U. S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[Fee Required]
For the fiscal year ended: December 31, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[No Fee Required]
For the transition period from to
Commission file number: 0-12979
BANK OF GONZALES HOLDING COMPANY, INC.
(Name of small business issuer in its charter)
Louisiana 72-0967503
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P. O. Box 1089, Gonzales, Louisiana 70707-1089
(Address of principal executive offices and zip code.)
Issuer's telephone number: (504) 621-7200
Securities Registered Under Section 12(b) of the Exchange Act:
None
Securities Registered Pursuant To Section 12(g) Of The Act:
Common Stock, No Par Value Per Share
(Title of class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year:
$11,400,000
State the aggregate market value of the voting stock held by non-
affiliates* of the issuer as of February 19, 1996:
$13,107,000
Common Stock, No Par Value, 541,611 shares outstanding as of
March 1, 1996.
Transitional Small Business Disclosure Format: Yes No X
*For purposes of this computation only, shares held by directors,
officers and principal shareholders have been excluded.
<PAGE>
FORM 10-KSB INDEX
Page
Part I
Item 1. Description of Business . . . . . . . . . . . . . . 4
Item 2. Description of Property . . . . . . . . . . . . . . 18
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . 19
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 19
Part II
Item 5. Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . 19
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . 19
Item 7. Financial Statements . . . . . . . . . . . . . . . 25
Item 8. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . 55
Part III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act . . . . . . . . 55
Item 10. Executive Compensation . . . . . . . . . . . . . . 57
Item 11. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . 58
Item 12. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . 60
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . 61
Signatures . . . . . . . . . . . . . . . . . . . . 62
<PAGE>
PART I
Item 1. - Description of Business
GENERAL
Bank of Gonzales Holding Company, Inc. (the "Company") is a
Louisiana business corporation and a one-bank holding company
registered under the federal Bank Holding Company Act of 1956.
It was formed in 1983 primarily for the purpose of holding all of
the outstanding stock of the Bank of Gonzales (the "Bank"), which
is the Company's sole subsidiary.
The Bank was formed in 1920 under the banking laws of the State
of Louisiana. The Bank conducts a general commercial banking
business through its main office at South Burnside Avenue and
Worthey Road, Gonzales, Louisiana and at two branch offices in
eastern Ascension Parish, Louisiana. The Bank offers a full
range of traditional commercial banking services, including
demand, savings and time deposits, consumer, commercial and real
estate loans, safe-deposit boxes and access to two retail credit
plans -- "VISA" and "MasterCard". The Bank does not offer trust
services. Drive-in banking facilities and automated teller
machines ("ATMs") are located at all three banking locations.
The Bank also maintains three stand-alone ATMs within Ascension
Parish.
COMPETITION
The Bank competes actively with national and state banks and
savings and loan institutions in Louisiana for all types of loans
and deposits. The Bank also competes for loans with other
financial institutions, such as insurance companies, real estate
investment trusts, savings and loans, small loan companies,
credit unions and certain government agencies. As of December
31, 1995, the Bank was the largest financial institution
headquartered in Ascension Parish as measured by total deposits
and total assets. Five other financial institutions have a total
of eleven banking offices located in Ascension Parish.
EMPLOYEES
As of December 31, 1995, the Company and the Bank had
approximately 63 full time equivalent employees. The Company has
no salaried employees, although certain executive officers hold
parallel positions with the Bank. No employees are represented
by unions or other bargaining units, and management considers its
relations with employees to be satisfactory.
SUPERVISION AND REGULATION
General
The Company and the Bank are extensively regulated under both
federal and state laws. To the extent that the following
information describes particular statutory provisions, it is
qualified in its entirety by reference to the particular
statutory and regulatory provisions. Any change in applicable
law or regulation may have a material effect on the business and
prospects of the Company.
The Company
The Company is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the "Act"), and, as
such, is subject to the provisions of the Act and to regulation
and supervision by the Board of Governors of the Federal Reserve
System (the "Board"). The Company is required to file with the
Board annual reports containing such information as the Board may
require pursuant to the Act and also is subject to periodic
examination by the Board.
The Act limits, with certain exceptions, the business in which a
bank holding company may engage, directly or through
subsidiaries, to banking, managing or controlling banks, and
furnishing or performing activities so closely related to banking
or managing or controlling banks as to be a proper incident
thereto. In determining whether a particular activity is a
proper incident to banking or managing or controlling banks, the
Board must consider whether its performance by an affiliate of a
bank holding company can reasonably be expected to produce
benefits to the public, such as greater convenience, increased
competition or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or other unsound
banking practices.
The Board has adopted regulations implementing the provisions of
the Act with respect to the activities of bank holding companies.
Whether or not a particular non-banking activity is permitted
under the Act, the Board is authorized to require a bank holding
company to terminate any activity or to divest itself of any
non-banking subsidiary if its actions represent unsafe or unsound
practices or violations of law.
Under the Act, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in
connection with the extension of credit, the lease or sale of
property or provision of any services. In addition, the Act
prohibits a bank holding company from borrowing from its bank
subsidiaries unless such loans are secured by specified amounts
and types of collateral. Such secured loans are also subject to
certain limitations based upon the subsidiary bank's capital and
surplus.
The Federal Deposit Insurance Corporation Improvement Act of 1991
(the "1991 Act") subjected bank holding companies as well as
banks to significantly increased regulation and supervision.
Among other things, the 1991 Act provides that undercapitalized
institutions, as defined by regulatory authorities, must submit
recapitalization plans, and a parent company of such an
institution must either (i) guarantee the institution's
compliance with the capital plan, up to an amount equal to the
lesser of five percent of the institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency
when the institution fails to comply with the plan, or (ii)
suffer certain adverse consequences such as a prohibition of
dividends by the parent company to its shareholders.
The Company is also subject to the Louisiana Bank Holding Company
Act, as amended (the "Louisiana Act") which, among other things,
provides that a bank holding company and its subsidiaries may not
engage in any insurance activity in which a bank may not engage.
The Louisiana Commissioner of Financial Institutions is
authorized to administer the Louisiana Act and to issue orders
and regulations thereunder.
Federal and Louisiana laws provide for the enforcement of any pro
rata assessment of shareholders of a bank to cover impairment of
capital stock by sale, to the extent necessary, of the stock of
any assessed shareholder failing to pay the assessment. The
Company, as shareholder of the Bank, is subject to these
provisions.
The Bank
Both federal and state laws extensively regulate various aspects
of the banking business, including requirements regarding the
maintenance of reserves against deposits, limitations on the
rates that can be charged on loans or paid on deposits, branching
and restrictions on the nature and amounts of loans and
investments that can be made.
As a state bank, the Bank is subject to the supervisory authority
of the Louisiana Commissioner of Financial Institutions, whose
office conducts periodic examinations of the Bank. As a
federally insured bank, the Bank is also subject to supervision
and regulation by the Federal Deposit Insurance Corporation (the
"FDIC").
Under certain circumstances, regulatory authorities may prohibit
the payment of dividends by a bank or its parent holding company.
The 1991 Act and regulations promulgated thereunder classify
banks into five categories generally relating to their regulatory
capital ratios and institute a system of supervisory actions
indexed to a bank's particular classification. Generally, banks
that are classified as "well capitalized," or "adequately
capitalized" are not subject to the supervisory actions specified
in the 1991 Act for prompt corrective action, but may be
restricted from taking certain actions that will lower their
classification. Banks classified as "undercapitalized,"
significantly undercapitalized," or "critically undercapitalized"
are subject to restrictions in supervisory actions of increasing
stringency based on the level of classification.
Under present regulation, the Bank is "well capitalized." While
such a classification would exclude the Bank from the
restrictions and actions envisioned by the prompt corrective
action provisions of the 1991 Act, the regulatory agencies have
broad powers under other provisions of federal law that would
permit them to place restrictions on the Bank or to take other
supervisory action regardless of such classification.
SUPPLEMENTAL FINANCIAL INFORMATION
Supplemental financial information for Bank of Gonzales Holding
Company, Inc. and subsidiary is set forth below and on the
following pages.
Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential
Average balance sheets, interest income and expenses, and average
yields on interest-bearing assets and effective rates paid on
interest-bearing liabilities for 1995 and 1994 were:
December 31, 1995
Average Yield/
Balance Interest Rate
(In thousands of dollars)
ASSETS
Interest-earning assets:
Loans(1) $ 60,049 $6,437 10.72%
Taxable investment securities 50,013 3,384 6.77%
Tax-exempt investment securities 699 31 4.43%
Interest-bearing deposits with
other banks 409 28 6.85%
Federal funds sold 1,763 101 5.73%
Total interest-earning assets 112,853 9,981 8.84%
Noninterest-earning assets:
Cash and due
from banks 4,161
Premises and equipment, net 2,318
Other real estate owned 431
Deferred tax asset 1,476
Other assets 1,833
Less allowance for loan losses (1,488)
$121,664
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 19,132 $ 407 2.13%
Savings deposits 20,510 499 2.43%
Time deposits of $100,000 or more 6,554 337 5.14%
Time deposits of less than $100,000 38,057 1,793 4.71%
Federal funds purchased 148 9 6.08%
Other borrowed funds 3,330 213 6.40%
Total interest-bearing liabilities 87,731 3,258 3.71%
Noninterest-bearing liabilities:
Demand deposits 21,270
Other 892
Total liabilities 109,893
Shareholders' equity 11,771
$121,664
Net interest income $6,723
Net interest margin 5.96%
December 31, 1994
Average Yield/
Balance Interest Rate
(In thousands of dollars)
ASSETS
Interest-earning assets:
Loans(1) $ 59,352 $6,114 10.30%
Taxable investment securities 47,317 2,772 5.86%
Tax-exempt investment securities 489 20 4.09%
Interest-bearing deposits with
other banks 77 3 3.90%
Federal funds sold 748 31 4.14%
Total interest-earning assets 107,983 8,940 8.28%
Noninterest-earning assets:
Cash and due
from banks 4,124
Premises and equipment, net 2,420
Other real estate owned 658
Deferred tax asset 2,924
Other assets 1,539
Less allowance for loan losses (1,732)
$117,916
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 18,452 $ 342 1.85%
Savings deposits 20,541 473 2.30%
Time deposits of $100,000 or more 5,968 210 3.52%
Time deposits of less than $100,000 36,627 1,264 3.45%
Federal funds purchased 569 23 4.04%
Other borrowed funds 2,711 176 6.49%
Total interest-bearing liabilities 84,868 2,488 2.93%
Noninterest-bearing liabilities:
Demand deposits 20,099
Other 940
Total liabilities 105,907
Shareholders' equity 12,009
$117,916
Net interest income $6,452
Net interest margin 5.98%
(1) For the purpose of these computations, nonaccruing loans are
included in the average balance. Also, installment loans
are stated net of unearned income.
The following table sets forth for the periods indicated a
summary of the changes in interest earned and interest paid
resulting from changes in volume and changes in rates:
1995 Compared to 1994 1994 Compared to 1993
Increase (Decrease) Increase (Decrease)
Due to (1) Due to (1)
Vol. Rate Net Vol. Rate Net
(In thousands of dollars)
Interest-earning
assets:
Loans(2) $ 74 $ 249 $ 323 $ 192 $ 316 $ 508
Taxable investment
securities 181 431 612 197 40 237
Tax-exempt invest-
ment securities 9 2 11 9 (9) -
Interest-bearing
deposits with
other banks 21 4 25 1 (1) -
Federal funds sold 58 12 70 3 8 11
Total interest-earn-
ing assets 343 698 1,041 402 354 756
Interest-bearing
liabilities:
Interest-bearing
demand deposits 13 52 65 39 (52) (13)
Savings deposits (1) 27 26 25 (35) (10)
Time deposits of
$100,000 or more 30 97 127 (23) - (23)
Time deposits of
less than
$100,000 67 462 529 (74) (12) (86)
Federal funds
purchased (26) 12 (14) 11 3 14
Other borrowed
funds 39 (2) 37 174 - 174
Total interest-bear-
ing liabilities 122 648 770 152 (96) 56
$ 221 $ 50 $ 271 $ 250 $ 450 $ 700
(1) The change in interest due to both rate and volume has been
allocated entirely to volume.
(2) Balances of nonaccrual loans have been included for
computational purposes.
The following table shows the interest rate sensitivity gaps for
different time periods and the cumulative interest rate
sensitivity gaps for the same periods as of December 31, 1995.
3 Months 3 to 6 6 to 12
or Less Months Months
(In thousands of dollars)
Interest-earning assets:
Loans(1) $ 21,424 $ 2,015 $ 2,946
Taxable investment securities 501 - 2,334
Tax-exempt investment securi-
ties - 572 -
Interest-bearing deposits
with other banks 300 - 1,000
Federal funds sold 2,634 - -
Total interest-earning assets 24,859 2,587 6,280
Interest-bearing liabilities:
Interest-bearing demand
deposits 20,039 - -
Savings deposits 20,711 - -
Time deposits of $100,000 or
more 900 2,409 2,765
Time deposits of less than
$100,000 9,614 7,821 11,099
Other borrowed funds - - -
Total interest-bearing
liabilities 51,264 10,230 13,864
Gap $(26,405) $ (7,643) $ (7,584)
Cumulative gap $(26,405) $(34,048) $(41,632)
1 to 5 Over 5
Years Years Total
(In thousands of dollars)
Interest-earning assets:
Loans(1) $ 28,074 $ 4,815 $ 59,274
Taxable investment securities 16,334 32,023 51,192
Tax-exempt investment securi-
ties - 995 1,567
Interest-bearing deposits
with other banks - - 1,300
Federal funds sold - - 2,634
Total interest-earning assets 44,408 37,833 115,967
Interest-bearing liabilities:
Interest-bearing demand
deposits $ - $ - $ 20,039
Savings deposits - - 20,711
Time deposits of $100,000 or
more 1,011 - 7,085
Time deposits of less than
$100,000 10,160 - 38,694
Other borrowed funds - 3,260 3,260
Total interest-bearing
liabilities 11,171 3,260 89,789
Gap $ 33,237 $ 34,573 $ 26,178
Cumulative gap $ (8,395) $ 26,178 $
(1) Loans above exclude nonaccrual loans of $299,000.
Investment Portfolio
The following table sets forth the maturities of investment
securities at December 31, 1995 and the weighted average yields
of such securities (calculated on the basis of the cost and
effective yields weighted for the scheduled maturity of each
security). As discussed in the notes to the consolidated
financial statements presented in Item 7, the Company has an
unused net operating loss carryforward at December 31, 1995.
Accordingly, tax-equivalent adjustments have not been made in
calculating yields on obligations of states and political
subdivisions. In addition, for purposes of this table, Federal
Home Loan Bank stock with a book value of $572,000 has been
excluded.
After One
Within But Within
One Year Five Years
Securities available-for-sale: Amount Yield Amount Yield
(In thousands of dollars)
U.S. Treasury securities and obli-
gations of other U.S. Government
agencies and corporations $2,523 6.97% $10,725 6.45%
Obligations of states and political
subdivisions - - - -
$2,523 $10,725
Mortgage-backed bonds and collateral-
ized mortgage obligations $ 313 7.16% $ 4,650 5.98%
Securities held-to-maturity:
U.S. Treasury securities and obli-
gations of other U.S. Government
agencies and corporations $ - - $ 959 7.58%
Obligations of states and political
subdivisions - - - -
$ - $ 959
Mortgage-backed bonds and collateral-
ized mortgage obligations $ - $ -
After Five
But Within After
Ten Years Ten Years
Securities available-for-sale: Amount Yield Amount Yield
(In thousands of dollars)
U.S. Treasury securities and obli-
gations of other U.S. Government
agencies and corporations $1,721 6.58% $ - -
Obligations of states and political
subdivisions - - - -
$1,721 $ -
Mortgage-backed bonds and collater-
alized mortgage obligations $ - - $19,912 6.74%
Securities held-to-maturity:
U.S. Treasury securities and obli-
gations of other U.S. Government
agencies and corporations $2,504 6.86% $ - -
Obligations of states and political
subdivisions 519 3.55% 476 5.60%
$3,023 $ 476
Mortgage-backed bonds and collateral-
ized mortgage obligations $4,742 5.63% $ 3,144 6.65%
The Bank's mortgage-backed bonds and collateralized mortgage
obligations stated maturity dates are as scheduled above, however
principal and interest payments are received monthly causing a
portion of the outstanding balance to paydown throughout the
term.
The Company does not own securities representing 10% or more of
its shareholders' equity with any one issuer.
The following table sets forth the carrying amounts of investment
securities at the dates indicated:
December 31,
1995 1994
(In thousands of dollars)
U.S. Treasury securities and obliga-
tions of other U.S. Government agen-
cies and corporations $18,432 $15,158
Obligations of state and political sub-
divisions 995 499
Mortgage-backed bonds and collateralized
mortgage obligations 32,760 30,809
Federal Home Loan Bank stock 572 537
Total $52,759 $47,003
Loan Portfolio
The table below sets forth the Bank's loan distribution at the
end of each of the last two years:
December 31,
1995 1994
(In thousands of dollars)
Commercial, financial and agricultural $27,327 $27,772
Real estate - mortgage 20,210 20,586
Real estate - construction 1,894 1,618
Installment 10,142 9,694
Total $59,573 $59,670
The following table shows the maturity of loans (excluding real
estate-mortgage and installment loans) outstanding as of
December 31, 1995. Also provided are the amounts due after one
year, classified according to sensitivity to changes in interest
rates.
Maturing
Within After One But After
One Year Within Five Years Five Years Total
(In thousands of dollars)
Commercial,
financial
and agri-
cultural $6,018 $13,394 $7,915 $27,327
Real estate -
construction 1,894 - - 1,894
$7,912 $13,394 $7,915 $29,221
Loans maturing
after one
year with:
Fixed interest
rates $13,816
Variable inter-
est rates 7,492
$21,308
Summary of Loan Loss Experience
The following table summarizes the Bank's loan loss experience
for each of the two years ended:
December 31,
1995 1994
(In thousands of dollars)
Balance at beginning of period $1,525 $1,835
Charge-offs:
Commercial, financial and agricultural 25 32
Real estate (construction and mortgage) 10 9
Installment 184 133
219 174
Recoveries:
Commercial, financial and agricultural 8 67
Real estate (construction and mortgage) 15 11
Installment 28 36
51 114
Net charge-offs 168 60
Provision charged (credited) to operations 60 (250)
Balance at end of period $1,417 $1,525
Ratio of net charge-offs to average loans
outstanding .28% .10%
The provision for loan losses, which is charged to income from
operations, is based upon the changes in the loan portfolio, the
amount of net loan losses incurred, and management's estimation
of potential future losses based on several factors including,
but not limited to, current economic conditions, loan portfolio
composition, nonaccrual loans, problem loans and prior loan loss
experience.
As a result of an improving economy and loan portfolio during
1994, management determined that the allowance for possible loan
losses exceeded the required amount by $250,000 and credited the
provision for possible loan losses for this amount.
The following table shows an allocation of the allowance for
possible loan losses for each of the two years indicated:
December 31, 1995 December 31, 1994
Percentage Percentage
of Loans in of Loans in
Each Category Each Category
Amount to Total Loans Amount to Total Loans
(In thousands of dollars)
Commercial,
financial and
agricultural $1,059 45.87% $ 919 46.54%
Real estate -
mortgage 332 33.92% 408 34.50%
Real estate -
construction - 3.18% 27 2.71%
Installment 20 17.03% 160 16.25%
Unallocated 6 -% 11 -%
$1,417 100.00% $1,525 100.00%
Risk Elements
The following table summarizes nonperforming loans at December 31, 1995
and 1994:
1995 1994
Nonaccrual loans $299 $ 123
Accruing loans past due 90 days or more $ 26 $ 23
Restructured loans not included above $833 $1,076
If nonaccrual loans had performed in accordance with their original terms,
interest income would have increased by approximately $17,000 in 1995 and
$11,000 in 1994. Interest collected and recognized as interest income on
these loans was $9,000 in 1995 and $126,000 in 1994.
Deposits
The average deposits and rates paid on such deposits are
summarized for the period indicated in the following tables:
Years ended December 31,
1995 1994
Amount Rate Amount Rate
(In thousands of dollars)
Noninterest-bearing demand
deposits $ 21,270 $ 20,099
Interest-bearing demand
deposits 19,132 2.13% 18,452 1.85%
Savings deposits 20,510 2.43% 20,541 2.30%
Time deposits 44,611 4.77% 42,595 3.46%
Total $105,523 $101,687
Maturities of time deposits of $100,000 or more outstanding as of
December 31, 1995 are summarized as follows:
Time Certificates
of Deposit
(In thousands of dollars)
3 months or less $ 900
Over 3 through 6 months 2,409
Over 6 through 12 months 2,765
Over 12 months 1,011
Total $7,085
Return on Equity and Assets
Years Ended December 31,
1995 1994
Return on average assets 2.15% 2.23%
Return on average equity 22.18% 21.87%
Dividend payout ratio 112.03% 111.21%
Average equity to average assets 9.68% 10.18%
Item 2. - Description of Property
The principal properties of the Company and the Bank are their
headquarters, a 36,000-square foot building located at the corner
of South Burnside Avenue and Worthey Road, Gonzales, Louisiana,
and two branch banking offices, all of which are owned by the
Bank. All of the properties are considered to be in good
condition and adequate for the Bank's needs.
Additionally, through foreclosure proceedings or acceptance of
deed in lieu of foreclosure, the Bank has acquired certain other
properties which are held for resale and are not used to conduct
the business of the Bank. Substantially all of these properties
are located in and around Ascension Parish.
Item 3. - Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the Company's business
to which the Company or the Bank is a party or to which any of
their property is the subject.
Item 4. - Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. - Market for Common Equity and Related Stockholder
Matters
No established public trading market for the Company's common
stock exists. The primary market area for the Company's common
stock is Ascension Parish. No sales of the Company's common
stock have come to the attention of management in 1995.
The approximate number of holders of record of each class of the
Company's equity securities as of February 1, 1996 was as
follows:
Title of Class Number of Record Holders
Common stock, no par value 756
In 1995 and 1994, the Company paid eight quarterly dividends of
$0.35 per share, plus four extraordinary dividends totaling $8.00
per share, for total dividends of $5,849,000.
