
-------- ---------- ---------- ----------
Net income per share
Basic per share income for the
periods ended:
<S> <C> <C> <C> <C>
June 30, 2000 $0.70 $0.05 $0.66 $0.07
December 31, 1999 $1.26 $0.11 $1.23 $0.13
December 31, 1998 $1.32 $0.11 $1.28 $0.13
December 31, 1997 $1.36 $0.10 $1.29 $0.14
Fully diluted per share income for the
periods ended:
June 30, 2000 $0.70 $0.05 $0.66 $0.07
December 31, 1999 $1.26 $0.10 $1.22 $0.13
December 31, 1998 $1.32 $0.10 $1.27 $0.13
December 31, 1997 $1.36 $0.09 $1.28 $0.13
Cash dividends per share for the
twelve months ended:
December 31, 1999 $0.60 $ -- $0.60 $0.06
December 31, 1998 $0.59 $ -- $0.59 $0.06
December 31, 1997 $0.59 $ -- $0.59 $0.06
Book value per share
December 31, 1999 $11.40 $1.22 $11.55 $1.22
December 31, 1998 $10.89 $1.11 $10.83 $1.14
December 31, 1997 $10.18 $1.00 $10.05 $1.06
10
<PAGE>
</TABLE>
RISK FACTORS
In addition to the other information in this joint proxy
statement-prospectus, the following factors with respect to Britton & Koontz
should be carefully considered in connection with the proposed merger. This
discussion is intended to illustrate certain potential risks associated with an
investment in Britton & Koontz common stock and does not represent Britton &
Koontz's management's expectation of what necessarily will occur if the merger
is completed.
Britton & Koontz stock is thinly traded, and there can be no assurance that the
stock will be freely tradable in the future.
Britton & Koontz common stock trades sporadically on the Nasdaq Small
Cap Index. There can be no assurance that a market for the Britton & Koontz
common stock will be sustained in the future. At present, there are two market
makers for the Britton & Koontz common stock; however, the market makers are not
obligated to continue to make a market for Britton & Koontz common stock. If the
market makers do not continue to make a market in Britton & Koontz common stock,
shares received in the merger may be difficult to sell.
The market price of Britton & Koontz common stock may be volatile.
The market price of the Britton & Koontz common stock may be volatile
depending on various factors, including the amount of shares placed for sale at
any particular time, the general economy, stock market conditions, announcements
by Britton & Koontz or its competitors and fluctuations in the operating results
of Britton & Koontz. There can be no assurance that Britton & Koontz common
stock will retain the market value it has at the time of the merger.
Shares of Britton & Koontz common stock are not insured by the FDIC
Neither the Federal Deposit Insurance Corporation nor any other
governmental agency insures the shares of Britton & Koontz common stock.
Britton & Koontz may experience difficulties in managing growth.
As part of Britton & Koontz's overall growth strategy, Britton & Koontz
may acquire banks and related businesses which Britton & Koontz's board of
directors believes provide a strategic fit with its business. To the extent that
Britton & Koontz does grow, we cannot assure you that Britton & Koontz will be
able to adequately and profitably manage such growth. In addition, Britton &
Koontz may not obtain regulatory approval for acquisitions proposed to be
undertaken in the future. Acquiring other banks and businesses will involve
risks commonly associated with acquisitions, including:
o potential exposure to liabilities of any acquired banks and businesses;
11
<PAGE>
o difficulty and expense of integrating the operations and personnel of any
acquired banks and businesses;
o potential disruption to Britton & Koontz's business;
o potential diversion of Britton & Koontz's management's time and attention;
and
o impairment of relationships with and the possible loss of key employees and
customers of any acquired banks and businesses.
It may be difficult for Britton & Koontz to maintain its historical growth rate.
Britton & Koontz opened additional branches in the past few years that
significantly enhanced its rate of growth. We make no assurances that Britton &
Koontz will continue to sustain this rate of growth or grow at all. Britton &
Koontz may target acquisition candidates that a variety of larger financial
institutions with substantially greater resources than it also may be interested
in acquiring, which may make it more difficult for Britton & Koontz to acquire
any candidate.
There are special risks associated with the proposed merger
Britton & Koontz has never acquired another commercial bank. The
success of the merger will depend on a number of factors including, but not
limited to, Britton & Koontz's ability to:
o integrate Louisiana Bancshares' operations into its current operations;
o maintain existing relationships with depositors in Louisiana Bank to
minimize withdrawals of deposits subsequent to the merger;
o maintain and enhance existing relationships with borrowers to limit
unanticipated losses from loans of Louisiana Bank;
o control the incremental non-interest expense from Louisiana Bank to
maintain overall operating efficiencies;
o retain and attract qualified personnel; and
o compete effectively in the communities served by Louisiana Bank and in
nearby communities.
There can be no assurance that Britton & Koontz will be able to manage
effectively its growth resulting from the merger.
12
<PAGE>
Government regulation and legislation could hurt business and prospects of
banks.
Britton & Koontz and Louisiana Bancshares and their respective banking
subsidiaries are subject to extensive state and federal regulation, supervision
and legislation which govern almost all aspects of their operations. Their
businesses are particularly susceptible to being affected by the enactment of
federal and state legislation which may have the effect of increasing or
decreasing the cost of doing business, modifying permissible activities or
enhancing the competitive position of other financial institutions. These laws
are subject to change from time to time and are primarily intended for the
protection of consumers, depositors and the deposit insurance funds and not for
the protection of stockholders of Britton & Koontz or Louisiana Bancshares.
Britton & Koontz cannot predict what effect any presently contemplated or future
changes in the laws or regulations or their interpretations would have on its
business and prospects, but it could be material and adverse. For information
about regulation and supervision of banks and bank holding companies, see
"Information About Britton & Koontz - Regulatory Considerations" and
"Information About Louisiana Bancshares - "Supervision and Regulation."
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This joint proxy statement-prospectus includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Although Britton & Koontz and Louisiana Bancshares believe, concerning their
respective statements, that the expectations reflected in forward-looking
statements are reasonable, the statements are based on numerous assumptions
(some of which may prove to be incorrect) and are subject to risks and
uncertainties that could cause the actual results to differ materially from
Britton & Koontz's and Louisiana Bancshares' expectations.
Britton & Koontz and Louisiana Bancshares have made and will make
forward-looking statements in their written documents and oral presentations.
Such statements are based on Britton & Koontz's and Louisiana Bancshares'
managements' beliefs as well as assumptions made by and information currently
available to Britton & Koontz and Louisiana Bancshares management. When used in
Britton & Koontz's and Louisiana Bancshares' documents or oral presentations,
the words "anticipate," "estimate," "expect," "objective," "projection,"
"forecast," "goal" and similar expressions are intended to identify
forward-looking statements.
In addition to any assumptions and other factors referred to
specifically in connection with such forward-looking statements, factors that
could cause Britton & Koontz's or Louisiana Bancshares' actual results to differ
materially from those contemplated in any forward-looking statements include,
among others:
o increased competition,
o regulatory factors,
13
<PAGE>
o economic conditions,
o changing market conditions,
o availability or cost of capital,
o employee workforce factors,
o cost and other effects of legal and administrative proceedings, and
o changes in federal, state or local legislative requirements.
Britton & Koontz and Louisiana Bancshares undertake no obligation to
update or revise any forward-looking statements, whether as a result of changes
in actual results, changes in assumptions or other factors affecting such
statements.
THE PARTIES TO THE MERGER
Britton & Koontz Capital Corporation
Britton & Koontz is a Mississippi corporation registered under the Bank
Holding Company Act of 1956, as amended. As of June 30, 2000, Britton & Koontz
had total consolidated assets of approximately $238 million and stockholders'
equity of approximately $20.7 million.
Britton & Koontz's sole banking subsidiary is Britton & Koontz First
National Bank. Britton & Koontz First National Bank provides retail and
commercial banking services through banking offices located in Natchez and
Vicksburg, Mississippi.
From time to time, Britton & Koontz investigates and holds discussions
and negotiations in connection with possible mergers or similar transactions
with other financial institutions. On the date of this joint proxy
statement-prospectus, Britton & Koontz's merger agreement with Louisiana
Bancshares is the only definitive agreement relating to a merger to which
Britton & Koontz is a party. Britton & Koontz expects to pursue other possible
acquisition opportunities in the future. Britton & Koontz may enter into any
such transactions before or after the merger with Louisiana Bancshares. The
terms of any future transactions cannot be predicted at this time. Future
transactions would be subject to regulatory approval and the approval of
stockholders as required by law.
14
<PAGE>
The principal executive offices of Britton & Koontz are located at:
500 Main Street
Natchez, Mississippi 39120
Telephone: (601) 445-5576
e-mail: [email protected]
For additional information concerning the business and financial
condition of Britton & Koontz, please refer to "Incorporation of Certain
Documents by Reference" and the 1999 annual report and June 30, 2000 quarterly
report accompanying this joint proxy statement-prospectus.
Louisiana Bancshares, Inc.
Louisiana Bancshares is a Louisiana corporation registered under the
federal Bank Holding Company Act of 1956, as amended, and owns all of the issued
and outstanding shares of stock of Louisiana Bank & Trust Company, Baton Rouge,
Louisiana. As of June 30, 2000, Louisiana Bancshares had total consolidated
assets of $42.4 million and stockholders' equity of $3.9 million.
Louisiana Bank is a community bank that operates two banking offices in
Baton Rouge, Louisiana. Its principal executive office is located at:
7142 Florida Boulevard
Baton Rouge, Louisiana 70806
Telephone: (225) 924-0984
Additional information concerning the business and financial condition
of Louisiana Bancshares is included below under the headings "Information
Concerning Louisiana Bancshares" and "Financial Statements of Louisiana
Bancshares."
SPECIAL MEETING INFORMATION
You have received this joint proxy statement-prospectus because the
boards of directors of Britton & Koontz and Louisiana Bancshares are soliciting
your proxy for the Britton & Koontz and Louisiana Bancshares special meetings,
respectively. Each copy of this joint proxy statement-prospectus mailed to
holders of Britton & Koontz and Louisiana Bancshares common stock is accompanied
by a proxy card for use at either the Britton & Koontz or Louisiana Bancshares
special meeting and at any adjournment of the special meeting. Only holders of
record of Britton & Koontz common stock or Louisiana Bancshares common stock on
October 13, 2000 are entitled to notice of and to vote at the respective
meetings.
15
<PAGE>
At the special meetings, stockholders will consider and vote upon the
merger agreement and any other matters that are properly brought before the
meetings or any adjournments of the meetings.
If you have not already done so, please complete, date and sign the accompanying
proxy card and return it promptly in the enclosed, postage paid envelope.
Solicitation and Revocation of Proxies
If you have delivered a proxy for the meetings, you may revoke it any
time before it is voted by:
o attending the meeting and voting in person;
o giving written notice revoking your proxy to the corporate secretary at or
before the special meeting; or
o submitting a signed proxy card dated later than your initial proxy, and if
it is received before the meeting, the later-dated proxy will be voted.
The Britton & Koontz and Louisiana Bancshares boards of directors have
appointed proxies who will vote as directed all proxy cards received at or prior
to the special meetings and not subsequently revoked. If you complete, date and
sign your proxy card but do not provide instructions as to your vote, such
proxies will vote your shares FOR approval of the merger agreement. If any other
matters are properly presented at the special meetings for consideration, the
persons named in the proxy card will have discretionary authority to vote on
those matters. The Britton & Koontz and Louisiana Bancshares boards are not
aware of any matter to be presented at the special meetings other than the
proposal to approve the merger agreement.
Each company will bear the cost of soliciting proxies from its
stockholders, except that Britton & Koontz will bear all expenses incurred in
printing and mailing this joint proxy statement-prospectus. Each company will
solicit stockholder votes by mail, and maybe by telephone or other means of
telecommunications. Directors, officers and employees of the companies may also
solicit stockholder votes in person. If these individuals solicit your vote in
person, they will receive no additional compensation for doing so. Britton &
Koontz's stock transfer agent, American Stock Transfer and Trust Company, will
also assist in the solicitation of proxies from brokers and nominees of
stockholders for the Britton & Koontz special meeting. Britton & Koontz
estimates that fees and expenses of American Stock Transfer & Trust Company will
not exceed $1,000, plus out-of-pocket costs and expenses. Britton & Koontz and
Louisiana Bancshares will reimburse brokerage firms and other persons
representing beneficial owners of shares for their reasonable expenses in
forwarding solicitation material to such beneficial owners.
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Louisiana Bancshares stockholders should not forward any stock
certificates with their proxy cards. If the merger agreement is approved,
Louisiana Bancshares stockholders will receive instructions regarding the
exchange of their stock certificates after the merger has been consummated.
Record Date; Quorum and Vote Required
The record date for each meeting is October 13, 2000. Britton & Koontz
and Louisiana Bancshares stockholders of record as of the close of business on
that day will receive notice of the meetings and will be able to vote at the
meetings. As of October 13, 2000, there were 1,752,564 shares of Britton &
Koontz common stock outstanding and entitled to vote at the Britton & Koontz
special meeting and 3,051,907 shares of Louisiana Bancshares common stock
outstanding and entitled to vote at the Louisiana Bancshares special meeting.
The presence, in person or by proxy, of a majority of the shares of
Britton & Koontz and Louisiana Bancshares entitled to vote on the merger
agreement is necessary to constitute a quorum at each meeting. Each share of
Britton & Koontz and Louisiana Bancshares common stock outstanding on October
13, 2000 entitles its holder to one vote as to the approval of the merger
agreement and any other proposal that may properly come before the meeting.
Britton & Koontz and Louisiana Bancshares will count their respective
shares of common stock present in person at their respective meeting but not
voting, and their respective shares of common stock for which they have received
proxies but with respect to which holders of such shares have abstained, as
present at the respective meeting for purposes of determining the presence or
absence of a quorum for the transaction of business.
Under Mississippi Law, approval of the merger agreement requires the
affirmative vote of the holders of a majority of all votes entitled to be cast
on the merger agreement at the Britton & Koontz meeting. Abstentions and broker
non-votes will have the effect of a vote against the merger at the Britton &
Koontz special meeting.
The articles of incorporation of Louisiana Bancshares require the
affirmative vote of the holders of no less than two-thirds of the voting power
present at the Louisiana Bancshares special meeting to approve the merger
agreement. Abstentions will be counted for purposes of determining whether
the merger is approved at the Louisiana Bancshares special meeting, but broker
non-votes will not be counted.
The Britton & Koontz and Louisiana Bancshares boards urge their
respective stockholders to complete, date and sign the accompanying proxy and
return it promptly in the enclosed, postage-paid envelope.
As of the record date for the meetings, Britton & Koontz directors and
executive officers beneficially owned a total of 488,786 shares, or
approximately 27.9%, of the outstanding shares of Britton & Koontz common stock,
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and Louisiana Bancshares directors and executive officers beneficially
owned a total of 1,073,562 shares, or approximately 35.2%, of the outstanding
shares of Louisiana Bancshares common stock. These individuals are expected to
vote their stock in favor of approving the merger agreement.
Recommendations of the Boards of Directors of Britton & Koontz and Louisiana
Bancshares
The Britton & Koontz board of directors has unanimously approved the
merger agreement and believes that the merger is in the best interests of
Britton & Koontz and its stockholders. The Britton & Koontz board recommends
that holders of Britton & Koontz common stock vote FOR approval of the merger
agreement. In making their recommendation to stockholders, the Britton & Koontz
directors considered, among other things, the fairness opinion of Mercer
Capital, which concludes that the terms of the merger are fair to Britton &
Koontz's stockholders from a financial point of view. See "Proposed Merger ---
Background of the Merger" and "Proposed Merger --- Opinion of Mercer Capital,"
below.
The Louisiana Bancshares board of directors has unanimously approved
the merger agreement and believes the merger is in the best interests of
Louisiana Bancshares and its stockholders. The Louisiana Bancshares board
recommends that holders of Louisiana Bancshares common stock vote FOR approval
of the merger agreement. In making their recommendation to stockholders, the
Louisiana Bancshares directors considered, among other things, the fairness
opinion of National Capital, which concludes that the terms of the merger are
fair to Louisiana Bancshares' stockholders from a financial point of view. See
"Proposed Merger --- Background of the Merger" and "Proposed Merger --- Opinion
of National Capital," below.
PROPOSED MERGER
This section of the joint proxy statement-prospectus describes certain
aspects of the merger. The following description is not intended to include
every aspect of the merger, but rather focuses on only the significant terms of
the merger. This discussion is qualified in its entirety by reference to the
merger agreement, which is attached as Appendix A to this joint proxy
statement-prospectus and is incorporated herein by reference. We urge you to
read the merger agreement carefully and in its entirety.
General
If the stockholders of Britton & Koontz and Louisiana Bancshares
approve the merger agreement and the other conditions to the consummation of the
merger are satisfied, Louisiana Bancshares will be merged with and into Britton
& Koontz. Britton & Koontz will exchange shares of Britton & Koontz common
stock, plus cash instead of any fractional share, for each outstanding share of
Louisiana Bancshares common stock as to which rights of appraisal have
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not been exercised and perfected. Each share of Britton & Koontz common stock
outstanding immediately prior to the effective date of the merger will remain
outstanding and unchanged as a result of the merger, unless the holder exercises
dissenters' rights.
Background of the Merger
Louisiana Bank, organized in 1986, is a Louisiana state bank
headquartered in Baton Rouge, Louisiana. Like other community banks, the core of
Louisiana Bank's business has consisted of attracting deposits from the general
public and originating loans to consumers, to finance the acquisition,
construction, or improvement of residential properties and to finance small
commercial projects in the market area served by Louisiana Bank.
Since the formation of Louisiana Bancshares as the holding company for
Louisiana Bank in 1996, the board of directors of Louisiana Bancshares has
analyzed strategic alternatives available to it and Louisiana Bank.
Historically, the strategic alternatives focused on providing short term versus
long term profitability. Louisiana Bancshares' strategy was to run the company
with a view toward developing quality growth in its core banking operations and,
at the same time, to review methods of increasing return to its stockholders.
During the first half of 1999, the board of directors of Louisiana
Bancshares reviewed various strategic alternatives. In light of its niche market
and concentration in commercial real estate loans, the board decided that it
should look into the possibility of a merger. The board retained National
Capital to assist it in determining whether a sale of Louisiana Bancshares or
Louisiana Bank was in the best interests of the company and its stockholders.
The board also formed a merger and acquisition committee, comprised of Mr. Dale
Matherne, Mr. R. Andrew Patty II and Mr. Thomas Sylvest, to work with National
Capital and evaluate the various strategic alternatives available to Louisiana
Bancshares. With the assistance of the committee, National Capital prepared a
confidential disclosure package to provide information about Louisiana
Bancshares and Louisiana Bank to possible acquirors.
National Capital sent out a total of six disclosure packages. National
Capital received two indications of interest. The first indication of interest
proposed a merger for approximately $5,000,000 in cash. The committee, with the
assistance of National Capital, considered the proposal and found the offer
insufficient.
The second indication of interest was received from Britton & Koontz,
which proposed a merger with stock as the consideration. After analyzing the
Britton & Koontz proposal, which analysis included potential synergies,
increased services and products to customers, minimal employee overlap, dividend
history and market liquidity, the committee recommended to the board that the
Britton & Koontz offer presented an attractive opportunity to Louisiana
Bancshares and its stockholders.
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On June 21, 2000, the board of directors of Louisiana Bancshares
authorized the officers of the Company to sign a nonbinding letter of intent
with Britton & Koontz pursuant to which Louisiana Bancshares' stockholders
would receive approximately 365,000 shares of Britton & Koontz common stock in
the aggregate. Louisiana Bancshares retained legal counsel to assist it in
preparing the definitive agreement with Britton & Koontz. Upon completion of
the negotiated definitive agreement, the full board of directors met to consider
the offer.
After a thorough discussion and consideration of the factors discussed
below under "Reasons for the Merger and Recommendation of the Boards of
Directors," the Louisiana Bancshares board and the Britton & Koontz board
unanimously approved the merger agreement and authorized the execution of the
merger agreement. The merger agreement was signed on August 25, 2000.
Reasons for the Merger and Recommendations of the Boards of Directors
Determination of the Louisiana Bancshares Board of Directors
In reaching its conclusion to approve the merger, the Louisiana
Bancshares board of directors considered a number of factors. Louisiana
Bancshares' board did not assign any relative or specific weights to the factors
considered. Among other things, the Louisiana Bancshares board considered the
following:
o the recommendation of the merger and acquisition committee;
o the likelihood that the transaction would give Louisiana Bancshares
stockholders greater liquidity, as there is currently no active trading
market for their shares of Louisiana Bancshares common stock, while Britton
& Koontz common stock is quoted and traded on the Nasdaq Small Cap Market;
o the expectation that the transaction would be tax-free to the Louisiana
Bancshares stockholders;
o the consideration to be received by Louisiana Bancshares stockholders in
the merger, which the Louisiana Bancshares board of directors believed to
represent an attractive premium and to be fair to the Louisiana Bancshares
stockholders from a financial point of view;
o the growth prospects of Louisiana Bank and the fact that the present size
and market position of Louisiana Bancshares and its subsidiary bank make
acquisitions of other banking institutions extremely difficult;
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o the state of the banking industry generally and the increased competition
brought about by consolidation, deregulation and other factors, as well as
the financial size and resources necessary to compete in this environment;
o the merger consideration in relation to the book value, assets and earnings
of Louisiana Bancshares and Britton & Koontz;
o information concerning the financial condition, results of operations and
prospects of Louisiana Bancshares, including the return on assets and
return on equity of Louisiana Bancshares; and
o the opinion of National Capital as to the fairness of the consideration to
Louisiana Bancshares stockholders from a financial point of view.
Louisiana Bancshares board of directors' determination was based on,
among other things, a comparison of the terms of the proposed transaction with
other recent bank mergers and acquisitions, the evaluation of publicly available
information regarding Britton & Koontz, the review and evaluation of other
information concerning the valuation of banks and analyses of recent bank
acquisitions, and the review and evaluation of financial information and
analyses regarding Britton & Koontz and Louisiana Bancshares' financial advisor
National Capital. The Louisiana Bancshares board of directors determined that
the premium to be received by the Louisiana Bancshares stockholders pursuant to
the merger agreement is within the range of premiums in recent comparable bank
transactions in the State of Louisiana and the Southeast, generally, and
represented more value than Louisiana Bancshares management believed it could
generate by remaining independent.
Louisiana Bancshares' board of directors believes that the terms of the
merger agreement, which are the product of arms-length negotiations between
Louisiana Bancshares and Britton & Koontz, are in the best interests of
Louisiana Bancshares and its stockholders. In the course of reaching its
determination, Louisiana Bancshares' board of directors consulted with legal
counsel with respect to its legal duties, the terms of the merger agreement and
the issues related thereto, with its investment banker/financial advisor with
respect to the financial aspects and fairness of the transaction and with senior
management regarding, among other things, operational matters.
More specifically, in reaching its determination to approve the merger
agreement, Louisiana Bancshares' board of directors considered a number of
factors, including:
o the current condition and growth prospects of Louisiana Bancshares, its
historical results of operations and its prospective results of operations
if it were to remain independent;
o the current operating environment, including, but not limited to, the
mergers and increasing competition in the banking and financial services
industries, the
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prospect for further changes in these industries and the importance of
being able to capitalize on developing opportunities in these industries;
o the presentation of National Capital and the fact that National Capital
would render an opinion that the consideration to be received in the merger
by the Louisiana Bancshares stockholders was fair to such stockholders from
a financial point of view;
o the fact that the merger will be a tax-free exchange to the Louisiana
Bancshares stockholders for federal income tax purposes and that Louisiana
Bancshares' obligation to consummate the merger is conditioned on receipt
of an opinion of Phelps Dunbar, L.L.P. to this effect;
o the detailed financial analyses and other information with respect to
Louisiana Bancshares and Britton & Koontz, discussed by National Capital,
as well as Louisiana Bancshares' board's own knowledge of Louisiana
Bancshares, Britton & Koontz and their respective businesses;
o the value of Louisiana Bancshares common stock continuing as a stand-alone
entity compared to the effect of Louisiana Bancshares combining with
Britton & Koontz in light of the facts summarized above and the current
economic and financial environment, including, but not limited to, other
possible strategic alternatives, and the belief of the Louisiana Bancshares
board of directors and management that the merger offered the best
transaction available to Louisiana Bancshares and its stockholders;
o the greater financial and management resources and customer product
offerings, including Internet banking products, of Britton & Koontz, which
could increase the competitiveness of the combined institution in the
market area and its ability to serve the depositors, customers and the
communities served by Louisiana Bancshares; and
o the opportunities for growth and leveraging Louisiana Bancshares' capital.
After deliberating with respect to the merger and the other
transactions contemplated by the merger agreement, considering, among other
things, the matters discussed above and the opinion of National Capital referred
to above, the Louisiana Bancshares board of directors approved and adopted the
merger agreement and the transactions contemplated thereby as being in the best
interests of Louisiana Bancshares and its stockholders.
The Louisiana Bancshares board of directors has unanimously approved the merger
and unanimously recommends that Louisiana Bancshares stockholders vote "FOR"
approval of the merger.
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Opinion of National Capital Corporation
Louisiana Bancshares retained National Capital Corporation as its
financial advisor to render an opinion to the Louisiana Bancshares board of
directors concerning the fairness, from a financial point of view, to Louisiana
Bancshares stockholders of the consideration to be paid pursuant to the merger
agreement. National Capital was retained by Louisiana Bancshares on the basis
of, among other things, its experience and expertise in the banking industry in
Louisiana. As part of its investment banking business, National Capital is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, competitive bids, private placements and
valuations for various other purposes.
On August 25, 2000, National Capital delivered its written opinion to
the board of directors of Louisiana Bancshares that as of August 25, 2000, and
based upon and subject to certain matters stated in such opinion, the
consideration to be paid is fair, from a financial point of view, to Louisiana
Bancshares stockholders.
The full text of the written opinion of National Capital, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken, is attached hereto as Appendix C and is incorporated herein by
reference. Louisiana Bancshares stockholders are encouraged to read this opinion
carefully in its entirety. National Capital's opinion is directed only to the
fairness to Louisiana Bancshares stockholders, from a financial point of view,
of the consideration to be paid, and does not address any other aspect of the
merger or related transactions and does not constitute a recommendation to any
stockholder as to how such stockholder should vote at the Louisiana Bancshares
special meeting. The summary of the opinion of National Capital set forth in
this joint proxy statement-prospectus is qualified in its entirety by reference
to the full text of such opinion.
In arriving at its opinion, National Capital reviewed the merger
agreement and held discussions with certain senior officers, directors and other
representatives and advisors of Britton & Koontz and certain senior officers and
other representatives and advisors of Louisiana Bancshares concerning the
businesses, operations and prospects of Britton & Koontz and Louisiana
Bancshares. National Capital examined certain publicly available business and
financial information relating to Britton & Koontz and Louisiana Bancshares as
well as certain financial forecasts, to the extent publicly available, and other
data for Britton & Koontz and Louisiana Bancshares that were provided to
National Capital by the respective management teams of Britton & Koontz and
Louisiana Bancshares, including information relating to certain strategic
implications and operational benefits anticipated from the merger. National
Capital reviewed the financial terms of the merger as set forth in the merger
agreement in relation to, among other things, current and historical market
prices and trading volumes of Britton & Koontz and Louisiana Bancshares common
stock, and the capitalization and financial condition of Britton & Koontz and
Louisiana Bancshares. National Capital considered, to the extent publicly
available, the financial terms of certain other similar transactions recently
effected that National Capital believed relevant in evaluating the merger and
analyzed certain financial, stock
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market and other publicly available information relating to the businesses of
other companies whose businesses National Capital considered relevant in
evaluating those of Britton & Koontz and Louisiana Bancshares. In addition to
the foregoing, National Capital conducted such other analyses and examinations
and considered such other financial, economic and market criteria as National
Capital deemed appropriate to arrive at its opinion. National Capital noted that
its opinion was necessarily based upon information available and other
conditions and circumstances existing and disclosed to National Capital as of
the date of its opinion.
In conducting its review and rendering its opinion, National Capital
assumed and relied, without independent verification, upon the accuracy and
completeness of all financial and other information publicly available or
furnished to or otherwise reviewed by or discussed with National Capital. With
respect to financial forecasts and other information provided to or otherwise
reviewed by or discussed with National Capital, the management teams of Britton
& Koontz and Louisiana Bancshares advised National Capital that such forecasts
and other information were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the respective management teams
of Britton & Koontz and Louisiana Bancshares as to the future financial
performance of Britton & Koontz and Louisiana Bancshares and the strategic
implications and operational benefits anticipated from the merger. National
Capital assumed that the merger would be accounted for as a pooling-of-interests
in accordance with generally accepted accounting principles and as a tax-free
reorganization for federal income tax purposes.
National Capital did not express an opinion as to what the value of
Britton & Koontz common stock actually will be when issued pursuant to the
merger or the price at which Britton & Koontz common stock will trade subsequent
to the merger. In addition, National Capital did not make or obtain an
independent evaluation or appraisal of the assets or liabilities, contingent or
otherwise, of Britton & Koontz or Louisiana Bancshares nor did National Capital
make any physical inspection of the properties or assets of Britton & Koontz or
Louisiana Bancshares. National Capital was not asked to consider, and its
opinion does not address, the relative merits of the merger as compared to any
alternative business strategies that might exist for Louisiana Bancshares or the
effect of any other transaction in which Louisiana Bancshares might engage. In
addition, National Capital was not asked to and did not assist in recommending
the specific consideration payable in the merger. Louisiana Bancshares imposed
no limitations on National Capital with respect to the investigations made or
procedures followed by National Capital in rendering its opinion.
The following is a summary of the principal analyses performed by
National Capital in connection with its opinion.
Summary Transaction Analysis. National Capital reviewed the terms of
the proposed transaction, including the consideration to be received and the
aggregate transaction value. National Capital reviewed the implied value of the
consideration offered, based upon a market price per share of $14.35 per share
of Britton & Koontz common stock (the average closing price
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of Britton & Koontz for 20 business days preceding August 25, 2000). This
indicates an implied value of $1.51 per share of Louisiana Bancshares common
stock. National Capital's analysis assumed 3,051,907 shares of Louisiana
Bancshares common stock outstanding and 477,099 unexercised options to acquire
shares of Louisiana Bancshares common stock for a total of 3,499,006 fully
diluted shares. The implied aggregate transaction value was $5,237,750, as of
August 25, 2000. National Capital calculated that as of June 30, 2000, the
aggregate transaction value represented 1.4 times Louisiana Bancshares' stated
tangible book value at June 30, 2000, 15.3 times Louisiana Bancshares' earnings
for the trailing four quarters ended June 30, 2000, 15.30% of total deposits
at June 30, 2000, 12.3% of the total assets of Louisiana Bancshares at
June 30, 2000, and a 5.6% premium over tangible book value measured as a
percent of core deposits.
Contribution Analysis. National Capital performed a contribution
analysis on the combination of Britton & Koontz and Louisiana Bancshares using
June 30, 2000 financial data. Louisiana Bancshares will contribute 15.1% of
total assets, 15.3% of total deposits, 18% of core deposits, 15.6% of equity
capital and 13% of trailing four quarter earnings of the combined company. In
exchange for these balance sheet and income contributions, the stockholders of
Louisiana Bancshares and Louisiana Bancshares employees who hold options, will
receive or have options to acquire approximately 17.4% of the voting power
of the combined company in the aggregate. Based on National Capital's
assumptions, the transaction would be accretive to book value and earnings
per share for Louisiana Bancshares stockholders. In addition, Britton &
Koontz has historically paid a substantial semi-annual cash dividend on its
shares of common stock which the former stockholders of Louisiana Bancshares
would receive subsequent to the consummation of the merger. Louisiana Bancshares
has not historically paid a dividend.
Non-Dilutive Exchange Analysis. National Capital also performed an
analysis involving hypothetical non-dilutive exchange transactions with 13
publicly traded companies with significant operations in Louisiana and
Mississippi. The average value of the resulting shares received in the exchanges
was $1.45 per share assuming a 40% control premium after determining the "as if
freely traded minority value" yielded from the values of publicly traded
companies stock in the open market.
No company used in the publicly traded comparable companies is
identical to Louisiana Bancshares. Accordingly, an analysis of the results of
the foregoing necessarily involves complex considerations concerning differences
in financial and operating characteristics of the companies and other factors.
Statistical analysis, such as determining the average, or the median, is not, in
itself, a meaningful method of using comparable company or transaction data.
Discounted Cash Flow Analysis. National Capital performed a discounted
cash flow analysis of the projected earnings of Louisiana Bancshares for the
fiscal years 2000 through 2004 based on projections provided by Louisiana
Bancshares management. Using this information, National Capital calculated a
range of equity values for Louisiana Bancshares based on the sum of (a) the
present value of the earnings Louisiana Bancshares and (b) the present value of
the estimated sale value of Louisiana Bancshares assuming that it was sold at
the end of fiscal year
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2004. In performing its discounted cash flow analysis, National Capital assumed,
among other things, discount rates of 15% to 20%. Those discount rates reflect
National Capital's qualitative judgments concerning the specific risk associated
with such an investment and the historical and projected operating performance
of Louisiana Bancshares. This analysis resulted in a range of equity values for
Louisiana Bancshares of $4.568 million to $5.531 million, with a median of
$4.925 million.
The summary of the National Capital opinion set forth above does not
purport to be a complete description of the analyses performed by National
Capital. The preparation of a fairness opinion is not necessarily susceptible to
partial analysis or summary description. National Capital believes that its
analysis and the summary set forth above must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, or of the
above summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the opinion.
In addition, National Capital may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to represent the
actual value of Louisiana Bancshares or the combined company.
In performing its analyses, National Capital made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Louisiana Bancshares
or Britton & Koontz. The analyses performed by National Capital are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. Such
analyses were prepared solely as part of National Capital's analysis of the
fairness, from a financial point of view, of the consideration to be paid to
Louisiana Bancshares stockholders. The analyses do not purport to be appraisals
or to reflect the prices at which a company might actually be sold or the prices
at which any securities may trade at the present time or at any time in the
future.
Determination of the Britton & Koontz Board of Directors
In reaching its decision to approve the merger, the Britton & Koontz
board consulted with its legal counsel regarding the terms of the transaction,
with financial advisors regarding financial aspects and fairness of the
transaction and with senior management relative to operational and other
matters. Without assigning any relative or specific weights, the Britton &
Koontz board of directors considered all of the factors it deemed material, both
from a short-term and long-term perspective, which are the following:
o detailed information concerning the business, earnings, asset quality and
financial condition of Louisiana Bancshares, as well as the Britton &
Koontz board of directors own knowledge of Louisiana Bancshares and its
business;
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o the opportunity for achieving revenue enhancements from the combined
operations and the ability of the Louisiana Bancshares franchise to
contribute to the earnings of Britton & Koontz;
o the opportunities for Britton & Koontz in the Baton Rouge area market;
o the treatment of the merger as a tax-free exchange of Louisiana Bancshares
common stock for Britton & Koontz common stock;
o the treatment of the merger as a pooling-of-interests for accounting
purposes; and
o the compatibility and continued involvement of certain of the management
and board of directors of Louisiana Bancshares with Britton & Koontz.
Britton & Koontz has also received the opinion of Mercer Capital that
the terms of the merger are fair to the stockholders of Britton & Koontz from a
financial point of view. For these reasons, the Britton & Koontz board of
directors believes that the merger will enhance the business and operations of
Britton & Koontz and is in the best interests of Britton & Koontz and its
stockholders.
The Britton & Koontz board of directors has unanimously approved the merger and
unanimously recommends that Britton & Koontz stockholders vote "FOR" approval of
the merger agreement.
Opinion of Mercer Capital to Britton & Koontz
Mercer Capital Management, Inc. is a business valuation and strategic
financial advisory firm located in Memphis, Tennessee. As part of its advisory
business, Mercer engages in the review of the fairness of bank acquisition
transactions from a financial perspective and in the valuation of banks and
other businesses in connection with mergers, acquisitions, and other
transactions. Neither Mercer nor any of its affiliates has a material financial
interest in Britton & Koontz or Louisiana Bancshares. Mercer was selected to
advise the Britton & Koontz board of directors based upon its familiarity with
Britton & Koontz, the regional community banking industry, and its knowledge of
the banking industry as a whole.
Mercer delivered a written opinion as of the date of this joint proxy
statement-prospectus that the consideration paid by the holders of Britton &
Koontz common stock under the merger agreement was fair to such stockholders
from a financial point of view. A copy of the Mercer fairness opinion, which
sets forth certain assumptions made, matters considered and limitations on the
review undertaken, is attached as Exhibit B to this joint proxy
statement-prospectus and should be read in its entirety. The summary of the
Mercer fairness opinion set forth herein is qualified in its entirety by
reference to the text of the Mercer fairness opinion.
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Mercer was engaged by Britton & Koontz to render the fairness opinion
and to act as an advisor to the Britton & Koontz board of directors during the
negotiations with Louisiana Bancshares. For its participation and rendering its
opinion, Mercer received a fee of $30,000, which fee is not contingent on the
closing of the merger.
In arriving at its fairness opinion, Mercer performed the merger
analyses described below. Mercer also reviewed certain publicly available
business and financial information relating to Britton & Koontz and Louisiana
Bancshares. Mercer considered certain financial and stock market data of Britton
& Koontz, compared that data with similar data for certain other publicly- held
banks and bank holding companies and considered the financial terms of certain
other recent comparable community bank acquisition transactions in the United
States, as further discussed below. Mercer also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria that it deemed relevant.
In connection with its review, Mercer did not independently verify the
foregoing information and relied on such information as being complete and
accurate in all material respects. Financial forecasts prepared with Britton &
Koontz management are based on assumptions believed by Mercer to be reasonable
and to reflect currently available information, but Mercer did not independently
verify such information. Mercer did not make an independent evaluation or
appraisal of the assets of Britton & Koontz or Louisiana Bancshares. In
connection with rendering its fairness opinion, Mercer performed a variety of
financial analyses, including those summarized below. The summary set forth
below does not purport to be a complete description of the analyses performed by
Mercer in this regard.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to summary description. Accordingly,
notwithstanding the separate factors summarized below, Mercer believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
its opinion. In performing its analyses, Mercer made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond Britton & Koontz's or Louisiana Bancshares'
control.
The analyses performed by Mercer are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. No company or transaction considered
as a comparison in the analyses is identical to Britton & Koontz, Louisiana
Bancshares or the merger. Accordingly, an analysis of the results of such
comparisons is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operational characteristics of
companies and other factors that could affect the public trading value of the
companies involved in such comparisons. In addition, the analyses do not purport
to be appraisals or to reflect the process or the prices at
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which businesses actually may be sold or the prices at which any securities may
trade at the present time or at any time in the future.
Merger Analysis. The merger consideration paid by Britton & Koontz is
based on a defined exchange ratio equal to 0.1054. Each share of Louisiana
Bancshares common stock (or options to acquire shares, as the case may be) will
be converted into the right to receive 0.1054 shares of Britton & Koontz common
stock. The September 25, 2000 closing price for Britton & Koontz common stock
was $131/8 per share. Based on the September 25, 2000 closing price for Britton
& Koontz, the transaction value equals $1.38 per share for each of the 3,499,006
average fully-diluted shares of Louisiana Bancshares common stock for the June
30, 2000 fiscal quarter. This aggregate and per share value equals 1.25 times
the June 30, 2000 stated book value per share of Louisiana Bancshares and 14.2
times Louisiana Bancshares' stated trailing-12 months earnings as of June 30,
2000. This value equals 11.4% of stated total assets as of June 30, 2000.
Comparable Transactions Analysis. Mercer reviewed the merger as of
September 25, 2000 for the purpose of determining purchase premiums, or
transaction multiples, that could be used in comparing the merger with other
transactions. Mercer reviewed the purchase premiums paid in five transaction
groups. These included:
o transactions announced in 2000 (through September 22) with an aggregate
announced transaction value of less than $10 million, involving selling
bank holding companies or banks in the United States;
o transactions announced in 2000 (through September 22) with an aggregate
announced transaction value of between $10 million and $50 million,
involving selling bank holding companies or banks in the United States;
o transactions announced in 2000 (through September 22) involving selling
bank holding companies or banks in the Mid-South United States (AL, AR, KY,
LA, MO, MS, TN);
o transactions announced in 2000 (through September 22) involving selling
bank holding companies or banks in the United States with stated total
assets of between $30 million and $60 million; and
o transactions announced in 1999 and 2000 (through September 22) involving
selling bank holding companies or banks located in Louisiana.
On average, the comparable transactions reported an announced deal
price to book value of 1.95 times, an announced deal price to earnings of 18.2
times, and a purchase price as a percent of assets of 19.3%. Among the
respective transaction groups, the median deal price to book value ranged from
1.66 times to 2.45 times, the median deal price to earnings ranged from
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14.9 times to 20.5 times and the median purchase price as a percentage of assets
ranged from 14.9% to 23.1%.
Dilution Analysis. Mercer also reviewed the merger as of September 25,
2000 for the purpose of determining dilution or accretion per share for Britton
& Koontz as a result of the transaction. Per share dilution analyses allow the
user to compare pro forma independent performance with pro forma merged
performance. Utilizing management's estimate of future growth rates for Britton
& Koontz and Louisiana Bancshares, Mercer projected dilution for earnings and
book value per share for a four-year period. The results of the projections were
modest earnings accretion and positive impact for Britton & Koontz stockholders
relative to independent results. Book value was diluted modestly initially, with
that dilution decreasing materially within the forecast period.
Mercer's analysis assumed that options to purchase 34,945 shares of
Louisiana Bancshares common stock will expire upon the resignation of the option
holder, which will be concurrent with the effective date of the merger. See
"Proposed Merger---Terms of the Merger" below.
After consideration of the foregoing criteria, Mercer concluded that,
based on the structure of the merger agreement and the analyses it performed,
the consideration to be paid by the stockholders of Britton & Koontz was fair
from a financial point of view.
Terms of the Merger
If Louisiana Bancshares and Britton & Koontz stockholders approve the
merger agreement and the other conditions to the consummation of the merger are
satisfied, Britton & Koontz and Louisiana Bancshares expect the merger will be
completed on December 1, 2000. See "Proposed Merger -- Representations and
Warranties; Conditions to the Merger; Waiver" for a discussion of the other
conditions to completing the merger.
