SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ASSUMPTION BANCSHARES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies: Assumption Bancshares, Inc. Common Stock, $5.00 par
value per share
(2) Aggregate number of securities to which transaction
applies: 160,000 Shares of Assumption Bancshares, Inc. Common
Stock
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined): $134,375*
(4) Proposed maximum aggregate value of transaction: $21,500,000*
(5) Total fee paid: $4,300
* Payable in cash or shares of ArgentBank Common Stock, $.10
par value per share, at the election of the shareholder, subject
to certain limitations contained in the Merger Agreement.
[x] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
[ASSUMPTION BANCSHARES INC. LETTERHEAD]
April 28, 1997
Dear Shareholders:
You are cordially invited to attend a Special Meeting (the
"Meeting") of Shareholders of Assumption Bancshares, Inc.,
("ABI") to be held at Assumption Bank & Trust Company
("Assumption Bank"), 110 Franklin Street, Napoleonville,
Louisiana, 70390-0398, on Thursday, May 22, 1997,
at 2:00 p.m., local time.
At the Meeting, you will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Merger the ("Plan"),
and related Company Merger Agreement and Bank Merger Agreement
(collectively, the "Merger Agreements") pursuant to which (a) ABI
will merge with and into Assumption Bank (the "Company Merger")
and (b) immediately thereafter, Assumption Bank will merge with
and into ArgentBank ("ArgentBank") (the "Mergers"). Upon
consummation of the Mergers each shareholder of ABI may elect,
subject to certain allocation restrictions, to receive either
cash or shares of ArgentBank common stock (or a combination of
the two) in exchange for his or her shares of ABI common stock as
more fully described in the attached Joint Proxy
Statement/Offering Circular. Regardless of your vote, upon
consummation of the Mergers, each shareholder will be treated
equally as to their election of cash and stock, except that
holders of 15 of fewer shares of ABI Common Stock and ABI
shareholders who perfect dissenters rights will receive only cash
for their shares.
After months of exhaustive study, careful consideration, and
lengthy debate based on past and current events and future
probabilities and possibilities, your Board of Directors has
found this offer from ArgentBank to be a good, sound offer from a
financial point-of-view. Please read the enclosed proxy
materials carefully.
Your directors have a fiduciary responsibility to you, the
shareholder. We hired two firms that specialize in these
transaction, Jones Walker (a law firm) and Chaffe and Associates,
Inc. (an investment banking firm). They collected and analyzed
information, reviewed projections made by Assumption Bank's
management, joined in on discussions with the Merger Committee
and the full Board, negotiated with ArgentBank and its
representatives and counseled us throughout this entire process.
We, as a Board, have unanimously approved the Plan and we
unanimously recommend to you, the shareholders, the approval of
the Plan. The affirmative vote of the holders of at least
two-thirds of the ABI shares present at the meeting, in person or by
proxy, is required to approve the Plan.
In the material accompanying this letter, you will find a Notice
of Special Meeting of Shareholders, a Joint Proxy
Statement/Offering Circular relating to the actions to be taken
by the ABI shareholders at the Meeting and a Proxy Card. The
Joint Proxy Statement/Offering Circular more fully describes the
proposed Mergers and includes information about ABI, Assumption
Bank and ArgentBank.
Your Board of Directors urges that you sign, date and return the
enclosed form of proxy promptly, whether or not you plan to
attend the Meeting. The prompt return of your signed proxy,
regardless of the number of shares you hold, will assist ABI in
reducing the expense of additional proxy solicitation. Your
proxy may be revoked at any time prior to the vote at the Meeting
by notice to the Secretary of ABI or by execution and delivery of
a later dated proxy. If you attend the Meeting you may, if you
wish, revoke your proxy and vote in person on all matters brought
before the Meeting.
Sincerely,
BOARD OF DIRECTORS
ASSUMPTION BANK & TRUST COMPANY
Clarence J. Savoie, II
Chairman of the Board
Joseph H. Montero, II
President & Chief Executive Officer
<PAGE>
Assumption Bancshares, Inc.
110 Franklin Street
Napoleonville, Louisiana 70390-0398
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting of
Shareholders of Assumption Bancshares, Inc., a Louisiana
corporation ("ABI") will be held at Assumption Bank & Trust
Company ("Assumption Bank"), 110 Franklin Street, Napoleonville,
Louisiana, 70390-0398, on Thursday, May 22, 1997, at 2:00
p.m., local time (the "Meeting"), for the following purposes:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger, and related Company Merger
Agreement and Bank Merger Agreement each dated November 20, 1996,
as amended (collectively, the "Merger Agreements") pursuant to which (a) ABI
would merge with and into Assumption Bank (the "Company Merger");
(b) immediately thereafter Assumption Bank would merge with and
into ArgentBank, a Louisiana state nonmember bank ("ArgentBank")
(the "Bank Merger" and, together with the Company Merger, the
"Mergers"); and (c) upon consummating the Mergers each
outstanding share of Assumption Bank common stock received in the
Company Merger would be converted into the right to receive a
certain number of shares of ArgentBank common stock or cash at
the option of each shareholder subject to certain allocation
restrictions and as determined in accordance with the Merger
Agreements; and
2. To transact such other business as may properly come
before the Meeting.
Only those shareholders of record at the close of business
on April 18, 1997 will be entitled to notice of and to
vote at the Meeting. Approval of the Merger Agreements requires
the affirmative vote of the holders of two-thirds voting power of
ABI common stock present at the Meeting.
Dissenting shareholders of ABI who comply with the
procedural requirements of the Louisiana Business Corporation Law
or the Louisiana Banking Law will be entitled to receive payment
of the fair cash value of their shares of ABI common stock if the
Mergers are effected upon approval by less than eighty percent
(80%) of the total voting power of ABI.
THE ABI BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF ABI COMMON STOCK VOTE FOR APPROVAL OF THE MERGER
AGREEMENTS. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF
SHARES THAT YOU OWN. EVEN IF YOU PLAN TO ATTEND THE SPECIAL
MEETING, PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE. YOUR PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTE AT THE SPECIAL
MEETING BY NOTICE TO THE SECRETARY OF ABI OR BY EXECUTION AND
DELIVERY OF A LATER DATED PROXY. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
Harold F. Templet,
Secretary/Treasurer
Napoleonville, Louisiana
April 28, 1997
<R/>
<PAGE>
[ARGENTBANK LETTERHEAD]
April 28, 1997
Dear Shareholders:
You are cordially invited to attend a Special Meeting (the
"Meeting") of Shareholders in Lieu of the Annual Meeting of
Shareholders of ArgentBank, a Louisiana state nonmember bank
("ArgentBank") to be held at 400 Green Street, Thibodaux,
Louisiana 70301 on Thursday, May 22, 1997, at 3:00 p.m.,
local time.
At the Meeting, you will be asked to consider and vote upon
four matters: First, a proposal to approve an Agreement and Plan
of Merger, and related Bank Merger Agreement (collectively, the
"Merger Agreements") pursuant to which among other things
(a) Assumption Bank & Trust Company, Napoleonville, Louisiana, a
Louisiana state nonmember bank ("Assumption Bank") will merge
with and into ArgentBank (the "Bank Merger") and (b) each
shareholder of Assumption Bancshares, Inc. ("ABI"), the parent
company of Assumption Bank, may elect to receive either cash or
shares of ArgentBank common stock (or a combination of the two)
in exchange for his or her shares of Assumption Bank common stock
subject to certain allocation restrictions as more fully
described in the attached Joint Proxy Statement/Offering
Circular); second, the election of twenty Directors; third, the
ratification of the selection of Deloitte & Touche LLP as
ArgentBank's independent external Auditors for 1997 (the
"Auditors"); and fourth, the approval of amendments to
ArgentBank's Articles of Incorporation to be included in
ArgentBank's Amended and Restated Articles of Incorporation.
Details of the proposed Bank Merger and related merger of
ABI into Assumption Bank (the "Company Merger") are set forth in
the accompanying Joint Proxy Statement/Offering Circular, which
you should read carefully. Only those shareholders of record at
the close of business on April 18, 1997, will be entitled
to notice of and to vote at the Meeting.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENTS AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF MERGER
AGREEMENTS. IN ADDITION, THE ARGENTBANK BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE DIRECTOR NOMINEES
LISTED HEREIN; FOR THE RATIFICATION OF THE SELECTION OF THE
AUDITORS AND FOR APPROVAL OF THE AMENDMENTS TO THE AMENDED AND
RESTATED ARTICLES.
Accompanying this letter, you will find a Notice of Special
Meeting of Shareholders, a Joint Proxy Statement/Offering
Circular relating to the actions to be taken by ArgentBank
shareholders at the Special Meeting (as well as the actions to be
taken by the ABI shareholders at their special meeting) and a
Proxy Card. The Joint Proxy Statement/Offering Circular more
fully describes the Mergers, and includes information about
ArgentBank and ABI. The ArgentBank Board of Directors urges that
you vote "FOR" these items by signing, dating and returning the
enclosed form of proxy promptly, whether or not you plan to
attend the Meeting. The prompt return of your signed proxy,
regardless of the number of shares you hold, will assist
ArgentBank in reducing the expense of additional proxy
solicitation. Your proxy may be revoked at any time prior to the
vote at the Meeting by notice to the Cashier of ArgentBank or by
execution and delivery of a later dated proxy. If you attend the
Meeting you may, if you wish, revoke your proxy and vote in
person on all matters brought before the Meeting.
Very truly yours,
Randall E. Howard
President
<PAGE>
ArgentBank
203 W. Second Street
Thibodaux, Louisiana 70301
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting in Lieu of the
Annual Meeting of Shareholders of ArgentBank, a Louisiana state
nonmember bank association ("ArgentBank") will be held at
ArgentBank, 400 Green Street, Thibodaux, Louisiana, 70302, on
Thursday, May 22, 1997, at 3:00 p.m., local time (the "Meeting"):
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger, and related Bank Merger Agreement
each dated November 20, 1996, as amended (collectively, the "Merger
Agreements") and the transactions contemplated thereby pursuant
to which (a) Assumption Bank & Trust Company ("Assumption Bank")
will merge with and into ArgentBank (the "Bank Merger") and (b)
each outstanding share of Assumption Bancshares, Inc. ("ABI") the
parent company of Assumption Bank, will be converted into the
right to receive ArgentBank common stock or cash as more fully
described in the attached Joint Proxy Statement/Offering Circular
at the option of each ABI shareholder.
2. The election of Twenty directors.
3. The ratification of the selection of Deloitte & Touche
LLP as ArgentBank's independent auditors for 1997.
4. The approval of four proposals, each to be voted on
separately, to amend ArgentBank's Articles of Incorporation to be
included in ArgentBank's Amended and Restated Articles of
Incorporation (the "Articles"):
(a) an amendment to the Articles to change the date of
the annual shareholders meeting;
(b) an amendment to the Articles to eliminate the
requirement of shareholder approval of certain
business combinations in which ArgentBank is the
acquiror and surviving entity;
(c) an amendment to the Articles to increase the
number of authorized shares of common stock from
10,000,000 to 16,000,000; and
(d) an amendment to the Articles to authorize Board
meetings by teleconference.
5. Such other business as may properly come before the
Meeting (including any motion to adjourn to a later
date to permit further solicitation of proxies if
necessary) or before any adjournments thereof.
A majority of the shares outstanding constitute a quorum.
The Bank Merger is more fully described in the Joint Proxy
Statement/Offering Circular and the appendices thereto, including
the Merger Agreements, accompanying this Notice. Only those
shareholders of record at the close of business on April 18,
1997 will be entitled to notice of and to vote at the Meeting.
Approval of the Merger Agreements and the Bank Merger requires
the affirmative vote of a majority of the shareholders of
ArgentBank common stock. The affirmative vote of the holders of
a plurality of the outstanding shares of ArgentBank's common
stock present at the Meeting is required for election of
directors. The affirmative vote of the holders of two-thirds of
the voting power present at the Meeting is required for the
approval of Proposals (a), (c) and (d) as amendments to the
Articles. The affirmative vote of seventy five percent (75%) of
the voting power of all outstanding and issued shares of
ArgentBank common stock is required for the approval of proposal
(b) as an amendment to the Articles.
BY ORDER OF THE BOARD OF DIRECTORS
William B. Gautreaux
Executive Vice President, CFO and
Cashier
Thibodaux, Louisiana
April 28, 1997
THE ARGENTBANK BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF ARGENTBANK COMMON STOCK VOTE FOR ITEMS 1, 2, 3 AND 4
ABOVE. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES
THAT YOU OWN. EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE. YOUR PROXY MAY
BE REVOKED AT ANY TIME PRIOR TO THE VOTE AT THE SPECIAL MEETING
BY NOTICE TO THE CASHIER OF ARGENTBANK OR BY EXECUTION AND
DELIVERY OF A LATER DATED PROXY. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
ARGENTBANK AND ASSUMPTION BANCSHARES, INC.
JOINT PROXY STATEMENT
OFFERING CIRCULAR OF ARGENTBANK
931,667 SHARES OF COMMON STOCK, $.10 PAR VALUE
This Joint Proxy Statement/Offering Circular is being
furnished to the shareholders of ArgentBank, a Louisiana state
nonmember bank ("ArgentBank") in connection with the solicitation
of proxies by the ArgentBank Board of Directors for use at the
Special Meeting in Lieu of the Annual Meeting of ArgentBank
shareholders (the "ArgentBank Meeting") to be held at 3:00 p.m.,
local time, on May 22, 1997 at ArgentBank, located at 400
Green Street, Thibodaux, Louisiana, and at any adjournments or
postponements thereof. At the ArgentBank Meeting, holders of
ArgentBank common stock (as defined below) will be asked to
consider and vote upon a proposal to approve an Agreement and
Plan of Merger (the "Plan") and related Bank Merger Agreement
(the "Bank Merger Agreement") each dated as of November 20,
1996, as amended. The Plan also includes a related Company Merger Agreement
dated as of November 20, 1996 between Assumption Bancshares, Inc.
("ABI") and Assumption Bank & Trust company ("Assumption Bank"),
a Louisiana state nonmember bank (the "Company Merger
Agreement"), pursuant to which ABI will be merged with and into
Assumption Bank (the "Company Merger"); (b) Assumption Bank will
merge with and into ArgentBank (the "Bank Merger" and, together
with the Company Merger, the "Mergers"); and (c) upon
consummation of the Mergers each outstanding share of Assumption
Bank common stock received in the Company Merger will be
converted into the right to receive a certain number of shares of
ArgentBank common stock or cash. At the ArgentBank Meeting,
holders of ArgentBank common stock will also be asked to
consider and vote upon the election of Directors to serve for the
coming year, to ratify the selection of Deloitte & Touche, LLP as
ArgentBank's independent auditors for 1997 and to approve certain
amendments to the Amended and Restated Articles of Incorporation
of ArgentBank.
This Joint Proxy Statement/Offering Circular is also being
furnished to the shareholders of ABI in connection with the
solicitation of proxies by the ABI Board of Directors for use at
the Special Meeting of ABI shareholders (the "ABI Meeting") to be
held at 2:00 p.m., local time, on May 22, 1997 at
ABI's executive corporate headquarters located at 110 Franklin
Street, Napoleonville, Louisiana, and at any adjournments or
postponements of the ABI Meeting. At the ABI Meeting, holders of
shares of Common Stock of ABI, par value $5.00 per share ("ABI
Common Stock"), will be asked to consider and vote upon a
proposal to approve and adopt the Plan.
ArgentBank has filed a Form F-5 with the Federal Deposit
Insurance Corporation (the "Registration Statement") to register
931,667 shares of ArgentBank's common stock ("ArgentBank Common
Stock"), under the Securities Act of 1933 (the "Securities Act")
which is the maximum number of shares estimated to be issued in
connection with the Bank Merger. The actual number of shares of
ArgentBank Common Stock to be issued will be determined in
accordance with the terms of the Plan described herein. This
Joint Proxy Statement/Offering Circular also constitutes the
Offering Circular of ArgentBank for use in connection with the
offer and issuance of shares of ArgentBank Common Stock, $.10
par value per share, pursuant to the Bank Merger.
This Joint Proxy Statement/Offering Circular and the
accompanying Proxy Cards are first being mailed to shareholders
of ArgentBank and ABI on or about April 28, 1997.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY
STATEMENT/OFFERING CIRCULAR IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY ARGENTBANK, ABI OR ASSUMPTION BANK. THIS JOINT
PROXY STATEMENT/OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO PURCHASE NOR SHALL THERE BE
ANY SALE OF THE SECURITIES OFFERED BY THIS JOINT PROXY
STATEMENT/OFFERING CIRCULAR IN ANY JURISDICTION IN WHICH, OR TO
ANY PERSON TO WHOM, IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER,
SOLICITATION, OR SALE. NEITHER THE DELIVERY OF THIS JOINT PROXY
STATEMENT/OFFERING CIRCULAR NOR ANY OFFER OR SALE MADE HEREUNDER
NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH THIS JOINT PROXY
STATEMENT/OFFERING CIRCULAR RELATES SHALL, UNDER ANY
CIRCUMSTANCES, IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF ARGENTBANK, ABI OR ASSUMPTION BANK SINCE THE DATE HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION ("SEC"), THE FEDERAL
DEPOSIT INSURANCE CORPORATION ("FDIC") , THE STATE OF LOUISIANA
OFFICE OF FINANCIAL INSTITUTIONS OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT
PROXY STATEMENT/OFFERING CIRCULAR. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS
ACCOUNTS OR OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS JOINT PROXY STATEMENT/OFFERING CIRCULAR IS DATED
APRIL 28, 1997.
<PAGE>
AVAILABLE INFORMATION
ArgentBank and ABI are subject to the information
requirements of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith file
reports, proxy statements and other information with the Federal
Deposit Insurance Corporation ("FDIC"), and the Securities and
Exchange Commission ("SEC"), respectively. Copies of such
reports, proxy statements and other information can be obtained,
with respect to ArgentBank, at prescribed rates, from the FDIC's
Offices at 550 17th Street N.W., Washington, D.C. 20428, or with
respect to ABI from the SEC by addressing written requests for
such copies to the Public Reference Section of the SEC at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements and other
information concerning ABI can be inspected at the public
reference facilities referred to above and at the regional
offices of the SEC at 7 World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 300 West Madison Street,
Suite 1400, Chicago, Illinois 60661. The SEC also maintains a
Web site that contains reports, proxy and information statements
and other information regarding registrants that file
electronically, including ABI, with the SEC at
http://www.sec.gov.
ALL INFORMATION CONTAINED IN THIS JOINT PROXY
STATEMENT/OFFERING CIRCULAR RELATING TO ARGENTBANK HAS BEEN
SUPPLIED BY ARGENTBANK, AND ALL INFORMATION CONTAINED IN THIS
JOINT PROXY STATEMENT/OFFERING CIRCULAR RELATING TO ABI AND
ASSUMPTION BANK HAS BEEN SUPPLIED BY ABI AND ASSUMPTION BANK.
<PAGE>
TABLE OF CONTENTS
[OMITTED]
Page
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION
CONTAINED ELSEWHERE IN THIS JOINT PROXY STATEMENT/OFFERING
CIRCULAR. THE SUMMARY DOES NOT CONTAIN A COMPLETE DESCRIPTION OF
THE MERGER AGREEMENTS, A COPY OF WHICH IS ATTACHED HERETO AS
APPENDIX A, OR THE MERGERS. THE SUMMARY IS NECESSARILY
INCOMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
DETAILED INFORMATION CONTAINED ELSEWHERE HEREIN, THE APPENDICES
HERETO (WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE) AND
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS ARE
URGED TO READ CAREFULLY ALL SUCH MATERIAL.
THE PARTIES
ASSUMPTION BANCSHARES, INC. Assumption Bancshares, Inc.
("ABI"), a Louisiana corporation, was organized on March 4, 1984
and is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended. At December 31, 1996, ABI had
total consolidated assets of approximately $112 million and
shareholders' equity of approximately $9.8 million. ABI is
domiciled in Napoleonville, Louisiana and its principal executive
offices are located at 110 Franklin Street, Napoleonville,
Louisiana 70390 and its telephone number is (504) 369-7269. See
"CERTAIN INFORMATION CONCERNING ABI AND ASSUMPTION BANK."
ASSUMPTION BANK & TRUST COMPANY. Assumption Bank and Trust
Company ("Assumption Bank"), a Louisiana state nonmember bank,
was organized on December 18, 1933. Assumption Bank's deposits
are insured by the FDIC. At December 31, 1996, Assumption Bank
had total assets of approximately $112 million, total deposits of
approximately $101 million and total shareholders' equity of
approximately $9.8 million. Assumption Bank is domiciled in
Napoleonville, Louisiana and its principal executive office is
located at 110 Franklin Street, Napoleonville, Louisiana 70390
and its telephone number is (504) 369-7269. Assumption currently
operates three full service facilities throughout Assumption
Parish and one additional branch in LaPlace, St. John the Baptist
Parish, Louisiana. See "CERTAIN INFORMATION CONCERNING ABI AND
ASSUMPTION BANK."
ARGENTBANK. ArgentBank ("ArgentBank") is a Louisiana state
nonmember bank organized on February 26, 1929 and headquartered
in Thibodaux, Louisiana. At December 31, 1996, ArgentBank had
total assets of approximately $590 million and total shareholders
equity of approximately $68 million. ArgentBank operates a total
of 16 banking offices, one stand alone automated teller machine,
one drive-up facility and one cash dispenser. See "CERTAIN
INFORMATION CONCERNING ARGENTBANK."
MEETINGS OF SHAREHOLDERS
DATE, TIME, PLACE, RECORD DATES, OUTSTANDING SHARES
ABI. A special meeting of the shareholders of ABI will be
held at the offices of Assumption Bank, 110 Franklin Street,
Napoleonville, Louisiana, on Thursday, May 22, 1997 at 2:00
p.m., local time (the "ABI Meeting"). Only record holders of
common stock, $5.00 par value, of ABI ("ABI Common Stock") on
April 18, 1997 (the "ABI Record Date") are entitled to notice
of and to vote at the ABI Meeting. On the ABI Record Date, there
were 160,000 shares of ABI Common Stock outstanding, each of
which will be entitled to one vote on each matter to be acted on.
ARGENTBANK. A special meeting in lieu of the annual meeting
of the shareholders of ArgentBank will be held at the offices of
ArgentBank, 400 Green Street, Thibodaux, Louisiana, on May 22,
1997 at 3:00 p.m., local time (the "ArgentBank
Meeting"). Only record holders of common stock, $0.10 par value,
of ArgentBank ("ArgentBank Common Stock") on April 18, 1997
(the "ArgentBank Record Date") are entitled to notice of and to
vote at the ArgentBank Meeting. On the ArgentBank Record Date,
there were 5,863,668 shares of ArgentBank Common Stock
outstanding, each of which will be entitled to one vote on each
matter to be acted on.
PURPOSES OF THE MEETINGS
ABI MEETING. At the ABI Meeting shareholders of record of
ABI on the ABI Record Date will be asked to consider and vote
upon a proposal to approve the Plan and related Company Merger
Agreement and Bank Merger Agreement (collectively, the "Merger
Agreements"), a copy of which is attached to this Joint Proxy
Statement/Offering Circular.
ARGENTBANK MEETING. At the ArgentBank Meeting shareholders
of record of ArgentBank on the ArgentBank Record Date will be
asked to consider and vote upon a proposal to approve the Plan
and the Bank Merger Agreement; the election of twenty directors
to serve for the coming year; the ratification of the selection
of Deloitte & Touche LLP as ArgentBank's independent external
Auditors for 1997 (the "Auditors"); and the approval of certain
amendments to ArgentBank's Amended and Restated Articles of
Incorporation (the "Articles").
QUORUM AND VOTES REQUIRED
ABI. Approval of the Merger Agreements will require the
affirmative vote of the holders of at least two-thirds of the
shares of ABI Common Stock present in person or by proxy, at the
ABI Meeting. Each shareholder of ABI Common Stock is entitled to
one vote for each share owned by him. The required quorum for
the transaction of business at the ABI meeting is a majority of
the total shares of ABI Common Stock issued and outstanding on
the ABI Record Date. As of the ABI Record Date, directors and
executive officers of ABI and their affiliates were the
beneficial owners of approximately 7.69 percent of
the outstanding ABI Common Stock entitled to vote at the ABI
Meeting. Approval of the Plan requires the affirmative vote of
two-thirds of the voting power present at the ABI Meeting. It is
a condition to consummation of the Mergers that a majority of the
ABI directors (all of whom hold in the aggregate 12,308 shares of
ABI Common Stock) vote their shares in favor of the Merger
Agreements. See "THE ABI MEETING -- Shares Entitled to Vote;
Quorum." ABI as the sole shareholder of Assumption Bank has
approved the Bank Merger Agreement.
ARGENTBANK. Approval of the Bank Merger Agreement will
require a simple majority vote of the shareholders of ArgentBank.
The affirmative vote of the holders of a plurality of the
outstanding shares of ArgentBank's Common Stock present at the
meeting is required for election of directors. The affirmative
vote of the holders of two-thirds of the voting power present is
required for the approval of proposals (a), (c) and (d) as
amendments to the Articles. The affirmative vote of seventy five
percent (75%) of the voting power of all outstanding and issued
shares of ArgentBank Common Stock is required for the approval of
proposal (b) as an amendment to the Articles. The required
quorum for the transaction of business at the ArgentBank Meeting
is a majority of the outstanding capital stock on the ArgentBank
Record Date. Each shareholder of ArgentBank Common Stock is
entitled to one vote for each share owned by him. See "THE
ARGENTBANK MEETING -- Shares Entitled to Vote; Quorum."
FAIRNESS OPINIONS
ABI. The Board of Directors of ABI has received the written
opinion of Chaffe & Associates, Inc. ("Chaffe"), ABI's financial
advisor, that based upon and subject to the procedures, matters
and limitations described in its opinion and such other matters
as it considers relevant as of the date of its opinion, the
consideration to be received by ABI shareholders in the Mergers
is fair, from a financial point of view, to ABI's shareholders.
The opinion of Chaffe is attached hereto as Appendix D and should
be read in its entirety. See "THE MERGERS -- Opinions of
Financial Advisors."