Item 6. - Management's Discussion and Analysis of Financial
Condition and Results of Operations
The purpose of this discussion is to focus on information about
the financial condition and results of operations of the Company
and the Bank that is not otherwise apparent from the consolidated
financial statements and financial data presented elsewhere
herein.
Financial Condition
Total assets of the Company at December 31, 1995 and 1994 were
$124,435,000 and $117,569,000, respectively, a $6,866,000 or 5.8%
increase. Average assets for 1995 and 1994 were $121,530,000 and
$117,916,000, a 3.1% increase. In order to better understand the
reasons for the overall increase in total assets, and likewise,
in liabilities and shareholders' equity, this discussion will
focus on changes in the significant components of the Company's
balance sheet.
Cash and due from banks represent coin and currency on hand at
the Bank and amounts on deposit with correspondent banks, and are
the primary source for the daily withdrawal needs of depositors
and credit needs of loan customers. At December 31, 1995 and
1994, cash and due from banks were $5,068,000 and $4,957,000, an
increase of $111,000. Average cash and due from banks were
$4,161,000 in 1995 and $4,124,000 in 1994, which represents a
$37,000 or 0.9% increase. As the largest nonearning asset on the
balance sheet, management closely monitors the level of cash on
hand and in correspondent banks as part of the overall
asset/liability strategy, in order to maintain a balance between
the needs of customers and management's obligation to endeavor to
enhance shareholders' profits by assuring that the level of all
nonearning assets is minimized.
Earning assets include federal funds sold, investment securities,
and loans and are the Company's principal source of income.
Earning assets averaged $113,403,000 in 1995 and $108,502,000 in
1994, a $4,901,000 or 4.5% increase. Total interest earned on
these assets in 1995 and 1994 were $9,981,000 and $8,940,000,
respectively, which represents average yields of 8.80% and 8.24%.
Banks must meet legal reserve requirements on a daily basis by
maintaining a specified level of currency and coin on hand plus
funds on deposit at Federal Reserve Banks. Banks with excess
reserves on a particular day may sell the excess to other banks
needing funds to meet their reserve requirements on that day.
These federal funds sold represent unsecured loans to other
banks, usually on a daily basis, and are made at an agreed rate
of interest (the federal funds rate). At December 31, 1995 and
1994, federal funds sold were $2,634,000 and $627,000,
respectively. Average federal funds sold were $1,763,000 in 1995
and $748,000 in 1994 and yielded 5.73% and 4.14%, respectively.
Investment securities, in addition to providing a source of
income, are used to manage interest rate and liquidity risk as
part of the Bank's overall asset/liability strategy. On January
1, 1994, the Bank adopted the Financial Accounting Standards
Board's Statement of Financial Accounting Standards number 115
(SFAS 115), "Accounting for Certain Investments in Debt and
Equity Securities". Under SFAS 115, investment securities of the
Bank are classified as either "held-to-maturity" or
"available-for-sale". Investments held-to-maturity are bonds and
notes for which the Bank has the positive intent and ability to
hold until their maturity, and are carried at cost, adjusted for
amortization of premiums and accretion of discounts. Investments
available-for-sale consist of bonds and notes not classified as
held-to-maturity and are carried at their fair value.
The carrying amounts of all investment securities at December 31,
1995 and 1994 were $52,759,000 and $47,003,000. At December 31,
1995 and 1994, the amortized costs of all investment securities
(available-for-sale and held-to-maturity) were $52,304,000 and
$49,138,000, respectively, and the fair values were $52,682,000
and $46,083,000. Average carrying amounts of investments were
$51,262,000 in 1995 and $48,325,000 in 1994, which include
average unrealized losses on securities available-for-sale of
$709,000 and $901,000, respectively. The decrease in interest
rates in 1995 caused an increase in the fair values of the
securities. At the end of 1994, the fair value of all securities
was $3,054,000 less than the amortized cost. At the end of 1995,
the fair value was $378,000 more than the amortized cost. Of
this $378,000 net unrealized gain at December 31, 1995,
unrealized gains of $455,000 have increased the carrying amount
of securities available-for-sale, while unrealized losses of
$77,000 have not affected the carrying amount of the securities
held-to-maturity, which are carried at amortized cost. The
average amortized cost of the investment securities increased by
$2,745,000, from $49,226,000 in 1994 to $51,971,000 in 1995.
The Company's primary use of funds is for loan demand. Loans
outstanding at the end of 1995 and 1994 were $59,573,000 and
$59,670,000, a decrease of only $97,000 or 0.2%. Average loans
outstanding for 1995 and 1994 were $60,049,000 and $59,352,000, a
$697,000 or 1.2% increase. Interest income generated from loans
was $6,437,000 for 1995 and $6,114,000 for 1994, for average
yields of 10.72% and 10.30%, respectively. The increase in
average yield on loans does not reflect the general decrease in
interest rates which occurred during the latter part of 1995.
Management expects average loans to continue to increase due to
the continued strong economic environment, aggressive marketing
strategies, and the decline in rates.
Deposits are the Company's primary source of funds. Total
deposits at December 31, 1995 and 1994 were $108,180,000 and
$102,527,000, respectively. Deposits averaged $105,523,000 in
1995 and $101,687,000 in 1994, a $3,836,000 or 3.8% increase.
Interest-bearing deposits in 1995 and 1994 averaged $84,253,000
and $81,588,000. Interest expensed for these deposits was
$3,036,000 in 1995 and $2,289,000 in 1994, for average rates paid
of 3.60% and 2.81%. Although rates began falling during the
latter part of 1995, the average rates paid in 1995 remained
higher than the 1994 average.
Stockholders' equity increased from $11,042,000 at December 31,
1994 to $12,435,000 at December 31, 1995 due to net income in
1995 of $2,611,000, dividends declared of $2,925,000, and an
increase during 1995 in the fair values of investment securities
available-for-sale, net of deferred income taxes, of $1,707,000.
During 1995 and 1994, the Company paid regular dividends of $0.35
per share per quarter, plus $4.00 per share per year in
extraordinary dividends.
Results of Operations
Net income for 1995 and 1994 was $2,611,000 and $2,626,000,
respectively, a $15,000 or 0.6% decrease.
Net interest income is the difference between interest income
from loans, investments, and other interest-earning assets and
interest expense on deposits and other interest-bearing
liabilities. Net interest income for 1995 and 1994 was
$6,723,000 and $6,452,000, a $271,000 or 4.2% increase. The
various components of net interest income as they relate to the
particular interest-earning assets and interest-bearing
liabilities have been discussed in the previous section titled
"Financial Condition". The net interest margin (that is, net
interest income divided by average interest-earning assets) was
5.93% in 1995 and 5.95% in 1994. With close monitoring of the
rates, along with proper asset/liability management, the net
interest margin will be managed to maximize profits under both
falling and rising interest rate environments.
The provision for possible loan losses is based on changes in the
loan portfolio, the amount of net loan losses incurred, and
management's estimates of potential future losses based on
several factors including, but not limited to, current economic
conditions, loan portfolio composition, prior loan loss
experience, and the level of impaired and other problem loans.
The continued improvement of the economy and reduction of
nonperforming and other problem loans contributed to management's
decision to reduce the allowance for possible loan losses by
$250,000 in 1994 through a credit to operations. In 1995, the
allowance decreased by $108,000 due to net charge-offs of
$168,000 offset by a charge to operations for the provision for
loan losses of $60,000. The Company adopted Statement of
Financial Accounting Standard number 114, "Accounting by
Creditors for Impairment of a Loan", in 1995, which did not have
a material effect on financial condition or the results of
operations. Loans which have been identified by management as
impaired generally include nonaccrual loans, loans past due
ninety days or more and still accruing, loans which have
previously had some portion classified as either loss or
doubtful, and other loans which for specific reasons have been
identified as impaired. At December 31, 1995, loans totaling
$1,746,000 were specifically classified as impaired.
Nonperforming loans at December 31, 1994 include nonaccrual
loans, loans which are past due ninety days or more as to
principal or interest payments and still accruing, and loans for
which the terms have been restructured due to the financial
troubles of borrowers. Total nonperforming loans at December 31,
1994 were $1,222,000. In addition, management has identified
other loans which are contractually current and not classified as
either impaired or nonperforming, but the borrowers are
experiencing financial difficulties. These other loans totaled
$2,282,000 at the end of 1995 and $1,895,000 at the end of 1994.
Noninterest income was $1,419,000 for 1995 and $1,477,000 for
1994. Noninterest income consists primarily of service charges
on deposit accounts and fees for other financial services, which
were $1,164,000 in 1995 and $1,126,000 in 1994, a $38,000 or 3.3%
increase. This increase is directly attributable to the 3.6%
increase in demand, NOW, money market, and savings accounts
during 1995. The net income from operation of foreclosed real
estate was $60,000 in 1995 and $142,000 in 1994. The major
portion of these amounts were from credits to the provision for
loss on foreclosed real estate of $40,000 in 1995 and $100,000 in
1994.
Noninterest expense was $4,241,000 for 1995 and $4,302,000 for
1994, a $61,000 or 1.4% decrease. This decrease is attributable
principally to two components of noninterest expense: (1) net
occupancy expense, which was $307,000 in 1995 and $346,000 in
1994, a $39,000 decrease, and (2) equipment expense, which was
$347,000 in 1995 and $373,000 in 1994, a $26,000 decrease. The
decrease in net occupancy expense was primarily due to a $28,000
reduction in building repairs and maintenance. The decrease in
equipment expense was primarily due to a $36,000 decrease in
depreciation expense on furniture, equipment and automobiles.
Income tax expense was $1,230,000 and $1,251,000 for 1995 and
1994. These provisions for taxes include current expenses of
$93,000 in 1995 and $66,000 in 1994, which represent alternative
minimum tax that the Company has paid. These taxes are expected
to be recovered in future years as credit carryovers when the
Company again begins incurring taxes under the regular income tax
system.
Liquidity and Capital Resources
The primary functions of asset/liability management are to assure
adequate liquidity and to maintain an appropriate balance between
interest-earning assets and interest-bearing liabilities.
Liquidity management involves the ability to meet the cash flow
requirements of customers who may be either depositors wanting to
withdraw funds or borrowers needing assurance that sufficient
funds will be available to meet their credit needs. The
principal sources of liquidity for the Company are cash and due
from bank accounts, investment securities which are
available-for-sale, federal funds sold, maturing loans,
short-term borrowings through federal funds lines of credit, and
advances from the Federal Home Loan Bank.
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 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.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios
of total and Tier 1 capital, as defined in the regulations, to
risk-weighted assets, as defined, and of Tier 1 capital to
average assets, as defined. Management believes, as of December
31, 1995, that the Bank meets all capital adequacy requirements
to which it is subject.
As of December 31, 1995, the most recent notification from the
Federal Deposit Insurance Corporation categorized the Bank as
well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the
Bank must maintain a total risk-based capital ratio of 10% or
higher, Tier 1 risk-based capital ratio of 6% or higher, and Tier
1 leverage capital ratio of 5% or higher. No conditions or
events have occurred since that notification that management
believes have changed the Bank's category.
Merger Agreement
On January 18, 1996, the Company's Board of Directors voted to
merge the Company with Deposit Guaranty Corporation of
Mississippi. Under the terms of the merger agreement, the Bank
will become a branch of a subsidiary owned by Deposit Guaranty,
and shareholders of the Company will receive approximately 1.17
shares of Deposit Guaranty's common stock in exchange for each
share of their Company common stock. The merger is subject to
the approval of the Company's shareholders and appropriate
regulatory authorities. Such approval is expected by June, 1996.
<PAGE>
Item 7. - Financial Statements
Independent Auditors' Report
Consolidated Statements of Financial Condition as of December 31,
1995 and 1994
Consolidated Statements of Income for the years ended December
31,
1995 and 1994
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the years
ended
December 31, 1995 and 1994
Notes to Consolidated Financial Statements for the years ended
December 31, 1995 and 1994
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Bank of Gonzales Holding Company, Inc.
We have audited the accompanying consolidated statements of
financial condition of Bank of Gonzales Holding Company, Inc. and
its subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity, and cash
flows for the years then ended. 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 audit 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 financial
position of Bank of Gonzales Holding Company, Inc. and its
subsidiary as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
BASIL M. LEE And COMPANY,
Certified Public Accountants
Baton Rouge, Louisiana
January 31, 1996
<PAGE>
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
1995 1994
(In thousands of dollars)
ASSETS
Cash and due from banks $ 5,068 $ 4,957
Federal funds sold 2,634 627
Cash and cash equivalents 7,702 5,584
Interest-bearing deposits in banks 1,300 -
Securities available-for-sale, at fair
value 40,416 33,275
Securities held-to-maturity, fair values
of $12,266 in 1995 and $12,808 in 1994 12,343 13,728
Loans receivable, net of allowance for
loan losses of $1,417 in 1995 and
$1,525 in 1994 58,156 58,145
Premises and equipment 2,289 2,360
Foreclosed real estate 290 572
Accrued interest receivable 788 759
Deferred tax asset 794 2,811
Other assets 357 335
Total assets $124,435 $117,569
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing demand deposits $ 21,651 $ 20,438
Interest-bearing demand, NOW's and MMDA's 20,039 19,186
Savings 20,711 20,589
Time deposits $100,000 and more 7,085 5,716
Other time deposits 38,694 36,598
Total deposits 108,180 102,527
Advance from Federal Home Loan Bank 3,260 3,410
Accrued interest payable 201 162
Other liabilities 359 428
Total liabilities 112,000 106,527
SHAREHOLDERS' EQUITY
Common stock, no par value - 10,000,000
shares authorized, 561,801 shares
issued and outstanding in 1995 and
1994 13,227 13,227
Retained earnings (deficit) (606) (292)
Treasury stock, at cost, 20,190 shares
in 1995 and 1994 (485) (485)
Net unrealized appreciation (depreciation)
on available-for-sale securities, net of
tax of $154 in 1995 and $726 in 1994 299 (1,408)
Total shareholders' equity 12,435 11,042
Total liabilities and shareholders'
equity $124,435 $117,569
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
(In thousands of dollars,
except per share data)
Interest income
Loans receivable $6,437 $6,114
Taxable investment securities 3,384 2,772
Tax-exempt investment securities 31 20
Federal funds sold 101 31
Other 28 3
Total interest income 9,981 8,940
Interest expense
Deposits 3,036 2,289
Federal Home Loan Bank Advance 213 176
Other 9 23
Total interest expense 3,258 2,488
Net interest income 6,723 6,452
Provision for loan losses 60 (250)
Net interest income after provision for
loan losses 6,663 6,702
Noninterest income
Service charges on deposit accounts 1,164 1,126
Other service charges and fees 47 71
Net income from operation of foreclosed
real estate 60 142
Other 148 138
Total noninterest income 1,419 1,477
Noninterest expense
Salaries and employee benefits 2,028 2,010
Net occupancy expense 307 346
Equipment expense 347 373
Investment securities losses 50 43
Other 1,509 1,530
Total noninterest expense 4,241 4,302
Income before income taxes 3,841 3,877
Income tax expense 1,230 1,251
Net income $2,611 $2,626
Net income per common and common equivalent
share--based on weighted average number
of shares outstanding (541,611 in 1995
and 540,587 in 1994) $ 4.82 $ 4.86
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
(In thousands of dollars)
Cash flows from operating activities
Net income $ 2,611 $ 2,626
Adjustments to reconcile net income
to net cash provided by operating
activities -
Deferred tax expense 1,137 1,186
Depreciation and amortization 241 296
Provision for loan losses 60 (250)
Net realized losses on available-
for-sale securities 50 44
Provision for losses on foreclosed
real estate (40) (100)
Net (accretion) amortization of
securities (70) 190
(Gain) on sales of foreclosed real
estate (18) (40)
Loss on sales of premises and equip-
ment - 11
(Increase) in accrued interest
receivable (29) (150)
(Increase) in other assets (43) (52)
Increase in accrued interest payable 39 19
Increase (decrease) in accrued
expenses and other liabilities (69) 131
Net cash provided by operating activi-
ties 3,869 3,911
Cash flows from investing activities
Net (increase) in interest-bearing
deposits with banks (1,300) -
Purchases of available-for-sale
securities (21,704) (17,066)
Proceeds from sales of available-for-
sale securities 12,790 19,976
Proceeds from maturities of available-
for-sale securities 2,644 4,134
Purchases of held-to-maturity securi-
ties (4,698) (11,388)
Proceeds from maturities of held-to-
maturity securities 7,819 766
Net (increase) in loans (122) (458)
Proceeds from sales of foreclosed real
estate 391 165
Net purchases of premises and equipment (149) (116)
Net cash (used) by investing activities (4,329) (3,987)
Cash flows from financing activities
Net increase in demand, savings, NOW and
money market accounts 2,188 5,379
Net (decrease) in time deposits $100,000
and more (2,175) (1,540)
Net increase (decrease) in other time
deposits 5,640 (507)
Net (decrease) in federal funds purchased - (1,050)
Net increase (decrease) in F.H.L.B.
advances (150) 3,410
Dividends paid (2,925) (2,874)
Purchases of treasury stock - (19)
Sales of treasury stock - 27
Net cash provided by financing activi-
ties 2,578 2,826
Net increase in cash and cash equivalents 2,118 2,750
Cash and cash equivalents, beginning of
year 5,584 2,834
Cash and cash equivalents, end of year $ 7,702 $ 5,584
Interest paid $ 3,219 $ 2,469
Income taxes paid $ 102 $ 40
Foreclosed real estate acquired in satis-
faction of loans $ 51 $ 88
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
Net
Realized
Appre-
ciation
(Depre-
ciation)
Cost of on Total
Retained Common Available- Share-
Common Earnings Stock in for-Sale holders'
Stock (Deficit) Treasury Securities Equity
(In thousands of dollars)
Balance at
January 1,
1994 $13,203 $ 75 $(561) $ - $12,717
Net unrealized
appreciation
at January 1,
1994, due to
adoption of
S.F.A.S. 115,
net of taxes
of $151 - - - 294 294
Net income, 1994 - 2,626 - - 2,626
Sale of 3,950
shares of
treasury stock 1 (69) 95 - 27
Purchase of 783
shares of
treasury stock - - (19) - (19)
Dividends
declared - (2,924) - - (2,924)
Deferred tax
benefit from
exercise of
stock options 23 - - - 23
Net changes in
unrealized
appreciation
(deprecia-
tion) on
available-for-
sale securi-
ties, net of
taxes of
$877 - - - (1,702) (1,702)
Balance at
December 31,
1994 13,227 (292) (485) (1,408) 11,042
Net income,
1995 - 2,611 - - 2,611
Dividends
declared - (2,925) - - (2,925)
Net changes in
unrealized
appreciation
(deprecia-
tion) on
available-for-
sale securi-
ties, net of
taxes of
$880 - - - 1,707 1,707
Balance at
December 31,
1995 $13,227 $ (606) $(485) $ 299 $12,435
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by Bank of Gonzales Holding
Company, Inc. (the Company) and its wholly-owned subsidiary, Bank
of Gonzales (the Bank), and the methods of applying those
principles conform with generally accepted accounting principles
consistently applied and generally practiced within the banking
industry. The principles which significantly affect the
determination of financial condition and net income are
summarized below:
Principles of Consolidation: The consolidated financial
statements include the accounts of the Company and the Bank. All
significant intercompany balances and transactions have been
eliminated. Investment in the Bank is carried at the Company's
equity in the underlying net assets.
Nature of operations: The Bank provides a variety of financial
services to individual and business customers through its three
offices in Ascension Parish, Louisiana, which is primarily an
industrial area. The Bank's primary deposit products are
checking and savings accounts and certificates of deposit. Its
primary lending products are commercial, 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.
Material estimates that are particularly susceptible to
significant change relate to the determination of the allowance
for losses on loans and the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowances for losses on
loans and foreclosed real estate, management obtains independent
appraisals for significant properties.
While management uses available information to recognize losses
on loans and foreclosed real estate, future additions to the
allowances may be necessary based on changes in local economic
conditions, which depends heavily on the petrochemical industry.
In addition, regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowances
for losses on loans and foreclosed real estate. Such agencies
may require the Bank to recognize additions to the allowances
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 allowances for losses on loans and
foreclosed real estate may change materially in the near term.
Investment Securities: Investment securities are classified in
two categories and accounted for as follows:
Securities Held-to-Maturity. Bonds and notes for which
the Bank has the positive intent and ability to hold to
maturity are reported at cost, adjusted for amortization
of premiums and accretion of discounts which are
recognized in interest income using the interest method
over the period to maturity.
Securities Available-for-Sale. Securities available-for-
sale consist of bonds and notes not classified as
securities held-to-maturity.
Declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other
than temporary result in write-downs of the individual securities
to their fair value. The related write-downs are included in
earnings as realized losses. Unrealized holding gains and
losses, net of tax, on securities available-for-sale are reported
as a net amount in a separate component of shareholders' equity
until realized. Gains and losses on the sale of securities
available-for-sale are determined using the
specific-identification method.
Loans Receivable and Allowance for Loan Losses: Loans are stated
at the amount of unpaid principal reduced by unearned income and
the allowance for loan losses. Unearned income on discounted
loans is recognized as income over the term of the loans using a
method that approximates the interest method. Interest on other
loans is calculated by using the simple interest method on daily
balances of the principal amount outstanding. Loans are
generally placed on nonaccrual when principal or interest is
delinquent for ninety days or more. Interest income generally is
not recognized on nonaccrual loans unless the likelihood of
further loss is remote. Interest payments received on such loans
are applied as a reduction of the loan principal balance.
Impaired loans generally include nonaccrual loans, loans past due
ninety days or more and still accruing, and restructured loans.
Loans reviewed for impairment include all loans (except consumer
installment loans, which are generally smaller balance,
homogeneous loans) which management has identified as warranting
special attention, such as past due loans, large loans, and loans
for which management is aware of a borrower's financial
difficulties.
The allowance for loan losses represents an amount which, in
management's judgment, will be adequate to absorb possible losses
on existing loans that may become uncollectible. 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.
Allowances for impaired loans are generally determined based on
collateral values. Ultimate losses may vary from current
estimates. A loan is charged off when it is determined to be
uncollectible. The allowance is increased by a provision for
loan losses, which is charged to expense, and reduced by
charge-offs, net of recoveries.