Louisiana Bancshares stockholders and Louisiana Bancshares employees
will receive or have options to acquire a total of 368,795 shares of Britton &
Koontz common stock, representing approximately 17.4% of the total Britton &
Koontz outstanding shares after the merger. However, because John Sylvest has
indicated that he will retire from Louisiana Bancshares in connection with the
consumation of the merger, 34945 options to acquire shares of Louisiana
Bancshares common stock held by Mr. Sylvest will lapse and, as a result, the
anticipated actual number of shares of Britton & Koontz common stock to be
issued in exchange for all the shares of Louisiana Bancshares common stock is
estimated to be 365,112. The number of shares may be lower if employees of
Louisiana Bancshares who hold options do not remain employed by Britton & Koontz
until fully vested and do not elect to exercise all of their options. On the
effective date of the merger, each outstanding share of Louisiana Bancshares
common stock, other than shares held by stockholders who exercise and
perfect dissenters' rights, will automatically convert to 0.1054 of a share
of Britton & Koontz common stock as described above. Louisiana Bancshares
stockholders will automatically be entitled to all of the rights and
privileges afforded to Britton & Koontz stockholders at that time. However,
the actual physical exchange of Louisiana Bancshares common stock
certificates for certificates representing Britton & Koontz common stock will
occur shortly after the merger.
Louisiana Bancshares stockholders should not forward their stock
certificates to Louisiana Bancshares or Britton & Koontz at this time. If the
merger is consummated, you
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will receive instructions on how to exchange your Louisiana Bancshares stock
certificates for certificates of Britton & Koontz common stock.
Closing Date and Effective Date of the Merger
Britton & Koontz and Louisiana Bancshares anticipate that all
conditions to consummation of the merger will be satisfied during the fourth
quarter of 2000. The closing date is expected to be December 1, 2000, or any
other date chosen by agreement of the parties. The Secretaries of State of
Mississippi and Louisiana will each issue a certificate of merger, which will
provide the effective date of the merger. However, delays in the consummation of
the merger could occur. The parties currently anticipate an effective date of
December 1, 2000.
The necessary stockholder and regulatory approvals may not be obtained.
Regulatory approval could be premised on conditions that are unacceptable to
Britton & Koontz or Louisiana Bancshares. Other conditions precedent to the
merger also may not be satisfied. These conditions are not all within the
control of Britton & Koontz or Louisiana Bancshares, and the parties cannot
assure you that they will be satisfied. However, as of the date of this joint
proxy statement-prospectus, the parties are not aware of any condition to
approval that cannot or will not be met or obtained.
The board of directors of either Britton & Koontz or Louisiana
Bancshares may terminate the merger agreement if the merger is not consummated
by December 31, 2000, or as otherwise provided in Section 9.01 of the merger
agreement.
Employee Benefits of Louisiana Bancshares Employees after the Merger
Britton & Koontz has offered a "pay to stay" retention bonus to certain
Louisiana Bancshares employees in order to compensate those employees for their
extraordinary efforts in completing the merger and ensuring that the operating
and accounting systems of Louisiana Bancshares and Britton & Koontz's
subsidiaries are consolidated. The benefit provides a payment ranging from $
6,000 to $15,000 to be paid in a lump sum at the end of the Britton & Koontz
2001 fiscal year.
Britton & Koontz will recognize Louisiana Bancshares' employment
agreements dated July 1, 2000 with S. Allen Harris, III and Michael J. Johnson.
Those agreements are for a term of three years and will automatically renew on
June 30, 2003 for successive one-year terms, unless terminated by Mr. Harris or
Britton & Koontz, in the case of Mr. Harris' agreement, or Mr. Johnson or
Britton & Koontz, in the case of Mr. Johnson's agreement.
Additionally, Louisiana Bancshares employees who become Britton &
Koontz employees will be entitled to the same employee benefits as those offered
Britton & Koontz employees, including:
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o eligibility to participate in Britton & Koontz's benefit plans on the
effective date of the merger; and
o full credit for their years of service with Louisiana Bancshares for both
eligibility and vesting purposes, to the extent such credit qualifies under
the terms of Britton & Koontz's plans.
Mr. John Sylvest, the president of Louisiana Bank, has indicated that
he intends to resign following the merger. In connection with the consummation
of the merger and Mr. Sylvest's retirement, Mr. Sylvest will receive certain
benefits pursuant to a severance agreement between Louisiana Bank and Mr.
Sylvest. These benefits include a lump-sum payment of $188,500 within 30 days of
Mr. Sylvest's resignation and payment for a period of 24 months of all
insurance premiums related to health, dental, life and other policies that were
provided by Louisiana Bank to Mr. Sylvest during the preceding twelve months.
Surrender and Exchange of Stock Certificates
American Stock Transfer & Trust Company, New York, New York will act as
exchange agent for the exchange of Louisiana Bancshares common stock for Britton
& Koontz common stock. Shortly after the effective date of the merger, all
non-dissenting Louisiana Bancshares stockholders will receive a letter of
transmittal that will include instructions for the exchange of Louisiana
Bancshares common stock certificates for certificates of Britton & Koontz common
stock. Each Louisiana Bancshares stock certificate outstanding immediately prior
to the merger will be deemed for all purposes to evidence ownership of shares of
Britton & Koontz common stock, regardless of when they are actually exchanged.
Louisiana Bancshares stockholders should not send in their stock
certificates until they receive instructions in the letter of transmittal.
When the exchange agent receives certificates of Louisiana Bancshares
common stock, together with a properly completed letter of transmittal, it will
issue and mail to each Louisiana Bancshares stockholder a certificate
representing the number of Britton & Koontz common shares the former Louisiana
Bancshares stockholder received in the exchange. If the Louisiana Bancshares
stockholder is entitled to receive a fraction of a Britton & Koontz share, the
exchange agent will mail the Louisiana Bancshares stockholder a check instead of
the fractional share.
Louisiana Bancshares stockholders will be able to vote at any meeting
of Britton & Koontz stockholders if the record date for the Britton & Koontz
meeting is after the effective date of the merger. In that case, Louisiana
Bancshares stockholders would be able to vote the number of shares of Britton &
Koontz common stock into which their Louisiana Bancshares common stock have been
converted regardless of whether such stockholders have surrendered their
Louisiana Bancshares stock certificates.
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Dividends or other distributions payable to Britton & Koontz
stockholders after the merger will be distributed to Louisiana Bancshares
stockholders only after surrender of the Louisiana Bancshares stock
certificates. When you exchange your Louisiana Bancshares stock certificates,
the exchange agent will send you all previously paid but undelivered dividends
and other distributions on your new Britton & Koontz common stock, if any. You
will not receive interest on those distributions for any period during which
Britton & Koontz holds them awaiting the exchange of your Louisiana Bancshares
common stock. Also, taxes may be deducted from those distributions.
Payment of Expenses Relating to the Merger
Britton & Koontz will pay all expenses of printing and distributing
this joint proxy statement-prospectus. The parties otherwise will pay all of
their own expenses related to negotiating and completing the merger.
Representations and Warranties in the Merger Agreement
Louisiana Bancshares and Britton & Koontz have made certain
representations and warranties to each other as part of the merger agreement.
Louisiana Bancshares' representations and warranties relate to, among other
things:
o its organization and authority to enter into the merger agreement;
o its capitalization, properties and financial statements;
o pending and threatened litigation against Louisiana Bancshares;
o Louisiana Bancshares' contractual obligations and contingent liabilities;
and
o its public reports (as filed with, among others, the Federal Reserve Board,
the Federal Deposit Insurance Corporation and the State of Louisiana Office
of Financial Institutions).
Louisiana Bancshares' representations and warranties are generally contained in
Article III of the merger agreement.
Britton & Koontz's representations and warranties relate to, among
other things:
o its organization and authority to enter into the merger agreement;
o its capitalization and financial statements;
o pending and threatened litigation against Britton & Koontz; and
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o its public reports.
Britton & Koontz's representations and warranties are generally contained in
Article IV of the merger agreement.
The representations and warranties of the parties generally will not
survive the effective date of the merger.
Conditions to the Merger; Waiver of Those Conditions
The merger agreement contains a number of conditions that must be
satisfied to complete the merger. The conditions must either be met or waived
(if they are waivable), and include, among other things:
o approval of the merger agreement by Britton & Koontz's and Louisiana
Bancshares' stockholders;
o approval of the merger agreement by all required governmental agencies and
the expiration of applicable waiting periods under all laws without the
imposition of conditions unacceptable to Britton & Koontz;
o issuance of an opinion from Phelps Dunbar, L.L.P. that the merger qualifies
as a tax-free reorganization;
o effectiveness of the registration statement covering the shares of Britton
& Koontz common stock to be issued to stockholders of Louisiana Bancshares,
with no stop order suspending its effectiveness in existence or threatened;
o approval for quotation on the Nasdaq Small Cap Market of the shares of
Britton & Koontz common stock to be issued to stockholders of Louisiana
Bancshares;
o absence of an order, decree or injunction enjoining or prohibiting
completion of the merger;
o continued accuracy as of the closing date of the merger of the
representations and warranties set forth in the merger agreement;
o qualification of the merger for pooling-of-interests accounting treatment;
o issuance of certain legal opinions by counsel for Britton & Koontz and
Louisiana Bancshares; and
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o no material adverse change has occurred in the financial condition of
Louisiana Bancshares or Britton & Koontz.
Most of the conditions to completing the merger may be waived at any
time by the party for whose benefit they were created. Regulatory and
stockholder approvals may not be waived. Also, the merger agreement may be
amended or supplemented at any time by written agreement of the parties.
However, any material change in the terms of the merger agreement after the
meetings would require a re-solicitation of votes from Britton & Koontz's and
Louisiana Bancshares' stockholders.
Regulatory and Other Required Approvals
The merger agreement provides for the merger of Louisiana Bancshares
into Britton & Koontz and, immediately thereafter the merger of Louisiana Bank
into Britton & Koontz First National Bank. Britton & Koontz First National Bank
is a national bank and is regulated by the U.S. Comptroller of the Currency, who
must first approve the merger prior to Britton & Koontz and Louisiana Bancshares
completing the merger. Louisiana Bancshares and Britton & Koontz must then wait
at least 15 days after the date of the Comptroller's approval before they may
complete the merger. During this 15-day period, the U.S. Department of Justice
may object to the merger on antitrust grounds.
The Britton & Koontz stock to be issued in exchange for Louisiana
Bancshares stock in the merger has been registered with the Securities and
Exchange Commission. The transaction also will be registered with various state
securities commissions as may be required.
Britton & Koontz filed an application for approval of the merger with
the Comptroller of the Currency on September 11, 2000, and currently expects to
receive approval of the merger by November 15, 2000. The approval of the
Comptroller of the Currency may be obtained or denied prior to or after the
meetings. The vote on the merger agreement at the meetings does not depend upon
and is not conditioned upon receipt of regulatory approval before the meetings.
Even if the merger agreement is approved at the special meetings, it will be
terminated if the approval of the Comptroller of the Currency is not obtained or
if the approval of the Comptroller of the Currency is conditioned upon any
actions that Britton & Koontz finds objectionable.
Business of Louisiana Bancshares Pending the Merger
The merger agreement requires Louisiana Bancshares to continue to
operate its business as usual pending the merger. Among other things, Louisiana
Bancshares may not, without Britton & Koontz's consent:
o pay any dividends prior to the merger, unless Britton & Koontz declares a
record date for payment of Britton & Koontz's regular semi-annual dividend,
which record date is prior to the consummation of the merger;
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o except as specifically permitted in the merger agreement, enter into or
amend an employment, severance or similar agreement or arrangement with any
director or officer or pay, or agree to pay, any bonus to any employee,
officer or director;
o change the method of accounting in effect at December 31, 1999 (except as
required by generally accepted accounting principles);
o incur any indebtedness for borrowed money, guarantee any such indebtedness
for borrowed money or issue or sell any debt securities of Louisiana
Bancshares or its subsidiary;
o purchase, lease or sell any assets outside the normal course of business;
o issue any additional common stock or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any common
stock or cause to be declared any stock dividend or stock split, except
common stock issuable upon the exercise of currently outstanding options
granted under the Louisiana Bancshares, Inc. Incentive Stock Option Plan
prior to the signing of the merger agreement; or
o solicit bids or other transactions that would result in a merger of
Louisiana Bancshares with an entity other than Britton & Koontz.
Termination of the Merger Agreement
Either Britton & Koontz or Louisiana Bancshares may terminate the
merger agreement for various reasons, including:
o by mutual written consent;
o a material breach by the other party of any covenant, representation or
warranty in the merger agreement if such breach has not been cured within
10 business days of receipt of notice of the nature of the breach;
o the parties do not receive tax opinions to the effect that the merger
qualifies as a tax-free reorganization;
o the stockholders of Britton & Koontz or Louisiana Bancshares fail to
approve the merger at either meeting;
o the merger is not consummated by December 31, 2000, unless extended.
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Louisiana Bancshares may terminate the merger if a material adverse
change occurs in the financial condition of Britton & Koontz. In addition,
Britton & Koontz may terminate the merger if:
o the required regulatory approvals are denied or contain conditions to
approval that are unacceptable to Britton & Koontz;
o a material adverse change occurs in the financial condition of Louisiana
Bancshares; or
o if the merger does not qualify as a pooling-of-interests in accordance with
generally accepted accounting principles.
Provisions of the merger agreement relating to reimbursement of
expenses survive both the merger and a termination of the merger agreement prior
to completion.
Management and Operations after the Merger
After the merger, Louisiana Bancshares will cease to exist as a
separate company. Two of the current members of the Louisiana Bancshares board
of directors - R. Andrew Patty, II and Vinod K. Thukral, Ph.D. - will be
appointed to the Britton & Koontz board of directors. The two offices of
Louisiana Bank will become branch offices of Britton & Koontz National Bank.
Certain Differences in Rights of Stockholders
If the merger is completed, all Louisiana Bancshares stockholders,
other than those who exercise and perfect dissenters' rights, will become
Britton & Koontz stockholders. Their rights as stockholders will then be
governed by Britton & Koontz's articles of incorporation and bylaws and
Mississippi law. The following is a list of the significant differences between
the rights of Louisiana Bancshares stockholders and Britton & Koontz
stockholders not described elsewhere in this joint proxy statement-prospectus:
Liquidity of Stock:
The common stock of Britton & Koontz is traded on the Nasdaq Small Cap
Market under the symbol BKBK. Current quotes of the market price of Britton &
Koontz common stock are available from Sterne, Agee & Leach and AnPac Securities
Group, Inc., who make a market in Britton & Koontz's common stock. Louisiana
Bancshares common stock is not publicly traded.
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Directors' Qualifications:
A Britton & Koontz director may not be over 72 years of age at the time
he or she is elected, and must retire at the next annual stockholders' meeting
after his or her 72nd birthday. Louisiana Bancshares does not have a comparable
restriction.
Number and Election of Directors:
Britton & Koontz has three classes of directors, each class as nearly
equal in number as possible, and the term of office of one class expiring with
each year. The minimum number of directors is five and the maximum number of
directors is twenty-five. The board of directors establishes by resolution the
number of directors to serve and the number of directors to comprise each class.
At each annual meeting, the number of directors equal to the number of the class
whose term expires at the time of such meeting is elected to hold office for a
term of three years.
Britton & Koontz directors are elected at the annual meeting of
stockholders, and any vacancy in the board of directors, however created, is
filled at the annual meeting succeeding the creation of such vacancy. If the
number of directors is changed, any increase or decrease is apportioned among
the classes so as to maintain the number of directors in each class as nearly
equal as possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such class holds office for a term that
coincides with the remaining term of that class. In no case does a decrease in
the number of directors shorten the term of any incumbent director.
Stockholders of Britton & Koontz have cumulative voting rights in the
election of Britton & Koontz directors. Cumulative voting entitles a Britton &
Koontz stockholder to give one particular candidate a number of votes equal to
the number of directors to be elected, multiplied by the number of shares held
by that stockholder, or to distribute the stockholder's total votes, computed on
the same principle, among as many candidates as the stockholder chooses. For
example, in an election to elect twelve directors, a Britton & Koontz
stockholder owning ten shares may cast 120 votes for one nominee, twelve votes
for ten nominees, 10 votes for each of the twelve nominees, or allocate his or
her 120 votes among the nominees in any manner. The twelve candidates receiving
the highest number of votes cast will be elected.
The board of directors of Louisiana Bancshares is comprised of no less
than 5 nor more than 9 directors. Directors hold office for five-year terms.
Stockholders of Louisiana Bancshares do not have the right to cumulate their
votes in the election of directors.
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Removal of Directors:
A Britton & Koontz director may be removed from office, with or without
cause, at a special meeting of the stockholders called for that purpose. Removal
of a director requires the affirmative vote of at least 80% of the shares
entitled to vote at an election of directors; however, if less than the entire
board of directors is to be removed, no one director may be removed if the votes
cast against his or her removal would be sufficient to elect him or her if then
cumulatively voted at an election of the class of directors of which he or she
is a member.
Stockholders of Louisiana Bancshares, by vote of a majority of the
total voting power present at any special meeting called for that purpose, may
remove a director from office, with or without cause.
Amendment of Articles and Bylaws:
Mississippi law provides that, unless the Mississippi Business
Corporation Act, the articles of incorporation or the board of directors require
a greater vote or a vote by voting groups, an amendment to the articles of
incorporation of a Mississippi corporation must be approved by a majority vote
by each voting group with respect to which the amendment would create
dissenters' rights. Britton & Koontz's articles of incorporation provide that
the affirmative vote of 80% or more of the outstanding voting shares of Britton
& Koontz is required to amend or repeal Article Seventh (required vote in
control shares acquisition), Article Tenth (election and removal of directors),
Article Eleventh (factors the board is required to take into account when
considering a proposed merger or consolidation) and Article Twelfth (election to
be governed by the Mississippi Control Share Act).See "Anti-Takeover Provisions"
below for additional super-majority voting requirements.
Louisiana Bancshares' articles of incorporation generally provide that
the affirmative vote of at least two-thirds of the voting power present at an
annual or special meeting of stockholders is required to amend or change the
articles of incorporation, remove a director from office or approve merger of
Louisiana Bancshares.
The Britton & Koontz bylaws may be altered, amended or repealed at any
meeting of the board of directors by the affirmative vote of two-thirds of the
directors then holding office.
Louisiana Bancshares' bylaws may be amended or repealed by either:
o the affirmative vote of a majority of the board of directors of Louisiana
Bancshares, or
o the affirmative vote of the holders of not less than two-thirds of the
shares of Louisiana Bancshares entitled to vote generally in the election
of directors, after giving effect to the provisions in the article of
incorporation that limit the shares
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of stock that may be voted by certain holders of shares in excess of the
10% limit provided in the articles of incorporation.
Approval of Mergers and Asset Sales:
The holders of a majority of the total outstanding shares of Britton &
Koontz common stock must approve a merger involving Britton & Koontz.
In order to effect any merger, consolidation, or share exchange with or
into any other corporation or any sale or lease of all or substantially all of
the assets of a Louisiana corporation, the Louisiana Business Corporation Law
generally requires the affirmative vote of at least two- thirds of the voting
power present or represented at a meeting of stockholders. The Louisiana
Bancshares Articles of Incorporation do not provide for any larger or smaller
vote in connection with a merger, consolidation or share exchange; however, they
do require, with respect to any sale, lease, exchange or other disposal of all
or substantially all of the corporation's assets, the consent of at least
two-thirds of the stockholders of record.
Meetings of Stockholders:
Special meetings of Britton & Koontz stockholders may be called by:
o the chairman of the board;
o the president;
o a majority of the board of directors; or
o by the President at the request of stockholders holding not less than 10%
of the issued and outstanding Britton & Koontz common stock.
Special meetings of Louisiana Bancshares stockholders may be called by:
o the chairman of the board;
o the executive committee of the board; or
o by the secretary of the board at the request of stockholders owning at
least two- thirds of the issued and outstanding Louisiana Bancshares common
stock.
Anti-takeover provisions
Britton & Koontz's articles of incorporation also contain certain
provisions, which may have the effect of delaying, deferring or preventing a
change in control of Britton & Koontz in
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certain circumstances. These provisions will be controlling upon completion of
the merger and after the merger shareholders of Louisiana Bancshares will be
subject to these provisions. Specifically, Article Seventh of Britton & Koontz's
articles of incorporation requires the affirmative vote of no less than 80% of
the outstanding shares of Britton & Koontz common stock to approve any merger or
consolidation with, or any sale, lease or exchange of substantially all of the
assets of Britton & Koontz to, any person, firm or corporation who beneficially
owns more than 10% of any class of equity voting security of Britton & Koontz,
or to any person, firm or corporation who controls, is controlled by or under
common control with any such person, firm or corporation. The amendment or
repeal of this provision of Britton & Koontz's articles of incorporation
requires the affirmative vote of the holders of no less than 80% of the
outstanding shares of Britton & Koontz common stock.
Britton & Koontz's articles of incorporation also incorporate the
provisions of the Mississippi Control Share Act (Miss. Code Ann. ss. 79-27-1, et
seq.), which may have the effect of delaying, deferring or preventing a change
in control of Britton & Koontz in certain circumstances. Specifically, the
Mississippi Control Share Act conditions acquisition of control of a corporation
on approval of a majority of disinterested shareholders (i.e., shareholders who
have not made control share acquisitions as described below). Under the terms of
the Act, a shareholder that acquires ownership or control of more than 20% of
the outstanding shares of the corporation (other than by issuance of the shares
to the shareholder by the corporation) will not be able to vote those shares in
excess of the 20% threshold without prior approval of the disinterested
shareholders. After disclosure of the circumstances surrounding the control
share acquisition to the disinterested shareholders, the party holding the
control shares can have the voting power restored to the control shares upon the
affirmative vote of a majority of the disinterested shareholders.
The amendment or repeal of this provision of Britton & Koontz's
articles of incorporation also requires the affirmative vote of the holders of
no less than 80% of the outstanding shares of Britton & Koontz common stock.
Louisiana Bancshares has expressly elected in its articles of
incorporation to not be governed by the control share provisions of Louisiana
law.
Description of Britton & Koontz's common stock
The authorized capital stock of Britton & Koontz consists of 12,000,000
shares of Britton & Koontz common stock, $2.50 par value per share, of which
1,752,564 shares of Britton & Koontz common stock were outstanding as of October
13, 2000. Each share has the same rights, privileges and preferences as every
other share and would share equally in Britton & Koontz's net assets upon
liquidation or dissolution. The shares of Britton & Koontz common stock have no
preemptive or other subscription rights, and there are no conversion rights or
redemption or sinking fund provisions. Each share is entitled to one vote,
except that in the election of directors, Britton & Koontz shareholders may vote
their shares cumulatively. All of
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the outstanding shares of Britton & Koontz common stock are fully paid and
non-assessable and each participates equally in dividends, which are payable
when and as declared by Britton & Koontz's board of directors out of funds
legally available therefor.
Interests of Certain Persons in the Merger
The merger agreement provides for:
o indemnification of Louisiana Bancshares officers and directors from
liability for actions arising while they served as Louisiana Bancshares
officers or directors;
o appointment of two members of Louisiana Bancshares' board of directors -
initially designated to be Mr. R. Andrew Patty, II and Vinod K. Thukral,
Ph.D. - to serve on the Britton & Koontz board of directors after
completion of the merger and, as such, to receive fees, see "Information
about Britton & Koontz - Compensation of Directors";
o In connection with the consummation of the merger and Mr. Sylvest's
retirement, Mr. Sylvest will receive certain benefits pursuant to a
severance agreement between Louisiana Bank and Mr. Sylvest. These benefits
include a lump-sum payment of $188,500 payable within 30 days of Mr.
Sylvest's resignation and payment for a period of 24 months of all
insurance premiums related to health, dental, life and other policies that
were provided by Louisiana Bank to Mr. Sylvest during the preceding twelve
months;
o continuation of certain employee benefits for Louisiana Bancshares'
employees, see "Employee Benefits of Louisiana Bancshares Employees after
the Merger" and "Management and Operations after the Merger," above; and
o replacement of any unexercised options to purchase Louisiana Bancshares
common stock held by directors and officers of Louisiana Bancshares with
options to purchase Britton & Koontz common stock. The value of the
replacement options will be tied to the exchange rate paid in the merger so
that Louisiana Bancshares option holders receive a replacement option for
Britton & Koontz common stock that is equivalent in value to the option of
Louisiana Bancshares common stock that it replaces. Based on the price of
$14.00 per share of Britton & Koontz common stock on October 13, 2000, the
value of options to acquire Britton & Koontz common stock to be received by
certain directors of Louisiana Bancshares upon conversion of their options
to acquire Louisiana Bancshares common stock in the merger is: $260,324 for
an option to acquire 36,584 shares of Britton & Koontz common stock by Mr.
John S. Sylvest, $11,900 for an option to acquire 4,480 shares of Britton &
Koontz common stock by Mr. S. Allen Harris, III, $8,579 for an option to
acquire 3,229 shares of Britton & Koontz common stock by Mr. Michael J.
Johnson and $7,521 for an option to
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<PAGE>
acquire 2,831 shares of Britton & Koontz common stock by Ms. Ellen C.
Sessions.
Material Tax Consequences of the Merger
The following is a summary description of the material income tax
consequences of the merger. It is not intended to be a complete description of
the federal income tax consequences of the merger. Tax laws are complex, and a
Louisiana Bancshares stockholder's individual circumstances may affect the tax
consequences to him or her. In addition, we have not included information about
the tax consequences of the merger under state, local or other tax laws. We urge
Louisiana Bancshares stockholders to consult a tax advisor regarding the tax
consequences of the merger to them.
Britton & Koontz and Louisiana Bancshares must receive the tax opinion
in order to complete the merger. The tax opinion is based upon representations
made by Britton & Koontz and Louisiana Bancshares about the terms of the merger
and certain other matters. The tax opinion concludes that the merger will
constitute a reorganization within the meaning of Section 368 of the Internal
Revenue Code. A reorganization within the meaning of Section 368 of the Internal
Revenue Code means:
o neither Louisiana Bancshares nor Britton & Koontz will recognize any gain
or loss in the merger;
o Louisiana Bancshares' stockholders will not recognize any gain or loss for
federal income tax purposes to the extent they receive Britton & Koontz
common stock in exchange for their Louisiana Bancshares common stock;
o the tax basis of the Britton & Koontz common stock received in the merger
will be the same as the tax basis of the exchanged Louisiana Bancshares
common stock;
o the holding period, for federal income tax purposes, for Britton & Koontz
common stock received in the exchange will include the period during which
the stockholder held the Louisiana Bancshares common stock (as long as the
Louisiana Bancshares common stock was held as a capital asset at the
effective date of the merger); and
o where solely cash is received by a holder of Britton & Koontz or Louisiana
Bancshares, Inc. common stock in the merger pursuant to the exercise of
dissenter's rights or rights of appraisal, such cash will be treated as a
redemption of the stockholder's common stock and will be subject to the
provisions and limitations of Section 302 of the Internal Revenue Code.
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See "Proposed Merger --- Representations and Warranties; Conditions to
the Merger; Waiver of Those Conditions."
Resale of Britton & Koontz Common Stock
The shares of Britton & Koontz common stock to be issued in the merger
have been registered under the Securities Act of 1933, as amended and will be
listed for trading after consummation of the merger on the Nasdaq Small Cap
Market. Stockholders who are not affiliates of Louisiana Bancshares or
Britton & Koontz may freely trade the Britton & Koontz common stock upon
completion of the merger. The term affiliate generally means each person who
was an executive officer, director or 10% stockholder of Louisiana Bancshares
or Britton & Koontz prior to the merger.
Those stockholders who are deemed to be affiliates of Louisiana
Bancshares may only sell their Britton & Koontz common stock as provided by Rule
145 of the Securities Act, or as otherwise permitted under the Securities Act.
Affiliates of Louisiana Bancshares who do not become affiliates of Britton &
Koontz may publicly resell their Britton & Koontz common stock if they register
the resale of those shares or they comply with the restrictions of Rule 145.
If you are or may be a Louisiana Bancshares affiliate, you should
carefully consider the resale restrictions imposed by Rule 145 before you
attempt to transfer any shares of Britton & Koontz common stock after the
merger. Further, shares of Britton & Koontz common stock issued to Louisiana
Bancshares affiliates in the merger will not be transferable until financial
results that include at least 30 days of post-merger combined operations of
Britton & Koontz and Louisiana Bancshares have been published. This restriction
is necessary in order to satisfy certain requirements for pooling-of-interests
accounting treatment.
Rights of Dissenting Stockholders
If you object to the merger and desire to perfect your dissenter's
rights, you must promptly take the following steps timely. A failure to perfect
your dissenter's rights will cause you to lose the right to dissent or seek an
appraisal from the merger. If you lose your right to dissent, you will have no
right to receive cash for your shares of Britton & Koontz or Louisiana
Bancshares common stock.
Dissenting Rights of Britton & Koontz Stockholders
The Mississippi Business Corporation Act, or MBCA, provides Britton &
Koontz stockholders with the right to dissent and obtain cash for their Britton
& Koontz shares if the merger is consummated. The availability of dissenters'
rights is conditioned upon compliance with the provisions of MBCA Sections
79-4-13.01, et seq. Accordingly, any Britton & Koontz stockholder who wishes to
dissent from the proposed merger and receive the cash value of his or her shares
should consult with legal counsel. The following summary of dissenter's rights
is qualified in its entirety by reference to MBCA Sections 79-4-13.01, et seq.,
a copy of which is attached as Appendix D to this joint proxy statement-
prospectus.
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To assert dissenter's rights, a Britton & Koontz stockholder must:
o give notice in writing to Britton & Koontz, prior to the vote on the merger
agreement, that he or she intends to demand payment for his or her shares
if the merger is consummated; and
o not vote his or her shares in favor of the merger agreement.
If the merger agreement is approved at the special meeting, Britton &
Koontz, no later than ten days after the date the merger becomes effective, will
deliver a written notice - the dissenter's notice - to each stockholder who
satisfied the requirements in the preceding paragraph. The dissenter's notice
will:
o state where the stockholder's payment demand is to be sent and where and
when the stockholder's certificates must be deposited;
o supply a form for the payment demand that includes the date of the first
announcement to the news media or to Britton & Koontz stockholders (August
25, 2000) of the terms of the proposed merger and requires the dissenting
stockholder to certify whether or not he or she acquired beneficial
ownership of the shares before that date;
o set a date by which Britton & Koontz must receive the stockholder's payment
demand, which date may not be fewer than forty nor more than sixty days
after the date the dissenters' notice is delivered; and
o be accompanied by a copy of Article 13 of the MBCA.
Upon receipt of the dissenter's notice, any stockholder who wishes to
perfect his or her dissenter's rights must do the following:
o send Britton & Koontz a payment demand, (Britton & Koontz must receive the
payment demand on or before the date set forth in the dissenter's notice);
o certify whether he or she acquired beneficial ownership of the shares
before the date set forth in the dissenter's notice; and
o deposit his or her Britton & Koontz stock certificates in accordance with
the terms of the dissenter's notice.
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A Britton & Koontz stockholder who demands payment and properly
deposits his or her shares retains all other rights of a Britton & Koontz
stockholder until those rights are canceled or modified by the consummation of
the merger.
As soon as the merger is consummated or upon receipt of the payment
demand, Britton & Koontz will pay each dissenting stockholder who has complied
with the above requirements the fair value of the Britton & Koontz shares, as
determined by Britton & Koontz, plus accrued interest. This payment will be
accompanied by the following:
o Britton & Koontz's balance sheet as of the end of its most recently
completed fiscal year, an income statement for that year, a statement of
changes in stockholders' equity for that year, and the latest available
interim financial statements;
o a statement of Britton & Koontz's estimate of the fair value of Britton &
Koontz shares;
o an explanation of how the interest was calculated;
o a statement of the dissenter's right to demand payment for his or her own
estimated fair value of his or her Britton & Koontz shares, and the amount
of interest due, if he or she is dissatisfied with the amount of the
payment; and
o a copy of Article 13 of the MBCA.
A dissenting stockholder may notify Britton & Koontz in writing of his
or her estimate of the fair value of shares and amount of interest due, and
demand payment of his or her estimate (less any payments previously made) if:
o the dissenting stockholder believes that the amount previously paid by
Britton & Koontz is less than the fair value of his or her shares or that
the interest paid was incorrectly calculated;
o in the case of a stockholder who was the beneficial owner of the shares
before the date set forth in the dissenter's notice, Britton & Koontz fails
to make payment within 60 days after the date set for receipt of the
payment demand; or
o Britton & Koontz, having failed to consummate the merger, does not return
the deposited certificates or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for receipt of the
payment demand.
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A dissenting stockholder is deemed to waive this right to demand
payment unless he or she notifies Britton & Koontz of his or her demand in
writing within 30 days after Britton & Koontz makes or offers payment for his or
her shares.
If a demand for payment remains unsettled, Britton & Koontz will
commence a proceeding within 60 days after receiving the payment demand and
petition the Chancery Court of Adams County, Mississippi to determine the fair
value of the shares and accrued interest. If Britton & Koontz does not commence
this proceeding within this 60-day period, Britton & Koontz will pay each
dissenting stockholder whose demand remains unsettled the amount demanded plus
interest.
Britton & Koontz will make all dissenting stockholders whose demands
remain unsettled parties to the proceeding and all parties must be served with a
copy of the petition. The Chancery Court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers have the powers described in the order appointing them, or
in any amendment to it. Dissenting stockholders are entitled to the same
discovery rights as parties in other civil litigation.
Each dissenting stockholder made a party to the proceeding will be
entitled to judgement for:
o the amount, if any, by which the Chancery Court finds the fair value of his
or her shares, plus interest, exceeds the amount paid by Britton & Koontz,
or
o the fair value, plus accrued interest, of his or her after-acquired shares
for which Britton & Koontz elected to withhold payment.
The Chancery Court will determine all costs of the proceeding including
the reasonable compensation and expense of appraisers appointed by the Chancery
Court. The Chancery Court will assess these costs against Britton & Koontz,
except that it may assess costs against all or some of the dissenting
stockholders, in amounts it finds equitable, if it finds the dissenting
stockholders acted arbitrarily, vexatiously or not in good faith in demanding
payment.
The Chancery Court may assess the fees and expenses of counsel and
experts for the respective parties, in amounts it finds equitable as follows:
o against Britton & Koontz and in favor of any and all dissenting
stockholders if it finds that Britton & Koontz did not substantially comply
with its legal obligations under Article 13 of the MBCA; or
o against either Britton & Koontz or a dissenting stockholder, in favor of
any other party, if it 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 Article 13 of the MBCA
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<PAGE>
.
You must do all of the things described above in order to preserve your
right to dissent and to receive the fair value of your shares in cash. If you do
not follow each of the steps described above, you will have no right to receive
cash for your shares. In view of the complexity of these provisions of
Mississippi law, Britton & Koontz stockholders who are considering dissenting
from the approval of the merger agreement and exercising their rights should
consult their legal advisors.
Dissenters' Rights of Louisiana Bancshares Stockholders
The Louisiana Business Corporation Law, or LBCL, provides Louisiana
Bancshares stockholders with the right to dissent and obtain cash for their
shares of Louisiana Bancshares common stock if the merger is consummated and the
merger was approved by less than eighty percent of the total voting power. If
eighty percent or more of the total voting power approves the merger,
dissenters' rights are not available. The availability of dissenters' rights is
conditioned upon compliance with the provisions of the Louisiana Revised
Statutes 12:131. Accordingly, any Louisiana Bancshares stockholder who wishes to
dissent from the proposed merger and receive the cash value of his or her shares
should consult with legal counsel. The following summary of dissenters' rights
is qualified in its entirety by reference to Sections 12:131 of the LBCL, a copy
of which is attached as Appendix E to this joint proxy statement- prospectus.
Louisiana Bancshares stockholders who follow the procedures set forth
in Section 131 of the LBCL may receive cash for their Louisiana Bancshares
common stock instead of exchanging the shares for Britton & Koontz common stock.
This cash payment will be equal to the fair value of their Louisiana Bancshares
shares. The fair value will be determined by judicial appraisal and could be
more than, the same as, or less than, the value of Britton & Koontz common stock
the Louisiana Bancshares stockholder will receive in the merger exchange.
In order to exercise your rights of appraisal you MUST comply with the
following requirements of Section 131 of the LBCL:
Each dissenting stockholder must file with Louisiana Bancshares prior
to or at the special meeting, a written objection to the merger agreement and
must vote his shares against the merger agreement. If the merger agreement is
approved by less than 80% of the total voting power of Louisiana Bancshares,
Louisiana Bancshares will give written notice to each dissenting stockholder
that the merger agreement was approved. Within twenty days after mailing of the
notice to the dissenting stockholders they must file a demand in writing for the
fair cash value of their shares as of the day before the vote on the merger
agreement was taken. The demand shall set forth the value demanded, and a post
office address to which Louisiana Bancshares' reply may be sent.
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At the same time, the stockholder must deposit in escrow in a chartered
bank or trust company located in East Baton Rouge Parish, the certificates
representing his shares, duly endorsed and transferred to Louisiana Bancshares
upon the sole condition that said certificates be delivered to the corporation
upon payment of the value of the shares. With the demand, the stockholder must
deliver to Louisiana Bancshares a written acknowledgment from the bank or trust
company that it holds his certificates of stock.
If Louisiana Bancshares does not agree to the value so stated and
demanded or does not agree that a payment is due, Louisiana Bancshares shall
notify the stockholder in writing at the designated post office address, of its
disagreement within twenty days after receipt of such demand and acknowledgment.
Louisiana Bancshares shall state in such notice the value Louisiana Bancshares
will agree to pay if any payment should be held to be due; otherwise, Louisiana
Bancshares shall be liable for, and shall pay to the dissatisfied stockholder,
the value demanded by him for his shares.
In case of disagreement as to the fair cash value, or as to whether any
payment is due, after compliance with the above provisions, the dissatisfied
stockholder may file suit in the state district court for East Baton Rouge
Parish against Louisiana Bancshares within sixty days after receipt of notice in
writing of the corporation's disagreement and ask the court to fix and decree
the fair cash value of the dissatisfied stockholder's shares as of the day
before the merger was approved. The court shall decide summarily whether any
payment is due and, if so, the cash value of the shares.
Any stockholder entitled to file such suit may, within the sixty-day
period, intervene as a plaintiff in a suit filed by another stockholder and
recover under that judgement for the fair cash value of his shares.
Failure of the stockholder to bring suit or intervene within sixty days
after receipt of notice of disagreement by Louisiana Bancshares shall bind the
stockholder:
(1) by Louisiana Bancshares' statement that no payment is due, or
(2) if Louisiana Bancshares does not contend that no payment is
due, to accept the value of the stockholder's shares as fixed
by Louisiana Bancshares.
When the fair value of the shares has been agreed upon between the
stockholder and Louisiana Bancshares, or when Louisiana Bancshares has become
liable for the value demanded by the stockholder because of failure to give
notice of disagreement and of the value it will pay, or when the stockholder has
become bound to accept the value Louisiana Bancshares proposes because he failed
to bring suit within sixty days after notice of Louisiana Bancshares'
disagreement, the action of the stockholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
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If Louisiana Bancshares, in its notice of disagreement, offered to pay
the dissatisfied stockholder on demand, an amount in cash deemed by it to be the
fair cash value of his shares, and if the dissatisfied stockholder institutes a
suit claiming an amount in excess of the amount so offered, Louisiana Bancshares
shall deposit in the registry of the court, the amount so offered. If the amount
finally awarded to the stockholder, exclusive of interest and costs, is more
than the amount offered and deposited, the costs of the proceeding shall be
taxed against Louisiana Bancshares; otherwise the costs of the proceeding shall
be taxed against the stockholder.
After filing a demand for the value of his shares, the stockholder
shall cease to have any rights of a stockholder, except those accorded under
Section 131 of the LBCL.
A demand may be withdrawn by the stockholder at any time before
Louisiana Bancshares gives notice of disagreement. After such notice of
disagreement is given, withdrawal of a notice of election shall require the
written consent of Louisiana Bancshares.
If a notice of election is withdrawn, or the merger transaction is
abandoned or rescinded, or a court determines that the stockholder is not
entitled to receive payment for the shares, or the stockholder otherwise loses
his dissenters' rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him, and he shall be
reinstated to all his rights as a stockholder as of the filing of his demand for
value, including any intervening preemptive rights, and the right to payment of
any intervening dividend or other distribution. If any such rights have expired
or any such dividend or distribution other than in cash has been completed, at
the election of Louisiana Bancshares, the fair value in cash as determined by
the board as of the time of such expiration or completion, but without prejudice
to any corporate proceeding that may have been taken in the interim.
All written communications from Louisiana Bancshares stockholders
regarding the exercise of dissenters' rights prior to the effective date of the
merger should be mailed to John Sylvest at Louisiana Bancshares, Inc, 7142
Florida Boulevard, Baton Rouge, Louisiana 70806. After the effective date of the
merger, all written communications from stockholders with respect to the
exercise of dissenters' rights should be mailed to W. Page Ogden, 500 Main
Street, Natchez, Mississippi 39120.
You MUST do all of the things described above in order to preserve your
rights of appraisal and to receive the fair value of your shares in cash.
Failure to follow the steps required by the LBCL for perfecting dissenters'
rights may result in the loss of such rights. In view of the complexity of these
provisions of Louisiana law, Louisiana Bancshares stockholders who are
considering dissenting from the approval of the merger agreement and exercising
their rights under Section 131 should consult their legal advisors.
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Accounting Treatment of the Merger
Britton & Koontz intends to account for the merger as a
pooling-of-interests. For the merger to qualify for pooling-of-interests
accounting treatment, among other things, the total amount of cash that Britton
& Koontz is required to pay as a result of the merger cannot exceed 10% of the
value of the outstanding Louisiana Bancshares common stock to be exchanged in
the merger. Also, for the pooling-of-interests accounting method to apply,
affiliates of Louisiana Bancshares and Britton & Koontz cannot sell, transfer,
pledge or otherwise alienate or encumber any shares of Britton & Koontz common
stock (whether received in the merger or otherwise) until the results of at
least 30 days of post-merger combined operations of Louisiana Bancshares and
Britton & Koontz have been published. Britton & Koontz is not obligated to
consummate the merger if the merger does not qualify for pooling-of-interests
accounting treatment under these circumstances.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined balance sheets of Britton &
Koontz for the twelve-month periods ended December 31, 1999, 1998 and 1997 give
effect to the pending merger with Louisiana Bancshares, assuming that the merger
is accounted for as a pooling-of- interests. The pro forma combined balance
sheets treat the merger as if it occurred on December 31 of each year indicated;
the pro forma combined income statements treat the merger as if it had occurred
on January 1, 1997.