ARGENTBANK. The Board of Directors of ArgentBank has
received the written opinion of Chase Securities Inc. ("Chase"),
ArgentBank's financial advisor, that based upon and subject to
the procedures, matters and limitations described in its opinion
and such other matters as it considers relevant as of the date of
its opinion, the purchase price is fair, from a financial point
of view, to ArgentBank's shareholders. The opinion of Chase is
attached hereto as Appendix E and should be read in its entirety.
See "THE MERGERS -- Opinions of Financial Advisors."
REASONS FOR THE MERGERS
ABI AND ASSUMPTION BANK. The Boards of Directors of ABI and
Assumption Bank believe that the approval of the Plan is in the
best interests of ABI, Assumption Bank and their respective
shareholders because it would permit ABI shareholders to exchange
on favorable terms their ownership interest in ABI for ownership
in a multi-parish regional bank. In reaching their decision, the
Boards considered a number of factors, including the
consideration to be paid to its shareholders, the financial terms
of the Plan, the outlook for Assumption Bank in the financial
institutions industry, the opportunity to provide liquidity to
the ABI's shareholders, the parties' respective earnings and
dividend records, financial conditions, historical stock prices
and management, and the position of Assumption Bank in the
financial institutions' industry. See "THE MERGERS -- Reasons for
the Mergers."
ARGENTBANK. The Board of Directors of ArgentBank believes
the Bank Merger is in the best interests of ArgentBank and its
shareholders because it will provide ArgentBank with the
opportunity to expand with additional branch locations, some of
which are within an area that ArgentBank currently has a very
small deposit base, and because of Assumption Bank's steady
profitability in recent years and strong customer base.
RECOMMENDATIONS OF BOARDS OF DIRECTORS
ABI AND ASSUMPTION BANK. The Boards of Directors of ABI
and Assumption Bank have unanimously approved the Merger
Agreements and unanimously recommend that its shareholders vote
FOR approval of the Merger Agreements.
ARGENTBANK. The Board of Directors of ArgentBank has
unanimously approved the Merger Agreements and unanimously
recommends that its shareholders vote FOR approval of the Merger
Agreements, the twenty directors as nominated, the ratification
of the selection of Auditors, and the four proposed amendments to
the Articles.
THE PLAN OF MERGER AND RELATED MATTERS
GENERAL; CONVERSION OF ABI AND ASSUMPTION BANK STOCK; EXCHANGE
RATIO
Pursuant to the Merger Agreements, ABI will be merged into
Assumption Bank (the "Company Merger"), and immediately
thereafter, Assumption Bank will be merged into ArgentBank (the
"Bank Merger" and collectively with the Company Merger, the
"Mergers"). Upon consummation of the Mergers, each then
outstanding share of ABI Common Stock will be converted into one
share of Assumption Bank Common Stock, each of which (other than
the Assumption Bank Common Stock owned by ABI) will then be
converted into the right to receive either (a) $134.375 in cash
or (b) a number of shares of ArgentBank Common Stock, or a
combination of both, subject to certain allocation restrictions
and procedures discussed below. Depending upon these allocation
restrictions, a shareholder may be required to accept a
combination of cash and ArgentBank Stock even though such
shareholder had elected to receive only cash or only ArgentBank
Common Stock. See "Allocation Restrictions and Procedures" below
and "THE MERGERS -- Allocation Restrictions and Procedures".
The number of shares of ArgentBank Common Stock to be
received in the Mergers will be equal to (i) $21.5 million
divided by the Average Market Price (as defined below) of a share
of ArgentBank Common Stock divided by (ii) the number of
outstanding shares of Assumption Bank Common Stock received in
the Company Merger on the Effective Date (as defined below),
provided that the maximum amount of cash that will be paid upon
consummation of the Mergers is $10,535,000 and the minimum amount
of cash that will be paid upon consummation of the Mergers is
$7,525,000; provided further that holders of 15 or fewer shares
of Assumption Bank Common Stock received in the Company Merger
("De-minimus Shares") and ABI shareholders who perfect dissenters
rights will be deemed to have elected to receive only cash for
their shares.
The "Average Market Price" is defined as the average of the
closing sale prices of a shares of ArgentBank Common Stock
reported on the American Stock Exchange for the 40 trading days
preceding the fifth trading day immediately prior to the
Effective Date.
If an ABI stockholder elects to receive only ArgentBank
Common Stock for his Assumption Bank Common Stock, he will
receive approximately 5-8 shares of ArgentBank Common Stock for
each share of Assumption Bank Common Stock. The table below sets
forth examples of this exchange ratio, assuming the Average
Market Price of ArgentBank Common Stock is as specified below.
The table assumes that 160,000 shares of Assumption Bank Common
Stock are outstanding on the Effective Date (which was the number
of shares outstanding on the date of this Joint Proxy
Statement/Offering Circular).
<TABLE>
Assumed Average Market Price Number of ArgentBank
of ArgentBank Common Stock Shares Per
Assumption Bank Share
<C> <C>
$23.00 5.8424
$22.00 6.1080
$21.00 6.3988
$20.00 6.7188
$19.00 7.0724
$18.00 7.4653
$17.00 7.9044
$16.00 8.3984
$15.00 8.9583
</TABLE>
On April 18, 1997, the Average Market Price of a share of
ArgentBank Common Stock was $20.13.
Due to fluctuations in the trading prices of ArgentBank
Common Stock, the actual number of shares to be received by ABI
shareholders cannot currently be determined. In as much as the
exchange ratio is based on the Average Market Price of ArgentBank
Common Stock as defined in the Plan, the actual market value of
ArgentBank Common Stock to be received by a holder of Assumption
Bank Common Stock may be more or less than the cash payment that
the holder could elect to receive for his shares of Assumption
Bank Common Stock.
ALLOCATION RESTRICTIONS AND PROCEDURES
Each currently outstanding share of ArgentBank Common Stock
will remain outstanding and unchanged following the Mergers.
Moreover, as stated above, under the terms of the Plan, the
amount of cash that will be paid by ArgentBank upon consummation
of the Mergers is limited to a maximum of $10,535,000 (the
"Available Cash"), and a minimum of $7,525,000, which means that
the maximum number of shares of ArgentBank Common Stock (the
"Available Shares") that ArgentBank will issue upon consummation
of the Merger will have an aggregate value of $13,975,000. The
exact number of Available Shares will depend on the Average
Market Price of a share of ArgentBank Common Stock, but assuming
an Average Market Price for the ArgentBank Common Stock of
$19.00, the Available Shares would equal 735,530 shares.
If holders of ABI Common Stock elect to receive in the
aggregate cash in excess of the Available Cash stated above, the
Available Cash left after paying fractional shares, dissenting
shares and de minimus shares will be allocated pro rata among
those ABI shareholders electing to receive cash and the amount in
excess of each such holder's pro rata share will be paid in
ArgentBank Common Stock using the same exchange ratio as set
forth above. Conversely, if the holders of ABI Common Stock
elect to receive in the aggregate shares of ArgentBank Common
Stock in excess of the Available Shares stated above, the
Available Shares will be allocated pro rata among those ABI
shareholders electing to receive stock and the amount in excess
of each such holder's pro rata share will be paid in cash.
Under the terms of the Plan, ABI and Assumption Bank have
the right to terminate the Mergers if the Average Market Price of
ArgentBank Common Stock exceeds $23 per share and ArgentBank has
the right to terminate the Mergers if the Average Market Price of
ArgentBank Common Stock is less than $15 per share. Therefore,
the minimum and maximum number of shares of ArgentBank Common
Stock that may be issued upon consummation of the Mergers is
476,739 and 931,667 shares, respectively, representing
approximately 7.5% and 13.7% of the total post-Merger outstanding
shares of ArgentBank Common Stock, respectively.
ELECTION PROCEDURES AND EXCHANGE OF CERTIFICATES
Prior to or promptly after the Effective Date, SunTrust
Bank, Atlanta, Georgia, as the exchange agent, will mail an
election form and other appropriate transmittal materials to each
holder of record of ABI Common Stock permitting such holder (or
in the case of nominee record holders, the beneficial owner
through proper instructions and documentation) to elect to
receive the number of shares of ArgentBank Common Stock and/or
cash payments as such holder desires.
No certificates or script representing fractional shares of
ArgentBank Common Stock will be issued upon the surrender for
exchange of certificates for ABI Common Stock. In lieu of the
issuance of any fractional share of ArgentBank Common Stock each
such holder of ABI Common Stock will be entitled to receive an
amount in cash (without interest) equal to such fractional share
multiplied by the Average Market Price.
ABI Shareholders are requested not to send in their stock
certificates until they have received a letter of transmittal and
further written instructions.
REGULATORY APPROVALS AND OTHER CONDITIONS TO THE MERGERS
The Mergers are subject to approval by the Federal Deposit
Insurance Corporation ("FDIC") and the Louisiana Office of
Financial Institutions ("OFI"). The merger applications relating
to the respective Mergers have been accepted for processing by
the FDIC and the OFI. There can be no assurance that such
approvals will be given, or will be given without unacceptable
conditions. In addition, there can be no assurance as to when
such approvals will be given, if given. In addition to approval
by the ArgentBank and ABI shareholders, consummation of the
Mergers is also subject to a number of conditions included in the
Plan. See "THE MERGERS -- Regulatory Approvals and Other
Conditions to the Bank Merger."
Each of the Bank Merger and the Company Merger will become
effective on the date the OFI issues a Certificate of Merger and
following the satisfaction or waiver of all conditions set forth
in the Plan (the "Effective Date"). It is the intent of the
parties that the Company Merger will be effected immediately
prior to the Bank Merger.
TERMINATION
Among other reasons, the Plan may be terminated, at any time
on or prior to the Effective Date as follows: by mutual consent
of the parties; by either ArgentBank or ABI, if the Mergers have
not occurred by June 30, 1997; by ArgentBank, ABI or Assumption
Bank, if the Merger Agreements are not approved by the required
vote of shareholders of ABI or ArgentBank; by ABI or Assumption
Bank, if the Average Market Price of ArgentBank Common Stock on
the Effective Date exceeds $23.00; by ArgentBank, if the Average
Market Price of ArgentBank Common Stock on the Effective Date is
less than $15.00 or in the event there are dissenting
shareholders who hold more than ten percent (10%) of the shares
of ABI Common Stock; or by ABI's Board of Directors if necessary
to fulfill its fiduciary duties to ABI based upon the advice of
counsel upon payment of certain expenses.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Mergers is conditioned upon receipt of
an opinion of counsel substantially to the effect that the
Mergers will be treated, for federal income tax purposes, as
tax-free reorganizations, with the result that, no gain or loss will
be recognized by: (1) ABI or Assumption Bank, (2) holders of ABI
Common Stock who exchange all of their ABI Common Stock solely
for Assumption Bank Common Stock pursuant to the Company Merger,
or (3) holders of Assumption Bank Common Stock who exchange all
of their Assumption Bank Common Stock solely for ArgentBank
Common Stock pursuant to the Bank Merger (except with respect to
cash, if any, received in lieu of fractional shares); that those
shareholders of Assumption Bank who receive cash and ArgentBank
Common Stock could recognize gain, and that those Assumption Bank
shareholders who receive solely cash in the Bank Merger could
recognize gain, but in any event, such gain would not exceed the
amount of cash received. If the exchange has the effect of the
distribution of a dividend under federal income tax principles,
then the amount of the gain recognized that is not in excess of
the Assumption Bank shareholder's ratable share of undistributed
earnings and profits will be treated as a dividend and taxed at
ordinary income tax rates. The determination of whether the
exchange has the effect of the distribution of a dividend must be
made on a shareholder-by-shareholder basis.
Because of the complexity of the tax laws, each shareholder
should consult his tax advisor concerning the applicable federal,
state and local income tax consequences of the Mergers. In addition,
assets and liabilities will be recorded at fair value on the date of
the transaction. See"MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS."
ACCOUNTING TREATMENT
It is intended that the Mergers will qualify for purchase
accounting treatment under general accepted accounting
principles. Accordingly, the earnings of Assumption Bank will be
combined with the earnings of ArgentBank from and after the
Effective Date of the Bank Merger and any goodwill or other
intangibles recorded in the transaction will be amortized through
charges to income in future periods. In addition, assets and
liabilities will be recorded at fair value on the date of the
transaction. See "THE MERGERS -- Accounting Treatment."
DISSENTERS' RIGHTS
ABI. Under certain conditions, and by complying with the
specific procedures required by statutes and described herein,
ABI shareholders would have the right to dissent from the Company
Merger, in which event, if the Company Merger is consummated,
they may be entitled to receive in cash the fair value of their
shares of ABI Common Stock. See "DISSENTERS' RIGHTS -- ABI
Shareholders."
ARGENTBANK. Under Louisiana Banking Laws ArgentBank
shareholders are not entitled to appraisal rights in connection
with the Bank Merger. See "DISSENTERS' RIGHTS -- ArgentBank
Shareholders."
INTERESTS OF CERTAIN PERSONS
ABI. The executive officers and members of the Boards of
Directors of ABI and Assumption Bank have interests in the
Mergers that are in addition to their interests as shareholders
of ABI generally. Those interests include, among others,
severance and other employee benefits to be received by employees
of Assumption Bank; ArgentBank's agreement to appoint one of
ABI's directors to ArgentBank's Board of Directors upon
consummation of the Mergers; the continued employment of Harold
F. Templet by ArgentBank after the Effective Date of the Mergers
and the indemnification of directors and officers of ABI and
Assumption Bank and continuation of directors and officers
liability insurance by ArgentBank. See "THE MERGERS -- Interests
of Certain Persons."
RECENT STOCK PRICES AND DIVIDENDS
ABI. The primary market area for the ABI Common Stock is
the Assumption Parish area. There is no established trading
market for the ABI Common Stock. The limited number of
transactions that have come to the attention of ABI's management
during the past two years have occurred at prices ranging from
$27 to $42 per share. No assurance can be given that this range
of prices per share represents the actual market value of ABI's
Common Stock. In each of 1996 and 1995 ABI declared annual
dividends of $2.60 per share.
ARGENTBANK. The table below presents the high and low sales
prices and dividend information of ArgentBank. Prior to February
21, 1997 ArgentBank's Common Stock was traded on the NASDAQ Stock
Market System under the trading symbol "ARGT". Beginning on
February 21, 1997 ArgentBank's Common Stock is currently traded
on the American Stock Exchange under the trading symbol "AGB." On
October 17, 1995, the ArgentBank Board of Directors declared a
two-for-one stock split to shareholders of record on October 31,
1995.
<TABLE>
Market Values & Dividends High Low Cash
Dividend
<S> <C> <C> <C>
1997:
For Quarter Ended:
March 31 $20.25 $17.25 .14
1996:
For Quarter Ended:
March 31 $24.50 $20.25 $ .13
June 30 22.00 18.50 .13
September 30 21.00 17.25 .13
December 31 19.00 17.25 .13
----
$ .52
=====
1995:
For Quarter Ended:
March 31 $13.88 $12.38 $.11
June 30 19.13 13.88 .11
September 30 22.50 18.13 .13
December 31 25.00 20.50 .13
-----
$ .48
=====
</TABLE>
The parties entered into the Merger Agreement as of
November 20, 1996. On November 20, 1996 the reported closing
sales price of ArgentBank Common Stock was $17.75. On
April 22, 1997, the reported closing sales price was $20.13.
On November 20, 1996, ArgentBank's 5,863,688 outstanding shares
of common stock were owned by 2,743 shareholders of record.
SELECTED FINANCIAL DATA
The following selected financial data for ABI and
ArgentBank has been derived from the consolidated financial
statements of ABI and ArgentBank. The information set forth
below should be read in conjunction with the consolidated
financial statements of ABI and ArgentBank included elsewhere
herein.
<PAGE>
<TABLE>
<CAPTION>
ABI SELECTED FINANCIAL DATA
FISCAL YEARS ENDING DECEMBER 31
1996 1995 1994 1993 1992
------------------------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
AT YEAR END:
Total assets $111,802 109,108 106,426 105,843 107,728
======== ======= ======= ======= =======
Total securities $ 34,094 37,365 42,676 48,669 45,142
======== ======= ======= ======= =======
Total loans $ 60,831 57,086 50,576 43,559 42,889
======== ======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31:
Interest income:
Interest and fees on loans $ 5,510 4,819 4,259 4,169 4,520
Interest on securities 2,176 2,510 2,668 3,008 3,554
Other 250 170 151 164 153
-------- ------- ------- ------- -------
Total interest income 7,936 7,499 7,078 7,341 8,227
Interest expense 3,211 3,125 2,569 2,832 3,601
-------- ------- ------- ------- -------
Net interest income 4,725 4,374 4,509 4,509 4,626
Provision for possible loan losses 36 l36 60 321 446
-------- ------- ------- ------- -------
Net interest income after
provision for possible loan
losses 4,689 4,238 4,449 4,188 4,180
-------- ------- ------- ------- -------
Other income 587 637 531 662 330
Other expenses 3,723 3,582 3,539 3,241 3,101
-------- ------- ------- ------- -------
Income before income taxes 1,553 1,293 1,441 1,609 1,409
Income tax expense 420 216 275 496 432
-------- ------- ------- ------- -------
Income before cumulative effect
of change in accounting principle 1,133 1,077 1,166 1,113 977
Cumulative effect of change in
accounting - - - 54 -
for income taxes -------- ------- ------- ------- -------
NET INCOME $ 1,133 1,077 1,166 1,167 977
======== ======= ======= ======= =======
PER SHARE DATA:
Income before cumulative effect
of change in accounting
principle $ 7.08 6.73 7.29 6.95 6.11
======== ======= ======= ======= =======
Cumulative effect of change
in accounting for income taxes - - - .34 -
======== ======= ======= ======= =======
Net income $ 7.08 6.73 7.29 7.29 6.11
======== ======= ======= ======= =======
Dividends declared $2.60 2.60 2.25 2.50 1.75
======== ======= ======= ======= =======
Number of shares
used in computations 160,000 160,000 160,000 160,000 160,000
======== ======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARGENTBANK SELECTED FINANCIAL DATA
FISCAL YEARS ENDING DECEMBER 31
1996 1995 1994 1993 1992
----------------------------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
AT YEAR END:
Total assets $589,954 $562,087 $549,177 $545,133 $542,853
Total deposits 516,488 490,168 486,923 488,514 491,922
Loans, net 335,286 277,926 219,803 186,780 178,696
Total securities 192,659 233,312 278,337 312,371 308,931
Total equity 67,663 66,503 59,022 54,083 47,905
Total cash dividends paid 3,070 2,837 2,211 1,352 1,001
FOR THE YEAR ENDED DECEMBER 31:
Interest income $41,292 $38,169 $34,681 $36,376 $41,266
Interest expense 16,843 14,834 11,888 11,875 17,005
Net interest income 24,449 23,335 22,793 24,501 24,261
Provision for loan losses(1) (300) (1,000) (2,091) 1,870 5,390
Non-interest income 3,186 3,191 3,118 3,125 2,781
Non-interest expense 16,613 15,736 16,280 15,251 13,583
------- ------- ------- ------- -------
Income before provision for taxes 11,322 11,790 11,722 10,505 8,069
Provisions for income taxes 3,584 3,716 3,720 2,975 2,467
------- ------- ------- ------- -------
Net income $7,738 $ 8,074 $ 8,002 $ 7,530 $ 5,602
======= ======= ======= ======= =======
PER SHARE INFORMATION:
Shares outstanding 5,863,668 5,975,464 5,975,464 5,975,464 5,975,464
Number of shareholders 2,862 2,645 2,512 2,470 2,425
Earnings per share 1.31 1.35 1.34 1.26 .94
Dividends per share .52 .48 .37 .23 .17
Book value per share 11.53 11.13 9.88 9.05 8.02
KEY RATIOS:
Return on average total assets 1.35% 1.49% 1.47% 1.41% 1.04%
Return on Shareholders' equity 11.75% 12.94% 13.97% 13.92% 11.69%
Equity to total assets (excluding
market fluctuations) 11.46% 11.61% 10.89% 9.92% 8.82%
Note: All shares and per-share figures give effect to the two-for-one stock split
effective October 31, 1995 and the four-for-one stock split effective August 13, 1993.
(1) For years 1994, 1995 and 1996 reflected negative provision for loan losses due to
favorable net chargeoffs.
</TABLE>
<PAGE>
COMPARATIVE PER SHARE DATA
The following table presents certain information for
ArgentBank and ABI on a historical, unaudited pro forma combined
and unaudited pro forma equivalent basis. The unaudited pro
forma combined information is based upon the historical financial
condition and results of operations of ArgentBank and ABI and
adjustments directly attributable to the Plan based on estimates
derived from information currently available. This information
does not purport to be indicative of the results that would
actually have been obtained if the Mergers had been consummated
on the date or for the periods indicated below, or the results
that may be obtained in the future. The actual amounts may be
more or less than that shown. See "THE MERGERS -- Exchange
Ratio". ArgentBank expects to account for the Bank Merger using
the purchase method of accounting applied in accordance with
generally accepted accounting principles. Accordingly, the
earnings of Assumption Bank will be combined with the earnings of
ArgentBank from and after the Effective Date of the Bank Merger
and any goodwill or other intangibles recorded in the transaction
will be amortized through charges to income in future periods.
In addition, assets and liabilities will be recorded at fair value
on the date of the transaction. See "THE MERGERS -- Accounting Treatment."
<TABLE>
Pro Forma Assumption
ArgentBank ABI Combined(1) Equivalent(2)
<S> <C> <C> <C> <C>
Earnings per common share:
Year ended December 31,
1996 $1.31 $7.08 $1.21 $8.56
Dividends declared per common
share: Year ended
December 31, 1996 $0.52 $2.60 $0.52 $3.68
Book value per common share:
As of December 31, 1996 $11.53 $61.47 $12.29 $86.92
</TABLE>
(1) Assumes an Average Market Price of ArgentBank Common Stock of
$19.00, and the issuance of 735,530 shares of
ArgentBank to effect the merger.
(2) The Assumption Equivalent is calculated by multiplying the
amount in the pro forma combined column by an exchange ratio of
7.0724.
<PAGE>
THE ARGENTBANK MEETING
GENERAL
This Joint Proxy Statement/Offering Circular is being
furnished on or about April 28, 1997 to the shareholders of
ArgentBank ("ArgentBank") in connection with the solicitation of
proxies on behalf of the Board of Directors of ArgentBank (the
"ArgentBank Board") for use at a special meeting (the "ArgentBank
Meeting"), to be held at the offices of ArgentBank, 400 Green
Street, Thibodaux, Louisiana, 70302, on Thursday, May 22,
1997, at 3:00 p.m., local time, and at any adjournment
thereof. A Notice of Special Meeting for ArgentBank is attached
hereto and a proxy card relating to the ArgentBank Meeting
accompanies this Joint Proxy Statement/Offering Circular.
The purpose of the ArgentBank Meeting is to consider and
vote upon four matters: (i) a proposal to approve and adopt an
Agreement and Plan of Merger, and related Bank Merger Agreement
(collectively, the "Merger Agreements") pursuant to which
Assumption Bancshares, Inc. ("ABI") and its wholly-owned
subsidiary Assumption Bank & Trust Company ("Assumption Bank")
will be merged with and into ArgentBank; (ii) the election of
twenty directors to serve for the coming year; (iii) the
ratification of the selection of Deloitte & Touche LLP as
ArgentBank's independent external auditors for 1997; and (iv) a
proposal to approve four amendments to the Articles of
Incorporation of ArgentBank (the "Articles").
SHARES ENTITLED TO VOTE; QUORUM
The Board of Directors of ArgentBank has fixed the close of
business on April 18, 1997, as the record date (the ArgentBank
Record Date") for the determination of ArgentBank shareholders
entitled to notice of and to vote at the ArgentBank Meeting. As
of the ArgentBank Record Date, there were 5,863,668 shares of
ArgentBank common stock, $.10 par value ("ArgentBank Common
Stock") outstanding. Each share of ArgentBank Common Stock is
entitled to one vote on all matters to come before the ArgentBank
Meeting.
With respect to all matters to come before the ArgentBank
Meeting, the presence at the ArgentBank Meeting, in person or by
proxy, of the holders of a majority of the outstanding shares of
ArgentBank Common Stock is necessary to constitute a quorum.
VOTING OF PROXIES; VOTES REQUIRED
The accompanying ArgentBank proxy card is solicited on
behalf of the ArgentBank Board. Shareholders are requested to
complete, date, sign and return the proxy in the accompanying
envelope. All properly executed, returned and unrevoked proxies
will be voted in accordance with the instructions indicated
thereon. Executed but unmarked proxies will be voted FOR each of
the Proposals listed therein. The ArgentBank Board does not
presently intend to bring any other business before the
ArgentBank meeting other than the specific proposals referred to
in this Joint Proxy Statement/Offering Circular and specified in
the Notice of the ArgentBank Meeting. As to any business that
may properly come before the ArgentBank Meeting, including any
motion made for adjournment of the ArgentBank Meeting, the
proxies will vote in their discretion. An ArgentBank shareholder
who has given a proxy may revoke it at any time before it is
exercised at the ArgentBank Meeting by (i) filing a written
notice of revocation with, or delivering a duly executed proxy
bearing a later date to William B. Gautreaux, CFO and Cashier or
(ii) by attending the ArgentBank Meeting and voting in person
(although attendance at the ArgentBank Meeting will not, by
itself, revoke a proxy).
The approval of the Bank Merger requires the approval by a
majority vote of the shareholders of ArgentBank. The approval by
two-thirds of the voting power present at the ArgentBank Meeting
is required to approve the amendments to the Articles related to
changing the annual meeting date, increasing the number of
authorized shares of ArgentBank Common Stock to 16,000,000, and
authorizing the Board or its committees to participate in and
hold meetings by means of conference telephone or other similar
means of communication, and a seventy-five percent (75%) vote of
the issued and outstanding shares of ArgentBank Common Stock is
required to approve the amendment to the Articles relating to
shareholder approval of certain business combinations.
ABSTENTIONS; BROKER NON-VOTES
If an executed ArgentBank proxy is returned and the
shareholder has specifically abstained from voting on any matter
the shares represented by such proxy will be considered present
at the ArgentBank Meeting for purposes of determining a quorum.