Premises and Equipment: Premises and equipment are stated at
cost less accumulated depreciation. Repairs and maintenance
expenditures which extend the useful life of an asset are
capitalized, and routine maintenance and repair expenditures are
expensed as incurred. Depreciation expense is computed using the
straight-line method over the estimated useful lives of the
respective assets.
Foreclosed Real Estate: Foreclosed real estate is comprised of
properties acquired through foreclosure proceedings or acceptance
of deed in lieu of foreclosure. These properties are carried at
the lower of cost or estimated fair market value. Losses arising
at the time of acquisition of such property are charged against
the allowance for loan losses. Subsequent losses are included in
net income from operation of foreclosed real estate.
Federal Income Taxes: Provision for deferred income taxes is
made as a result of temporary differences between the financial
and taxable bases of assets and liabilities. These differences
relate principally to the provision for possible loan losses,
foreclosed real estate expense, accretion of discounts on
investment securities, and the tax net operating loss
carryforward.
Statement of Cash Flows: For purposes of the statement of cash
flows, the Company considers due from bank accounts and federal
funds sold to be cash equivalents.
Treasury Stock: Treasury stock is accounted for by the cost
method on an average cost basis.
Fair Values of Financial Instruments: Statement of Financial
Accounting Standards number 107, "Disclosures about Fair Value of
Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not
recognized in the statement of financial condition. In cases
where quoted market prices are not available, fair values are
based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of
future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent
markets and, in many cases, could not be realized in immediate
settlement of the instruments. Statement 107 excludes certain
financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value
amounts presented do not represent the underlying value of the
Company.
Reclassifications: Certain items included in the financial
statements for 1994 have been reclassified to conform with the
1995 presentation and have no effect on net income previously
reported.
NOTE B--RESTRICTIONS ON SHAREHOLDERS' EQUITY
Under applicable law, the Bank cannot, without the prior approval
of regulatory authorities, pay dividends during any year which
exceed the combined net income of that year and the immediately
preceding year. Additionally, under applicable law, the Bank
cannot make loans, extensions of credit, repurchase agreements,
investments, or advances, which will exceed 10% of its capital
stock and surplus, to an affiliate. At December 31, 1995, the
Bank had no such loans or advances to its affiliate.
NOTE C--RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances with
the Federal Reserve Bank. The average amount of these reserve
balances for the years ended December 31, 1995 and 1994 was
approximately $811,000 and $787,000, respectively.
NOTE D--INVESTMENT SECURITIES
The amortized cost and estimated fair value of investments in
debt securities are as follows:
December 31, 1995
Securities Gross Gross Estimated
available-for- Amortized Unrealized Unrealized Fair
sale: Cost Gains Losses Value
(In thousands of dollars)
U.S. Treasury
securities $ 3,973 $ 64 $ - $ 4,037
U.S. Government
agencies and
corporations 10,781 199 48 10,932
Mortgage-backed
securities and
collateralized
mortgage obliga-
tions 24,635 357 117 24,875
$39,389 $ 620 $ 165 $39,844
December 31, 1995
Gross Gross Estimated
Securities held- Amortized Unrealized Unrealized Fair
to-maturity: Cost Gains Losses Value
(In thousands of dollars)
U.S. Government
agencies and
corporations $ 3,463 $ 46 $ - $ 3,509
Obligations of
states and
political sub-
divisions 995 17 46 966
Mortgage-backed
securities and
collateralized
mortgage obliga-
tions 7,885 22 116 7,791
$12,343 $ 85 $ 162 $12,266
Debt securities
pledged to
secure public
funds and for
other purposes $ 4,116 $ 4,058
December 31, 1994
Securities Gross Gross Estimated
available-for- Amortized Unrealized Unrealized Fair
sale: Cost Gains Losses Value
(In thousands of dollars)
U.S. Treasury
securities $ 6,455 $ - $ 185 $ 6,270
U.S. Government
agencies and
corporations 2,199 - 292 1,907
Mortgage-backed
securities and
collateralized
mortgage obliga-
tions 26,218 - 1,657 24,561
$34,872 $ - $ 2,134 $32,738
Securities held-to-
maturity:
U.S. Government
agencies and
corporations $ 6,981 $ 14 $ 201 $ 6,794
Obligations of
states and
political sub-
divisions 499 - 87 412
Mortgage-backed
securities and
collateralized
mortgage obliga-
tions 6,248 - 646 5,602
$13,728 $ 14 $ 934 $12,808
Debt securities
pledged to
secure public
funds and for
other purposes $ 3,214 $ 3,149
The following is a summary of maturities of securities available-
for-sale and held-to-maturity as of December 31, 1995:
Securities Securities
available-for-sale held-to-maturity
Contractual Amortized Estimated Amortized Estimated
maturities: Cost Fair Value Cost Fair Value
Due in one year or
less $ 2,807 $ 2,836 $ - $ -
Due after one year
through five
years 15,249 15,375 959 976
Due after five years
through ten years 1,704 1,721 7,764 7,632
Due after ten years 19,629 19,912 3,620 3,658
$39,389 $39,844 $12,343 $12,266
Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Proceeds from sales of investments in debt securities during 1995
and 1994 were $12,790,000 and $19,976,000, respectively. Gross
gains of $74,000 in 1995 and $111,000 in 1994, and gross losses
of $124,000 in 1995 and $155,000 in 1994, were realized on those
sales.
The Bank owns stock in the Federal Home Loan Bank of
approximately $572,000 which was pledged to partially secure a
line of credit totaling $6,204,000. Quarterly stock dividends
are paid and the Federal Home Loan Bank will repurchase the stock
at par if no advances are outstanding.
NOTE E--LOANS RECEIVABLE
Most of the Bank's loan customers are in Ascension Parish,
Louisiana and its adjacent parishes. Loans, net of unearned
discount, consisted of the following major categories at
December 31:
1995 1994
(In thousands of dollars)
Commercial, financial and agricultural $27,327 $27,772
Real estate-mortgage 20,210 20,586
Real estate-construction 1,894 1,618
Installment 10,973 10,449
60,404 60,425
Unearned income (831) (755)
$59,573 $59,670
Changes in the allowance for loan losses for the years ended
December 31, 1995 and 1994 were as follows:
1995 1994
(In thousands of dollars)
Balance at beginning of year $ 1,525 $ 1,835
Provision charged (credited) to
operations 60 (250)
Loans charged-off (219) (174)
Recoveries 51 114
Balance at end of year $ 1,417 $ 1,525
The Bank adopted Statement of Financial Accounting Standards
number 114, "Accounting by Creditors for Impairment of a Loan,"
in 1995, which did not have a material effect on financial
condition or the results of operations. At December 31, 1995,
loans totaling $1,746,000 were specifically classified as
impaired. Of the total impaired loans at December 31, 1995,
$416,000 had a related allowance for loan losses of $104,000.
The average balance of these loans in 1995 was approximately
$2,178,000. In 1995, interest income recognized on these loans
was approximately $175,000. No commitments to loan additional
funds to borrowers of impaired loans were outstanding at December
31, 1955.
Nonperforming loans at December 31, 1994, prior to the adoption
of Statement 114, consist of nonaccrual loans, past due loans and
restructured loans. Nonaccrual loans are loans on which interest
recognition has been suspended until realized because of doubts
as to the borrower's ability to repay principal or interest.
Past due loans are accruing loans that are contractually past due
90 days or more as to principal or interest. Restructured loans
are loans whose terms have been modified, because of a
deterioration in financial condition of the borrower, to provide
for a reduction of either interest or principal payments. The
following table summarizes the Company's nonperforming and
restructured loans at December 31, 1994, in thousands of dollars:
Nonaccrual loans $ 123
Accruing loans past due 90
days or more $ 23
Restructured loans $1,076
In 1994, if nonaccrual loans had performed in accordance with
their original terms, interest income would have increased by
approximately $11,000. Interest collected and recognized as
interest income on these loans in 1994 was $126,000.
In addition, at December 31, 1995 and 1994, the Bank had
approximately $2,282,000 and $1,895,000, respectively, of loans
which were contractually current and not considered impaired or
nonperforming, but the borrowers were experiencing financial
difficulties.
NOTE F--TRANSACTIONS WITH RELATED PARTIES
Loans have been made to directors, principal shareholders and
executive officers and their associates. The balance of such
loans at December 31, 1995 and 1994 was $5,091,000 and
$5,542,000, respectively. During 1995, new loans of $755,000
were made and repayments of $1,206,000 were received. There were
no nonaccrual, past due and other loans to related parties who
are currently experiencing financial difficulties at December 31,
1995 and 1994.
At December 31, 1995 and 1994 related parties had deposit
balances totaling approximately $4,016,000 and $3,587,000,
respectively.
Consulting and other service fees amounting to approximately
$9,000 in 1995 and $9,000 in 1994 have been paid to business
affiliates of certain directors.
NOTE G--FORECLOSED REAL ESTATE
Changes in the allowance for losses on foreclosed real estate for
the years ended December 31 were as follows:
1995 1994
(In thousands of dollars)
Balance at beginning of year $ 50 $ 150
Provision (credited) to operations (40) (100)
Foreclosed real estate charged-down (10) -
Balance at end of year $ - $ 50
NOTE H--PREMISES AND EQUIPMENT
Premises and equipment at December 31 are summarized as follows:
1995 1994
(In thousands of dollars)
Land $ 334 $ 334
Buildings and improvements 4,072 4,022
Furniture and equipment 1,240 1,155
Total 5,646 5,511
Less accumulated depreciation and
amortization 3,357 3,151
Net $2,289 $2,360
NOTE I--PENSION PLAN
In 1989, the Bank established a 401(k) profit sharing plan and
trust ("cash or deferred arrangement"). Under the plan, all
employees who were employed at January 1, 1989, the effective
date, are eligible to participate. Other employees become
eligible on the first January 1 or July 1 following their
attaining age 21 and completing 3 months of service.
Participants may elect to defer from 1% up to 15% of their
compensation as elective contributions. The Bank is not required
to match employee contributions, but is permitted to make a
discretionary contribution that would be allocated to all
participants based on compensation. The Bank contributed $30,000
to the plan in 1995. No contributions were made by the Bank in
1994.
NOTE J--INCOME TAXES
The components of income tax expense for each of the two years
ended December 31 were:
1995 1994
(In thousands of dollars)
Current $ 93 $ 66
Deferred 1,137 1,185
$1,230 $1,251
The applicable federal income tax expense for financial reporting
purposes differed from the amount computed by applying the
federal statutory income tax rate of 34% to income before income
taxes for the following principal reasons:
1995 1994
Amount Rate Amount Rate
(In thousands of dollars)
Taxes at statutory rates $1,306 34.0 % $1,318 34.0 %
Tax-exempt income (23) (0.6)% (15) (0.4)%
Nondeductible expenses 7 0.2 % 5 0.1 %
Alternative minimum tax 93 2.4 % 66 1.7 %
(Increase) decrease in tax
credits carryforward (153) (4.0)% (123) (3.1)%
$1,230 32.0 % $1,251 32.3 %
At December 31, 1995 and 1994, a net deferred tax asset of
$794,000 and $2,811,000 was recorded which consisted of:
1995 1994
(In thousands of dollars)
Net unrealized (appreciation) deprecia-
tion on available-for-sale securities $ (154) $ 726
Tax net operating loss carryforward 853 2,032
Provision for real estate losses 73 160
Provision for loan losses (161) (181)
Depreciation expense (118) (107)
Credits carryforward 329 182
Other (28) (1)
$ 794 $2,811
A valuation allowance of $14,000 and $167,000 at December 31,1995
and 1994 was recorded to reduce the deferred tax asset related to
the carryforward of tax credits due to expire in future years.
At December 31, 1995, the Company had available net operating
loss carryforwards of approximately $2,509,000 which, if not
used, will expire as follows: 2005 - $1,071,000 and 2006 -
$1,438,000.
NOTE K--CREDIT ARRANGEMENTS
Pursuant to unsecured line of credit agreements for short-term
borrowings with certain banks, the Company may borrow up to
$5,400,000 on such terms as the Company and the banks mutually
agree. At December 31, 1995, $5,400,000 remained available to
the Company.
Pursuant to collateral agreements with the Federal Home Loan Bank
("FHLB"), the Company may borrow up to $6,204,000, which
represents 65% of the Bank's first mortgage loans, in advances
secured by FHLB stock, cash and interest-bearing deposits in FHLB
and qualifying first mortgage collateral. FHLB advances may be
short-term or long-term, and they may have either fixed or
floating interest rates. The Company had $3,260,000 in
outstanding advances from the FHLB at December 31, 1995 and
$3,410,000 at December 31, 1994. Principal and interest is due
monthly at an average weighted interest rate of 6.38%. Annual
principal repayment requirements are:
1996 $ 160,000
1997 170,000
1998 181,000
1999 193,000
2000 206,000
Thereafter 2,350,000
$3,260,000
NOTE L--BANK OF GONZALES HOLDING COMPANY, INC. (PARENT COMPANY
ONLY) FINANCIAL INFORMATION
Statements of Financial Condition
December 31,
1995 1994
(In thousands of dollars)
ASSETS
Cash $ 5 $ 5
Investment in Bank of Gonzales, at
equity 12,191 10,797
Deferred tax asset 240 240
Dividends receivable 190 190
Total assets $12,626 $11,232
LIABILITIES
Dividends payable $ 190 $ 190
Other liabilities 1 -
Total liabilities 191 190
SHAREHOLDERS' EQUITY
Common Stock 13,227 13,227
Retained earnings (deficit) (606) (292)
Less treasury stock, at cost (485) (485)
Net unrealized appreciation (deprecia-
tion) on available-for-sale securi-
ties of subsidiary, net of taxes 299 (1,408)
Total shareholders' equity 12,435 11,042
Total liabilities and sharehold-
ers' equity $12,626 $11,232
Statements of Income
Years Ended December 31,
1995 1994
(In thousands of dollars)
Income
Dividends from bank subsidiary $2,925 $2,924
Expenses 1 -
Income before equity in undistributed
income of subsidiary 2,924 2,924
Equity in undistributed income
of Bank of Gonzales (313) (298)
Net income $2,611 $2,626
Statements of Cash Flows
Years ended December 31,
1995 1994
(In thousands of dollars)
Cash flows from operating activities
Net income $ 2,611 $ 2,626
Adjustments to reconcile net income
to net cash provided by operating
activities
Equity in undistributed net income
of bank 313 298
Deferred tax benefit - (5)
Increase in dividends receivable - (50)
Increase in other liabilities 1 -
Net cash provided by operating activi-
ties 2,925 2,869
Cash flows from investing activities - -
Cash flows from financing activities
Proceeds from sales of treasury stock - 27
Purchases of treasury stock - (19)
Dividends paid (2,925) (2,874)
Net cash (used) by financing activities (2,925) (2,866)
Net increase in cash and cash equivalents - 3
Cash and cash equivalents, beginning of
year 5 2
Cash and cash equivalents, end of year $ 5 $ 5
NOTE M--STOCK OPTION AGREEMENT
In 1991 and 1992 the Company granted to all senior vice
presidents (4 persons) an option to purchase up to 2,500 shares
of common stock each of Bank of Gonzales Holding Company, Inc.
at an exercise price equal to the book value of such shares on
December 31, 1988. These options are not transferable and became
exercisable in 1992 upon attainment of an $8.00 per share book
value of stock and the termination of the Cease and Desist Order
by FDIC. During 1994, 3,500 shares were exercised at $4.32 per
share.
The following is a summary of transactions for the year ended
December 31, 1994:
Shares Under Option 1994
Outstanding, beginning of year 3,500
Granted during the year -
Exercised during the year 3,500
Canceled during the year -
Outstanding, end of year -
Exercisable, end of year -
NOTE N--FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include
commitments to extend credit and standby letters of credit, which
involve credit risk in excess of the amounts recognized in the
balance sheets. The Bank's exposure to credit loss in the event
of nonperformance by the other party to these financial
instruments is represented by the contractual amounts of the
instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for on-balance
sheets instruments, including collateral or other security to
support the financial instruments.
At December 31, 1995 and 1994, commitments to extend credit
totaled $5,873,000 and $5,485,000, respectively. These
commitments are agreements to lend to a customer as long as there
is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many
of the commitments may expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements.
At December 31, 1995 and 1994, commitments under standby letters
of credit totaled $210,000 and $98,000, respectively. Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. The
credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loans to customers.
The estimated fair values of the Company's financial instruments
at December 31, 1995 are as follows:
Carrying Fair
Amount Value
(In thousands of
dollars)
Financial assets:
Cash and due from banks $ 5,068 $ 5,068
Federal funds sold 2,634 2,634
Interest-bearing deposits in banks 1,300 1,300
Securities 52,759 52,682
Loans receivable 58,156 59,315
Financial liabilities:
Deposits 108,180 108,026
Federal Home Loan Bank advance 3,260 3,304
Unrecognized financial instruments:
Commitments to extend credit - 19
Standby letters of credit - 1
The following methods and assumptions were used by the Company in
estimating fair values of financial instruments:
Cash, due from banks, federal funds sold, and interest-bearing
deposits in banks. The carrying amount is a reasonable estimate
of fair value.
Securities. Fair value is based on quoted market price, if
available. If a quoted market price is not available, fair value
is estimated using quoted market prices for similar securities.
Loans receivable. The fair value is estimated by discounting the
estimated future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit
ratings and for the same remaining maturities.
Deposits. The fair value of demand, savings, NOW and money
market accounts is the amount payable on demand at the reporting
date. The fair value of fixed-maturity time deposits is
estimated using the rates currently offered for deposits of
similar remaining maturities.
Federal Home Loan Bank advance. Rates currently available to the
Bank for debt with similar terms and remaining maturities are
used to estimate fair value of existing debt.
Commitments to extend credit and standby letters of credit. The
fair value is estimated using the fees currently charged to enter
into similar agreements, taking into account the remaining terms
of the agreements and the present creditworthiness of the
counterparties.
NOTE O--OTHER EXPENSES
Other expenses for the years ended December 31 were:
1995 1994
(In thousands of dollars)
Advertising $ 148 $ 73
Director fees 116 110
Postage, freight, express 116 102
Office supplies 115 102
FDIC and State assessments 140 247
Bank shares tax 109 184
Other 765 712
$1,509 $1,530
NOTE P--CONTINGENCIES
The Bank has entered into agreements with its senior officers
(total of four persons) that, should the Bank terminate their
employment for any reason, other than for cause, death or
permanent disability, within two years after a change in control,
each would be entitled to a lump sum payment of twice their
annual compensation reduced by amounts paid by the Bank after a
change in control. In addition, should the president of the Bank
be terminated, other than for cause, death, or permanent
disability, prior to December 31, 1998, the Bank would be
obligated to pay as severance pay the present value of the
remaining salary due him through December 31, 1998 in the form of
a lump sum.
NOTE Q--DEPOSITS
At December 31, 1995, the scheduled maturities of time deposits,
in thousands of dollars, are as follows:
1996 $34,872
1997 10,163
1998 634
1999 110
$45,779
NOTE R--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 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.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios
of total and Tier 1 capital, as defined in the regulations, to
risk-weighted assets, as defined, and of Tier 1 capital to
average assets, as defined. Management believes, as of December
31, 1995, that the Bank meets all capital adequacy requirements
to which it is subject.
As of December 31, 1995, the most recent notification from the
Federal Deposit Insurance Corporation categorized the Bank as
well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the
Bank must maintain a total risk-based capital ratio of 10% or
higher, Tier 1 risk-based capital ratio of 6% or higher, and Tier
1 leverage capital ratio of 5% or higher. No conditions or
events have occurred since that notification that management
believes have changed the Bank's category.
NOTE S--SUBSEQUENT EVENTS
On January 18, 1996, the Company's Board of Directors voted to
merge the Company with Deposit Guaranty Corporation (the
"Acquiror") of Mississippi. The Bank will become a branch of a
subsidiary owned by the Acquiror, and shareholders of the Company
will receive approximately 1.17 shares of the Acquiror's common
stock in exchange for each share of their Company common stock.
The merger is subject to the approval of the Company's
shareholders and appropriate regulatory authorities. Such
approval is expected by June, 1996.
NOTE T--IMPAIRMENT OF LONG-LIVED ASSETS
The Company will adopt Statement of Financial Accounting
Standards number 121 (FASB 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," in 1996. FASB 121 requires that long-lived assets be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable, and that an impairment loss be recognized if
the sum of the future cash flows from the use of the asset is
less than the carrying amount. Management expects that the
adoption of FASB 121 in 1996 will result in a charge to
operations of approximately $190,000 related to the carrying
amount of certain Bank premises.
<PAGE>
Item 8. - Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 9. - Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act
The following table sets forth certain information with respect
to each director of the Company. All current directors are also
directors of the Bank of Gonzales, the Company's sole subsidiary
(the "Bank"). Unless otherwise indicated, each person has been
engaged in the principal occupation listed below for the past five years.
First
Elected
Name Age Principal Occupation Director(1)
Class I Directors
(term expires in 1996):
John P. Casey, Jr. 68 Retired Auto Retailer 1958
Phillip A. Lewis, Jr.,
PhD 63 President, Manager and 1991
Chairman of J&R Enter-
prises, Inc. (struc-
tural pest control
services)
Gayle P. Robert(5) 57 Co-Owner and Officer, 1991
Roland J. Robert Dis-
tributors, Inc. Robert
Brothers, Inc., Super
Stop, Inc., Robert
Tire, Inc. (Petroleum
Distributing and Retail
Convenience Stores)
Cynthia S. Stafford 48 Real Estate Broker and 1991
Appraiser; Owner and
President, Eastbank
Realty, Inc.