The information for the years ended December 31, 1999, 1998 and 1997,
in the column titled "Britton & Koontz" is summarized from the consolidated
financial statements of Britton & Koontz contained in Britton & Koontz's 1999
annual report on Form 10-K, which has also been incorporated by reference
herein. The information contained in the column titled "Louisiana Bancshares" is
based on the financial statements and related notes, and Management's Discussion
and Analysis of Financial Condition and Results of Operations, of Louisiana
Bancshares contained elsewhere in this joint proxy statement-prospectus. We
encourage you to read all of the other financial information about Britton &
Koontz and Louisiana Bancshares included with or contained in this joint proxy
statement-prospectus.
The Pro Forma Financial Statements are presented for information
purposes only. The results shown in them are not necessarily indicative of the
actual results that might have occurred if the merger had been completed on
January 1, 1997. Also, they are not necessarily indicative of results that might
be achieved in the future if the merger is completed.
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PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Unaudited)
The following unaudited pro forma combined condensed balance sheet
combines the consolidated historical balance sheets of Britton & Koontz and
Louisiana Bancshares, assuming the companies had been combined as of December
31, 1999, on a pooling-of-interests accounting basis.
<TABLE>
<CAPTION>
Britton & Louisiana Pro Forma Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ -------------- -------------
(In thousands)
ASSETS:
<S> <C> <C> <C> <C>
Cash and due from banks........................... $ 5,450 $ 2,438 $ - $ 7,888
Interest-bearing deposits due from banks.......... 136 - - 136
Federal funds sold and securities purchased
under repurchase agreements 875 6,700 - 7,575
Securities:
Held-to-maturity.................................. 46,553 214 - 46,767
Available-for-sale................................ 6,212 2,683 - 8,895
------------- ------------ -------------- -------------
Total securities.................................. 52,765 2,897 - 55,662
Loans, net of unearned interest................... 139,977 30,005 - 169,982
Allowance for loan losses......................... 836 315 - 1,151
-------------- ------------ -------------- -------------
Net loans ........................................ 139,141 29,690 - 168,831
Premises and equipment, net....................... 6,216 726 - 6,942
Other real estate................................. 103 298 - 401
Intangible assets................................. 1,527 - - 1,527
Other............................................. 2,641 299 - 2,940
------------- ------------ -------------- -------------
Total assets............................... $ 208,854 $ 43,048 $ - $ 251,902
============= ============ ============== =============
LIABILITIES:
Noninterest-bearing deposits...................... $ 25,572 $ 4,908 $ - $ 30,480
Interest-bearing deposits......................... 140,745 27,161 - 167,906
------------- ------------ -------------- -------------
Total deposits............................. 166,317 32,069 - 198,386
Federal funds purchased and securities sold
under repurchase agreements ...................... 1,482 - - 1,482
Other borrowed funds.............................. 17,850 7,000 - 24,850
Other liabilities................................. 3,053 253 - 3,306
------------- ------------ -------------- -------------
Total liabilities.......................... $ 188,702 $ 39,322 $ - $ 228,024
------------- ------------ -------------- -------------
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STOCKHOLDERS' EQUITY: Britton & Louisiana Pro Forma Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ -------------- -------------
Common stock...................................... 4,418 305 499 (1) 5,222
Surplus and retained earnings..................... 15,974 3,429 (499)(1) 18,904
Unearned compensation............................. - - - -
Loan receivable - ESOP.............................. - - - -
Treasury stock...................................... - - - -
Accumulated other comprehensive income(loss)........ (240) (8) - (248)
-------------- ------------ -------------- -------------
Total stockholders' equity........................ 20,152 3,726 - 23,878
------------- ------------ -------------- -------------
Total liabilities and stockholders equity......... $ 208,854 $ 43,048 $ - $ 251,902
=========== ============ ============== =============
(1) Reclassification of capital accounts to reflect the exchange of Louisiana
Bancshares common stock for Britton & Koontz common stock.
See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
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PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)
The following pro forma combined condensed statements of consolidated
income present the combined statements of income of Britton & Koontz and
Louisiana Bancshares, assuming the companies had been combined for each period
presented on a pooling-of-interests accounting basis. Per share data has been
adjusted retroactively for stock splits.
For the Year Ended December 31, 1999
Britton & Louisiana Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ ------------ -------------
(In thousands, except per share amounts)
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans....................... $ 11,187 $ 2,958 $ - $ 14,145
Interest and dividends on securities............. 2,875 75 - 2,950
Other interest income............................ 44 350 - 394
--------------- --------------- ------------ -------------
Total interest income...................... 14,106 3,383 - 17,489
Interest expense:
Interest on deposits............................. 5,287 1,370 - 6,657
Interest on borrowed funds....................... 574 230 - 804
-------------- --------------- ------------ -------------
Total interest expense..................... 5,861 1,600 - 7,461
Net interest income................................. 8,245 1,783 - 10,028
Provision for loan losses........................... 275 12 - 287
-------------- ---------------- ------------ -------------
Net interest income after provision for loan
losses.......................................... 7,970 1771 - 9,741
Noninterest income.................................. 1,718 170 - 1,888
Noninterest expense................................. 6,354 1,424 - 7,778
-------------- --------------- ------------ -------------
Net income before income taxes...................... 3,334 517 - 3,851
Income tax expense.................................. 1,114 176 - 1,290
-------------- ---------------- ------------ -------------
Net income....................................... $ 2,220 $ 341 $ $ 2,561
============== ================ ============ =============
Net income per share:
Basic............................................ $ 1.26 $ 0.11 $ (.14)(1) $ 1.23
Diluted.......................................... 1.26 0.10 (.14)(1) 1.22
Weighted-average common shares outstanding:
Basic............................................ 1,767,064 3,051,907 (2,730,236)(1) 2,088,735
Diluted.......................................... 1,767,064 3,499,006 (3,158,937)(1) 2,107,133
(1) To adjust the combined amounts to be reflective of the actual number of
post-merger shares (basic and diluted) outstanding.
See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
54
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)
For the Year Ended December 31, 1998
Britton & Louisiana Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ ------------ -------------
(In thousands, except per share amounts)
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans....................... $ 9,967 $ 2,866 $ - $ 12,833
Interest and dividends on securities............. 2,990 58 - 3,048
Other interest income............................ 109 245 - 354
------------- ------------ ------------ -------------
Total interest income...................... 13,066 3,169 - 16,235
Interest expense:
Interest on deposits............................. 5,593 1,354 - 6,947
Interest on borrowed funds....................... 216 152 - 368
------------- ------------ ------------ -------------
Total interest expense..................... 5,809 1,506 - 7,315
Net interest income................................. 7,257 1,663 - 8,920
Provision for loan losses........................... 162 9 - 171
------------- ------------ ------------ -------------
Net interest income after provision for loan
losses.......................................... 7,095 1,654 - 8,749
Noninterest income.................................. 1,496 155 - 1,651
Noninterest expense................................. 5,103 1,333 - 6,436
------------- ------------ ------------ -------------
Net income before income taxes...................... 3,488 476 - 3,964
Income tax expense.................................. 1,156 138 - 1,294
------------- ------------ ------------ -------------
Net income....................................... $ 2,332 $ 338 $ $ 2,670
============= ============ ============ =============
Net income per share:
Basic............................................ $ 1.32 $ 0.11 $ (.15)(1) $ 1.28
Diluted.......................................... 1.32 0.10 (.15)(1) 1.27
Weighted-average common shares outstanding:
Basic............................................ 1,767,064 3,051,907 (2,730,236)(1) 2,088,735
Diluted.......................................... 1,768,700 3,499.600 (3,159,531)(1) 2,108,769
(1) To adjust the combined amounts to be reflective of the actual number of
post-merger shares (basic and diluted) outstanding.
See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
55
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)
For the Year Ended December 31, 1997
Britton & Louisiana Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ ------------ -------------
(In thousands, except per share amounts)
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans....................... $ 8,990 $ 2,350 $ $ 11,340
Interest and dividends on securities............. 3,084 107 - 3,191
Other interest income............................ 48 122 - 170
------------- ------------ ------------ -------------
Total interest income...................... 12,122 2,579 - 14,701
Interest expense:
Interest on deposits............................. 5,012 1,216 - 6,228
Interest on borrowed funds....................... 222 1 - 223
------------- ------------ ------------ -------------
Total interest expense..................... 5,234 1,217 - 6,451
Net interest income................................. 6,888 1,362 - 8,250
Provision for loan losses........................... 160 (234) - (74)
--------------- ------------ ------------ -------------
Net interest income after provision for loan
losses.......................................... 6,728 1,596 - 8,324
Noninterest income.................................. 1,445 142 - 1,587
Noninterest expense................................. 4,566 1,243 - 5,809
-------------- ------------ ------------ -------------
Net income before income taxes...................... 3,607 495 - 4,102
Income tax expense.................................. 1,209 203 - 1,412
-------------- ------------ ------------ -------------
Net income....................................... $ 2,398 $ 292 $ - $ 2,690
============= ============ ============ =============
Net income per share:
Basic............................................ $ 1.36 $ 0.10 $ (.17)(1) $ 1.29
Diluted.......................................... 1.36 0.09 (.17)(1) 1.28
Weighted-average common shares outstanding:
Basic............................................ 1,767,108 3,045,700 (2,724,683)(1) 2,088,125
Diluted.......................................... 1,767,142 3,350,270 (3,012,163)(1) 2,105,249
(1) To adjust the combined amounts to be reflective of the actual number of
post-merger shares (basic and diluted) outstanding.
See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
56
<PAGE>
Consolidated Statement of Condition
Combined
06/30/00
Britton & Louisiana Pro Forma Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ -------------- -------------
(In thousands)
ASSETS:
<S> <C> <C> <C> <C>
Cash and due from banks.......................... $ 6,237 $ 3,537 $ - $ 9,774
Interest-bearing deposits due from banks......... 482 - - 482
Federal funds sold and securities purchased
under repurchase agreements 1,100 3,650 - 4,750
Securities:
Held-to-maturity................................. 55,726 155 - 55,881
Available-for-sale......................... 6,354 2,707 - 9,061
-------------- ------------ -------------- --------------
Total securities................................. 62,080 2,862 - 64,942
Loans, net of unearned interest.................. 157,965 30,977 - 188,942
Allowance for loan losses........................ 988 279 - 1,267
Net loans ....................................... 156,977 30,698 - 187,675
Premises and equipment, net...................... 6,451 709 - 7,160
Other real estate................................ 68 605 - 673
Intangible assets................................ 1,473 - - 1,473
Other............................................ 3,159 366 - 3,525
------------- ------------ -------------- --------------
Total assets............................... $ 238,027 $ 42,427 $ - $ 280,454
============= ============ ============== ==============
LIABILITIES:
Noninterest-bearing deposits..................... $ 27,150 $ 4,729 $ $ 31,879
Interest-bearing deposits........................ 162,324 29,455 - 191,779
------------- ------------ -------------- --------------
Total deposits............................. 189,474 34,184 - 223,658
Federal funds purchased and securities sold
under repurchase agreements...................... 1,200 - 1,200
Other borrowed funds............................. 22,840 4,000 26,840
Other liabilities................................ 3,844 361 521(1) 4,726
-------------- ------------ -------------- --------------
Total liabilities.................................. 217,358 38,545 521 256,424
STOCKHOLDERS' EQUITY:
Common stock..................................... 4,418 305 499(2) 5,222
Surplus and retained earnings.................... 16,679 3,586 (1,020)(1)(2) 19,245
Unearned compensation............................ - - - -
57
<PAGE>
Britton & Louisiana Pro Forma Pro Forma
Koontz Bancshares Adjustments Combined
------------- ------------ -------------- -------------
(In thousands)
Loan receivable - ESOP.............................. - - - -
Treasury stock...................................... (257) - - (257)
Accumulated other comprehensive income(loss)........ (171) (9) - (180)
------------- ------------ -------------- --------------
Total stockholders' equity....................... 20,669 3,882 $ (521) $ 24,030
------------- ------------ -------------- --------------
Total liabilities and stockholders equity........ $ 238,027 $ 42,427 $ - $ 280,454
============= ============ ============== ==============
(1) Restructuring and merger related costs anticipated to be incurred and
recognized upon consummation of the merger.
(2) Reclassification of capital accounts to reflect the exchange of Louisiana
Bancshares common stock for Britton & Koontz common stock.
58
<PAGE>
Consolidated Statement of Income
Combined
For the Six Months Ended
June 30, 2000
Britton & Louisiana Pro Forma
Koontz Bancshares Adjustments Combined
------------ ------------ ------------ -----------
(In thousands, except per share amounts)
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans....................... $ 6,530 $ 1,487 $ - $ 8,017
Interest and dividends on securities............. 1,979 93 - 2,072
Other interest income............................ 13 132 - 145
------------ ------------ ------------ -----------
Total interest income...................... 8,522 1,712 - 10,234
Interest expense:
Interest on deposits............................. 3,352 694 - 4,046
Interest on borrowed funds....................... 580 106 - 686
------------ ------------ ------------ -----------
Total interest expense..................... 3,932 800 - 4,732
Net interest income................................. 4,590 912 - 5,502
Provision for loan losses........................... 160 6 - 166
------------ ------------ ------------ -----------
Net interest income after provision for loan
losses.......................................... 4,430 906 - 5,336
Noninterest income.................................. 964 74 - 1,038
Noninterest expense................................. 3,544 749 521(1) 4,814
------------ ------------ ------------ -----------
Net income before income taxes...................... 1,850 231 (521) 1,560
Income tax expense.................................. 618 74 - 692
------------ ------------ ------------ -----------
Net income....................................... $ 1,232 $ 157 $ (521) $ 868
============ ============ ============ ===========
Net income per share:
Basic............................................ $ 0.70 $ 0.05 $ (0.33)(2) $ 0.42
Diluted.......................................... 0.70 0.05 (0.34)(2) 0.41
Weighted-average common shares outstanding:
Basic............................................ 1,760,166 3,051,907 (2,730,236)(2) 2,081,837
Diluted.......................................... 1,760,166 3,499,006 (3,158,937)(2) 2,100,235
(1) Restructuring and merger related costs anticipated to be incurred and
recognized upon consummation of the merger.
(2) To adjust the combined amounts to be reflective of the actual number of
post-merger shares (basic and diluted) outstanding.
59
<PAGE>
</TABLE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The unaudited pro forma combined condensed information presented herein
is not necessarily indicative of the results of operations or the combined
financial position that would have resulted had the merger been consummated at
the beginning of the applicable periods presented, nor is it necessarily
indicative of the results of operations in future periods or the future
financial position of the combined entities.
1. The merger will be accounted for on a pooling-of-interests accounting
basis. Each share of Louisiana Bancshares common stock issued and
outstanding will be converted into 0.1054 shares of Britton & Koontz common
stock. Each share of Louisiana Bancshares common stock under an option to
purchase will be converted to an option to purchase 0.1054 shares of
Britton & Koontz common stock subject to the same restrictions on exercise.
At June 30, 2000, Louisiana Bancshares had outstanding 3,051,907 common
shares. Based on the exchange ratio and the shares outstanding of Louisiana
Bancshares, 321,670 shares of Britton & Koontz common stock will be issued
in exchange for the outstanding common stock of Louisiana Bancshares.
Additionally, based on the exchange ratio, options to purchase 47,124
shares of Britton& Koontz stock will be issued in exchange for options to
purchase 447,099 shares of Louisiana Bancshares shares.
Britton & Koontz expects to realize revenue enhancements and cost
savings from the acquisition. The pro forma financial information does not
reflect any of the potential revenue enhancements or potential savings from
the consolidation of operations of Britton & Koontz and Louisiana
Bancshares.
2. In connection with the merger, Britton & Koontz and Louisiana Bancshares
expect to incur certain restructuring and merger related costs, including
legal, accounting, and other related transaction costs and fees.
Additionally, other restructuring and merger related costs associated with
the integration of the separate financial institutions are expected to be
incurred. Based upon information currently available, the total amount of
restructuring and merger related expenses to be recognized in connection
with the merger is estimated to be $521,400 after tax. Since the merger has
not yet been consummated, the restructuring and merger related expenses can
only be estimated at this time, and are subject to revision, as further
information becomes available.
These restructuring and merger related costs will be charged to
expense in the period in which the merger is consummated, or in subsequent
periods when incurred. Although the restructuring and merger related costs
are nonrecurring, these have been reflected as an adjustment to the pro
forma combined condensed statement of income as of and for the six months
ended June 30, 2000. Also, the pro forma financial data does not reflect
cost savings, operating synergies and revenue enhancements which are
expected to be realized.
60
<PAGE>
INFORMATION ABOUT LOUISIANA BANCSHARES
Principal Business
Louisiana Bancshares, a Louisiana corporation located in Baton Rouge,
Louisiana, is a one-bank holding company registered with and subject to
supervision of the Federal Reserve Board. Louisiana Bancshares is engaged in the
commercial banking business through its wholly- owned subsidiary, Louisiana
Bank. Louisiana Bancshares does not, as an entity, engage in separate business
activities of a material nature apart from its ownership of Louisiana Bank. The
primary activities of Louisiana Bancshares are to provide assistance in the
management and coordination of Louisiana Bank's financial resources, to provide
capital, business development, long-range planning and public relations services
for Louisiana Bank and to analyze future expansion opportunities for Louisiana
Bank. Louisiana Bancshares maintains its principal office at the main office of
Louisiana Bank.
As of June 30, 2000, Louisiana Bancshares had, on a consolidated basis,
total assets of approximately $42.4 million, total deposits of approximately
$34.2 million and total stockholders' equity of approximately $3.8 million. As
of October 13, 2000, the record date for the special meeting, there were
approximately 167 holders of record of Louisiana Bancshares common stock.
Louisiana Bancshares' primary source of revenue is dividends from
Louisiana Bank. Any future dividend payments by Louisiana Bank will be
determined by the board of directors of Louisiana Bank based on its financial
condition, and such dividends may only be declared and paid in compliance with
applicable law and regulatory guidelines. Louisiana Bank will also be subject to
certain restrictions on the payment of dividends as a result of the requirement
that it maintain an adequate level of capital in accordance with guidelines
promulgated by the FDIC.
As a bank holding company, Louisiana Bancshares is subject to
regulation by the Federal Reserve in accordance with the requirements set forth
in the Bank Holding Company Act and by the rules promulgated thereunder by the
Federal Reserve Board.
Louisiana Bank
Louisiana Bank is a state bank chartered under the laws of the State of
Louisiana. Louisiana Bank was incorporated in 1986 under the name Acadia State
Bank, and the name was changed to Louisiana Bank in 1996. Louisiana Bank
conducts commercial banking operations from two locations in Baton Rouge,
Louisiana, serving the surrounding communities of East Baton Rouge Parish.
Louisiana Bank concentrates its lending activities in three principal areas:
commercial loans, real estate loans and installment loans, with real estate
loans comprising approximately 82 % of Louisiana Bank's loan portfolio at June
30, 2000.
61
<PAGE>
At June 30, 2000, Louisiana Bank had total assets of approximately
$40.9 million, total deposits of approximately $33.4 million and total
stockholders' equity of approximately $3.8 million. The primary geographic
market area for Louisiana Bank includes East Baton Rouge Parish.
Competition
Louisiana Bank experiences competition in attracting deposits and
lending funds. Primary competitors of Louisiana Bank are other commercial banks
and savings and loan associations located in Louisiana Bank market area and, to
a lesser extent, finance companies, insurance companies, credit unions, credit
card organizations and other financial institutions located in the geographic
area in which Louisiana Bank competes. Louisiana Bank competes with other
financial institutions to make loans to customers and to obtain deposits of
customers. This competition is generally based on the interest rates charged on
loans or paid on deposits. Louisiana Bank faces increasing competition from
larger financial institutions, many of which have entered the competitive area
of Louisiana Bank by making acquisitions.
Supervision and Regulation
Louisiana Bancshares and Louisiana Bank are subject to extensive
regulation by federal and state agencies. The regulation of bank holding
companies and banks is intended primarily for the protection of depositors,
federal deposit insurance funds and the banking system as a whole and not for
the protection of security holders.
To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to the full
text of those provisions. Also, such statutes, regulations and policies are
continually under review by Congress and state legislatures and federal and
state regulatory agencies. A change in statutes, regulations or regulatory
policies applicable to Louisiana Bancshares or Louisiana Bank could have a
material effect on the business of Louisiana Bancshares or Louisiana Bank.
Louisiana Bancshares. As a bank holding company under the Bank Holding
Company Act, Louisiana Bancshares is registered with and is subject to
supervision and regulation by the Federal Reserve Board. Among other things,
applicable statutes and regulations require Louisiana Bancshares to file annual
and other reports with and furnish information to the Federal Reserve Board,
which performs examinations of the Louisiana Bancshares. The Bank Holding
Company Act provides that a bank holding company must obtain the prior approval
of the Federal Reserve Board for the acquisition of more than five percent of
the voting stock or substantially all the assets of any bank or bank holding
company. In addition, the Bank Holding Company Act restricts the extension of
credit by Louisiana Bank to Louisiana Bancshares. The Bank Holding Company Act
also provides that, with certain exceptions, a bank holding company may not (i)
engage in any activities other than those of banking or managing or controlling
banks and other authorized subsidiaries or (ii) own or control more than five
percent of the voting
62
<PAGE>
shares of any company that is not a bank. The Federal Reserve Board has deemed
certain limited activities to be closely related to banking and therefore
permissible for a bank holding company to engage.
Under the Small Bank Holding Company Policy Statement promulgated by
the Federal Reserve Board under the Bank Holding Company Act, a bank holding
company with consolidated assets of less than $150 million that is not engaged
in nonbanking activities and does not have a significant amount of outstanding
debt is subject to certain limitations in the transactions it can conduct in its
own securities and the dividends that it can pay. Small bank holding companies
generally must have a pro forma debt to equity ratio of 1:1 or less and
otherwise be in compliance with such policy.
Louisiana Bank Louisiana Bank, as a Louisiana state chartered
non-Federal Reserve Board member bank, is subject to various requirements and
restrictions under the laws of the United States and the State of Louisiana, and
to regulation, supervision and regular examination by the FDIC and the OFI.
Louisiana Bank is subject to the power of the FDIC and the OFI to enforce
compliance with applicable banking statutes and regulations. Such requirements
and restrictions include requirements to maintain reserves against deposits and
restrictions on the nature and amount of loans that may be made and the interest
that may be charged thereon and restrictions relating to investments and other
activities of the Bank.
The capital classification of Louisiana Bank affects the frequency of
examinations of Louisiana Bank, impacts the ability of Louisiana Bank to engage
in certain activities and affects the deposit insurance premiums paid by the
Louisiana Bank. Louisiana Bank has its deposits insured up to $100,000 per
depositor.
Monetary Policy. Monetary policies and regulatory authorities,
including the Federal Reserve Board, have a significant effect on the business
of Louisiana Bancshares and Louisiana Bank. The Federal Reserve Board supervises
and regulates the national supply of bank credit through the sale of U.S.
government securities, changes in the discount rate on bank borrowings from the
Federal Reserve Board and changes in reserve requirements with respect to member
bank deposits. The Federal Reserve Board also regulates the types of loans and
investments in which banks may participate. These regulatory efforts can affect
the overall business of Louisiana Bank and interest rates it charges on loans or
pays for deposits, which in turn, affects the business prospects of Louisiana
Bancshares. The effect of future Federal Reserve Board policies on the business
of Louisiana Bank cannot be predicted with certainty.
Capital Adequacy Guidelines. Regulatory authorities governing the
operations of Louisiana Bank establish minimum capital requirements of Louisiana
Bank designed to reduce risk in operations, to account for off-balance sheet
exposure and to insure adequate liquidity in Louisiana Bank Further information
is provided in this joint proxy statement-prospectus at Louisiana Bancshares'
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
63
<PAGE>
Employees
As of October 13, 2000, Louisiana Bancshares and its subsidiary had 17
full time employees.
Properties
The following list describes the location and general character of the
principal properties owned or leased by Louisiana Bancshares and Louisiana Bank:
<TABLE>
<CAPTION>
Approximate Office
Location Own/Lease Use Space (square feet)
-------- --------- ------------------------ -------------------
<S> <C> <C> <C>
7142 Florida Boulevard Owned Main Office of Bank 6,000
Baton Rouge, Louisiana
12716 Perkins Road Leased Branch Office of Bank 2,000
Baton Rouge, Louisiana
</TABLE>
In the opinion of Louisiana Bancshares' management, both of Louisiana
Bancshares' properties are in generally good condition and are adequate to meet
the needs of the communities they serve.
Legal Proceedings
Louisiana Bancshares is a party to various ordinary routine legal
proceedings incidental to its business. Louisiana Bancshares' management does
not believe that any of these proceedings will have a material effect on the
financial position or results of Louisiana Bancshares' operations.
Market Prices and Dividends
Louisiana Bancshares' authorized capital stock consists of 6,000,000
shares of common stock, of which 3,051,977 shares of common stock were issued
and outstanding as of October 13, 2000. Additionally, Louisiana Bancshares has
granted options to purchase up to 447,099 shares of common stock under
Louisiana Bancshares' Incentive Stock Option Plan, which options are exercisable
at prices ranging from $0.73 to $1.20 per share. As of October 13, 2000, there
were approximately 167 shareholders. Louisiana Bancshares acts as its own
transfer agent and registrar.
There is no established public market for the Common Stock, nor are
there any published quotations for such shares. Although Louisiana Bancshares
acts as its own transfer agent, it is not aware of the per price involved in the
transactions. As a result, it does not know the prices at which such trades were
consummated. Louisiana Bancshares does know the number of shares transferred and
the number of transactions it has been notified of which is represented in the
table below, for the quarterly periods indicated:
64
<PAGE>
No. of Shares No. of Transfers
1998
First Quarter 1998 297,871 10
Second Quarter 1998 160,000 2
Third Quarter 1998 87,500 3
Fourth Quarter 1998 0 N/A
1999
First Quarter 1999 0 N/A
Second Quarter 1999 0 N/A
Third Quarter 1999 55,023 19
Fourth Quarter 1999 0 N/A
2000
First Quarter 2000 0 N/A
Second Quarter 2000 0 N/A
Third Quarter 2000 (through October 4) 160,000 1
The table may not include all trades that occurred during the reported
period. Because of the absence of an established public trading market for the
common stock, the amount of consideration to be paid for the common stock in
connection with the merger was determined by arms-length negotiations with
Britton & Koontz, and the price was based on a number of factors, including,
among other things, the growth rate and earnings of Louisiana Bancshares and
book value of the common stock, the industry, the capital structure of Louisiana
Bancshares, the market in which Louisiana Bancshares operates, the capital needs
of Louisiana Bancshares and judgments as to Louisiana Bancshares' future
prospects. This price may not be indicative of the market or actual value of the
common stock.
Management and Principal Stockholders
The following table sets forth certain information regarding the
beneficial ownership of Louisiana Bancshares Common Stock as of October 4, 2000
by: (i) each person known by Louisiana Bancshares to be the beneficial owner of
more than 5% of the outstanding shares of Louisiana Bancshares Common Stock,
showing the amount and nature of such beneficial ownership; (ii) each director
and executive officer of Louisiana Bancshares and the number of shares of
Louisiana Bancshares common stock beneficially owned by such director and
executive officer; and (iii) the number of shares of Louisiana Bancshares common
stock owned beneficially by all directors and executive officers as a group.
65
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
<S> <C> <C>
Name Beneficially Owned(1) Percent of Class(2)
---- ------------------ ----------------
Robert E. DeSilva, Jr...................................... 160,000 5.24%
S. Allen Harris, III(3).................................... 21,516 *
Ridley T. Hebert........................................... 160,000 5.24%
Michael J. Johnson(4)...................................... 7,753 *
Kenneth A. Juban........................................... 160,000 5.24%
Dale J. Matherne........................................... 170,000 5.57%
R. Andrew Patty, II........................................ 10,000 *
Deanna Morrow Patty........................................ 160,000 5.24%
Ellen C. Sessions(5)....................................... 61,038 2.0%
John S. Sylvest(6)......................................... 164,196 5.38%
Vinod K. Thukral, Ph.D(7).................................. 310,000 10.16%
J. Ken Walters(8).......................................... 310,000 10.16%
Charles H. Williamson, M.D. 160,000 5.24%
William R. Williamson, M.D................................. 160,000 5.24%
Robert M. Coleman, III .................................... 219,059 7.18%
Thomas A. Sylvest.......................................... 110,000 3.60%
All directors and executive officers as a group
(9 persons) 1,073,562 35.18%
----------------------------------------
*Indicates less than 1 %
</TABLE>
(1) Unless otherwise indicated in the footnotes to this table and
subject to community property laws where applicable, each of the shareholders
named in this table has sole voting and investment power with respect to the
shares shown as beneficially owned by it.
(2) Shares issuable to an individual under stock options exercisable
within 60 days of the Record Date are considered outstanding for the purpose of
calculating the percentage of total outstanding shares of common stock owned by
such individual or group, which calculation is based on a total of 3,051,907
outstanding shares of Louisiana Bancshares common stock.
66
<PAGE>
(3) Includes 8,500 shares which may be acquired upon the exercise of options
exercisable within 60 days of the Record Date.
(4) Includes 6,128 shares which may be acquired upon the exercise of options
exercisable within 60 days of the Record Date.
(5) Includes 5,372 shares which may be acquired upon the exercise of options
exercisable within 60 days of the Record Date.
(6) Includes 138,496 shares which may be acquired upon the exercise of options
exercisable within 60 days of the Record Date.
(7) Includes 150,000 shares held by Thukral Holdings, LLC over which Dr.
Thukral has voting and investment power.
(8) Includes 160,000 shares held in the J. Ken Walters Individual Retirement
Account, 14,700 shares held in the J. Ken Walters Simple Individual
Retirement Account and 147,034 shares held in the Cynthia P. Walters
Individual Retirement Account over which Mr. Walters shares voting and
investment power. Cynthia Walters is Mr. Walters' wife.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is a discussion of Louisiana Bancshares' financial
condition at December 31, 1999 and June 30, 2000, and its results of operations
for the two fiscal years ended December 31, 1999 and 1998, and for the six-month
periods ended June 30, 2000 and 1999. This discussion should be read in
conjunction with the financial statements that are included with this proxy
statement-prospectus.
Comparison of Operating Results for the Years Ended December 31, 1999 and 1998
Earnings Summary. Louisiana Bancshares reported net income of
approximately $341,000, or $.11 per share, for the year ended December 31, 1999,
compared to net income of approximately $338,000, or $.11 per share, for the
year ended December 31, 1998. Fully diluted net income per share was $.10 for
both fiscal 1999 and 1998. Net earnings in 1999 resulted in a return on average
assets of 0.81%, compared to a 0.93% return on assets in 1998. The return on
average stockholders' equity was 9.6% in 1999 and 10.5% in 1998.
The main components of Louisiana Bancshares' earnings are net interest
income, and non-interest income (less non-interest expenses). Each of those
components will be discussed below.
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<PAGE>
Net Interest Income. Net interest income is the difference between
interest and fees earned on loans, securities and other interest-earning assets
(interest income) and interest paid on deposits (interest expense). Net increase
income is affected by changes in volume of interest-earning assets and
interest-bearing liabilities, and the rates paid thereon. For the purposes of
this earnings analysis, net interest income has been adjusted to a fully taxable
equivalent basis for certain investments included in interest-earning assets.
Interest-earning assets, including loans, have been presented as averages, net
of unearned income.
Net interest income increased 7.2% to $1.8 million in 1999 from $1.7
million in 1998. The net interest spread (the difference between the average
interest rate earned on interest- earning assets and the average interest rate
paid on interest-bearing liabilities) declined from 4.1% in 1998 to 4.0% in 1999
due in large part to a decline in the interest rates earned on loans, only
partially offset by a $1.4 million increase in the volume of average loans. The
net interest margin (the difference between the average interest rate earned on
interest-earning assets and the average interest rate paid on all liabilities
funding those assets) decreased ten basis points, from 4.24% in 1998 to 4.14% in
1999. Although both noninterest-bearing deposits and stockholders' equity
increased in 1999, compared to 1998, those increases were not large enough to
offset a $3.7 million (11.0%) increase in average interest-earning assets.
Interest income. Interest income increased approximately $214,000 to
$3.4 million in the year ended December 31, 1999, from $3.2 million in 1998. The
increase was attributable primarily to an overall growth in the volume of
earning assets, which was partially offset by a decline in the average rates
earned on those assets. Growth occurred primarily in average loans ($1.4
million) and average federal funds sold under agreements to repurchase ($1.9
million). Louisiana Bancshares' average securities portfolio rose only sightly
(by $350 thousand) during 1999, compared to 1998.
Loans comprised 78.9% of average earning assets in 1999, compared to
83.3% in 1998. During 1999, investment securities represented 3.6% of average
earning assets, compared to 2.9% for 1998. Federal funds sold represented 17.5%
of Louisiana Bancshares' average earning assets in 1999, compared to 13.8% in
1998.
The yield on average earning assets decreased slightly to 9.02% in 1999
from 9.38% in 1998. The yield on average loans was 9.98% for the year ended
December 31, 1999, compared to 10.17% in 1998. For the years ended December 31,
1999 and 1998, the yield on average taxable investment securities was 5.82% and
6.14%, respectively. The net interest spread was negatively affected by the
relatively larger part of Louisiana Bancshares interest-earning assets portfolio
invested in lower-earning federal funds sold. The yields on average federal
funds sold in 1999 was 5.35%, compared to 5.28% in 1998.
Interest Expense. Interest expense increased approximately $94,000 (or
6.3%) to approximately $1.6 million in the year ended December 31, 1999, from
approximately $1.5 million in 1998, primarily because Louisiana Bancshares
borrowed money to fund its loan
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<PAGE>
growth and Y2K contingency spending. Borrowings outstanding at December 31, 1999
and 1998 were $7 million and $5.3 million, respectively. During 1999 the volume
of interest-bearing liabilities averaged $32 million, or 11.9% higher than the
$28.6 million average during 1998. Time deposits represented 71.8% of
interest-bearing liabilities in 1999, compared to 77.5% in 1998.
Interest-bearing demand deposits (NOW and money market deposits) represented
11.5% of total interest-bearing liabilities in 1999, compared to 10.6% in 1998.
The increase in volume of interest-bearing funds was only partially
offset by a decrease in the average rate paid on interest-bearing liabilities.
The average rate paid on interest-bearing liabilities in 1999 was 5.0%, compared
to 5.3% in 1998. The average yields paid on time deposits were 5.3% in 1999,
compared to 5.6% in 1998. The average yield paid on interest- bearing demand
deposits (NOW and money market deposits) was approximately 2.7% in both 1999 and
1998.
Average Balance Sheet. The following table represents average balance
sheet amounts and average yields for the years ended December 31, 1999 and 1998,
on a tax-equivalent basis. The two major components affecting Louisiana
Bancshares' earnings are interest earning assets and interest bearing
liabilities.
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<PAGE>
<TABLE>
<CAPTION>
Year ended December 31, 1999 Year ended December 31, 1998
----------------------------------- ------------------------------------
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rate Balances Expense Rates
-------- ------- -------- -------- ------- -------
(dollars in thousands)
Assets:
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $29,644 $2,957 9.98% $28,204 $2,867 10.17%
Taxable securities 1,100 64 5.82% 749 46 6.14%
Tax exempt securities 249 17(1) 6.83% 249 17(1) 6.83%
Federal funds sold 6,558 350 5.35% 4,639 244 5.28%
Total earning assets 37,551 3,388 9.0% 33,841 3,174 9.4%
Allowance for loan losses (319) (334)
Non-earning assets 3,140 2,384
------ ------
Total Average Assets $40,372 $35,891
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Now $2,707 $82 $1,860 $57
Money Market 994 25 1,160 29
Savings 1,262 38 817 24
Time deposits 23,001 1,226 22,144 1,244
Other borrowed funds 4,031 229 2,594 152
Total interest-bearing deposit 31,995 1,600 28,575 1,506
Noninterest-bearing deposit 4,592 3,893
Other liabilities 260 234
Stockholders' equity 3,525 3,189
Total liabilities and $40,372 $35,891
stockholders' equity
Net interest spread $1,788 $1,668
Net interest margin 4.14% 4.24%
(1) Tax equivalent adjustment made to reflect benefit of nontaxable income at a
rate of 34%.
Noninterest Income. Noninterest income was $170,000 for 1999, an
increase of $15,000 (or 9.7%), compared to $155,000 in 1998. The increase in
noninterest income for 1999 was a result of changes in Louisiana Bancshares' fee
structure. Return check charges increased $23,000, or 29%, as a result of more
stringent policies being applied to overdraft accounts beginning in 1999. The
following table lists the accounts from which noninterest income was derived,
gives totals for these accounts for the years ended December 31, 1999 and 1998,
and indicates the amount of and percentage change for each category.
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<PAGE>
Year ended Year ended
December 31, Increase (Decrease) December 31,
1999 Amount Percent 1998
------------------- ------------ --------------- --------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Service charges and service
fees on deposit accounts $143 $9 6.7% $134
Other income 27 6 28.6% 21
Total noninterest income $170 $15 9.7% $155
Noninterest Expense. Total noninterest expense increased $91,000, or
6.8%, to $1,424,000 in 1999, compared to $1,333,000 in 1998. The increase in
salary and other compensation was due to normal merit increases from 1998 to
1999. Furniture and equipment expense increased as a result of increased
depreciation expense on software and equipment installed as part of Louisiana
Bancshares' Y2K upgrade. The increase in marketing expense and supplies in 1999
was primarily due to an expanded deposit base and promotion of a branch opened
in 1997.
Louisiana Bank's operating efficiency ratio is calculated as the
percentage of net interest income plus noninterest income that is represented by
noninterest expense. The efficiency ratio was 72.9% in 1999, compared to 73.3%
in 1998. The following table lists in detail each component of noninterest
expense in 1999 and 1998, and indicates the amount of and percentage change for
each category from 1998 to 1999.
Year ended Year ended
December 31, Increase (Decrease) December 31,
1999 Amount Percent 1998
--------------------- --------------- -------------------- --------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Salaries and benefits $736 $43 6.2% $693
Furniture and equipment 104 29 38.7% 75
Occupancy 80 - 0.0% 80
Marketing 46 (2) (4.2%) 48
Communications 21 1 5.0% 20
Professional fees 105 36 52.2% 69
State assessment 13 2 18.2% 11
Supplies 58 9 18.4% 49
Data processing 13 (13) (50.0%) 26
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<PAGE>
Share tax 38 7 22.6% 31
Directors fees 31 (12) (27.9%) 43
Nonperforming assets 46 - 0.0% 46
(expense)
Other expense 133 (9) (6.3%) 142
Total noninterest expense $1,424 $91 $1,333
Operating efficiency ratio 72.9% 73.3%
Income Taxes. Louisiana Bancshares reported tax expense on income of
$176,801 in 1999 and $138,553 in 1998. Louisiana Bancshares applies Statement of
Financial Accounting Standards No. 109. In applying FAS 109, Louisiana
Bancshares recorded a net deferred tax liability of ($91,848) at December 31,
1999 and ($68,502) at December 31, 1998, which represented future taxable income
primarily related to the temporary difference between book and tax bases in the
allowance for loan loss. Gross deferred tax assets recorded as a result of
non-deductible write-down of other real estate and a net operating loss
carryforward (NOL) were $237,553 and $239,552 for December 31, 1999 and 1998,
respectively. No valuation allowance was recorded against the deferred tax asset
because management believed that it was likely that the deferred tax asset would
be realized in full. The NOL carryforward of $466,970 at December 31, 1999 will
expire on December 31, 2006. The NOL is currently limited to $66,710 annual
utilization. This limitation may be increased after the merger.
Comparison of Financial Position from December 31, 1998 to December 31, 1999
Securities. Investment securities averaged $1,349,000 in 1999, a 35.1%
increase compared to the $998,000 securities average in 1998. The decrease in
average securities was the result of the reinvestment of securities previously
held to maturity into higher yielding loans.
Securities Held to Maturity. Louisiana Bancshares accounts for its
investment securities under Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Securities
held to maturity are those securities that management has the ability and intent
to hold to maturity, and are reported at amortized cost. Securities classified
as held to maturity amounted to $213,667 (or 8.8% of the investment portfolio)
at December 31, 1999, compared to $320,213 (or 55.8% of the investment
portfolio) at December 31, 1998.
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<PAGE>
Securities Available for Sale. Securities available for sale represent
those securities in its portfolio that Louisiana Bancshares may sell in response
to changes in interest rates or liquidity needs. These securities are recorded
at market value with unrealized gains or losses, net of any tax effect,
reflected as component of stockholders' equity. Securities classified as
available for sale totaled $2,221,844 (or 91.2% of the investment portfolio) at
December 31, 1999, compared to $252,752 (or 44.2% of the investment portfolio)
at December 31, 1998. The net unrealized appreciation (depreciation ) on
securities available for sale was ($12,617) at December 31, 1999, compared to
$3,895 at December 31, 1998.
Loans. Total loans increased $349,000 (or 1.2%) to $30,006,000 at
December 31, 1999, compared to the December 31, 1998 balance of $29,657,000. The
primary growth in Louisiana Bancshares' loan portfolio can be attributed to a
$1.1 million (or 3.8%) increase in real estate loans in 1999. Consumer loans
increased 1.1% in 1999 to $2.3 million.
Louisiana Bancshares' loan-to-deposit ratio for 1999 increased slightly
to 93.6%, compared to 93.1% in 1998. Louisiana Bancshares' management expects
continued growth in the loan portfolio, although management does not expect the
loan portfolio to grow at the same rate experienced in 1999. The table below
shows the categories of loans and amounts for the years ended December 31, 1999
and 1998, and the amount of and percentage change for each category.
Year ended Year ended
December 31, Increase (Decrease) December 31,
1999 Amount Percent 1998
------------------ --------------- ------------ ----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial and industrial $3,649 $587 19.2% $3,062
Construction and land 2,841 (1,703) (37.5%) 4,544
development
Real Estate 21,141 1,117 5.6% 20,024
Personal and other 2,375 348 17.2% 2,027
Total loan portfolio $30,006 $349 1.1% $29,657
Nonperforming Assets and Past Due Loans. Nonperforming assets were
$637,000 at December 31, 1999, reflecting a $212,000 increase from the $425,000
balance at December 31, 1998. Total past due loans increased $315,000 to
$339,000 for December 31, 1999. There were no loans past due 90 days or more and
still accruing interest at December 31, 1999 or December 31, 1998. Other real
estate owned decreased to $298,000 in 1999 from $401,000 in 1998.