If an executed proxy is returned by a broker holding shares in
street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or
more matters, such shares will be considered present at the
ArgentBank Meeting for purposes of determining a quorum. Because
the required vote of the ArgentBank shareholders is based upon
the number of outstanding shares for approval of the Bank Merger
and for the Articles Amendment relating to business combinations
rather than upon the shares actually voted, the failure by the
holder of any such shares to submit a proxy or to vote in person
at the ArgentBank Meeting (including abstentions and "broker
non-votes") will have the same effect as a vote against approval of
the Merger Agreements. Because the required vote for the other
Articles Amendments is based upon the voting power present at the
Meeting, the failure by the holder of any such shares to submit a
proxy or to vote in person at the ArgentBank Meeting (including
abstentions and "broker non-votes") will have the same effect as
a vote against approval of the other Articles Amendments and the
Articles Amendment relating to business combinations.
SOLICITATION OF PROXIES AND EXPENSES
The cost of soliciting these proxies, including any and all
professional fees paid to attorneys and accountants in connection
with the preparation and filing with the Federal Deposit
Insurance Corporation and the Securities and Exchange Commission
of this Joint Proxy Statement/Offering Circular and other proxy
materials, and the cost of printing and mailing these proxy
materials, will be borne by ArgentBank. In addition to the use
of the mails, proxies may be solicited personally, by telephone,
telecopier, or telegram by directors, officers and employees of
ArgentBank. Such officers, directors and employees will continue
to receive any compensation from ArgentBank to which they are
entitled by virtue of their employment or status as an officer or
director, but will not receive any additional fee, compensation,
or other remuneration for soliciting proxies in connection with
the ArgentBank Meeting.
<PAGE>
THE ABI MEETING
GENERAL
This Joint Proxy Statement/Offering Circular is being
furnished on or about April 28, 1997 to the shareholders of
ABI common stock ("ABI Common Stock") in connection with the
solicitation of proxies on behalf of the Board of Directors of
ABI (the "ABI Board") for use at the ABI special meeting (the "ABI
Meeting"), to be held at the offices of Assumption Bank, 110
Franklin Street, Napoleonville, Louisiana, 70390-0398, on
Thursday, May 22, 1997, at 2:00 p.m. local time, and at any
adjournment thereof. A Notice of Special Meeting for ABI is
attached hereto and a proxy card relating to the ABI Meeting
accompanies this Joint Proxy Statement/Offering Circular.
The purpose of the ABI Meeting is to consider and vote upon
a proposal to approve and adopt an Agreement and Plan of Merger
(the "Plan"), and related Company Merger Agreement and Bank
Merger Agreement (collectively, the "Merger Agreements") pursuant
to which, ABI would merge with and into Assumption Bank,
Assumption Bank would then immediately merge with and into
ArgentBank (collectively, the "Mergers"), and upon consummation
of the Mergers, each share of ABI common stock, par value $5.00,
outstanding (the "ABI Common Stock") would be converted into the
right to receive shares of ArgentBank Common Stock or cash, as
more fully described in the Plan.
SHARES ENTITLED TO VOTE; QUORUM
The Board of Directors of ABI has fixed the close of
business on April 18, 1997, as the record date (the "ABI
Record Date") for the determination of ABI shareholders entitled
to notice of and to vote at the ABI Meeting. As of the ABI
Record Date, there were 160,000 shares of ABI Common Stock
outstanding. Each share of ABI Common Stock is entitled to one
vote on all matters to come before the ABI Meeting.
With respect to all matters to come before the ABI Meetings,
the presence at the ABI Meeting, in person or by proxy, of the
holders of a majority of the total voting power of ABI Common
Stock is necessary to constitute a quorum.
VOTING OF PROXIES; VOTES REQUIRED
The accompanying ABI proxy card is solicited on behalf of
the ABI Board. Shareholders are requested to complete, date,
sign and return the proxy in the accompanying postage-paid
envelope. All properly executed, returned and unrevoked proxies
will be voted at the ABI Meeting in accordance with the
instructions indicated thereon, or, if no instructions are
indicated, will be voted FOR the approval of the Plan and, in
the discretion of the proxy holders, as to any other matter which
may properly come before the ABI Meeting or any adjournment or
postponement thereof. The ABI Board does not presently intend to
bring any other business before the ABI Meeting other than the
specific proposals referred to in this Joint Proxy
Statement/Offering Circular and specified in the Notice of the
ABI Meeting. If a shareholder does not sign and return a proxy
and specify on the proxy an instruction to vote against the Plan
or if he abstains from voting on the Plan, he will not be able to
exercise dissenter's rights with respect to the Plan unless he
attends the ABI Meeting in person and votes against the Plan and
gives written notice of his dissent from the Plan at or prior to
the ABI Meeting. See "DISSENTERS RIGHTS -- ABI Shareholders."
An ABI shareholder who has given a proxy may revoke it at any
time before it is exercised at the ABI Meeting by (i) filing a
written notice of revocation with, or delivering a duly executed
proxy bearing a later date to Harold R. Templet, Secretary and
Treasurer, or (ii) by attending the ABI Meeting and voting in
person (although attendance at the ABI Meeting will not, by
itself, revoke a proxy).
Approval of the Plan requires the affirmative vote of
two-thirds of the voting power present at the ABI Meeting. It is a
condition to consummation of the Mergers that a majority of the
ABI directors (all of whom hold in the aggregate 12,308 shares of
ABI Common Stock) vote their shares in favor of the Plan.
ABSTENTIONS; BROKER NON-VOTES
If an executed ABI proxy is returned and the shareholder has
specifically abstained from voting on any matter, the shares
represented by such proxy will be considered present at the ABI
Meeting for purposes of determining a quorum and with respect to
the proposal. If an executed proxy is returned by a broker
holding shares in street name which indicates that the broker
does not have discretionary authority as to certain shares to
vote on one or more matters (a "broker non-vote"), such shares
will be considered present at the ABI Meeting for purposes of
determining a quorum but will not be considered as present with
respect to the proposal. Therefore, because approval of the Plan
requires a vote of 2/3 of the voting power present at the ABI
Meeting, abstentions will have the effect of a vote against the
Plan but a broker non-vote will have no effect on the outcome of
the vote. An abstention will also cause a shareholder otherwise
entitled to dissenters rights to forfeit any claim to such
rights.
SOLICITATION OF PROXIES AND EXPENSES
The cost of soliciting these proxies, including any and all
professional fees paid to attorneys and accountants in connection
with the preparation and filing with the Federal Deposit
Insurance Corporation and the SEC of this Joint Proxy
Statement/Offering Circular and other proxy materials, and the
cost of printing and mailing these proxy materials, will be borne
by ABI. In addition to the use of the mails, proxies may be
solicited personally, by telephone, telecopier, or telegram by
directors, officers and employees of ABI. Such officers,
directors and employees will not receive any additional fee,
compensation, or other remuneration for soliciting proxies in
connection with the ABI Meeting.
<PAGE>
THE MERGERS
(ITEM NO. 1 ON ABI PROXY CARD)
(ITEM NO. 1 ON ARGENTBANK PROXY CARD)
GENERAL
The transactions contemplated by the Plan and related
Company Merger Agreement and Bank Merger Agreement are to be
effected in accordance with the terms and conditions of the
Merger Agreements, a copy of which is attached hereto as Appendix
A. The following description does not purport to be complete and
is qualified in its entirety by reference to the Merger
Agreements.
The ultimate result of the transactions contemplated by the
Merger Agreements will be that the business and properties of ABI
and Assumption Bank will become the business and properties of
ArgentBank with all banking facilities of Assumption Bank
becoming branches of ArgentBank, and the shareholders of ABI who
so choose will become shareholders of ArgentBank.
CONVERSION OF ABI AND ASSUMPTION BANK COMMON STOCK
Upon consummation of the Mergers, each share of ABI common
stock ("ABI Common Stock") outstanding immediately prior to the
Effective Date as defined below, will be converted into one share
of common stock, par value $25.00 per share, of Assumption Bank
("Assumption Bank Common Stock"), each of which will then
immediately be converted into the right to receive, at the
election of each holder thereof (subject to the election and
allocation procedures provided for in the Plan as described under
"Allocation Restrictions and Procedures" and "Election Procedures
and Exchange of Certificates") either: (i) that number of shares
of ArgentBank Common Stock equal to (x) $21.5 million (the
"Aggregate Merger Consideration Value") divided by the Average
Market Price (as defined below) of ArgentBank Common Stock,
divided by (y) the number of outstanding shares of Assumption
Bank Common Stock (the "Conversion Number"), or (ii) the right to
receive $134.375 in cash (the "Cash Payment") ((i) and (ii)
together, the "Merger Consideration"); except that any holder of
15 or fewer shares of ABI Common Stock ("De minimis Holdings")
will only be entitled to receive a Cash Payment for such shares.
The "Average Market Price" means the average of the closing sale
prices of a share of ArgentBank Common Stock on the American
Stock Exchange ("AMEX") for the 40 days on which AMEX is open for
trading preceding the fifth trading day immediately prior to the
Effective Date.
EXCHANGE RATIO
If an ABI stockholder elects to receive only ArgentBank
Common Stock for his Assumption Bank Common Stock, he will
receive approximately 5-8 shares of ArgentBank Common Stock for
each share of Assumption Bank Common Stock. The table below sets
forth examples of this exchange ratio, assuming the Average
Market Price of ArgentBank Common Stock is as specified below.
The table assumes that 160,000 shares of Assumption Bank Common
Stock are outstanding on the Effective Date (which was the number
of shares outstanding on the date of this Joint Proxy
Statement/Offering Circular).
ASSUMED AVERAGE MARKET PRICE NUMBER OF ARGENTBANK
OF ARGENTBANK COMMON STOCK SHARES PER
ASSUMPTION BANK SHARE
$23.00 5.8424
$22.00 6.1080
$21.00 6.3988
$20.00 6.7188
$19.00 7.0724
$18.00 7.4653
$17.00 7.9044
$16.00 8.3984
$15.00 8.9583
Due to fluctuations in the trading prices of ArgentBank
Common Stock, the actual number of shares to be received by ABI
shareholders cannot currently be determined. In as much as the
exchange ratio is based on the Average Market Price of ArgentBank
Common Stock as defined in the Merger Agreements, the actual
market value of ArgentBank shares to be received by the holders
of ABI Common Stock may be more or less than the $134.375 cash
payment that the holder could elect to receive for his ABI
shares.
ALLOCATION RESTRICTIONS AND PROCEDURES
The total amount of Cash Payments that shall be paid upon
consummation of the Merger, including (i) the Cash Payments that
holders of ABI Common Stock have elected, or have been deemed to
have elected to receive ("Elected Cash Payments"), (ii) the Cash
Payments that have been made in exchange for De Minimis Holdings,
(iii) the amount of cash paid in lieu of fractional shares, and
(iv) the amount of cash paid with respect to shares of ABI Common
Stock ("Dissenting Shares") as to which dissenters rights have
been perfected ("Total Cash Payments") will be limited to a
maximum of $10,535,000 (the "Available Cash") and a minimum of
$7,525,000 which means that the maximum number of shares of
ArgentBank Common Stock (the "Available Shares") that ArgentBank
will issue upon consummation of the Mergers will have an
aggregate value of $13,975,000. The exact number of Available
Shares depends on the average Market Price of a share of
ArgentBank Common Stock, but assuming an Average Market Price for
the ArgentBank Common Stock of $19.00, the Available Shares would
equal 735,530 shares.
If holders of ABI Common Stock elect to receive in the
aggregate cash in excess of the Available Cash stated above, the
Available Cash left after paying fractional shares, dissenting
shares and de minimus shares will be allocated pro rata among
those ABI shareholders electing to receive cash and the amount in
excess of each such holder's pro rata share will be paid in
ArgentBank Common Stock using the same exchange ratio as set
forth above. Conversely, if the holders of ABI Common Stock
elect to receive in the aggregate shares of ArgentBank Common
Stock in excess of the Available Shares stated above, the
Available Shares will be allocated pro rata among those ABI
shareholders electing to receive stock and the amount in excess
of each such holder's pro rata share will be paid in cash.
Under the terms of the Plan, ABI and Assumption Bank have
the right to terminate the Mergers if the Average Market Price of
ArgentBank Common Stock exceeds $23 per share and ArgentBank has
the right to terminate the Mergers if the Average Market Price of
ArgentBank Common Stock is less than $15 per share. Therefore,
the minimum and maximum number of shares of ArgentBank Common
Stock that may be issued upon consummation of the Mergers is
476,739 and 931,667 shares, respectively, representing
approximately 7.5% and 13.7% of the total post-merger outstanding
shares of ArgentBank Common Stock, respectively.
ELECTION PROCEDURES AND EXCHANGE OF CERTIFICATES
Prior to or promptly after the Effective Date, SunTrust
Bank, Atlanta, Georgia, as the exchange agent (the "Exchange
Agent"), will mail (the "Mailing Date") an election form and
other appropriate transmittal materials ("Election Form") to each
holder of record of ABI Common Stock permitting such holder (or
in the case of nominee record holders, the beneficial owner
through proper instructions and documentation) to elect to
receive the number of shares of ArgentBank Common Stock and/or
Cash Payments as such holder desires. Shareholders of ABI are
requested not to surrender their ABI Common Stock certificates
until such materials are received.
An ABI shareholder may elect to receive all cash, all stock
or a combination of cash and stock in exchange for his or her
shares of ABI Common Stock, subject to the allocation
restrictions discussed above. A shareholder who does not make an
election by 5:00 p.m., local time on the 20th day following the
Mailing Date will be deemed to have elected to receive either
shares of ArgentBank Common Stock, or cash, at the option of
ArgentBank, as the sole Merger Consideration for each of such
holder's shares of ABI Common Stock. An election form will be
properly completed only if accompanied by certificates (or
customary affidavits and indemnities regarding the loss thereof)
representing all shares of ABI Common Stock covered thereby.
Any election form may be revoked or changed by the person
who submitted such election form at or prior to the Election
Deadline.
As soon as practicable after the Election Deadline, the
Exchange Agent will determine the allocation of the aggregate
Merger Consideration among Cash Payments and ArgentBank Common
Stock in accordance with the Plan and within five (5) business
days after such allocations are made, the Exchange Agent will
distribute the ArgentBank Common Stock and/or Cash Payments.
After the completion of the foregoing allocation, each
holder of an outstanding certificate or certificates which prior
thereto represented shares of ABI Common Stock who surrendered
such certificate or certificates to the Exchange Agent will, upon
acceptance thereof by the Exchange Agent, be entitled to a
certificate or certificates representing the number of full
shares of ArgentBank Common Stock and/or the amount of Cash
Payments into which the aggregate number of shares of ABI Common
Stock previously represented by such certificate or certificates
surrendered shall have been converted in each case without
interest.
No certificates or script representing fractional shares of
ArgentBank Common Stock will be issued upon the surrender for
exchange of certificates for Assumption Bank Common Stock. In
lieu of the issuance of any fractional share of ArgentBank Common
Stock each such holder of ABI Common Stock shall be entitled to
receive an amount in cash (without interest) equal to such
fractional share multiplied by the Average Market Price.
After the Effective Date and until surrendered, ABI
shareholders will cease to have any rights as a shareholder of
ABI and his or her sole right will be to receive the number of
shares of ArgentBank Common Stock and/or the Cash Payments into
which his or her ABI Common Stock have been converted.
Shareholders of ABI who cannot locate their stock
certificates are urged to contact promptly Investment Relations
at ArgentBank, Hugh Hamilton, Post Office Box 819, Thibodaux,
Louisiana 70302-0819. In the event any certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
certifying that such certificate is lost, stolen or destroyed
and, if required by ArgentBank, the posting by such person of a
bond in such reasonable amount as ArgentBank may direct as
indemnity against any claim that may be made against it with
respect to such certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed certificate the
shares of ArgentBank Common Stock and/or payments, as
appropriate, and cash in lieu of fractional shares, and any
unpaid dividends and distributions on shares of ArgentBank Common
Stock.
BACKGROUND OF THE MERGERS
Over the last several years the Board and management of
Assumption Bank has held informal discussions with several area
and regional financial institutions and in 1992 and again in 1995
considered proposals from other institutions regarding a sale of
Assumption Bank, both of which were rejected as inadequate. One
of these proposals was submitted by ArgentBank. In early 1996
the Board was contacted by a regional bank, provided it with
limited financial information and in March 1996 received an
informal indication of interest regarding its acquisition of
Assumption Bank.
In April 1996, Assumption Bank was again contacted by
ArgentBank representatives and in May 1996, ArgentBank provided
Assumption Bank with an indication of interest in the form of a
range of prices, the upper end of which was substantially below
the price ultimately agreed upon. Negotiations were conducted
with ArgentBank during May, June and July 1996 regarding the
price and other terms and conditions of its indication of
interest. During this period the other regional bank was
contacted in an attempt to obtain a higher and more definitive
offer and management and Chaffe performed an in-depth analysis of
Assumption Bank and its prospects as an independent institution,
which plan included, among other things, the implementation of
cost saving measures and projections of potential growth through
branching.
On August 12, 1996, ArgentBank presented Assumption Bank
with its written offer of $21.5 million. This offer was
substantially higher than the price offered by the other regional
bank, which declined to increase its previous indication of
interest. The ArgentBank offer was also greater than the
projected values set forth in management's analysis of the bank
as an independent institution.
Representatives of the Board of ABI met with ArgentBank
officials and made further attempts to negotiate an increase in
the offer. After considerable examination and analysis, the
Board determined that the $21.5 million ArgentBank offer was the
highest and best offer that it could practically expect to
receive from ArgentBank and based on a number of factors,
including the amount of the offer, a condition to the ArgentBank
offer, and the advice of its advisors, determined not to attempt
to seek additional offers from additional institutions. On
August 23, 1996 Assumption Bank and ArgentBank executed an
Exclusivity Agreement, which contained a "fiduciary out", in
effect permitting further discussions with other institutions
that thereafter offered higher prices, so long as contact was not
initiated by ABI, Assumption Bank or its representatives. A
joint press release was issued on August 23, 1996 announcing the
offer price and the terms of this fiduciary out; however, no
additional offers or indication of interest were received by
Assumption Bank, and on November 20, 1996 the Plan was executed.
REASONS FOR THE MERGERS
REASONS OF ARGENTBANK FOR THE BANK MERGER
ArgentBank, through the guidance of its Merger and
Acquisition Committee of its Board of Directors, has from time to
time considered potential acquisitions that would strengthen
ArgentBank's position in its market which consists of the
southern region of the State of Louisiana. ArgentBank's criteria
in evaluating potential acquisitions of banking institutions
include a strong management team, good historical profitability
and the potential for continued growth. ArgentBank's reasons for
the Bank Merger include the following:
a. The Merger provides ArgentBank with five branch
locations within an area that ArgentBank currently has very
little deposit base;
b. Assumption Bank has a stable, experienced management
team that is supportive of an affiliation with ArgentBank and
willing to manage Assumption Bank cooperatively with ArgentBank;
c. Assumption Bank has exhibited steady profitability in
recent years and has a strong and loyal customer base;
d. ArgentBank can realize new growth opportunities by
providing additional banking products and services to Assumption
Bank customers and by expanding Assumption Bank's area of
operations through new branch openings in other parts of the
Southern Louisiana market; and
e. ArgentBank believes that through consolidation of
functions and other cost-savings techniques, it can assist
Assumption Bank in realizing operating cost savings and improving
profitability.
REASONS OF ABI FOR THE MERGERS
ABI and Assumption Bank and their respective Boards of
Directors concluded that they could best serve their
shareholders, employees, customers and communities by combining
with a regional banking organization, provided that ABI could
obtain a fair price for its shareholders.
In deciding to enter into the Merger Agreements, the Board
of Directors of ABI and Assumption Bank, after considering
various alternatives, concluded that the Merger Agreements were
in the best interest of ABI and its shareholders because it would
permit shareholders to exchange on favorable terms their
ownership interest in ABI for participation in the ownership of a
regional banking organization operating on a multi-parish basis.
The Board of Directors also concluded that the shareholders
of ABI would benefit from the Mergers by obtaining greater
liquidity in their investment by obtaining shares of stock of a
corporation whose securities are more widely held and
significantly more actively traded on a national exchange.
Among the factors considered by the Board of Directors of
ABI in deciding to approve and recommend the terms of the Merger
Agreements were:
(i) The parties' respective earnings and dividend records,
financial conditions, historical stock prices and
managements;
(ii) The position of each in the financial institutions
industry;
(iii) The outlook for each in the financial institutions
industry;
(iv) The financial terms of the Mergers, including the
relationship of the consideration to be paid in the
Mergers to the market value, book value and earnings
per share of the ABI Common Stock; and
(v) The opinion rendered by Chaffe & Associates, Inc.
("Chaffe"), ABI's financial advisor, to the effect that
based upon and subject to certain procedures, matters
and limitations, the terms of the Plan are fair from a
financial point of view, to the holders of ABI Common
Stock.
ABI's Board did not assign a specific or relative weight to
the foregoing factors in its considerations. ABI's Board
believes that the Plan will provide significant value to all ABI
shareholders and will enable them to participate in opportunities
for growth that ABI's Board believes the Mergers make possible.
BOARD RECOMMENDATIONS
BASED ON THE FOREGOING, THE BOARDS OF DIRECTORS OF ABI,
ASSUMPTION BANK AND ARGENTBANK HAVE UNANIMOUSLY APPROVED THE
PLAN, BELIEVE THAT THE MERGERS ARE IN THE BEST INTEREST OF ABI'S
AND ARGENTBANK'S SHAREHOLDERS, AND UNANIMOUSLY RECOMMEND THAT ALL
SHAREHOLDERS OF ABI AND ARGENTBANK VOTE "FOR" THE APPROVAL OF THE
PLAN.
OPINIONS OF FINANCIAL ADVISORS
ABI. ABI retained Chaffe to act as its financial advisor
in connection with the Mergers in May 1996. Chaffe was selected
by ABI's Board of Directors as its financial advisor on the
basis of Chaffe's experience and expertise in transactions
similar to the Mergers and Chaffe's reputation in banking and
investment communities. Chaffe is a recognized investment banking
firm and is experienced in the securities industry, in investment
analysis and appraisal, and in related corporate finance and
investment banking activities, including mergers and
acquisitions, corporate recapitalization, and valuations for
estate, corporate and other purposes. Chaffe is frequently
retained to perform similar services for other banks and bank
holding companies. Also, in 1995, Chaffe had advised ABI in its
consideration of proposals regarding a sale of Assumption Bank.
In connection with Chaffe's engagement to act as ABI's
financial advisor with respect to the Mergers, ABI instructed
Chaffe to evaluate the fairness to ABI's shareholders, from a
financial point of view, of the Merger Consideration, pursuant to
the provisions of the Merger Agreements, and to conduct such
investigations as Chaffe deemed appropriate for such purposes.
ABI did not place any limitations on the scope or manner of
Chaffe's investigation and review. The Merger Consideration to be
received by ABI's shareholders in the Bank Merger was determined
by ABI and ArgentBank through arms length negotiations.
Chaffe rendered its verbal opinion to ABI's Board on
November 20, 1996, to the effect that, based upon and subject to
the assumptions made, the factors considered, the review
undertaken and the limitations stated and based upon such other
matters as Chaffe considered relevant, on the date thereof, the
Merger Consideration was fair, from a financial point of view, to
the holders of ABI Common Stock. Chaffe updated and confirmed
its opinion in writing as of April , 1997 (the "Opinion").
THE FULL TEXT OF CHAFFE'S OPINION IS ATTACHED HERETO AS
APPENDIX B AND IS INCORPORATED BY REFERENCE. THE SUMMARY
DESCRIPTION OF CHAFFE'S OPINION SET FORTH HEREIN IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO APPENDIX B. ABI'S SHAREHOLDERS ARE
URGED TO READ CHAFFE'S OPINION IN ITS ENTIRETY FOR A DESCRIPTION
OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY CHAFFE. CHAFFE'S
OPINION RELATES ONLY TO THE MERGER CONSIDERATION TO BE RECEIVED
BY ABI'S SHAREHOLDERS, FROM A FINANCIAL POINT OF VIEW, AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY ABI SHAREHOLDER AS TO HOW
SUCH SHAREHOLDER SHOULD VOTE AT THE ABI MEETING.
In connection with rendering its Opinion, Chaffe, among
other things: (i) reviewed the Merger Agreements and a draft of
the Joint Proxy/Offering Circular dated April 14, 1997 in substantially
the same form to be sent by ABI to its shareholders; (ii) reviewed and
analyzed certain publicly-available financial statements and
other information of ABI and ArgentBank, respectively; (iii)
reviewed and analyzed certain internal financial statements and
other financial and operating data concerning ABI, prepared by
the management of ABI, including budget projections; (iv)
discussed the past and current operations and financial
condition, and the prospects of ArgentBank and ABI with senior
executives of ArgentBank and ABI, respectively; (v) reviewed and
discussed with the senior management of ABI and ArgentBank the
strategic objectives of the Mergers and the synergies and certain
other benefits of the Mergers; (vi) reviewed the historical
prices and trading volumes of the shares of ArgentBank Common
Stock and ABI Common Stock; (vii) compared the financial
performance of ABI and ArgentBank, and the prices and trading
activity of the ABI Common Stock and ArgentBank Common Stock,
with that of certain other comparable publicly-traded companies
and their securities; (viii) reviewed the financial terms of
business combinations in the commercial banking industry
specifically and other industries generally, which Chaffe deemed
generally comparable to the Mergers; (ix) considered a number of
valuation methods, including among others, those that incorporate
book value, deposit base premium and capitalization of earnings;
and (x) performed such other studies and analyses as Chaffe
deemed appropriate to its Opinion.
In its review, Chaffe relied, without independent
verification, upon the accuracy and completeness of the
historical and projected financial information, and all other
information reviewed by it for the purposes of its Opinion.
Chaffe did not make or obtain an independent review of ABI's or
ArgentBank's assets or liabilities, nor was Chaffe furnished with
any such appraisals. Chaffe relied solely on ABI and ArgentBank
for information as to the adequacy of their respective loan loss
reserves and values of their respective other real estate owned.
With respect to ABI's projected financial results, Chaffe has assumed
that they were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of
future financial performance. The Opinion was necessarily based
upon market, economic and other conditions as they existed on,
and could be evaluated as of, the date thereof. Chaffe expressed
no opinion on the tax consequences of the proposed transaction or
the effect of any tax consequences on the value to be received by
the holders of ABI Common Stock.
The following is a summary of selected analyses performed by
Chaffe in connection with its Opinion. The summary set forth
below does not purport to be a complete description of the
analyses performed in this regard, but does include all material
analyses.