Elaine S. Neese 61 Realtor, DSK Realty 1995
Class II Directors
(term expires in 1997):
John F. Fraiche, M.D. 45 Physician 1994
Rosa B. Jackson 55 Principal - George 1994
Washington Carver
Primary School
Randal J. Robert(5) 34 Attorney, Kantrow, 1994
Spaht, Weaver, Blitzer,
A Professional Law Cor-
poration(6)
Class III Directors
(term expires in 1998):
Earl D. Dixon 84 Chairman Emeritus of 1955
Company and the Bank(2)
D. Dale Gaudet 60 President and Chief 1988
Executive Officer of
the Company and the
Bank
Roy L. Marchand, Jr. 65 Chairman of the Company 1963
and the Bank; Owner,
Roy Marchand & Son
(retail seafood and res-
taurant)
Eric W. St. Amant 56 Pharmacist, Baton Rouge 1976(3)
General Medical Center
(1) The Company was formed and became the Bank's sole
shareholder in 1983, at which time all directors of the Bank
became directors of the Company. Dates prior to 1983
reflect service as a director of the Bank.
(2) Mr. Dixon served as Chairman of the Company and the Bank
from September 28, 1988 to May 23, 1990.
(3) Mr. St. Amant was not a director of the Company between 1989
and 1994.
(4) During 1992, Mr. Casey was office manager and controller of
Capitol Buick-GMC Trucks, Inc. Prior to January 1992, Mr.
Casey served as General Manager of Miller-Terrell, Inc.
(auto retailer).
(5) Randal Robert and Gayle Robert are cousins.
(6) Mr. Robert has been an attorney with Kantrow, Spaht,
Weaver, Blitzer, A Professional Law Corporation, since
graduating from Louisiana State University School of Law in
1992.
The principal executive officers of the Company and the Bank as
of March 15, 1996 are as follows, all of whom serve one year
terms in such capacities:
Name Age Position & Office
D. Dale Gaudet 60 Chief Executive Office of the Bank
since March 1988 and President of the
Bank since September 1988; President
of the Company since March 1989; a
member of the Board of Directors
since June 1988
Rachel P. Cherco 36 Senior Vice President since 1990;
Treasurer of the Company since 1991
James H. May, Jr. 51 Senior Vice President of the Bank
since 1989; Vice President of the
Company since 1991
Ida N. Reine 47 Senior Vice President of the Bank
since 1990; Secretary of the Company
since 1991
Donald C. Kuehn 50 Senior Vice President of the Bank and
Vice President of the Company since
February, 1996
Item 10. - Executive Compensation
Summary of Compensation
The following table provides certain information regarding the
compensation of Mr. D. Dale Gaudet, President and Chief Executive
Officer of the Company and the Bank, for each of the preceding
three years. No other executive officer earned $100,000 or more
in any of the three years covered by the table.
Summary Compensation Table
Annual Compensation
Name and Other Annual
Principal Position Year Salary Bonus Compensation
D. Dale Gaudet, President 1995 $105,395 $38,834 $16,221(1)
and Chief Executive 1994 100,019 38,256 13,433
Officer 1993 88,131 8,813 13,630
(1) Includes $5,500 of director compensation, $3,715 of term
life insurance premiums, and $7,006 allocated for personal
use of the Bank's automobile.
Employment Agreement
The Bank has an employment agreement with Mr. Gaudet that
provides, among other things, a minimum annual salary of
$100,000, participation in the Bank's employee benefit plans and
use of an automobile. If Mr. Gaudet is terminated without cause,
he will be entitled to receive certain severance benefits,
including an amount equal to the present value (using a 5%
discount rate) of the remaining salary due under the term of the
agreement, which expires on December 31, 1997.
Director Compensation
Directors of the Company do not receive fees for attending the
Company's Board meetings. The Chairman of the Board of Directors
of the Bank receives a monthly retainer of $500 and each other
director of the Bank receives a $250 monthly retainer. Each
director, except Mr. Gaudet, also receives $250 for each meeting
of the Bank's Board attended and $150 for each committee meeting
attended. In 1995, all directors had the option to participate
in the Bank's health insurance plan and received an additional
cash payment of $2,500 pursuant to the Company's Bonus Plan.
Item 11. - Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information regarding ownership of
the Common Stock as of March 1, 1996 by (i) each person known to
the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company,
(iii) the Company's President and Chief Executive Officer, D.
Dale Gaudet (who is also a director), and (iv) all of the
directors and executive officers of the Company as a group,
determined in accordance with Rule 13d-3 under the Securities and
Exchange Act of 1934. Unless otherwise indicated, the Common
Stock is held with sole voting and investment power.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
John P. Casey, Jr.
9166 West Pomona Drive
Baton Rouge, Louisiana 70815 13,772(1) 2.54%
Earl D. Dixon
38265 Highway 42
Prairieville, Louisiana 70769 5,720(2) 1.06%
John F. Fraiche, M.D.
2647 S. Riverview Blvd.
Gonzales, Louisiana 70737 225 *
D. Dale Gaudet
1607 Sharp Road
Baton Rouge, Louisiana 70815 26,507(3) 4.89%
Rosa B. Jackson
P. O. Box 51
Gonzales, Louisiana 70707-0051 225 *
Phillip A. Lewis, Jr., PhD
P. O. Box 191
Gonzales, Louisiana 70707-0191 6,600(4) 1.22%
Roy L. Marchand, Jr.
624 N. Burnside Avenue
Gonzales, Louisiana 70737 12,275(5) 2.27%
Matthew G. McKay
18332 N. Mission Hills
Baton Rouge, Louisiana 70810 35,544 6.56%
Elanie S. Neese
2239 South Evergreen Avenue
Gonzales, Louisiana 70737 68,820 12.71%
John B. Noland
Suite 2424
One American Place
Baton Rouge, Louisiana 70825 37,702 6.96%
Gayle P. Robert
12096 W. Main Street
Gonzales, Louisiana 70737 2,938(6) *
Randal J. Robert
42215 Weber City Road
Gonzales, Louisiana 70737 367(7) *
Eric W. St. Amant
P. O. Box 1273
Gonzales, Louisiana 70707 17,040(8) 3.15%
Penrose C. St. Amant
P. O. Box 128
Gonzales, Louisiana 70707-0128 48,878(9) 9.02%
Cynthia S. Stafford
2008 S. Burnside Avenue
Gonzales, Louisiana 70737-4637 5,044 *
All directors and executive
officers as a group (15 persons) 165,115 30.49%
* Less than 1%
(1) Includes 13,222 shares as to which Mr. Casey shares voting
and investment power.
(2) Includes 400 shares as to which Mr. Dixon shares voting and
investment power.
(3) Includes 25,911 shares as to which Mr. Gaudet shares voting
and investment power.
(4) Includes 6,050 shares as to which Mr. Lewis shares voting
and investment power.
(5) Includes 2,511 shares as to which Mr. Marchand shares voting
and investment power.
(6) Includes 754 shares as to which Mr. G. Robert shares voting
and investment power.
(7) Includes 142 shares as to which Mr. R. Robert shares voting
and investment power.
(8) Includes 440 shares as to which Mr. E. St. Amant shares
voting and investment power.
(9) Includes 3,922 shares as to which Mr. P. St. Amant shares
voting and investment power.
Item 12. - Certain Relationships and Related Transactions
Certain Transactions
The Company's directors and executive officers and their
affiliates are customers of, and certain of them have loans with
the Bank in the ordinary course of business. In the opinion of
management all loans to such persons were made, and since made
have remained outstanding on substantially the same terms,
including interest rates and collateral, as those prevailing for
comparable transactions with other persons and did not involve
when made, and have not involved since the time they were made,
more than the normal risk of collectibility or present other
unfavorable features.
Item 13. - Exhibits and Reports on Form 8-K
(a) Exhibits
(2) Definitive merger agreement with Deposit Guaranty
Corporation
(3a) Articles of Incorporation of the Company (filed with
the Commission as Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992 and incorporated herein by reference)
(3b) By-laws of the Company (filed with the Commission
with the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1994 and incorporated
herein by reference)
(10a) Employment Agreement dated January 20, 1995, by and
between the Bank and D. Dale Gaudet (filed with the
Commission with the Company's Annual Report on Form
10-KSB for the year ended December 31, 1994 and
incorporated herein by reference)
(10d) Contingent Severance Agreement dated January 20,
1995, by and among the Company and its executive
officers (filed with the Commission with the
Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994 and incorporated herein by
reference)
(22) List of Subsidiaries (filed with the Commission as
Exhibit 22 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991 and
incorporated herein by reference)
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Bank of Gonzales Holding Company, Inc.
March 28, 1996 By: s/D. Dale Gaudet
D. Dale Gaudet
President and Director
March 28, 1996 By: s/Rachel P. Cherco
Rachel P. Cherco
Treasurer and Chief Financial Officer
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
date indicated.
March 28, 1996
Signature Title
s/Roy L. Marchand, Jr. Director and Chairman of the
Roy L. Marchand, Jr. Board
s/D. Dale Gaudet President and Director
D. Dale Gaudet (Principal executive officer)
s/John P. Casey, Jr. Director
John P. Casey, Jr.
s/Earl D. Dixon Director
Earl D. Dixon
s/Cynthia S. Stafford Director
Cynthia S. Stafford
s/Gayle P. Robert Director
Gayle P. Robert
s/Phillip A. Lewis, Jr. Director
Phillip A. Lewis, Jr.
s/Eric W. St. Amant Director
Eric W. St. Amant
s/Randal J. Robert Director
Randal J. Robert
s/John F. Fraiche Director
John F. Fraiche
s/Rosa B. Jackson Director
Rosa B. Jackson
s/Elaine S. Neese Director
Elaine S. Neese
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 5068
<INT-BEARING-DEPOSITS> 1300
<FED-FUNDS-SOLD> 2634
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40416
<INVESTMENTS-CARRYING> 12343
<INVESTMENTS-MARKET> 12266
<LOANS> 59573
<ALLOWANCE> 1417
<TOTAL-ASSETS> 124435
<DEPOSITS> 108180
<SHORT-TERM> 0
<LIABILITIES-OTHER> 560
<LONG-TERM> 3260
0
0
<COMMON> 13227
<OTHER-SE> (792)
<TOTAL-LIABILITIES-AND-EQUITY> 124435
<INTEREST-LOAN> 6437
<INTEREST-INVEST> 3415
<INTEREST-OTHER> 129
<INTEREST-TOTAL> 9981
<INTEREST-DEPOSIT> 3036
<INTEREST-EXPENSE> 3258
<INTEREST-INCOME-NET> 6723
<LOAN-LOSSES> 60
<SECURITIES-GAINS> (50)
<EXPENSE-OTHER> 4191
<INCOME-PRETAX> 3841
<INCOME-PRE-EXTRAORDINARY> 2611
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2611
<EPS-PRIMARY> 4.82
<EPS-DILUTED> 4.82
<YIELD-ACTUAL> 5.96
<LOANS-NON> 299
<LOANS-PAST> 26
<LOANS-TROUBLED> 833
<LOANS-PROBLEM> 2282
<ALLOWANCE-OPEN> 1525
<CHARGE-OFFS> 219
<RECOVERIES> 51
<ALLOWANCE-CLOSE> 1417
<ALLOWANCE-DOMESTIC> 1417
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
AGREEMENT AND PLAN OF MERGER
By and Among
DEPOSIT GUARANTY CORP.,
COMMERCIAL NATIONAL CORPORATION,
CITIZENS NATIONAL BANK,
BANK OF GONZALES HOLDING COMPANY, INC.
And
BANK OF GONZALES
<PAGE>
Table of Contents
Article I. THE HOLDING COMPANY MERGER1
1.01 Holding Company Merger.1
1.02 Effective Date of the Holding Company
Merger.1
1.03 Effect of the Holding Company Merger.1
1.04 Additional Actions.2
1.05 Conversion of Gonzales Holding Shares.2
1.06 Exchange of Shares.2
1.07 DGC to Make Shares Available.4
1.08 Shares of CNC.4
1.09 Tax Consequences.4
Article II. THE BANK MERGER4
2.01 The Bank Merger.4
2.02 Effective Date.4
2.03 Cancellation of Capital Stock of
Gonzales
Bank.4
2.04 Capital Structure of the Receiving
Association.4
2.05 Effects of the Bank Merger.5
2.06 Tax Consequences.5
Article III. REPRESENTATIONS AND WARRANTIES OF GONZALES BANK
AND GONZALES HOLDING5
3.01 Corporate Organization.6
3.02 Capitalization.6
3.03 Investments; No Subsidiaries.7
3.04 Loan Portfolio.7
3.05 Authority; No Violation.7
3.06 Consents and Approvals.7
3.07 SEC Documents; Financial Statements;
Other
Reports;
Liabilities.8
3.08 No Broker's Fees.9
3.09 Title to Properties; Encumbrances.9
3.10 No Undisclosed Liabilities.10
3.11 Absence of Certain Changes or Events.10
3.12 Leases. 12
3.13 Trademarks; Trade Names.12
3.14 Compliance with Applicable Law.12
3.15 Absence of Questionable Payments.12
3.16 Insurance.13
3.17 Powers of Attorney; Guarantees.13
3.18 Tax Matters13
3.19 Benefit and Employee Matters.14
3.20 Contracts and Commitments; No Default15
3.21 Disclosure. 17
3.22 Litigation.17
3.23 Environmental Matters.18
3.24 Contract Termination Provisions19
Article IV. REPRESENTATIONS AND WARRANTIES OF DGC, CNC AND
CNB19
4.01 Corporate Organization.19
4.02 Capitalization.19
4.03 Authority; No Violation.20
4.04 Consents and Approvals.20
4.05 SEC Documents; Financial Statements;
Liabilities.21
4.06 Litigation.21
4.07 Legality of DGC Common Stock.22
4.08 Statements are True and Correct.22
4.09 No Shareholder Vote.22
4.10 Broker's and Finder's Fee.22
4.11 Disclosure22
Article V. COVENANTS OF THE PARTIES23
5.01 Conduct of Business.23
5.02 Limitation on Actions.24
5.03 Current Information.24
5.04 Access to Properties and Records;
Confidentiality.24
5.05 Interim Financial Statements.25
5.06 Regulatory Matters.25
5.07 Approval of Shareholders.27
5.08 Compliance with SEC Rules 144 and 145.27
5.09 Further Assurances.27
5.10 Public Announcements.27
5.11 Benefits.28
5.12 Election of Directors.28
5.13 Indemnification and Liability
Insurance.28
Article VI. CLOSING CONDITIONS29
6.01 Conditions to Each Party's Obligations
under this Agreement.29
6.02 Conditions to the Obligations of DGC,
CNC,
and CNB
under this Agreement. 29
6.03 Conditions to the Obligations of Bank of
Gonzales and
Bank of Gonzales Holding Company, Inc.
under this
Agreement.32
Article VII. CLOSING35
7.01 Time and Place.35
7.02 Deliveries at the Closing.35
Article VIII. TERMINATION35
8.01 Termination.35
8.02 Effect of Termination.36
Article IX. MISCELLANEOUS36
9.01 Expenses.36
9.02 Notices.36
9.03 Parties in Interest.37
9.04 Amendment, Extension and Waiver.38
9.05 Complete Agreement.38
9.06 Non-Survival of Representations and
Warranties38
9.07 Counterparts.38
9.08 Governing Law. 39
9.09 Headings.39
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February
5,
1996, by and among Bank of Gonzales Holding Company, Inc.
("Gonzales Holding"), a corporation organized under the laws of
the
State of Louisiana, and its wholly-owned subsidiary Bank of
Gonzales ("Gonzales Bank"), a state banking association organized
under the laws of Louisiana, and Deposit Guaranty Corp. ("DGC"),
a
corporation organized under the laws of the State of Mississippi,
its wholly-owned subsidiary Commercial National Corporation
("CNC"), a corporation organized under the laws of Louisiana, and
CNC's wholly-owned subsidiary Citizens National Bank ("CNB"), a
banking association organized under the laws of the United
States,
each acting pursuant to a resolution of its Board of Directors.
In consideration of the mutual covenants,
representations,
warranties and agreements herein contained, the parties agree
that
Gonzales Holding shall be merged into CNC (the "Holding Company
Merger") on the terms and subject to the conditions set forth in
this Agreement and simultaneously therewith or immediately
following the Holding Company Merger, Gonzales Bank shall be
merged
into CNB (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.
I.
THE HOLDING COMPANY MERGER
1.1 Holding Company Merger. In accordance with the
applicable provisions of the Louisiana Business Corporation Law
("LBCL"), Gonzales Holding shall be merged with and into CNC
pursuant to a certificate of merger substantially in the form
attached as Exhibit A and executed and acknowledged in the
manner
required by law; the separate existence of Gonzales Holding shall
cease; and CNC shall be the corporation surviving the Holding
Company Merger.
1.2 Effective Date of the Holding Company Merger. The
Holding Company Merger shall become effective on the date (the
"Effective Date") set forth in the certificate of merger filed in
the office of the Secretary of State of Louisiana.
1.3 Effect of the Holding Company Merger. On the
Effective
Date, (i) the separate existence of Gonzales Holding shall cease
and Gonzales Holding shall be merged with and into CNC, (ii) CNC
shall continue to possess all of the rights, privileges and
franchises possessed by it and shall, on the Effective Date,
become
vested with and possess all rights, privileges and franchises
possessed by Gonzales Holding, (iii) CNC shall be responsible for
all of the liabilities and obligations of Gonzales Holding in the
same manner as if CNC had itself incurred such liabilities or
obligations, and the Holding Company Merger shall not affect or
impair the rights of the creditors or of any persons dealing with
Gonzales Holding, (iv) the Holding Company Merger will not of
itself cause a change, alteration or amendment to the Articles of
Incorporation or the Bylaws of CNC, (v) the Holding Company
Merger
will not of itself affect the tenure in office of any officer or
director of CNC and no such person will succeed to such positions
solely by virtue of the Holding Company Merger, and (vi) the
Holding Company Merger shall, from and after the Effective Date,
have all the effects provided by applicable Louisiana law.
1.4 Additional Actions. If, at any time after the Effective
Date, CNC shall consider or be advised that any further
assignments
or assurances in law or any other acts are necessary or desirable
(i) to vest, perfect or confirm, of record or otherwise, in CNC,
title to or the possession of any property or right of Gonzales
Holding acquired or to be acquired by reason of, or as a result
of,
the Holding Company Merger, or (ii) otherwise to carry out the
purposes of this Agreement, Gonzales Holding and its proper
officers and directors shall be deemed to have granted to CNC 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 CNC and otherwise to
carry
out the purposes of this Agreement; and the proper officers and
directors of CNC are fully authorized in the name of Gonzales
Holding to take any and all such action.
1.5 Conversion of Gonzales Holding Shares. Each share of
common stock, no par value, of Gonzales Holding (the "Gonzales
Holding Common Stock") issued and outstanding immediately prior
to
the Effective Date other than shares of Gonzales Holding Common
Stock owned by stockholders who, pursuant to the LBCL, perfect
dissenters' rights ("Dissenting Shares"), shall, by virtue of
this
Agreement and without any action on the part of the holder
thereof,
be converted into and exchangeable for the number of shares of
common stock, no par value, of DGC (the "DGC Common Stock") equal
to the Exchange Ratio, as defined below, subject to adjustment as
provided herein and, in respect of fractional shares, subject to
Section 1.06 hereof. The Exchange Ratio shall equal 634,000
divided by the number of shares of Gonzales Holding Common Stock
outstanding on the date immediately preceding the Effective Date.
If prior to the Effective Date DGC should split or combine DGC
Common Stock, or pay a dividend or other distribution in DGC
Common
Stock, then the exchange ratio shall be appropriately adjusted to
reflect such split, combination, dividend or distribution.
1.6 Exchange of Shares. (a) As soon as practicable after
the Effective Date, Deposit Guaranty National Bank, acting as
exchange agent (the "Exchange Agent"), shall mail to each holder
of
record of a certificate or certificates which immediately prior
to
the Effective Date represented issued and outstanding shares of
Gonzales Holding Common Stock (the "Certificates"), a form letter
of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange
Agent)
and instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing DGC Common
Stock. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall
be
entitled to receive in exchange therefor a certificate
representing
that number of shares of DGC Common Stock to which such holder of
Gonzales Holding Common Stock shall have become entitled pursuant
to the provisions hereof, and the Certificate so surrendered
shall
forthwith be cancelled. Lost Certificates shall be treated in
accordance with the existing procedures of Gonzales Holding.
(b) No dividends or other distributions declared after the
Effective Date with respect to DGC Common Stock and payable to
the
holders of record thereof after the Effective Date shall be paid
to
the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate. Subject to the effect,
if any, of applicable law, after the subsequent surrender and
exchange of a Certificate, the record holder thereof shall be
entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become
payable
with respect to the shares of DGC Common Stock into which the
shares represented by such certificate have been converted.
(c) If any certificate representing shares of DGC Common
Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it
shall be a condition of the issuance thereof that the Certificate
so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form
for transfer, and that the person requesting such exchange shall
pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate representing
shares of DGC Common Stock in any name other than that of the
registered holder of the Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Date there shall be no transfers on
the stock transfer books of Gonzales Holding of the shares of
Gonzales Holding Common Stock which are outstanding immediately
prior to the Effective Date. If, after the Effective Date,
Certificates representing such shares are presented for transfer
to
the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of DGC Common Stock as provided
herein.
(e) No certificates or scrip representing fractional shares
of DGC Common Stock shall be issued upon the surrender for
exchange
of such Certificates, no dividend or distribution with respect to
DGC Common Stock shall be payable on or with respect to any
fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a
shareholder of DGC. In lieu of any such fractional share, DGC
shall pay to each former stockholder of Gonzales Holding who
otherwise would be entitled to receive a fractional share of DGC
Common Stock an amount in cash determined by multiplying (i) the
closing sale price of a share of DGC Common Stock on the date
immediately proceeding the Effective Date as quoted on the
National
Association of Securities Dealers Automated Quotation System, by
(ii) the fraction of a share of DGC Common Stock to which such
holder would otherwise be entitled.
1.7 DGC to Make Shares Available. DGC shall make available
a sufficient number of shares for conversion and exchange in
accordance with Section 1.05, by transferring such shares to the
Exchange Agent for the benefit of the stockholders of Gonzales
Holding.
1.8 Shares of CNC. The shares of capital stock of CNC
outstanding immediately prior to the Effective Date shall not be
changed or converted by virtue of the Holding Company Merger.
1.9 Tax Consequences. It is intended that the Holding
Company Merger shall constitute a reorganization within the
meaning
of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall constitute a
"plan of reorganization" within the meaning of Section 368 of the
Code.
II.