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<PAGE>
The following table summarizes the past due loans for the years ended
December 31, 1999 and 1998.
December 31, 1999 December 31, 1998
-------------------- ------------------------
(dollars in thousands)
Loans past due 90 days $ - $ -
Nonaccrual loans 339 24
Total past due loans 339 24
Other real estate 298 401
Total nonperforming assets $ 637 $ 425
Allowance and Provision for Possible Loan Losses. The allowance for
possible loan losses totaled $314,673 as of December 31, 1999, compared to
$314,314 for December 31, 1998, which represented 1.05% of total loans
outstanding for both years. Louisiana Bank experienced net charge-offs of
$11,641 in 1999, compared to net charge-offs of $52,215 in 1998. The allowance
was adequate in 1999 and 1998 to absorb the net charge-offs, with only modest
provisions of $12,000 and $9,000, respectively, in each year.
The following table shows the changes to the allowance for possible
loan losses during 1999 and 1998.
December 31, 1999 December 31, 1998
-------------------- --------------------
(dollars in thousands)
Balance at beginning of period $ 314 $ 357
Charge-offs (28) (62)
Recoveries 17 10
Net charge-offs (11) (52)
Provision for possible loan losses 12 9
Balance at end of period $ 315 $ 314
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<PAGE>
Deposits. Total deposits increased $200,000 (or .62%) to $32.1 million
as of December 31, 1999, from total deposits at December 31, 1998.
Noninterest-bearing demand deposits increased 10.5% in 1999 to $4.9 million.
Interest-bearing demand deposits increased 26% (or $993,000) in 1999. Time
deposits decreased slightly by 5.3% in 1999; although time deposits of $100,000
or more remained relatively constant in 1999 at $6.2 million. The following
table shows the deposit accounts and balances at the end of 1999 and 1998, and
the amount of and percentage change in each account.
December 31, Increase (Decrease) December 31,
1999 Amount Percent 1998
------------------ ------------ --------------- ------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Noninterest-bearing demand $4,908 $466 10.5% $4,442
Interest-bearing demand 2,612 782 42.7% 1,830
Money market accounts 1,003 (9) (0.9%) 1,012
Savings 1,202 220 22.4% 982
Core time deposits 16,178 (1,036) (6.0%) 17,214
Total core deposits 25,903 423 1.7% 25,480
Time certificates of deposits of 6,166 6,390
$100,000 or more
Total deposits $32,069 $31,870
Interest Rate Sensitivity. The primary assets of banks are portfolios
of investment securities and loans, while liabilities are primarily composed of
interest bearing deposits and borrowed funds. Assets and liabilities have
varying maturities, and the associated rates may be fixed or variable.
Asset/liability management techniques are used to maintain what are believed to
be appropriate levels and relationships between rate-sensitive assets and
liabilities. They represent the efforts to maximize overall returns and to
minimize the risk of loss associated with significant, often unforeseen, shifts
in interest rates.
A liability sensitive company will generally benefit from a falling
interest rate environment as the cost of interest-bearing liabilities falls
faster than the yields on interest- earning assets, thus creating a widening of
the net interest margin. Conversely, an asset sensitive company will generally
benefit from a rising interest rate environment as the yields on interest-
earning assets rise faster than the costs on interest-bearing liabilities.
Management of Louisiana Bank utilizes a computerized interest rate
simulation analysis as its primary measure of interest rate sensitivity.
Management's analyses indicate that in a rising rate scenario, in the first 12
months, net interest income increases as the short-term funding base
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<PAGE>
reprices much slower than the larger short-term asset base. In a falling rate
environment, with a 100 basis point rate shock, net interest income would
decrease by only $40 thousand over the first 12 months of the simulation, as
decreases in funding costs are not quite big enough to offset the decline in
asset yields.
Changes in the mix of earning assets or supporting liabilities can
either increase or decrease the net interest margin without affecting interest
rate sensitivity. In addition, the interest rate spread between an asset and its
supporting liability can vary significantly while the timing of repricing for
both the asset and the liability remains the same, thus impacting net interest
income. Varying interest rate environments can create unexpected changes in
prepayment levels of assets and liabilities which are not reflected in the above
interest sensitivity analysis discussion. These prepayments may have significant
effects on Louisiana Bancshares' net interest margin. Because of these factors,
the interest sensitivity analysis discussion above does not provide a complete
assessment of Louisiana Bancshares' exposure to changes in interest rates.
Management also evaluates the condition of the economy, the pattern of
market interest rates and other economic data in an attempt to determine the
appropriate mix and repricing characteristics of assets and liabilities required
to produce an optimal net interest margin and thus maximize income. The
following table shows the interest rate sensitivity for Louisiana Bancshares at
December 31, 1999.
3 months or 3 to 12 1 to 3 Over 3
less months years years
----------------- ---------------- ---------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Total rate sensitive assets $15,364 11,114 $11,402 $2,693
Total rate sensitive liabilities 9,105 14,714 8,165 8,589
Excess (deficiency)of interest-bearing 6,259 (3,600) 3,237 (5,896)
assets over interest-bearing liabilities
Cumulative excess of interest-bearing 6,259 2,659 5,896 0
liabilities
Cumulative excess of interest-earning 15.43% 6.55% 14.53% 0.00%
assets over interest-bearing liabilities as a
percent of total assets
Capital. Stockholders' equity totaled approximately $3,726,000 at
December 31, 1999, compared to $3,396,000 at December 31, 1998. The ratio of
stockholders' equity to assets increased to 8.66% at December 31, 1999 from
8.32% in 1998. Louisiana Bank's risk-based capital ratios exceed the minimum
regulatory guidelines for designation as a "well-capitalized" institution.
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<PAGE>
Year ended December 31,
1999 1998
------ -----
Tier 1 (core capital) 13.9% 12.5%
Tier 2 (supplementary capital) 1.2% 1.2%
Total Capital 15.1% 13.7%
Liquidity. Liquidity is a measure of a bank's ability to fund loan
commitments and meet deposit maturities and withdrawals in a timely manner. The
liquidity position of Louisiana Bancshares is founded on a stable base of core
deposits. Louisiana Bank's loan-to-deposit ratio at year-end 1999 increased
slightly to 93.6%, compared to 93.1% at year-end 1998. In 1999, the bank's
growth in loans, which outpaced increases in the deposits, was funded by
borrowings from the Federal Home Loan Bank and national market deposits.
In addition to the liquidity provided by maturing loans and investments
and the stability of core deposits, Louisiana Bancshares maintains the capacity
to borrow additional funds when the need arises through federal funds purchased,
credit lines with correspondent banks, and by having collateral pledged with the
Federal Reserve for any contingent funding needs. Additional borrowing capacity
is available on 1-4 family residential first mortgage loans through the Federal
Home Loan Bank.
Comparison of Operating Results for the Six-Month Periods Ended June 30, 2000
and 1999
Earnings Summary. Louisiana Bancshares earned $157 thousand, or $.05
per share, for the first six months of 2000, compared to $144 thousand, or $.05
per share, in the first six months of 1999. Returns on average assets and
average equity for the six-month period ending June 2000 were 0.77 and 8.59%,
respectively, compared to .74% and 8.79% for the comparable period ending June
1999.
Net Interest Income. Net interest income increased $58 thousand (or
6.8%) to $912 thousand for the first six months of 2000 due to a 5.55% growth in
average loans. The net interest margin increased from 4.44% to 4.65%, primarily
due to an increase in Louisiana Bancshares' volume of earning assets. Yields on
earning assets increased 14 basis points to 8.71%, while Louisiana Bancshares'
cost of funds fell 6 basis points to 4.06%.
Provision for Loan Losses. To determine the amount of the provision for
loan losses, management considers factors such as historical trends of
charge-offs and recoveries, past due loans and economic conditions along with
additional analysis of individual loans and pools of loans for possible loss
exposure. After allocating the existing reserves to estimated exposures,
management then adds to the reserve through a loan loss provision to cover
potential losses in the portfolio. The provision for loan losses was modest in
the periods ended June 2000 and 1999, $6 thousand for both periods, because
Louisiana Bank had credits to its reserve accounts for the
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<PAGE>
three previous years (1997, 1996 and 1995) of $285 thousand, $192 thousand and
$234 thousand, respectively. Those credits were possible due to substantial
recoveries that resulted from settling protracted litigation and asset
conservation activities. The bank only began making a monthly provision in
mid-1998.
Noninterest Income. Income from bank operations primarily is derived
from fees charged on deposit accounts as Louisiana Bank has historically not
sold nontraditional products and services. Noninterest income decreased from $94
thousand to $74 thousand from year to date June 1999 to June 2000 as more
stringent policies were applied to overdrafts and some nonrecurring
miscellaneous income items were recorded in 1999. The following table lists the
accounts from which noninterest income was derived, gives totals for these
accounts for the periods ended June 30, 2000 and 1999, and indicates the amount
of and percentage change for each category.
Period ended June 30 Increase (Decrease)
2000 1999 Amount Percent
---------------------------------- ------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Service charges and fees on
deposit accounts $52 $68 $(16) (23.53%)
Other income 22 26 (4) (15.38%)
Total noninterest income $74 $94 $(20) (21.28%)
Noninterest Expense. Noninterest expense increased only $29 thousand to
$744 thousand for the first half of 2000, compared to $715 thousand in 1999.
Salaries and employee benefits remained unchanged. Equipment and occupancy
expense increased slightly, by $8 thousand. The following table lists the
accounts that comprise noninterest expense, gives totals for these accounts for
the periods ended June 30, 2000 and 1999, and indicates the amount of and
percentage change for each category.
Period ended June 30 Increase (Decrease)
2000 1999 Amount Percent
----------- -------------- ----------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Salaries and benefits $381 $380 $1 0.26%
Furniture and equipment 47 40 7 17.50%
Occupancy 50 49 1 2.04%
Marketing 35 30 5 16.67%
Communications 9 11 (2) (18.18%)
Professional fees 38 44 (2) (4.55%)
Data processing 15 14 1 7.14%
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<PAGE>
Period ended June 30 Increase (Decrease)
2000 1999 Amount Percent
----------- -------------- ----------- ------------
(Dollars in thousands
Supplies 22 23 (1) (4.34%)
FDIC assessment 3 2 1 50.00%
Blanket bond & other insurance 14 14 - -
Other taxes 26 26 - -
Nonperforming assets (expenses) 46 36 10 27.78%
Other expenses 58 46 12 26.09%
Total noninterest expense $744 $715 $29 4.06%
Operating efficiency ratio 75.44% 75.47%
Interest Rate Sensitivity. The following table shows the amount of rate
sensitive assets and liabilities at June 30, 2000 for each category of maturity
and the difference between the assets and liabilities for each category and
cumulatively by amount and as a percentage.
3 months 3 to 12 1 to 3 Over 3
or less months years years
----------------- --------- ---------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Total rate sensitive assets $14,173 $13,524 $9,535 $2,225
Total rate sensitive liabilities 8,749 11,404 9,908 9,396
Excess (deficiency of interest-bearing 5,424 2,120 (373) (7,171)
assets over interest-bearing liabilities
Cumulative excess (deficiency) of 5,424 7,544 7,171 0
interest-bearing liabilities
Cumulative excess (deficiency) of 13.75% 19.12% 18.17% 0.00%
interest-earning assets over interest-
bearing liabilities as a percent of total
assets
Year 2000 Compliance. Louisiana Bank had prepared for the year 2000
change-over throughout the previous two years by adopting several steps to
assure that the systems it uses to process financial institution records would
be year 2000 compliant. The year end date
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<PAGE>
changeover did not present any technological issues or malfunctions of the
systems. Louisiana Bank will continue to monitor this issue over the remaining
critical dates in the future.
Comparison of Financial Condition at June 30, 2000 from December 31, 1999
Total Assets. Total assets decreased slightly to $42.4 million at June
30, 2000, compared to $43.0 million at year-end 1999. Loans (net of unearned
interest and allowance for loan losses), the largest component of Louisiana
Bancshares' assets, increased marginally to $31.0 million at June 30, 2000,
compared to $29.7 million at December 31, 1999.
Nonperforming Loans. Nonperforming loans at June 30, 2000 decreased to
$328 thousand from $339 thousand at December 31, 1999. At the end of both
periods, nonperforming loans consisted entirely of nonaccrual loans. There were
no loans past due 90 days or more for the period ended June 30, 2000, or for the
year ended December 31, 1999. Nonperforming loans as a percent of loans, net of
unearned income, decreased to 1.06% at June 30, 2000, from 1.13% at December 31,
1999. The table below presents additional information on nonperforming assets as
of June 30, 2000 and December 31, 1999.
June 30, 2000 December 31, 1999
---------------------- -----------------------
(Dollars in thousands)
<S> <C> <C>
Nonaccrual loans by type
Real estate $327 $292
Installment 0 47
Commercial and all other loans 1 0
Total nonaccrual loans 328 339
Loans past due 90 days or more 0 0
Total nonperforming loans 328 339
Other real estate 605 298
Total nonperforming assets $933 $637
Nonperforming loans as a percent of loans, net of
unearned interest and loans held for sale 1.06% 1.03%
Allowance for Loan Losses. The allowance for loan losses decreased $36
thousand to $279 thousand at June 30, 2000, compared to $315 thousand at
December 31, 1999. The ratio of the allowance for loan losses to loans, net of
unearned income, decreased slightly to .90% at June 30, 2000 from 1.0% at
December 31, 1999. Approximately 40 percent of the loan portfolio is invested in
1-4 family residential mortgage loans. A smaller portion of the allowance is
allocated to these loans due to their generally higher credit quality.
Management regularly
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<PAGE>
</TABLE>
reviews the level of the allowance for loan losses to ensure the level is
adequate to absorb loan losses inherent in the loan portfolio.
Investment Securities. Management determines the classification of its
investment securities at the time of acquisition. Securities that are deemed to
be held-to-maturity are accounted for by the amortized cost method while
securities that are purchased as available-for-sale are accounted for at fair
value. Securities held-to-maturity decreased slightly to $155 thousand at June
30, 2000, compared to $214 thousand at December 31, 1999. Louisiana Bank's
available-for-sale securities portfolio was $2.7 million at both June 30, 2000,
and December 31, 1999. After tax-effecting the available-for-sale securities,
net unrealized losses amounted to only $9 thousand.
Louisiana Bancshares' cash and cash equivalents were $3.5 million at
June 30, 2000 and $2.4 million at December 31, 1999. A decrease in federal funds
sold of $3 million, from $6.7 million at December 31, 1999 to $3.7 million at
June 30, 2000, accounted for most of the funds provided by investing activities.
This decrease in investing activities was offset by Louisiana Bank's financing
activities, all of which involved a decrease in Federal Home Loan Bank advances
from $7 million at December 31, 1999 to $4 million at June 30, 2000. The
increased borrowings at year-end 1999 were a result of Louisiana Bank's Y2K
liquidity strategy whereby additional liquid funds were placed in highly liquid
assets for any contingent funding needs that could have come about from a
Y2K-induced national systemic funding crisis. No such contingencies arose and
Louisiana Bank returned to its normal operating strategies.
Funding Sources. Deposits are Louisiana Bancshares' primary source of
funding for earning assets. Deposits increased $2.1 million to $34.2 million at
June 30, 2000. Most of this deposit increase was in local time certificates of
deposit greater than $100,000. Borrowings, consisting almost exclusively of
advances from the Federal Home Loan Bank of Dallas decreased $3 million as
discussed in the preceding paragraph. Management has used nontraditional funding
sources, such as Federal Home Loan Bank credit facilities and electronic
bulletin board system time certificates, to manage overall funding costs and to
meet loan demand.
Liquidity. Principal sources of liquidity for Louisiana Bancshares are
asset cash flows and the ability to borrow against investment securities and
loans. The portfolio primarily includes investments in obligations of the U.S.
Treasury, government agency obligations and mortgage-backed securities. Asset
liquidity is provided by scheduled maturities within the loan portfolio,
although the probability of conversion is not as certain as with investment
securities. At June 30, 2000, over $18.8 million, or 60% of the loan portfolio,
was scheduled to mature within one year. Core deposits provide liability
liquidity along with other sources of funds generated from the normal customer
base. Most of the deposit funds utilized by Louisiana Bancshares are generated
from the normal customer base. From time to time Louisiana Bank utilizes
national market deposits to meet funding needs. At June 30, 2000, Louisiana Bank
had approximately $4 million in national market deposits.
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<PAGE>
In addition to the liquidity provided by the balance sheet, Louisiana
Bancshares maintains a capacity to borrow additional funds when the need arises
through federal funds purchased lines with correspondent banks and by having
collateral pledged with the Federal Reserve for any contingent funding needs.
Additional borrowing capacity is available on 1-4 family residential first
mortgage loans through the Federal Home Loan Bank.
Capital and Dividends. Stockholders' equity increased by $157 thousand
to $3.8 million at June 30, 2000, compared to $3.7 million at the end of 1999.
The ratio of stockholders' equity to assets increased to 9.14% at June 30, 2000,
from 8.61% at December 31, 1999, primarily due to a slight decrease in assets of
Louisiana Bancshares, coupled with increased retained earnings. Louisiana
Bancshares has not paid dividends historically. Louisiana Bank maintained a Tier
1 capital to risk weighted assets ratio at June 30, 2000 of 13.70%, a total
capital to risk weighted assets ratio of 14.69% and a leverage ratio of 9.63%.
These levels substantially exceed the minimum requirements of the regulatory
agencies of 4.00%, 8.00% and 3.00%, respectively, and place Louisiana Bancshares
in the "well-capitalized" category under applicable regulatory guidelines.
INFORMATION ABOUT BRITTON & KOONTZ
Incorporation of Certain Documents by Reference
The following documents filed by Britton & Koontz with the SEC are
incorporated by reference in this joint proxy statement-prospectus:
o its Annual Report on Form 10-KSB for the year ended December 31, 1999 (the
"1999 Annual Report");
o its Quarterly Report on Form 10 QSB for the six-month period ended June 30,
2000 (the "Second Quarter 2000 Report"); and
o all documents filed by Britton & Koontz with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this joint
proxy statement- prospectus and prior to the effective date of the merger
will be deemed to be incorporated by reference in this joint proxy
statement-prospectus from the date they are filed. 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 joint
proxy statement-prospectus to the extent that a statement contained herein
or in any other subsequently filed document which is also or is deemed to
be incorporated by reference herein modifies or supersedes such statement.
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Copies of the 1999 Annual Report and the Second Quarter 2000 Report
have been included with the mailing of this joint proxy statement-prospectus. If
you are a beneficial owner of Louisiana Bancshares common stock or Britton &
Koontz common stock and would like a copy of any of the other information
incorporated by reference in this joint proxy statement- prospectus other than
exhibits to such information (unless such exhibits are specifically incorporated
by reference into such information), Britton & Koontz will provide it to you
without charge.
If you would like to receive any of that information, please call or
write to:
Britton & Koontz
500 Main Street
Natchez, Mississippi 39120
Attention: Mr. W. Page Ogden
Telephone: (601) 445-5576
You should make your request before November 20, 2000 in order to
receive the information prior to the meetings.
Regulatory Considerations
General
Britton & Koontz is regulated and supervised by the Federal Reserve
Board. Under federal law, bank holding companies may not directly or indirectly
acquire the ownership or control of more than 5% of the voting shares or
substantially all of the assets of any company, including a bank, without the
prior approval of the Federal Reserve Board. Bank holding companies also
generally are prohibited from engaging in non-banking activities.
Britton & Koontz's national banking subsidiary, Britton & Koontz First
National Bank, is regulated, supervised and examined by the Office of the
Comptroller of the Currency. Britton & Koontz Bank is also subject to various
requirements and restrictions under federal and state law, including:
o requirements to maintain reserves against deposits;
o restrictions on the types and amounts of loans that may be made; and
o restrictions on the interest that may be charged on loans and types of
services that may be offered.
Various consumer laws and regulations also affect the operations of
Britton & Koontz and Britton & Koontz Bank. Commercial banks such as Britton &
Koontz Bank are also affected
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by the Federal Reserve Board's attempts to control the money supply and credit
availability in order to influence the economy.
Payment of Dividends
Britton & Koontz derives substantially all of its income from the
payment of dividends by Britton & Koontz Bank. Britton & Koontz Bank's ability
to pay dividends affects Britton & Koontz's ability to pay dividends to its
stockholders. Various statutory restrictions apply to Britton & Koontz Bank's
ability to pay dividends to Britton & Koontz. As of June 30, 2000, Britton &
Koontz Bank had approximately $2.265 million available to pay dividends to
Britton & Koontz.
A national bank is generally prohibited from engaging in an unsafe or
unsound practice such as payment of dividends if the payment of the dividend
would deplete a bank's capital to an inadequate level. Britton & Koontz's
ability to pay dividends in the future is influenced by bank regulatory policies
or agreements and by capital guidelines. The level of this influence could
increase in the future. Additional information on this topic is available in
Britton & Koontz 's 1999 Annual Report on Form 10-KSB, which has been
incorporated by reference herein and delivered along with this joint proxy
statement-prospectus.
The Federal Reserve Board maintains a policy that requires bank holding
companies to serve as a source of strength for their subsidiary banks. In
furtherance of this policy, the Federal Reserve Board has stated that a bank
holding company generally should not maintain a rate of cash dividends unless
its net income available to common stockholders has been sufficient to fully
fund the dividends, and the prospective rate of earnings retention appears to be
consistent with the holding company's capital needs, asset quality and overall
financial condition.
Restrictions on Extensions of Credit
Federal law restricts Britton & Koontz's ability to:
o extend credit to affiliates (including Britton & Koontz );
o purchase assets of affiliates;
o issue a guarantee, acceptance or letter of credit on behalf of affiliates
(including an endorsement or standby letter of credit); or
o purchase or invest in the stock or securities of an affiliate or take that
stock or securities as collateral for loans to any borrower.
Extensions of credit and issuances to affiliates generally must be
secured by eligible collateral. In addition, all such transactions with a single
affiliate are generally limited to 10% of
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Britton & Koontz's capital and surplus and all such transactions with affiliates
may not exceed 20% of Britton & Koontz's capital and surplus.
Britton & Koontz is also limited in the aggregate amount that may be
loaned to a single borrower or a group of borrowers that are deemed to be
affiliated with each other for purposes of these rules. These loans are limited
to 15% of Britton & Koontz's capital and surplus.
Members of the Board of Directors
The Board of Directors of Britton & Koontz is divided into three
classes - Class I, Class II and Class III - with the members of each class
elected for three-year terms. Classes I and III each currently consist of four
directors. Class II currently consists of only three directors. The terms of the
Class I directors will expire at the 2003 annual meeting, the terms of the Class
II directors will expire at the 2001 annual meeting, and the terms of the Class
III directors will expire at the 2002 annual meeting. Britton & Koontz's
directors also serve as directors of Britton & Koontz National Bank.
Britton & Koontz's bylaws require directors who have reached the age of
72 to retire as of the annual meeting following the director's 72nd birthday.
This policy began with the 2000 annual meeting of stockholders.
Britton & Koontz's articles of incorporation and bylaws require that if
there is any change in the number of directors on the Board, the increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible. Accordingly, the Board has
set the number of directors at thirteen (following the merger) and shall consist
of four Class I directors, four Class II directors and five Class III directors.
Two current directors of Louisiana Bancshares, Mr. R. Andrew Patty, II
and Vinod K. Thukral, Ph.D., will become directors of Britton & Koontz after the
merger.
The following table sets forth information with respect to the
directors of Britton & Koontz on September 15, 2000. Unless otherwise indicated,
the information under the caption "Position and Business Experience" describes
the director's business experience for the past five years. The information in
the table below has been provided to Britton & Koontz by the named individuals.
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<TABLE>
<CAPTION>
Director
Name Age Since Principal Occupation
------------------- -------- -------- ----------------------------------------
<S> <C> <C> <C>
A. J. Ferguson 65 1982 Mr. Ferguson is a self-employed consulting
(Class I) geologist. He also is a director of Energy
Drilling Co., an oil drilling company, and
the Secretary of Highland Corp., a land-
lease company.
W. Page Ogden(2) 53 1989 Mr. Ogden is the President and Chief
(Class I) Executive Officer of Britton & Koontz and
Britton & Koontz Bank. He is also
Secretary and Treasurer of Sumx, Inc.
Bethany L. Overton 63 1988 Mrs. Overton is the Vice President of
(Class I) Oilwell Acquisition Company, Inc., an oil
exploration and operating company. Mrs.
Overton is also a partner in Access Travel,
a travel agency, and the President of
Lambdin-Bisland Realty Co., a real estate
company.
Robert R. Punches 51 1984 Mr. Punches is a partner in the Natchez law
(Class I) firm of Gwin, Lewis & Punches, LLP.
James J. Cole(2) 60 1993 Mr. Cole is Executive Vice President, and
(Class III) a Trust Officer of Britton & Koontz Bank,
in charge of mortgage lending.
W. W. Allen, Jr.(1) 48 1988 Mr. Allen is President of Allen Petroleum
(Class II) Services, Inc., an oil and gas exploration
and petroleum land services company. Mr.
Allen is also a partner in various timber
management companies, and a partner in
Dutch Ann Foods, Inc., a pie shell and tart
business.
Craig A. Bradford, DMD(1) 45 1988 Dr. Bradford is a dentist engaged primarily
(Class II) in pediatric dentistry. He is also a partner
in various timber management companies,
and Mount Olive Farms, LLC, a firm
that raises and shows horses.
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Director
Name Age Since Principal Occupation
------------------- -------- -------- ----------------------------------------
W. J. Feltus III (2) 70 1982 Mr. Feltus is Chairman of the Board of
(Class II) Britton & Koontz and of Britton & Koontz
Bank. He also serves as President of Feltus
Brothers, Ltd. and Somerset Ltd., both of
which are real estate management
companies, and he is a director of Energy
Drilling Co, an oil well drilling company.
C. H. Kaiser, Jr.(2) 72 1982 Mr. Kaiser is Vice Chairman of the Board
(Class III) of both Britton & Koontz and Britton &
Koontz Bank. He is the owner of Jordan,
Kaiser & Sessions, LLC, an engineering,
consulting, and land surveying firm.
Bazile R. Lanneau, Jr.(2) 48 1989 Mr. Lanneau, Jr. is Vice President,
(Class III) Assistant Secretary, Chief Financial and
Accounting Officer, and Treasurer of
Britton & Koontz and Executive Vice
President, Assistant Secretary, Chief
Financial Officer, Treasurer and Trust
Officer of Britton & Koontz Bank. Mr.
Lanneau, Jr. is President and Chief
Executive Officer of Sumx Inc., an Internet
banking software and services company.
Albert W. Metcalfe(1)(2) 68 1982 Mr. Metcalfe is Secretary of the Board of
(Class III) both Britton & Koontz and Britton &
Koontz Bank. He is the President of Jordan
Auto Company, Inc., an automobile
dealership.
</TABLE>
(1) Member of Audit Committee
(2) Member of Executive Committee
Meetings and Committees of the Board of Directors
During the year ended December 31, 1999, the board of directors of
Britton & Koontz met thirteen times. Each director attended at least 75% of the
aggregate of all meetings held by the Board and the committees on which he or
she served, with the exception of Mrs. Bethany Overton, who attended 62% of the
aggregate of all meetings.
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The board of directors has established, jointly with Britton & Koontz
Bank, various committees, including the Executive Committee, the Audit
Committee, the Trust Investment Committee, the Asset/Liability Management
Committee, the ESOP Administrative Committee, and the Directors Loan Committee.
These committees generally meet monthly and at call, except that the Trust
Investment Committee meets quarterly and at call, and the Directors Loan
Committee meets weekly and at call.
The board of directors has not established either a compensation or a
nominating committee; however, the Executive Committee generally performs the
functions of a compensation committee. Messrs. Cole, Feltus (Chairman), Kaiser,
Lanneau, Jr., Metcalfe and Ogden are members of the Executive Committee, which,
among other things, (i) approves remuneration arrangements for executive
officers of Britton & Koontz, (ii) reviews compensation plans relating to
executive officers and directors, (iii) determines other benefits under Britton
& Koontz's compensation plans and (iv) performs general reviews of Britton &
Koontz's employee compensation policies. The full Executive Committee, including
those members who also serve as executive officers of Britton & Koontz and
Britton & Koontz Bank, makes recommendations to the Board regarding salaries for
and other compensation (including grants of stock options) to executive
officers. Directors who also serve as executive officers of Britton & Koontz and
Britton & Koontz Bank do not, however, participate in any board of directors
determination regarding salaries for and other compensation to executive
officers. During 1999, the Executive Committee held twelve meetings.
Messrs. Allen and Metcalfe (Chairman) and Dr. Bradford are members of
the Audit Committee. None of the members of the Audit Committee are employees of
either Britton & Koontz or Britton & Koontz Bank and are independent directors.
This committee is responsible for the engagement of independent auditors, review
of audit fees, supervision of matters relating to audit functions, review and
establishment of internal policies and procedures regarding audits, accounting
and other financial controls, and review of related party transactions. During
1999, the Audit Committee held six meetings. The Audit Committee has adopted a
charter.
Compensation of Directors
During 1999, each director received a retainer of $600 per month for
service on Britton & Koontz's board of directors. Directors who are not
employees of either Britton & Koontz or Britton & Koontz Bank receive up to an
additional $200 per month for each committee on which they serve. Finally, the
chairman, vice-chairman and secretary of the board of directors receive an
additional $1,000, $667, and $400 per month, respectively, for serving in those
capacities.
Stock Ownership of Directors, Officers and Principal Stockholders
The following table shows, as of September 15, 2000, the number of
shares of Britton & Koontz's common stock beneficially owned by (i) each person
known by Britton & Koontz to be the beneficial owner of more than five percent
of the outstanding shares of Britton & Koontz
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common stock, (ii) all directors and nominees, (iii) all executive officers
named in the Summary Compensation Table, and (iv) all directors and executive
officers as a group. Unless otherwise noted, the named persons have sole voting
and investment power with respect to the shares indicated (subject to any
applicable community property laws).
Number of Shares
Beneficially Percentage
Name Owned(1) Ownership(2)
Britton & Koontz First National Bank Employee
Stock Ownership Plan (the "ESOP")
Britton & Koontz First National Bank, Trustee 228,570 13%
500 Main Street, Natchez, MS 39120
W. W. Allen, Jr.(3) 4,184 *
Craig A. Bradford, DMD(4) 17,394 1%
James J. Cole(5) 9,471 *
W. J. Feltus III(6) 24,576 1.4%
A. J. Ferguson 12,180 *
C. H. Kaiser, Jr.(7) 23,434 1.3%
Bazile R. Lanneau, Jr.(8) 71,969 4.1%
Albert W. Metcalfe(9) 74,400 4.3%
W. Page Ogden(10) 46,179 2.6%
Bethany L. Overton(11) 4,248 *
Robert R. Punches(12) 14,700 *
Directors and executive officers as a group 488,786 27.9%
(11 persons)(12)
* Less than one percent.
(1) Includes shares as to which such person, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise has or
shares voting power and/or investment power as these terms are defined in
Rule 13d-3(a) of the Securities Exchange Act of 1934.
(2) Based upon 1,752,564 shares of Common Stock outstanding.
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(3) Of the shares shown, Mr. Allen disclaims beneficial ownership of 20 shares
owned by his wife and 20 shares owned by his son.
(4) Of the shares shown, Dr. Bradford disclaims beneficial ownership of 2,685
shares owned by his wife.
(5) Includes 2,551 shares allocated to Mr. Cole's account in the ESOP and 1,320
shares which Mr. Cole may purchase upon the exercise of outstanding stock
options.
(6) Include 8,000 shares owned by Feltus Bros. Ltd., of which Mr. Feltus is a
director, and 776 shares owned by Mr. Feltus' wife, as to which he
disclaims beneficial ownership.
(7) Of the shares shown, Mr. Kaiser disclaims beneficial ownership of 7,768
shares owned by his wife.
(8) Includes 4,496 shares held by Mr. Lanneau as custodian for his minor
children, 21,913 shares allocated to Mr. Lanneau's account in the ESOP,
7,712 shares held in trust for third parties by the Bank, of which Mr.
Lanneau has beneficial ownership in his capacity as Trust Officer of the
Bank, 68 shares owned by Mr. Lanneau, Jr.'s wife, of which he disclaims
beneficial ownership, and 1,980 shares that Mr. Lanneau may purchase
pursuant to outstanding stock options. Mr. Lanneau, Jr. is the nephew of
Mr. Metcalfe.
(9) Includes 12,316 shares owned by Mr. Metcalfe's wife, as to which he
disclaims beneficial ownership, and 8,160 shares that are owned by Jordan
Auto Company, Inc., of which Mr. Metcalfe is President. Mr. Metcalfe is the
uncle of Mr. Lanneau.
(10) Includes 2,200 shares that Mr. Ogden may acquire pursuant to outstanding
stock options and 18,055 shares which have been allocated to Mr. Ogden's
account in the ESOP. Although Mr. Ogden, in his capacity as Administrator
of the ESOP has beneficial ownership of all of the shares of Common Stock
owned by the ESOP, they are not included in his individual holdings shown
in the table, but are included in the table as owned by all directors and
executive officers as a group.
(11) The shares shown include 1,060 shares held in trust with respect to which
Mrs. Overton has sole voting power.
(12) The shares shown include 5,216 shares held in trust for the benefit of Mr.
Punches' children with respect to which Mr. Punches has sole voting power.
(13) Where shares of Common Stock are deemed to be beneficially owned by more
than one director and/or executive officer, they are included only once in
the total number of shares beneficially owned by all directors and
executive officers as a group.
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Executive Officers
The following table sets forth information with respect to the
executive officers of Britton & Koontz on December 31, 1999. Unless otherwise
indicated, the information under the caption "Position and Business Experience"
describes the officer's business experience for the past five years.
<TABLE>
<CAPTION>
Officer
Name Since Age Position and Business Experience
--------------------- ------- ----- --------------------------------------------------------
<S> <C> <C> <C>
W. Page Ogden 1988 53 President, Chief Executive Officer and director of Britton
& Koontz and Britton & Koontz Bank
Bazile R. Lanneau, Jr. 1986 48 Vice President, Assistant Secretary, Chief Financial and
Accounting Officer, Treasurer and director of Britton &
Koontz. Executive Vice President, Chief Financial and
Accounting Officer, Treasurer, Assistant Secretary, Trust
Officer and director of Britton & Koontz Bank.
James J. Cole 1993 60 Director of Britton & Koontz and Britton & Koontz Bank,
Executive Vice President and Trust Officer of Britton &
Koontz Bank.
Executive Compensation
No executive officer ceased to serve as such at any time during the
fiscal year ended December 31, 1999. The following table sets forth the
compensation for services in all capacities to Britton & Koontz for the fiscal
years ending December 31, 1999, 1998 and 1997, of W. Page Ogden, Britton &
Koontz's Chief Executive Officer, and Bazile R. Lanneau, Jr., the only other
executive officer whose total annual salary and bonus equaled or exceeded
$100,000 in 1999:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------- ---------------
Securities
Other Annual Underlying All Other
Name and Position Year Salary Bonus Compensation(1) Options/SARs(#) Compensation(2)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. Page Ogden,
President & CEO 1999 $110,000 $40,000 $7,200 0 $22,600
1998 $110,000 $40,000 $7,200 0 $20,639
1997 $100,000 $30,000 $5,400 10,000 $19,112
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Long-Term
Compensation
Annual Compensation Awards
------------------------------------------- ----------------
Securities
Other Annual Underlying All Other
Name and Position Year Salary Bonus Compensation(1) Options/SARs(#) Compensation(2)
------------------------------------------------------------------------------------------------------------------------------------
Bazile R. Lanneau, Jr.
Vice President 1999 $95,000 $25,000 $7,200 0 $15,376
1998 $95,000 $25,000 $7,200 0 $13,921
1997 $85,000 $25,000 $5,400 9,000 $12,865
</TABLE>
(1) For fiscal 1999, this amount includes directors' fees of $7,200 per year.
For fiscal year 1998, the directors' fees included were $7200, and for fiscal
year 1997, the directors' fees included were $5,400.
(2) This amount includes, for the years 1999, 1998, and 1997: (a) the amounts
accrued in favor of the named executive in connection with a Salary Continuation
Plan ($12,788, $11,807, and $10,902, respectively, in the case of Mr. Ogden and
$6,810, $6,289, and $5,807, respectively, in the case of Mr. Lanneau, Jr., see
"Employment Agreements," below), and (b) Britton & Koontz's annual contribution
to Britton & Koontz's ESOP on behalf of the named executive ($2,961, $2,944, and
$2,943, respectively, in the case of Mr. Ogden and $2,585, $2,544, and $2,491,
respectively, in the case of Mr. Lanneau, Jr.). This amount also includes, for
1999 and 1998, an estimate on behalf of the named executive for Britton &
Koontz's contributions to its 401k Plan ($6,851, and $5,888, respectively, in
the case of Mr. Ogden, and $5,981 and $5,088, respectively, in the case of Mr.
Lanneau, Jr.).
Employment Agreements
Britton & Koontz has entered into employment agreements with W. Page Ogden,
Bazile R. Lanneau, Jr. and James J. Cole. The employment agreements in favor of
Messrs. Ogden and Lanneau, Jr. are for three-year terms, which expired on
December 31, 1999. Each such agreement, however, automatically renews for three
successive one-year terms through December 31, 2002, unless ninety days prior
notice is given by either of the respective parties. Mr. Cole's employment
agreement with Britton & Koontz is for a two-year term, which will terminate on
December 31, 2000. The agreement will automatically renew for two successive
one-year terms unless terminated by one of the parties. Each of the above
employment agreements can be terminated with or without cause. If terminated for
cause (such as breach of fiduciary duty and similar types of misconduct), the
employee will not receive any severance pay. If the employee is terminated
without cause, Britton & Koontz is required to pay the employee a lump sum equal
to the greater of $50,000 in the case of Mr. Ogden, $42,500 in the case of Mr.
Lanneau, Jr., and $40,000 in the case of Mr. Cole, or six months of the
employee's then current salary. Each of these employee has the
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use of an automobile for business use provided and maintained by Britton &
Koontz. Britton & Koontz also pays country club, professional, and civic
organization dues on behalf of the above employees. Further, these employees are
entitled to all of the benefits that are available to other employees of Britton
& Koontz and Britton & Koontz Bank, such as health and disability insurance.
Effective September 26, 1994, Britton & Koontz entered into Salary
Continuation Agreements with Messrs. Ogden, Lanneau, Jr. and Cole. This
retirement plan provides for the payment of normal and early retirement benefits
and provides that if there is a "Change of Control" (as defined in the
retirement plan) of Britton & Koontz and the employee's employment with the
acquiring company is terminated within 36 months of the Change in Control, then
the employee will be paid the greater of (a) a lump sum cash payment ($250,000
in the case of Mr. Ogden, $175,000 in the case of Mr. Lanneau, Jr., and $125,000
in the case of Mr. Cole), or (b) the total balance in their respective
retirement accounts.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
Neither Messrs. Ogden nor Lanneau, Jr. exercised any stock options during
1999. The following table sets forth certain information about Mr. Ogden's and
Mr. Lanneau's outstanding stock options:
<TABLE>
<CAPTION>
Number of Securities
Underlying In-the-Money
Unexercised Options at Options/SARs at
Fiscal-Year End Fiscal-Year End(1)
Exercisable (E)/ Exercisable (E)/
Name Unexercisable (U) Unexercisable-(U)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(in dollars)
2,200(E) $0(E)
Mr. Ogden 7,800(U) $0(U)
1,980(E) $0(E)
Mr. Lanneau, Jr. 7,020(U) $0(U)
(1) For each option, the value is determined by multiplying the number of shares
subject to option times $19.94 (the exercise price per share), but not less than
0. Since the closing market price of the Company's Common Stock on December 31,
1999 was $18.75, none of Mr. Ogden's or Mr. Lanneau's options were
"in-the-money".
</TABLE>
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Salary Committee Interlocks and Insider Participation in Compensation Decisions
The Board has not established a compensation committee; however, the
Executive Committee generally performs the functions of a compensation
committee. Messrs Cole, Feltus (Chairman), Kaiser, Lanneau, Jr., Metcalfe and
Ogden are members of the Executive Committee, which, among other things, (i)
approves remuneration arrangements for executive officers of Britton & Koontz,
(ii) reviews compensation plans relating to executive officers and directors,
(iii) determines other benefits under Britton & Koontz's compensation plans and
(iv) performs general reviews of Britton & Koontz's employee compensation
policies. The full Executive Committee, including those members who also serve
as executive officers of Britton & Koontz and the Britton & Koontz Bank, makes
recommendations to the Board regarding salaries for and other compensation
(including grants of stock options) to executive officers. Directors who also
serve as executive officers of Britton & Koontz and Britton & Koontz Bank do
not, however, participate in any Board determination regarding salaries for and
other compensation to executive officers.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND INDEBTEDNESS
On December 3, 1998, Britton & Koontz acquired 1,000,000 shares of
Series A Preferred Stock in Sumx Inc. ("Sumx"), a Mississippi corporation, for
$1,000,000. On September 15, 2000, Britton & Koontz acquired 250,000 shares of
Series B Preferred Stock in Sumx for $250,000. Depending upon marketing related
contingencies associated with the Series B Preferred Stock, Britton & Koontz's
ownership interest in Sumx may vary from 36.62% to 38.25%. Assuming an interest
of 38.25%, the remaining ownership interests in Sumx are 18.53% by Mr. Bazile R.
Lanneau, Jr., President and Chief Executive Officer of Sumx and Executive Vice
President of Britton & Koontz and Britton & Koontz Bank, and 43.22% by Summit
Research, Inc., a Texas corporation. The funds provided to Sumx have been used
for marketing and continued development of the SumxNet Internet banking system
and for data center operations. Sumx maintains offices in Madison, Mississippi
and Highland Village, Texas.
Britton & Koontz and Britton & Koontz Bank utilize the services of Mr.
Lanneau and his father to procure life, health and disability insurance. The
total commissions paid to Messrs. Lanneau, Sr. and Lanneau, Jr. attributable to
insurance purchased by Britton & Koontz and Britton & Koontz Bank in 1999 and
1998 were approximately $19,180 and $13,876, respectively.