ANALYSIS OF SELECTED FINANCIAL DATA. Chaffe analyzed the
historical performances of ABI and ArgentBank, and considered
the current financial conditions, operations and prospects for
each company. Chaffe noted ABI's dominant position in its
primary market area, its low-cost deposit base and its stable
profitability in recent years. Chaffe also noted ABI's high
overhead expense and low fee income level relative to its peers.
In regard to ArgentBank, Chaffe noted the return on average
assets for 1996 was 1.35%, and the return on average equity for
1996 was 11.75%. ArgentBank's efficiency ratio in 1996 was
approximately 59.4%. For the three months ended March 31, 1997,
ArgentBank had an annualized ROA of 1.41% and an annualized ROE
of 12.39%. Its Tier 1 equity to total assets as of
March 31, 1997 was 11.65%, and its ratio of nonperforming
assets to total assets for that date was 0.07%. ArgentBank's
loan loss reserve to total loans was 2.89% on March 31,1997.
STOCK PRICE AND DIVIDEND REVIEW. Chaffe reviewed certain
historical market information for ABI Common Stock and noted
that no independent market exists for these shares. In addition,
Chaffe reviewed the trading prices of ArgentBank Common Stock
from January 1, 1995, to April 22, 1997, and noted that as of
April 22, 1997, the last closing price of ArgentBank Common Stock
was $20.125. Chaffe also compared the prices of ArgentBank versus
the NASDAQ Bank index from January 1, 1995 to April 22, 1997.
Chaffe reviewed the dividend histories and current dividend
levels of ABI and ArgentBank, and noted that ABI's and
ArgentBank's annual dividend per share were $2.60 and $0.56,
respectively. Chaffe determined that if the exchange ratio outlined
in the Merger Agreements was calculated on ArgentBank's last closing
price of $20.125 as of April 22, 1997, each share of ABI Common Stock
exchanged for ArgentBank Common Stock would receive an annual dividend
of $3.74.
ANALYSIS OF COMPARABLE MERGER TRANSACTIONS. In order to
obtain a valuation range for ABI, Chaffe performed an analysis
of prices paid for selected banks or bank holding companies with
characteristics comparable to ABI, although Chaffe noted no
transaction was identical to the Mergers proposed. Comparable
transactions were considered to be transactions announced in the
United States for the period April 21, 1996 through April 21, 1997,
in which the sellers had total assets between $75 million and $200
million, a tangible equity ratio between 7.5% and 10.5%, a return
on average assets between 1.0% and 2.0%, and nonperforming assets
less than 2.0% of total assets. In addition, Chaffe performed an
analysis of prices paid for a similar group of selected banks,
limited in geographic areas to sixteen states in the southern
United States. Finally, Chaffe performed an analysis of prices
paid for substantially all Louisiana banks sold during the period
April 21, 1996 through April 21, 1997. With respect to each of
these groups of transactions and the proposed Bank Merger, Chaffe
compared the prices to be received by the peer groups as a
multiple of their tangible equity, their earnings per share for
the four quarters prior to the announcement of such a
transaction, their premium over tangible equity to core deposits,
and their total assets. The following table summarizes certain
results of this analysis.
<TABLE>
ArgentBank/ U.S. SOUTHERN LOUISIANA
ABI PEER GROUP PEER GROUP PEER GROUP
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Seller Total Assets
($000's)
Mean n/a 123,152 132,448 105,684
Median 112,068 114,270 125,936 62,936
Seller Tangible
Equity 8.99% 8.74% 8.52% 9.22%
Seller YTD ROAA 1.20% 1.33% 1.38% 1.11%
Seller YTD ROAE 13.34% 15.56% 15.75% 13.76%
Seller NPA/Assets 0.61% 0.28% 0.28% 0.75%
Price/Tangible
Equity 2.13x 2.09x 2.36x 2.36x
Price/4-Quarter EPS 19.10x 15.33x 17.07x 15.45x
Price-Tangible
Equity/Core
Deposits 11.75% 13.26% 15.21% 14.47%
Price/Assets 19.18% 18.92% 18.98% 21.41%
</TABLE>
Chaffe determined that the transaction's value was within the
ratio of values which resulted from this analysis.
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow
analysis of ABI, Chaffe determined the value for the ABI Common
Stock based on the net present value of the stream of after-tax
cash flows of ABI. These streams of after-tax cash flows were
based on information from the senior management of Assumption
Bank, which included forecasts of net income for 1997 through
1999 under various circumstances, and included assumptions
relating to earnings and growth thereafter based on information
from the management of ABI. Chaffe reviewed these forecasts and
assessed the likelihood of ABI achieving such forecasts. Chaffe
then discounted these cash flow streams assuming an estimated
required rate of return for ABI of 15.2%. Chaffe
determined that the transaction's value was above the range of
net present values which result from this analysis.
In arriving at its Opinion, Chaffe did not rely on any
single analysis, but relied on a combination of factors derived
from all of the analytical procedures employed. The preparation
of a fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or summary description.
Conclusions based on these analyses are not necessarily
mathematical. Chaffe believes that the summary set forth above
and Chaffe's analysis must be considered as a whole and that
selecting portions of its analyses are not necessarily indicative
of actual values or actual future results, which may be
significantly more or less favorable than suggested by such
analyses. Additionally, analyses relating to the value of
businesses do not purport to be appraisals or necessarily reflect
the prices at which businesses actually may be sold. The fact
that any specific analysis has been referred to in the summary
above is not meant to indicate that such analysis was given
greater weight than any other analysis.
Neither Chaffe nor any of its officers or employees has any
interest in the Common Stock of ABI or ArgentBank. ABI has
paid Chaffe approximately $150,000 in fees plus
out-of-pocket expenses for its services, including its services
in rendering the Fairness Opinion. For any other services
requested of Chaffe by ABI, ABI has agreed to pay Chaffe on an
hourly basis. The fees received by Chaffe in connection with its
services to ABI were not dependent or contingent upon the
occurrence or lack thereof of any transaction.
ABI has agreed to indemnify and hold harmless Chaffe, its
subsidiaries and affiliates, and its officers, directors,
shareholders, employees, attorneys, agents and representatives,
and the successor and assigns of each of the foregoing parties
from and against any person claiming to have relied on Chaffe's
advice or services, or the performance or nonperformance thereof,
or claiming to have been entitled to some benefit therefrom, or
claiming that such services were not adequately performed, and
all related damage, claim, demand, expense or cost of any kind or
nature, including reasonable attorney fees and expenses, arising
directly or indirectly, from or in any way related to, the
Opinions or any other services performed by Chaffe, provided that
Chaffe has not been negligent or guilty of reckless or willful
misconduct in connection with the Opinion, or any other services.
OPINION TO ARGENTBANK. The Board of Directors of ArgentBank
retained the investment banking firm of Chase Securities Inc.
("Chase") to render its opinion as to the fairness from a financial
point of view to the shareholders of ArgentBank of the consideration
to be issued for each share of ABI Common Stock pursuant to the
Merger Agreements ("Chase's Opinion").
Chase delivered its written opinion to the Board of
Directors of ArgentBank to the effect that, as of April 18,
1997 the aggregate consideration offered pursuant to the Merger
Agreements is fair to the shareholders of ArgentBank.
A copy of Chase's written opinion dated April 18, 1997,
which sets forth the assumptions made, matter considered and
limits on the review taken is attached hereto as Appendix C to
this Proxy Statement and is incorporated herein be reference.
ArgentBank shareholders are urged to read Chase's Opinion in its
entirety. The description of Chase's Opinion set forth herein is
qualified in its entirety by reference to the full text of such
Opinion. Chase's Opinion is directed only to the consideration
to be paid and does not constitute a recommendation to any
ArgentBank shareholders as to how such shareholder should vote at
the ArgentBank Meeting.
In arriving at its written Opinion dated April 18,
1997, Chase, among other things (i) reviewed the Plan; (ii)
reviewed ABI's Annual Reports, Forms 10-K and related financial
information for the four fiscal years ending December 31, 1993
through December 31, 1996; (iii) reviewed
ArgentBank's annual Reports, Forms 10-K for each of the four
years ending December 31, 1993 through December 31, 1996;
(iv) held discussions with members of management of ArgentBank
regarding the Mergers, certain aspects of past and current
business operations, financial condition and future prospects of
ArgentBank and ABI; (v) compared the financial and operating
performance of ABI with publicly available information concerning
other companies Chase deemed relevant; (vi) compared the financial
terms of the transaction contemplated by the Mergers with the
financial terms of certain other mergers and acquisitions which
Chase deemed to be relevant; (vii) considered the pro forma
effect of the Mergers on ArgentBank's capitalization ratios,
earnings, and book value per share; and (viii) reviewed such
other financial studies and analyses and performed such other
investigations and took into account such other matters as it
deemed necessary.
Chase has relied, without independent verification, upon the
accuracy and completeness of all of the financial and other
information reviewed by Chase for the purpose of its Opinion.
Chase also relied upon the management of ArgentBank as to the
reasonableness and achievability of the financial and other
operating forecasts provided to Chase. In that regard, Chase
assumed with ArgentBank's consent that such forecasts, including
without limitation, projected cost savings and operating
synergies resulting from the Mergers and projections regarding
underperforming and nonperforming assets, net charge-offs and the
adequacy of reserves, reflected the best currently available
estimates and judgments of such matters. Chase is not an expert
in the evaluation of allowances for loan losses of ArgentBank or
ABI nor has it reviewed any individual credit files. In
addition, Chase has not made an independent evaluation or
appraisal of the assets and liabilities of ArgentBank or ABI or
any of their subsidiaries, and has not been furnished with any
such evaluation or appraisal.
Set forth below is a summary of selected analyses performed
by Chase in reaching its Opinion delivered on April 18, 1997.
SUMMARY OF PROPOSAL. Chase described the terms of the
proposed transaction as reflected in the Plan, including the
aggregate consideration offered. Based upon the aggregate
consideration offered, Chase calculated price to book, price to
earnings, and price to assets multiples for ABI. This analysis
yielded a price to book multiple of 2.19x, a price to earnings
multiple of 18.9x, an adjusted price to earnings multiple that
excludes approximately $240,000 in merger-related expenses
incurred during 1996 by ABI of 15.9x, and a price to assets
multiple of 19.2% based upon ABI's net earnings and balance
sheet data for the twelve months ended December 31, 1996.
PRO FORMA MERGER ANALYSIS. Chase analyzed certain pro forma
effects resulting from the Mergers. This analysis indicated that
the core earnings of ABI could be enhanced through cost savings
and revenue enhancements. Accounting for estimates of core
earnings and cost savings provided to Chase by ArgentBank,
Chase's analysis showed approximately 3.4 % earnings per share
dilution in year one and 5.6% earnings per share accretion in
year two. Chase's analysis also noted that on a cash flow per
share basis, the transaction would be 4.9% accretive to
ArgentBank in year one.
DISCOUNTED CASH FLOW ANALYSIS. Using a projected cash flow
stream, Chase estimated the value of the future streams of after
tax cash flow that ABI could produce through the year 2003. In
this analysis, Chase assumed that ABI performed in accordance
with the earnings forecasts and merger synergies provided to
Chase by ArgentBank's management. Chase applied a range of
terminal values based upon (i) 8 to 12 times ABI's earnings
in the Year 2004, and (ii) a perpetuity growth rate of 2% to
4%. The after tax cash flow stream and terminal values were
then applied to a weighted average cost of capital of 11.5% to
13.5 %. This analysis was based on ArgentBank's management
projections, which were based upon many factors and assumptions,
many of which are beyond the control of ArgentBank and ABI. As
indicated below, this analysis is not necessarily indicative of
actual future results and does not purport to reflect the prices
at which any securities may trade at the present or any time in
the future.
ANALYSIS OF SELECTED BANK MERGER TRANSACTIONS. Chase
reviewed a number of merger transactions which occurred since
January 1, 1995. These transactions included mergers and
acquisitions within Louisiana for which the asset size
of the acquired company ranged between $86 million and $283 million in value.
Chase calculated the price to earnings, price to book value and
price to asset ratios in the contemplated transaction and such
selected bank merger transaction. This yielded a range of price
to earnings multiples of approximately 9.1x to 24.9x with a
mean of 15.4x and a median of 15.8x, a range of price to book
value multiples of approximately 2.01x to 2.50x with a mean of
2.22x and a median of 2.16x and a range of price to assets multiple
of approximately 12.3% to 26.1% with a mean of 20.6% and a median of
22.0%.
No company or transaction used in the above analyses as a
comparison is identical to ArgentBank, ABI or the contemplated
transaction. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and
judgements concerning differences in the financial and operating
characteristics of the companies and other factors that could
affect the public trading value of the companies which were
compared. Mathematical analysis (such as determining the mean or
the median) is not, in itself, a meaningful method of using
comparable company or transaction data.
COMPARISON OF SELECTED COMPANIES. In connection with the
rendering of its Opinion, Chase compared selected operating data
for ABI to the corresponding data of Auburn National Bancorporation,
Inc., MidSouth Bancorp, Inc., National Bancshares Corporation of
Texas, South Alabama Bancorporation, and Surety Capital Corporation
(collectively, the "Peers"). This comparison showed, among other
things, that (i) for the twelve month period ending December 31, 1996,
ABI's return on assets was 10.6%, compared to a mean of 1.02%
and a median of 1.11% for the Peers; (ii) for the twelve month
period ending December 31, 1996, ABI's return on equity
was 11.9%, compared to a mean of 9.9% and a median of 11.5% for
the Peers; (iii) for the period ended December 31, 1996, ABI's
equity to assets ratio was 8.8%, compared to a mean of 8.9% and
a median of 10.3% for the Peers; and (iv) for the period ended
December 31, 1996, ABI's nonperforming assets to total assets ratio
was 0.76%, compared to a mean of 0.34% and a median of 0.38% for
the Peers.
The summary of Chase's Opinion set forth above provides a
description of the principal elements of the analyses performed
by Chase in arriving at its Opinion. It does not purport to be a
complete description of such analyses. The preparation of
Chase's Opinion is not necessarily susceptible to partial
analysis or summary description. Chase believes that its
analyses and the summary set forth above must be considered as a
whole and that selected portions of its analyses, without
considering all analyses, or selecting all or part of the above
summary, without considering all factors and analyses, would
create an incomplete view of the procedures underlying the Chase
Opinion. In addition, while Chase gave the various analyses
approximately similar weight it may have used them for different
purposes, and may have deemed various assumptions more or less
reliable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not
be taken to be Chase's view of the actual value of ABI or
ArgentBank. The fact that any specific analysis has been
referred to in the summary above is not meant to indicate that
such analysis was given more weight than any other analyses.
In performing its analyses, Chase made numerous assumptions
with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond
the control of ABI or ArgentBank. The analyses performed by
Chase are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable
than suggested by such analyses. Such analyses were prepared
solely as part of Chase's analysis of the fairness of the
aggregate consideration offered with respect to shareholders of
ArgentBank, the conclusions of which were provided to
ArgentBank's Board of Directors. The analyses do no purport to
be appraisals or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade
at the present time or at any time in the future. In additions,
as described above, Chase's Opinion to the ArgentBank Board of
Directors is just one of many factors taken into consideration by
the ArgentBank Board of Directors.
Chase is a nationally recognized investment banking firm
with substantial experience in transactions similar to the
Mergers and is familiar with ArgentBank and its business. Chase
regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions, debt and
equity underwritings, private placements, and valuations for
estate, corporate and other purposes.
Pursuant to its engagement letter and upon closing of the
Mergers, Chase will receive a fee of $450,000 for services
provided as financial advisor to ArgentBank, including the
delivery of Chase's Opinion to the ArgentBank Board of Directors.
Chase will also be reimbursed for its reasonable out-of-pocket
expenses incurred in connection with its services, including
reasonable attorneys' fees and disbursements, and will be
indemnified against certain liabilities, including liabilities
arising under the securities laws.
EFFECTIVE DATE
The closing (the "Closing") of the transactions contemplated
by the Merger Agreements will take place at ArgentBank's offices
at 400 Green Street, Thibodaux, Louisiana 70301, on a mutually
agreeable date by ArgentBank and Assumption Bank ("Closing Date")
as soon as practicable following the satisfaction of certain
conditions, including ABI and ArgentBank shareholder approvals,
receipt of all applicable regulatory approvals relating to the
Mergers and satisfaction or waiver of all other conditions of the
Merger Agreements.
The Company Merger Agreement will be filed and recorded with
the Louisiana Secretary of State and the OFI as provided by law
immediately following (or concurrently with) the Closing, and the
Company Merger will be effective at the time specified in a
certificate or other written record issued by the OFI. The Bank
Merger Agreement will be filed and recorded with the OFI as
provided by law immediately following (or concurrently with) the
Closing, and the Bank Merger will be effective at the time
specified in a certificate or other written record issued by the
OFI. It is the intent of the parties that the Company Merger
will be effected immediately prior to the Bank Merger. The date
on which and the time at which the Bank Merger becomes effective
are referred to as the "Effective Date" and the "Effective Time,"
respectively.
REGULATORY APPROVALS AND OTHER CONDITIONS TO THE MERGERS
The Company Merger is subject to approval by the FDIC and
the OFI. On or about January 23, 1997, ABI and Assumption Bank
filed with the FDIC and the OFI, respectively, an application
seeking approval to merge ABI into Assumption Bank. This
application has been accepted for processing by the FDIC and the
OFI. As of the date of this Joint Proxy Statement/Offering
Circular, neither the FDIC nor the OFI had approved the
application for the Company Merger. The Company Merger cannot be
consummated for fifteen days after approval thereof by the FDIC.
The Bank Merger is subject to approval by the FDIC and the
OFI. On or about January 23, 1997, ArgentBank filed with the
FDIC and the OFI, respectively, an application seeking approval
to merge Assumption Bank into ArgentBank. As of the date of this
Joint Proxy Statement/Offering Circular, neither the FDIC nor the
OFI had approved the application for the Bank Merger. The Bank
Merger cannot be consummated for fifteen days after approval
thereof by the FDIC, and during such period, the Justice
Department may challenge the merger of Assumption Bank into
ArgentBank on antitrust grounds.
In addition to the receipt of all necessary regulatory
approvals, the expiration of all required notice and waiting
periods following the granting of such approvals, and the
approval of the Mergers by the requisite vote of the shareholders
of ArgentBank and ABI, consummation of the Mergers is subject to
the satisfaction of certain other conditions on or before the
Effective Date, including that; (i) no action or proceeding shall
have been threatened or instituted before a court or other
governmental body to restrain or prohibit the transactions
contemplated by the Merger Agreements; and (ii) ArgentBank and
Assumption Bank have received from Watkins Ludlam & Stennis,
P.A., an opinion of counsel as to certain tax aspects of the
transactions contemplated by the Merger Agreements.
The obligations of each of ArgentBank, ABI and Assumption
Bank to effect the Mergers are also subject to the following
additional conditions at or prior to the Closing; (i) that each
of the representations and warranties of the other parties set
forth in the Merger Agreement is true and correct in all material
respects as of the Closing; (ii) that the other parties have in
all material respects performed all obligations required by the
Merger Agreement prior to the Closing; (iii) that there have not
been any material adverse change in the financial condition,
results of operations or business of the other party, and (iv)
the receipt of customary legal opinions of the other's counsel.
It is also a condition to ArgentBank's obligation to
consummate the Mergers that a majority of ABI's Board have voted
the shares of ABI Common Stock held by them in favor of the Plan
and not have intentionally, openly and publicly undertaken or
participated in any concerted overt efforts against the
transactions contemplated by the Plan.
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE DATE
ArgentBank has agreed to operate its business solely in the
ordinary course consistent with prudent business practices and in
compliance with all applicable laws, regulations, and rules, but
is not limited or restricted in its assets, liabilities or
capital structure provided however, that ArgentBank and its
executive officers, directors, and control persons and any
affiliates, will not effect any transactions in ArgentBank Common
Stock in violation of Rule 10b-6 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or otherwise for the
purpose, of manipulating the trading price of ArgentBank Common
Stock.
Pending the consummation of the Mergers, ABI and Assumption
Bank have agreed to conduct their business in the ordinary course
consistent with prudent business practices and in compliance with
all applicable laws; and without the prior consent of ArgentBank,
will not, among other matters, amend its Articles of
Incorporation or Bylaws, issue or reacquire any stock, pay
dividends except a December 1996 dividend of $1.10 per share,
authorize any capital expenditure exceeding $20,000, extend any
new loan which individually exceeds $100,000 or refinance a loan
which exceeds $150,000 and does not meet Assumption Bank's loan
policy requirements, adopt any type of compensation benefit or
plan for ABI or Assumption Bank officers or employees except 1996
year end bonuses consistent with past practices and not exceeding
in the aggregate $50,000.
NO SOLICITATION
Prior to the Effective Date neither ABI or Assumption Bank
will solicit or initiate any discussions, inquiries or proposals
related to any merger, consolidation, sale of assets or similar
transactions involving ABI or Assumption Bank, except with
ArgentBank. This agreement will not prohibit any officer or
director of ABI or Assumption Bank from taking any action that is
required to discharge his fiduciary duties to ABI, Assumption
Bank or their shareholders. The ABI Board of Directors may
terminate the Plan in this event only upon payment of all
reasonable expenses incurred by ArgentBank in connection with the
Mergers. See "THE MERGERS -- Amendment; Termination."
AMENDMENT; TERMINATION
The Plan may be amended by written agreement of all the
parties, except that no amendment may be made after ABI
shareholder approval to change the amount or type of
consideration to be delivered to the ABI shareholders unless
further shareholder approval is obtained.
The Plan may be terminated at any time prior to the
Effective Date (a) by mutual written consent of the parties; (b)
by either ArgentBank, ABI or Assumption Bank if, (i) there is
breach of any covenant, representation or warranty of the other
party that reflects a material adverse change in the financial
condition of the other party, (ii) regulatory approvals are not
obtained, (iii) if the transaction is not consummated by June 30,
1997, (iv) 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 Mergers violate the antitrust laws of the United
States; or (v) the Plan shall not have been approved by the
required vote of the holders of ABI's or ArgentBank's
shareholders; (c) by ABI or Assumption Bank if the Average Market
Price of ArgentBank Common Stock exceeds $23; or (d) by
ArgentBank, or (i) if the average market price of ArgentBank
Common Stock is less than $15; or (ii) in the event there are
dissenting shareholders who hold more than ten percent (10%) of
the shares of ABI Common Stock.
In the event that ArgentBank terminates the Merger
Agreements because of the imposition of a material condition to
the approval of the transaction contemplated hereby by any
regulatory or governmental authority which requires a divestiture
or other antitrust or anticompetitive condition, that is not
acceptable to ArgentBank, ArgentBank will pay all reasonable
third party out of pocket expenses incurred by ABI and Assumption
Bank in connection with the Mergers.
In recognition of the fact that ArgentBank will bear the
bulk of the expenses in preparing for regulatory approvals, if
the shareholders of ABI fail to approve the Plan because of
action taken by an officer or director of ABI or Assumption Bank
upon opinion of counsel in order to fulfill their fiduciary
duties, ABI will pay all reasonable third party out of pocket
expenses incurred by ArgentBank in connection with the Mergers.
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
It is anticipated that the employees of Assumption Bank will
become employees of ArgentBank. Pursuant to the Plan, Harold F.
Templet, Senior Vice President of Assumption Bank, will receive a
guaranteed employment term of eighteen months, and guaranteed
salary amounts and severance benefits. ArgentBank will pay to
Mr. Templet an annual salary of not less than $69,280.
Additionally, Mr. Templet shall participate in all executive
salary programs maintained by ArgentBank and shall be entitled to
salary increases in amounts awarded to similarly situated
executives of ArgentBank and its affiliates. An annual incentive
bonus may be paid with respect to the services provided by Mr.
Templet, in such amount as may be determined from time to time by
ArgentBank's Board of Directors or Compensation Committee.
ArgentBank will furnish Mr. Templet with benefits and perquisites
at least as valuable as those currently maintained by ArgentBank
for its employees generally, and for its senior executives in
particular, on the same basis and subject to the same
requirements and limitations as may be applicable to senior
executive employees of ArgentBank as described in ArgentBank's
current personnel manual.
Pursuant to the Plan, for a period of not less than two
years after the Effective Date of the Bank Merger, the Board of
Directors of ArgentBank shall nominate and recommend at least one
former member of the Board of Directors of ABI to serve as a
director of ArgentBank.
From and after the Effective Date ArgentBank will indemnify
former ABI and Assumption Bank officers, employees and agents
against all losses, claims or damages to which such parties
become subject, arising out of actions occurring prior to the
Effective Date (including transactions contemplated by the Plan)
to the full extent of Louisiana Law or by ABI's Articles of
Incorporation and Bylaws. ArgentBank has also agreed to honor
certain indemnity agreements executed by ABI or Assumption Bank.
Prior to closing ABI will extend its directors and officers
liability coverage for such persons who are currently covered for
a period of three years following the Effective Date.
EMPLOYEE BENEFITS
ABI's and Assumption Bank's group health and life benefit
plan will be continued through the Effective Date of the Mergers.
Thereafter, all retained employees will be eligible to
participate in ArgentBank's group health and life benefit plan
based on the provisions in the plan. The ninety (90) day
employment period will be waived for eligible retained employees
in accordance with ArgentBank's plan. ArgentBank will waive
pre-existing medical conditions for health insurance purposes as
to all retained personnel, provided such pre-existing medical
conditions were covered at Closing under ABI's group health
benefit plan.
ArgentBank will pay severance benefits to any former ABI or
Assumption Bank employee who within nine months following the
Effective Date either (i) is terminated without cause or (ii)
resigns after such person is relocated more than 40 miles from
his place of employment or suffers a reduction in his hours to
less than 30 hours a week. Severance benefits will be based upon
such person's salary on the Effective Date of the Mergers.
From and after the Effective Date, ArgentBank will, subject
to compliance with applicable legal and regulatory requirements,
provide coverage for all Assumption Bank employees under all
ArgentBank employee benefit plans for which they are eligible, as
soon as practicable after the Effective Date. All prior years of
service of Assumption Bank employees will be counted for vesting
and eligibility purposes (including eligibility for early
retirement benefits under the ArgentBank Pension Plan) under all
applicable ArgentBank employee benefit plans to the extent
permitted by applicable law. Any Assumption Bank employee who,
immediately prior to the Effective Date, is covered by or is a
participant in an Assumption Bank employee benefit plan, shall,
at the Effective Date, be covered by or participate in the
comparable ArgentBank employee benefit plan if a comparable plan
otherwise is maintained by ArgentBank and if the eligibility
requirements of the ArgentBank plan are met. ArgentBank will
merge the retirement plan for employees of Assumption Bank into
the ArgentBank pension plan.