THE BANK MERGER
2.1 The Bank Merger. On the Effective Date (as defined in
Section 2.02 hereof), Gonzales Bank shall be merged with and into
CNB under the Articles of Association of CNB, as amended,
existing
under Charter No. 13648, pursuant to the provisions of, and with
the effect provided in, 12 U.S.C. Section 215a and La. R.S. 6:351 et
seq.
On the Effective Date, CNB, the Receiving Association, shall
continue to be a national banking association, and its business
shall continue to be conducted at its main office in Hammond,
Louisiana, and at its legally established branches (including,
without limitation, the legally established offices from which
Gonzales Bank conducted business immediately prior to the
Effective
Date). The Articles of Association of CNB shall not be altered
or
amended by virtue of the Bank Merger, and the incumbency of the
directors and officers of CNB shall not be affected by the Bank
Merger nor shall any person succeed to such positions by virtue
of
the Bank Merger. CNB shall file this Agreement with the
Louisiana
Commissioner of Financial Institutions (the "Commissioner")
pursuant to La. R.S. 6:352 and make appropriate filings with the
Office of the Comptroller of the Currency (the "OCC"). Gonzales
Bank and CNB are sometimes referred to together as the "Merging
Associations."
2.2 Effective Date. The Bank Merger shall become effective
on the Effective Date.
2.3 Cancellation of Capital Stock of Gonzales Bank. On
the
Effective Date, by virtue of the Bank Merger, all shares of the
capital stock of Gonzales Bank shall be cancelled and no cash,
securities or other property shall be issued in the Bank Merger
in
respect thereof.
2.4 Capital Structure of the Receiving Association. As of
December 31, 1995, CNB had capital of $2,341,210 divided into
234,121 shares of common stock authorized, each of $10 par value
("CNB Common Stock"), surplus of $3,603,351 and undivided
profits,
including capital reserves, of $12,480,851. As of December 31,
1995, Gonzales Bank had capital of $4,400,000 divided into
440,000
shares of common stock authorized, each of $10 par value,
surplus
of $8,506,000 and an accumulated deficit, including capital
reserves, of $775,000.
On the Effective Date, the amount of capital of the Receiving
Association shall be $2,341,210 divided into 234,121 shares of
common stock, each of the par value of $10, and on the Effective
Date, the Receiving Association shall have a surplus of
$3,603,351,
plus the value of the consideration to be paid by DGC in the
Holding Company Merger, and undivided profits, including capital
reserves, which when combined with capital and surplus will be
equal to the capital structure of CNB, as set forth above,
adjusted, however, for the results of operations of CNB between
December 31, 1995 and the Effective Date.
2.5 Effects of the Bank Merger. On the Effective Date, the
corporate existence of each of the Merging Associations shall be
merged into and continued in CNB, the Receiving Association, and
such Receiving Association shall be deemed to be the same
corporation as each bank or banking association participating in
the Bank Merger. All rights, franchises and interests of the
individual Merging Associations in and to every type of property
(real, personal and mixed) and choses in action shall be
transferred to and vested in the Receiving Association by virtue
of
the Bank Merger without any deed or other transfer. The
Receiving
Association, upon the Bank Merger and without any order or other
action on the part of any court or otherwise, shall hold and
enjoy
all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights
and interests as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estates, and in every other
fiduciary
capacity, in the same manner and to the same extent as such
rights,
franchises and interests were held or enjoyed by any one of the
Merging Associations at the time of the Bank Merger, subject to
the
conditions specified in 12 U.S.C. Section 215a(f). The Receiving
Association shall, from and after the Effective Date, be liable
for
all liabilities of the Merging Associations.
2.6 Tax Consequences. It is intended that the Bank Merger
shall constitute a tax-free reorganization pursuant to Section
368(a)(1)(A) of the Code, and that the transactions made the
subject matter of the plan shall constitute a "plan of
reorganization" for purposes of the rules and regulations
governing
Code Section 368.
III.
REPRESENTATIONS AND WARRANTIES OF
GONZALES BANK AND GONZALES HOLDING
Gonzales Bank and Gonzales Holding hereby make the following
representations and warranties to DGC, CNB, and CNC:
3.1 Corporate Organization. (a) Gonzales Bank is a
banking
association duly organized, validly existing and in good standing
under the laws of the State of Louisiana. Gonzales Bank has the
power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted.
(b) Gonzales Holding is a corporation duly organized,
validly
existing and in good standing under the laws of the State of
Louisiana. Gonzales Holding has the corporate power and
authority
to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed
or
qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of
the
properties and assets owned or leased by it makes such licensing
or
qualification necessary.
3.2 Capitalization. (a) The authorized capital stock of
Gonzales Bank consists of 600,000 shares of common stock, $10.00
par value (the "Gonzales Bank Common Stock"). At the close of
business on December 31, 1995, there were 440,000 shares of
Gonzales Bank Common Stock issued and outstanding and no shares
held in Gonzales Bank's treasury. Except as set forth on
Schedule
3.02 hereto, all issued and outstanding shares of Gonzales Bank
Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights with no
personal liability attaching to the ownership thereof. Except as
set forth on Schedule 3.02 hereof, Gonzales Bank has not issued
any
additional shares of Gonzales Bank Common Stock since December
31,
1995, and does not have and is not bound by any outstanding
subscription, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any
shares
of Gonzales Bank Common Stock or any security representing the
right to purchase or otherwise receive any Gonzales Bank Common
Stock. Gonzales Holding has good, valid and marketable title to,
the Gonzales Bank Common Stock, and on the Effective Date the
same
will be free and clear of all liens, encumbrances, pledges,
claims,
options, charges and assessments of any nature whatsoever.
(b) The authorized capital stock of Gonzales Holding
consists
of 10,000,000 shares of Gonzales Holding Common Stock. At the
close of business on December 31, 1995, there were 561,801 shares
of Gonzales Holding Common Stock issued and outstanding and
20,190
shares held in Gonzales Holding's treasury. Except as set forth
on
Schedule 3.02 hereto, all issued and outstanding shares of
Gonzales
Holding Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights
with no personal liability attaching to the ownership thereof.
Except as set forth on Schedule 3.02 hereof, Gonzales Holding has
not issued any additional shares of Gonzales Holding Common Stock
since December 31, 1995, and does not have and is not bound by
any
outstanding subscription, options, warrants, calls, commitments
or
agreements of any character calling for the purchase or issuance
of
any shares of Gonzales Holding Common Stock or any security
representing the right to purchase or otherwise receive any
Gonzales Holding Common Stock.
3.3 Investments; No Subsidiaries. The "Gonzales
Consolidated Group," as such term is used in this Agreement,
consists of Gonzales Holding and Gonzales Bank. Except as set
forth on Schedule 3.03 hereof, neither Gonzales Bank nor Gonzales
Holding has any subsidiaries or equity interest or other
investment, direct or indirect, in any corporation, partnership,
joint venture or other entity except for such equity interest or
other investment which Gonzales Bank may have acquired as a
result
of foreclosure and is as of the date hereof holding subject to
sale.
3.4 Loan Portfolio. All loans, discounts and financing
leases (in which any
member of the Gonzales Consolidated Group is lessor) reflected on
the Gonzales Latest Balance
Sheet (as defined in Section 3.07) (a) were, at the time and
under the circumstances in which made,
made for good, valuable and adequate consideration in the
ordinary course of business of the
Gonzales Consolidated Group, (b) are evidenced by genuine notes,
agreements or other evidences
of indebtedness and (c) to the extent secured, have been secured
by valid liens and security interests
which have been perfected. Set forth in Schedule 3.04 hereto is
a true and complete list of all real
property in which Gonzales Bank has an interest as creditor or
mortgagee in an amount greater than
$50,000. Except as set forth in Schedule 3.04 hereto, there are
no outstanding loans held by
Gonzales Bank with an unpaid balance of $25,000 or more in which
a material default has occurred.
A material default for purposes of this Section 3.04 includes,
without limitation, the failure to pay
indebtedness or an installment thereof more than sixty (60) days
after it is due and payable.
3.5 Authority; No Violation. Each of Gonzales Bank and
Gonzales Holding has full
corporate power and authority to execute and deliver this
Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the
consummation of the transactions contemplated hereby by Gonzales
Bank have been duly and validly
approved by the Board of Directors of Gonzales Bank, and, except
for approval by Gonzales Holding
as the sole shareholder of Gonzales Bank, no other corporate
proceedings on the part of Gonzales
Bank are necessary to consummate the transactions so
contemplated. The Board of Directors of
Gonzales Holding has duly and validly approved this Agreement and
the transactions contemplated
hereby and has authorized the execution and delivery of this
Agreement by Gonzales Holding, and,
except for the approval of this Agreement by its shareholders, no
other corporate proceedings on the
part of Gonzales Holding are necessary to consummate the
transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Gonzales Bank and Gonzales Holding
and constitutes a valid and binding obligation of Gonzales Bank
and of Gonzales Holding enforceable
against each in accordance with its terms, except that
enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court
decisions relating to or affecting the
enforcement of creditors' rights generally and by general
equitable principles.
3.6 Consents and Approvals. Except as set forth in
Schedule 3.06 hereto, no permit,
consent, approval or authorization of, or declaration, filing or
registration with, any public body or
authority or to the knowledge of Gonzales Bank and Gonzales
Holding any third party is necessary
in connection with (i) the execution and delivery by Gonzales
Bank or Gonzales Holding of this
Agreement, or (ii) the consummation by Gonzales Holding or
Gonzales Bank of the Mergers and the
other transactions contemplated hereby.
3.7 SEC Documents; Financial Statements; Other Reports;
Liabilities. (a) Gonzales
Holding has filed all required reports, schedules, forms,
statements and other documents with the
SEC since January 1, 1992 (the "Gonzales Holding SEC Documents"),
complete copies of which
have been provided to DGC, CNC, and CNB. As of their respective
dates, the Gonzales Holding
SEC Documents, and any such reports, forms and documents filed by
Gonzales Holdings with the
SEC after the date hereof, complied, or will comply, as to form
in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act")
or the Securities Exchange Act of
1934 (the "Exchange Act"), as the case may be, and the rules and
regulations of the SEC
promulgated thereunder applicable to such Gonzales Holding SEC
Documents, and none of the
Gonzales Holding SEC Documents 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. Except
to the extent that information contained in any Gonzales Holding
SEC Document has been revised
or superseded by a later filed Gonzales Holding SEC Document,
none of the Gonzales Holding SEC
Documents contains any untrue statement of a material fact or
omits to state any 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.
(b) The consolidated financial statements of Gonzales
Holding and its consolidated
subsidiaries (collectively, the "Gonzales Financial Statements")
included in the Gonzales Holding SEC
Documents have been audited by Basil M. Lee and Company,
certified public accountants (in the case
of the audited Gonzales Financial Statements) in accordance with
generally accepted auditing
standards, have been prepared in accordance with generally
accepted accounting principles and,
except as disclosed therein, applied on a basis consistent with
prior periods, and present fairly the
financial position of Gonzales Holding and its consolidated
subsidiaries at such dates and the results
of operations and cash flows for the periods then ended, except,
in the case of the interim financial
statements (collectively, the Gonzales Interim Financial
Statements"), as permitted by Rule 10-01 of
Regulation S-X of the SEC. The Gonzales Interim Financial
Statements reflect all adjustments
(consisting only of normal recurring adjustments) that are
necessary for a fair statement of the results
for the interim periods presented therein. Neither Gonzales
Holding nor any of its consolidated
subsidiaries has, nor are any of their respective assets subject
to, any liability, commitment, debt or
obligation (of any kind whatsoever whether absolute or
contingent, accrued, fixed, known, unknown,
matured or unmatured) that is material individually or in the
aggregate, except as and to the extent
reflected on the latest balance sheet included as part of the
Gonzales Interim Financial Statements (the
"Gonzales Latest Balance Sheet"), or as may have been incurred or
may have arisen since the date
of the Gonzales Latest Balance Sheet in the ordinary course of
business.
(c) Since the date of the Gonzales Latest Balance Sheet,
there has been no change that
has had or is likely to have a material adverse effect on any
member of the Gonzales Consolidated
Group.
(d) Gonzales Holding has delivered to DGC, CNC and CNB true
and complete copies of
the annual report to the Board of Governors of the Federal
Reserve System (the "Federal Reserve
Board") for the year ended December 31, 1994 of each member of
the Gonzales Consolidated Group
required to file such reports and all call reports made to the
Federal Deposit Insurance Corporation
("FDIC") or the Federal Reserve Board, as the case may be, since
December 31, 1992, of each
member of the Gonzales Consolidated Group required to file such
reports. All call reports referred
to above have been filed on the appropriate form and prepared in
all material respects in accordance
with such form's instructions and the applicable rules and
regulations of the regulating federal agency.
3.8 No Broker's Fees. Except as fully described and set
forth in Schedule 3.08 hereto,
neither Gonzales Bank, Gonzales Holding nor any of their officers
or directors has employed any
broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in
connection with any of the transactions contemplated by this
Agreement, except for fees payable in
connection with the financial services rendered by Alex
Sheshunoff & Co.
3.9 Title to Properties; Encumbrances. Except as set
forth in Schedule 3.09 hereto,
Gonzales Bank and Gonzales Holding have good, valid and
marketable title to, or a valid leasehold
interest in, (a) all their real properties and (b) all other
properties and assets reflected in the Gonzales
Latest Balance Sheet, other than any of such properties or assets
which have been sold or otherwise
disposed of since the date of the Gonzales Latest Balance Sheet
in the ordinary course of business
and consistent with past practice. Except as set forth in
Schedule 3.09 hereto, all of such properties
and assets are free and clear of all title defects, mortgages,
pledges, liens, claims, charges, security
interests or other encumbrances of any nature whatsoever,
including, without limitation, leases,
options to purchase, conditional sales contracts, collateral
security arrangements and other title or
interest retention arrangements, and are not, in the case of real
property, subject to any easements,
building use restrictions, exceptions, reservations or
limitations of any nature whatsoever, except,
with respect to all such properties and assets (i) liens for
current taxes and assessments not in default,
(ii) minor imperfections of title, and encumbrances, if any,
which have arisen in the ordinary course
of business, which are not substantial in character, amount or
extent and which do not detract from
the value of or interfere with the present or contemplated use of
any of the properties subject thereto
or affected thereby or otherwise impair the business operations
conducted or contemplated by
Gonzales Bank or Gonzales Holding, (iii) mortgages and
encumbrances which secure indebtedness,
which is properly reflected in the Gonzales Latest Balance Sheet,
and (iv) liens arising as a matter of
law in the ordinary course of business with respect to obligation
incurred after the date of the
Gonzales Latest Balance Sheet provided that such obligations are
not delinquent or are being
contested in good faith. All personal property material to the
business, operations or financial
condition of Gonzales Bank or Gonzales Holding, and all
buildings, structures and fixtures used by
Gonzales Bank or Gonzales Holding in the conduct of their
businesses, are in good operating
condition and repair, ordinary wear and tear excepted. Except as
set forth in Schedule 3.09 hereto,
neither Gonzales Bank nor Gonzales Holding has received any
notification of any violation (which
has not been cured) of any building, zoning or other similar law,
ordinance or regulation in respect
of such property or structures or its use thereof.
3.10 No Undisclosed Liabilities. Except as set forth in
Schedule 3.10 hereto, as of the
date hereof neither Gonzales Bank nor Gonzales Holding has any
liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise and
whether due or to become due),
except liabilities and obligations (i) fully reflected or
reserved against in the Gonzales Latest Balance
Sheet or disclosed in the notes thereto or (ii) incurred since
the date of the Gonzales Latest Balance
Sheet in the ordinary course of business and consistent with past
practice.
3.11 Absence of Certain Changes or Events. (a) Except as
set forth in Schedule 3.11
hereto, since the date of the Gonzales Latest Balance Sheet,
there has not been:
i) any material adverse change in the business,
operations, properties, assets or
financial condition of Gonzales Bank or Gonzales Holding, or
any event which has had or will
have a material adverse effect on any of the foregoing;
ii) any loss, damage, destruction or other casualty
materially and adversely
affecting any of the properties, assets or business of
Gonzales Bank or Gonzales Holding or
any of their subsidiaries (whether or not covered by
insurance);
iii) any increase of more than ten percent (10%) in the
compensation payable by
Gonzales Bank or Gonzales Holding to any of their directors,
officers, agents, consultants,
or any of their employees whose total compensation after
such increase was in excess of
$25,000 per annum, or any extraordinary bonus, percentage
compensation, service award or
other like benefit granted, made or accrued to the credit of
any such director, officer, agent,
consultant or employee, or any extraordinary welfare,
pension, retirement or similar payment
or arrangement made or agreed to by Gonzales Bank or
Gonzales Holding for the benefit of
any such director, officer, agent, consultant or employee;
iv) any change in any method of accounting or
accounting practice of Gonzales
Bank or Gonzales Holding;
v) any loan in excess of $25,000 or portion thereof
rescheduled as to payments
thereon, subject to a moratorium on payment thereof or
written off by Gonzales Bank or
Gonzales Holding as uncollectible; or
vi) any agreement or understanding, whether in writing
or otherwise, of Gonzales
Bank or Gonzales Holding to do any of the foregoing.
(b) Except as set forth in Schedule 3.11 hereto, since
the date of the Gonzales Latest
Balance Sheet, neither Gonzales Bank nor Gonzales Holding has:
i) issued or sold any promissory note, stock, bond or
other corporate security
of which it is the issuer in an amount greater than $25,000;
ii) discharged or satisfied any lien or encumbrance or
paid or satisfied any
obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due
or to become due) in an amount greater than $50,000 as to
each such lien, encumbrance,
obligation or liability other than current liabilities shown
on the Gonzales Latest Balance
Sheet and current liabilities incurred since the date of the
Gonzales Latest Balance Sheet in
the ordinary course of business and consistent with past
practice and other than any such lien,
encumbrance, obligation or liability of the nature
(regardless of amount) required to be
disclosed pursuant to Section 3.11(a)(iii) hereto;
iii) declared, paid or set aside for payment any
dividend or other distribution
(whether in cash, stock or property) in respect of its
capital stock, except for (i) a Special
Dividend by Gonzales Holding in February 1996 of $2.00 per
share, (ii) regular quarterly
dividends in 1996 of $.35 per share for each complete
calendar quarters elapsed prior to the
Effective Date, and (iii) dividends by Gonzales Bank to
Gonzales Holding to the extent
necessary to fund authorized dividends of Gonzales Holding
and to pay necessary and routine
expenses of Gonzales Holding;
iv) split, combined or reclassified any shares of its
capital stock, or redeemed,
purchased or otherwise acquired any shares of its capital
stock or other securities;
v) sold, assigned or transferred any of its assets
(real, personal or mixed, tangible
or intangible) canceled any debts or claims or waived any
rights of substantial value, except,
in each case, in the ordinary course of business and
consistent with past practice;
vi) paid any amounts or incurred any liability to or in
respect of, or sold any
properties or assets (real, personal or mixed, tangible or
intangible) to, or engaged in any
transaction (other than any transaction of the nature
(regardless of amount) required to be
disclosed pursuant to Section 3.11(a)(iii) hereof) or
entered into any agreement or
arrangement with, any corporation or business in which
Gonzales Bank, Gonzales Holding
or any of their officers or directors, or any "affiliate" or
"associate" (as such terms are defined
in the rules and regulations promulgated under the
Securities Act of any such person, has any
direct or indirect interest;
vii) entered into any collective bargaining agreements;
or
viii) entered into any other transaction other than
in the ordinary course of business
and consistent with past practice or in connection with the
transactions contemplated by this
Agreement.
3.12 Leases. Set forth in Schedule 3.12 hereto is an
accurate and complete list of all
leases calling for annual rent payments in excess of $10,000
pursuant to which Gonzales Bank or
Gonzales Holding, as lessee, leases real or personal property,
including, without limitation, all leases
of computer or computer services and all arrangements for
time-sharing or other data processing
services, describing for each lease Gonzales Bank's or Gonzales
Holding's financial obligations under
such lease its rental payments, expiration date and renewal
terms. Except as set forth in Schedule
3.12 hereto: (a) all such leases are in full force and effect in
accordance with their terms and (b) there
exists no event of default or event, occurrence, condition or act
which with the giving of notice, the
lapse of time or the happening of any further event or condition
would become a default under any
such lease.
3.13 Trademarks; Trade Names. Set forth in Schedule 3.13
hereto is an accurate and
complete list and brief description of all trademarks (either
registered or common law), trade names
and copyrights (and all applications and licenses therefor) owned
by Gonzales Bank or Gonzales
Holding or in which they have any interest. Gonzales Bank and
Gonzales Holding own, or have the
rights to use, all trademarks, trade names and copyrights used in
or necessary for the ordinary
conduct of their existing businesses as heretofore conducted, and
the consummation of the
transactions contemplated hereby will not alter or impair any
such rights. Except as set forth in
Schedule 3.13 hereto, no claims are pending by any person for the
use of any trademarks, trade names
or copyrights or challenging or questioning the validity or
effectiveness of any license or agreement
relating to the same, nor is there any valid basis for any such
claim, challenge or question, and use of
such trademarks, trade names and copyrights by Gonzales Bank or
Gonzales Holding does not
infringe on the rights of any person.
3.14 Compliance with Applicable Law. Gonzales Bank and
Gonzales Holding hold all
licenses, franchises, permits and governmental authorizations
necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have
complied in all material respects with and
are not in default in any respect under any, applicable statutes,
laws, ordinances, rules, regulations,
and orders of all federal, state and local governmental bodies,
agencies and subdivisions having,
asserting or claiming jurisdiction over them or over any part of
their operations (to the extent that
such default could result in a material limitation on the conduct
of Gonzales Bank's or Gonzales
Holding's business, or could cause Gonzales Bank or Gonzales
Holding to incur a substantial financial
penalty); and, except as set forth in Schedule 3.14 hereto,
neither Gonzales Bank nor Gonzales
Holding has received notice of a violation of, and does not know
of any violation of or of any valid
basis for any claim of a violation of, any of the above.