During 1999, Britton & Koontz Bank engaged the professional services of a
realtor who is the son of W. J. Feltus III, a director of Britton & Koontz, in
connection with the acquisition of land for a branch site. Britton & Koontz Bank
purchased the site from Mr. Feltus' son during 1999 for a purchase price of
$185,961, which represented the costs of the land acquisition and development by
the realtor, along with a $13,600 commission. Britton & Koontz purchased
additional property from Mr. Feltus' son during 2000 for a purchase price of
$371,500, along with a commission of $36,034.
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Britton & Koontz and Britton & Koontz Bank utilize the services of
Jordan Auto Company, Inc., of which Mr. Metcalfe, a director, is President, to
provide and repair vehicles owned by Britton & Koontz. During 1999 and 1998,
Jordan Auto was paid approximately $23,963, and $4,441, respectively, for
automobile purchases and repair services.
The law firm of Gwin, Lewis & Punches, LLP, of which Mr. Robert
Punches, a director, is a partner, serves as general counsel to Britton & Koontz
and Britton & Koontz Bank. During 1999, Gwin, Lewis & Punches, LLP was paid
$3,342 for legal services in connection with its representation of Britton &
Koontz and Britton & Koontz Bank.
Certain directors and officers of Britton & Koontz, businesses with
which they are associated, and members of their immediate families are customers
of Britton & Koontz Bank and had transactions with Britton & Koontz Bank in the
ordinary course of its business during Britton & Koontz Bank's fiscal years
ended December 31, 1999 and 1998.
In the opinion of the board of directors, the foregoing transactions
were made in the ordinary course of business, were made on substantially the
same terms (including, in the case of loan transactions, interest rates and
collateral) as those prevailing at the time for comparable transactions with
other persons. The Board believes that the loan transactions referred to above
do not involve more than the normal risk of collectibility or present other
unfavorable features.
OTHER MATTERS
Britton & Koontz's management is not aware of any other matters to be
brought before the Britton & Koontz special meeting, and Louisiana Bancshares
management is not aware of any other matters to be brought before the Louisiana
Bancshares special meeting. However, if any other matters are properly brought
before either special meeting, the persons named in the enclosed forms of proxy
will have discretionary authority to vote all proxies with respect to such
matters in accordance with their judgment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Britton & Koontz's
directors, executive officers, and any person beneficially owning more than ten
percent of Britton & Koontz's common stock to file reports of securities
ownership and changes in that ownership with the Commission. Officers, directors
and greater than ten percent stockholders also are required by rules promulgated
by the Commission to furnish Britton & Koontz with copies of all Section 16(a)
forms they file.
Based solely upon a review of the copies of such forms filed during
1999, Britton & Koontz believes that during the fiscal year ended December 31,
1999, its officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements.
95
<PAGE>
PROPOSALS OF STOCKHOLDERS
At the annual meeting of stockholders each year, the board of directors
submits to stockholders its nominees for election as directors. The board of
directors may also submit other matters to the stockholders for action at the
annual meeting. Stockholders of Britton & Koontz may also submit proposals for
inclusion in the proxy materials. Proposals of stockholders intended to be
presented at the 2001 annual meeting of stockholders must be received by W. Page
Ogden, President and Chief Executive Officer of Britton & Koontz at 500 Main
Street, Natchez, Mississippi 39120, no later than November 1, 2000 in order for
such proposals to be considered for inclusion in the proxy statement and form of
proxy relating to the 2001 annual meeting.
VALIDITY OF SHARES AND LEGAL MATTERS
Phelps Dunbar, L.L.P. has provided an opinion as to the validity of the
shares to be issued by Britton & Koontz in the merger. Phelps Dunbar, L.L.P.,
New Orleans, Louisiana, has also issued a legal opinion regarding the material
U.S. federal income tax consequences of the merger.
Legal matters in connection with the merger will be passed upon for
Louisiana Bancshares by the law firm of Jenkens & Gilchrist, Professional
Corporation, Austin, Texas and for Britton & Koontz by the law firm of Phelps
Dunbar, L.L.P., New Orleans, Louisiana.
EXPERTS
The audited consolidated financial statements of Britton & Koontz
included in Britton & Koontz's 1999 Annual Report have been audited by May &
Company, independent auditors, as set forth in their report that is incorporated
herein by reference. These consolidated financial statements are incorporated
herein by reference in reliance upon May & Company's report given the authority
of the firm as experts in accounting and auditing. A representative of May &
Company is expected to be present at the Britton & Koontz special meeting, with
the opportunity to make any statement he or she desires at that time, and will
be available to respond to appropriate questions.
Postlethwaite & Netterville, independent certified public accountants,
has audited the consolidated financial statements of Louisiana Bancshares for
the years ended December 31, 1999 and 1998. Those financial statements are
included in the joint proxy statement-prospectus, and have been included in
reliance upon the report of Postlethwaite & Netterville appearing elsewhere
herein, and upon the authority of the firm as experts in accounting and
auditing. A representative of Postlethwaite & Netterville is expected to be
present at the Louisiana Bancshares special meeting, with the opportunity to
make any statement he or she desires at that time, and will be available to
respond to appropriate questions.
96
<PAGE>
IMPORTANT NOTICE FOR LOUISIANA BANCSHARES STOCKHOLDERS
If you cannot locate your Louisiana Bancshares common stock
certificate(s), please contact John Sylvest at Louisiana Bancshares, Inc., 7142
Florida Boulevard, P.O. Box 14175, Baton Rouge, Louisiana 70898-4175, telephone
number (225) 924-0984. If you have misplaced your stock certificates or if you
hold certificates in names other than your own and wish to vote in person at the
Louisiana Bancshares special meeting, we encourage you to resolve those matters
before the meeting.
Louisiana Bancshares stockholders should not send their stock
certificates at this time.
HOW TO OBTAIN ADDITIONAL INFORMATION
Britton & Koontz and Louisiana Bancshares are publicly traded companies
and are required to file certain reports, proxy statements and other information
with the SEC. The SEC maintains a web site on the Internet that contains
reports, proxy statements and other information about public companies,
including Britton & Koontz and Louisiana Bancshares. The address of that site is
http://www.sec.gov. You may also read and copy any materials filed with the SEC
by Britton & Koontz or Louisiana Bancshares at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Britton & Koontz has filed a registration statement on Form S-4 with
the SEC that registers the Britton & Koontz common stock to be issued in the
merger This joint proxy statement- prospectus does not contain all of the
information in the registration statement. Please refer to the registration
statement for further information about Britton & Koontz and the Britton &
Koontz common stock to be issued in the merger exchange. Statements contained in
this joint proxy statement-prospectus concerning the provisions of certain
documents included in the registration statement are not necessarily complete. A
complete copy of each document is filed as an exhibit to the registration
statement. You may obtain copies of all or any part of the registration
statement, including exhibits thereto, upon payment of the prescribed fees, at
the offices of the SEC listed above.
Britton & Koontz has supplied all of the information contained in this
joint proxy statement-prospectus relating to Britton & Koontz and its
subsidiary, Britton & Koontz First National Bank Louisiana Bancshares has
supplied all of the information relating to Louisiana Bancshares and its
subsidiary, Louisiana Bancshares Company.
This joint proxy-statement-prospectus incorporates important business
and financial information about Britton & Koontz that is not included in or
delivered with the joint proxy statement-prospectus. That information is
available without charge upon your request to:
97
<PAGE>
Britton & Koontz Capital Corporation
500 Main Street
Natchez, Mississippi 39120
Attention: Mr. W. Page Ogden
Telephone: (601) 445-5576
You should make your request before November 20, 2000 in order to receive the
information prior to the meetings.
98
<PAGE>
FINANCIAL STATEMENTS OF LOUISIANA BANCSHARES
F-1
<PAGE>
INDEX TO FINANCIAL STATEMENTS
of
LOUISIANA BANCSHARES, INC.
Index to Financial Statements
Audited Financial Statements for the Two Year Period Ended December 31, 1999
Independent Auditor's Report of Postlethwaite & Netterville
Consolidated Statement of Financial Condition
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Unaudited Financial Statements for the Six-Month Period Ended June 30, 2000
and 1999
Consolidated Statements of Financial Condition
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statement of Changes in Stockholders'Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Louisiana Bancshares, Inc. and Subsidiary
Baton Rouge, Louisiana
We have audited the accompanying consolidated statement of financial condition
of Louisiana Bancshares, Inc. and its subsidiary as of December 31, 1999, and
the related consolidated statements of operations and comprehensive income,
changes in stockholders' equity, and cash flows for the years ended December 31,
1999 and 1998. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial position of
Louisiana Bancshares, Inc. and its subsidiary as of December 31, 1999, and the
results of their operations and their cash flows for the years ended December
31, 1999 and 1998, in conformity with generally accepted accounting principles.
Baton Rouge, Louisiana Postlethwaite & Netterville
February 22, 2000
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1999
A S S E T S
<S> <C>
Cash and due from banks $ 2,438,011
Federal funds sold 6,700,000
Securities available-for-sale 2,221,844
Securities to be held-to-maturity (fair values
of $229,738 at December 31, 1999 213,667
Other stocks, at cost 461,100
Loans, less allowances for loan losses of
$314,673 29,690,511
Bank premises and equipment, net of
accumulated depreciation 725,720
Other real estate owned 298,139
Accrued income and other assets 299,223
---------------------
TOTAL ASSETS $ 43,048,215
=====================
<PAGE>
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
<S> <C>
LIABILITIES
Demand deposit accounts $ 4,908,251
Savings and NOW accounts 4,817,042
Other time deposits 22,343,941
--------------------
Total deposits 32,069,234
Other borrowed funds 7,000,000
Deferred taxes 91,848
Accrued expenses and other liabilities 160,876
--------------------
Total liabilities 39,321,958
--------------------
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY
Common stock - $0.10 par value; 3,100,000 shares
authorized; 3,051,907 shares issued and outstanding 305,191
Capital surplus 4,110,113
Accumulated deficit (680,743)
Accumulated other comprehensive income (8,304)
--------------------
Total stockholders' equity 3,726,257
--------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,048,215
====================
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
-------------------- --------------------
<S> <C> <C>
INTEREST INCOME
Interest on loans $ 2,958,313 $ 2,866,568
Interest on available-for-sale securities 35,834 33,603
Interest on held-to-maturity securities 39,254 24,566
Interest on federal funds sold 318,970 240,021
Interest on deposits with other banks 31,375 4,728
-------------------- --------------------
Total interest income 3,383,746 3,169,486
-------------------- --------------------
INTEREST EXPENSE
Interest on deposits 1,370,429 1,353,679
Interest on other borrowed funds 229,984 152,319
-------------------- --------------------
Total interest expense 1,600,413 1,505,998
-------------------- --------------------
NET INTEREST INCOME 1,783,333 1,663,488
Provision (credit) for loan losses 12,000 9,000
-------------------- --------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,771,333 1,654,488
-------------------- --------------------
NON-INTEREST INCOME
Service charges on deposit accounts 106,082 124,826
Other service charges and fees 36,757 9,301
Other income 26,869 20,885
-------------------- --------------------
Total other income 169,708 155,012
-------------------- --------------------
NON-INTEREST EXPENSES
Salaries and employee benefits 736,204 693,201
Occupancy expenses 80,387 79,908
Equipment expenses 103,995 74,818
Advertising expenses 46,139 48,444
Other operating expenses 456,841 436,756
-------------------- --------------------
Total other expenses 1,423,566 1,333,127
-------------------- --------------------
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
-------------------- --------------------
<S> <C> <C>
INCOME BEFORE INCOME TAX EXPENSE $ 517,475 $ 476,373
Income tax expense 176,801 138,553
-------------------- --------------------
NET INCOME 340,674 337,820
OTHER COMPREHENSIVE INCOME
Unrealized holding gains (losses) arising during
the period, net of taxes (10,898) 918
-------------------- --------------------
COMPREHENSIVE INCOME $ 329,776 $ 338,738
==================== ====================
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
Common Stock Accumulated
--------------------- Other Total
Capital Accumulated Comprehensive Stockholders'
Shares Amount Surplus Deficit Income Equity
--------------------- ------------ ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 3,045,700 $ 304,570 $ 4,103,281 $(1,359,237) $ 1,676 $ 3,050,290
Net income - - - 337,820 - 337,820
Issuance of common stock 6,207 621 6,832 - - 7,453
Net change in unrealized gain
on available-for-sale
securities, net of taxes
of $473 - - - - 918 918
--------- --------- ---------- ----------- ------------- -----------
Balance at December 31, 1998 3,051,907 305,191 4,110,113 (1,021,417) 2,594 3,396,481
Net income - - - 340,674 - 340,674
Net change in unrealized gain
on available-for-sale
securities, net of taxes
of $5,614 - - - - (10,898) (10,898)
--------- --------- ---------- ----------- ------------- -----------
Balance at December 31, 1999 3,051,907 $ 305,191 $ 4,110,113 $ (680,743) $ (8,304) $ 3,726,257
========= ========= =========== =========== ============= ===========
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
-------------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 340,674 $ 337,820
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 64,921 50,860
Gain on sale of other real estate (5,816) -
Provisions for losses on foreclosed real estate 46,200 46,200
Net amortization of discounts on
investment securities (27,165) (800)
Gains on sales of assets - -
Provision for loan losses 12,000 9,000
Deferred income taxes 33,960 (8,709)
Decrease (increase) in accrued income
and other assets 9,692 (6,572)
Increase (decrease) in accrued expenses and
other liabilities (87,688) 46,766
-------------------- -------------------
Net cash provided by operating activities 386,778 474,565
-------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in federal funds sold 775,000 (5,725,000)
Purchases of available-for-sale securities (1,982,940) -
Purchases of held-to-maturity securities - (355,700)
Proceeds from maturities of available-for-sale
securities - 375,000
Proceeds from maturities of held-to-maturity
securities 106,547 148,838
Proceeds from sales of other real estate 62,000 4,135
Net increase in loans (359,660) (2,964,525)
Purchases of property and equipment (54,121) (67,262)
-------------------- -------------------
Net cash used in investing activities (1,453,174) (8,584,514)
-------------------- -------------------
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
------------------- -------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposit accounts,
NOW accounts, and savings accounts $ 1,458,808 $ 925,573
Net increase (decrease) in time deposits (1,260,056) 2,483,310
Net decrease in borrowings on line-of-credit - (75,000)
Net increase in borrowed funds 1,750,000 5,250,000
Proceeds from issuance of stock - 7,453
-------------------- -------------------
Net cash provided by financing activities 1,948,752 8,591,336
-------------------- -------------------
Increase in cash and due from banks 882,356 481,387
Cash and due from banks - beginning of year 1,555,655 1,074,268
-------------------- -------------------
Cash and due from banks - end of year $ 2,438,011 $ 1,555,655
==================== ===================
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 1,621,481 $ 1,474,009
==================== ===================
Cash paid during the year for income taxes $ 215,301 $ 78,535
==================== ===================
Loans transferred to other real estate during
the year $ - $ 60,320
==================== ===================
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
</TABLE>
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The accounting and reporting policies of Louisiana Bancshares, Inc. (the
Company) and its subsidiary conform to generally accepted accounting
principles and the prevailing practices within the banking industry. A
summary of significant accounting policies is as follows:
Principles of consolidation
The Company was organized during 1997 as a one-bank holding company.
On July 1, 1997, the Company acquired 100% of the stock of Louisiana
Bank & Trust Company (the Bank) through the issuance of 3,045,700
shares of common stock. The consolidated financial statements include
the accounts of the Company and its subsidiary. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Nature of operations
Substantially all of the assets, liabilities, and operations presented
in the consolidated financial statements are attributable to Louisiana
Bank & Trust Company, which was founded and incorporated in Louisiana
under the name Acadia State Bank. The Bank provides a variety of
banking services to individuals and businesses primarily in and around
East Baton Rouge Parish, Louisiana. The Bank's primary deposit
products are demand deposits, savings deposits, and certificates of
deposits, and its primary lending products are commercial, business,
real estate, and consumer loans.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported 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 reporting period. Actual results could differ
from those estimates.
The determination of the adequacy of the allowance for loan losses is
based on estimates that are particularly susceptible to significant
changes in the economic environment and market conditions. In
connection with the determination of the estimated losses on loans,
management obtains independent appraisals for significant collateral.
The Bank's loans are generally secured by specific items of collateral
including real property, consumer assets, and business assets.
Although the Bank has a diversified loan portfolio, a substantial
portion of its debtors' ability to honor their contracts is dependent
on economic conditions in the local construction industry.
<PAGE>
1. Summary of Significant Accounting Policies (continued)
Use of estimates (continued)
While management uses available information to recognize losses on
loans, further reductions in the carrying amounts of loans may be
necessary based on changes in local economic conditions. In addition,
regulatory agencies, as an integral part of their examination process,
periodically review the estimated losses on loans. Such agencies may
require the Bank to recognize additional losses based on their
judgments about information available to them at the time of their
examination. Because of these factors, it is reasonably possible that
the estimated losses on loans may change materially in the near term.
However, the amount of the change that is reasonably possible cannot
be estimated.
Investment securities
The Bank's investments in securities are classified in two categories
and accounted for as follows:
o Securities to be held-to-maturity: Bonds, notes, and debentures
for which the Bank has the positive intent and ability to hold to
maturity are reported at cost, adjusted for premiums and
discounts that are recognized in interest income using the
interest method over the period to maturity.
o Securities available-for-sale: Available-for-sale securities
consist of bonds, notes, and debentures that are available to
meet the Bank's operating needs. These securities are reported at
fair value as determined by quoted market prices.
Unrealized holding gains and losses, net of tax, on available-for-sale
securities are reported as a net amount in other comprehensive income.
Gains and losses on the sale of securities are determined using the
specific-identification method. Realized gains (losses) on the sales
and maturities of securities are classified as non-interest income.
Loans receivable
Loans receivable that management has the intent and ability to hold
for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal adjusted for any charge-offs, the
allowance for loan losses, and any deferred fees or costs on
originated loans and unamortized premiums or discounts on purchased
loans.
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 the accrual of interest is discontinued, all
unpaid accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.
<PAGE>
1. Summary of Significant Accounting Policies (continued)
Allowance for loan losses
The allowance for loan losses is established as losses are estimated
to have occurred through a provision for loan losses charged to
earnings. Loan losses are charged against the allowance when
management believes the uncollectibility of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the
allowance.
The allowance for loan losses is evaluated on a regular basis and is
maintained at a level which, in management's judgement, is adequate to
absorb credit losses inherent in the loan portfolio. The amount of the
allowance is based on management's evaluation of the collectibility of
the loan portfolio, including the nature of the portfolio, credit
concentrations, trends in historical loss experience, specific
impaired loans, and economic conditions.
A loan is considered impaired when, based on current financial
information and events, it is probable that the Company will be unable
to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Allowances
for impaired loans are generally determined based on collateral values
or the present value of estimated cash flows.
Foreclosed real estate
Real estate properties acquired through, or in lieu of, loan
foreclosure are to be sold and are initially recorded at the lower of
cost or fair value at the date of foreclosure, establishing a new cost
basis. After foreclosure, valuations are periodically performed by
management, and the real estate is subsequently carried at the lower
of carrying amount or fair value less cost to sell. Revenues and
expenses from operations and changes in the valuation allowance are
included in the loss on foreclosed real estate.
Bank premises and equipment
Land is carried at cost. Bank premises and equipment are stated at
cost less accumulated depreciation, which is computed using
straight-line and accelerated methods over the estimated useful lives
of the assets, which range from 3 to 30 years.
Income taxes
Provisions for income taxes are based on taxes payable or refundable
for the current year (after exclusion of non-taxable income, such as
interest on state and municipal securities) and deferred taxes on
temporary differences between the amount of taxable income and pretax
financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements. Deferred tax
assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which
the deferred tax assets and liabilities are expected to be realized or
settled as prescribed in Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. As changes in tax laws or rates
are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.
1. Summary of Significant Accounting Policies (continued)
Off-balance-sheet financial instruments
In the ordinary course of business, the Bank has entered into
off-balance-sheet financial instruments consisting of commitments to
extend credit, commercial letters of credit, and standby letters of
credit. Such financial instruments are recorded in the financial
statements when they are funded or related fees are incurred or
received.
Cash equivalents
For purposes of presentation in the consolidated statements of cash
flows, cash and cash equivalents are defined as those amounts included
in the statement of financial condition caption "Cash and due from
banks."
Comprehensive Income
Comprehensive income is the change in stockholders' equity during the
period from transactions and other events and circumstances from
non-owner sources. Comprehensive income includes the change in
unrealized gains (losses), net of taxes, on available-for-sale
securities during the period.
Reclassification
Certain amounts in the 1998 consolidated financial statements have
been reclassified to conform with the current year presentation.
Advertising
The Company expenses the cost of advertising as incurred. Total
advertising expense for the years ended December 31, 1999 and 1998 was
$46,139 and 48,444, respectively.
<PAGE>
<TABLE>
<CAPTION>
2. Investment Securities
Debt and equity securities have been classified in the consolidated
statements of financial condition according to management's intent.
Securities classified as held-to-maturity consisted of the following:
December 31, 1999
------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Mortgage-backed securities $ 165,867 $ 163 ($ - ) $ 166,030
Other 47,800 15,908 ( - ) 63,708
--------------- ----------------- ------------- ---------------
$ 213,667 $ 16,071 ( - ) $ 229,738
=============== ================ ============= ===============
Securities classified as available-for-sale consisted of the following:
December 31, 1999
------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S.
government agencies $ 1,985,281 $ - ($ 11,631) $ 1,973,650
Obligations of states and
political subdivisions 249,180 - ( 986) 248,194
--------------- ---------------- ----------------- ---------------
$ 2,234,461 $ - ($ 12,617) $ 2,221,844
=============== ================ ================ ===============
The amortized cost and estimated market value of debt securities at
December 31, 1999, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers have
the right to call or prepay obligations with or without call or prepayment
penalties.
Securities held-to-maturity Available-for-sale securities
------------------------------------- ------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
-------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Within one year $ - $ - $ 49,970 $ 49,950
Greater than one but within five years - - 2,184,491 2,171,894
Greater than five but within ten years 165,867 166,030 - -
Greater than ten years 47,800 63,708 - -
-------------- ---------------- --------------- ---------------
$ 213,667 $ 229,738 $ 2,234,461 $ 2,221,844
============== ================ =============== ===============
</TABLE>
<PAGE>
3. Loans
The components of loans in the consolidated statements of financial
condition at December 31, 1999 (in thousands) were as follows:
Commercial and industrial $ 3,649
Construction and land development 2,841
Real estate - residential 12,816
Real estate - non-residential 8,325
Personal 2,301
Other 74
----------------
30,006
Allowance for loan losses ( 315)
----------------
Loans - net $ 29,691
================
Changes in the allowance for loan losses during the years ended December
31, 1999 and 1998 were as follows:
1999 1998
---------------- ----------------
Balance, beginning of year $ 314,314 $ 357,529
Provision for loan losses 12,000 9,000
Loans charged off ( 28,392) ( 62,174)
Recoveries 16,751 9,959
---------------- ----------------
Balance, end of year $ 314,673 $ 314,314
================ ================
Impairment of loans having carrying values of $339,329 at December 31, 1999
have been recognized in conformity with Statement of Financial Accounting
Standards (SFAS) No. 114, Accounting for Creditors for Impairment of a
Loan, as amended by SFAS No. 118. There was approximately $18,000 in
allowance for loan losses related to these loans at December 31, 1999.
No interest income on impaired loans, which is recognized when cash
payments are received, was recognized during either the year ended December
31, 1999 and 1998.
The Bank is not committed to lend additional funds to debtors whose loans
have been modified.
<PAGE>
4. Bank Premises and Equipment
Components of bank premises and equipment included in the statements of
financial condition at December 31, 1999 were as follows:
Land $ 105,000
Building 460,218
Furniture, fixtures, and equipment 232,094
Leasehold improvements 102,251
---------------
899,563
Less : accumulated depreciation and amortization ( 173,843)
--------------
$ 725,720
===============
Depreciation and amortization expenses totaled $64,921 and $50,860 during
the years ended December 31, 1999 and 1998, respectively.
5. Deposits
Deposits at December 31, 1999 (in thousands) were as follows:
Demand deposit accounts $ 4,908
NOW accounts 3,615
Savings accounts 1,202
Time deposits 22,344
----------------
$ 32,069
================
Included in deposits were $6,166,223 of certificates of deposit in amounts
of $100,000 or more at December 31, 1999. Interest expense on these types
of deposits was approximately $129,000 and $274,000 during the years ended
December 31, 1999 and 1998, respectively.
At December 31, 1999, the scheduled maturities of all outstanding
certificates of deposit were as follows:
During the
year ending
December 31, Amount
------------ ------------------
2000 $ 15,837,720
2001 4,832,232
2002 1,460,552
2003 213,437
------------------
$ 22,343,941
==================
6.
<PAGE>
Other Borrowed Funds
The Bank has established various lines-of-credit with the Federal Home Loan
Bank (FHLB) totaling approximately $8,000,000 to provide an additional
source of operating capital. The current advances, which totaled $7,000,000
at December 31, 1999, bore interest ranging from 5.07% to 6.06% at December
31, 1999. This line-of-credit is secured by $461,100 of FHLB stock owned by
the Bank and all wholly-owned residential (1-4 units) first mortgage loans,
and is scheduled to mature in 2000.
7. Income Tax
The source and tax effect of items reconciling income tax expense to the
amount computed by applying the federal income tax rates in effect to net
loss before income tax expense for periods ended December 31, 1999 and
1998, are as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- -------------------------
Amount Percent Amount Percent
-------------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Income before income taxes $ 517,475 100.0% $ 476,373 100.0%
============== ========== ============= =========
U.S. Federal income tax expense $ 175,941 34.0% $ 161,967 34.0%
Non-taxable income ( 2,978) ( .5 ) ( 3,185) ( .7 )
Other 3,838 .7 ( 20,229) ( 4.2 )
-------------- ---------- ------------- ---------
Income tax expense $ 176,801 34.2% $ 138,553 29.1%
============== ========== ============= =========
The components of income tax expense for the years ended December 31, 1999
and 1998 are as follows:
1999 1998
------------ -------------
Current tax expense $ 142,841 $ 147,262
Deferred tax expense (benefit) 33,960 ( 8,709)
------------ -------------
Income tax expense $ 176,801 $ 138,553
============ =============
<PAGE>
7. Income Tax (continued)
----------
The Company records deferred income taxes on the tax effect of changes in
temporary differences. Deferred tax assets are subject to a valuation
allowance if their realization is less than 50% likely. Deferred tax assets
(liabilities) were comprised of the following at December 31, 1999:
<S> <C>
Investment accretion ($ 1,185)
Unrealized gain on securities -
Cash-to-accrual ( 44,915)
Allowance for credit losses ( 274,741)
Stock dividends ( 8,560)
---------------
Gross deferred tax liability ( 329,401)
---------------
Depreciation 7,714
Unrealized gain on securities 4,313
Other real estate 66,756
Net operating loss carryforward 158,770
----------------
Gross deferred tax asset 237,553
Less: deferred tax asset valuation allowance -
----------------
Net deferred tax liability ($ 91,848)
================
For federal income tax purposes, the Bank has $466,970 of net operating
loss carryforwards and alternative minimum tax net operating loss
carryforwards which are scheduled to expire during the year ending December
31, 2006. Due to recapitalization, the Bank is limited to the utilization
of $66,710 of net operating losses per year until expiration.
8. Leases
The Bank entered into an operating lease during the year ended December 31,
1996 for a branch office. This facility is leased under a five-year
operating lease, which expires in September 2001, and there is a renewal
option for five additional years at an increased monthly rental.
<PAGE>
8. Leases (continued)
------
Total rent expense charged to operations was $28,875 during the years ended
December 31, 1999 and 1998. Future obligations for this lease at December
31, 1999 were as follows:
Year
ending
December 31, Amount
------------ ------------------
2000 $ 28,875
2001 29,925
2002 29,925
2003 29,925
2004 29,925
Thereafter 29,925
------------------
$ 178,500
==================
9. Financial Instruments
The Bank is a party to financial instruments with off-balance sheet risk
in the normal course of business in order 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 and interest rate risk in excess of
the amount recognized in the consolidated statements of financial
condition. The contract or notional amounts of these instruments reflect
the extent of the Bank's involvement in particular classes of financial
instruments.
The Bank'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 notional
amount of those instruments. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for financial
instruments recorded on its statement of financial condition.
Commitments to extend credit
Commitments to extend credit are agreements to lend to a customer, as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require the payment of a fee. Since many
of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's creditworthiness on
a case-by-case basis. The amount of collateral obtained, if it is
deemed necessary by the Bank upon extension of credit, is based on
management's credit evaluation of the counterparty. Collateral held
varies but may include accounts receivable; inventory; property,
plant, and equipment; and income-producing commercial properties. At
December 31, 1999, unfunded loan commitments were approximately
$4,400,000.
<PAGE>
9. Financial Instruments (continued)
Commitments to extend credit (continued)
----------------------------
Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party.
These guarantees are primarily issued to support public and private
borrowing arrangements. At December 31, 1999, commitments under
standby letters of credit totaled approximately $40,000. The credit
risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Because
these instruments have fixed maturity dates, they do not generally
present any significant liquidity risk to the Bank.
The Bank has not been required to perform on any financial guarantees
during the past two years. The Bank did not incur any losses on its
commitments during either 1999 or 1998.
10. Related Party Transactions
The Bank has entered into transactions with certain officers and directors
of the Bank and companies in which they have a 10% or more beneficial
ownership. An analysis of activity during the year ended December 31,
1999 with respect to loans to officers and directors of the Bank is as
follows:
1999
---------------
<S> <C>
Balance, beginning of year $ 125,417
Additions 167,007
Payments ( 104,165)
--------------
Balance, end of year $ 188,259
===============
At December 31, 1999, related party deposits totaled approximately
$1,100,000.
11. 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 and the regulatory framework for prompt
corrective action, the Bank must meet specific capital 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 amounts and classification are also subject
to qualitative judgments by the regulators about components, risk
weightings, and other factors.
<PAGE>
11. 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 total and Tier I capital (as defined in the regulations)
to risk-weighted assets (as defined), and of Tier I capital (as defined)
to average assets (as defined). Management believes, as of December 31,
1999, that the Bank meets all capital adequacy requirements to which it is
subject.
The most recent examination by the Federal Deposit Insurance Corporation
(as of September 30, 1999) 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
I risk-based, and Tier I 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 as of December 31, 1999 are
also presented in the table.
To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
------------------------- ------------------------- --------------------------
Amount % Amount % Amount %
-------------- -------- -------------- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1999:
Total Capital
(to risk weighted assets) $ 4,011,000 15.1% $ 2,131,120 > 8.0% $ 2,663,900 > 10.0%
- -
Tier I Capital
(to risk weighted assets) 3,696,327 13.9% 1,065,560 > 4.0% 1,598,340 > 6.0%
- -
Tier I Capital
(to average assets) 3,696,327 8.9% 1,659,200 > 4.0% 2,074,000 > 5.0%
- -
</TABLE>
12. Restrictions on Accumulated Deficit
Dividends paid by the Bank are subject to certain regulatory restrictions.
State regulations require approval of the Commissioner if the total
dividends declared and paid during any one year exceed the total of its
net retained profits of that year combined with net retained profits from
the preceding year. The Bank can declare, without the approval of the
Commissioner, dividends totalling $352,270 more than its retained net
earnings during the year ending December 31, 2000.
13. Commitments and Contingencies
The Bank has been named as a defendant in two separate lawsuits, which
arose from normal business activities. While the outcome of these lawsuits
cannot be predicted with certainty, management does not expect these
matters to have a material adverse effect on the Bank's financial position
or results of its operations.
<PAGE>
14. Stock Options
The Company has an incentive stock option agreement with its president.
Under this agreement, the president has the option to purchase up to 10%
of the Company's outstanding common stock over a ten-year period ending
July 1, 2006 at the fair value on the date of grant which was $.73 per
share. None of these options have exercised as of December 31, 1999.
The Company has additional incentive stock option agreements for key
officers and employees. During 1998, the Company issued 100,000 stock
options to three key officers. The key officers have the option to
purchase 100,000 shares of stock, over a ten-year period, at the market
price on the date of grant which was $1.20 per share. None of these
options have been exercised as of December 31, 1999. Total shares
available under all agreements for future option grants at December 31,
1999, were 35,000.
15. Significant Concentrations of Credit Risk
The majority of the Bank's business activity is with customers located
within East Baton Rouge Parish. As of December 31, 1999, the Bank's
receivables from, guarantees of, and obligations from construction loans
were a concentration. Generally, the loans are secured by real estate and
are expected to be repaid from cash flow or proceeds from the sales of
real estate. Loan losses arising from lending transactions with
construction contractors compare favorably with the Bank's loan loss
experience on its loan portfolio as a whole.
The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Commercial and standby letters of
credit were granted primarily to commercial borrowers. The contractual
amounts of credit-related financial instruments such as commitments to
extend credit, credit card arrangements, and letters of credit represent
the amounts of potential accounting loss should the contract be fully
drawn upon, the customer default, and the value of any existing collateral
become worthless.
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Parent Only Financial Statements
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1999
A S S E T S
1999
-----------------
<S> <C>
Assets:
Cash in subsidiary bank $ 38,234
Investment in subsidiary bank 3,688,023
-----------------
Total assets $ 3,726,257
=================
S T O C K H O L D E R S' E Q U I T Y
Common stock, $0.10 par value, 3,100,000 shares
authorized; 3,051,910 shares issued and outstanding
at December 31, 1999 $ 305,191
Capital surplus 4,110,113
Accumulated deficit (680,743)
Accumulated other comprehensive income (8,304)
-----------------
Total stockholders' equity $ 3,726,257
=================
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Parent Only Financial Statements (continued)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
------------------ -------------------
<S> <C> <C>
EXPENSES
Consultant fees $ - $ 1,758
Legal fees 8,591 4,924
Interest expense - 566
Other operating expenses 3,005 669
------------------ -------------------
11,596 7,917
------------------ -------------------
Income (loss) before equity in
undistributed earnings of subsidiary (11,596) (7,917)
Equity in undistributed
earnings of subsidiary 352,270 345,734
------------------ -------------------
NET INCOME 340,674 337,817
OTHER COMPREHENSIVE INCOME
Unrealized holding gains (losses) arising during
the period, net of taxes (10,898) 918
------------------ -------------------
COMPREHENSIVE INCOME $ 329,776 $ 338,735
================== ===================
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Parent Only Financial Statements (continued)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, AND 1998
1999 1998
----------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 340,674 $ 337,817
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Undistributed income of subsidiaries (352,270) (345,734)
Decrease in dividends receivable - 125,872
Decrease in accrued interest payable - (2,813)
----------------- ------------------
Net cash provided by (used in) operating activities (11,596) 115,142
----------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in line of credit - (75,000)
Proceeds from the issuance of stock - 7,457
----------------- ------------------
Net cash provided by (used in) financing activities - (67,543)
----------------- ------------------
Increase (decrease) in cash in subsidiary bank (11,596) 47,599
Cash in subsidiary bank - beginning of period 49,830 2,231
----------------- ------------------
Cash in subsidiary bank - end of period $ 38,234 $ 49,830
================= ==================
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ - $ 3,379
================= ==================
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 30, 2000 AND 1999
(In Thousands)
(Unaudited)
A S S E T S
2000 1999
-------------------- ----------------------
<S> <C> <C>
Cash and due from banks $ 3,537 $ 2,179
Federal funds sold 3,650 7,600
Securities available-for-sale 2,707 741
Securities to be held-to-maturity 155 175
Loans, less allowances for loan losses of
$279 and $321 at June 30,
2000 and 1999, respectively 30,698 29,027
Bank premises and equipment, net of
accumulated depreciation 709 745
Other real estate owned 605 321
Accrued income and other assets 366 281
-------------------- ----------------------
TOTAL ASSETS $ 42,427 $ 41,069
==================== ======================
<PAGE>
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
2000 1999
--------------------- ---------------------
<S> <C> <C>
LIABILITIES
Non-interest bearing accounts $ 4,729 $ 4,398
Interest bearing accounts 29,455 28,689
--------------------- ---------------------
Total deposits 34,184 33,087
Other borrowed funds 4,000 3,500
Federal funds purchased - 700
Accrued expenses and other liabilities 361 243
--------------------- ---------------------
Total liabilities 38,545 37,530
--------------------- ---------------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common stock - $0.10 par value; 3,100,000 shares
authorized; 3,051,907 shares issued and outstanding
at June 30, 2000 and 1999, respectively 305 305
Capital surplus 4,110 4,110
Accumulated deficit (524) (877)
Accumulated other comprehensive income (9) 1
--------------------- ---------------------
Total stockholders' equity 3,882 3,539
--------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 42,427 $ 41,069
===================== =====================
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In Thousands)
(Unaudited)
2000 1999
--------------------- ---------------------
<S> <C> <C>
INTEREST INCOME
Interest on loans $ 1,487 $ 1,466
Interest on available-for-sale securities 88 13
Interest on held-to-maturity securities 5 6
Interest on federal funds sold 112 160
Interest on deposits with other banks 20 5
--------------------- ---------------------
Total interest income 1,712 1,650
--------------------- ---------------------
INTEREST EXPENSE
Interest on deposits 694 699
Interest on other borrowed funds 106 97
--------------------- ---------------------
Total interest expense 800 796
--------------------- ---------------------
NET INTEREST INCOME 912 854
Provision for loan losses 6 6
--------------------- ---------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 906 848
--------------------- ---------------------
NON-INTEREST INCOME
Service charges on deposit accounts 52 67
Other service charges and fees 10 21
Other income 12 6
--------------------- ---------------------
Total other income 74 94
--------------------- ---------------------
NON-INTEREST EXPENSES
Salaries and employee benefits 364 364
Occupancy expenses 97 89
Other operating expenses 288 268
--------------------- ---------------------
Total other expenses 749 721
--------------------- ---------------------
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In Thousands)
(Unaudited)
2000 1999
--------------------- ---------------------
INCOME BEFORE INCOME TAX EXPENSE $ 231 $ 221
Income tax expense 74 77
--------------------- ---------------------
NET INCOME 157 144
OTHER COMPREHENSIVE INCOME
Unrealized holding gains (losses) arising during
the period, net of taxes (1) (2)
--------------------- ---------------------
COMPREHENSIVE INCOME $ 156 $ 142
===================== =====================
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In Thousands)
(Unaudited)
June 30, 2000 June 30, 1999
--------------------- ---------------------
<S> <C> <C>
Balance at December 31, 1999 and 1998 $ 3,726 $ 3,397
Net income 157 144
Net change in unrealized gain
on available-for-sale
securities, net of tax (1) (2)
--------------------- ---------------------
Balance at end of period $ 3,882 $ 3,539
===================== =====================
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In Thousands)
(Unaudited)
2000 1999
-------------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 157 $ 144
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 32 32
Gain on sale of other real estate - (6)
Provisions for losses on foreclosed real estate 23 23
Net amortization of discounts on
investment securities (13) (13)
Provision for loan losses 6 6
Decrease (increase) in accrued income
and other assets (67) 28
Increase (decrease) in accrued expenses and
other liabilities 108 (69)
-------------------- ---------------
Net cash provided by operating activities 246 145
-------------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in federal funds sold 3,050 575
Purchases of available-for-sale securities (473) (475)
Proceeds from maturities of held-to-maturity
securities 520 582
Proceeds from sales of other real estate - 62
Net increase in loans (1,343) 309
Purchases of property and equipment (16) (41)
-------------------- ---------------
Net cash used in investing activities 1,738 1,012
-------------------- ---------------
<PAGE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In Thousands)
(Unaudited)
2000 1999
-------------------- ---------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposit accounts,
NOW accounts, and savings accounts $ (179) $ (45)
Net increase (decrease) in time deposits 2,294 1,261
Net decrease in borrowings on line-of-credit (3,000) (1,750)
-------------------- ---------------
Net cash provided by financing activities (885) (534)
-------------------- ---------------
Increase in cash and due from banks 1,099 623
Cash and due from banks - beginning of year 2,438 1,556
-------------------- ---------------
Cash and due from banks - end of year $ 3,537 $ 2,179
==================== ===============
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 783 $ 753
==================== ===============
Cash paid during the year for income taxes $ - $ 153
==================== ===============
Loans transferred to other real estate during the year $ 307 $ -
==================== ===============
<PAGE>
</TABLE>
LOUISIANA BANCSHARES, INC. AND SUBSIDIARY
BATON ROUGE, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and item 310(b) of Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2000. For further information, refer to the financial
statements and footnotes hereto included in this joint Proxy
Statement-Prospectus.
2. Plan of Merger
Louisiana Bancshares, parent company of Louisiana Bank & Trust (LBT)
signed an Agreement and Plan of Merger (the "Plan of Merger") with Britton
& Koontz Capital Corporation, parent company of Britton & Koontz First
National Bank, NA (Britton & Koontz) on August 25, 2000. Pursuant to the
Plan of Merger, if all conditions are satisfied or waived, LBT will be
merged into Britton & Koontz (the "Merger") and the separate existence of
LBT will cease. By reason of the Merger, the outstanding shares of LBT
common stock will be converted into shares of common stock, Britton &
Koontz. LBT shareholders will receive for each share of stock, .1054 of a
share of fully-paid, non-assessable and registered common stock of Britton
& Koontz.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
between
BRITTON & KOONTZ CAPITAL CORPORATION
and
BRITTON & KOONTZ FIRST NATIONAL BANK
and
LOUISIANA BANCSHARES, INC.
and
LOUISIANA BANK & TRUST COMPANY
dated as of August 25, 2000
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of August 25, 2000 by and between BRITTON & KOONTZ CAPITAL CORPORATION,
a Mississippi corporation ("B&K"), and its wholly-owned subsidiary, BRITTON &
KOONTZ FIRST NATIONAL BANK, N.A., a national banking association with its
principal offices in Natchez, Mississippi ("B&K Bank"), and LOUISIANA
BANCSHARES, INC., a Louisiana corporation ("Louisiana Bancshares"), and its
wholly-owned subsidiary, LOUISIANA BANK & TRUST COMPANY, a banking association
organized under the laws of the State of Louisiana, with its principal offices
in Baton Rouge, Louisiana ("Louisiana Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of B&K and Louisiana
Bancshares have approved this Agreement and determined that it is desirable and
in the best interests of their respective companies and shareholders that
Louisiana Bancshares merge with and into B&K (the "Holding Company Merger") and
that Louisiana Bank merge with and into B&K Bank (the "Bank Merger" and together
with the Holding Company Merger, the "Mergers"), on the terms and subject to the
conditions set forth in this Agreement and in the Agreement of Merger attached
hereto as Exhibit A (the "Bank Merger Agreement");
WHEREAS, as a result of the Mergers (i) all of the issued and
outstanding shares of common stock of Louisiana Bancshares (other than shares
held by dissenting shareholders, fractional share interests and as otherwise set
forth herein) shall be converted into and exchanged for shares of common stock
of B&K, and (ii) all outstanding options to acquire common stock of Louisiana
Bancshares shall be converted into options to acquire common stock of B&K, on
the terms and subject to the conditions set forth herein;
WHEREAS, B&K and Louisiana Bancshares desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement and certain
additional agreements related to the transactions contemplated hereby; and
WHEREAS, the Holding Company Merger is intended to qualify as a
tax-free reorganization within the meaning of the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code") and as a "pooling of
interests" under generally accepted accounting principles.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
<PAGE>
ARTICLE I. THE MERGERS
1.01 The Mergers.
(a) On the Effective Date (as hereinafter defined), the parties shall
file with the Secretary of State of Mississippi Articles of Merger in the form
attached hereto as Exhibit B and shall file with the Louisiana Secretary of
State (the "LSOS") a Certificate of Merger in the form attached hereto as
Exhibit C, pursuant to which Louisiana Bancshares will, subject to the terms and
conditions stated herein, merge with and into B&K, which will be the surviving
corporation.