EXPENSES
ArgentBank, ABI and Assumption Bank have agreed to pay all
costs, fees and expenses which each has incurred in connection
with or incidental to the matters contained in the Plan including
without limitation any fees and disbursements to their respective
accountants, counsel and financial advisors. ArgentBank will be
responsible for preparing the applications, regulatory filings
and registration and proxy statement necessary to obtain
regulatory and its shareholder approval of the Mergers and the
issuance of the ArgentBank Common Stock. ABI will be responsible
for all costs related to conducting its shareholders' meeting and
obtaining its shareholders' approval of the Mergers.
In recognition of the fact that ArgentBank will bear the
bulk of the expenses in preparing for regulatory approvals, if
the shareholders of ABI fail to approve the Plan because of
action taken by an officer or director of ABI or Assumption Bank
upon opinion of counsel in order to fulfill their fiduciary
duties, ABI will pay all reasonable third party out of pocket
expenses incurred by ArgentBank in connection with the Mergers.
ACCOUNTING TREATMENT
It is intended that the Mergers will qualify for purchase
accounting treatment under general accepted accounting
principles. Accordingly, the earnings of Assumption Bank will be
combined with the earnings of ArgentBank from and after the
Effective Date of the Bank Merger and any goodwill or other
intangibles recorded in the transaction will be amortized through
charges to income in future periods. In addition, assets and
liabilities will be recorded at fair value on the date of the transaction.
<PAGE>
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS
Set forth below is a discussion of material federal income
tax consequences of the Mergers. The discussion is intended only
as a summary and does not purport to be a complete analysis of
all potential tax effects relevant to a decision whether to vote
for the approval of the Plan. The discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations thereunder, and applicable judicial and
administrative interpretations on the date hereof, any of which
is subject to change at any time. It is a condition to
consummation of the Mergers that both parties shall have received
from Watkins Ludlam & Stennis, P.A., an opinion of counsel as to
certain tax aspects of the transactions contemplated by the
Merger Agreements.
ALL STOCK RECEIVED. Each ABI shareholder who, pursuant to
the Company Merger, exchanges all of his ABI Common Stock for
Assumption Bank Common Stock, will recognize no gain or loss upon
such exchange. Any Assumption Bank shareholder who, pursuant to
the Bank Merger, exchanges all of the Assumption Bank Stock that
such holder owns solely for ArgentBank Common Stock will not
recognize any gain or loss upon such exchange. The aggregate tax
basis of ArgentBank Common Stock received by such a holder in
exchange for Assumption Bank Common Stock will equal such
holder's tax basis in the Assumption Bank Common Stock
surrendered. If such shares of Assumption Bank Common Stock are
held as capital assets on the Effective Date, the holding period
of the ArgentBank Common Stock received will include the holding
period of the Assumption Bank Common Stock surrendered therefor.
Assumption Bank's shareholders should consult their tax advisors
as to the determination of their tax basis and holding period in
any one share of ArgentBank Common Stock, as several methods of
determination may be available and in view of the stock exchange
in the Company Merger.
Part Stock and Part Cash Received. If the consideration
received by an Assumption Bank shareholder consists of part cash
and part ArgentBank Common Stock, a shareholder whose adjusted
basis in the shares of Assumption Bank Common Stock surrendered
in the transaction is less than the value, as of the Effective
Date, of the ArgentBank Common Stock plus the amount of cash
received will realize a gain on the transaction. Such
shareholders will recognize gain equal to the lesser of (i) the
excess, if any, of the value, as of the Effective Date, of the
ArgentBank Common Stock plus the amount of cash received, over
the adjusted basis of the shares of Assumption Bank Common Stock
surrendered in the transaction or (ii) the amount of cash
received. THE CHARACTER OF SUCH RECOGNIZED GAIN (I.E., AS A
DIVIDEND OR CAPITAL GAIN) WILL DEPEND UPON WHETHER, ON A
SHAREHOLDER-BY-SHAREHOLDER BASIS, THE EXCHANGE OF ASSUMPTION BANK
COMMON STOCK FOR ARGENTBANK COMMON STOCK AND CASH HAS THE EFFECT
OF THE DISTRIBUTION OF A DIVIDEND. IN THIS CASE, THERE ARE TWO
APPLICABLE TESTS FOR THIS DETERMINATION: (I) A TEST TO SEE IF THE
HYPOTHETICAL REDEMPTION OF ARGENTBANK COMMON STOCK (DISCUSSED
BELOW) IS "SUBSTANTIALLY DISPROPORTIONATE" WITH RESPECT TO THE
SHAREHOLDER, AND (II) A TEST TO DETERMINE WHETHER THE
HYPOTHETICAL REDEMPTION OF ARGENTBANK COMMON STOCK IS "NOT
ESSENTIALLY EQUIVALENT TO A DIVIDEND," WITH BOTH TESTS TAKING
INTO ACCOUNT THE CONSTRUCTIVE STOCK OWNERSHIP RULES OF SECTION
318(A) OF THE CODE. IF EITHER ONE OF THESE TESTS IS MET, THE
ASSUMPTION BANK SHAREHOLDER WILL BE ENTITLED TO CAPITAL GAIN
TREATMENT.
The determination of whether the exchange is "substantially
disproportionate" with respect to the shareholder must be made by
comparing the interest each Assumption Bank shareholder actually
receives in ArgentBank in the Bank Merger exchange with the
interest such shareholder would have received in ArgentBank if
solely ArgentBank Common Stock had been received, followed by a
hypothetical redemption by ArgentBank. The deemed redemption
will qualify as "substantially disproportionate" if the
shareholder experiences a more than 20 percent reduction in his
proportionate interest in ArgentBank as a result.
The hypothetical redemption of ArgentBank Common Stock will
be treated as "not essentially equivalent to a dividend" if such
redemption (a) involves a minority shareholder whose relative
stock interest in ArgentBank is minimal and who exercises no
control over the affairs of ArgentBank, or (b) results in a
reduction of the former Assumption Bank shareholder's right to
vote, to participate in current earnings and accumulated surplus,
or to share in ArgentBank's net assets on liquidation.
In the event an Assumption Bank shareholder realizes a loss,
under current tax laws, such loss would not be currently allowed
and would not be recognized for federal income tax purposes. Such
disallowed loss would be reflected in the adjusted tax basis of
the shares of ArgentBank Common Stock received in the Bank
Merger. As previously noted, no gain or loss will be recognized
in connection with the stock-for-stock exchange pursuant to the
Company Merger.
ALL CASH RECEIVED. If the consideration received by an
Assumption Bank shareholder consists entirely of cash, gain or
loss will be recognized by the shareholder to the extent of the
difference between the amount of cash received and the adjusted
tax basis of the shares of Assumption Bank Common Stock
surrendered in the transaction. Any such gain or loss recognized
will be treated as capital gain or loss if the shares of
Assumption Common Stock surrendered in the transaction were held
as capital assets and if after the exchange such shareholder is
not treated as constructively owning any ArgentBank Common Stock.
In determining constructive ownership, stock owned by a
shareholder's spouse, children, grandchildren and parents
generally must be attributed to that shareholder. Stock owned by
partnerships, estates, trusts and certain corporations is
attributed to the partners, beneficiaries and shareholders in
applying these rules. If a shareholder's interest after
application of these attribution rules has not been completely
terminated in the transaction, that shareholder may nevertheless
receive capital gain treatment under the "substantially
disproportionate" or "not essentially equivalent to a dividend"
tests discussed above.
FRACTIONAL SHARES. There will be no fractional shares issued
in connection with the Company Merger. To avoid the expense and
inconvenience to ArgentBank of issuing fractional shares, no
fractional shares of ArgentBank Common Stock will be issued
pursuant to the Bank Merger. Any Assumption Bank shareholder who
receives cash pursuant to the Bank Merger in lieu of a fractional
share interest will be treated as having received such fractional
share pursuant to the merger, and then as having exchanged such
fractional share for cash in a redemption by ArgentBank subject
to the provisions and limitations of Section 302(a) of the Code.
If the ArgentBank Common Stock represents a capital asset in the
hands of the shareholder, then the shareholder will generally
recognize capital gain or loss on such a deemed redemption of the
fractional share in an amount determined by the difference
between the amount of cash received for such fractional share and
the shareholder's tax basis in the fractional share.
DISSENTERS. ABI or Assumption Bank shareholders who perfect
statutory appraisal rights in connection with the Mergers will be
treated as having received the fair value of ABI Common Stock or
Assumption Bank Common Stock, as the case may be, as determined
in the appraisal rights proceeding, in redemption of ABI or
Assumption Bank Common Stock subject to the proceeding. Such
deemed redemption will be subject to the provisions and
limitations of Section 302(a) of the Code, with the result that a
holder who exercises statutory appraisal rights will recognize
gain or loss equal to the difference between the amount realized
and such holder's tax basis in the stock subject to the
proceeding. Any such gain or loss recognized on such redemption
will be treated as capital gain or loss if the stock with respect
to which statutory appraisal rights were exercised were held as
capital assets and if after the deemed redemption, such
shareholder does not constructively own any Assumption Bank
Common Stock (after the Company Merger), or any ArgentBank Common
Stock (after the Bank Merger). Each shareholder who contemplates
exercising statutory appraisal rights in connection with either
of the Mergers should consult his tax advisor as to the
possibility that all or a portion of the payment received
pursuant to the appraisal proceeding will be treated as dividend
income.
BACKUP WITHHOLDING. Unless an exemption applies under the
applicable law and regulations, SunTrust Bank, as the Exchange
Agent, will be required to withhold thirty-one percent (31%) of
any cash payments to which a shareholder or other payee is
entitled pursuant to the Mergers unless the shareholder or other
payee provides his taxpayer identification number (social
security number or employer identification number) and certifies
that such number is correct. Each shareholder and, if applicable,
each other payee should complete and sign the substitute Form W-9
included as part of the transmittal letter so as to provide the
information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is
established in a manner satisfactory to ArgentBank and the
Exchange Agent.
THE FOREGOING ANALYSIS OF FEDERAL INCOME TAX CONSEQUENCES IS
INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED
AS A SUBSTITUTE FOR CAREFUL TAX PLANNING. SHAREHOLDERS OF ABI
AND ARGENTBANK ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGERS AND OF OWNERSHIP
OF ARGENTBANK COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT
OF STATE AND LOCAL INCOME AND OTHER TAX LAWS.
<PAGE>
DISSENTERS' RIGHTS
ABI SHAREHOLDERS
IF A SHAREHOLDER OF ABI COMMON STOCK WHO OBJECTS TO
THE MERGERS AND DESIRES TO PERFECT DISSENTERS' RIGHTS IS
NOT TIMELY IN TAKING ANY OF THE FOLLOWING STEPS, THE
SHAREHOLDER WILL LOSE THE RIGHT TO DISSENT FROM THE
MERGERS AND THE SHARES OWNED BY SUCH SHAREHOLDER WILL BE
CONVERTED AS OF THE EFFECTIVE TIME OF THE MERGERS INTO
THE RIGHT TO RECEIVE ARGENTBANK COMMON STOCK AND/OR CASH IN
ACCORDANCE WITH THE TERMS OF THE PLAN.
Unless the Mergers are approved by the holders of at least
eighty percent (80%) of the total voting power of ABI, Section
131 of the LBCL allows a shareholder of ABI Common Stock who
objects to the Mergers and who complies with the provisions of
that section to dissent from the Mergers and to be paid the fair
cash value of his shares of ABI Common Stock, as of the day
before the ABI Meeting, as determined by agreement between the
shareholder and ArgentBank or by the state district court for the
Parish of Assumption if the shareholder and ArgentBank are unable
to agree upon the fair cash value of such shares.
To exercise the right of dissent, a shareholder must (i)
file with ABI a written objection to the Mergers prior to or at
the ABI Meeting, and (ii) vote his shares against the Mergers at
the ABI Meeting. Such written objection must be delivered to
ABI. Neither a vote against the Mergers nor a specification in a
proxy to vote against or an abstention from voting on the Mergers
alone will constitute the necessary written objection to the
Mergers. Moreover, by voting in favor of the Mergers, by
abstaining from voting on the Mergers, or by returning the
enclosed proxy without instructing the proxy holders to vote
against the Mergers, a shareholder waives his rights under
Section 131 of the LBCL.
If the Mergers are approved by less than 80 percent (80%) of
the total voting power of ABI, then promptly after the Effective
Date of the Mergers, written notice of consummation of the
Mergers will be given by registered mail to each shareholder who
filed a written objection and voted against the Mergers. Within
twenty days of the mailing of such notice, the shareholder must
file with ArgentBank a written demand for payment of the fair
cash value of his shares as of the day before the ABI Meeting and
must state the amount demanded and a post office address to which
ArgentBank may reply. The shareholder also must deposit the
certificate(s) formerly representing his shares of ABI Common
Stock in escrow with a bank or trust company located in
Assumption Parish, Louisiana. With the above-mentioned demand,
the shareholder must also deliver to ArgentBank the written
acknowledgment of such bank or trust company that it holds the
certificate(s), duly endorsed and transferred to ArgentBank, on
the sole condition that the certificate(s) will be delivered to
ArgentBank upon payment of the value of the shares in accordance
with Section 131.
Unless the shareholder objects to and votes against the
Mergers, demands payment, deposits his certificate(s) and
delivers the required acknowledgment in accordance with the above
mentioned procedures and within the time periods set forth above,
the shareholder will conclusively be presumed to have acquiesced
to the Mergers and will forfeit any right to seek payment
pursuant to Section 131.
If ArgentBank does not agree with the fair value demanded by
the shareholder, or does not agree that payment is due, it will
notify the shareholder within twenty days after receipt of the
shareholder's demand and acknowledgment, and state in such notice
the value it is willing to pay for the shares or its belief that
no payment is due. If the shareholder does not agree to accept
the amount offered by ArgentBank, he must, within 60 days after
receipt of such notice, file suit against ArgentBank in the state
district court for the Parish of Assumption for a judicial
determination of the fair cash value of the shares. Any
shareholder entitled to file such suit, within such 60-day period
but not thereafter, may intervene as a plaintiff in any suit
filed against ArgentBank by any other former ABI shareholder for
a judicial determination of the fair cash value of such other
shareholder's shares. If a shareholder fails to bring or to
intervene in such a suit within the applicable 60-day period, he
will be deemed to have consented to accept ArgentBank's statement
that no payment is due or, if ArgentBank does not contend that no
payment is due, to accept the amount specified by ArgentBank in
its notice of disagreement.
If, upon filing of any such suit or intervention, ArgentBank
deposits with the court the amount, if any, that it specified in
its notice of disagreement, and if in that notice ArgentBank
offered to pay such amount to the shareholder on demand, then the
costs (not including legal fees) of the suit or intervention will
be taxed against the shareholder if the amount finally awarded to
him, exclusive of interest or costs, is equal to or less than the
amount so deposited; otherwise, the costs (not including legal
fees) will be taxed against ArgentBank.
Upon filing a demand for the value of his shares, a
shareholder ceases to have any rights as a shareholder except the
rights created by Section 131. The shareholder's demand may be
withdrawn voluntarily at any time before ArgentBank gives its
notice of disagreement. Withdrawal of a demand thereafter
requires the written consent of ArgentBank. If withdrawn, or if
the shareholder otherwise loses his dissenters' rights under
Section 131, he will be restored to his rights as a shareholder
as of the time of filing his demand for fair cash value.
Prior to the Effective Date, dissenting shareholders of ABI
should send any communications regarding their rights to Harold
R. Templet, Secretary, Assumption Bancshares, Inc., 110 Franklin
Street, Napoleanville, Louisiana 70390-0398. On or after the
Effective Date, dissenting shareholders should send any
communications regarding their rights to William B. Gautreaux,
Cashier, ArgentBank, 400 Green Street, Thibodaux, Louisiana
70301. All such communications should be signed by or on behalf
of the dissenting shareholder in the form in which his shares are
registered on the books of ABI. ArgentBank has the right to
terminate the Merger Agreements if the number of shares of ABI
Common Stock as to which holders thereof are legally entitled to
assert dissenters' rights equals 10% or more of the outstanding
shares of ABI Common Stock. See "THE MERGERS -- Amendment;
Termination."
THE FOREGOING SUMMARY OF DISSENTERS' RIGHTS UNDER THE LBCL
IS NECESSARILY INCOMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SECTION 131 OF THE LBCL, WHICH IS SET FORTH IN ITS
ENTIRETY IN THIS JOINT PROXY STATEMENT/OFFERING CIRCULAR AS
APPENDIX D.
ARGENTBANK SHAREHOLDERS
ArgentBank is governed by the Louisiana Banking Laws.
Pursuant to R.S. 6:376 of the Louisiana Banking Laws, the
shareholders of ArgentBank are not entitled to appraisal rights
in connection with the Mergers because ArgentBank Common Stock is
listed on the American Stock Exchange.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined
financial information gives effect to the Merger using the
purchase method of accounting and should be read in conjunction
with the consolidated financial statements and notes thereto of
ArgentBank incorporated herein by reference and of ABI included
elsewhere in this Joint Proxy Statement/Offering Circular. The
pro forma information is presented for illustrative purposes
only, and is not necessarily indicative of the operating results
or financial position that would have occurred if the merger had
been consummated in accordance with the assumptions set forth
under "Notes to Unaudited Pro Forma Condensed Combined Financial
Statements," nor is it necessarily indicative of future operating
results or financial position.
The unaudited pro forma condensed combined balance sheet at
December 31, 1996, set forth below, gives effect to the Merger
under the purchase method of accounting as if the Merger had
occurred on December 31, 1996. The unaudited pro forma condensed
combined statement of income for the year ended December 31, 1996
combines the historical statements of income of ArgentBank and
ABI as if the Merger had been effective as of January 1, 1996.
The costs associated with the Merger, estimated to be
approximately $600,000, will be capitalized as part of
intangibles upon the consummation of the Merger and have not been
reflected in the following pro forma statements.
<PAGE>
<TABLE>
<CAPTION>
ARGENTBANK
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1996
PRO FORMA PRO FORMA
DECEMBER 31, 1996 (IN THOUSANDS) ARGENTBANK ABI ADJUSTMENT COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <S> <C>
ASSETS
Cash and due from banks $20,331 4,366 (7,525) (a) $17,172
Federal Funds sold 20,950 10,400 31,350
Held-to-maturity securities 42,433 13,755 233 (b) 56,421
Available-for-sale securities 150,226 20,339 170,565
Loans, net of unearned
discount 345,713 60,831 943 (b) 407,487
Less: Allowance for loan
losses (10,427) (1,190) (11,617)
--------- -------- --------
Loans, net 335,286 59,641 395,870
Accrued interest receivable 3,980 851 4,831
Other real estate, net - - - - 30 30
Bank premises and equipment,
net 9,855 2,092 11,947
Other assets 6,893 328 10,489 (c) 17,710
--------- -------- --------
TOTAL ASSETS $589,954 $111,802 $705,896
========= ======== ========
LIABILITIES
Deposits:
Non-interest-bearing $82,693 $14,295 $96,988
Interest-bearing 433,795 87,083 520,878
--------- -------- --------
TOTAL DEPOSITS 516,488 101,378 617,866
Accrued interest payable 4,026 368 4,394
Other liabilities 1,777 221 1,998
--------- -------- --------
TOTAL LIABILITIES 522,291 101,967 624,258
EQUITY
Capital stock 586 800 (726) (a) 660
Capital surplus 25,079 450 13,451 (a) 38,980
Net unrealized gains (losses)
on AFS securities 96 (11) 11 (a) 96
Retained earnings 41,902 8,596 (8,596) (a) 41,902
--------- -------- -------- --------
TOTAL EQUITY 67,663 9,835 81,638
--------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $589,954 $111,802 $705,896
========= ======== ========
</TABLE>
See accompanying notes to pro forma Condensed Combined Financial Statements.
<TABLE>
<CAPTION>
ARGENTBANK
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER PRO FORMA PRO FORMA
SHARE DATA) ARGENTBANK ABI ADJUSTMENT COMBINED
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <S> <C>
INTEREST INCOME:
Loans, including fees $27,145 $5,510 (190) (e) $32,465
Securities 13,423 2,176 15,599
Federal funds sold 724 244 968
Deposits in other banks - - - - 6 6
-------- ------- ------ -------
TOTAL INTEREST INCOME 41,292 7,936 49,038
INTEREST EXPENSE-DEPOSITS 16,843 3,211 20,054
------- ------- -------
NET INTEREST INCOME 24,449 4,725 28,984
Provision for (recovery of) loan
losses (300) 36 (264)
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 24,749 4,689 29,248
NON-INTEREST INCOME:
Customer service fees 2,703 443 3,146
Securities gains, net 151 7 158
Other income 332 137 469
------- ------ ------
TOTAL NON-INTEREST INCOME 3,186 587 3,773
NON-INTEREST EXPENSE:
Salaries and employee benefits 7,651 1,835 9,486
Net occupancy expense of bank premises 2,384 661 3,045
Data processing expense 1,797 18 1,815
Other expense 4,781 1,209 675 (d) 6,665
------ ------ ------
TOTAL NON-INTEREST EXPENSE 16,613 3,723 21,011
------ ------ ------
INCOME BEFORE INCOME TAXES 11,322 1,553 12,010
Income taxes 3,584 420 4,004
------ ------ ------
NET INCOME $7,738 $1,133 $8,006
====== ====== ======
Weighted average shares outstanding 5,906,000 1,131,584 6,641,530
Earnings per share $1.31 $1.00 1.21
</TABLE>
See accompanying notes to pro forma Condensed Combined Financial Statements.
ARGENTBANK
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(a) Under the terms of the Plan, ArgentBank will issue cash and
ArgentBank Common Stock with an aggregate value at the
Effective Date of the Bank Merger of $21,500,000. The
number of shares of ArgentBank Common Stock to be exchanged
in the Bank Merger will be determined by the Average Market
Price of ArgentBank Common Stock. For purposes of the pro
forma financial statements, the ArgentBank Common Stock is
assumed to have an Average Market Price in the merger of
$19.00, resulting in the issuance of 735,530 shares of
ArgentBank Common Stock for 65% of the common stock of
Assumption Bank (an exchange ratio of 7.0724) and $7,525,000
cash for the remaining 35%.
(b) Adjustment reflects the write-up of Assumption Bank's
held-to-maturity securities and loans to fair value.
(c) Amount represents the resulting intangibles of core deposits
and goodwill. ArgentBank intends to have a core deposit
study performed in order to determine the appropriate
allocation of the intangibles. For pro forma financial
statement purposes, the core deposit intangible is estimated
to be approximately $3,000,000 with a life of 8 years, and
the goodwill is estimated to be $7,489,000 with a life of 25
years.
(d) Amount represents approximately one year of amortization of
intangibles assuming that the Merger was consummated on
January 1, 1996.
(e) Amount represents approximately one year amortization of
premium on loans assuming that the Merger was consummated on
January 1.
<PAGE>
COMPARISON OF RIGHTS OF SHAREHOLDERS
If the shareholders of ABI approve the Merger Agreements and
Bank Merger is subsequently consummated, all shareholders of ABI
who elect, or are required by the terms of the Plan, to receive
shares of ArgentBank Common Stock, will become shareholders of
ArgentBank. The rights of shareholders of ABI who receive
ArgentBank Common Stock in connection with the Mergers will be
governed by the Articles of Incorporation as amended, and Bylaws,
as amended, of ArgentBank, rather than the Articles of
Incorporation and Bylaws of ABI. The rights of ArgentBank's
shareholders are governed by the Articles of Incorporation of
ArgentBank, the Bylaws of ArgentBank and the laws of the State of
Louisiana, including the Louisiana Banking Laws. The rights of
ABI's shareholders are governed by the Articles of Incorporation
of ABI, the Bylaws of ABI and the Louisiana Business Corporation
Law. The following is a brief summary of the principal
differences between the rights of shareholders of ArgentBank and
the shareholders of ABI. This summary is qualified in its
entirety by reference to the Articles of Incorporation and Bylaws
of ArgentBank; the Articles of Incorporation and Bylaws of ABI;
as well as the Louisiana Banking Laws and the Louisiana Business
Corporation Law (the "LBCL").
AUTHORIZED CAPITAL
ABI has 1,000,000 shares of authorized capital stock having
a par value of $5.00 per share and no authorized preferred stock.
ArgentBank currently has an authorized capitalization of
10,000,000 shares of capital stock, par value $.10 per share, but
plans to increase this amount to 16,000,000 upon the approval of
ArgentBank's shareholders at the ArgentBank Meeting. Of these
authorized shares, as of the date of this Joint Proxy
Statement/Offering Circular, 5,863,668 shares of capital stock
were issued and outstanding.
BOARD OF DIRECTORS
According to ABI's Bylaws, the affairs of ABI shall be
managed by a Board of Directors of thirteen persons. They shall
be elected at the annual meeting of the shareholders and shall
hold office for a three-year term. Directors must be between 30
and 70 years of age. The ABI Board of Directors is divided into
three classes, as nearly equal in number as possible, with
members of each class to serve for three years and with one class
being elected each year. At all meetings of the Board of
Directors of ABI, a majority of the directors constitutes a
quorum for the transaction of business. By resolution of the ABI
Board of Directors, those persons serving as directors may be
compensated a fixed salary and actual expenses of attendance, if
any, for attending board meetings.
Nominations for election to the ABI Board of Directors may
be made by the Board of Directors or by any shareholders.
Shareholder nominations to the Board must be in writing and
delivered to the President not less than 14 nor more than 50
days prior to any meeting of shareholders held for the purpose of
electing directors; provided, however, that if less than 21 days'
notice of such meeting is given to shareholders, such nomination
shall be mailed or delivered to the President of ABI not later
than the close of business on the seventh day following the day
on which the notice of meeting was mailed. Such notification
shall contain certain information concerning the proposed nominee
or nominees.
ArgentBank's Articles provide for a Board of Directors of
15-25 shareholders, all of whom must be United States citizens
and residents of Louisiana. Directors are elected at a general
meeting of the shareholders for a one-year term. Presently
there are twenty directors. Management of ArgentBank does not
plan to fill these vacancies at this time, except after the
Effective Date of the Mergers, if consummated, the Board intends
to expand the size of the Board of Directors by nominating a
former ABI director to the ArgentBank Board of Directors.