3.15 Absence of Questionable Payments. Gonzales Bank and
Gonzales Holding have not,
and, to the knowledge of Gonzales Bank or Gonzales Holding, no
director, officer, agent, employee,
consultant or other person acting on behalf of, Gonzales Bank or
Gonzales Holding has, (a) used any
Gonzales Bank or Gonzales Holding corporate funds for unlawful
contributions, gifts, entertainment
or other unlawful expenses relating to political activity or (b)
made any direct or indirect unlawful
payments to government officials from any Gonzales Bank or
Gonzales Holding corporate funds, or
established or maintained any unlawful or unrecorded accounts
with funds received from Gonzales
Bank or Gonzales Holding.
3.16 Insurance. Set forth in Schedule 3.16 hereto is an
accurate and complete list of all
policies of insurance, including the amounts thereof, owned by
Gonzales Bank or Gonzales Holding
or in which Gonzales Bank or Gonzales Holding is named as the
insured party. All such policies are
valid, enforceable and in full force and effect, and no member of
the Gonzales Consolidated Group
has received any notice of material premium increase or
cancellation with respect to any of its
insurance policies now in effect. Such insurance with respect to
Gonzales Bank's and Gonzales
Holding's property and the conduct of their businesses is in such
amounts and against such risks as
are usually insured against by institutions of similar size
operating similar properties and businesses
in the State of Louisiana and, in the opinion of management of
Gonzales Holding or Gonzales Bank,
as the case may be, are adequate for the conduct of Gonzales
Bank's and Gonzales Holding's
businesses. Except as set forth in Schedule 3.16 hereto, within
the past five (5) years, neither
Gonzales Bank nor Gonzales Holding has ever been refused any
insurance nor have their coverages
been limited (other than certain exclusions for coverage of
certain events or circumstances stated in
such policies) by any insurance carrier to which they have
applied for insurance or with which they
have carried insurance.
3.17 Powers of Attorney; Guarantees. Except as set forth
in Schedule 3.17 hereto, other
than in the ordinary course of business neither Gonzales Bank nor
Gonzales Holding has given any
power of attorney to any person to act on its behalf, or has any
obligation or liability, either actual,
accruing or contingent, as guarantor, surety, cosigner, endorser,
co-maker or indemnitor in respect
of the obligation of any person, corporation, partnership, joint
venture, association, organization or
other entity.
3.18 Tax Matters. Gonzales Bank and Gonzales Holding make
the following
representations with respect to tax matters:
(a) For purposes of this Section, the following definitions
shall apply:
(1) The term "Taxes" shall mean all taxes, however
denominated, including any interest,
penalties or other additions to tax that may become payable in
respect thereof, imposed by any
federal, state or local government or any agency or political
subdivision of any such government,
which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state
income taxes), real property gains taxes,
payroll and employee withholding taxes, unemployment insurance
taxes, social security taxes, sales
and use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer
taxes, workers' compensation, Pension Benefit Guaranty
Corporation premiums and other
governmental charges, and other obligations of the same or of a
similar nature to any of the
foregoing, which any member of the Gonzales Consolidated Group is
required to pay, withhold or
collect.
(2) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax,
information statements and returns relating to, or required to be
filed in connection with, any Taxes,
including information returns or reports with respect to backup
withholding and other payments to
third parties.
(b) To the knowledge of the Gonzales Consolidated Group, all
material Returns required
to be filed by or on behalf of members of the Gonzales
Consolidated Group have been duly filed and,
to the knowledge of the Gonzales Consolidated Group, such Returns
are true, complete and correct
in all material respects. All Taxes shown to be payable on the
Returns or on subsequent assessments
with respect thereto have been paid in full on a timely basis,
and no other Taxes are payable by the
Gonzales Consolidated Group with respect to items or periods
covered by such Returns or with
respect to any period prior to the date of this Agreement. Each
member of the Gonzales
Consolidated Group has withheld and paid over all Taxes required
to have been withheld and paid
over, and complied with all information reporting and backup
withholding requirements, including
maintenance of required records with respect thereto, in
connection with amounts paid or owning to
any employee, creditor, independent contractor, or other third
party. There are no liens on any of
the assets of any member of the Gonzales Consolidated Group with
respect to Taxes, other than liens
for Taxes not yet due and payable or for Taxes that a member of
the Gonzales Consolidated Group
is contesting in good faith through appropriate proceedings and
for which appropriate reserves have
been established.
(c) The Returns of the Gonzales Consolidated Group have
never been audited by a
government or taxing authority, nor to the knowledge of the
Gonzales Consolidated Group, is any
such audit in process, pending or threatened. To the knowledge
of the Gonzales Consolidated
Group, no deficiencies exist or have been asserted or are
expected to be asserted with respect to
Taxes of the Gonzales Consolidated Group, and no member of the
Gonzales Consolidated Group has
received notice or expects to receive notice that it has not
filed a Return or paid Taxes required to
be filed or paid by it. No member of the Gonzales Consolidated
Group is a party to any action or
proceeding for assessment or collection of Taxes, nor to the
knowledge of the Gonzales Consolidated
Group, has such event been asserted or threatened against any
member of the Gonzales Consolidated
Group or any of its assets. No waiver or extension of any statute
of limitations is in effect with
respect to Taxes or Returns of the Gonzales Consolidated Group.
3.19 Benefit and Employee Matters. (a) Schedule 3.19(a)
lists all pension, retirement,
stock option, stock purchase, stock ownership, savings, stock
appreciation right, profit sharing,
deferred compensation, employment, compensation arrangements,
consulting, bonus, collective
bargaining, group insurance, severance and other employee
benefit, incentive and welfare policies,
contracts, plans and arrangements, and all trust agreements
related thereto established or maintained
by Gonzales Holding or Gonzales Bank, for the benefit of any of
the present or former directors,
officers, or other employees of Gonzales Bank and Gonzales
Holding. Schedule 3.19(a) also
identifies each "employee benefit plan," as such term is defined
in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
maintained or contributed to by any
member of the Gonzales Consolidated Group. Except as set forth
in Schedule 3.19(a), all "employee
benefit plans" maintained by Gonzales Bank or Gonzales Holding
(all such plans being listed in
Schedule 3.19(a) hereto) (collectively, the "Gonzales Bank
Plans") are in material compliance with
the provisions of ERISA and the applicable provisions of the
Code. No member of the Gonzales
Consolidated Group has ever maintained or become obligated to
contribute to any "employee benefit
plan" as such term is defined in Section 3(3) of ERISA, (i) that
is subject to Title IV of ERISA or (ii)
that is a multiemployer plan under Title IV of ERISA. To the
knowledge of the Gonzales
Consolidated Group, no "prohibited transaction," as defined in
Section 406 of ERISA or Section
4975 of the Code, has occurred that could result in liability to
Gonzales Holding, Gonzales Bank or
DGC, CNC or CNB. The Bank of Gonzales Savings Plan & Trust has
been determined to be
"qualified" within the meaning of Section 401(a) of the Code and
neither Gonzales Bank nor
Gonzales Holding knows of any fact which would adversely affect
the qualified status of such plan.
Gonzales Holding has provided to DGC copies of the most recent
determination letter issued by the
Internal Revenue Service with respect to such plan. No member of
the Gonzales Consolidated Group
has any current or projected liability in respect of
post-employment welfare benefits for retired,
current or former employees, except as required to avoid excise
tax under Section 4980B of the
Code.
(b) Except as set forth in Schedule 3.19(b) hereto, (i) each
of Gonzales Bank and
Gonzales Holding is in material compliance with all applicable
laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours, occupational safety
and health and neither is engaged in any unfair labor practice,
(ii) there is no unfair labor practice
complaint against Gonzales Bank or Gonzales Holding pending or
threatened before, or on appeal
from, the National Labor Relations Board, (iii) there is no labor
strike, dispute, slowdown or
stoppage actually pending or threatened against or affecting
Gonzales Bank or Gonzales Holding, (iv)
no representation question exists respecting the employees of
Gonzales Bank or Gonzales Holding,
(v) no grievance which might have an adverse effect on Gonzales
Bank or Gonzales Holding or the
conduct of their businesses nor any arbitration proceeding
arising out of or under collective
bargaining agreements is pending and no claims therefor exist,
(vi) no collective bargaining agreement
which is binding on Gonzales Bank or Gonzales Holding restricts
them from closing any of their
operations, and (vii) neither Gonzales Bank nor Gonzales Holding
has experienced any work
stoppage or other material labor difficulty during the last five
(5) years.
3.20 Contracts and Commitments; No Default. (a) The
following information relating to
Gonzales Bank and Gonzales Holding has been made available to
DGC, CNC or CNB:
i) to the extent permitted by law, any bank regulatory
agency reports relating to
the examination of Gonzales Bank which have been made
available to Gonzales Bank or
Gonzales Holding for the past five (5) years;
ii) the name of each bank with which Gonzales Bank or
Gonzales Holding has
an account or safekeeping or custodial arrangement or
correspondent relationship and the
names of all persons who are authorized with respect
thereto;
iii) all mortgages, indentures, promissory notes, deeds
of trust, loan or credit
agreements or similar instruments under which Gonzales Bank
or Gonzales Holding is
indebted in an amount greater than $50,000 for borrowed
money or the price of purchased
property, accompanied by originals or certified copies
thereof and all amendments or
modifications of any thereof;
iv) any loans, including any other credit arrangements
by Gonzales Bank, to any
holder of ten percent (10%) or more of Gonzales Holding
Common Stock, to any of
Gonzales Bank's or Gonzales Holding's directors or executive
officers, to any members of the
immediate families of any of Gonzales Bank's or Gonzales
Holding's directors or executive
officers or to any corporation, firm or other organization
in which any of such directors or
executive officers has a financial interest; and
v) any pending application, including any documents or
materials relating thereto,
which has been filed by Gonzales Bank or Gonzales Holding
with any bank regulatory
authority in order to obtain the approval of such bank
regulatory authority for the
establishment of a new branch bank or a new subsidiary bank.
(b) Except as set forth in Schedule 3.20 hereto,
neither Gonzales Bank nor Gonzales
Holding is a party to or bound by, nor have any bids or proposals
been made by or to Gonzales Bank
or Gonzales Holding with respect to, any written or oral, express
or implied:
i) contract relating to the matters referred to in
paragraph (a) above;
ii) contract with or arrangement for directors,
officers, employees, former
employees, agents or consultants with respect to salaries,
bonuses, percentage compensation,
pensions, deferred compensation or retirement payments, or
any profit-sharing, stock option,
stock purchase or other employee benefit plan or
arrangement;
iii) collective bargaining or union contract or
agreement;
iv) contract, commitment or arrangement for the
borrowing of money or for a line
of credit in an amount greater than $50,000;
v) contract, commitment or arrangement for the lending
of money or for the
granting of a line of credit in an amount greater than
$100,000;
vi) contract or agreement for the future purchase by it
of any materials,
equipment, services, or supplies, which is not in the
ordinary course of business, and has a
term of more than twelve (12) months (including periods
covered by any option to renew by
either party);
vii) contract containing covenants purporting to limit
its freedom to compete;
viii) contract or commitment for the acquisition,
construction or refurbishment of
any property, plant or equipment, other than contracts and
commitments for the acquisition,
construction or refurbishment of any property, plant or
equipment not in excess of $20,000
for any one establishment or $50,000 in the aggregate.
(c) Each of Gonzales Bank and Gonzales Holding have
performed in all material respects
all the obligations required to be performed by it under any
material contract, agreement,
arrangement, commitment or other instrument to which it is a
party (including, without limitation,
any of those described in paragraphs (a) and (b) of this Section
3.20), and there is not, with respect
to any such contract, agreement, commitment or other instrument,
(i) any notice of violation, or (ii)
any existing default (or event which, with or without due notice
or lapse of time or both, would
constitute a default) on the part of Gonzales Bank or Gonzales
Holding, which default would have
a material adverse effect on its business, operations,
properties, assets or financial condition, and
neither Gonzales Bank nor Gonzales Holding has received notice of
any such default, nor has
Gonzales Bank or Gonzales Holding knowledge of any facts or
circumstances which would
reasonably indicate that it will be or may be in default under,
any such contract, agreement,
arrangement, commitment or other instrument subsequent to the
date hereof.
3.21 Disclosure. All facts material to the business,
operations, properties, assets, liabilities
(contingent or otherwise), financial condition and prospects of
Gonzales Bank and Gonzales Holding
have been disclosed to DGC, CNC, and CNB in writing in or
pursuant to this Agreement. No
representation or warranty contained in this Agreement, and no
statement contained in any schedule
or certificate, list or other writing furnished to DGC or CNB
pursuant to the provisions hereof,
contains any untrue statement of a material fact or omits to
state a material fact necessary in order
to make the statements herein or therein not misleading. No
information material to this transaction
which is necessary to make the representations and warranties
herein contained not misleading has
been withheld from, or has not been delivered in writing to, DGC
and CNB.
3.22 Litigation. Except (a) as disclosed in a Gonzales
Holding SEC Document, (b) that
are not material individually or in the aggregate, or (c) as
listed on Schedule 3.22, there are no
actions, suits, proceedings, arbitrations or investigations
pending or, to the knowledge of Gonzales
Holding or Gonzales Bank, threatened, before any court, any
governmental agency or instrumentality
or any arbitration panel, against or affecting Gonzales Holding
or Gonzales Bank or any of their
subsidiaries or any of the directors, officers, or employees of
the foregoing, and to the knowledge of
Gonzales Holding or Gonzales Bank no facts or circumstances exist
that would be likely to result in
the filing of any such action that would have a material adverse
effect on Gonzales Holding or
Gonzales Bank. Neither Gonzales Holding or Gonzales Bank nor any
of their subsidiaries is subject
to any currently pending judgment, order or decree entered in any
lawsuit or proceeding.
3.23 Environmental Matters. (a) To the best knowledge of
each, Gonzales Holding and
Gonzales Bank are, and have been, in compliance with all
applicable federal, state and local laws,
regulations, rules and decrees pertaining to pollution or
protection of the environment
("Environmental Laws"), including without limitation the
Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., the
Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq., the Louisiana Environmental
Quality Act, La. R.S. 30: 2001 et seq.,
or any similar federal, state or local law, except for such
instances of non-compliance that are not
reasonably likely to have, individually or in the aggregate, a
material adverse effect on the financial
condition, results of operations, business or prospects of
Gonzales Holding and Gonzales Bank.
(b) To the best knowledge of each, all property owned,
leased, operated or managed by
Gonzales Holding or Gonzales Bank, or in which Gonzales Holding
or Gonzales Bank has any
interest, including any mortgage or security interest ("Business
Property"), and all businesses and
operations conducted on any of the Business Property (whether by
Gonzales Holding or Gonzales
Bank, a mortgagor, or any other person), are, and have been, in
compliance with all applicable
Environmental Laws, except for such instances of non-compliance
that are not reasonably likely to
have, individually or in the aggregate, a material adverse effect
on the financial condition, results of
operations, business or prospects of Gonzales Holding or Gonzales
Bank.
(c) To the best knowledge of each, there is no judicial,
administrative, arbitration or other
similar proceeding pending or threatened before any court,
governmental agency, authority or other
forum in which Gonzales Holding or Gonzales Bank or any prior
owner of any Business Property has
been or, with respect to threatened matters, is threatened to be
named as a party relating to (i) alleged
noncompliance with any applicable Environmental Law or (ii) the
release or threatened release into
the environment of any Hazardous Substance (as defined below),
and relating to any of the Business
Property, except for such proceedings pending or threatened that
are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on
the financial condition, results of
operations, business or prospects of Gonzales Holding or Gonzales
Bank, and to the knowledge of
each there is no reasonable basis for any such proceeding. The
term "Hazardous Substance" means
any pollutant, contaminant, or toxic or hazardous substance,
chemical, or waste defined, listed or
regulated by any Environmental Law (and specifically shall
include, but not be limited to, asbestos,
polychlorinated biphenyls, and petroleum and petroleum products).
(d) To the best knowledge of each, there has been no release
or threatened release of a
Hazardous Substance in, on, under, or affecting any of its
Business Property, except such release or
threatened release that is not reasonably likely to have,
individually or in the aggregate, a material
adverse effect on the financial condition, results of operations,
business or prospects of Gonzales
Holding or Gonzales Bank.
3.24 Contract Termination Provisions. Except for those
contracts set forth in Schedule
3.24 hereto, all contracts between Gonzales Bank or Gonzales
Holding and any employee thereof or
independent contractor thereto shall, by the terms of such
contracts or a written addendum thereto,
be terminable by DGC, CNC, or CNB following the Mergers, upon no
more than thirty (30) day's
written notice to the employee or independent contractor.
IV.
REPRESENTATIONS AND WARRANTIES OF DGC, CNC AND CNB
DGC, CNC and CNB represent and warrant to Gonzales Bank and
Gonzales Holding as
follows:
4.1 Corporate Organization. DGC and CNC are corporations
duly organized, validly
existing and in good standing under the laws of the States of
Mississippi and Louisiana, respectively,
and CNB is a national banking association duly organized, validly
existing and in good standing under
the laws of the United States. DGC, CNC, and CNB, respectively,
have the corporate power and
authority (and CNB has received appropriate authorizations from
the OCC to own or lease all of their
properties and assets and to carry on their businesses as they
are now being conducted.
4.2 Capitalization. The authorized capital stock of DGC
consists of 50,000,000 shares
of DGC Common Stock, 10,000,000 shares of Class A Voting
Preferred Stock, no par value, and
10,000,000 shares of Class B Non-Voting Preferred Stock, no par
value (collectively, "the DGC
Preferred Stock"). At the close of business on December 31,
1995, there were 19,379,643 shares of
DGC Common Stock issued and outstanding and no shares of DGC
Preferred Stock had been issued.
In addition, options to acquire 442,852 shares of DGC Common
Stock were outstanding. The
authorized capital stock of CNC consists of 5,000,000 shares, no
par value. At the close of business
on December 31, 1995, there were 4,200,000 shares of CNC Common
Stock issued and outstanding,
one hundred percent (100%) of which shares were owned by DGC.
The authorized capital stock of
CNB consists of 234,121 shares of CNB Common Stock. At the
close of business on December 31,
1995, there were 234,121 shares of CNB Common Stock issued and
outstanding, one hundred
percent (100%) of which shares were owned by CNC. All issued and
outstanding shares of DGC
Common Stock have been, and the shares of DGC Common Stock to be
issued pursuant to the
Holding Company Merger will be, duly authorized and validly
issued, and all such shares are and will
be fully paid. Except as referred to above, DGC does not have
and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the
purchase or issuance of any shares of DGC Common Stock or DGC
Preferred Stock or any security
representing the right to purchase or otherwise receive any DGC
Common Stock or DGC Preferred
Stock.
4.3 Authority; No Violation. (a) DGC, CNC, and CNB,
respectively, have full
corporate power and authority to execute and deliver this
Agreement and to consummate the
transactions contemplated hereby. The respective Boards of
Directors of DGC, CNC, and CNB, or
a majority thereof, and DGC as the sole shareholder of CNC, have
duly and validly approved and
adopted this Agreement and the transactions contemplated hereby,
have executed or authorized the
execution of and have authorized the delivery of this Agreement,
and except for approval by CNC,
as the sole shareholder of CNB, no other corporate proceedings on
the part of DGC, CNC, or CNB
are necessary or desirable to consummate the transactions so
contemplated. This Agreement has been
duly and validly executed and delivered by DGC, CNC, and CNB and
constitutes a valid and binding
obligation of each of DGC, CNC, and CNB, enforceable in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
DGC, CNC, or CNB nor the
consummation by DGC, CNC, or CNB of the transactions contemplated
hereby, nor compliance by
DGC, CNC, or CNB with any of the provisions hereof, will (i)
violate any provision of the Certificate
of Incorporation or Bylaws of DGC, or CNC, or the Articles of
Association or Bylaws of CNB, (ii)
to the best knowledge of DGC, CNC, and CNB violate any statute,
code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to DGC,
CNC, CNB, or any of their
subsidiaries or any of their respective properties or assets, or
(iii) to the best knowledge of DGC,
CNC, and CNB violate, conflict with, result in a breach of any
provisions of, constitute a default (or
an event which, with or without due 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 the creation
of any lien, security interest, charge or other encumbrance upon
any of the respective properties or
assets of DGC, CNC, CNB, or any of their subsidiaries under, any
of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other
instrument or obligation to which DGC, CNC, CNB, or any of their
respective subsidiaries is a party,
or by which they or any of their respective properties or assets
may be bound or affected, except for
such conflicts, breaches or defaults as are set forth in Schedule
4.03 hereto, or which either
individually or in the aggregate will not have a material adverse
effect on the business, operations,
properties, assets or financial condition of DGC, CNB or any of
their respective subsidiaries.
4.4 Consents and Approvals. Except for consents and
approvals of, or filings or
registrations, with the SEC, OCC, the Federal Reserve Bank, the
FDIC, and the Commissioner, no
consents or approvals of or filings or registrations with any
third party or any public body or authority
are necessary in connection with (i) the execution and delivery
by DGC, CNC, and CNB of this
Agreement or (ii) the consummation of the Mergers and the other
transactions contemplated hereby.
4.5 SEC Documents; Financial Statements; Liabilities. (a)
DGC has filed all required
reports, schedules, forms, statements and other documents with
the SEC since January 1, 1992 (the
"DGC SEC Documents"), complete copies of which have been provided
to Gonzales Holding. As
of their respective dates, the DGC SEC Documents, and any such
reports, forms and documents filed
by DGC with the SEC after the date hereof, complied, or will
comply, as to form in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder
applicable to such DGC SEC Documents,
and none of the DGC SEC Documents 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. Except
to the extent that information contained in any DGC SEC Document
has been revised or superseded
by a later filed DGC SEC Document, none of the DGC SEC Documents
contains any untrue
statement of a material fact or omits to state any 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.