(b) As soon as practicable following the execution of this Agreement,
B&K Bank and Louisiana Bank will enter into the Bank Merger Agreement, pursuant
to which Louisiana Bank will, subject to the terms and conditions stated herein
and therein, merge with and into B&K Bank, which will be the surviving bank.
1.02 Effects of the Mergers. The Holding Company Merger shall have the
effects provided by this Agreement and as set forth under applicable law. The
surviving corporation shall be deemed to be the successor to each of Louisiana
Bancshares and B&K, shall be subject to all the liabilities, obligations, duties
and relations of each merging party, and shall, without the necessity of any
conveyance, assignment or transfer, become the owner of all of the assets of
every kind and character formerly belonging to Louisiana Bancshares and B&K. The
Bank Merger will have the effects set forth in 12 U.S.C. ss. 215a-1.
1.03 Merger Consideration; Conversion of Shares. Subject to the
satisfaction (or waiver) of the conditions stated in Article VIII hereof, upon
consummation of the Holding Company Merger on the Effective Date, and except for
shares as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited, each issued and outstanding share of common stock, $0.10
par value per share, of Louisiana Bancshares ("Louisiana Bancshares Common
Stock") shall become and be converted into 0.1054 of a share (or options to
acquire shares, as the case may be) of fully- paid, non-assessable and
registered common stock, $2.50 par value per share, of B&K ("B&K Common Stock")
(the "Per Share Merger Consideration"). Cash will be paid in lieu of any
fractional share of B&K Common Stock as provided in Section 1.05 below.
1.04 Stock Options.
(a) Between the date of this Agreement and the Effective Date (as
hereinafter defined), each person holding one or more Louisiana Bancshares
Options (as defined in Section 5.03) shall continue to have the right to
exercise any vested Louisiana Bancshares Option.
(b) At the Effective Date, each Louisiana Bancshares Option that is an
outstanding and unexercised non-qualified stock option or incentive stock option
(within the meaning of Section 422 of the Code) immediately prior thereto shall
cease to represent a right to acquire shares of Louisiana
<PAGE>
Bancshares Common Stock and shall be assumed by B&K and converted automatically
into an option to purchase shares of B&K Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to the terms
of Section 424(a) of the Code (in the case of incentive stock options) and the
Louisiana Bancshares Option Plan (as defined in Section 5.03) and the agreements
evidencing grants thereunder):
(i) the number of shares of B&K Common Stock to be subject to
the converted option shall be equal to the product of the number of shares of
Louisiana Bancshares Common Stock subject to the original Louisiana Bancshares
Option, multiplied by the Per Share Merger Consideration (provided that such
number of shares shall be rounded to the nearest whole share); and
(ii) the exercise price per share of B&K Common Stock under
the converted Louisiana Bancshares Option shall be equal to the exercise price
per share of Louisiana Bancshares Common Stock under the option, divided by the
Per Share Merger Consideration (provided that such exercise price shall be
rounded to the nearest whole cent).
1.05 Fractional Shares. Each holder of Louisiana Bancshares Common
Stock who would otherwise have been entitled to receive a fraction of a share of
B&K Common Stock pursuant to the Holding Company Merger (or upon the exercise of
a stock option, as the case may be) shall receive, in lieu thereof, an amount in
cash (without interest) equal to the product of such fractional share,
multiplied by the "Market Price" of B&K Common Stock. For these purposes, the
Market Price of B&K Common Stock shall be the average of the high and low
closing bid quotations with respect to B&K Common Stock as reported by the
National Association of Securities Dealers Automated Quotation System Small Cap
Market during the period of 20 business days immediately prior to the business
day that is 3 business days preceding the Effective Date (or the exercise date
of the stock option, as the case may be).
1.06 Exchange Provisions. After the Effective Date, each holder of an
outstanding certificate or certificates theretofore representing shares of
Louisiana Bancshares Common Stock (other than shares as to which dissenters'
rights have been perfected and not withdrawn or otherwise forfeited), upon
surrender thereof to American Stock Transfer & Trust Company, as Exchange Agent
(the "Exchange Agent"), will be entitled to receive the shares of B&K Common
Stock into which such shares have been ultimately converted as provided in
Sections 1.03 and 1.04 and cash in lieu of any fractional share as provided in
Section 1.05. Until so surrendered, each outstanding certificate theretofore
representing shares of Louisiana Bancshares Common Stock will be deemed for all
purposes, other than as provided below with respect to the payment of dividends
or other distributions, if any, in respect of B&K Common Stock, to represent the
number of whole shares of B&K Common Stock into which the shares of Louisiana
Bancshares Common Stock represented thereby have been converted. B&K may, at its
option, refuse to pay any dividend or other distribution, if any, payable to the
holders of shares of B&K Common Stock to the holders of certificates evidencing
unsurrendered Louisiana Bancshares Common Stock; provided, however, that upon
surrender of such certificates, B&K will pay to the record holder of the B&K
Common Stock for which certificates are issued in exchange for the surrendered
certificates, to the extent not
<PAGE>
previously paid, the amount of dividends and distributions, if any, without
interest, which have become payable from the Effective Date through the date of
such surrender with respect to the number of whole shares of B&K Common Stock
into which the shares of Louisiana Bancshares Common Stock have been converted.
Whether or not a certificate representing Louisiana Bancshares Common Stock is
surrendered, from and after the Effective Date, such certificate will under no
circumstances evidence, represent or otherwise constitute any stock or other
interest in Louisiana Bancshares, Louisiana Bank or any entity other than B&K.
1.07 Transfers. On and after the Effective Date there shall be no
transfers on the stock transfer books of Louisiana Bancshares or B&K of the
shares of Louisiana Bancshares Common Stock which were issued and outstanding
immediately prior to the Effective Date. If, after the Effective Date,
certificates representing shares of Louisiana Bancshares Common Stock are
properly presented to the Exchange Agent, they shall be cancelled and exchanged
for certificates representing the number of whole shares of B&K Common Stock and
a check representing the amount of cash into which the Louisiana Bancshares
Common Stock represented thereby was converted in the Holding Company Merger.
Any other provisions of this Agreement notwithstanding, neither the Exchange
Agent nor any party hereto shall be liable to a holder of Louisiana Bancshares
Common Stock for any amount paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat or similar law.
1.08 Dissenting Shareholders. Shares of Louisiana Bancshares Common
Stock held by any holder having rights of a dissenting shareholder as provided
in the Louisiana Business Corporation Law (the "LBCL"), who shall have properly
objected to the Holding Company Merger and who shall have properly demanded
payment for his stock in accordance with and subject to the provisions of
Section 12:131 of the LBCL, shall not be converted as provided herein until such
time as such holder shall have failed to perfect, or shall have effectively
lost, his right to appraisal of and payment for his shares of Louisiana
Bancshares Common Stock, at which time such shares shall be converted into the
Per Share Merger Consideration.
ARTICLE II. THE CLOSING
2.01 Closing. Subject to the satisfaction or waiver of the conditions
set forth in Article VIII, the closing of the Mergers (the "Closing") will take
place at the offices of B&K, 500 Main Street, Natchez, Mississippi 39120 at
10:00 a. m. local time, on a date mutually agreeable to B&K and Louisiana
Bancshares which is not less than 10 business days nor more than 20 business
days following receipt of all "Approvals" (as defined herein), or at such other
time and place as B&K and Louisiana Bancshares mutually agree (the "Closing
Date"). At the Closing, the parties will deliver the certificates, letters and
opinions which constitute conditions to the Closing, and each party will provide
the others with such proof or indication of satisfaction of the conditions of
such others to consummate the Mergers as such others may reasonably require.
2.02 Filing and Recordation of Certificate of Merger; Effective Date.
In order to effect the mergers, the Articles of Merger and Certificate of Merger
referred to in Section 1.01 above will be
<PAGE>
filed and recorded as provided by law immediately following (or concurrently
with) the Closing. The Holding Company Merger will be effective on the date
specified in a certificate or other written record issued by the respective
Secretaries of State of the States of Mississippi and Louisiana or otherwise in
accordance with applicable law (the "Effective Date"). The Bank Merger will be
effective on the Effective Date, one minute following the effectiveness of the
Holding Company Merger upon filing of the Bank Merger Agreement, the Articles of
Merger referred to in Section 1.01 above and the Certificate of Merger referred
to in Section 1.01 above.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF LOUISIANA BANCSHARES AND LOUISIANA BANK
Louisiana Bancshares and Louisiana Bank, jointly, severally and in
solido, represent and warrant to B&K and B&K Bank as follows, subject to such
exceptions and limitations set forth in the Schedules of Louisiana Bancshares
attached hereto as Group Exhibit D (the "Schedules"):
3.01 Organization of Louisiana Bancshares and its Subsidiaries.
(a) Louisiana Bancshares' "Consolidated Group," as such term is used in
this Agreement, consists of all entities required to be consolidated on
Louisiana Bancshares' consolidated financial statements, pursuant to generally
accepted accounting principles ("GAAP"). Schedule 3.01(a) lists all members of
the Consolidated Group.
(b) Louisiana Bancshares is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana, and has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is being conducted as of the date
hereof. Louisiana Bancshares is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended (the "BHCA"). Louisiana Bancshares is
duly qualified to do business as a foreign corporation in good standing in each
state in which such qualification is required and the failure to so qualify
would have a material adverse effect on the financial condition, results of
operations, business or prospects of Louisiana Bancshares (a "Material Adverse
Effect").
(c) Louisiana Bank is a state bank duly organized and validly existing
under the laws of the State of Louisiana. Louisiana Bank is an "insured bank" as
defined in the Federal Deposit Insurance Act, as amended, and the rules and
regulations promulgated thereunder (the "FDIA"), and is not a member of the
Federal Reserve System. Other than Louisiana Bank, Louisiana Bancshares has no
subsidiary that is a "depository institution," as defined in the FDIA.
(d) Each subsidiary of Louisiana Bancshares and Louisiana Bank (a
"Subsidiary") other then Louisiana Bank, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary has all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as it is
being conducted on the date hereof. Each Subsidiary is duly qualified to do
business as a foreign corporation in good standing in each state in which such
qualification is required and the failure to
<PAGE>
so qualify would have a Material Adverse Effect. Schedule 3.01(d) lists all
Subsidiaries of Louisiana Bancshares and indicates for each the jurisdiction of
its organization and the interest of Louisiana Bancshares in such Subsidiary.
3.02 Capitalization.
(a) The authorized capital stock of Louisiana Bancshares consists of
6,000,000 shares of Louisiana Bancshares Common Stock, of which 3,051,907 shares
are issued and outstanding and no shares are held in its treasury. All issued
and outstanding shares of Louisiana Bancshares Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable. All of the
outstanding shares of Louisiana Bancshares Common Stock have been issued in
compliance with all legal requirements and in compliance with any preemptive
rights. Except for outstanding options to purchase 447,099 shares of Louisiana
Bancshares Common Stock, there are no outstanding (a) shares of capital stock or
other equity securities of Louisiana Bancshares or (b) options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of capital stock or other equity securities of Louisiana Bancshares.
(b) Except as set forth on Schedule 3.02(b), Louisiana Bancshares
and/or Louisiana Bank own, directly or indirectly, all issued and outstanding
shares of capital stock of each Subsidiary free and clear of any claim, option,
charge, lien, encumbrance or agreement with respect thereto. All issued and
outstanding shares of capital stock of each Subsidiary have been duly authorized
and are validly issued, fully paid and nonassessable (except, in the case of
Louisiana Bank, any assessment imposed by law under La. R.S. 6:262 or any
comparable federal or state banking law requirement, as applicable). All of the
outstanding shares of capital stock of each Subsidiary have been issued in
compliance with all legal requirements and in compliance with any preemptive
rights. No shares of capital stock or other equity security of any Subsidiary is
or may be required to be issued by reason of any option, warrant, scrip, right
to subscribe to, call or commitment of any character whatsoever relating to, or
security or right convertible into or exchangeable for, shares of capital stock
or other equity securities of such Subsidiary.
3.03 Authorization.
(a) (i) Subject to the approval of the transactions contemplated by
this Agreement by the shareholders of Louisiana Bancshares and the execution,
certification, acknowledgment and filing of all required documents and
instruments with the LSOS in accordance with the LBCL and all other filings
required by applicable law and regulation, (A) all corporate acts and
proceedings required of Louisiana Bancshares for the due and valid
authorization, execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been validly and appropriately taken by
Louisiana Bancshares, and (B) this Agreement constitutes a legal, valid and
binding obligation of Louisiana Bancshares, enforceable against it in accordance
with its terms except that such enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court decisions relating
to or affecting the enforcement of creditors' rights and by
<PAGE>
general equity principles; (ii) upon the approval of the transactions
contemplated by this Agreement by Louisiana Bancshares, as the sole shareholder
of Louisiana Bank, and the due execution, certification, acknowledgment and
filing of all required documents and instruments with the Louisiana Office of
Financial Institutions (the "OFI") and the LSOS in accordance with the Louisiana
Banking Law (the "LBL"), (A) all corporate acts and proceedings required of
Louisiana Bank for the due and valid authorization, execution, delivery and
performance of this Agreement and the Bank Merger Agreement and the transactions
contemplated hereby and thereby have been validly and appropriately taken and
(B) this Agreement and the Bank Merger Agreement each constitute a legal, valid
and binding obligation of Louisiana Bank, enforceable against it in accordance
with its terms except that such enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court decisions relating
to or affecting the enforcement of creditors' rights and by general equity
principles.
(b) Neither the execution or delivery of this Agreement or the Bank
Merger Agreement, nor the consummation of the transactions contemplated hereby
and thereby, nor compliance with any of the provisions hereof or thereof, by
either Louisiana Bancshares or Louisiana Bank will (i) violate, conflict with,
result in a breach of any provision of, constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default) under, result
in the termination of, accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Louisiana Bancshares or any of its Subsidiaries under the terms, conditions or
provisions of (A) the articles of association (or articles of incorporation) or
bylaws (or equivalent governing instruments) of Louisiana Bancshares or any of
its Subsidiaries or (B) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Louisiana
Bancshares or any of its Subsidiaries is a party, or by which Louisiana
Bancshares or any of its Subsidiaries or any of their respective properties or
assets may be bound or affected, and that would, individually or in the
aggregate, in any such event, have a Material Adverse Effect, or enable any
person to enjoin the transactions contemplated hereby, or (ii) subject to the
approvals referred to in Section 3.03(a) and compliance with the statutes and
regulations referred to in Section 3.03(c), violate any judgment, ruling, order,
writ, injunction, decree, law, statute, rule or regulation applicable to
Louisiana Bancshares or any of its Subsidiaries or any of their respective
properties or assets.
(c) Other than in connection or compliance with the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the securities laws of
any applicable state and the rules of the National Association of Securities
Dealers, Inc. and other than applications, filings, notices, consents,
authorizations, approvals and/or exemptions required under federal and state
banking laws and applicable state corporate laws, no notice to, filing with,
authorization of, exemption by, or consent or approval of any public body or
authority is necessary for the consummation by Louisiana Bancshares or Louisiana
Bank of the transactions contemplated by this Agreement and the Bank Merger
Agreement.
<PAGE>
3.04 Corporate Documents. Louisiana Bancshares has delivered to B&K
true and complete copies of the articles of incorporation and bylaws, as amended
or restated through the date hereof, of itself and each of its Subsidiaries. The
minute books of Louisiana Bancshares and Louisiana Bank have been made available
for inspection by B&K and contain complete and accurate records of all formal
corporate actions of their shareholders and Boards of Directors.
3.05 Financial Statements. Louisiana Bancshares has delivered to B&K
true and complete copies of its (i) consolidated balance sheets as of June 30,
2000 (the "Latest Balance Sheet") and June 30, 1999 and the related statements
of income, cash flow and changes in shareholders' equity (the "Interim Financial
Statements"), and (ii) the consolidated statements of income, cash flow and
changes in shareholders' equity for each of the years in the three-year period
ended December 31, 1999, including the notes thereto, and the report thereon of
its independent public accountants (collectively, the "Annual Financial
Statements"). The Annual Financial Statements and the Interim Financial
Statements have been prepared, and all financial statements of Louisiana
Bancshares required to be delivered to B&K under this Agreement prior to the
Effective Date will be prepared, in accordance with GAAP, applied on a
consistent basis, and present fairly, or will present fairly, as the case may
be, the consolidated financial position, results of operations and cash flow of
Louisiana Bancshares' Consolidated Group at the respective dates thereof and for
the periods referred to therein. As of the date of the Latest Balance Sheet, no
member of Louisiana Bancshares' Consolidated Group had, nor were any of its
assets subject to, any liability, commitment, indebtedness or obligation (of any
kind whatsoever, whether absolute, accrued, contingent, known, unknown, matured
or unmatured) that is required to be, but is not, reflected and adequately
reserved against in the Latest Balance Sheet. The Annual Financial Statements
and the Interim Financial Statements are, and any financial statements of
Louisiana Bancshares delivered hereunder subsequent to the date hereof will be,
supported by and consistent with detailed trial balances of investment
securities, loans and commitments, depositor's accounts and cash balances on
deposit with other institutions, copies of which have been made available for
inspection by B&K.
3.06 Reports. Since December 31, 1999, Louisiana Bancshares and each of
its Subsidiaries have filed all reports, registrations and statements, together
with any required amendments thereto, that they were required to file with (a)
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), (b) the Federal Deposit Insurance Corporation (the "FDIC"), (c) the OFI
and (d) any other applicable securities or banking authorities. All such reports
and statements filed (and to be filed prior to the Effective Date) with any such
regulatory body or authority are collectively referred to herein as the
"Louisiana Bancshares Reports." As of their respective dates, all such Louisiana
Bancshares Reports were filed (and, prior to the Effective Date, will be filed)
on the appropriate form and complied (and, prior to the Effective Date, will
comply) in all material respects with the instructions to the form and the
applicable rules and regulations promulgated by the Federal Reserve Board, the
FDIC and the OFI. At the time of filing, unless amended subsequent thereto, in
which case at the time of filing such amendment, no Louisiana Bancshares Report
contained or will contain any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Louisiana Bancshares
<PAGE>
has delivered, or caused to be delivered, to B&K true and complete copies of (a)
Louisiana Bancshares' annual report to the Federal Reserve Board on Form FR Y-6
for the years ended December 31, 1999 and 1998, its report of bank holding
company intercompany transactions and balances to the Federal Reserve Board on
Form FR Y-8 since December 31, 1999, and the quarterly reports on Form Y-9C,
Form Y-9LP and Form Y-11 of Louisiana Bancshares and of each of its Subsidiaries
required to file such reports, (b) all of Louisiana Bank's reports made to the
OFI for the years ended December 31, 1999 and 1998; (c) all annual reports
provided to shareholders of Louisiana Bancshares for the years ended December
31, 1998 and 1999 and all subsequent quarterly reports provided to shareholders,
if any, and (d) all proxy statements disseminated to shareholders of Louisiana
Bancshares since December 31, 1998.
3.07 Absence of Certain Changes. Since the date of the Latest Balance
Sheet, there has not been any change in the business, financial condition or
results of operations of Louisiana Bancshares or any of its Subsidiaries, which
has had, or may reasonably be expected to have, a Material Adverse Effect,
excluding changes in banking laws or regulations that affect financial
institutions generally and changes which have been agreed to, in writing, by
Louisiana Bancshares and B&K. Except as set forth in Schedule 3.07, neither
Louisiana Bancshares nor any of its Subsidiaries has:
(a) since the date of the Latest Balance Sheet, except in the ordinary
course of business consistent with past practices, (i) borrowed any money, (ii)
loaned any money or pledged any of its credit in connection with any aspect of
its business, (iii) mortgaged or otherwise subjected to any lien, encumbrance or
other liability any of its assets, (iv) sold, assigned or transferred any of its
assets or properties, or (iv) incurred any material liability, commitment,
indebtedness or obligation (of any kind whatsoever, whether accrued, contingent,
known, unknown, matured or unmatured), which would result in a Material Adverse
Effect;
(b) since the date of the Latest Balance Sheet, suffered any material
damage, destruction or loss, whether or not covered by insurance, which would
result in a Material Adverse Effect;
(c) since the date of the Latest Balance Sheet, experienced any
material change in asset concentrations as to customers or industries or in the
nature and source of its liabilities, which would result in a Material Adverse
Effect;
(d) as of the date hereof, received notice or had knowledge or reason
to believe that any material labor unrest exists among any of its employees or
that any group, organization or union has attempted to organize any of its
employees;
(e) as of the date hereof, received notice or had knowledge or reason
to believe that any of its substantial customers has terminated or intends to
terminate such customer's relationship with it, which would result in a Material
Adverse Effect;
<PAGE>
business after taking into account all recoveries reasonably anticipated in the
ordinary course of business and (iv) to the extent secured, secured by valid
liens and security interests which have been perfected, except for any such
loan, discount or financing lease which would not result in a Material Adverse
Effect; or
(p) since the date of the Latest Balance Sheet, entered into any
agreement, contract or commitment to do, or which could reasonably be expected
to result in, any of the foregoing.
3.08 Properties and Leases.
(a) Except as may be reflected in the Annual Financial Statements and
except for any lien for taxes accrued but not yet payable, Louisiana Bancshares
and each Subsidiary has good and merchantable title, free and clear of any
liens, claims, charges, options, encumbrances or similar restrictions material
to Louisiana Bancshares and its Subsidiaries as a whole, to all of the real and
personal property reflected on the Latest Balance Sheet and real and personal
property acquired since such date, except for such real and material personal
property as has been disposed of for adequate consideration in the ordinary
course of business. Except as set forth in Schedule 3.08(a), no member of the
Consolidated Group has any obligation, absolute or contingent, to sell or
otherwise dispose of any of its assets except in the ordinary course of business
consistent with prior practice or to sell or otherwise dispose of assets with a
book value, fair market value or proposed purchase price in excess of $10,000,
whether or not such sale or disposition is in the ordinary course of business
consistent with prior practice.
(b) Any real property and other material assets held under lease by
Louisiana Bancshares or any Subsidiary are held under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property by Louisiana
Bancshares or any Subsidiary. Except as set forth on Schedule 3.08(b), with
respect to each lease of any real property or a material amount of personal
property to which Louisiana Bancshares or any Subsidiary is a party, except for
financing leases in which Louisiana Bancshares or any Subsidiary is lessor, (i)
such lease is in full force and effect in accordance with its terms; (ii) all
rents and other monetary amounts that have become due and payable thereunder
have been paid; (iii) there exists no default, or event, occurrence, condition
or act, which with the giving of notice, the lapse of time or both would become
a default, under such lease; and (iv) neither the Mergers nor the transactions
contemplated by this Agreement will constitute a default or a cause for
termination or modification of such lease.
3.09 Loan Portfolio.
(a) All loans, discounts and financing leases (under which Louisiana
Bancshares or any of its Subsidiaries is lessor) reflected on the Latest Balance
Sheet (i) have been made for good, valuable and adequate consideration in the
ordinary course of business, (ii) are evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and what they purport to be
<PAGE>
and (iii) to the extent secured, have been secured by valid liens and security
interests that have been perfected.
(b) Except as specifically noted in the attached Schedule 3.09,
Louisiana Bank is not a party to any written or oral loan agreement, note or
borrowing arrangement, including any loan guaranty, which was, as of the Latest
Balance Sheet, (i) delinquent by more than 30 days in the payment of principal
or interest or where, to the knowledge of Louisiana Bancshares or Louisiana
Bank, the obligor is in default of any other provision of such agreement,
instrument or obligation; (ii) classified as "substandard," "doubtful," "loss,"
"other assets especially mentioned" or any comparable classification by
Louisiana Bank, the FDIC or the OFI, (iii) with any director, executive officer
or ten percent shareholder of Louisiana Bancshares or any of its Subsidiaries
who is subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part
215), or any person, corporation or enterprise controlling, controlled by or
under common control with any of the foregoing, or (iv) which is in violation of
any law, regulation or rule of any governmental authority which violation could
have a Material Adverse Effect.
3.10 Loan Loss Reserve; OREO; Substantive Repossessions. Except as set
forth on Schedule 3.10, the allowance for loan losses shown on the Latest
Balance Sheet is adequate in all material respects, and there are no facts or
circumstances known, as of date hereof, to Louisiana Bancshares or Louisiana
Bank that are likely to require a future material increase or decrease in the
allowance for loan losses reflected in the Latest Balance Sheet. The other real
estate reflected on the Latest Balance Sheet is carried at the lower of cost or
fair value, and adequate reserves have been established for possible subsequent
valuation adjustments. Loans in which Louisiana Bank has more exposure to the
risk of ownership of the collateral than does the borrower are accounted for in
the same manner as properties acquired through foreclosure.
3.11 Commitments and Contracts.
(a) Other than as described in the Schedule 3.11(a), neither Louisiana
Bancshares nor any of its Subsidiaries is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to indemnification or to severance or
termination pay liabilities or fringe benefits) with any present or former
officer, director, employee or consultant;
(ii) any plan, contract or understanding providing for any
bonus, pension, stock option or other stock based right, deferred compensation,
retirement payment, profit sharing or similar arrangement with respect to any
present or former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
<PAGE>
(iv) any contract containing any covenant limiting the ability
of Louisiana Bancshares or any of its Subsidiaries to compete in any line of
business or with any person, or which involves any restriction of the
geographical area in which, or method by which, Louisiana Bancshares or any of
its Subsidiaries may carry on its business; or
(v) any lease which individually has, or any two or more
related leases which in the aggregate have, annual rental payments exceeding
$25,000.
Schedule 3.11 lists each material agreement, contract or commitment
(except those entered into in the ordinary course of business with respect to
loans, lines of credit, letters of credit, depositor agreements, certificates of
deposit and similar banking activities) to which Louisiana Bancshares or any of
its Subsidiaries is a party or which affects any such member of the Louisiana
Bancshares Consolidated Group.
(b) Neither Louisiana Bancshares nor any of its Subsidiaries is in
breach of any provision of, or is in default in any respect under the terms of
(or but for any existing waiver would be in breach of any provisions of or in
default in any respect under), any contract, plan or instrument, the result of
which breach or default would be a Material Adverse Effect, nor is there any
pending or, to the knowledge of Louisiana Bancshares or Louisiana Bank,
threatened claim or notice that there has been such a breach or default. To the
knowledge of Louisiana Bancshares and Louisiana Bank, the other party or parties
to any such contract, plan or instrument are not in breach or default thereof.
3.12 Material Interests of Certain Persons. Except as set forth in
Schedule 3.12, no past or present director, executive officer or five percent
shareholder of any member of the Consolidated Group has, since December 31,
1998, engaged in any transaction or series of transactions which, if Louisiana
Bancshares had been subject to Section 14(a) of the Exchange Act at all times
since that date, would be required to be disclosed in its proxy materials
pursuant to Item 404 of Regulation S-K of the Rules and Regulations of the
Securities and Exchange Commission (the "SEC").
3.13 Litigation.
(a) Except as described in Schedule 3.13 (a), there are no claims of
any kind or any actions, suits, proceedings, arbitrations or investigations
pending or, to the knowledge of Louisiana Bancshares or Louisiana Bank,
threatened, in any court or before any governmental agency or instrumentality or
arbitration panel or otherwise, against Louisiana Bancshares or any of its
Subsidiaries or any of their respective assets or properties.
(b) Except as set forth in Schedule 3.13 (b), there is no judgment,
decree, injunction, ruling or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against Louisiana
Bancshares or any of its Subsidiaries or affecting any of such entities' assets
or properties.
<PAGE>
(c) Except as set forth in Schedule 3.13 (c), there are no uncured
violations, or violations with respect to which refunds or restitution may be
required, cited in any compliance report to Louisiana Bancshares or any of its
Subsidiaries as a result of an examination by a regulatory agency.
(d) Except as set forth in Schedule 3.13(d), neither Louisiana
Bancshares nor any of its Subsidiaries is subject to any written agreement,
memorandum or order with or by any regulatory agency, and there have been no
resolutions or commitments adopted by the Board of Directors of Louisiana
Bancshares or any of its Subsidiaries at the request of any regulatory agency.
3.14 Taxes.
(a) Except as set forth in Schedule 3.14, since 1996, Louisiana
Bancshares and Louisiana Bank have timely filed all federal, state and local tax
returns required to be filed and Louisiana Bancshares and Louisiana Bank have
paid, or have made adequate provision for the payment of, all taxes required to
be paid in respect of all periods ending on or before the date of this Agreement
(and the Effective Date) to any city, parish, state, foreign country, the United
States or any other taxing authority. Neither Louisiana Bancshares nor any of
its Subsidiaries has or will have any liability for any taxes in excess of the
amounts so paid or provided for and no deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
definitely) against Louisiana Bancshares or Louisiana Bank which have not been
adequately provided for.
(b) Neither Louisiana Bancshares nor any of its Subsidiaries is
delinquent in the payment of any tax, assessment or governmental charge (other
than any being contested in good faith by appropriate proceedings and set forth
in the Schedules), nor has it requested any extension of time within which to
file any tax returns in respect of any fiscal year which have not since been
filed and no requests for waivers of the time to assess any tax are pending.
3.15 Insurance. Louisiana Bancshares and each of its Subsidiaries are
presently insured, and during each of the past five calendar years have been
insured, in amounts and by reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. Schedule 3.15 contains an accurate list of all
such insurance policies. Neither Louisiana Bancshares nor any of its
Subsidiaries is now liable for any material retroactive premium adjustment in
accordance with any policy existing on the date of this Agreement or prior
thereto. All policies are valid and enforceable and in full force and effect,
and neither Louisiana Bancshares nor any of its Subsidiaries has received any
notice of a material premium increase or cancellation with respect to any of its
insurance policies or bonds. Within the last three years, neither Louisiana
Bancshares nor any of its Subsidiaries has been refused any insurance coverage
sought or applied for, and neither Louisiana Bancshares nor any of its
Subsidiaries has reason to believe that its existing insurance coverage cannot
be renewed as and when the same will expire, upon terms and conditions as
favorable as those presently in effect.
<PAGE>
3.16 Employee Benefit Plans.
(a) Each of Louisiana Bancshares and Louisiana Bank and each plan,
agreement, arrangement, commitment, practice or policy (including any item set
forth in an employee handbook) that is an employment, consulting or deferred
compensation agreement, or an executive compensation, incentive bonus, pension,
profit sharing, savings, retirement, stock option, stock purchase or severance
pay plan, or a holiday, vacation or other bonus practice, or any other benefit
plan, agreement, arrangement or commitment, including without limitation any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained by either of
Louisiana Bancshares or Louisiana Bank, or with respect to which either
Louisiana Bancshares or Louisiana Bank has since June 30, 1995, any liability or
obligation or any contingent liability or obligation ("Employee Benefit Plan")
is in material compliance with, and is not in material breach or violation of,
any laws, requirements or orders under ERISA or the Code, which non-compliance,
breach or violation is reasonably likely to have a Material Adverse Effect. Each
Employee Benefit Plan which is intended to be qualified under Sections 401 or
501 of the Code has received a favorable determination letter from the Internal
Revenue Service or is within the remedial amendment period for obtaining such
letter, and neither Louisiana Bancshares nor Louisiana Bank is aware of any
circumstances that are reasonably likely to materially affect qualification in
an adverse manner. Neither Louisiana Bancshares nor Louisiana Bank currently
maintains nor have they ever maintained an Employee Benefit Plan that is subject
to Title IV of ERISA. Neither Louisiana Bancshares nor Louisiana Bank has
contributed to, participated in or agreed to participate in a "multiemployer
plan" as defined in Section 3(37) of ERISA. Neither Louisiana Bancshares nor
Louisiana Bank currently maintains, nor have they ever maintained, an Employee
Benefit Plan that is subject to the minimum funding standards under Code section
412 and ERISA section 302. All required premiums and contributions have been
made to or for, and are reflected in the manner and to the extent required by
GAAP on the books of account of each Employee Benefit Plan of Louisiana
Bancshares and Louisiana Bank. No Employee Benefit Plan or any "disqualified
person" (within the meaning of ERISA section 4975(e)(2)) or "party-in- interest"
(within the meaning of ERISA section 3(14)) with respect thereto, has engaged in
a "prohibited transaction" as defined in Section 406 of ERISA or where
applicable, Section 4975 of the Code (i) for which no exemption is applicable,
or for which adequate provision has not been included by it in its most recent
Financial Statements or Interim Financial Statements, and (ii) which prohibited
transaction is reasonably likely to have a Material Adverse Effect.
(b) Except as described in Schedule 3.16, neither Louisiana Bancshares
nor Louisiana Bank has an Employee Benefit Plan covering persons presently or
previously employed by or providing services to it.
3.17 Environmental Protection.
(a) Louisiana Bancshares and each of its Subsidiaries has obtained all
permits, licenses and other authorizations that are required by it in connection
with the operation of its business and ownership of its properties, including
without limitation properties acquired by foreclosure or in
<PAGE>
settlement of loans (collectively, the "Subject Properties"), under any
applicable environmental law or regulation except for such instances where the
failure to obtain a license or other authorization is not reasonably likely to
have individually or in the aggregate a Material Adverse Effect.
(b) Louisiana Bancshares and each of its Subsidiaries are in material
compliance with all terms and conditions of such permits, licenses and
authorizations and with all applicable environmental laws and regulations.
(c) To the knowledge of Louisiana Bancshares and Louisiana Bank, there
are no past or present events, conditions, circumstances, activities or plans
related in any manner to Louisiana Bancshares or any of its Subsidiaries or the
Subject Properties that may, in any material respect, violate or prevent
compliance or continued compliance with any applicable environmental law or
regulation or give rise to any liability under any environmental law.
(d) There is no civil, criminal or administrative action, suit, demand,
claim, order, judgment, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or, to its knowledge, threatened by any
person against Louisiana Bancshares or any of its Subsidiaries, or any prior
owner of any of the Subject Properties and relating to any of the Subject
Properties, and relating in any way to any environmental law or regulation or
seeking to impose any environmental liability.
3.18 Brokers and Finders. Except as set forth in Schedule 3.18, neither
Louisiana Bancshares nor any of its Subsidiaries, nor any of their respective
officers, directors or employees acting in their behalf, has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Louisiana Bancshares or any of its Subsidiaries in connection
with this Agreement or the Bank Merger Agreement or the transactions
contemplated hereby and thereby.
3.19 Compliance with Laws. Louisiana Bancshares and each of its
Subsidiaries have all permits, licenses, authorizations, orders and approvals
of, and have made all filings, applications and registrations with, federal,
state, local or foreign governmental or regulatory bodies that are required in
order to permit them to own or lease their properties and assets and to carry on
their business as it is presently conducted and that are material to the
business of Louisiana Bancshares or Louisiana Bank or to the business of
Louisiana Bancshares and its Subsidiaries taken as a whole. All such permits,
licenses, authorizations, orders and approvals are in full force and effect and,
to the knowledge of Louisiana Bancshares and Louisiana Bank, no suspension,
cancellation or modification of any of them is threatened. The conduct by
Louisiana Bancshares and by each of its Subsidiaries of their business does not
violate in any material respect any applicable federal, state, local or foreign
law, statute, ordinance, license or regulation. Louisiana Bancshares and each of
its Subsidiaries have complied with and are not in default under (and have not
been charged or threatened with or come under investigation with respect to any
charge concerning any violation of any provisions of) any law, order, license,
regulation or demand of any federal, state, local, foreign or other governmental
agency or any order, writ, injunction or decree of any court, agency or
instrumentality that would
<PAGE>
have a Material Adverse Effect. Except for statutory or regulatory restrictions
of general application, no federal, state, municipal or other governmental
authority has placed any restriction on the business of Louisiana Bancshares or
any of its Subsidiaries that could have a Material Adverse Effect.
3.20 Community Reinvestment Act. Louisiana Bank has complied with the
provisions of the federal Community Reinvestment Act (the "CRA") and the rules
and regulations promulgated thereunder, has received CRA ratings not worse than
"Satisfactory" in any past CRA examination and neither Louisiana Bancshares nor
Louisiana Bank knows of any facts that, if known by the FDIC, would be likely to
result in a CRA rating of less than Satisfactory.
3.21 Disclosure Statements. None of the information provided by
Louisiana Bancshares or Louisiana Bank for inclusion in the documents to be
prepared in connection with the transactions contemplated by this Agreement
including, without limitation, (a) documents to be filed with the SEC, including
the registration statement on SEC Form S-4 that B&K will file to register the
shares of B&K Common Stock to be delivered on the Effective Date (the
"Registration Statement"), the related joint proxy statement/prospectus,
including letters to shareholders, notices of special meetings and forms of
proxy (collectively, the "Joint Proxy Statement/Prospectus"), or any amendments
or supplements thereto, (b) filings pursuant to any state securities laws, and
(c) filings made in connection with obtaining the approval of regulatory
authorities, will, in the case of the Registration Statement, at the time the
Registration Statement is declared effective pursuant to the Securities Act, in
the case of the Joint Proxy Statement/Prospectus (as supplemented or amended) at
the time of the mailing thereof and at the time of the meeting of the
shareholders of Louisiana Bancshares, and in the case of other documents, at the
time such documents are filed with any federal or state regulatory authority and
at the time any such documents are distributed to shareholders of Louisiana
Bancshares, will contain any untrue statement of material fact, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading. All documents
which Louisiana Bancshares or its Subsidiaries are responsible for filing with
any regulatory authority in connection with the Mergers will comply as to form
in all material respects with the provisions of applicable law.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF B&K
B&K and B&K Bank represent and warrant to Louisiana Bancshares and
Louisiana Bank as follows:
4.01 Organization and Authority.
(a) B&K is a corporation duly organized, validly existing and in good
standing under the laws of the State of Mississippi, and has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as it is being conducted as of the date hereof. B&K is a
bank holding company registered under the BHCA. B&K is duly qualified in good
<PAGE>
standing to do business as a foreign corporation in each state in which the
failure to so qualify would have a Material Adverse Effect.
(b) B&K Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as it is being conducted as of the date hereof. B&K
Bank is an "insured bank" as defined in the FDIA and is a member of the Federal
Reserve System. B&K Bank is duly qualified in good standing to do business as a
foreign corporation in each state in which such qualification is required and
the failure to so qualify would have a Material Adverse Effect.
4.02 Capitalization. The authorized capital stock of B&K consists of
(a) 12,000,000 shares of common stock par value of $2.50 per share ("B&K Common
Stock"), of which 1,759,064 shares were issued and outstanding as of June 30,
2000. All outstanding shares of B&K Common Stock have been duly authorized and
are validly issued, fully paid and nonassessable. None of the outstanding shares
of B&K Common Stock have been issued in violation of any preemptive right.
Except as described in Schedule 4.02, there are (i) no shares of capital stock
or other equity securities of B&K outstanding and (ii) no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of capital stock or other equity securities of B&K.
4.03 Authorization.
(a) All corporate acts and proceedings required of (i) B&K for the due
and valid authorization, execution, delivery and performance of this Agreement
and the transactions contemplated hereby have been validly and appropriately
taken, and this Agreement constitutes a legal, valid and binding obligation of
B&K, enforceable against it in accordance with its terms; (ii) B&K Bank for the
due and valid authorization, execution, delivery and performance of this
Agreement and the Bank Merger Agreement and the transactions contemplated hereby
and thereby have been validly and appropriately taken, and this Agreement and
the Bank Merger Agreement each constitute a legal, valid and binding obligation
of B&K Bank, enforceable against it in accordance with its terms.
(b) Neither the execution or delivery of this Agreement or the Bank
Merger Agreement, nor the consummation of the transactions contemplated hereby
and thereby, nor compliance with any of the provisions hereof or thereof, by B&K
or B&K Bank will (i) violate, conflict with, result in a breach of any provision
of, constitute a default (or an event that, with notice or lapse of time or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of B&K or any of its
subsidiaries under the terms, conditions or provisions of (A) the articles of
incorporation (or articles of association) or bylaws (or equivalent governing
instruments) of B&K or any of its subsidiaries or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
<PAGE>
instrument or obligation to which B&K or any of its subsidiaries is a party, or
by which B&K or any of its subsidiaries or any of their respective properties or
assets may be bound or affected, and that would, individually or in the
aggregate, in any such event, have a Material Adverse Effect, or enable any
person to enjoin the transactions contemplated hereby, or (ii) subject to
compliance with the statutes and regulations referred to in Section 4.03(c),
violate any valid and enforceable judgment, ruling, order, writ, injunction,
decree, law, statute, rule or regulation applicable to B&K or any of its
subsidiaries or any of their respective properties or assets.
(c) Other than in connection or compliance with the provisions of the
corporate law of the State of Mississippi, the Securities Act, the Exchange Act,
the securities laws of any applicable state and the rules of the NASD, and other
than consents, authorizations, approvals or exemptions required under federal
and state banking laws, no notice to, filing with, authorization of, exemption
by, or consent or approval of any public body or authority is necessary for the
consummation by B&K and B&K Bank of the transactions contemplated by this
Agreement and the Bank Merger Agreement.