Directors must own at least 1,200 shares of unpledged ArgentBank
Common Stock. A majority of the directors constitutes a quorum
at any meeting.
Nominations for election for up to 25 persons to the Board
of Directors may be made by the Board of Directors or by a
shareholder or shareholders owning in the aggregate 10% of the
outstanding stock of ArgentBank. Shareholder nominations to the
Board must by made in writing and delivered to the Chairman of
the ArgentBank Board on or before 120 days prior to the annual
meeting of shareholders in order to be considered for inclusion
in a proxy statement for an annual meeting of shareholders. Such
notification must contain certain information concerning the
proposed nominee or nominees.
REMOVAL OF DIRECTORS
Pursuant to the ABI Articles, the shareholders may remove a
director by a vote of seventy-five percent (75%) of the total
voting power of ABI.
The Board of Directors of ArgentBank may declare vacant the
office of a director if he is interdicted or adjudicated an
incompetent, is adjudicated a bankrupt, becomes incapacitated for
six months or ceases to have the qualifications required by the
Articles or ArgentBank Bylaws. The ArgentBank shareholders,
pursuant to the Louisiana Banking laws, by the vote of a majority
of the total voting power at any meeting called for that purpose,
may remove from office any one or more directors, notwithstanding
that his or their terms or office may not have expired, and may
fill such vacancy for the unexpired term.
VACANCIES IN THE BOARD OF DIRECTORS
The ABI Bylaws provide that the remaining directors, even
though not constituting a quorum, may, by a majority vote, fill
any vacancy on the Board (including any vacancy resulting from an
increase in the authorized number of directors, or from failure
of the shareholders to elect the full number of authorized
directors) for an unexpired term. The Bylaws further provide
that the shareholders have the right to fill the vacancy at a
special meeting called for that purpose. A director elected to
fill a vacancy serves the unexpired term of his predecessor in
office.
Vacancies on the ArgentBank Board from any cause shall be
filled by the remaining directors or by the shareholders at a
special meeting called for such purpose.
AMENDMENT OF THE ARTICLES OF INCORPORATION
The affirmative vote of the holders of two-thirds of the
voting power of shareholders shall be necessary to amend the
Articles of Incorporation of ABI except that the affirmative vote
of the holders of seventy-five percent (75%) of the total voting
power of ABI is required to amend or repeal Article IV
(Directors) and the affirmative vote of the holders of not less
than seventy-five percent (75%) or more of the outstanding shares
of Common Stock and the affirmative vote of the holders of not
less than a majority of the Independent Shares (see "COMPARISON
OF RIGHTS OF SHAREHOLDERS -- Supermajority Voting Requirements;
Business Combinations") shall be required to repeal Article VI
(Certain Business Combinations).
Articles X and XI of ArgentBank's Articles shall not be
amended without a vote of seventy-five percent (75%) of the
voting power of all outstanding and issued shares of ArgentBank
Common Stock. The remaining Articles shall not be amended
without a vote of two-thirds of the voting power present at a
shareholders meeting.
AMENDMENT OF BYLAWS
The ABI Bylaws may be amended or repealed by the Board of
Directors at any regular or special meeting or by the
shareholders at any annual or special meeting.
The ArgentBank Bylaws may be amended or repealed by the
Board of Directors at any regular board meeting.
SPECIAL MEETINGS OF SHAREHOLDERS
The ABI Articles provide that at any time, upon the written
request of any shareholder or shareholders holding in the
aggregate a majority of the outstanding shares of ABI Common
Stock, the Secretary shall call a special shareholders meeting.
Special meetings of the ArgentBank shareholders may be
called at any time by the Board of Directors and upon the request
in writing by any shareholder or shareholders holding in the
aggregate one-fifth of the total voting power. A majority of the
outstanding capital stock shall constitute a quorum for a
shareholder's meeting.
SHAREHOLDERS' PROPOSALS
ABI. ABI's Articles and Bylaws have no provisions
concerning shareholders' proposals.
ARGENTBANK. Shareholders' proposals to be presented at the
annual meeting shall be received by ArgentBank not less than 90
days in advance of a date corresponding to the date of
ArgentBank's proxy statement released to the shareholders in
connection with the previous year's annual meeting of
shareholders, except that if the date of the annual meeting has
been changed by more than 30 calendar days from the date of the
previous year's annual meeting, a proposal shall be received by
management in reasonable time before the solicitation is made.
PREEMPTIVE RIGHTS
The holders of ABI Common Stock do not have any preemptive
or preferential right to purchase or subscribe for any additional
shares of ABI Common Stock that may be issued.
The holders of ArgentBank Common Stock do not have any
preemptive rights to subscribe to any additional shares or other
securities that may be issued or offered by ArgentBank in the
future. Accordingly, ArgentBank Common Stock may be offered in
the future to the investing public or to shareholders at the
discretion of its Board of Directors.
REPORTS TO SHAREHOLDERS
The ABI Common Stock is registered under the Exchange Act
and, therefore ABI is required to provide annual reports
containing audited financial statements to shareholders and to
file such other reports with the SEC and solicit proxies in
accordance with the rules of the SEC. ABI also provides reports
to its shareholders on a interim basis containing unaudited
financial information.
As a state chartered bank, the ArgentBank Common Stock is
registered under the Exchange Act and therefore ArgentBank is
required to provide annual reports containing audited financial
statements to shareholders and to file such other reports with
the FDIC and solicit proxies in accordance with the rules of the
FDIC. ArgentBank also provides reports to its shareholders on an
interim basis containing unaudited financial information.
DIVIDENDS
The sources of funds for payments of dividends by ABI is
Assumption Bank. Because Assumption Bank is a financial
institution, payments made by Assumption Bank to ABI is limited
by law and regulations of Assumption Bank regulatory authorities.
The Louisiana Business Corporation Law provides that a board
of directors may declare dividends in cash, property or shares
out of surplus (except earned surplus reserved by the board)
except: (1) when the corporation is insolvent or would thereby
become insolvent, or (2) when such would be contrary to
restrictions in the corporation's Articles of Incorporation. If
no surplus is available, dividends may be paid out of net profits
for current or preceding fiscal years, under certain
restrictions. No dividend may be paid in shares other than with
treasury shares without transfer to stated capital from surplus
of (1) an amount not less than the aggregate par value of shares
issued, and (2) an amount determined by directors in respect to
no par shares issued.
The shareholders of ArgentBank are similarly entitled to
dividends when and as declared by its Board of Directors out of
funds legally available therefore. No dividends may be declared
or paid until ArgentBank has surplus equal to fifty percent of
its outstanding common stock, provided that surplus shall not be
reduced below that fifty percent level by the payment of the
dividend. In addition, prior approval of the Commissioner of the
Louisiana Office of Financial Institutions shall be required if
the total of all dividends declared and paid by ArgentBank during
any one year would exceed the total of its net profits of that
year combined with the net profits from the immediately preceding
year. ArgentBank's ability to pay dividends can be further
limited by its governing regulatory agency pursuant to the
imposition of various enforcement actions upon ArgentBank. As a
result, the ability of ArgentBank to pay dividends on its
outstanding shares is subject, to some extent, to federal
regulatory limitations.
VOTING RIGHTS
The holders of shares of ABI Common Stock, and the holders
of ArgentBank Common Stock are each entitled to one vote per
share on all matters brought before the shareholders.
SUPERMAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS
The ABI Articles require the affirmative vote of the holders
of not less than seventy-five percent (75%) of the outstanding
shares of ABI Common Stock and the affirmative vote of the
holders of not less than a majority of the Independent Shares for
the approval of any Business Combination, which is defined to
include any merger, consolidation, sale, lease or exchange of
ABI's assets, with any Related Person. The term Independent
Shares means the outstanding shares of ABI Common Stock which are
not beneficially owned by a Related Person, defined as a person
or entity which together with affiliates owns in the aggregate
between fifteen percent (15%) or more of the outstanding ABI
Common Stock. A two-thirds vote of the shares present at the
meeting is required and the seventy-five percent provision is not
applicable if the Business Combination is approved by not less
than a majority of the continuing directors or if other
conditions are met which relate to the price per share paid by
the Related Person or the fair market value per share on the date
the related person acquired fifteen percent (15%) of the shares
and the consideration to be received by the ABI shareholders.
The ABI Articles' provisions described above may not be
amended without the affirmative vote of the holders of
seventy-five percent (75%) of the outstanding shares of ABI Common Stock
and the affirmative vote of not less than a majority of the
Independent Shares.
ArgentBank's Articles currently provide that unless a
merger, consolidation, liquidation of conversion is previously
approved by at least two-thirds vote of the entire Board of
Directors, in which case a simple majority vote of the
shareholders will be sufficient for approval, no merger,
consolidation, liquidation or conversion shall be authorized
without the approval of seventy-five percent (75%) of the voting
power of all outstanding and issued shares of ArgentBank Common
Stock. The shareholders of ArgentBank will vote at the
ArgentBank Meeting to amend the Articles to eliminate the
requirement to obtain shareholder approval for certain business
combinations. See "APPROVAL OF AMENDMENTS TO ARGENTBANK
ARTICLES."
No amendment altering the provision of ArgentBank's Article
concerning business combinations may be adopted except by
seventy-five (75%) percent of the voting power of all outstanding
and issued share at an annual or special meeting of shareholders,
the notice of which sets forth the proposed amendment or a
summary of the changes to be made thereby.
REDEMPTION AND RETIREMENT
As a Louisiana Corporation, ABI cannot purchase or redeem
its shares when it is insolvent, or at a price, in the case of
shares subject to redemption, exceeding the redemption price
thereof, or when its net assets are less than, or such purchase
would reduce its net assets below, the aggregate amount payable
on liquidation upon any issued shares having a preferential right
to participate in the assets in the event of liquidation which
remain after the purchase or redemption and cancellation of any
shares in connection with the purchase or redemption.
As a Louisiana state bank, ArgentBank may reduce its capital
stock only in conformity with the written permission of the
Commissioner of OFI. In addition, ArgentBank may be required to
obtain permission from the FDIC to retire or repurchase capital.
SHAREHOLDERS' INSPECTION RIGHTS
Under the Louisiana Business Corporation Law, upon at least
five days' written notice, any shareholder of ABI, except a
business competitor, who is and has been the holder of record of
at least five percent of the outstanding shares of any class of a
corporation for at least six months has the right to examine, in
person or by agent or attorney, at any reasonable time, for any
proper and reasonable purpose, any and all of the records and
accounts of the corporation and to make extracts therefrom.
Louisiana law allows two or more shareholders, each of whom has
been a holder of record for six months, whose aggregate holdings
equal five percent to inspect the records.
Under the Louisiana Banking Laws, every shareholder (or
combination of two or more shareholders of ArgentBank), except a
business competitor of the state bank, who has been the holder of
record of at least two percent of all outstanding shares of a
state bank for at least six months has the right to examine, in
person or by agent or attorney, at any reasonable time and for
any proper and reasonable purpose, books showing the amount of
common stock subscribed, the names and residences of owners of
shares, the amount of stock owned by each of them, the amount of
said stock paid by whom, the last transfer of said stock with the
date of transfer, the names and residences of its officers, the
records of proceedings of shareholders, of the directors, and of
the committees of the board, and the articles of incorporation
and bylaws of ArgentBank. Every shareholder (or combination of
two or more shareholders), except a business competitor of the
state bank, who has been a holder of record of at
least twenty-five percent of all of the outstanding shares of ArgentBank for
at least six months shall have the right to examine in person, by
agent, or attorney, at any reasonable time and for any proper and
reasonable purpose, any and all of the books and records of
ArgentBank, except files relating to credit information, loan
transaction, and deposit accounts of individual customers of
ArgentBank, which are confidential and not subject to shareholder
inspection.
LIMITATION OF LIABILITY OF DIRECTORS
The ABI Articles provide that no director or officer of the
corporation shall be liable to ABI or its shareholders for
monetary damages for breach of his fiduciary duty, provided that
ABI shall not limit the liability of a director for any breach of
his duty of loyalty to ABI or its shareholders (b) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of laws (c) liability for
unlawful redemption or purchase of ABI's shares from shareholders
of ABI, under and to the extent provided in R.S. 12:920; or
(d) any transaction from which he derived an improper personal
benefit.
The ArgentBank Articles provide that no director or officer
shall be personally liable to ArgentBank or to any shareholder
for monetary damages for breach of his or her fiduciary duty.
INDEMNIFICATION
The ABI articles provide for ABI to indemnify its officers,
directors, employees and agents to the extent set forth in the
Bylaws. The ABI Bylaws provide that to the extent expenses
exceed the amounts reimbursed or paid pursuant to insurance
maintained by ABI, ABI shall indemnify directors and officers
against any expenses actually incurred by him in connection with
any claim, if he is successful in his defense of the claim on the
merits or has been found by a determining body to have met the
applicable standard of conduct; provided that the amount
otherwise payable by ABI may be reduced by the determining body
if it determines that the claim involved the receipt of a
personal benefit. No indemnification shall be made for liability
for willful or intentional misconduct in the performance of his
duty to ABI or to have obtained an improper personal benefit
unless a court determines such person is entitled to indemnify
for such expenses as the court deems proper.
ArgentBank's Articles provide that ArgentBank shall fully
indemnify and otherwise hold the said Officer or Director
harmless from any such action or Judgment obtained therein or
claim, except that said Officer or Director shall be responsible
for (a) a breach of his or her fiduciary obligation to the
corporation or its Shareholders, (b) acts or omissions not in
good faith, acts or omissions of intentional misconduct or
knowingly in violation of the law, (c) liability under Louisiana
Revised Statutes 12:92(D); or (d) any transaction from which the
Officer or Director derived an improper personal benefit.
The Louisiana Banking Laws permit a state bank to indemnify
a director, officer, employee or agent if he conducted himself in
good faith; reasonably believed that his conduct was in the best
interests of the state bank, or that the conduct was at least
not opposed to the best interests of the state bank. In the case
of a criminal proceeding, the director must show that he has no
reasonable cause to believe his conduct was unlawful. The
termination of a proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the
standard of conduct required under the Louisiana Banking Laws.
Unless limited by its articles of incorporation, a state
bank may indemnify a director or officer who was wholly
successful, on the merits or otherwise, in the defense or any
proceeding to which he was a party because he is or was a
director, officer, employee or agent of the state bank against
reasonable expenses incurred by him in connection with the
proceeding. A state bank may pay for or reimburse the reasonable
expenses incurred by a director, officer, employee or agent who
is a party to a proceeding prior to a final disposition of the
proceeding upon the party furnishing a written affirmation of his
good faith belief that he has meet the required standard of
conduct and a written undertaking to repay the advance if it is
ultimately determined that he did not meet the standard of
conduct. The undertaking need not be secured and may be accepted
without reference to financial ability to make repayment.
A state bank may not indemnify a director unless authorized
in the specific case after a determination has been made that the
indemnification of the director is permissible in the
circumstances because he has met the required standard of
conduct. The determination may be made by a majority vote of a
quorum consisting of directors not party to the proceeding. If
such quorum cannot be obtained, the determination may be made by
majority vote of a committee duly designated by the board (in
which directors who are parties may participate), consisting
solely of two or more directors not at the time parties to the
proceeding or by a special legal counsel selected by the board or
the directors or by the shareholders. Shares held by directors
who are parties may not be voted on the determination.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, ArgentBank has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
APPRAISAL RIGHTS
The LBCL provides appraisal rights to shareholders of ABI in
connection with mergers and consolidations and the sale, lease or
exchange of all of the corporation's assets, if such are approved
by less than eighty percent (80%) of a corporation's total voting
power. Appraisal rights are not available under the LBCL in the
case of: (1) a sale pursuant to a court order; (2) a sale for
cash requiring distribution of all or substantially all of the
net proceeds to shareholders in accordance with their respective
interests within one (1) year of the date of the sale; and (3)
shareholders holding shares of any class of stock which, at the
record date fixed to determine shareholders entitled to receive
notice of and to vote at the meeting of shareholders at which a
merger or consolidation was acted on, were listed on a national
securities exchange unless the shares of such shareholders were
not converted by the merger or consolidation solely into shares
of the surviving or new corporation.
Pursuant to Louisiana Banking Laws, ArgentBank shareholders
do not have dissenters' rights in the event of a sale, lease or
exchange of all or substantially all of its assets if ArgentBank
is the surviving bank of the Business Combination and if
ArgentBank's Common Stock is listed on a national securities
exchange (which includes the American Stock Exchange, on which
ArgentBank is currently listed) and if the shares held by
ArgentBank's shareholders will not be converted by virtue of the
merger. However, if ArgentBank, by vote of its shareholders,
authorizes a merger or combination into another entity or a
voluntary liquidation, ArgentBank shareholders, may dissent to a
merger and receive in cash the fair market value of their shares
as of the date of the shareholders' meeting only if the merger is
effected upon approval by less than eighty percent (80%) of
ArgentBank's total voting power.
PRINCIPAL BUSINESS
ASSUMPTION BANCSHARES, INC. ABI, a Louisiana corporation,
was organized on March 4, 1984 and is a bank holding company
registered under the Bank Holding Company Act of 1956, as
amended. At December 31, 1996, ABI had total consolidated assets
of approximately $112 million and shareholders' equity of
approximately $9.8 million. ABI is domiciled in Napoleonville,
Louisiana and its principal executive offices are located at 110
Franklin Street, Napoleonville, Louisiana 70390 and its telephone
number is (504) 369-7269. See "CERTAIN INFORMATION CONCERNING
ABI AND ASSUMPTION BANK."
ASSUMPTION BANK & TRUST COMPANY. Assumption Bank, a
Louisiana state nonmember bank, was organized on December 18,
1933. Assumption Bank's deposits are insured by the FDIC. At
December 31, 1996, Assumption Bank had total assets of
approximately $112 million, total deposits of approximately $101
million and total shareholders' equity of approximately $9.8
million. Assumption Bank is domiciled in Napoleonville, Louisiana
and its principal executive offices are located at 110 Franklin
Street, Napoleonville, Louisiana 70390 and its telephone number
is (504) 369-7269. Assumption currently operates four (4) full
service facilities throughout Assumption Parish and one
additional branch in LaPlace, St. John the Baptist Parish,
Louisiana. See "CERTAIN INFORMATION CONCERNING ABI AND
ASSUMPTION BANK."
Assumption Bank conducts general commercial banking
business throughout the State of Louisiana with the majority
of its business concentrated in Assumption Parish, western
Ascension Parish and northern Lafourche Parish. Its principal
office and a motor branch are located in Napoleonville,
Louisiana. Assumption Bank operates three other branch
offices, one each in Pierre Part, Labadieville and LaPlace,
Louisiana and an automatic teller machine in Belle Rose,
Louisiana.
Assumption Bank provides the usual services offered by
banks of similar size and in similar markets. Assumption Bank
does have trust powers, but does not have an active trust
department.
Assumption Bank competes actively with national and
state banks in Southern Louisiana for all types of loans
and deposits. In addition, Assumption Bank competes for funds
with savings and loan associations, the U.S. Government,
credit unions, and other financial service companies. It
competes for loans with other financial service institutions,
such as savings and loan associations, insurance companies,
small loan companies, credit unions, mortgage companies, and
certain government agencies. Assumption Bank's primary
competitors in its service area are ArgentBank, Iberville Bank,
Service Mortgage Co., Guidry Finance Company and banks and
savings and loans located in Thibodaux, Donaldsonville and
LaPlace, Louisiana.
Assumption Bank does not receive a material portion of its
deposits from any single person. However, as of December 31,
1996, the Assumption Parish School Board, Assumption Parish
Waterworks District #1, the Assumption Parish Sheriff's
Office, the Assumption Parish Police Jury, the Assumption Parish
Clerk of Court, Assumption General Hospital and four commercial
enterprises accounted for an aggregate of 12% of Assumption
Bank's deposits.
The lending services of Assumption Bank include a broad
range of consumer, real estate and commercial loans. As of
December 31, 1996, real estate and home loans represented
approximately 83% of all loans; commercial, financial and
agricultural loans accounted for 4% and individual loans, which
include auto and mobile home loans accounted for 13%.
ABI and Assumption 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 ABI.
ABI 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"). ABI is
required to file with the Board annual reports containing such
information as the Board may require pursuant to the Act and is
also subject to periodic examination by the Board.
Under the Act, a bank holding company may not acquire more
than 5% of the voting shares or substantially all the assets of
any bank or another bank holding company without the prior
approval of the Board. The Act also limits 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 addition, ABI is subject to the Securities Exchange Act
of 1934 and files reports with the Securities and Exchange
Commission under provisions of that Act.
Both federal and state laws extensively regulate various
aspects of the banking industry, including requirements
regarding the maintenance of reserves against deposits,
limitations on the rates that can be charged on loans, and
restrictions on the nature and amounts of loans and investments
that can be made.
As a state bank, Assumption Bank is subject to the
supervisory authority of the Louisiana Commissioner of
Financial Institutions, whose office conducts periodic
examinations of Assumption Bank. As a federally-insured bank,
Assumption Bank is also subject to supervision and regulation
by the Federal Deposit Insurance Corporation. The foregoing
regulation is primarily intended to protect Assumption Bank's
creditors and depositors rather than ABI's security holders.
COMPETITION
Assumption Bank has a main office in Napoleonville and three
(3) branch facilities in Assumption Parish (Napoleonville,
Labadieville, Pierre Part), one (1) drive-up facility and one (1)
branch facility located in LaPlace in St. John the Baptist
Parish. The relevant geographic market for Assumption Bank
consists of a twenty (20) mile radius of Napoleonville which
includes: (1) all of Assumption Parish; (2) the southwest corner
of Ascension Parish; (3) the extreme northwest corner of
Lafourche Parish; (4) the extreme eastern tip of St. Mary Parish;
and (5) the southeastern corner of Iberville Parish.
SEASONALITY OF BUSINESS AND CUSTOMERS
Assumption Bank's location in the heart of Louisiana's
sugar cane country subjects it to seasonal variations in
business. Because of the impact of the sugar industry, deposits
typically vary by four to five million dollars during the
course of each fiscal year.
EMPLOYEES
ABI and Assumption Bank employ 51 persons full-time and 6
persons part-time.
PROPERTY
The principal properties of ABI and Assumption Bank, are
its main offices located at 110 Franklin Street,
Napoleonville, Louisiana, a motor branch in Napoleonville,
Louisiana, an automatic teller machine (ATM) in Belle Rose,
Louisiana, and branch offices in Pierre Part and Labadieville,
Louisiana. Assumption Bank owns all of these properties with
no encumbrances. Assumption Bank also owns certain
leasehold improvements associated with its LaPlace branch.
LEGAL PROCEEDINGS
ABI and Assumption Bank are parties to various ordinary
routine legal proceedings incidental to its business, none of
which it is believed by management, after consulting with
counsel, will have a material effect on the financial
position or results of operations of either ABI or Assumption
Bank.
STOCK PRICES AND DIVIDENDS
MARKET PRICES.
The primary market area for ABI Common Stock is the
Assumption Parish area. There is no established trading market
for the common stock. The limited number of transactions
that have come to the attention of management during the past
two years have occurred at prices ranging from $27 to $42 per
share. No assurance can be given that this range of prices per
share represents the actual market value of ABI's Common Stock.
The approximate number of holders of record of each class of
ABI's equity securities as of December 31, 1996, was as follows:
Title of Class Number of Record Holders
Common stock, $5 par value 732
ABI CASH DIVIDENDS.
In 1996 and 1995 ABI declared annual dividends of $2.60 per
share.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information
concerning the beneficial ownership of the ABI Common Stock by
(i) each director of ABI; (ii) each executive officer of ABI, and
(iii) all directors and executive officers of ABI as a group as
of April 28, 1997. Beneficial ownership of the shares of ABI
Common Stock has been determined in accordance with Rule 13d-3
under the Exchange Act. Unless otherwise indicated, all shares
shown as beneficially owned are held with sole voting and
investment power.
<TABLE>
Shares of
Principal First Common Stock Percent
Occupation Elected Beneficially of
Name Age or Employment Director Owned Class
- --------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <C> <C>
F. N. Carrier, Jr. 81 Retired; Investor 1958 1,790 1.12%
Ridley J. Gros, Phd. 55 Dean, College of 1991 200 *
Business
Administration,
Nicholls State
University
Leonard C. Guedry, Jr. 47 President, Leonard 1991 200 *
Guedry Insurance
Agency, Inc.;
Owner, Guedry Real
Estate Agency
Robert J. Tregre 52 President, Robert's 1991 400 *
Food Store, Inc.
(Retail Outlet)
Patrick E. Cancienne,
Sr.(1) 67 Retired; for more 1982 1,300 *
five years prior to
3/1/95 he served as
President, Savoie
Industries, Inc.
(sugar cane growers
and processors)
Joseph H. Montero, II 62 President and Chief 1972 2,000 1.25%
Executive Officer of
ABI and Assumption
Bank
Clarence J. Savoie, II(1)49 Chairman of the 1987 925(2) *
Board of ABI and
Assumption Bank
since 1995;
President, C.J.
Savoie
Consulting Engineers,
Inc.
Stanley S. Sternfels 62 President, Economical 1983 1,250 *
Wholesale, Inc.
(wholesale grocery
company)
Nelson A. Cox, Sr., M.D. 84 Physician; 1965 1,870 1.17%
Coroner of
Assumption Parish
Felix H. Savoie, Jr.(1) 65 Attorney at Law; 1993 1,090 *
Vice President -
Dugas & LeBlanc Ltd.
(sugar cane growers and
processors)
Nicess P. Templet 69 Retired; Investor; 1987 978 *
Former owner of
Griffin's AG, Inc.
(retail grocer)
All Directors and
Executive Officers
as a Group (12 Persons) 12,308 7.69%
</TABLE>
- -----------------------------
*Less than one percent.
(1) Mr. Cancienne, Mr. C. Savoie and Mr. F. Savoie are cousins.
(2) Includes 60 shares as to which Mr. Savoie shares voting and
investment power.
- ------------------------
Management is not aware of any person or group of persons who
beneficially owns more than
five percent of the ABI Common Stock.
STATISTICAL INFORMATION
The following tables contain additional information concerning
the business operations of ABI and Assumption Bank and should be
read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the
consolidated financial statements and the related notes thereto
for the three years ended December 31, 1996.