(b) The DGC financial statements included in the DGC SEC
Documents have been
audited by KPMG Peat Marwick LLP, certified public accountants
(in the case of the DGC audited
financial statements) in accordance with generally accepted
auditing standards, have been prepared
in accordance with generally accepted accounting principles and,
except as disclosed therein, applied
on a basis consistent with prior periods, and present fairly the
financial position of DGC and its
consolidated subsidiaries at such dates and the results of
operations and cash flows for the periods
then ended, except, in the case of the DGC interim financial
statements, as permitted by Rule 10-01
of Regulation S-X of the SEC. The DGC interim financial
statements reflect all adjustments
(consisting only of normal recurring adjustments) that are
necessary for a fair statement of the results
for the interim periods presented therein. Neither DGC nor any
of its consolidated subsidiaries has,
nor are any of their respective assets subject to, any liability,
commitment, debt or obligation (of any
kind whatsoever whether absolute or contingent, accrued, fixed,
known, unknown, matured or
unmatured) that is material individually or in the aggregate,
except as and to the extent reflected on
the latest balance sheet included in the DGC interim financial
statements (the "DGC Latest Balance
Sheet"), or as may have been incurred or may have arisen since
the date of the DGC Latest Balance
Sheet in the ordinary course of business.
(c) Since the date of the DGC Latest Balance Sheet, there
has been no change that has
had or is likely to have a material adverse effect on DGC or its
subsidiaries.
4.6 Litigation. Except (a) as disclosed in a DGC SEC
Document, (b) that are not
material individually or in the aggregate, or (c) as listed on
Schedule 4.06, there are no actions, suits,
proceedings, arbitrations or investigations pending or, to the
knowledge of DGC, threatened, before
any court, any governmental agency or instrumentality or any
arbitration panel, against or affecting
DGC or any of its subsidiaries or any of the directors, officers,
or employees of the foregoing, and
to the knowledge of DGC no facts or circumstances exist that
would be likely to result in the filing
of any such action that would have a material adverse effect on
DGC. Neither DGC nor any of its
subsidiaries is subject to any currently pending material
judgment, order or decree entered in any
lawsuit or proceeding.
4.7 Legality of DGC Common Stock. The DGC Common Stock to
be issued in
connection with the Holding Company Merger, when issued and
delivered in accordance with the
terms hereof, will be duly authorized, validly issued, fully paid
and non-assessable, and free of
pre-emptive rights.
4.8 Statements are True and Correct. None of the
information included in (a) the
Registration Statement to be filed by DGC with the SEC in
connection with the DGC Common Stock
to be issued in the Holding Company Merger in accordance with
Section 5.06 hereof, (b) the Proxy
Statement to be mailed to the shareholders of Gonzales Holding in
connection with its shareholders
meeting, and (c) any other documents to be filed with the SEC or
any other regulatory authority in
connection with the transactions contemplated hereby that has
been or will be supplied by DGC or
any of its subsidiaries, will, at the respective times such
documents are filed, and, in the case of the
Registration Statement, when it becomes effective and, with
respect to the Proxy Statement, when
first mailed to the shareholders of Gonzales Holding, 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, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto,
at the time of the Gonzales Holding shareholders' meeting, be
false or misleading with respect to any
material fact or omit to state any material fact necessary to
make the statements therein in light of the
circumstances under which they were made not misleading. All
documents that DGC is responsible
for filing with the SEC or any other regulatory authority in
connection with the transactions
contemplated hereby, will comply in all material respects with
the provisions of applicable law.
4.9 No Shareholder Vote. No vote of any class of
shareholders of DGC is required to
approve this Agreement or the transactions contemplated hereby in
order to comply with the
Mississippi Business Corporation Act, DGC's Articles of
Incorporation or Bylaws, or the rules and
regulations of any exchange on which the DGC Common Stock is
listed or traded.
4.10 Broker's and Finder's Fee. No agent, broker, person
or firm acting on behalf of
DGC, CNC or CNB is or will be entitled to any commission or
broker's or finder's fee from any of
the parties hereto, or from any affiliate of the parties hereto,
in connection with any of the
transactions contemplated herein.
4.11 Disclosure. No representations or warranties by DGC,
CNC or CNB in this
Agreement and no statement contained in the schedules or exhibits
or in any certificates to be
delivered pursuant to this Agreement, contains or will contain
any untrue statement of material fact
or omits or will omit to state any material fact necessary, in
light of the circumstances under which
it was made, in order to make the statements herein or therein
not misleading.
V.
COVENANTS OF THE PARTIES
5.1 Conduct of Business. Except with the consent of the
other parties hereto, during the
period from the date of this Agreement to the Effective Date:
(a) Gonzales Bank and Gonzales Holding will conduct their
businesses and engage in
transactions only in the ordinary course and consistent with
prudent banking practice.
(b) Neither Gonzales Holding nor Gonzales Bank shall (i)
increase by more than ten
percent (10%) the compensation payable by Gonzales Bank or
Gonzales Holding to any of its
directors, officers, agents, consultants, or any of its employees
whose total compensation after such
increase would be in excess of $25,000 per annum, (ii) grant or
pay any extraordinary bonus,
percentage compensation, service award or other like benefit to
any such director, officer, agent,
consultant or employee, or (iii) make or agree to any
extraordinary welfare, pension, retirement or
similar payment or arrangement for the benefit of any such
director, officer, agent, consultant or
employee.
(c) Neither Gonzales Holding nor Gonzales Bank shall sell or
dispose of material assets
except in the ordinary course of business.
(d) Neither Gonzales Holding nor Gonzales Bank shall enter
into any new capital
commitments or make any capital expenditures, except commitments
or expenditures within existing
operating and capital budgets or otherwise in the ordinary course
of business.
(e) Neither Gonzales Bank nor Gonzales Holding shall
authorize or issue any additional
shares of any class of its capital stock or any securities
exchangeable for or convertible into any such
shares or any options or rights to acquire any such shares, nor
shall Gonzales Bank or Gonzales
Holding otherwise authorize or affect any change in its
capitalization.
(f) No dividends shall be paid by Gonzales Holding, except
for (i) a special dividend by
Gonzales Holding in February, 1996 of $2.00 per share, and (ii)
regular quarterly dividends in 1996
of $.35 per share for each complete calendar quarters that
elapses prior to the Effective Date. No
dividends shall be paid by Gonzales Bank except dividends by
Gonzales Bank to Gonzales Holding
to the extent necessary to fund authorized dividends of Gonzales
Holding and to pay necessary and
routine expenses of Gonzales Holding.
5.2 Limitation on Actions. Prior to the Effective Date or
until the termination of this
Agreement, Gonzales Holding shall not, without the prior approval
of the chief executive officer of
DGC,
(a) solicit or encourage inquiries or proposals with respect
to; or
(b) except as may be necessary as advised in writing by
its counsel to discharge its
fiduciary duties, furnish any information relating to or
participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or of a
substantial equity interest in, Gonzales Holding or any
subsidiary thereof, or any business combination
with Gonzales Holding or any subsidiary thereof, other than as
contemplated by this Agreement; and
shall instruct its officers, directors, agents and affiliates to
refrain from doing any of the above;
provided, however, that nothing contained herein shall be deemed
to prohibit any officer or director
of Gonzales Holding from taking any action that counsel to
Gonzales Holding has advised in writing
is required to discharge his or her fiduciary duties to Gonzales
Holding and its shareholders.
Gonzales Bank and Gonzales Holding agree to notify DGC by
telephone within twenty-four
hours of receipt of any inquiry with respect to a proposed
merger, consolidation, assets acquisition,
tender offer or other takeover transaction with another person or
receipt of a request for information
from the FDIC, OCC or other governmental authority with respect
to a proposed acquisition of
Gonzales Bank or Gonzales Holding by another party.
5.3 Current Information. During the period from the date
of this Agreement to the
Effective Date, Gonzales Bank and Gonzales Holding will cause one
or more of its designated
representatives to confer on a regular and frequent basis with
representatives of DGC and to report
the general status of its ongoing operations. In addition,
separate reporting on matters involving the
loan portfolio will occur monthly and will include, but not be
limited to, (i) all board reports, (ii) new
and renewed loans (including loan applications), (iii)
delinquency reports, (iv) loan extensions, (v)
to the extent possible, loan policy exceptions, loan
documentation exceptions, and financial statement
exceptions, (vi) watch list reports, (vii) all written
communications concerning problem loan accounts
greater than $50,000, (viii) notification and written details
involving new loan products and/or loan
programs, and (ix) such other information regarding specific
loans, the loan portfolio and
management of the loan portfolio as may be requested. Gonzales
Bank and Gonzales Holding will
promptly notify DGC of any material change in the normal course
of their business or in the operation
of their properties and of any governmental complaints,
investigations or hearings (or
communications indicating that the same may be contemplated), or
the institution or the threat of
litigation involving either party, and will keep DGC fully
informed of such events.
5.4 Access to Properties and Records; Confidentiality.
(a) For purposes of allowing
DGC, CNC, and CNB and their counsel to prepare regulatory
submissions, and for other relevant
purposes, Gonzales Bank and Gonzales Holding shall permit DGC
reasonable access to their
properties during normal business hours, and shall disclose and
make available to DGC and its agents
all books, papers and records relating to their assets, stock
ownership, properties, operations,
obligations and liabilities, including, but not limited to: their
books of account (including their general
ledgers); tax records; minute books of directors' and
shareholders' meetings; charter documents;
bylaws; material contracts and agreements; filings with any
regulatory authority; litigation files;
compensatory plans affecting its employees; and any other
materials pertaining to business activities,
projects or programs in which the other parties may have a
reasonable interest in light of the proposed
Mergers. No member of the Gonzales Consolidated Group shall be
required to provide access to or
to disclose information where such access or disclosure would
violate or prejudice the rights of any
customer or other person, would jeopardize the attorney-client
privilege of the institution in
possession or control of such information, or would contravene
any law, rule, regulation, order,
judgment, decree or binding agreement. The parties will make
appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished by any member of the Gonzales
Consolidated Group
pursuant hereto shall be treated as the sole property of the
party furnishing the information until
consummation of the Mergers contemplated hereby and, if such
Mergers shall not occur, DGC, CNC,
and CNB shall return to Gonzales Holding all documents or other
materials containing, reflecting
or referring to such information, shall use its best efforts to
keep confidential all of such information,
and shall not directly or indirectly use such information for any
competitive or other commercial
purpose. The obligation to keep such information confidential
shall continue for two (2) years from
the date the proposed Mergers are abandoned and shall not apply
to (a) any information which (i)
DGC, CNC and CNB can establish by convincing evidence was already
in its possession prior to the
disclosure thereof by Gonzales Holding or Gonzales Bank, (ii) was
then generally known to the public
or set forth in public records, (iii) became known to the public
through no fault of DGC, CNC or
CNB, or (iv) was disclosed to the party receiving the information
by a third party not bound by an
obligation of confidentiality, or (b) disclosures in accordance
with an order of a court of competent
jurisdiction.
5.5 Interim Financial Statements. As soon as reasonably
available, but in no event more
than fifteen (15) days after the end of each month ending after
the date of this Agreement, Gonzales
Bank and Gonzales Holding will deliver to DGC copies of their
monthly financial statements.
5.6 Regulatory Matters. (a) DGC shall prepare and file a
registration statement with the
SEC on Form S-4 under the Securities Act (the "Registration
Statement"), including a proxy
statement (the "Proxy Statement") to be mailed to Gonzales
Holding shareholders in connection with
the meeting to be called to consider the Holding Company Merger,
as soon as reasonably practicable
following the date of this Agreement. The Registration Statement
shall comply in all material respects
with the Securities Act and DGC will use its best efforts to
cause the Registration Statement to be
declared effective as soon as practicable, to qualify the DGC
Common Stock under the securities or
blue sky laws of such jurisdictions as may be required and to
keep the Registration Statement and
such qualifications current and in effect for so long as is
necessary to consummate the transactions
contemplated hereby.
(b) DGC will use its best efforts to prepare all necessary
documentation, to effect all
necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all
third parties and governmental bodies necessary to consummate the
transactions contemplated by this
Agreement, including those required by the OCC, the Federal
Reserve Board, the FDIC and the
Commissioner.
(c) Gonzales Holding shall cooperate in preparing the
Registration Statement and the
Proxy Statement. Gonzales Holding will promptly furnish all such
data and information relating to
it and its subsidiaries as DGC may reasonably request for the
purpose of including such data and
information in the Registration Statement.
(d) DGC will indemnify and hold harmless Gonzales Holding,
each of its directors, each
of its officers and each person, if any, who controls Gonzales
Holding within the meaning of the
Securities Act against any losses, claims, damages or
liabilities, joint, several or solidary, to which
they or any of them may become subject, under the Securities Act,
any state securities or blue sky
laws, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact
contained in the Registration Statement, or in any amendment or
supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make
the statements therein not misleading, and will reimburse each
such person for any legal or other
expenses reasonably incurred, promptly as they are incurred, by
such person in connection with
investigating or defending any such action or claim; provided,
however, that DGC shall not be liable
in any case to the extent that any such loss, claim, damage or
liability (or action in respect thereof)
arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged
omission made in the Registration Statement or any such amendment
or supplement in reliance upon
or in conformity with information furnished to DGC by or on
behalf of the Gonzales Consolidated
Group for use therein.
(e) Promptly after receipt by an indemnified party under
subparagraph (d) above of notice
of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to
be made against DGC under such subparagraph, notify DGC in
writing of the commencement thereof.
In case any such action shall be brought against any indemnified
party and it shall notify DGC of the
commencement thereof, DGC shall be entitled to participate
therein and, to the extent that it shall
wish, to assume the defense thereof, with counsel satisfactory to
such indemnified party, and, after
notice from DGC to such indemnified party of its election so to
assume the defense thereof, DGC
shall not be liable to such indemnified party under such
subparagraph for any legal expenses of other
counsel or any other expenses subsequently incurred by such
indemnified party; provided, however,
if DGC elects not to assume such defense or counsel for the
indemnified parties advises in writing that
there are material substantive issues which raise conflicts of
interest between DGC or Gonzales
Holding and one or more of the indemnified parties, such
indemnified parties may retain counsel
satisfactory to them, and DGC shall pay all reasonable fees and
expenses of such counsel for the
indemnified parties promptly as statements therefor are received.
5.7 Approval of Shareholders. Gonzales Holding will (i)
take all steps necessary to call,
give notice of, convene and hold a special meeting of its
shareholders as soon as practicable for the
purpose of approving this Agreement and the transactions
contemplated hereby and for such other
purposes as may be necessary or desirable, (ii) subject to the
provisions of Section 5.02(b) hereof,
recommend to its shareholders the approval of this Agreement and
the transactions contemplated
hereby and such other matters as may be submitted to its
shareholders in connection with this
Agreement, and (iii) cooperate and consult with DGC, CNC, and CNB
with respect to each of the
foregoing matters. Gonzales Holding, as the sole shareholder of
Gonzales Bank, shall approve this
Agreement and the Bank Merger. CNC, as the sole shareholder of
CNB, shall approve this
Agreement and the Bank Merger.
5.8 Compliance with SEC Rules 144 and 145. Gonzales
Holding shall identify in a letter
to DGC, after consultation with its counsel and with DGC and its
counsel, persons who may be
deemed to be affiliates of Gonzales Holding as that term is
defined in Rule 145 under the Securities
Act and who will become beneficial owners of Common Stock of DGC
pursuant to the Holding
Company Merger ("Gonzales Holding Affiliates"). Gonzales Holding
shall use its best efforts to
cause all Gonzales Holding Affiliates to execute and deliver to
DGC written agreements to comply
with the applicable resale restrictions set forth in Rules 144
and 145 under the Securities Act.
5.9 Further Assurances. Subject to the terms and
conditions herein provided, each of
the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement. In case at any time
after the Effective Date any further action is necessary or
desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to
this Agreement shall take all such
necessary or desirable action.
5.10 Public Announcements. DGC, CNC, CNB, Gonzales Bank
and Gonzales Holding
will cooperate with each other in the development and
distribution of all news releases and other
public information disclosures with respect to this Agreement or
any of the transactions contemplated
hereby. No party to this agreement shall make any public
announcement or otherwise make any
disclosure (either public or private), other than such disclosure
to employees or agents of any such
party as may be required to carry out the transactions
contemplated by this Agreement and except
as may be required by law, without the express written consent of
all parties hereto. Each party
hereto shall undertake such reasonable steps as may be required
to ensure that its employees and
agents comply with the provisions of this Section 5.10.
5.11 Benefits. (a) From and after the Effective Date, DGC
will, subject to compliance
with applicable legal and regulatory requirements, provide
coverage for all Gonzales Bank employees
under all DGC employee benefit plans for which they are eligible,
as soon as practicable after the
Effective Date. All prior years of service of Gonzales Bank
employees will be counted for vesting
and eligibility purposes under all applicable DGC employee
benefit plans to the extent permitted by
applicable law. Any Gonzales Bank employee who, immediately
prior to the Effective Date, is
covered by or is a participant in a Gonzales Bank employee
benefit plan listed in Schedule 3.20 of this
Agreement, shall, on the Effective Date, be covered by or
participate in the comparable DGC
employee benefit plan if a comparable plan otherwise is
maintained by DGC and if the eligibility
requirements of the DGC plan are met.
(b) After the Effective Date, CNB will honor the employment
agreements described in
Schedule 5.11 and will provide severance benefits to former
employees of Gonzales Bank that are
at least equivalent to the benefits that would have been provided
under the current severance policy
of Gonzales Bank, a copy of which has been provided to CNB.
5.12 Election of Directors. For a period of not less than
three (3) years after the Effective
Date, DGC and CNC shall elect at least two (2) former members of
the Board of Directors of
Gonzales Bank to serve as directors of CNB.
5.13 Indemnification and Liability Insurance. (a) From
and after the Effective Date, CNC
shall indemnify, defend, and hold harmless the former directors,
officers, employees and agents of
Gonzales Holding (each such director, officer, employee or agent
referred to as a "Holding Company
Indemnified Party") against all losses, claims, damages,
liabilities, judgments (and related expenses
including but not limited to, attorney's fees and amounts paid in
settlement), joint, several or solidary,
and any action or other proceeding in respect thereof, to which
the Holding Company Indemnified
Parties or any of them become subject, based upon or arising out
of actions or omissions of such
persons occurring at or prior to the Effective Date (including
the transactions contemplated by this
Agreement) to the full extent permitted under Louisiana Law or by
Gonzales Holding's Articles of
Incorporation and Bylaws as in effect on the date hereof,
whichever is greater.
(b) From and after the Effective Date, CNB shall indemnify,
defend, and hold harmless
the former directors, officers, employees and agents of Gonzales
Bank (each such director, officer,
employee or agent referred to as a "Bank Indemnified Party")
against all losses, claims, damages
liabilities, judgments (and related expenses including but not
limited to, attorney's fees and amounts
paid in settlement), joint, several or solidary, and any action
or other proceeding in respect thereof,
to which the Bank Indemnified Parties or any of them become
subject, based upon or arising out of
actions or omissions of such persons occurring at or prior to the
Effective Date (including the
transactions contemplated by this Agreement) to the full extent
permitted under Louisiana Law or
by Gonzales Bank's Articles of Incorporation and Bylaws as in
effect on the date hereof, whichever
is greater.
(c) CNB and CNC shall use its best efforts to maintain the
existing directors' and officers'
liability insurance policy of Gonzales Bank and Gonzales Holding,
respectively, covering persons who
are currently covered by such insurance for a period of five (5)
years after the Effective Date on terms
generally no less favorable than those in effect on the date of
this Agreement; provided, however, that
CNB and CNC may substitute therefor policies providing at least
comparable coverage containing
terms and conditions no less favorable than those in effect on
the date of this Agreement.
VI.
CLOSING CONDITIONS
6.1 Conditions to Each Party's Obligations under this
Agreement. The respective
obligations of each party under this Agreement shall be subject
to the fulfillment at or prior to the
Effective Date of the following conditions, none of which may be
waived:
(a) This Agreement and the transactions contemplated hereby
shall have been approved
by the affirmative vote of the holders of at least a majority of
the outstanding shares of Gonzales
Holding Common Stock, voted at the special meeting of
shareholders of Gonzales Holding called
pursuant to Section 5.07 hereof.
(b) None of the parties hereto shall be subject to any
order, decree or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits
the consummation of the Mergers.
(c) DGC, CNC, CNB, Gonzales Holding and Gonzales Bank shall
have received an
opinion of Messrs. Watkins Ludlam & Stennis, P.A. substantially
to the effect that the transactions
contemplated by this Agreement will be treated for federal income
tax purposes as a tax-free
reorganization under Section 368 of the Code.
(d) A Registration Statement relating to the shares of DGC
Common Stock to be issued
pursuant to this Agreement shall have become effective under the
Securities Act and shall not be
subject to any stop order or a threatened stop order. All
necessary consents or permits from or
registrations or filings with state securities commissions shall
have been obtained or made.
(e) This Agreement and the transactions contemplated hereby
shall have been approved
by the OCC and all other applicable federal and state
authorities.
6.2 Conditions to the Obligations of DGC, CNC, and CNB
under this Agreement. The
obligations of DGC, CNC, and CNB under this Agreement shall be
further subject to the satisfaction,
at or prior to the Effective Date, of the following conditions,
any one or more of which may be
waived by DGC, CNC, and CNB:
(a) Each of the obligations of Gonzales Bank and Gonzales
Holding required to be
performed by it at or prior to the Closing pursuant to the terms
of this Agreement shall have been
duly performed and complied with and the representations and
warranties of Gonzales Bank and
Gonzales Holding contained in this Agreement shall be true and
correct in all material respects as of
the date of this Agreement and as of the Effective Date as though
made at and as of the Effective
Date (except as otherwise contemplated by this Agreement) and
DGC, CNC, and CNB shall have
received a certificate to that effect signed by the president and
the chief financial officer of Gonzales
Bank and Gonzales Holding.
(b) All action required to be taken by, or on the part of,
Gonzales Bank and Gonzales
Holding to authorize the execution, delivery and performance of
this Agreement by Gonzales Bank
and Gonzales Holding and the consummation of the transactions
contemplated hereby shall have been
duly and validly taken by the Boards of Directors of Gonzales
Bank and Gonzales Holding and DGC,
CNC, and CNB shall have received certified copies of the
resolutions evidencing such authorization.
(c) Any and all permits, consents, waivers, clearances,
approvals and authorizations (in
addition to those referred to in Section 6.01 hereof) of all
third parties and governmental bodies shall
have been obtained by Gonzales Bank and Gonzales Holding, which
are necessary in connection with
the consummation of the Mergers by Gonzales Holding and Gonzales
Bank and the other transactions
contemplated hereby.