4.04 Financial Statements. The consolidated balance sheets of B&K and
its subsidiaries as of December 31, 1999 and 1998, and the consolidated
statements of income, cash flow and changes in shareholders' equity for each of
the years in the three-year period ended December 31, 1999, together with the
notes thereto, certified by B&K's independent public accountants and included in
B&K's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999,
as filed with the SEC, and the consolidated balance sheets of B&K and its
subsidiaries as of June 30, 2000 and 1999, and the related statements of income,
cash flow and changes in shareholders' equity included in B&K's Quarterly Report
on Form 10-QSB for the fiscal quarter ended June 30, 2000 (collectively, the
"B&K Financial Statements") have been prepared, and all B&K Financial Statements
included in Forms 10-QSB filed with the SEC subsequent to the date of this
Agreement and prior to the Effective Date will be prepared, in accordance with
GAAP applied on a consistent basis, and present fairly or will present fairly,
as the case may be, the consolidated financial position, results of operations
and cash flow of B&K and its subsidiaries as of the respective dates thereof and
for the periods referred to therein.
4.05 Reports. Since December 31, 1999, B&K and B&K Bank have filed all
reports, registrations and statements, together with any required amendments
thereto, that either of them was required to file with (a) the SEC, including,
but not limited to, all Forms 10-KSB, Forms 10-QSB, Annual Reports and proxy
statements, (b) the Federal Reserve Board, (c) the Office of the Comptroller of
the Currency (the "OCC"), and (d) any applicable state securities or banking
authorities. All such reports and statements filed (and to be filed in the
future) with any such regulatory body or authority are collectively referred to
herein as the "B&K Reports". As of their respective dates, all such B&K Reports
were filed (or, in the future, will be filed) on the appropriate form and
complied (or, in the future, will comply) with the instructions to the form and
with the applicable rules and regulations promulgated by the SEC, the Federal
Reserve Board, the OCC and state securities or banking authorities. At the time
of filing, no B&K Report contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
<PAGE>
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.06 Undisclosed Liabilities. Neither B&K nor any of its subsidiaries
has any material liability or obligation, accrued, absolute, contingent or
otherwise and whether due or to become due (including, without limitation,
unfunded obligations under any service recognition or severance agreement,
whether written or oral, or material liabilities for federal, state or local
taxes or assessments or material liabilities under any agreement) that are not
reflected in or disclosed in the B&K Financial Statements, except (i) those
liabilities and expenses incurred in the ordinary course of business and
consistent with prudent business practices since June 30, 2000 or (ii) as
disclosed on Schedule 4.06.
4.07 Litigation.
(a) Except as described in Schedule 4.07(a), there are no claims of any
kind or any actions, suits, proceedings, arbitrations or investigations pending
or, to the knowledge of B&K or B&K Bank, threatened, in any court or before any
governmental agency or instrumentality or arbitration panel or otherwise,
against B&K or any of its subsidiaries or either of their respective assets or
properties.
(b) There is no judgment, decree, injunction, ruling or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against B&K or any of its subsidiaries or affecting any
of such entities' assets or properties.
(c) There are no uncured violations, or violations with respect to
which refunds or restitution may be required, cited in any compliance report to
B&K or any of its subsidiaries as a result of an examination by a regulatory
agency.
(d) Neither B&K nor any of its subsidiaries is subject to any written
agreement, memorandum or order with or by any regulatory agency, and there have
been no resolutions or commitments adopted by the Board of Directors of B&K or
any of its subsidiaries at the request of any regulatory agency.
4.08 Taxes.
(a) Except as set forth in Schedule 4.08, since 1996, B&K and B&K Bank
have timely filed all federal, state and local tax returns required to be filed,
and B&K and B&K Bank have paid, or have made adequate provision for the payment
of, all taxes required to be paid in respect of all periods ending on or before
the date of this Agreement (and the Effective Date) to any city, county, state,
foreign country, the United States or any other taxing authority. Neither B&K
nor any of its subsidiaries has or will have any liability for any taxes in
excess of the amounts so paid or provided for and no deficiencies for any tax,
assessment or governmental charge have been proposed, asserted
<PAGE>
or assessed (tentatively or definitely) against B&K or B&K Bank which have not
been adequately provided for.
(b) Neither B&K nor any of its subsidiaries is delinquent in the
payment of any tax, assessment or governmental charge (other than any being
contested in good faith by appropriate proceedings and set forth in the
Schedules), nor has it requested any extension of time within which to file any
tax returns in respect of any fiscal year which have not since been filed and no
requests for waivers of the time to assess any tax are pending.
4.09 Insurance. B&K and each of its subsidiaries are presently insured,
and during each of the past five calendar years have been insured, in amounts
and by reputable insurance companies against such risks as companies engaged in
a similar business would, in accordance with good business practice, customarily
be insured. Schedule 4.09 contains an accurate list of all such insurance
policies. Neither B&K nor any of its subsidiaries is now liable for any material
retroactive premium adjustment in accordance with any policy existing on the
date of this Agreement or prior thereto. All policies are valid and enforceable
and in full force and effect, and neither B&K nor any of its subsidiaries has
received any notice of a material premium increase or cancellation with respect
to any of its insurance policies or bonds. Within the last three years, neither
B&K nor any of its subsidiaries has been refused any insurance coverage sought
or applied for, and neither B&K nor any of its subsidiaries has reason to
believe that its existing insurance coverage cannot be renewed as and when the
same will expire, upon terms and conditions as favorable as those presently in
effect.
4.10 Employee Benefit Plans. Each of B&K and B&K Bank and each plan,
agreement, arrangement, commitment, practice or policy (including any item set
forth in an employee handbook) that is an employment, consulting or deferred
compensation agreement, or an executive compensation, incentive bonus, pension,
profit sharing, savings, retirement, stock option, stock purchase or severance
pay plan, or a holiday, vacation or other bonus practice, or any other benefit
plan, agreement, arrangement or commitment, including without limitation any
"employee benefit plan" as defined in Section 3(3) of ERISA, maintained by
either of B&K or B&K Bank or with respect to which either B&K or B&K Bank has
any liability or obligation or any contingent liability or obligation ("B&K
Employee Benefit Plan") is in material compliance with, and is not in material
breach or violation of, any laws, requirements or orders under ERISA or the
Code, which non- compliance, breach or violation is reasonably likely to have a
material adverse effect on its financial condition, results of operations,
business or prospects, taken as a whole. Each B&K Employee Benefit Plan which is
intended to be qualified under Sections 401 or 501 of the Code has received a
favorable determination letter from the Internal Revenue Service or is within
the remedial amendment period for obtaining such letter, and it is not aware of
any circumstances that are reasonably likely to materially affect qualification
in an adverse manner.
4.11 Environmental Protection.
(a) B&K and each of its subsidiaries has obtained all permits,
licenses and other authorizations that are required by it in connection with the
operation of its business and ownership
<PAGE>
of its properties, including without limitation properties acquired by
foreclosure or in settlement of loans (collectively, the "Subject Properties"),
under any applicable environmental law or regulation except for such instances
where the failure to obtain a license or other authorization are not reasonably
likely to have individually or in the aggregate a Material Adverse Effect.
(b) B&K and each of its subsidiaries is in material compliance with all
terms and conditions of such permits, licenses and authorizations and with all
applicable environmental laws and regulations.
(c) To the knowledge of B&K and B&K Bank, there are no past or present
events, conditions, circumstances, activities or plans related in any manner to
B&K or any of its subsidiaries or the Subject Properties that may, in any
material respect, violate or prevent compliance or continued compliance with any
applicable environmental law or regulation or give rise to any liability under
any environmental law.
(d) There is no civil, criminal or administrative action, suit, demand,
claim, order, judgment, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or, to its knowledge, threatened by any
person against B&K or any of its subsidiaries, or any prior owner of any of the
Subject Properties and relating to any of the Subject Properties, and relating
in any way to any environmental law or regulation or seeking to impose any
environmental liability.
4.12 Books and Records. The minute books, stock certificate books and
stock transfer ledgers of B&K and B&K Bank (i) have been kept accurately in the
ordinary course of business, (ii) are complete and correct in all material
respects, (iii) reflect transactions representing bona fide transactions, and
(iv) do not fail to reflect transactions involving the business of B&K and B&K
Bank that were required to have been set forth therein and that have not been
accurately so set forth.
4.13 Disclosure Statements. None of the information included, or
supplied or to be supplied by B&K for inclusion, in the documents to be prepared
in connection with the transactions contemplated by this Agreement including,
without limitation, (a) documents to be filed with the SEC, including the
Registration Statement, (b) filings pursuant to any state securities laws, and
(c) filings made in connection with obtaining the approval of regulatory
authorities, will, in the case of the Registration Statement, at the time the
Registration Statement is declared effective pursuant to the Securities Act, in
the case of the Joint Proxy Statement-Prospectus (as supplemented or amended) at
the time of the mailing thereof and at the time of the meeting of the
shareholders of B&K and Louisiana Bancshares, and in the case of other
documents, at the time such documents are filed with any federal or state
regulatory authority and at the time any such documents are distributed to
shareholders of Louisiana Bancshares, contain any untrue statement of material
fact, be false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements therein not
misleading. All documents which B&K or B&K Bank is responsible for filing with
any regulatory authority in connection with the Mergers will comply as to form
in all material respects with the provisions of applicable law.
<PAGE>
4.14 Brokers and Finders. Except for its engagement of Mercer Capital
in connection with the transactions contemplated by this Agreement, neither B&K
nor any of its subsidiaries, nor any of their respective officers, directors or
employees, has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted directly or indirectly for B&K in connection with
this Agreement or the Bank Merger Agreement or the transactions contemplated
hereby and thereby.
4.15 Due Authorization and Issuance. On the Effective Date, the shares
of B&K Common Stock to be issued pursuant to the Holding Company Merger, as
described in Section 1.03 of this Agreement, will be duly authorized by all
necessary corporate action and, upon issuance in accordance with this Agreement,
will be (i) validly issued, fully paid and nonassessable, (ii) issued pursuant
to the Registration Statement, which shall have become effective, and in
compliance with all applicable state securities laws and (iii) listed on the
Nasdaq Small Cap Market.
4.16 Community Reinvestment Act. B&K Bank has complied with the
provisions of the CRA and the rules and regulations promulgated thereunder, has
received CRA ratings not worse than "Satisfactory" in any past CRA examination
and neither B&K nor B&K Bank knows of any facts that, if known by the regulatory
agency, would be likely to result in a CRA rating of less than Satisfactory.
4.17 No Material Adverse Change. Since the filing of B&K's Form 10-QSB
for the second fiscal quarter of 2000, there has been no event or condition of
any character that has had, or can reasonably be expected to have, a Material
Adverse Effect on the financial condition, results of operations, business or
prospects of B&K and its subsidiaries as a whole, excluding changes in banking
laws or regulations which affect financial institutions generally.
ARTICLE V. CONDUCT OF BUSINESS BY
LOUISIANA BANCSHARES AND ITS SUBSIDIARIES
From the date hereof through the Effective Date, Louisiana Bancshares
and Louisiana Bank each agree that, except to the extent specifically permitted
by the terms of this Agreement, or as the Chief Executive Officer of B&K or his
designee consents in writing, or as may otherwise be required by any applicable
regulatory agency or by law, each of them and each of their Subsidiaries will
conduct their respective businesses in the following manner.
5.01 Ordinary Course. Louisiana Bancshares will, and will cause its
Subsidiaries to, carry on their respective businesses in the ordinary course in
substantially the manner in which such businesses heretofore have been conducted
(including the maintenance of appropriate levels of insurance and reserves) and
will use reasonable efforts to preserve intact their business organizations,
keep available the services of their principal officers and key employees, and
preserve their relationships with customers, depositors and other persons having
business dealings with them.
<PAGE>
5.02 Dividends; Changes in Stock; Repurchases of Stock. Louisiana
Bancshares will not, and will not permit any of its Subsidiaries to, (a) except
as set forth below, declare or pay any dividend on or make any other
distribution in respect of any of its outstanding capital stock, (b) split,
combine or reclassify any of its outstanding capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its outstanding capital stock, or (c) redeem,
repurchase or otherwise acquire any shares of its outstanding capital stock;
provided, however that Louisiana Bank may declare and pay a dividend to
Louisiana Bancshares to pay the costs and expenses associated with these
transactions. If the Mergers are not consummated by the date that B&K has
declared the record date for the payment of its semi-annual dividend ("Dividend
Date") as described in Section 6.17, Louisiana Bancshares may, in the sole
discretion of its Board of Directors, declare and pay a dividend to its
shareholders in an amount that would be not more than an amount equivalent to
the dividend such shareholders would have received had the Mergers been
consummated by the Dividend Date.
5.03 Issuance of Securities. Except as otherwise contemplated or
required by this Agreement, Louisiana Bancshares will not, and will not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of its capital stock of any class, or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, except that Louisiana Bancshares may issue
shares of Louisiana Bancshares Common Stock upon the exercise of currently
outstanding options, whether currently vested or to be accelerated, to acquire
shares of Louisiana Bancshares Common Stock ("Louisiana Bancshares Options"),
granted prior to the date hereof under the Louisiana Bancshares, Inc. Incentive
Stock Option Plan, formerly known as the Acadia State Bank Incentive Stock
Option Plan, dated June 20, 1996 (the "Louisiana Bancshares Option Plan") and
all agreements issued thereunder (the "Option Agreements") prior to the
Effective Date.
5.04 Governing Documents. Louisiana Bancshares will not, and will not
permit its Subsidiaries to, amend (including any amendment effected solely by
action of the board of directors) their respective articles of incorporation or
bylaws (or similar governing instruments) or amend any resolution or agreement
concerning indemnification of their directors or officers.
5.05 No Other Bids. Except as permitted below, Louisiana Bancshares
and Louisiana Bank will not enter into or propose to enter into, and
will not authorize or permit any of their officers, directors or employees or
any investment banker, attorney, accountant or other representative retained by
Louisiana Bancshares or any of its Subsidiaries to, solicit, initiate or
encourage any inquiries or the making of any proposals with respect to, enter
into or participate in any negotiations regarding, or furnish to any prospective
purchaser or its representatives any information with respect to, a merger,
consolidation, share exchange or other business combination (other than the
Mergers and the transactions contemplated by this Agreement) involving Louisiana
Bancshares or any of its Subsidiaries, or any sale of all or a substantial
equity interest in, or a substantial portion of the assets of, Louisiana
Bancshares or any of its Subsidiaries. Louisiana Bancshares will promptly advise
B&K of any inquiries or proposals with respect to the foregoing made to
Louisiana Bancshares or any of its Subsidiaries prior to the Effective Date.
Nothing
<PAGE>
contained herein or in Sections 5.06 or 5.07 shall in any way be deemed to
prohibit Louisiana Bancshares or Louisiana Bank or any of their respective
officers or directors from taking any action that, in the opinion of counsel to
Louisiana Bancshares, is required for the directors or officers of Louisiana
Bancshares or Louisiana Bank to comply with their respective fiduciary duties or
other legal obligations.
5.06 No Acquisitions. Except as permitted in Section 5.05, Louisiana
Bancshares will not, and will not permit any of its Subsidiaries to, acquire or
agree to acquire by merger, consolidation, share exchange, purchase of assets or
any other business combination, any business or any corporation, partnership,
association or other business organization, or any of the assets thereof or any
equity interest therein, except in the ordinary course of business in
satisfaction of a debt previously incurred by another party to Louisiana
Bancshares or any Subsidiary.
5.07 No Dispositions. Except as permitted in Section 5.05, Louisiana
Bancshares will not, and will not permit any of its Subsidiaries to, sell, lease
or otherwise dispose of any of its assets which are material, individually or in
the aggregate, to Louisiana Bancshares and its Subsidiaries taken as a whole,
provided, however, that this section shall not apply to transactions involving
Federal Funds sold under agreements to repurchase that are entered into in the
ordinary course of business and in accordance with past practices.
5.08 Indebtedness. Louisiana Bancshares will not, and will not permit
any of its Subsidiaries to, incur any indebtedness for borrowed money, guarantee
any such indebtedness for borrowed money or issue or sell any debt securities of
Louisiana Bancshares or any of its Subsidiaries, provided, however, that this
section shall not apply to transactions involving Federal Funds purchased under
agreements to resell that are entered into in the ordinary course of business
and in accordance with past practices.
5.09 Employment Agreements. Except as set forth on Schedule 3.11,
Louisiana Bancshares will not, and will not permit any of its Subsidiaries to,
enter into or amend an employment, severance or similar agreement or arrangement
with any director or any principal officer.
5.10 Employee Benefits Plans. Except as set forth below and otherwise
provided herein, Louisiana Bancshares will not, and will not permit any of its
Subsidiaries to, (a) adopt any new Employee Benefit Plan, (b) make any change in
or to any existing Employee Benefit Plan, other than any such changes as are
required by law or regulation or that, in the opinion of its counsel, are
necessary or advisable to maintain the tax-qualified status of any such plan and
of which B&K has been notified prior to such change or that Louisiana Bancshares
and B&K mutually agree upon, or (c) make any grants or awards under any such
employee benefit plan inconsistent with prior practice. No amendment permitted
pursuant to this Section 5.10 may materially increase the cost of the plan to
Louisiana Bancshares, unless agreed to in writing by Louisiana Bancshares and
B&K; provided, however, that Louisiana Bancshares may take such action as is
necessary to amend the Louisiana Bancshares Option Plan and all Option
Agreements to permit the acceleration of vesting of Louisiana
<PAGE>
Bancshares Options, to permit that such Louisiana Bancshares Options be
exercisable prior to the Effective Date and to permit the Option Price (as
defined in the Louisiana Bancshares Option Plan) to be paid by tendering
Louisiana Bancshares Common Stock (or options therefor) having a value equal to
such Option Price, to the extent that, and so long as, no such action by
Louisiana Bancshares shall cause the Mergers to fail to qualify for pooling of
interests accounting treatment.
5.11 Accounting Principles. Louisiana Bancshares will not, and will not
permit any of its Subsidiaries to, change the method of accounting in effect at
December 31, 1999, except as required by GAAP and with the concurrence of its
independent public accountants, or change the method for reporting income or
deductions, including bad debt deductions and partial charge-offs for federal
income tax purposes, from those employed in the preparation of its federal
income tax return for the taxable year ended December 31, 1999.
5.12 Tax Matters. Louisiana Bancshares will file, and will cause each
of its Subsidiaries to file, all federal, state and local tax returns required
to be filed and pay or make adequate provisions for the payment thereof.
Louisiana Bancshares will not, and will not permit any of its Subsidiaries to,
enter into any settlement or proposed adjustment or assessment of tax asserted
by any tax authority or consent to any waiver of a statute of limitations for
the assessment of taxes.
5.13 Preservation of Accuracy of Representations and Warranties.
Louisiana Bancshares will not, and will not permit any of its Subsidiaries to,
take any action that would, or reasonably could, result in any of the
representations and warranties set forth in this Agreement becoming untrue in
any material respect after the date hereof.
ARTICLE VI. ADDITIONAL AGREEMENTS
Each of the parties hereto covenant with the others as follows:
6.01 Shareholder Approval of the Mergers; Certification of the
Agreement. Following the execution of this Agreement, B&K and Louisiana
Bancshares will each duly call a special meeting of its shareholders to be held
as soon as practicable following the effectiveness of the Registration Statement
to vote upon the transactions contemplated by this Agreement (the "Shareholders'
Meetings"). B&K and Louisiana Bancshares, as the sole shareholders of B&K Bank
and Louisiana Bank, respectively, will approve the Bank Merger Agreement in
accordance with applicable law.
6.02 Registration Statement; Joint Proxy Statement/Prospectus.
Louisiana Bancshares agrees to cooperate and assist B&K in (i) preparing the
Registration Statement and the Joint Proxy Statement/Prospectus and (ii) filing
the Registration Statement and the Joint Proxy Statement/Prospectus with the
SEC, including furnishing to B&K all information concerning Louisiana Bancshares
that B&K may reasonably request in connection with preparation of such
Registration Statement and the Joint Proxy Statement/Prospectus.
<PAGE>
6.03 Regulatory Approvals. Following the execution of this Agreement,
each of B&K, B&K Bank, Louisiana Bancshares and Louisiana Bank promptly will
seek to obtain such regulatory approvals ("Approvals"), if any, as it may
reasonably require for the consummation of the Mergers and the other
transactions contemplated by this Agreement.
6.04 Access to Information and Inspection.
(a) Louisiana Bancshares will, and will cause its Subsidiaries to,
afford B&K, and its accountants, counsel and other representatives, reasonable
access during normal business hours to the properties, books, contracts, tax
returns, and other records of Louisiana Bancshares and its Subsidiaries from
time to time, for the purpose of conducting any review or investigation
reasonably related to the transactions contemplated by this Agreement, and
Louisiana Bancshares will, and will cause its Subsidiaries to, cooperate fully
with all such reviews and investigations. During such period Louisiana
Bancshares will furnish to B&K (i) all Reports referred to in Section 3.06
promptly upon the filing thereof and (ii) all other information concerning the
business, properties and personnel of Louisiana Bancshares and its Subsidiaries
as B&K may reasonably request. Louisiana Bancshares will (i) provide B&K with
monthly and other interim financial statements reasonably satisfactory to B&K,
(ii) cause one or more of its designated representatives to confer on a regular
and frequent basis with representatives of B&K and (iii) notify B&K promptly of
any material change in the business, operations or prospects (financial or
otherwise) of Louisiana Bancshares or any of its Subsidiaries, of any material
governmental complaints, investigations or hearings (or communications that the
same may be contemplated) and of the institution or the threat of material
litigation involving Louisiana Bancshares or any of its Subsidiaries, and will
keep B&K fully informed of such events.
(b) B&K will provide Louisiana Bancshares with copies of all B&K
Reports filed between the date hereof and the Effective Date as soon as
practicable after such B&K Reports are filed, and B&K will afford Louisiana
Bancshares and its accountants, counsel and other representatives, reasonable
access during normal business hours to the properties, books, contracts, tax
returns, commitments and records of B&K and its Subsidiaries and will furnish to
Louisiana Bancshares such information with respect to the assets and business of
B&K and its Subsidiaries as Louisiana Bancshares may from time to time
reasonably request in connection with this Agreement and the transactions
contemplated hereby.
(c) Notwithstanding the foregoing, neither party will be required to
grant access or furnish information to the other party to the extent that such
access or the furnishing of such information is prohibited by law. No
investigation by the parties hereto made heretofore or hereafter will affect the
representations and warranties of the parties which are contained herein and
each such representation and warranty will survive such investigation.
6.05 Confidentiality. Each party agrees that it will use its best
efforts to keep confidential any information furnished to it in connection with
the transactions contemplated by this Agreement which is reasonably designated
as confidential at the time of delivery, except to the extent that such
<PAGE>
information (a) was already known to the party receiving such information and
was received from a source other than the other party or any of its
subsidiaries, directors, officers, employees or agents, (b) thereafter was
lawfully obtained from another source, or (c) is required to be disclosed to the
SEC, Federal Reserve Board, OCC, FDIC, OFI or any other governmental agency or
authority, or is otherwise required to be disclosed by law. Each party agrees
not to use such information, and to implement safeguards and procedures that are
reasonably designed to prevent such information from being used, for any purpose
other than in connection with the transactions contemplated by this Agreement
and the Bank Merger Agreement. Each party agrees to return or, at the option of
the party holding such information, destroy (provided that if such information
is destroyed, an executive officer of the party destroying such information
shall deliver a certificate attesting to such destruction) such confidential
information at any time after the termination of this Agreement at the request
of the party that has provided such information.
6.06 Cooperation; Best Efforts.
(a) Each of Louisiana Bancshares and B&K will cooperate, and will cause
its subsidiaries to cooperate, with each other and their respective accountants,
counsel and other representatives, in connection with the preparation of any
applications and documents required to obtain the Approvals contemplated by
Section 6.03, which cooperation will include providing all information,
documents and appropriate representations as may be necessary in connection
therewith.
(b) Each of B&K, B&K Bank, Louisiana Bancshares and Louisiana Bank
agrees to use its respective best efforts to satisfy or cause to be satisfied
all conditions to its respective obligations under this Agreement and the Bank
Merger Agreement.
6.07 Press Releases. B&K and Louisiana Bancshares will consult with
each other as to the form and substance of all press releases or other public
disclosure of matters related to this Agreement and the transactions
contemplated hereby; provided, however, that nothing in this Section 6.07 will
prohibit either party from making any disclosure which its counsel deems
necessary or advisable in order to fulfill such party's disclosure obligations
imposed by law.
6.08 Restrictions on Resales. At least 20 days prior to the Closing
Date, Louisiana Bancshares shall deliver to B&K a list identifying each person
who may reasonably be deemed an "affiliate" of Louisiana Bancshares within the
meaning of such term as used in Rule 145 under the Securities Act. Louisiana
Bancshares shall obtain and deliver to B&K, not less than 30 days prior to the
Closing Date, the signed agreement, in the form of Exhibit "E" hereto (the
"Shareholder Letter"), of each "affiliate" of Louisiana Bancshares, and of any
person who may become an "affiliate" or Louisiana Bancshares after the date of
this Agreement, regarding (i) compliance with the provisions of such Rule 145,
and (ii) compliance with the requirements of Accounting Principles Board Opinion
No. 16 regarding the disposition of shares of Louisiana Bancshares Common Stock
or B&K Common Stock (or reduction of risk with respect thereto) until such time
as the financial results covering at least 30 days of post-Merger combined
operations have been published.
<PAGE>
Louisiana Bancshares shall notify all "affiliates" as far in advance as is
reasonably practicable of the date on which the 30-day period prior to the
Closing Date is likely to begin.
6.09 Shareholder Lists. After the date of this Agreement, Louisiana
Bancshares shall from time to time make available to B&K, upon request, a list
of its shareholders and their addresses, a list showing all transfers of
Louisiana Bancshares Common Stock and such other information as B&K may
reasonably request regarding both the ownership and prior transfers of Louisiana
Bancshares Common Stock.
6.10 Employee Pension Plans. Louisiana Bancshares agrees the employee
pension plans of Louisiana Bancshares, including the Louisiana Bancshares
401(k)/Profit Sharing Plan, as amended (collectively, the "Louisiana Bancshares
Pension Plans"), may be frozen, modified or merged into similar employee pension
plans maintained by B&K or any B&K Subsidiary, including the B&K Capital Bancorp
Employee Stock Ownership Plan and the Incentive and Investment and Salary
Savings Plan, on or after the Effective Date, as determined by B&K in its sole
discretion, subject to compliance with applicable law, so long as any such
action preserves the rights of the participants in such Louisiana Bancshares
Pension Plans (including, without limitation, vesting rights).
6.11 Employee Benefit Plans.
(a) Louisiana Bancshares agrees that Louisiana Bancshares' employee
benefit plans, as defined in Section 3(1) of ERISA, may be terminated, modified
or merged into B&K's welfare benefit plans on or after the Effective Date, as
determined by Louisiana Bancshares and B&K subject to compliance with applicable
law so long as any such action preserves the rights of participants in such
plans.
(b) Louisiana Bancshares and B&K presently intend that, whether the
Employee Benefit Plans are terminated or merged, after the Effective Date,
neither Louisiana Bancshares nor B&K will make additional contributions to the
Employee Benefit Plans, other than any contributions specifically authorized by
this Agreement. Each employee of Louisiana Bancshares or Louisiana Bank who
after the Merger becomes an employee of B&K or B&K Bank (each, a "Continuing
Employee") will be entitled to participate in the employee benefit plans and
programs maintained for similarly situated employees of B&K or B&K Bank and
their affiliates, to the same extent as similarly situated employees of B&K or
B&K Bank, in accordance with the respective terms of such plans and programs,
and B&K and/or B&K Bank will take all actions necessary or appropriate to
facilitate coverage of the Continuing Employees in such plans and programs from
and after the Effective Time subject to the following:
(i) Each Continuing Employee shall be given vesting and
eligibility service credit for the time during which the Continuing Employee was
employed by Louisiana Bancshares and/or Louisiana Bank for purposes of
determining benefits due under the B&K's or B&K Bank's plans (as that term is
defined in ERISA Section 3(2)).
<PAGE>
(ii) Each Continuing Employee shall receive credit for all
time employed by Louisiana Bancshares and/or Louisiana Bank for purposes of the
application of B&K's or any subsidiary's severance and vacation policies, and
for all purposes under the employee welfare benefit plans (as that term is
defined in ERISA Section 3(1)) and all other employee benefit plans and programs
sponsored by B&K or its affiliates. Any preexisting condition exclusion
applicable to such plans and programs shall be waived with respect to any
Continuing Employee to the same extent waived under the Louisiana Bancshares
and/or Louisiana Bank Employee Benefit Plans. For purposes of determining each
Continuing Employee's benefit for the year in which the Merger occurs under the
B&K vacation program, any vacation taken by a Continuing Employee preceding the
Effective Date will be deducted from the total B&K's vacation benefit available
to such Continuing Employee for such calendar year.
(c) On or before, but effective as of the Effective Date, Louisiana
Bancshares and/or Louisiana Bank may take such actions as may he necessary (a)
to cause each individual employed by Louisiana Bancshares or Louisiana Bank
immediately prior to the Effective Date to have a fully vested and
nonforfeitable interest in such employee's account balance in the pension plans
(as that term is defined in ERISA Section 3(2)) sponsored by Louisiana
Bancshares or Louisiana Bank as of the Effective Date and (b) to contribute
amounts accrued on the books of Louisiana Bancshares and Louisiana Bank from
January 1, 2000 to the Effective Date to such plan(s).
(d) B&K agrees to make the payments as described on Schedule 6.11(d).
6.12 Louisiana Bancshares Stock Option Plans.
(a) Louisiana Bancshares shall transfer and B&K shall assume
sponsorship of the Louisiana Bancshares Option Plan, all Option Agreements
thereunder and all the Louisiana Bancshares Options, whether or not exercisable
or vested, in the manner set forth herein; provided, however, that B&K shall not
be obligated to issue any additional stock options under the Louisiana
Bancshares Option Plan or any related Option Agreements in excess of the number
of options specified in Section 3.02(a) hereof.
(b) B&K shall reserve and make available for issuance in connection
with the Holding Company Merger and in accordance with the terms of this
Agreement the number of full shares of B&K Common Stock calculated in accordance
with Section 1.04. As soon as practicable after the Effective Date, B&K shall
deliver to each holder of Louisiana Bancshares Options appropriate notices
setting forth such holders' rights pursuant to the Louisiana Bancshares Options,
and the agreements evidencing the grants of such Louisiana Bancshares Options
shall continue in effect on the same terms and conditions (subject to the
conversion required by Section 1.04 after giving effect to the Holding Company
Merger and the assumption by B&K as set forth above). To the extent necessary to
effectuate the provisions of this Section 6.12, B&K may deliver new or amended
agreements reflecting the terms of each Louisiana Bancshares Option assumed by
B&K and amend the Louisiana Bancshares Option Plan to reflect the terms hereof.
<PAGE>
(c) As soon as practicable after the Effective Date, B&K shall file
with the SEC a registration statement on an appropriate form with respect to the
shares of B&K Common Stock subject to such converted options, and shall use its
best efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the status of the prospectus or
prospectuses with respect thereto) for so long as such options remain
outstanding.
6.13 Operating Functions. Louisiana Bancshares will, and will cause
each of its Subsidiaries to, cooperate in the consolidation of appropriate
operating functions with B&K or its subsidiaries to be effective on the
Effective Date, provided that the foregoing will not be deemed to require any
action which, in the opinion of Louisiana Bancshares's Board of Directors or
executive officers, would adversely affect its or its Subsidiaries' operations
if the Mergers were not consummated.
6.14 Notice of Breach. B&K will promptly give written notice to
Louisiana Bancshares upon becoming aware of any breach by Louisiana Bancshares
or Louisiana Bank of any of their representations, warranties or covenants in
this Agreement, which notice shall specify the facts constituting such breach.
6.15 Regulatory Approvals and Registration Statement.
(a) B&K, with the cooperation of Louisiana Bancshares, shall promptly
file or cause to be filed applications for all regulatory approvals required to
be obtained by B&K in connection with this Agreement and the transactions
contemplated hereby, including but not limited to the necessary applications for
the prior approval of the Mergers by the Federal Reserve Board, the FDIC, the
OFI, and the OCC. B&K shall use its best efforts to obtain all such regulatory
approvals and any other approvals from third parties at the earliest practicable
time.
(b) B&K shall reserve and make available for issuance in connection
with the Holding Company Merger and in accordance with the terms of this
Agreement, the B&K Common Stock for the Per Share Merger Consideration and
shall, with the cooperation of Louisiana Bancshares, file with the SEC the
Registration Statement, which Registration Statement will contain the Joint
Proxy Statement/Prospectus, and B&K shall use its best efforts to cause the
Registration Statement to become effective. At the time the Registration
Statement becomes effective, the Registration Statement shall comply in all
material respects with the provisions of the Securities Act and the published
rules and regulations thereunder, and shall 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 false or misleading, and at the
time of mailing thereof to the shareholders of Louisiana Bancshares, at the time
of the Shareholders' Meeting and on the Effective Date, the Joint Proxy
Statement/Prospectus, as amended or supplemented by any amendment or supplement,
shall not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not false or misleading.
(c) B&K shall timely file all documents required to obtain all
necessary Blue Sky permits and approvals, if any, required to carry out the
transactions contemplated by this Agreement, shall
<PAGE>
pay all expenses incident thereto and shall use its best efforts to obtain such
permits and approvals on a timely basis.
(d) B&K shall promptly and properly prepare and file (i) any
application required to list on Nasdaq the shares of B&K Common Stock to be
issued pursuant to the Holding Company Merger, and (ii) any filings required
under the Exchange Act, relating to the Holding Company Merger and the
transactions contemplated herein.
(e) B&K shall keep Louisiana Bancshares reasonably informed as to the
status of such applications and filings, and B&K shall promptly furnish
Louisiana Bancshares and its counsel with copies of all such regulatory filings
and all correspondence for which confidential treatment has not been requested.
(f) B&K shall not take any action at any time after the Effective Date
which would cause the Holding Company Merger not to qualify as a reorganization
within the meaning of Section 368 of the Code.
6.16 Director and Officer Liability Insurance.
(a) Upon the Effective Date, any executive officer or director of
Louisiana Bancshares who becomes an officer or director of B&K or any B&K
subsidiary shall be included in B&K's director and officer insurance policy.
(b) Louisiana Bancshares and Louisiana Bank shall be entitled to extend
coverage of their existing policy of directors and officers liability insurance
for a period of not less than three years after the Effective Date provided that
the premium for such tail coverage shall not exceed $12,000.
(c) If B&K or any of its respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidate or merger or
(ii) transfers all or substantially all of its proprieties and assets to any
person, then, and in each such case, the successors and assigns of such entity
shall assume the obligations set forth in this Agreement, which obligations are
expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each director and officer of Louisiana Bancshares and Louisiana
Bank on the Effective Date.
6.17 Payment of Semi-Annual Dividend. B&K agrees to delay, until
December 31, 2000, if necessary, the record date for the payment of B&K's
semi-annual dividend generally paid in December of each year, until the
consummation of the Mergers so that shareholders of Louisiana Bancshares who
receive B&K Common Stock in the Holding Company Merger and who retain such
shares will be entitled to receive such dividend.
ARTICLE VII. INDEMNIFICATION OF DIRECTORS AND OFFICERS
OF LOUISIANA BANCSHARES AND LOUISIANA BANK
<PAGE>
7.01 Indemnification. From and after the Effective Date, B&K agrees to
indemnify and hold harmless each person who is an officer or director of
Louisiana Bancshares or its Consolidated Group on the date of this Agreement (an
"Indemnified Person") from and against all damages, liabilities, judgments and
claims (and related expenses (including, but not limited to, attorneys' fees and
expenses) based upon or arising from his capacity as an officer or director of a
member of the Louisiana Bancshares Consolidated Group, to the same extent as he
would have been indemnified under the articles of incorporation or bylaws of
such member of the Louisiana Bancshares Consolidated Group, as appropriate, as
such articles of incorporation or bylaws were in effect on the date of execution
of this Agreement.
7.02 Survival of Rights. The rights granted to the Indemnified Persons
hereby and below will be contractual rights and will survive this Agreement and
any merger, consolidation or reorganization of B&K.
7.03 Limitations on Rights. The rights to indemnification granted
by this Article VII are subject to the following limitations:
(a) the total aggregate indemnification to be provided by B&K pursuant
to Section 7.01 will not exceed, as to all of the Indemnified Persons as a
group, the sum of $1,000,000, and B&K will have no responsibility to any
Indemnified Person for the manner in which such sum is allocated among that
group (but the Indemnified Persons may seek reallocation among themselves);
(b) amounts otherwise required to be paid by B&K to an Indemnified
Person pursuant to this Article VII will be reduced by any amounts that such
Indemnified Person recovers by virtue of the claim for which indemnification is
sought; and
(c) any claim for indemnification pursuant to this Article VII must be
submitted in writing to the chief executive officer of B&K within two years of
the date of this Agreement.
ARTICLE VIII. CONDITIONS TO CLOSING; WAIVER
8.01 Conditions of All Parties. The obligations of each of B&K, B&K
Bank, Louisiana Bancshares and Louisiana Bank to effect the Mergers will be
subject to the satisfaction or waiver, at or prior to the Closing Date, of the
following conditions:
(a) Shareholder Approvals. The sole shareholder of each of B&K Bank and
Louisiana Bank will have duly approved the Bank Merger Agreement and in
accordance with the applicable requirements of federal and state banking laws
and their respective articles of association (or articles of incorporation) and
bylaws. The shareholders of B&K and Louisiana Bancshares will have duly approved
the Holding Company Merger in accordance with the applicable requirements of the
Mississippi Business Corporation Act and the LBCL.
(b) Statutory Requirements and Regulatory Approval. All statutory
requirements for the valid consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement will have been fulfilled; all
appropriate orders, consents and approvals from all
<PAGE>
regulatory agencies and other governmental authorities whose order, consent or
approval is required by law for the consummation of the transactions
contemplated by this Agreement and the Bank Merger Agreement will have been
received; and the terms of all requisite orders, consents and approvals will
then permit the effectuation of the Mergers without imposing any conditions with
respect thereto except for any such conditions that are acceptable to B&K and
B&K Bank, in its sole discretion.
(c) No Injunction; Permissible Transaction. None of Louisiana
Bancshares, Louisiana Bank, B&K or B&K Bank will be prohibited by any order,
ruling, consent decree, judgment or injunction of a court or regulatory agency
from consummating the Mergers; neither Louisiana Bancshares nor B&K nor any of
their respective subsidiaries will have knowledge of any contemplated or
threatened order, ruling, consent decree, judgment or injunction attempting to
prohibit the Mergers; and the consummation of the Mergers will be legally
permissible pursuant to applicable law.
(d) Registration Statement. The Registration Statement, including any
amendments or supplements thereto, will have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement will be in effect and no proceedings for such purpose
will be pending before or, to the knowledge of any party, threatened by the SEC.
B&K will have received all state securities laws permits and authorizations
required by applicable state securities laws to consummate the transactions
contemplated hereby and such permits and authorizations shall be in effect. The
shares of B&K Common Stock to be issued to holders of Louisiana Bancshares
Common Stock will be approved for listing on the Nasdaq Small Cap Market.
8.02 Conditions to Obligations of B&K and B&K Bank. The obligations of
B&K and B&K Bank to effect the Mergers will be subject to the satisfaction or
waiver, at or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Louisiana Bancshares and its Subsidiaries set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date, with the same effect as though each
such representation and warranty had been made on and as of the Closing Date,
except to the extent of changes permitted by the terms of this Agreement. Each
of Louisiana Bancshares and Louisiana Bank will have delivered to B&K and B&K
Bank a certificate, dated the Closing Date and signed by its Chief Executive
Officer and its Chief Financial Officer, to such effect.
(b) Covenants. Each of the covenants and agreements of Louisiana
Bancshares and Louisiana Bank required to be performed or complied with pursuant
to this Agreement and the Bank Merger Agreement on or prior to the Closing Date
will have been duly performed and complied with in all material respects. Each
of Louisiana Bancshares and Louisiana Bank will have delivered to B&K and B&K
Bank a certificate, dated the Closing Date and signed by its Chief Executive
Officer and its Chief Financial Officer, to such effect.
<PAGE>
(c) No Material Adverse Effect. Since the date of this Agreement there
will not have occurred or been discovered any events, occurrences or facts, or
any changes in circumstances, whether or not publicly disclosed, which
individually has had, or in the aggregate have had, a Material Adverse Effect on
the financial condition, results of operations, business or prospects of
Louisiana Bancshares and Louisiana Bank.
(d) Opinion of Louisiana Bank's Counsel. B&K and B&K Bank will have
received the written opinion of Jenkens & Gilchrist, a Professional Corporation,
counsel for Louisiana Bancshares and Louisiana Bank, addressed to B&K and B&K
Bank and dated the Closing Date, substantially in the form of Exhibit F.
(e) Accountants' Comfort Letters. B&K and B&K Bank will have received
two letters from Louisiana Bancshares's independent public accounting firm, one
dated within two days of the Joint Proxy Statement-Prospectus and one dated the
Closing Date, with respect to certain financial information regarding Louisiana
Bancshares and its Subsidiaries, which will be substantially in the form
attached hereto as Exhibit G and will address the matters which are customary
for accountants' letters in merger transactions of the type contemplated by this
Agreement.
(f) Pooling of Interests Treatment. B&K shall have received a letter
from its independent public accounting firm dated as of the Closing Date, to the
effect that the Holding Company Merger will be accounted for as a "pooling of
interests" under GAAP.
(g) Tax free Reorganization. B&K shall have received a letter from its
independent public accounting firm or from Phelps Dunbar, L.L.P., dated as of
the Closing Date, to the effect that the Holding Company Merger will be a
tax-free reorganization under the Code.
(h) Fairness Opinion. B&K shall have received, prior to the date on
which the Joint Proxy Statement/Prospectus is disseminated to its shareholders,
an opinion from Mercer Capital Corporation to the effect that the terms of the
Mergers are fair to the shareholders of B&K, from a financial point of view.