SECURITIES PORTFOLIO
ABI and Assumption Bank adopted the provisions of Statement of
Financial Accounting Standards No. 115, ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES (Statement 115) at
December 31, 1993. Under Statement 115, held-to-maturity
securities are those securities which ABI has the ability and
intent to hold until maturity. Trading securities are bought and
held principally for the purpose of selling them in the near
future. All other securities not included in trading or
held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair
value. Held-to-maturity securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums and
discounts.
Carrying values of securities at December 31, 1996 and 1995, are
as follows (in thousands of dollars):
<TABLE>
1996 1995
------------------------------ -------
Held-to- Available-
maturity for-sale Total
------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed securities $ 3,405 13,406 16,811 20,984
Other U.S. Government agencies - 2,415 2,415 1,482
State and municipal obligations 9,909 4,172 14,081 14,129
Collateralized mortgage obligations 441 346 787 770
------ ------ ------ ------
$ 13,755 20,339 34,094 37,365
====== ====== ====== ======
</TABLE>
Additional information with respect to the amortized cost,
approximate market value and gross unrealized gains and losses is
included in note 2 to the consolidated financial statements.
The carrying value and average yield of securities at December
31, 1996, by contractual maturity are shown below (in thousands
of dollars). Expected maturities will differ from contractual
maturities on securities which may have call provisions.
<TABLE>
Amortized Average
Cost Yield
---------------------------
<S> <C> <C>
HELD-TO-MATURITY
State and municipal obligations:
Due after one year through five
years $ 501 6.69
Due after five years through ten
years 7,071 5.40
Due after ten years 2,337 5.36
9,909
Mortgage-backed securities 3,405 7.92
Collateralized mortgage obligations 441 7.98
------
Total held-to-maturity $ 13,755
======
Fair Average
Value Yield
----------------------------------
AVAILABLE-FOR-SALE
Other U.S. Government agencies:
Due in one year or less $ 1,204 7.76
Due after one year through five years 1,118 6.93
Due after five years through ten years 93 6.75
------
2,415
------
State and municipal obligations:
Due in one year or less 467 5.62
Due after one year through five years 2,501 5.02
Due after five through ten years 1,204 4.94
------
4,172
Mortgage-backed securities 13,406 6.69
Collateralized mortgage obligations 346 7.38
------
Total available-for-sale $ 20,339
======
</TABLE>
The weighted average yields shown above have been computed by
comparing the forward income stream on the securities, plus or
minus the anticipated accretion of discounts or amortization of
premiums, to the amortized cost of the securities, which is
stated at cost, adjusted for previous amortization or accretion.
Average yields on issues of states and political subdivisions
have not been computed on a tax equivalent basis.
At December 31, 1996, ABI and Assumption Bank held no securities
issued by a single issuer which exceeded 10% of stockholders'
equity. At December 31, 1995, ABI and Assumption Bank held
securities issued by Assumption Parish totaling $980,000, which
exceeded 10% of stockholders' equity.
LOAN PORTFOLIO
TYPES OF LOANS
The amount of loans outstanding by type and concentration is
shown in the following table (in thousands of dollars):
December 31
1996 1995
-------------------
Commercial, financial and agricultural $ 2,680 3,498
Real estate, principally mortgage 50,413 46,695
Individuals 7,738 6,893
------ ------
$ 60,831 57,086
====== ======
Substantially all of ABI and Assumption Bank's loans are derived
from borrowers and property located in the local market area
which is largely dependent on the agricultural and chemical
industries. ABI and Assumption Bank does not have concentrations
of credit in either of these industries. However, ABI and
Assumption Bank's borrowers are all indirectly affected by the
economic performance of these industries.
The loan portfolio contains no foreign loans.
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST
RATES
The following table presents the maturity distribution and
sensitivity to interest rate changes of the loan portfolio at
December 31, 1996 (in thousands of dollars):
<TABLE>
Due in Over 1 Over
1 year to 5 5
or less* years years Total
---------------------------------------------------
<S> <C> <C> <C> <C>
MATURITY OF LOANS
Commercial, financial and
agricultural $ 652 1,948 80 2,680
Real estate 12,265 36,635 1,513 50,413
Individuals 1,886 5,623 229 7,738
------ ------ ------ ------
$ 14,803 44,206 1,822 60,831
====== ====== ====== ======
INTEREST RATE SENSITIVITY
Loans with predetermined
rates 10,598 44,206 1,822 56,626
Loans with floating rates 4,205 - - 4,205
------ ------ ------ ------
$ 14,803 44,206 1,822 60,831
====== ====== ====== ======
</TABLE>
* Includes demand loans, loans having no stated schedule of
repayments and no stated maturity and overdrafts.
Interest rate sensitivity management is concerned with the
management of the timing and magnitude of repricing assets
compared to liabilities. It is the objective of interest rate
sensitivity management to generate stable growth in net interest
income and to control the risks associated with interest rate
movement. Management regularly reviews interest rate exposure by
utilizing forecasting models to analyze the impact various
interest rate changes would have on net interest income.
Interest rate sensitivity is defined as the exposure to
fluctuations in market rates of interest earned and paid.
Sensitivity to fluctuations in market rates of interest occurs
when the repricing characteristics of interest-earning assets and
interest-bearing liabilities do not match within the same period.
When the repricing characteristics do not match, a "gap" is
created. ABI and Assumption Bank's interest rate sensitivity on
December 31, 1996 is detailed in the following table. While the
table is presented on a contractual basis, a significant portion
of ABI and Assumption Bank's retail deposits do not respond to
changes in interest rates to the degree the unadjusted gap would
indicate.
ABI and Assumption Bank's experience has indicated that repricing
of NOW, savings and money market accounts does not result in
changes of the same magnitude as changes in general market rates.
In addition, these categories have historically been very stable
sources of funds to ABI and Assumption Bank, which would indicate
a much longer implicit maturity than their contractual
availability.
<TABLE>
<CAPTION>
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
(Dollars in thousands)
1996 1995 1994
-------------------------------------- ------- ----------------------- -------------------------
DAILY AMOUNT DAILY AMOUNT DAILY AMOUNT
AVERAGE EARNED AVERAGE AVERAGE EARNED AVERAGE AVERAGE EARNED AVE.
BALANCE OR PAID RATE BALANCE OR PAID RATE BALANCE OR PAID RATE
-------------------------------------- ------------------------------ --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning
assets:
Loans (1) $ 60,078 5,510 9.17% $ 54,072 4,819 8.91% $ 47,904 4,259 8.89%
Taxable securities 21,828 1,436 6.58 26,439 1,801 6.81 36,142 2,178 6.03
Tax-exempt securities(2) 13,869 740 5.34 13,644 709 5.20 9,862 490 4.97
Federal funds sold 4,683 244 5.21 2,797 164 5.86 4,032 146 3.62
Deposits with other
banks 99 6 6.06 99 6 6.06 99 5 5.05
------- ------- ------- ------- ------- ------- ------- ------- ----
Total interest-
earning assets 100,557 7,936 7.89 97,051 7,499 7.73 98,039 7,078 7.22
------- ------- ------- ------- ------- ------- ------- ------ ----
Noninterest-earning
assets:
Cash and due from banks 4,545 4,524 3,932
Bank premises and
equipment 2,171 2,210 1,839
Other assets 1,223 1,343 1,932
Allowance for loan
losses (1,222) (1,116) (1,104)
------- ------- -------
107,274 104,012 104,638
------- ------- -------
Liabilities:
Interest-bearing
liabilities:
Deposits:
NOW 17,657 421 2.38 18,166 485 2.67 19,225 439 2.28
Savings and IRA 22,591 761 3.37 23,096 827 3.58 24,087 793 3.29
Money market 10,395 232 2.23 10,892 260 2.39 11,850 295 2.49
Certificates of
deposit and other
time deposits,
$100,000 and over 3,925 205 5.22 3,571 187 5.24 3,237 112 3.46
Other certificates
of deposit 30,527 1,591 5.21 27,712 1,339 4.83 26,856 890 3.31
Fed funds purchased 8 1 6.25 441 26 5.90 805 40 4.97
------- ------- ------- ------- ------ ------ ------- ---- ----
Total interest-
bearing
liabilities 85,103 3,211 3.77 83,878 3,124 3.72 86,060 2,569 2.99
------- ------- ------- ------- ------- ------- ------- ------- ---
Noninterest-bearing
liabilities:
Demand deposits 11,898 10,912 10,111
Other liabilities 723 491 386
Stockholders' equity 9,550 8,731 8,081
------- ------- -------
$ 107,274 $ 104,012 $ 104,638
======= ======= =======
Net interest income/
average
earning assets $ 4,725 4.70% $ 4,375 4.51% $ 4,509 4.60%
======= ======= ======= ====== ======= ======
Notes:
(1) Loans on which interest accruals have been stopped are included in
the daily average balances of loans outstanding.
(2) Not taxable equivalent.
</TABLE>
<TABLE>
1996 compared with 1995 1995 compared with 1994
Variance due to Variance due to
RATE/ RATE/
VOLUME RATE VOLUME TOTAL VOLUME RATE VOLUME TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning
assets:
Loans(1) 535 140 16 691 548 10 1 560
Taxable securities (314) (62) 11 (365) (585) 283 (76) (378)
Tax-exempt securities(2) 12 19 --- 31 188 22 9 219
Federal funds sold 111 (18) (13) 80 (44) 91 (28) 19
Deposits with other
banks --- --- --- 0 --- 1 --- 1
------- ------- ------- ------- ------- ------- ------- ---
Total interest-
earning assets 344 79 15 437 107 407 (94) 421
------- ------- ------- ------- ------- ------- ------- -----
Noninterest-earning
assets:
Cash and due from banks
Bank premises and
equipment
Other assets
Allowance for loan losses
Liabilities:
Interest-bearing
liabilities:
Deposits:
NOW (14) (51) 1 (64) (24) 74 (4) 46
Savings and IRA (18) (49) 1 (66) (33) 69 (3) 34
Money market (12) (17) 1 (28) (24) (12) 1 (35)
Certificates of
deposit and other
time deposits,
$100,000 and over 19 --- --- 18 12 58 6 75
Other certificates
of deposit 136 105 11 252 28 408 13 449
Fed funds purchase (26) 2 (2) (26) (18) 7 (3) (14)
------- ------- ------- ------- ------- ------- ------- -----
Total interest-
bearing
liabilities 85 (10) 12 87 (59) 604 10 555
------- ------- ------- ------- ------- ------- ------- ----
Noninterest-bearing
liabilities:
Demand deposits
Other liabilities
Stockholders' equity
Net interest income/
average earning
assets 259 89 2 350 166 (197) (104) (134)
=== ======= === ======= ===== ======= ======= ======
</TABLE>
The table indicates ABI and Assumption Bank is liability
sensitive (a negative gap) at December 31, 1996 for periods 1-90
days and 91-365 days, and is asset sensitive (a positive gap) for
the period over one year or fixed. A positive gap indicates more
interest-earning assets are subject to repricing than
interest-bearing liabilities in a given period. Conversely, a negative
gap indicates more interest-bearing liabilities are subject to
repricing earlier than interest-earning assets. In an
environment of increasing interest rates, a positive gap implies
that earnings would be expected to increase as the volume of
repricing assets exceeds repricing liabilities. In contrast, a
negative gap implies that earnings would be expected to decrease
in an environment of increasing interest rates. It should be
noted that this presents the Bank's overall position for a single
day, which may not be indicative of its position in the future.
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY
1 - 90 91 - 365 OVER 1
DAYS DAYS YEAR TOTAL
--------------------------------------------
<S> <C> <C> <C> <C>
Loans $8,457 6,346 46,028 60,831
Securities 5,901 2,929 25,264 34,094
Federal funds sold 10,400 - - 10,400
Interest-bearing deposits - 99 - 99
--------------------------------------------
Total earning assets 24,758 9,374 71,292 105,424
--------------------------------------------
NOW and savings accounts 33,894 - - 33,894
Money market accounts 10,584 - - 10,584
Certificates of deposit and
IRA accounts 24,187 14,549 3,869 42,605
--------------------------------------------
Total interest-bearing
liabilities 68,665 14,549 3,869 87,083
--------------------------------------------
Gap $(43,907) (5,175) 67,423 18,341
============================================
Cumulative gap $(43,907) (49,082) 18,341
==================================
Cumulative gap/total
earning assets (41.65)% (46.56)% 17.40%
=================================
</TABLE>
RISK ELEMENTS
The following table sets forth the past due and nonaccrual loans
(in thousands of dollars):
<TABLE>
DECEMBER 31
-----------
1996 1995
-------------------
<S> <C> <C>
Loans past due 90 days or more $ 100 135
===================
Nonaccrual loans $ 850 853
===================
</TABLE>
The amount of additional interest income on nonaccrual loans,
which would have been recognized during 1996 and 1995, had the
related loans been performing according to their original terms
was not material. The income recognized on the cash basis on
loans in nonaccrual status was approximately $53,000 and $48,500
for 1996 and 1995, respectively.
Loans are placed on nonaccrual status when management's
assessment of the borrowers' financial condition indicates that
collection of interest is doubtful. In making this
determination, management considers current economic and business
conditions, the nature of the collateral, collection efforts and
regulatory guidelines.
POTENTIAL PROBLEM LOANS
Management has identified approximately $230,000 of potential
problem loans, which are loans for which payments are
contractually current but the borrowers are currently
experiencing financial difficulties at December 31, 1996, which
are not otherwise identified as past due or nonaccrual.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the activity in the allowance for
loan losses arising from loans charged-off, recoveries of loans
previously charged-off, and additions to the allowance charged to
income (in thousands of dollars):
<TABLE>
Years ended
December 31
1996 1995
-----------------------
<S> <C> <C>
Balance of the allowance for loan
losses at beginning of year $ 1,196 1,104
------- -------
Loans charged-off:
Commercial, financial and
agricultural 11 3
Real estate 57 25
Individuals 65 59
------- -------
133 87
--- ---
Recoveries on loans previously
charged-off:
Commercial, financial and
agricultural 44 9
Real estate 26 17
Individuals 21 17
------- -------
91 43
------- -------
Net loans charged-off 42 44
Provision charged to income 36 136
------- -------
Balance of the allowance for loan
losses at end of year $ 1,190 1,196
======= =======
Ratio of net charge-offs during
the year to average loans
outstanding during the year 0.07% 0.08%
======= =======
</TABLE>
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING LOANS
Management considers the allowance for loan losses adequate to
cover losses on the loans outstanding as of each reporting date.
It must be emphasized, however, that the determination of the
allowance for loan losses, using ABI and Assumption Bank's
procedures and methods, rests upon various judgments and
assumptions. The factors which influence management's judgment
in determining the level of the allowance for loan losses and the
amount which is charged to operating expenses are: (1) past loan
loss experience; (2) composition of the loan portfolio; (3)
evaluation of potential future losses; (4) current economic
conditions; (5) specific identification and anticipation of
problem and nonperforming loans, and (6) other relevant factors
affecting loans. No assurance can be given that ABI and
Assumption Bank will not, in any particular period, sustain loan
losses which are sizable in relation to the amount reserved or
that subsequent evaluations of the loan portfolio, in light of
conditions and factors then prevailing, will not require
significant changes in the allowance for loan losses. In
addition, various regulatory agencies, as an integral part of
their examination process, periodically review ABI and Assumption
Bank's allowance for loan losses. Such agencies may require ABI
and Assumption Bank to recognize additions to the allowance based
on their judgment about information available to them at the time
of their examinations.
The following is an allocation of the allowance for loan losses
by related categories of loans and the percentage of loans in
each category to total loans (in thousands of dollars):
<TABLE>
DECEMBER 31
1996 1995
--------------------------- --------------------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 52 4.4% $ 73 6.1%
Real estate 987 82.9 978 81.8
Individuals 151 12.7 145 12.1
------- ------ ------ -----
$ 1,190 100.0% $1,196 100.0%
======= ====== ====== ======
</TABLE>
DEPOSITS
The daily average amounts and average rates paid on deposits are
summarized below (in thousands of dollars):
<TABLE>
DECEMBER 31
1996 1995
----- -----
<S> <C> <C> <C> <C>
Noninterest-bearing demand $ 11,898 --% $ 10,912 --%
NOW accounts 17,657 2.4 18,166 2.7
Money market accounts 10,395 2.2 10,892 2.4
Savings and IRA accounts 22,591 3.4 23,096 3.6
Certificates of deposit and
other time
deposits, $100,000 and over 3,925 5.2 3,571 5.2
Other certificates of deposit 30,527 5.2 27,712 4.8
------- ==== ------- ====
$ 96,993 $ 94,349
======= =======
</TABLE>
Remaining maturities of deposits of $100,000 or more at December
31, 1996, are summarized as follows (in thousands of dollars):
<TABLE>
Over 3
Within through Over 12
3 months 12 months months Total
--------------------------------------
<S> <C> <C> <C> <C>
Certificates of deposit,
and other time deposits,
$100,000 and over $ 2,999 1,128 200 4,327
======================================
</TABLE>
ABI and Assumption Bank has no foreign deposits.
RETURN ON EQUITY AND ASSETS
The following table shows the return on assets (net income
divided by average total assets), return on equity (net income
divided by average equity), dividend payout ratio (dividends
declared per share divided by net income per share) and equity to
assets ratio (average equity divided by average total assets) for
each year indicated.
<TABLE>
YEAR ENDED
DECEMBER 31
1996 1995
----- -----
<S> <C> <C>
Return on assets 1.06% 1.04%
Return on equity 11.86 12.34
Dividend payout ratio 36.72 38.63
Equity to assets ratio 8.90 8.39
===== =====
</TABLE>
<PAGE>
MANAGEMENT OF ABI AND ASSUMPTION BANK
BOARD OF DIRECTORS
See "CERTAIN INFORMATION CONCERNING ABI AND ASSUMPTION BANK --
Security Ownership of Principal Shareholders and Management"
EXECUTIVE OFFICERS OF ABI
The executive officers of ABI and Assumption Bank are Joseph
H. Montero, II and Harold F. Templet. Mr. Montero, 62, is
the President and Chief Executive Officer of ABI and
Assumption Bank and has served as an executive officer of the
Bank since 1971. Mr. Templet, 50, has been an executive
officer of Assumption Bank since 1981 and currently serves as the
Company's Secretary and Treasurer and Assumption Bank's
Senior Vice President.
EXECUTIVE COMPENSATION
The following table provides certain information
regarding the compensation of Joseph H. Montero, II,
President and Chief Executive Officer of ABI and Assumption Bank,
for each of the preceding three years.
[CAPTION]
<TABLE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Name and Other Annual
Principal Position Year Salary Bonus Compensation(1)
- --------------------- ---- -------- ------ ---------------
<S> <C> <C> <C> <C>
Joseph H. Montero, II 1996 $103,555 $4,900 $6,750
President and Chief 1995 $103,555 $5,300 $6,000
Executive Officer 1994 $103,555 $6,000 $6,000
- ------------------------
</TABLE>
(1) Consists of director fees.
TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of ABI and Assumption Bank
and their associates have been customers of and have had loan
transactions with Assumption Bank, and such transactions are
expected to continue in the future. In the opinion of
management, all loans to such persons were made in the ordinary
course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at
the time for comparable transactions with others, and did not
involve when made and have not involved since they were made,
more than the normal risk of collectibility or present other
unfavorable features.
<PAGE>
CERTAIN INFORMATION CONCERNING ARGENTBANK
GENERAL
ArgentBank is a Louisiana state nonmember bank organized on
February 26, 1929 and headquartered in Thibodaux, Louisiana. At
December 31, 1996, ArgentBank had total assets of approximately
$590 million and total shareholders equity of approximately $68
million. ArgentBank operates a total of sixteen (16) banking
offices, one (1) stand alone automated teller machine, one (1)
drive-up facility and one (1) cash dispenser.
ArgentBank is community oriented and focuses primarily on
offering commercial, consumer and mortgage loans and deposit
services to individuals and small to middle market businesses in
its market area. ArgentBank's operating strategy is to provide
its customers with the financial sophistication and breadth of
products of a regional bank while successfully retaining the
local appeal and level of service of a community bank.
In October 1987, Lafourche National Bank of Thibodaux
("Lafourche National") merged with and into First Interstate Bank
of Southern Louisiana. At the time of the acquisition, Lafourche
National had total assets of approximately $115 million, total
deposits of approximately $104 million, total loans of
approximately $51 million, seven banking facilities and two ATMs.
In May 1990, First Interstate Bank of Southern Louisiana
acquired certain assets and accrued the insured deposits of
Peoples Federal Savings and Loan Association, Thibodaux,
Louisiana ("Peoples") from the Resolution Trust Corporation. As
a result of this transaction, First Interstate Bank of Southern
Louisiana acquired approximately $18 million in total assets and
$17 million in total deposits.
In June, 1993, First Interstate Bank of Southern Louisiana
changed its name to ArgentBank.
BUSINESS
ArgentBank is a commercial bank having its principal offices
in Thibodaux, Louisiana. ArgentBank opened two new full-service
branches in 1996 in Terrebonne Parish for a total of four
locations in Terrebonne Parish. ArgentBank closed the Baton
Rouge and New Orleans branches and sold the deposits and building
facilities during 1996. ArgentBank continues to operate loan
production offices in both areas. During 1996, ArgentBank
installed six (6) new ATM's giving ArgentBank a total of fifteen
(15) throughout the region.
ArgentBank offers complete commercial banking services to
businesses, commercial banks, industries, institutions, and
individuals. ArgentBank's lending services include real estate,
commercial and consumer loans. Other services provided include
checking, time deposit and savings accounts, safe deposit vaults,
installment collections, cash management and government and municipal bond
transactions.
The relevant geographic market for ArgentBank consists of
(1) the Houma-Thibodaux MSA which consists of Lafourche and
Terrebonne Parishes; and (2) Assumption Parish. Other
organizations in the immediate city and neighboring parishes
provide services similar to those provided by ArgentBank.
Competition is active in every service offered by ArgentBank as
numerous banks and other financial institutions in the service
area make loans and accept deposits. In Lafourche parish there
are seven other banks, one savings and loan association, and two
credit unions.
EMPLOYEES
At December 31, 1996, ArgentBank employed 191 full-time
employees and 62 part-time employees.
PROPERTIES
The main office of ArgentBank is located at 203 West Second
Street, Thibodaux, Louisiana. Throughout the parish of
Lafourche, ArgentBank has ten (10) full service facilities and
one (1) drive-up facility. ArgentBank has fifteen (15) ATM's to
meet its customers' needs. ArgentBank has four(4) branch
locations in Terrebonne Parish, and two (2) locations in
Assumption Parish which operate as full service facilities.
ArgentBank also operates Loan Production Offices in Mandeville,
Baton Rouge, and Harahan, Louisiana. ArgentBank has four (4)
facilities which are used for operations and off-site storage.
Of the other aforementioned operating branches, five (5) are
under leases which extend to the years, 1998, 2000, 2001 and
2005, with options existing to prolong these leases if deemed
necessary. ArgentBank purchased and leased land in Terrebonne
Parish for the purpose of building two (2) new branches opened in
1996. ArgentBank also owns two (2) parcels of land of which one
is used for a parking lot and the other for expansion.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which
ArgentBank is a party of or which any of its property is the
subject.
<TABLE>
<CAPTION>
SECURITIES OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Number of
Shares % of Shares
Owned Owned
Beneficially Benefically
Principal Has (Direct or (Direct or
Occupation For Served Indirect) Indirect)
Directors' Names Age as the Last as Director as of as of
of 1/31/97 Five Years Since 4/18/97** 4/18/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <C> <C>
J. Alvin Badeaux, Jr. 56 President, Badeaux Engineers,
Inc. 10/01/1987 21,242(1) *
Perry A. Blanchard, Sr. 59 President, P.A. Blanchard, Inc. 07/18/1989 3,200(2) *
Harold M. Block 51 Attorney, Block and Bouterie 05/20/1980 27,080(3) *
Joseph E. Boudreaux 54 AFLAC Associate (Insurance) 10/01/1987 2,400 *
Bonnie E. Brady 34 Assistant to President, 07/22/1996 1,500 *
MobileTel
Weber L. Callais 82 President, Golden Meadow 03/21/1972 7,360(4) *
Boat Rental, Inc
Paul B. Candies 56 President, Otto Candies Inc. 03/21/1972 135,564(5) 2.31
Brian P. Cheramie 43 CEO-Gilbert Cheramie Boat
Rentals, Inc. 07/22/1996 8,880 *
Elie J. Cheramie 82 President, Andrew Cheramie 03/21/1972 21,040(6) *
Marsh Buggies, Inc.
Garret H. Danos 47 President, Danos & Curole. 02/14/1995 3,400 *
Marine Contractors, Inc
Kevin J. Gaubert 68 President, Gaubert Oil Co.,
Inc. 09/21/1976 23,218(7) *
Carl E. Heck 86 President, Carl Heck Engineers,
Inc. 06/21/1961 19,916(8) *
Randall E. Howard 49 President and CEO, ArgentBank 04/18/1989 12,000 *
Irving E. Legendre, Jr. 61 President, Lafourche Sugars
Corp. & Legendre Land Corp. 07/18/1989 11,658(9) *
James T. Lytal, III 55 President, Lytal Marine 01/19/1982 19,560 *
Operators Inc. & Lytal
Offshore, Inc.
James R Peltier 66 Chairman, ArgentBank
(from 5/16/94) 12/16/1980 163,202(10) 2.78
Oral and Maxillofacial Surgeon
(retired)
Alfred G. Robichaux, Jr. 67 Real Estate & Insurance
Consultant 10/01/1987 8,808 *
David J. Robichaux, Jr. 61 President, Low Land 08/19/1980 4,768 *
Construction Co., Inc.
President, Robichaux Land, Inc.
President, D. J. R., Inc.
Donald J. Rouse 40 President, Rouse Enterprises,
Inc. 03/20/1990 63,218(11) 1.08
Vernon E. Toups, Jr. 55 Manager, Brown's Velvet Dairy 05/19/1992 11,000(12) *
President, Acadia Dairy, Inc. -------
20 DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP Total 569,014 9.70%
- ----------------------------------------------- ======= =====
</TABLE>
* less than one percent
** Constitutes Sole Ownership unless otherwise indicated.
(1) Includes 1,070 shares of which he is naked owner, and his
father has usufruct.