(d) DGC, CNC, and CNB shall have received an opinion from
Jones, Walker, Waechter,
Poitevent, Carrere & Denegre L.L.P., counsel to Gonzales Bank and
Gonzales Holding, dated the
date of the Closing, in form satisfactory to CNB, DGC, and CNC to
the effect that:
i) Gonzales Holding is a corporation duly organized,
validly existing and in good
standing under the laws of the State of Louisiana and has
all requisite power and authority
to own, lease and operate its properties and to carry on its
business as now being conducted.
Gonzales Bank is a state banking corporation duly organized,
validly existing and in good
standing under the laws of Louisiana (a) has all requisite
corporate power to own, lease and
operate its properties and to carry on its business as now
being conducted, (b) is duly
authorized to conduct a general banking business under the
Banking Laws of the State of
Louisiana, and (c) is an insured bank as defined in the
Federal Deposit Insurance Act;
ii) This Agreement has been duly and validly
authorized, executed and delivered
by Gonzales Holding and Gonzales Bank and is valid and
enforceable against each of them,
except that enforcement may be limited by bankruptcy,
reorganization, insolvency and other
similar laws and court decisions relating to or affecting
the enforcement of creditors' rights
generally and by general equitable principles;
iii) The authorized capital stock of Gonzales Holding
consists of 10,000,000
shares of Gonzales Holding Common Stock, of which, as of
December 31, 1995, 561,801
shares have been duly issued, are presently outstanding and
are fully paid and non-assessable;
iv) The authorized capital stock of Gonzales Bank
consists of 600,000 of
Gonzales Bank Common Stock of which, as of December 31,
1995, 440,000 shares are issued
and outstanding; all of such outstanding shares are validly
issued, fully paid and non-assessable;
v) The execution and delivery by Gonzales Holding and
Gonzales Bank of this
Agreement, consummation by Gonzales Holding and Gonzales
Bank of the transactions
contemplated hereby and compliance by Gonzales Holding and
Gonzales Bank with the
provisions hereof will not violate the Articles of
Incorporation of Gonzales Holding or
Gonzales Bank or violate, result in a breach of, or
constitute a default under, any material
lease, mortgage, contract, agreement, instrument, judgment,
order or decree to which
Gonzales Holding or Gonzales Bank is a party or to which
they may be subject;
vi) Such counsel has participated in several
conferences with representatives of
the parties of this Agreement and their respective
accountants and counsel in connection with
the preparation of the Registration Statement and the Proxy
Statement to be filed in
connection with the transactions contemplated by this
Agreement and have considered the
matters required to be stated therein and the statements
contained therein, and based on the
foregoing (in certain circumstances relying as to
materiality on the opinions of officers and
representatives of the parties to this Agreement) nothing
has come to the attention of such
counsel that would lead them to believe that such
Registration Statement or the Proxy
Statement, as amended or supplemented if it has been amended
or supplemented, at the time
it became effective and as amended or supplemented, (in the
case of the Registration
Statement) or at the time distributed to shareholders (in
the case of the Proxy Statement),
contained any untrue statement of a material fact or omitted
a material fact required to be
stated therein or necessary to make the statements therein
not misleading (except in each such
case for the financial statements and other financial and
statistical data included therein, as to
which no opinion need be rendered).
As to matters of fact, counsel to Gonzales Holding and
Gonzales Bank may rely, to the extent
they deem appropriate, upon certificates of officers of Gonzales
Holding and Gonzales Bank,
provided, such certificates are delivered to DGC and CNB prior to
the Closing or attached to the
opinion of counsel.
(e) There shall not have occurred any material adverse
change in the financial condition,
results of operations, business or prospects of Gonzales Holding
or Gonzales Bank from the date of
the Gonzales Latest Balance Sheet to the Closing.
(f) Gonzales Holding shall have used it bests efforts to
cause all Affiliates to execute and
deliver to DGC written agreements to comply with the applicable
resale restrictions set forth in Rule
145 under the Securities Act.
Gonzales Bank and Gonzales Holding will furnish DGC, CNC, and
CNB with such certificates
of their officers or others and such other documents to evidence
fulfillment of the conditions set forth
in this Section 6.02 as DGC, CNC, and CNB may reasonably request.
6.3 Conditions to the Obligations of Bank of Gonzales and
Bank of Gonzales Holding
Company, Inc. under this Agreement. The obligations of Gonzales
Bank and Gonzales Holding under
this Agreement shall be further subject to the satisfaction, at
or prior to the Effective Date, of the
following conditions, any one or more of which may be waived by
Gonzales Bank and Gonzales
Holding:
(a) Each of the obligations of DGC, CNC, or CNB,
respectively, required to be
performed by them at or prior to the Closing pursuant to the
terms of this Agreement shall have been
duly performed and complied with and the representations and
warranties of DGC, CNC, and CNB
contained in this Agreement shall be true and correct in all
material respects as of the date of this
Agreement and as of the Effective Date as though made at and as
of the Effective Date (except as
otherwise contemplated by this Agreement) and Gonzales Bank and
Gonzales Holding shall have
received certificates to that effect signed by the presidents and
chief financial officers of DGC, CNC,
and CNB, respectively.
(b) All action required to be taken by, or on the part of,
DGC, CNC, and CNB to
authorize the execution, delivery and performance of this
Agreement
of DGC, CNC, and CNB and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the
Boards of Directors of DGC, CNC, and CNB, respectively, and
Gonzales Bank and Gonzales Holding shall have received certified
copies of the resolutions evidencing such authorization.
(c) Gonzales Holding shall have received a letter from Alex
Sheshunoff & Co., or another
financial advisor selected by Gonzales Holding, dated within five
(5) days of the date of mailing of
the Proxy Statement to its shareholders to the effect that the
terms of the Holding Company Merger
are fair to its shareholders from a financial point of view.
(d) There shall not have occurred any material adverse
change in the financial condition,
results of operations, business or prospects of DGC, CNC or CNB
from the date of the DGC Latest
Balance Sheet to the Closing.
(e) Gonzales Holding and Gonzales Bank shall have received
from Messrs. Watkins,
Ludlam and Stennis, P.A., counsel for DGC, CNC and CNB (or as to
certain matters involving
Louisiana law from Louisiana counsel to DGC, CNC and CNB), an
opinion, dated as of the Closing,
in form and substance satisfactory to Gonzales Holding and
Gonzales Bank, to the effect that:
i) DGC is a corporation duly organized, validly
existing and in good standing
under the laws of the State of Mississippi and has all
requisite power and authority to own,
lease and operate its properties and to carry on its business
as now being conducted. DGC
is qualified to do business as a foreign corporation in
Louisiana. CNC is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Louisiana and
has all requisite power and authority to own, lease and
operate its properties and to carry on
its business as now being conducted. CNB is a state banking
corporation duly organized,
validly existing and in good standing under the laws of
Louisiana (a) has all requisite
corporate power to own, lease and operate its properties and
to carry on its business as now
being conducted, (b) is duly authorized to conduct a general
banking business under the
Banking Laws of the State of Louisiana, and (c) is an insured
bank as defined in the Federal
Deposit Insurance Act;
ii) This Agreement has been duly and validly
authorized, executed and delivered
by DGC, CNC, and CNB is valid and enforceable, except that
enforcement may be limited
by bankruptcy, reorganization, insolvency and other similar
laws and court decisions relating
to or affecting the enforcement of creditors' rights
generally and by general equitable
principles;
iii) The authorized capital stock of DGC consists of
50,000,000 shares of DGC
Common Stock, 10,000,000 shares of Class A Voting Preferred
Stock, no par value, and
10,000,000 shares of Class B Non-Voting Preferred Stock, no
par value of which, as of
December 31, 1995, 19,379,643 shares of Common Stock have
been duly issued, are
presently outstanding and are fully paid and non-assessable.
All shares of DGC Common
Stock to be issued to holders of Gonzales Holding Common
Stock will be, when issued as
described in this Agreement and the Registration Statement,
duly authorized and validly
issued, fully paid and non-assessable, free of liens,
security interests, pledges or other
encumbrances and all preemptive or similar rights other than
liens, security interests, pledges
or other encumbrances placed thereon by the holders of
Gonzales Holding Common Stock;
iv) The authorized capital stock of CNC consists of
5,000,000 shares of CNC
Common Stock, of which, as of December 31, 1995, 4,200,000
shares have been duly issued,
are presently outstanding and are fully paid and
non-assessable;
v) The authorized capital stock of CNB consists of
234,121shares of CNB
Common Stock of which, as of December 31, 1995, 234,121
shares are issued and
outstanding; all of such outstanding shares are validly
issued, fully paid and non-assessable;
vi) The execution and delivery by DGC, CNC, and CNB of
this Agreement,
consummation by DGC, CNC, and CNB of the transactions
contemplated hereby and
compliance by DGC, CNC, and CNB with the provisions hereof
will not violate the Articles
of Incorporation or Association of DGC, CNC, and CNB or
violate, result in a breach of, or
constitute a default under, any material lease, mortgage,
contract, agreement, instrument,
judgment, order or decree to which DGC, CNC, and CNB is a
party or to which they may be
subject;
vii) the Registration Statement has become effective,
and to such counsel's
knowledge, no stop order suspending its effectiveness has
been issued nor have any
proceedings for that purpose been instituted;
viii) the Registration Statement and each amendment
or supplement thereto, as of
their respective effective or issue dates, complied as to
form in all material respects with the
requirements of the Securities Act and the rules and
regulations promulgated thereunder, and
we do not know of any contracts or documents required to be
filed as exhibits to the
Registration Statement which are not filed as required; it
being understood that such counsel
need express no opinion as to the financial statements or
other financial or statistical data
contained in or omitted from the Registration Statement or
the Proxy Statement; and
ix) Such counsel has participated in several
conferences with representatives of
the parties of this Agreement and their respective
accountants and counsel in connection with
the preparation of the Registration Statement and the Proxy
Statement to be filed in
connection with the transactions contemplated by this
Agreement and have considered the
matters required to be stated therein and the statements
contained therein, and based on the
foregoing (in certain circumstances relying as to materiality
on the opinions of officers and
representatives of the parties to this Agreement) nothing has
come to the attention of such
counsel that would lead them to believe that such
Registration Statement or the Proxy
Statement, as amended or supplemented if it has been amended
or supplemented, at the time
it became effective and as amended or supplemented, (in the
case of the Registration
Statement) or at the time distributed to shareholders (in the
case of the Proxy Statement),
contained any untrue statement of a material fact or omitted
a material fact required to be
stated therein or necessary to make the statements therein
not misleading (except in each such
case for the financial statements and other financial and
statistical data included therein, as to
which no opinion need be rendered).
As to matters of fact, counsel to DGC, CNC and CNB may rely,
to the extent they deem
appropriate, upon certificates of officers of DGC, CNC, and CNB,
provided, such certificates are
delivered to Gonzales Holding and Gonzales Bank prior to the
Closing or attached to the opinion of
counsel.
DGC, CNC, and CNB will furnish Gonzales Bank and Gonzales
Holding with such certificates
of their officers or others and such other documents to evidence
fulfillment of the conditions set forth
in this Section 6.03 as Gonzales Bank and Gonzales Holding may
reasonably request.
VII.
CLOSING
7.1 Time and Place. Subject to the provisions of Articles
VI and VIII hereof, the Closing
of the transactions contemplated hereby shall take place at the
offices of DGC, One Deposit Guaranty
Plaza, 210 East Capitol Street, Jackson, Mississippi 39205 at
9:00 A.M., local time, on the first
business day after the date on which all of the conditions
contained in Article VI, to the extent not
waived, are satisfied or at such other place, at such other time,
or on such other date as DGC, CNC,
CNB, Gonzales Holding and Gonzales Bank may mutually agree upon
for the Closing to take place.
7.2 Deliveries at the Closing. Subject to the provisions
of Articles VI and VIII hereof,
at the Closing there shall be delivered to DGC, CNC, CNB,
Gonzales Holding and Gonzales Bank
the opinions, certificates, and other documents and instruments
required to be delivered under Article
VI hereof.
VIII.
TERMINATION
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective
Date, whether before or after approval of the Holding Company
Merger by the shareholders of
Gonzales Holding:
(a) by mutual written consent of the parties, properly
authorized by their respective
Boards of Directors;
(b) by DGC, CNC, and CNB, if at the time of such
termination there shall be a material
adverse change in the consolidated financial condition of
Gonzales Bank or Gonzales Holding from
that set forth in Gonzales Bank's or Gonzales Holding's Financial
Statements for the period ended
December 31, 1995;
(c) by any party hereto, if a United States District Court
shall rule upon application of the
Department of Justice after a full trial on the merits or a
decision on the merits based on a stipulation
of facts that the transactions contemplated by this Agreement
violate the antitrust laws of the United
States;
(d) by any party hereto, if at the special meeting of
shareholders to be called by Gonzales
Holding pursuant to this Agreement, this Agreement shall not have
been approved by the affirmative
vote of the holders of at least a majority of the outstanding
shares of Gonzales Holding Common
Stock voted at the special meeting of shareholders of Gonzales
Holding called pursuant to Section
5.07 hereof;
(e) by DGC, CNC, and CNB, in the event there are dissenting
shareholders who hold
more than ten percent (10%) of the shares of Gonzales Holding
Common Stock;
(f) by any party hereto if Closing shall not have occurred
by December 31, 1996; or
(g) by Gonzales Holding's Board of Directors in accordance
with Section 5.02(b) hereof
upon payment of the expenses referenced in Section 9.01 hereof.
8.2 Effect of Termination. In the event of termination of
this Agreement by either DGC,
CNC, CNB, Gonzales Holding or Gonzales Bank as provided above,
this Agreement shall forthwith
become void and except as provided in Section 5.04 and Section
9.01 hereof there shall be no further
liability on the part of Gonzales Bank, Gonzales Holding, DGC,
CNC, CNB, or their respective
officers or directors.
IX.
MISCELLANEOUS
9.1 Expenses. Except as set forth below, all
out-of-pocket costs and expenses incurred
in connection with the Mergers (including, but not limited to,
counsel fees) shall be paid by the party
incurring such costs and expenses.
In recognition of the fact that DGC will bear the bulk of the
expense in preparing for
regulatory approvals, in the event Gonzales Holding terminates or
seeks to terminate this Agreement
without cause, or if the shareholders of Gonzales Holding fail to
approve the transaction because of
action taken by an officer or director of Gonzales Holding upon
advice of counsel pursuant to Section
5.02(b), Gonzales Holding shall indemnify DGC for all expenses
reasonably incurred by DGC in
attempting to comply with the terms of the Agreement.
9.2 Notices. All notices or other communications hereunder
shall be in writing and shall
be deemed given if delivered personally or mailed by prepaid
registered or certified first class mail
(return receipt requested) or by facsimile, cable, telegram or
telex addressed as follows:
(a) If to DGC, CNC, or CNB, to:
Deposit Guaranty Corporation
One Deposit Guaranty Plaza
210 East Capitol Street
P.0. Box 730
Jackson, Mississippi 39205
Attention: Arlen L. McDonald
Fax Number: (601) 354-8192
Copy to:
Watkins Ludlam & Stennis, P.A.
633 North State Street (39202)
Post Office Box 427
Jackson, Mississippi 39205-0427
Attention: L. Keith Parsons, Esq.
Fax Number: (601) 949-4804
(b) If to Gonzales Bank or Gonzales Holding, to:
Bank of Gonzales Holding Company, Inc.
South Burnside Avenue at Worthey Road
P.O. Box 1089
Gonzales, La. 70709-1089
Attn: D. Dale Gaudet
Fax Number: (504) 621-7239
Copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P.
201 St. Charles Ave., Suite 5100
New Orleans, La. 70170
Attn: W. Philip Clinton
Fax Number: (504) 582-8012
or such other address as shall be furnished in writing by any
party, and any such notice or
communication shall be deemed to have been given as of the date
so mailed.
9.3 Parties in Interest. This Agreement shall be binding
upon and shall inure to the
benefit of the parties hereto and with respect to Sections 5.12
and 5.13, the additional parties
referenced therein, and their respective successors and assigns;
provided, however, that neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party
hereto without the prior written consent of the other parties,
and that nothing in this Agreement is
intended to confer, expressly or by implication, upon any other
person any rights or remedies under
or by reason of this Agreement.
9.4 Amendment, Extension and Waiver. Subject to
applicable law, at any time prior to
the consummation of the Mergers, whether before or after approval
thereof by the Gonzales Holding
shareholders, DGC, CNC, CNB, Gonzales Holding and Gonzales Bank
may, by action taken by their
respective Boards of Directors (i) amend this Agreement, (ii)
extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(iii) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto, or (iv)
waive compliance with any of the agreements or conditions
contained in Articles V and VI (other
than Section 6.01 hereof; provided, however, that, subject to
Section 1.01 hereof, after any approval
of the Holding Company Merger by the shareholders of Gonzales
Holding, there may not be, without
further approval of such shareholders, any amendment, extension
or waiver of this Agreement which
changes the amount or form of consideration to be delivered to
shareholders of Gonzales Holding.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of
the parties hereto. Any agreement on the part of a party hereto
to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation,
covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
9.5 Complete Agreement. This Agreement, including the
documents and other writings
referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of
the parties with respect to its subject matter. There are no
restrictions, agreements, promises,
warranties, covenants or undertakings other than those expressly
set forth herein or therein. This
Agreement supersedes all prior agreements and understandings
between the parties, both written and
oral, with respect to its subject matter.
9.6 Non-Survival of Representations and Warranties. None of
the representations and
warranties in this Agreement shall survive the Effective Date, or
the earlier termination of this
Agreement pursuant to Article VIII hereof. Each party hereby
agrees that its sole right and remedy
with respect to any breach of a representation or a warranty by
the other party shall be to not
consummate the transactions described herein if such breach
results in the nonsatisfaction of a
condition set forth in Section 6.02(a) or 6.03(a) hereof,
provided, however, that the foregoing shall
not be deemed a waiver of any claim for intentional
misrepresentation or fraud.
9.7 Counterparts. This Agreement may be executed in one
or more counterparts all of
which shall be considered one and the same agreement and each of
which shall be deemed an original.
9.8 Governing Law. This Agreement shall be governed by
the laws of the State of
Louisiana, without giving effect to the principles of conflicts
of laws thereof.
9.9 Headings. The Article and Section headings contained
in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, a majority of the members of the Boards
of Directors of CNB and
Gonzales Bank, respectively, have each executed this Agreement
and directed the authorized
signature and seal of each respective bank to be set hereunto by
its President and attested to by its
Secretary or Cashier, and the Boards of Directors of DGC, CNC,
and Gonzales Holding have caused
this Agreement to be executed by their duly authorized officers,
all as of the day and year first above
written.
Attest: DEPOSIT GUARANTY CORP.
______________________________ By
Secretary President
Attest: COMMERCIAL NATIONAL
CORPORATION
______________________________ By
Secretary President
Attest: BANK OF GONZALES HOLDING
COMPANY, INC.
______________________________ By
Secretary President
[EXECUTION BELOW BY CITIZENS NATIONAL BANK AND BANK OF GONZALES]
<PAGE>
Attest: CITIZENS NATIONAL BANK
______________________________ By
Secretary President
(Seal of Bank)
Attest: BANK OF GONZALES
______________________________ By
Secretary President
(Seal of Bank)
<PAGE>
The undersigned directors of BANK OF GONZALES and CITIZENS
NATIONAL BANK
hereby adopt and approve this Agreement pursuant to the
requirements of 12 U.S.C. Section 215a
and La R.S. 6:352(1) (but are not to be deemed parties to this
Agreement):
DIRECTORS OF BANK OF DIRECTORS OF CITIZENS NATIONAL BANK
GONZALES
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
CERTIFICATE OF SECRETARY OF
BANK OF GONZALES
(a Louisiana state banking organization)
I hereby certify that I am the duly elected Secretary of Bank
of Gonzales, a Louisiana state
bank, presently serving in such capacity and that the foregoing
Agreement was, in the manner
required by law, duly approved, without alteration or amendment,
by the sole shareholder of Bank
of Gonzales.
Certificate dated _______________, 1996.
________________________, Secretary
<PAGE>
CERTIFICATE OF SECRETARY OF
CITIZENS NATIONAL BANK
(a national banking association)
I hereby certify that I am the duly elected Secretary of
Citizens National Bank, a national
banking association, presently serving in such capacity and that
the foregoing Agreement was, in the
manner required by law, duly approved, without alteration or
amendment, by the sole shareholder of
Citizens National Bank.
Certificate dated _______________, 1996.
________________________, Secretary
<PAGE>
EXECUTION BY BANKS
Considering the approval of this Agreement by the
shareholders of the parties hereto, as
certified above, this Agreement is executed by such parties,
acting through their respective President,
this _____ day of _______________, 1996.
BANK OF GONZALES
By:
_____________________,
President
Attest:
_________________________
Secretary
[EXECUTION BY CITIZENS NATIONAL BANK ON NEXT PAGE
REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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CITIZENS NATIONAL BANK
By:
________________________,
President
Attest:
_________________________
Secretary
<PAGE>
ACKNOWLEDGMENT AS TO
BANK OF GONZALES
STATE OF LOUISIANA
PARISH OF____________-
BEFORE ME, the undersigned authority, personally came and
appeared ________, who,
being duly sworn, declared and acknowledged before me that he is
the President of Bank of Gonzales
and that in such capacity he was duly authorized to and did
execute the foregoing Agreement on
behalf of such bank, for the purposes therein expressed and as
his and such bank's free act and deed.
Appearer
Sworn to and subscribed before me
this _____ day of ____________,
1996.
___________________________________
Notary Public
<PAGE>
ACKNOWLEDGMENT AS TO
CITIZENS NATIONAL BANK
STATE OF LOUISIANA
PARISH OF _______________
BEFORE ME, the undersigned authority, personally came and
appeared __________, who,
being duly sworn, declared and acknowledged before me that he is
the President of Citizens National
Bank and that in such capacity he was duly authorized to and did
execute the foregoing Agreement
on behalf of such bank, for the purposes therein expressed and as
his and such bank's free act and
deed.
Appearer
Sworn to and subscribed before me
this _____ day of ____________,
1996.
___________________________________
Notary Public