8.03 Conditions to Obligations of Louisiana Bancshares and Louisiana
Bank. The obligation of Louisiana Bancshares and Louisiana Bank to effect the
Mergers will be subject to the satisfaction or waiver, at or prior to the
Closing Date, of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of B&K set forth in this Agreement will be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date,
with the same effect as though each such representation and warranty had been
made on and as of the Closing Date, except to the extent of changes permitted by
the terms of this Agreement. B&K will have delivered to Louisiana Bancshares and
Louisiana Bank a certificate, dated the Closing Date and signed by its Chief
Executive Officer and its Chief Financial Officer, to such effect.
(b) Covenants. Each of the covenants and agreements of B&K required
to be performed or complied with pursuant to this Agreement and the Bank Merger
Agreement on or prior to the
<PAGE>
Closing Date will have been duly performed and complied with in all material
respects. B&K and B&K Bank will have delivered to Louisiana Bancshares and
Louisiana Bank a certificate, dated the Closing Date and signed by its Chief
Executive Officer and its Chief Financial Officer, to such effect.
(c) No Material Adverse Effect. Since the date of this Agreement there
will not have occurred or been discovered any events or occurrences, or any
changes in circumstances previously known, whether or not publicly disclosed,
which individually has had, or in the aggregate have had, a Material Adverse
Effect on the financial condition, results of operations, business or prospects
of B&K and B&K Bank.
(d) Opinion of B&K Counsel. Louisiana Bancshares and Louisiana Bank
will have received the written opinion of Phelps Dunbar, L.L.P., counsel for B&K
and B&K Bank, addressed to Louisiana Bancshares and Louisiana Bank and dated the
Closing Date, substantially in the form of Exhibit H.
(e) Opinion of Investment Banker. Louisiana Bancshares shall have
received, prior to the date on which the Joint Proxy Statement/Prospectus is
disseminated to its shareholders, a letter from its financial advisor to the
effect that the terms of the transactions contemplated by this Agreement and the
Bank Merger Agreement are fair to Louisiana Bancshares and its shareholders from
a financial point of view.
(f) Opinion of Tax Counsel. Louisiana Bancshares shall have received an
opinion of Jenkens & Gilchrist, a Professional Corporation, tax counsel to
Louisiana Bancshares, to the effect that the Holding Company Merger is a
tax-free reorganization within the meaning of the Code.
8.04 Waivers. Any term, condition or provision of this Agreement or the
Bank Merger Agreement that may legally be waived may be waived by the party
which is, or whose shareholders are, entitled to the benefits thereof. Any such
waiver will be effective only if in writing and signed by an authorized
executive officer of the waiving party.
ARTICLE IX. TERMINATION, AMENDMENT AND SPECIFIC PERFORMANCE
9.01 Termination. Notwithstanding any other provision of this Agreement
or the Bank Merger Agreement, and notwithstanding approval of this Agreement by
the shareholders of B&K and Louisiana Bancshares, this Agreement and the Bank
Merger Agreement may be terminated and the Mergers abandoned at any time prior
to the Effective Date:
(a) by the mutual consent of the Boards of Directors of B&K and
Louisiana Bancshares.
(b) by the Board of Directors of B&K, in the event of a material breach
by Louisiana Bancshares or any of its Subsidiaries of any representation or
warranty contained in this Agreement or of any covenant contained in this
Agreement, which is not cured within ten business days after written notice of
such breach is given to Louisiana Bancshares, provided that the right to effect
such cure will not extend beyond the date set forth in Section 9.01(f).
<PAGE>
(c) by the Board of Directors of Louisiana Bancshares, in the event of
a material breach by B&K or any of its subsidiaries of any representation or
warranty contained in this Agreement or of any covenant contained in this
Agreement, which is not cured within ten business days after written notice of
such breach is given to B&K, provided that the right to effect such cure will
not extend beyond the date set forth in Section 9.01(f).
(d) by the Board of Directors of B&K, if any regulatory agency has
denied the approval contemplated by Section 6.03.
(e) by the Board of Directors of B&K, at any time after the
Shareholders' Meetings and prior to the Closing Date, if (i) the Holding Company
Merger has not been approved by at least 80% of the total voting power of
Louisiana Bancshares, and (ii) the number of shares of Louisiana Bancshares
Common Stock held by shareholders who have voted against the Holding Company
Merger at the Shareholders' Meeting of Louisiana Bancshares and who have
perfected their right to dissent pursuant to the LBCL exceeds 10% of the total
number of shares of Louisiana Bancshares Common Stock issued and outstanding on
the record date for the Louisiana Bancshares Shareholders' Meeting.
(f) by either the Board of Directors of B&K or Louisiana Bancshares,
notwithstanding any other provision of this Agreement or the Bank Merger
Agreement, if the Mergers have not been consummated by December 31, 2000.
(g) by the Board of Directors of B&K if (a) all conditions to Closing
required by Sections 8.01 and 8.02 have not been met or waived by the Effective
Date, or (b) any such condition cannot be met by the Effective Date and has not
been waived by B&K.
(h) by the Board of Directors of Louisiana Bancshares if (a) all
conditions to Closing required by Sections 8.01 and 8.03 have not been met or
waived by the Effective Date or (b) any such condition cannot be met by the
Effective Date and has not been waived by Louisiana Bancshares.
9.02 Effect of Termination. In the event of termination of this
Agreement and the Bank Merger Agreement as provided in Section 9.01, this
Agreement and the Bank Merger Agreement will cease to be of any further force
and effect and there will be no further obligation or liability on the part of
B&K or B&K Bank (or their respective directors, officers, shareholders, agents
or employees) to Louisiana Bancshares or Louisiana Bank or of Louisiana
Bancshares or Louisiana Bank (or their respective directors, officers,
shareholders, agents or employees) to B&K or B&K Bank, except as set forth in
the immediately following sentence and as set forth in Section 6.05 and Section
10.01. If this Agreement is terminated by a party in accordance with Sections
9.01(b) or (c) and the basis of such termination is that the non-terminating
party made a knowing misrepresentation or committed a willful breach of a
covenant contained in this Agreement, then the party so terminating will be
entitled to pursue such remedies as are available at law or in equity.
<PAGE>
9.03 Amendment. This Agreement and the Bank Merger Agreement (and the
Schedules and Exhibits hereto and thereto) may be amended at any time prior to
the Effective Date by the mutual agreement of the parties hereto by action taken
by or on behalf of their respective Boards of Directors, before or after
approval of this Agreement and the Bank Merger Agreement by the shareholders of
B&K or Louisiana Bancshares; provided, however, that after such approval no such
amendment may (a) alter or change the amount or the kind of the consideration to
be received by the holders of Louisiana Bancshares Common Stock provided for in
this Agreement or (b) alter or change any of the other terms and conditions of
this Agreement if such alteration or change would materially and adversely
affect the holders of Louisiana Bancshares Common Stock. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto. This Agreement and the Bank Merger Agreement (and the Schedules
and Exhibits hereto and thereto) may be amended at any time and, as amended,
restated by the Chief Executive Officers of the respective parties (or their
respective designees), without the necessity for approval by their respective
Board of Directors or shareholders, to correct typographical errors or to change
erroneous references or cross references, or in any other manner which is not
material to the substance of the transactions contemplated hereby.
9.04 Specific Performance. Each of the parties hereto acknowledges that
the other parties would be irreparably damaged and would not have an adequate
remedy at law for money damages if any of the covenants contained in this
Agreement were not performed in accordance with its terms or otherwise was
materially breached. Each of the parties hereto therefore agrees that, without
the necessity of proving actual damages or posting bond or other security, the
other parties shall be entitled to a temporary and/or permanent injunction or
injunctions to prevent breaches of such performance and to specific enforcement
of such covenants in addition to any other remedy to which such parties may be
entitled at law or in equity.
ARTICLE X. GENERAL PROVISIONS
10.01 Expenses. Regardless of whether the Mergers are consummated, each
party hereto will bear its own expenses incident to preparing, entering into and
carrying out this Agreement and the Bank Merger Agreement and the consummation
of the Mergers (including all fees and expenses of its counsel, accountants and
investment advisors).
10.02 Survival of Representations and Warranties. The representations
and warranties made herein by the parties hereto, as well as any representations
and warranties made by any of them in any other document related hereto,
including, without limitation, any certificate delivered in connection herewith,
shall expire with, and be terminated and extinguished by, the effectiveness of
the Mergers and shall not survive the Effective Date, except that no
representation or warranty given by any of them shall be deemed to be terminated
or extinguished so as to deprive the other parties or their respective directors
and officers, of any defense in law or equity which they otherwise would have to
any claim against them by any person. Survival of the representations and
warranties pursuant to the immediately preceding sentence shall be solely for
the purpose of affording defenses as described therein and shall not create, and
shall not be construed to create, a cause of action or other right (whether
direct, indirect or third-party) in any person. Whether or not the Mergers
<PAGE>
become effective, the sole right and remedy arising from a misrepresentation or
breach of a warranty made by either party shall be the termination of this
Agreement by the other party prior to the Effective Date pursuant to Section
9.01(b) or (c), unless the breach or misrepresentation was knowingly made, in
which event the remedies provided in Section 9.02 shall be available as and to
the extent provided herein.
10.03 Further Assurances. If, at any time after the Effective Date, B&K
or B&K Bank determines that any further assignments or assurances in law or any
other acts are necessary or desirable (a) to vest, perfect or confirm, of record
or otherwise, in B&K or B&K Bank title to or the possession of any property or
right of Louisiana Bancshares or Louisiana Bank acquired or to be acquired by
reason of, or as a result of, the Mergers, or (b) otherwise to carry out the
purposes of this Agreement, Louisiana Bancshares and Louisiana Bank and their
proper officers and directors will be deemed to have granted to B&K and B&K Bank
an irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
B&K and B&K Bank and otherwise to carry out the purposes of this Agreement; and
the proper officers and directors of B&K and B&K Bank are fully authorized in
the name of Louisiana Bancshares and Louisiana Bank to take any and all such
action.
10.04 Certain Definitions. "Material Adverse Effect" means any material
adverse effect (excluding expenses incurred or paid in connection with the
Mergers and payment of the dividend pursuant to Section 5.02) since June 30,
2000 in the business, results of operations, condition (financial or otherwise),
assets, properties, liabilities (absolute, accrued, contingent or otherwise),
reserves of B&K Bank or Louisiana Bank, as the case may be, and their respective
subsidiaries, taken as a whole, and specifically includes, without limitation,
with respect to Louisiana Bancshares, any change that reduces the tangible
shareholders' equity of Louisiana Bancshares by at least $250,000 or, with
respect to B&K, any change that reduces the tangible shareholders' equity of B&K
by at least $1,000,000.
10.05 Notices. Any notice or other communication given under this
Agreement or the Bank Merger Agreement will be in writing, and will be deemed
duly delivered when received upon delivery either (a) by hand, (b) by telegram
or facsimile transmission, (c) by a nationally recognized overnight courier
service, or (d) by registered or certified mail, postage prepaid, addressed as
follows:
<PAGE>
a. If to B&K or B&K Bank:
Britton & Koontz Capital Corporation
500 Main Street
Natchez, Mississippi 39120
Attention: W. Page Ogden, President and
Chief Executive Officer
Copy to:
Virginia Boulet
Phelps Dunbar, L.L.P.
Canal Place, Suite 2000
365 Canal Street
New Orleans, LA 70130-6534
and
b. If to Louisiana Bancshares or Louisiana Bank:
Louisiana Bancshares, Inc.
7412 Florida Boulevard
P. O. Box 14175
Baton Rouge, Louisiana 70898-4175
Attention: John S. Sylvest, President and
Chief Executive Officer
<PAGE>
Copy to:
Jeanne P. Breckinridge
Jenkens & Gilchrist, a Professional Corporation
2200 One American Center
600 Congress Avenue
Austin, Texas 78701-3215
or such other address or person as any such party may designate by notice in
writing to the other party.
10.06 Assignment; Parties in Interest. This Agreement is binding upon
and is for the benefit of the parties hereto and their respective successors,
legal representatives and permitted assigns, and no person not a party hereto
will have any rights or benefits under this Agreement, as a third party
beneficiary or otherwise. No party may assign its rights, interests or
obligations under this Agreement without the written consent of the others. A
business combination involving B&K shall not be deemed to be an assignment for
purposes of this section.
10.07 Headings; Section References. The headings in this Agreement are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of any provision of this Agreement.
All references in this Agreement to any "Section" or "Article" will mean a
Section or Article, as the case may be, of this Agreement, unless a section of
another agreement is specifically referred to.
10.08 Counterparts. This Agreement may be executed in counterpart, with
each counterpart being deemed an original, but all of which together will
constitute one and the same instrument.
10.09 Entire Agreement. This Agreement and the Bank Merger Agreement
(including the Schedules and Exhibits hereto and thereto) constitute the entire
agreement, and supersede any and all prior agreements and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof.
10.10 Governing Law. This Agreement will be governed by and construed
in accordance with the internal laws and not the choice of law rules of the
State of Louisiana and with the laws of the United States.
The parties hereto have caused this Agreement to be duly executed by
their respective officers thereunto duly authorized and their corporate seals
affixed hereto, all as of the date first written above.
ATTEST: BRITTON & KOONTZ CAPITAL CORPORATION
/s/ Albert W. Metcalfe By: /s/ W. Page Ogden
__________________________ ____________________________________________
Name: Albert W. Metcalfe Name: W. Page Ogden
Title: Secretary Title: President and Chief Executive Officer
<PAGE>
ATTEST: BRITTON & KOONTZ FIRST NATIONAL BANK,
NATIONAL ASSOCIATION
/s/ Albert W. Metcalfe By: /s/ W. Page Ogden
__________________________ ____________________________________________
Name: Albert W. Metcalfe Name: W. Page Ogden
Title: Secretary Title: President and Chief Executive Officer
ATTEST: LOUISIANA BANCSHARES, INC.
/s/ Ellen C. Sessions By: /s/ John S. Sylvest
__________________________ ___________________________________________
Name: Ellen C. Sessions Name: John S. Sylvest
Title: Secretary Title: President and Chief Executive Officer
ATTEST: LOUISIANA BANK & TRUST COMPANY
/s/ S. Allen Harris III By: /s/ John S. Sylvest
___________________________ ____________________________________________
Name: S. Allen Harris III Name: John S. Sylvest
Title: Secretary Title: President and Chief Executive Officer
<PAGE>
APPENDIX B
OPINION OF MERCER CAPITAL
The Board of Directors of Britton & Koontz Capital Corporation
October 27, 2000
Page 1
[MERCER CAPITAL CORPORATION LETTERHEAD]
October 27, 2000
The Board of Directors of Britton & Koontz Capital Corporation
c/o Mr. Page Ogden
Chief Executive Officer
Britton & Koontz Capital Corporation
P.O. Box 1407
Natchez, Mississippi 39121
Dear Mr. Ogden:
Mercer Capital Management, Inc. ("Mercer Capital") has been retained by
the Board of Directors of Britton & Koontz Capital Corporation ("BKBK") as
transaction advisor to issue a fairness opinion regarding the financial terms
for the proposed merger between BKBK and Louisiana Bancshares, Inc. ("LBI") and
Britton & Koontz First National Bank ("BKFNB") and Louisiana Bank & Trust
("LBT"). The fairness opinion is issued from a financial point of view of BKBK
shareholders.
Mercer Capital has not been asked to participate in any negotiations
with LBI. Our advisory services relate only to the provision of the fairness
opinion and supporting documentation.
Under terms of the Agreement and Plan of Merger ("the Agreement") dated
as of August 25, 2000 by and among Britton & Koontz Capital Corporation, Britton
& Koontz First National Bank, Louisiana Bancshares, Inc. and Louisiana Bank &
Trust, LBI shall be merged with and into BKBK and contemporaneously LBT shall be
merged into BKFNB.
On the Effective Date (as defined in the Agreement), each share of LBI
common stock (or options to acquire shares, as the case may be) outstanding on
the Effective Date of the Holding Company Merger (as defined in the Agreement),
shall become and be converted into 0.1054 of a share (or options to acquire
shares, as the case may be) of BKBK common stock. Each holder of LBI common
stock who would otherwise have been entitled to receive a fraction of a share of
BKBK common stock pursuant to the Holding Company Merger (or upon exercise of a
stock option, as the case may be) shall receive, in lieu thereof, an amount in
cash (without interest) equal to the product of such fractional share multiplied
by the "market price" of BKBK common stock. As defined in the Agreement, the
market price of BKBK common stock shall be the average of the high and low
closing bid quotations with respect to BKBK common stock as reported by the
National Association of Securities Dealers Quotation System Small Cap Market
during the 20 business days immediately prior to the business day that is 3
business days preceding the Effective Date (or the exercise date of the stock
option, as the case may be).
<PAGE>
The Board of Directors of Britton & Koontz Capital Corporation
October 27, 2000
Page 2
We understand that the mergers are conditioned upon, among other
things, receipt of an opinion to the effect that the mergers will qualify for
treatment as a tax-free reorganization.
Mercer Capital, as part of its investment banking and general valuation
businesses, assists financial institutions and businesses in merging with and
acquiring other entities, and valuing businesses and their securities in
connection with mergers and acquisitions, private placements, corporate
reorganizations, estate tax matters, and other purposes.
As part of this engagement, representatives of Mercer Capital visited
with BKBK management and with LBI management. Factors considered in rendering
this opinion include:
1. The terms of the Agreement, dated August 25, 2000;
2. Negotiations between representatives of BKBK and LBI;
3. An analysis of the estimated pro-forma changes in earnings per
share and book value per share from the perspective of the
BKBK shareholders;
4. A review of certain regulatory financial data of BKFNB for the
fiscal years ended December 31, 1995, 1996, 1997, 1998, and
1999, and the quarters ended March 31 and June 30, 2000.
5. A review of certain regulatory financial data of BKBK for the
fiscal years ended December 31, 1995, 1996, 1997, 1998, and
1999, for the quarters ended March 31 and June 30, 2000.
6. A review of BKBK's budget for fiscal 2000.
7. A review of certain regulatory financial data of LBI (parent
company only) for each of the fiscal years ended December 31,
1997, 1998, 1999 and the six months ended June 30, 2000.
8. A review of certain regulatory financial data of LBT for each
of the fiscal years ended December 31, 1996, 1997, 1998 and
1999 and the quarters ended March 31 and June 30, 2000.
9. A review of LBT's budget for fiscal 2000.
<PAGE>
The Board of Directors of Britton & Koontz Capital Corporation
October 27, 2000
Page 3
10. Tax consequences of the merger for BKBK shareholders. Our
opinion is rendered subject to the receipt by BKBK of a legal
opinion that the transaction will be treated as a tax-free
exchange.
Mercer Capital neither compiled nor audited the financial statements of
BKBK, BKFNB, LBI or LBT, nor have we independently verified the information
reviewed. We have relied upon such information as being complete and accurate in
all material respects. We have not made an independent valuation of the loan
portfolio, adequacy of the loan loss reserve or other assets or liabilities of
either institution.
Mercer Capital has not independently verified the number of shares of
LBI common stock subject to outstanding options. Mercer Capital has been advised
by Jenkens & Gilchrist, counsel for LBI, that there are outstanding options to
purchase 447,099 shares of LBI common stock. It is our understanding that
options to purchase 34,945 shares of LBI common stock will expire upon the
resignation of the option holder, which will be concurrent with the Effective
Date of the Holding Company Merger.
Our opinion does not constitute a recommendation to any shareholder as
to how the shareholder should vote on the proposed mergers; nor have we
expressed any opinion as to the price at which any security of BKBK might trade
in the future. The opinion is necessarily based on economic, market, financial,
and other conditions as they exist, and the information made available to us, as
of the date of this letter.
Based upon our analysis of the proposed transaction, it is our opinion
as of the date hereof that the proposed transaction is fair from a financial
point of view to the shareholders of BKBK.
Sincerely yours,
MERCER CAPITAL MANAGEMENT, INC.
/s/ Leonard L. McKinnon
Managing Director, Mercer Capital Advisors
<PAGE>
APPENDIX C
OPINION OF NATIONAL CAPITAL CORPORATION
Page 1
Board of Directors of Louisiana Bancshares, Inc.
October 20, 2000
[NATIONAL CAPITAL CORPORATION LETTERHEAD]
October 20, 2000
Board of Directors
Louisiana Bancshares, Inc.
7412 Florida Blvd.
Baton Rouge, Louisiana 70806-4551
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of the common stock of Louisiana Bancshares, Inc.
("Louisiana Bancshares" or "Company") of the consideration to be received by
such shareholders in a merger of Louisiana Bancshares with Britton & Koontz
Capital Corporation ("Britton & Koontz") pursuant to the Agreement and Plan of
Merger (the "Agreement") dated August 25, 2000. Unless otherwise noted, all
terms used herein shall have the same meaning as defined in the Agreement.
You have advised us that, pursuant to the Agreement, Louisiana Bancshares will
merge with and into Britton & Koontz. The consideration to be paid to Louisiana
Bancshares shareholders is equal to 0.1054 shares of Britton & Koontz's common
stock for each share of Louisiana Bancshares common stock (excluding shares held
by Louisiana Bancshares shareholders who have perfected their dissenter's rights
of appraisal) issued and outstanding at the Effective Time.
National Capital Corporation, as part of its investment banking business, is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, competitive bids, private placements and for
various other purposes. We have been retained by the Board of Directors of the
Company to serve as its financial advisor in connection with this Transaction.
National Capital Corporation will receive a fee for rendering this opinion. We
have not advised any party in connection with this Transaction other than
Louisiana Bancshares and we make no recommendations to the shareholders of
Louisiana Bancshares.
In connection with our opinion, we have (1) reviewed the Agreement; (2) held
discussions with various members of management and representatives of Louisiana
Bancshares and Britton & Koontz concerning each company's historical and current
operations, financial condition and prospects; (3) reviewed historical financial
and operating data that was publicly available or
<PAGE>
Page 2
Board of Directors of Louisiana Bancshares, Inc.
October 20, 2000
furnished to us by Louisiana Bancshares and Britton & Koontz; (4) reviewed
internal financial analyses, financial and operating forecasts, to the extent
publicly available, reports and other information prepared by officers and
representatives of the Company; (5) reviewed certain publicly available
information with respect to certain other companies that we believe to be
comparable to Louisiana Bancshares and Britton & Koontz and the trading markets
for such other companies' securities; (6) reviewed certain publicly available
information concerning the terms of certain other transactions that we deemed
relevant to our inquiry; (7) assessed the accretion/dilution to Louisiana
Bancshares's shareholders; and (8) conducted such other financial studies,
analyses and investigations as we deemed appropriate for the purpose of this
opinion.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed and relied upon
the representations and warranties of Louisiana Bancshares and Britton & Koontz
contained in the Agreement. We have not been engaged to, and have not
independently attempted to, verify any of such information. We have also relied
upon the management of Louisiana Bancshares and Britton & Koontz as to the
reasonableness and achievability of the financial and operating projections and
assumptions and bases therefore provided to us, and with your consent, we have
assumed that such projections reflect the best currently available estimates and
judgments of such respective managements of Louisiana Bancshares and Britton &
Koontz. We have not been engaged to assess the achievability of such projections
or the assumptions on which they were based and express no view as to such
projections or assumptions. In addition, we have not conducted a physical
inspection or appraisal of any of the assets, properties, or facilities of
either Louisiana Bancshares or Britton & Koontz nor have we been furnished with
any such evaluation or appraisal. We have also assumed that the conditions to
the Transaction would be consummated on a timely basis in the manner
contemplated in the Agreement. Our opinion is based upon analyses of the
foregoing factors in light of our assessment of general economic, financial and
market conditions as they exist and can be evaluated by us as of the date
hereof. We express no opinion as to the price or trading range at which shares
of Britton & Koontz's common stock will trade following the date hereof, or the
price or trading range at which Britton & Koontz's common stock will trade upon
completion of the Transaction.
It is understood that this opinion is not to be quoted or referred to, in whole
or in part (including excerpts or summaries), in any filing, report, document,
release or other communication used with the Transaction (unless required to be
quoted or referred to by applicable regulatory requirements), nor shall this
opinion be used for any other purposes, without our prior written consent, which
consent shall not unreasonably withheld. Furthermore, our opinion is directed to
the Board of Directors of Louisiana Bancshares and does not constitute a
recommendation to any shareholder of Louisiana Bancshares as to how such
shareholder should vote at the Shareholders' Meeting to be held in connection
with the Transaction.
<PAGE>
Page 3
Board of Directors of Louisiana Bancshares, Inc.
October 20, 2000
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that, as of the date hereof, the
consideration proposed to be paid in the Transaction is fair, from a financial
point of view, to the Company's shareholders.
Sincerely,
NATIONAL CAPITAL CORPORATION
By: /s/ J. Ken Walters
President
<PAGE>
APPENDIX D
CERTAIN PROVISIONS OF MISSISSIPPI LAW
RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS
Section 79-4-13.01. Definitions.
In this article:
(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 Section 79-4-13.02 and who exercises that right when and
in the manner required by Sections 79-4-13.20 through 79-4-13.28.
(3) "Fair value," with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation 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 79-4-13.02. Right to dissent.
(a) A shareholder is entitled to dissent from, and obtain payment of
the fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the
corporation is a party (i) if shareholder approval is required for the merger by
Section 79-4-11.03 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 Section 79-4-11.04;
(2) 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;
(3) 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 (1) year after the date of sale;
<PAGE>
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a dissenter's shares
because it: (i) Alters or abolishes a preferential right of the shares; (ii)
Creates, alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares; (iii) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities; (iv) Excludes or limits the right of the
shares to vote on any matter, or to cumulate votes, other than a limitation by
dilution through issuance of shares or other securities with similar voting
rights; or (v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fraction share so created is to be acquired for cash
under Section 79-4-6.04; or
(5) 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.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of either
(i) making such corporation subject to application of the Mississippi Control
Share Act, or (ii) making such act inapplicable to a control share acquisition
of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
Section 79-4-13.03. Dissent by nominees and beneficial owners.
(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he 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 he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He 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
(2) He does so with respect to all shares of which he is
the beneficial shareholder or over which he has power to direct the vote.
Section 79-4-13.20. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under
Section 79-4-13.02 is submitted to a vote at a shareholders's meeting, the
meeting notice must state that shareholders are or may be entitled to assert
dissenters' rights under this article and be accompanied by a copy of this
article.
(b) If corporate action creating dissenters' rights under Section
79-4-13.02 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Section
79-4-13.22.
<PAGE>
Section 79-4-13.21. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under
Section 79-4-13.02 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights (1) must deliver to the
corporation before the vote is taken written notice of his intent to demand
payment for his shares the proposed action is effectuated, and (2) must not vote
his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirement of subsection
(a) is not entitled to payment for his shares under this article.
Section 79-4-13.22 Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under
Section 79-4-13.02 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10) days
after the corporate action was taken, and must:
(1) State where the payment demand must be sent and where and
when certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is received;
(3) 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 he acquired beneficial ownership of the shares
before that date;
(4) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article.
Section 79-4-13.23. Duty to demand payment.
(a) A shareholder sent a dissenters' notice described in Section
79-4-13.22 must demand payment, certify whether he acquired beneficial ownership
of the shares before the date required to be set forth in the dissenters' notice
pursuant to Section 79-4-13.22(b)(3), and deposit his certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
<PAGE>
Section 79-4-13.24. Share restrictions.
(a) 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 taken or the restrictions released under Section 79-4-13.26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
Section 79-4-13.25. Payment.
(a) Except as provided in Section 79-4-13.27, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who complied with Section 79-4-13.23 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal
year ending not more than sixteen (16) 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;
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' right to demand payment
under Section 79-4-13.28; and
(5) A copy of this article.
Section 79-4-13.26. Failure to take action.
(a) If the corporation does not take the proposed action within sixty
(60) days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 79-4-13.22 and repeat the payment demand
procedure.
Section 79-4-13.27. After-acquired shares.
(a) A corporation may elect to withhold payment required by Section
79-4-13.25 from a dissenter unless he 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.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and
<PAGE>
shall pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer a
statement of its estimate of 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 Section 79-4-13.28.
Section 79-4-13.28. Procedure if shareholder dissatisfied with payment or offer.
(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under Section 79-4-13.25), or reject
the corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under Section
79-4-13.25 or offered under Section 79-4-13.27 is less than the fair value of
his shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section
79-4-13.25 within sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within sixty (60) days after the
date set for demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
within thirty (30) days after the corporation made or offered payment for his
shares.
Section 79-4-13.30. Court action.
(a) If a demand for payment under Section 79-4-13.28 remains unsettled,
the corporation shall commence a proceeding within sixty (60) 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 60-day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the chancery 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.
(c) 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.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) 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.
<PAGE>
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation, or (2)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under Section 79-4-13.27.
Section 79-4-13.31. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under Section
79-4-13.30 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 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 Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) 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 Sections 79-4-13.20 through 79-4-13.28; or
(2) Against either the corporation of 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 this article.
(c) 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 benefitted.
<PAGE>
APPENDIX E
CERTAIN PROVISIONS OF LOUISIANA LAW
RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS
State Law (Section 131 of the Louisiana Business Corporation Law)
A. Except as provided in subsection B of this section, if a corporation
has, by vote of its shareholders, authorized a sale, lease or exchange of all of
its assets, or has, by vote of its shareholders, become a party to a merger or
consolidation, then, unless such authorization or action shall have been given
or approved by at least eighty per cent of the total voting power, a shareholder
who voted against such corporate action shall have the right to dissent. If a
corporation has become a party to a merger pursuant to R.S. 12:112(G), the
shareholders of any subsidiaries party to the merger shall have the right to
dissent without regard to the proportion of the voting power which approved the
merger and despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist
in the case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance with
their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which,
at the record date fixed to determine shareholders entitled to receive notice of
and to vote at the meeting of shareholders at which a merger or consolidation
was acted on, were listed on a national securities exchange, or were designated
as a national market system security on an inter-dealer quotation system by the
National Association of Securities Dealers, unless the articles of the
corporation issuing such stock provide otherwise or, except in the case of
shareholders of a corporation surviving the merger or consolidation in which
each share of such corporation outstanding immediately prior to the effective
date of the merger or consolidation, the shares of such shareholders were not
converted by the merger or consolidation solely into shares of the surviving or
new corporation.
C. (1)(a) Except as provided in paragraph (4) of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than eighty
per cent of the total voting power, and the merger consolidation or sale, lease
or exchange of assets authorized thereby be effected, the corporation shall
promptly thereafter give written notice thereof to each shareholder who filed
such written objection to, and voted his shares against, such action, at such
shareholder's last address on the corporation's records.
(b) An affidavit of the secretary or assistant secretary or
of the transfer agent of the corporation that such notice has been given shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
(2) Each such shareholder may, within twenty days after the mailing
of such notice to him, but not thereafter, file with the corporation a demand in
writing for the fair cash value of his shares as of the day before such vote was
taken; provided that he state in such demand the value demanded, and a post
office address to which the reply of the corporation may be sent, and at the
same time deposit in escrow in a chartered bank or trust company located in the
parish of the registered office of the corporation, the certificates
representing his shares, duly endorsed and transferred to the corporation upon
the sole condition that said certificates shall be delivered to the corporation
upon payment of the value of the shares determined in accordance with the
provisions of this section. With his demand the shareholder shall deliver to the
<PAGE>
corporation, the written acknowledgment of such bank or trust company that it so
holds his certificates of stock.
(3) Unless the objection, demand and acknowledgment are made and
delivered by the shareholder within the period limited in paragraphs (1) and
(2), he shall conclusively be presumed to have acquiesced in the corporate
action proposed or taken.
(4) In the case of a merger pursuant to R.S. 12:112(G), the
dissenting shareholder need not file an objection with the corporation nor vote
against the merger, but need only file with the corporation within twenty days
after a copy of the merger certificate was mailed to him, a demand in writing
for the cash value of his shares as of the day before the certificate was filed
with the secretary of state, state in such demand the value demanded and a post
office address to which the corporation's reply may be sent, deposit the
certificates representing his shares in escrow as provided in paragraph (2), and
deliver to the corporation with his demand the acknowledgment of the escrow bank
or trust company as described in paragraph (2).
D. If the corporation does not agree to the value so stated and
demanded, or does not agree that a payment is due, it shall, within twenty days
after receipt of such demand and acknowledgment, notify in writing the
shareholder, at the designated post office address, of its disagreement, and
shall state in such notice the value it will agree to pay if any payment should
be held to be due; otherwise it shall be liable for, and shall pay to the
dissatisfied shareholder, the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to whether
any payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit filed
by another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the court
staying the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of the shareholder
to bring suit, or to intervene in such a suit, within sixty days after receipt
of notice of disagreement by the corporation shall conclusively bind the
shareholder (1) by the corporation's statement that no payment is due, or (2) if
the corporation does not content that no payment is due, to accept the value of
his shares as fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay to the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such
<PAGE>
shareholder, exclusive of interest and costs, be more than the amount offered
and deposited as aforesaid, the costs of the proceeding shall be taxed against
the corporation, or the merged or consolidated corporation, as the case may be;
otherwise the costs of the proceeding shall be taxed against such shareholder.
H. Upon filing a demand for the value of his shares, the shareholder
shall cease to have any of the rights of a shareholder except the rights
accorded by this section. Such a demand may be withdrawn by the shareholder at
any time before the corporation gives notice of disagreement, as provided in
subsection D of this section. After such notice of disagreement is given,
withdrawal of a notice of election shall require the written consent of the
corporation. If a notice of election is withdrawn, or the proposed corporate
action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him in
exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand for
value, including any intervening preemptive rights, and the right to payment of
any intervening dividend or other distribution, or, if any such rights have
expired or any such dividend or distribution other than in cash has been
completed, in lieu thereof, at the election of the corporation, the fair value
thereof in cash as determined by the board as of the time of such expiration or
completion, but without prejudice otherwise to any corporate proceedings that
may have been taken in the interim.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Mississippi Business Corporation Act ("MBCA") contains provisions
that directly affect the liability of officers and directors of Mississippi
corporations to the corporations and stockholders whom they serve. Article 8,
Subarticle E of the MBCA permits Mississippi corporations to indemnify officers
and directors, as well as certain other individuals who act on behalf of such
corporations. Article 8, Subarticle C sets forth the standards of conduct
required for directors, and Article 8, Subarticle D sets forth the standards of
conduct of officers of Mississippi corporations.
Section 79-4-8.30 of the MBCA provides that directors of Mississippi
corporations are required to discharge the duties of their positions in good
faith, with the care that an ordinarily prudent person would exercise under
similar circumstances in like positions and in a manner reasonably believed to
be in the best interests of the corporation. This section specifically provides
that in considering the best interests of the corporation, the director must
consider the interests of the corporation's stockholders. A director is allowed
to rely in good faith on information provided to him by the corporation's
officers, legal counsel, accountants, other experts and board committees on
which he is not a member. Section 79-4-8.42 imposes the same standards of
conduct on officers of Mississippi corporations, except there is no specific
provision regarding the interests of the stockholders. Officers are allowed to
rely in good faith on information provided to them by other officers, legal
counsel, accountants and other experts. If directors and officers perform their
duties in compliance with these sections, they will not be liable for any
action, or failure to take action, taken in the performance of their duties.
Section 79-4-8.33 imposes personal liability of directors to the
corporation and its stockholders for distributions made in excess of standards
established by Mississippi law or in the corporation's Articles of
Incorporation. The MBCA also provides that a director cannot be indemnified, as
allowed by the provisions of the MBCA discussed below, in circumstances where,
in his performance as a director, he has received a financial benefit to which
he is not entitled, he intentionally inflicts harm on the corporation or its
stockholders or he intentionally violates any criminal law. Section
79-4-2.02(b)(5) permits the corporation to include an obligatory indemnification
for directors in its Articles of Incorporation for all acts other than those
outlined above.
Article 8 of Britton & Koontz Capital Corporation's ("Britton &
Koontz") Articles of Incorporation complies with the permitted indemnification
provision of Section 79-4-2.02(b)(5). The personal liability of a director of
Britton & Koontz is eliminated, except liability for (a) the amount of a
financial benefit received by a director to which he is not entitled, (b) an
intentional infliction of harm on the Corporation or the stockholders, (c) a
violation of Section 79-4-8.33, Mississippi Code Ann. (1972), as amended, or (d)
an intentional violation of criminal law. Article VI of Britton & Koontz's
bylaws permits Britton & Koontz to advance all expenses for defense of a
director in any lawsuit brought against a director in his capacity as a
director. The MBCA
<PAGE>
specifically provides, in Section 79-4-8.53 that such advances are allowed by
Mississippi law. Such advances may be made under the MBCA only after a
determination that the director met all relevant standards of conduct
Section 79-4-8.51 of the MBCA permits a Mississippi corporation to
indemnify any officer to the same extent as to a director. Article VI of Britton
& Koontz's by-laws provides that any person who is or was a party or is
threatened to be made a party to any action, suit or proceeding by reason of the
fact that he or she was a director, officer, employee or agent of the
corporation, or was serving at the request of the corporation in one of those
capacities for another business, may be indemnified to the fullest extent
allowed law against all expense, liability and loss (including attorneys' fees,
judgments, fines and amounts paid in settlement) reasonably incurred by such
persons.
Indemnification of officers and directors against reasonable expenses
is mandatory under Section 79-4-8.52 of the MBCA to the extent the officer or
director is successful on the merits or otherwise in the defense of any action
or suit against him giving rise to a claim of indemnification.
Section 79-4-8.57 permits a Mississippi corporation to purchase and
maintain insurance on behalf of its officers and directors, against liability
asserted against or incurred by them in their capacities as officers or
directors, whether or not the corporation would have the power to indemnify such
officers or directors or advance funds for the same liability. Article VI,
Section 7 of Britton & Koontz's by-laws permits Britton & Koontz to obtain such
insurance.
The MBCA treats suits by or in the right of the corporation, or
derivative suits, differently from other legal actions. Indemnification is not
permitted in a derivative action, except for reasonable expenses incurred in
connection with the proceeding if the officer or director has met the relevant
standards of conduct.
Item 21. Exhibits and Financial Statements.
EXHIBIT NO. DESCRIPTION OF EXHIBITS
2 Agreement and Plan of Merger between Britton & Koontz
Capital Corporation and Britton & Koontz First
National Bank and Louisiana Bancshares, Inc. and
Louisiana Bank & Trust Company dated as of August 25,
2000 (filed as Appendix A to the joint proxy
statement-prospectus, which forms Part I of this
registration statement on Form S-4).
3(a) Articles of Incorporation of Britton & Koontz Capital
Corporation, as amended to date.
3(b) Bylaws of Britton & Koontz, as amended to date.
<PAGE>
5 Opinion of Phelps Dunbar, L.L.P., counsel for Britton
& Koontz (including consent of counsel for Britton &
Koontz). *
8 Opinion of Phelps Dunbar, L.L.P. with respect to tax
issues. *
10 Severance Agreement by and between John S. Sylvest
and Louisiana Bank & Trust Company dated July 1, 1996.
13 Britton & Koontz's Annual Report to Shareholders for
the year ended December 31, 1999.
23(a) Consent of Phelps Dunbar, L.L.P., counsel for Britton
& Koontz (included in Exhibit 5). *
23(b) Consent of May & Company.
23(c) Consent of Mercer Capital Corporation.
23(d) Consent of Postlethwaite & Netterville.
23(e) Consent of National Capital Corporation.
24 Form of Power of Attorney.
99(a) Form of Proxy of Britton & Koontz Capital Corporation.
99(b) Form of Proxy of Louisiana Bancshares, Inc.
* To be filed by amendment.
Item 22. Undertakings.
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. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed
<PAGE>
that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Natchez, State of Mississippi, on September 19, 2000.
BRITTON & KOONTZ CAPITAL CORPORATION
By: /s/ W. J. Feltus III
--------------------
W. J. Feltus III,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
--------------------------- ------------------------- -----------------
/s/ W. J. Feltus III Chairman of the Board September 19, 2000
---------------------------
W. J. Feltus III
/s/ W. Page Ogden President and Chief Executive September 19, 2000
--------------------------- Officer/Director
W. Page Ogden
/s/ Bazile R. Lanneau, Jr. Chief Financial and Accounting September 19, 2000
--------------------------- Officer/Director
Bazile R. Lanneau, Jr.
/s/ W. W. Allen, Jr. Director September 19, 2000
---------------------------
W. W. Allen, Jr.
/s/ Craig A. Bradford Director September 26, 2000
---------------------------
Craig A. Bradford
/s/ James J. Cole Director September 19, 2000
---------------------------
James J. Cole
S-1
<PAGE>
/s/ A. J. Ferguson Director September 19, 2000
---------------------------
A. J. Ferguson
/s/ C. H. Kaiser, Jr. Director September 19, 2000
---------------------------
C. H. Kaiser, Jr.
/s/ Albert W. Metcalfe Director September 19, 2000
---------------------------
Albert W. Metcalfe
/s/ Bethany L. Overton Director September 19, 2000
---------------------------
Bethany L. Overton
/s/ Robert R. Punches Director September 19, 2000
---------------------------
Robert R. Punches
S-2
<PAGE>
</TABLE>
EXHIBIT INDEX
Exhibit No. Description of Exhibits
2 Agreement and Plan of Merger between Britton & Koontz
Capital Corporation and Britton & Koontz First
National Bank and Louisiana Bancshares, Inc. and
Louisiana Bank & Trust Company dated as of August 25,
2000 (filed as Appendix A to the joint proxy
statement-prospectus, which forms Part I of this
registration statement on Form S-4).
3(a) Articles of Incorporation of Britton & Koontz Capital
Corporation, as amended to date.
3(b) Bylaws of Britton & Koontz, as amended to date.
5 Opinion of Phelps Dunbar, L.L.P., counsel for Britton
& Koontz (including consent of counsel for Britton &
Koontz). *
8 Opinion of Phelps Dunbar, L.L.P. with respect to tax
issues. *
10 Severance Agreement by and between John S. Sylvest
and Louisiana Bank & Trust Company dated July 1, 1996.
13 Britton & Koontz's Annual Report to Shareholders for
the year ended December 31, 1999.
23(a) Consent of Phelps Dunbar, L.L.P., counsel for Britton &
Koontz (included in Exhibit 5). *
23(b) Consent of May & Company.
23(c) Consent of Mercer Capital Corporation.
23(d) Consent of Postlethwaite & Netterville.
23(e) Consent of National Capital Corporation.
24 Form of Power of Attorney.
99(a) Form of Proxy of Britton & Koontz Capital Corporation.
99(b) Form of Proxy of Louisiana Bancshares, Inc.
* To be filed by amendment