(2) Includes 1,600 shares owned by wife, Rosalie Blanchard.
(3) Includes 11,010 shares of which Harold Block has shared
voting power, and 10,566 shares owned by wife, Jane W. Block
for which he has power of attorney and 2,504 shares by a
Foundation of which beneficial owner has shared investment
powers and shared voting power with Kevin Gaubert.
(4) Includes 800 shares owned by wife, Estelle Callais.
(5) Includes 1,098 shares owned by wife, Rita Candies.
(6) Includes 9,600 shares owned by tenants in common, wife,
Edith Cheramie; and 200 shares owned by wife.
(7) Includes 2,504 shares owned by a Foundation of which Kevin
Gaubert has shared voting power.
(8) Includes 1,200 shares owned by adult children for which he
has usufruct.
(9) Includes 1,600 shares owned by Legendre Land Corporation.
(10) Includes 800 shares owned by wife, Benita Ann Peltier and
30,152 shares owned by adult child for which he has Power of
Attorney with no maturity. James R. Peltier has shared
voting and investment powers with the beneficial owner.
(11) Includes 2,800 shares owned by tenants in common, wife, Sue
Rouse; 10,000 shares owned by Rouse Enterprises, Inc.; and
1,080 shares owned by minor children.
(12) Includes 2,000 shares owned by wife, Phyllis Toups, for
which he has shared voting and investment powers with the
beneficial owner.
There are no family relationships existing within the Board
of Directors and officers. The Board of Directors had twelve
meetings during 1996. Alfred G. Robichaux, Jr. attended fewer
than 75% of the aggregate total of the meetings held by the Board
of Directors for 1996. None of the directors is a director of
another company with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended
(the "Act"), or subject to the reporting requirements of Section
15(d) of the Act, or registered as an investment company under
the Investment Company Act of 1940.
PRINCIPAL SHAREHOLDERS
ArgentBank, as of April 18, 1997, has no knowledge
that any person beneficially owned, directly or indirectly, more
than five percent of the outstanding common stock of ArgentBank.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires ArgentBank's directors and executive officers to file
with the FDIC initial reports of ownership and reports of changes
in ownership of ArgentBank Common Stock. Executive officers and
directors are required by FDIC Regulations to furnish ArgentBank
with copies of all Section 16(a) forms they file. To
ArgentBank's knowledge, based solely on a review of the copies of
such reports furnished to ArgentBank and written representations
that no other reports were required, during the fiscal year ended
December 31, 1996 all Section 16(a) filing requirements
applicable to ArgentBank's executive officers and directors were
complied with.
COMMITTEES OF THE BOARD
The CRA/Compliance Committee of the Board of Directors meets
to review the activities and information regarding ArgentBank's
efforts in ascertainment, implementation, and effectiveness in
the areas of Community Reinvestment and compliance with all
applicable laws and regulations. The membership on this
committee is composed of J. Alvin Badeaux, Jr; Joseph E.
Boudreaux; Elie J. Cheramie; Randall E. Howard; James T. Lytal,
III; James R. Peltier, and Vernon E. Toups, Jr. This committee
met four times in 1996. For 1997, the CRA/Compliance Committee
has scheduled four meetings with special meetings to be called if
required.
The Audit Committee, which reports directly to the Board of
Directors, evaluates the work product of the Internal Auditors,
directs the work of the external audit and offers general
supervision without imposing any imitation on the scope of the
audit function. The Board of Directors appointed an Audit
Committee consisting of the following: Bonnie Brady; Perry A.
Blanchard Sr.; Garret H. Danos; Irving E. Legendre, Jr.; James T.
Lytal, III, and Vernon E. Toups, Jr. The Audit Committee had
four meetings during 1996. For 1997, the Audit Committee has
scheduled four meetings with special meetings to be called if
required.
The Compensation Committee reviews, evaluates and recommends
various salaries to be paid to the principal officers. The Board
of Directors appointed a Compensation Committee consisting of the
following: Harold M. Block; Paul B. Candies; Kevin J. Gaubert,
and Alfred G. Robichaux, Jr. The Compensation Committee had one
meeting during 1996 and has scheduled for 1997 one meeting, with
special meetings to be called if required.
The Board of Directors has not appointed a Nominating
Committee. There is no formal procedure for accepting
nominations from shareholders for the Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Base Compensation Compensation
Awards
Other Annual SARs All Other
Name and Principal Year Salary Bonus Compensation (Shares) Compensation
Position ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Randall E. Howard 1996 $196,588 $35,000 ---- ---- 1,902(4)
President & CEO 10,300(1) 276(5)
1995 194,712 35,000 ---- 42,272(3) 1,861(4)
10,300(1) 276(5)
1994 180,030 ---- ---- ---- 1,592(4)
9,300(1) 276(5)
James R. Peltier 1996 71,069 35,000 ---- ---- 711(4)
Chairman of the Board 10,300(2) 179(5)
1995 69,385 10,500 ---- ---- 321(4)
10,300(2) 271(5)
1994 49,231 ----
9,300(2) ---- ---- ---- 161(5)
</TABLE>
(1) Board of Directors Fees.
(2) Deferred Board of Directors Fees.
(3) Adjusted for two-for-one stock split effective October 31, 1995.
(4) Contributions made by Bank to the 401K Plan.
(5) Bank's payment of term life insurance premium.
<TABLE>
<CAPTION>
OPTIONS/SARS EXERCISED IN LAST FISCAL YEAR AND YEAR END OPTIONS/SAR VALUE
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES IN THE MONEY
UNDERLYING OPTIONS/SARS AT
SHARES OPTIONS/SARS AT FISCAL YEAR
ACQUIRED YEAR END (#)(1) END ($)(1)(2)
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) IN 1996 REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------
<S> <S> <S> <S> <C> <S> <C>
Randall E. Howard None None None/42,272 (3) None/$242,269
</TABLE>
</R
>
(1) SARs are exercisable upon a change of control of ArgentBank, disability,
normal retirement, death, or pro-rata value on non-renewal.
(2) Based on the closing price on the NASDAQ system $17.875 on December 31,
1996.
(3) Adjusted for two-for-one stock split effective October 31, 1995.
ArgentBank has entered into a severance agreement with
Randall E. Howard, which provides that Mr. Howard will receive
severance payments and benefits in the event his employment with
ArgentBank is terminated within two years of a change in control
of ArgentBank, for any reason other than death, disability, or
termination for cause. The agreement also provides that Mr.
Howard will receive severance benefits and payments in the event
that there is a change in his employment that represents a
negative change in the scope of his duties or responsibilities or
there is a negative change in his compensation resulting from the
change in control. Upon the occurrence of any of these events,
Mr. Howard will receive a cash payment equal to twice the highest
total annual compensation received in the last three years.
COMPENSATION OF DIRECTORS
The directors of ArgentBank received $400 per meeting
attended, with an additional $2,000 received at the end of the
year. Members of the CRA, Audit, and Asset-Liability Committees
receive an annual fee of $1,000. Members of the Loan Committee
receive an annual fee of $1,500. Pursuant to ArgentBank's
Deferred Compensation Plan for Directors, ArgentBank permits
directors to elect to defer director fees to be earned each year.
COMPENSATION PURSUANT TO PLANS
Defined-Benefit Pension Plan. The aggregate contribution to the
Pension Plan is 10.24% of annual salaries, not including benefits
or bonuses of the plan participants. The benefits reported are
for the plan year ended June 30, 1996.
To become a participant of ArgentBank's Pension Plan the
following are required:
a) Employee completes at least 1000 hours of employment in
a period of 12 consecutive months beginning with their
employment commencement date; and
b) The employee has attained the age of 21.
The Directors which are participants of the pension plan are
James R. Peltier who has 2 years of estimated credited service
and Randall E. Howard, President and CEO, who has 16.7 years of
estimated credited service. They have complied with the normal
requirements to participate.
Benefits are determined at the normal retirement age by
averaging the five highest annual salaries earned by the employee
during his/her last ten years of employment. The benefits are not
subject to any deduction for social security and are computed on
a straight life annuity. The cash compensation credited for
1996's principal officers for pension benefits is as follows:
Randall E. Howard - $150,000 maximum by law.
The table below illustrates the approximate annual
retirement benefit that would be payable under the plan to a
participant whose year of birth is 1950 or later upon his/her
retirement at the age of 60, with various assumptions as to
compensation and years of service. The Pension Plan has been
amended in 1993 so that employees with 25 years of service can
retire at age 60 with no reduction of benefits. Note that the
current tax law limits the salary used to determine benefits to
$150,000.
APPROXIMATE ANNUAL RETIREMENT BENEFITS
Final Average Salary 15 Years 20 Years 25 Years 30 Years
$25,000 $4,402 $5,870 $10,481 $10,481
50,000 8,804 11,739 20,963 20,963
75,000 14,044 18,725 33,438 33,438
150,000 30,660 40,880 73,000 73,000
Credited years of service upon
retirement for Randall E. Howard
is anticipated to be 27.7.
SUPPLEMENTAL PENSION PLAN. In July, 1993, ArgentBank
instituted a Supplemental Executive Retirement Plan (SERP), a
defined benefit plan under which ArgentBank will pay supplemental
pension benefits to Bank officers in addition to the amounts
received under ArgentBank's retirement plan. All qualified Bank
officers shall receive a supplemental benefit, at their early
retirement date or unreduced early retirement, provided they have
completed at least 25 years of service with ArgentBank and have
not reached the age of 62. ArgentBank retains its right to amend
or terminate this SERP at any time. The plan has no assets and
ArgentBank does not advance fund any of these anticipated costs.
At December 31, 1996, the accrued SERP was $11,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Philosophy. It is the philosophy of
ArgentBank's Compensation Committee of the Board to provide a
total compensation package to the President and CEO which rewards
strong corporate performance, provides incentives for long term
profitability and growth consistent with safety and soundness,
and remains competitive with other banks. The Committee uses a
combination of base pay, annual performance awards, and long term
incentives in achieving its philosophy. These compensation
factors are reviewed in the last quarter of each year. The plans,
the 1996 plan-related decisions, and supporting rationales are
outlined below.
BASE COMPENSATION. The base pay of the President and CEO
listed above is established to limit fixed salary costs by
targeting base pay to approximately eight percent below the peer
market average of base compensation. The peer group is comprised
of (6) banks in Louisiana with markets and asset levels similar
to ArgentBank (the "Peer Group").
EXECUTIVE VARIABLE PAY PLAN. The Executive Variable Pay
Plan is designed to establish executive compensation competitive
with other banks, to provide for meaningful cash awards, and to
increase profitability and growth of ArgentBank consistent with
other goals of ArgentBank, its shareholders, and its employees.
Awards are based primarily on total return to shareholders and
the financial results of ArgentBank indicated by ArgentBank's
return on equity ("ROE"), return on assets ("ROA") rank within
the Peer Group, and achievement of' individual goals.
In 1996, Randall E. Howard and James R. Peltier received
variable pay of $35,000. This payout was based upon total return
to shareholders and 1996 operating results of ArgentBank, which
exceeded targeted ROE and ROA goals.
STOCK APPRECIATION RIGHTS. This plan involves a grant of
units of common stock representing one share of ArgentBank stock
each, which entitles the CEO to an amount equal to the
appreciation of ArgentBank stock which occurs from the issue
price to the price at a future exercise date which will occur
upon a change in control of ArgentBank, disability, normal
retirement, or death. The plan is renewable at the option of the
Board of Directors every three years. Upon non-renewal of the
plan, the CEO will he entitled to a pro-rata share of the
appreciation of ArgentBank's stock. The number of units granted
was equal to three times the base salary of the CEO. This plan
provides an incentive to the CEO to assist in the successful
negotiation and consummation of an acquisition of ArgentBank by
another entity on the most preferential terms and at the highest
price to ArgentBank, in the event an offer to acquire ArgentBank
is made. The committee has no knowledge of anticipated or
pending offers to acquire ArgentBank. It is not intended that
additional grants of units will be made under this plan.
This report was presented by the Compensation Committee:
Harold M. Block
Paul B. Candies
Kevin J. Gaubert
Alfred G. Robichaux, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Bank directors who
are neither officers nor employees of ArgentBank. During 1996,
no executive officer of ArgentBank served as a member of the
Compensation Committee (or other board or committee performing
similar functions) or the Board of Directors of another entity,
one of whose executive officers served on the Compensation
Committee or the Board of Directors of ArgentBank.
STOCK PERFORMANCE GRAPH
The performance graph below compares the cumulative total
shareholder return of ArgentBank with the cumulative total return
of the NASDAQ Market Index and the MG Group Index. The MG Group
Index is an industry index prepared by Media General and consists
of 39 banks located in the east south central region of the
United States. The performance graph assumes that $100 was
invested in ArgentBank at the time it went public on the NASDAQ
National Market System on September 1, 1992 and assumes dividends
were reinvested through fiscal year ended December 31, 1996. The
stock price performance shown in this graph is neither
necessarily indicative of nor intended to suggest future stock
price performance.
[INSERT GRAPH]
TRANSACTIONS WITH MANAGEMENT
From time to time, ArgentBank has made loans to its officers
and directors and to businesses in which its officers and
directors own interest, and it intends to continue this policy.
Such loans are made only upon approval of the Board of Directors,
and at the same rate of interest, with the same security, and on
the same conditions applicable to loans of a comparable nature
made to others. These loans did not involve more than the normal
risk of collectibility or present other unfavorable features.
The Board of Directors with associates and principal
officers, as a whole, have direct and indirect liabilities of
$10,921,658.12 which is 16.14% of the Bank's Capital, Surplus,
and Undivided Profits. This amount represents loans of
$6,817,084.77 and committed credit lines of $4,338,181.00 of
which $4,104,573.35 is unfunded. Their total indebtedness at a
peak period during the year, as a whole, totaled $11,837,906.22
which is 17.50% of the Bank's Capital, Surplus and Undivided
Profits. There was no member of the Board of Directors and
principal officers who had direct and indirect liabilities in
excess of 10% of the Bank's total Capital, Surplus, and Undivided
Profits.
STOCK PRICES AND DIVIDENDS
The table below presents the high and low market prices and
dividend information. Until February 21, 1997, ArgentBank was
traded on the NASDAQ Stock Market System under the trading symbol
"ARGT". Since February 21, 1997, ArgentBank is traded on the
American Stock Exchange under the trading symbol "AGB." On
October 17, 1995, the Board of Directors declared a two-for-one
stock split to shareholders of record on October 31, 1995. On
July 20, 1993, the Board of Directors declared a four-for-one
stock split. As of December 31, 1996, the number of shareholders
of record of ArgentBank stock was 2,862.
<T>
MARKET VALUES & DIVIDENDS HIGH LOW CASH DIVIDEND
- ----------------------------------------------------------------------
1997:
March 31 $20.25 $17.25 $ .14
1996:
March 31 $24.50 $20.25 $ .13
June 30 22.00 18.50 .13
September 30 21.00 17.25 .13
December 31 19.00 17.25 .13
$ .52
===
1995:
March 31 $13.88 $12.38 $ .11
June 30 19.13 13.88 .11
September 30 22.50 18.13 .13
December 31 25.00 20.50 .13
$ .48
====
</T>
<PAGE>
DESCRIPTION OF ARGENTBANK CAPITAL STOCK
AUTHORIZED AND OUTSTANDING STOCK
ArgentBank has an authorized capitalization of 10,000,000
shares of capital stock, par value $.10 per share. Of these
authorized shares, as of the date of this Joint Proxy
Statement/Offering Circular, 5,863,668 shares of capital stock
were issued and outstanding.
VOTING RIGHTS
ArgentBank's shareholders, pursuant to state law, do not
have cumulative voting rights, and are entitled to one vote per
share for all matters submitted to a vote of the shareholders of
ArgentBank. Thus, a majority vote of the shareholders will elect
the entire ArgentBank Board of Directors.
ArgentBank's shareholders, pursuant to state law, must
approve mergers, consolidations, liquidations, and conversions by
a vote of at least two-thirds of the voting power present or by
such larger or smaller proportion not less than a majority of the
voting power present as the articles may provide. ArgentBank's
Articles currently provide that unless a merger, consolidation,
liquidation of conversion is previously approved by at least
two-thirds vote ofthe entire Board of Directors, in which case
a single majority vote of the shareholders will be sufficient for
approval, no merger, consolidation, liquidation or conversion
shall be authorized without the approval of seventy-five percent
(75%) of the voting power of all outstanding and issued shares of
ArgentBank Common Stock. The shareholders of ArgentBank will
vote at the ArgentBank Meeting to amend the Articles to eliminate
the requirement to obtain shareholder approval for certain
business combinations. See "APPROVAL OF AMENDMENTS TO ARGENTBANK
ARTICLES."
DIVIDEND RIGHTS
The shareholders of ArgentBank are entitled to dividends
when and as declared by its Board of Directors out of funds
legally available therefor. No dividends may be declared or paid
until ArgentBank has surplus equal to fifty percent of its
outstanding common stock, provided that surplus shall not be
reduced below that fifty percent level by the payment of the
dividend. In addition, prior approval of the Commissioner shall
be required if the total of all dividends declared and paid by
ArgentBank during any one year would exceed the total of its net
profits of that year combined with the net profits from the
immediately preceding year. ArgentBank's ability to pay
dividends can be further limited by its governing regulatory
agency pursuant to the imposition of various enforcement actions
upon ArgentBank. As a result, the ability of ArgentBank to pay
dividends on its outstanding shares is subject, to some extent,
to federal regulatory limitations.
PREEMPTIVE RIGHTS
The holders of ArgentBank Common Stock do not have any
preemptive rights to subscribe to any additional shares or other
securities that may be issued or offered by ArgentBank in the
future. Accordingly, ArgentBank Common Stock may be offered in
the future to the investing public or to shareholders at the
discretion of its Board of Directors.
LIQUIDATION RIGHTS
The holders of ArgentBank Common Stock are entitled to share
equally in the net assets of ArgentBank in the event of
liquidation or dissolution.
LIMITATION OF LIABILITY OF DIRECTORS
The ArgentBank Articles provide that no director or officer
shall be personally liable to ArgentBank or to any shareholder
for monetary damages for breach of his or her fiduciary duty.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
ArgentBank's Articles provide that ArgentBank shall (a)
fully indemnify its officers or directors from any such action or
Judgment obtained therein or claim, except that said officer or
director shall be responsible for a breach of his or her
fiduciary obligation to the corporation or its shareholders, (b)
acts or omissions not in good faith, acts or omissions of
intentional misconduct or knowingly in violation of the law, (c)
liability under Louisiana Revised Statutes 12:92(D); or (d) any
transaction from which the officer or director derived an
improper personal benefit.
TRANSFER AGENT
The registered transfer agent and registrar for ArgentBank
Common Stock is SunTrust Bank, Atlanta, Georgia.
CHANGES IN CONTROL
ArgentBank's Articles currently provide that unless a
merger, consolidation, liquidation of conversion is previously
approved by at least two-thirds vote of the entire Board of
Directors, in which case a single majority vote of the
shareholders will be sufficient for approval, no merger,
consolidation, liquidation or conversion shall be authorized
without the approval of seventy-five percent (75%) of the voting
power of all outstanding and issued shares of ArgentBank Common
Stock. The shareholders of ArgentBank will vote at the
ArgentBank Meeting to amend the Articles to eliminate the
requirement to obtain shareholder approval for certain business
combinations. See "APPROVAL OF AMENDMENTS TO ARGENTBANK
ARTICLES."
<PAGE>
ARGENTBANK'S MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The accompanying quarterly summary of income and selected
financial data offers an overview of ArgentBank's results of
operations. ArgentBank's net income amounted to $7.7 million or
$1.31 per share for the year ended December 31, 1996, as compared
to $8.1 million or $1.35 per share for the same period in 1995.
ArgentBank's annual return on average assets was 1.35%. Total
assets were $590.0 million at December 31, 1996, compared to
$562.1 million at December 31, 1995, an increase of 4.96%. Net
interest income increased by $1.1 million or 4.77%, as compared
to the prior year. The 1996 operating results are attributable
to the increased loan demand, the reduction in securities gains,
increase in non-interest expense and a reduction in the negative
provision for loan losses. The rise in net interest income
experienced in 1996 is contributable to the redeployment of
earning assets into the lending area.
Loans totaled $345.7 million at December 31, 1996, compared
to $288.5 million a year earlier. Commercial and real estate
loans increased by $43.7 million as the economy in all regions
showed signs of improvement. The increase in loan volume was
also due in part to the Indirect Loan Program initiated in
October 1994. The Indirect Loan Program totaled $35.8 million at
December 31, 1996, compared to $21.0 million at December 31,
1995.
ArgentBank's annual return on average shareholders' equity
was 11.7% for 1996, as compared to 12.9% for the same period in
1995. Shareholders' equity as of December 31, 1996 amounted to
$67.7 million, as compared to $66.5 million at December 31, 1995.
The shareholders equity-capital-to-total-assets ratio (excluding
market fluctuations) as of December 31, 1996 was 11.5%, compared
to 11.6% the prior year (by comparison, the regulatory minimum
capital ratio is 3.0%). The ratio of primary-capital-(equity
capital plus allowance for loan losses, excluding market
fluctuations) to-total-assets as of December 31, 1996 was 13.2%,
as compared to 13.5% for the prior year.
As of December 31, 1996, the allowance for loan losses was
$10.4 million, as compared to $10.6 million at December 31, 1995.
This represents a reserve-to-loan ratio of 3.0%, as compared to
3.7% at December 31, 1995. At December 31, 1996, non-performing
loans totaled $224 thousand, or .06% of total loans outstanding,
as compared to $130 thousand or .05% of total loans outstanding
in the prior year.
Total non-performing assets (including non-performing loans,
restructured debt and repossessed assets) were $1.1 million at
December 31, 1996, representing .17% of total assets, compared to
the prior year's total of $941 thousand or .17% of total assets.
As of December 31, 1996, ArgentBank had no other real estate
owned. ArgentBank experienced net recoveries of $174 thousand in
1996, as compared to charge-offs of $102 thousand for 1995. The
net charge-offs-to-average-loans for 1996 was -.05%, as compared
to .04% a year earlier. The favorable net charge-offs and a
continual low level of non-performing assets in 1996 enabled
ArgentBank to record a negative provision of $300 thousand for
the year, as compared to a negative provision of $1.0 million in
the previous year.
Total cash dividends paid for 1996 and 1995 were $.52 and
$.48 per share, respectively, reflecting an increase of 8.3%.
All per-share figures in management's discussion and analysis
give effect to the two-for-one stock split effective October 31,
1995.
NET INTEREST INCOME
The largest source of earnings is net interest income, the
difference between interest income on interest-earning assets and
interest expense incurred on interest-bearing liabilities. Net
interest income was $24.4 million in 1996, as compared to $23.3
million in 1995, reflecting an increase of $1.1 million. The
increase in net interest income is attributable to the shifting
of earning assets from securities to loans.
NON-INTEREST INCOME
Non-interest income remained stable during 1996.
Non-interest income is comprised of service charges on deposits,
other non-customer fees and securities gains and losses.
Non-interest income totaled $3.2 million in 1996 and 1995. As a
result of calls on securities and various sales, a gain of $151
thousand was recognized in 1996 as compared to $579 thousand in
1995.
NON-INTEREST EXPENSE
Non-interest operating expense increased to $16.6 million in
1996, from $15.7 million in 1995, an increase of $877 thousand or
5.6 percent. Personnel expenses increased by $315 thousand,
occupancy expenses increased by $252 thousand, data processing
expenses increased by $340 thousand, while other operating
expenses decreased by $27 thousand, as compared to 1995. The
increase in personnel cost was due primarily to the expansion of
two full-service branches in Terrebonne Parish, which increased
the full-time equivalent staff, from 210.5 to 222.0. The
increase in occupancy expenses was due to the addition of two
full-service branches and the purchase of a document imaging
system and an on-line teller system in 1996. The increase in
data processing expenses is due to outsourcing of ArgentBank's
LAN/WAN PC support to EDS.
FINANCIAL CONDITION
ASSETS
Total assets at December 31, 1996 were $590.0 million, an
increase of $27.9 million from the December 31, 1995 total of
$562.1 million. Total loans outstanding increased by $57.2
million to $345.7 million at December 31, 1996, compared to
$288.5 million at December 31, 1995. The redeployment of earning
assets into loans enabled ArgentBank to hedge the erosion of the
net interest margin in the face of declining interest rates
during most of 1996. The following table reflects the changes in
ArgentBank's loan portfolio for years 1996, 1995 and 1994 (in
thousands).
<TABLE>
<CAPTION>
Table 1 - Loan Portfolio 1996 1995 1994
LOANS LOANS LOANS
OUTSTANDING OUTSTANDING OUTSTANDING
YEARS ENDED DECEMBER 31, (IN THOUSANDS)
<S> <C> <C> <C>
Loans secured by real estate:
Construction and land development $ 9,010 $ 5,864 $ 2,382
Secured by farmland 2,464 416 476
Secured by 1-4 family residential
properties 91,908 80,626 67,791
Secured by multifamily (5 or more)
residential properties 27,697 24,607 18,772
Secured by nonfarm nonresidential
properties 115,803 100,479 82,300
Loans to depository institutions ---- 326 731
Loans to finance agricultural production and
other loans to farmers 122 32 71
Commercial and industrial loans 42,252 35,286 30,040
Loans to individuals for household, family,
and other personal expenditures 53,341 37,728 24,788
Obligations of state and political
subdivisions 3,907 3,818 4,797
Other loans 88 111 55
Less: Unearned income on loans (879) (814) (745)
Total loans and leases, net of unearned -------- -------- --------
income $345,713 $288,479 $231,458
======== ======== ========
</TABLE>
On December 31, 1996, ArgentBank's total securities portfolio amounted
to $192.7 million, as compared to $233.3 million at December 31, 1995.
The securities portfolio represented 32.7% of total assets and 35.1%
of earning assets as of December 31, 1996. The following table reflects
ArgentBank's breakdown of the investment portfolio for 1996, 1995 and 1994
(in thousands).
<TABLE>
<CAPTION>
Table 2 - Securities Portfolio
YEARS ENDED DECEMBER 31, (IN THOUSANDS) 1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
U. S. Treasury securities $53,768 $83,263 $87,881
U. S. Government agency and corporation
obligations:
Issued by FNMA and FHLMC 33,194 8,406 9,973
Guaranteed by GNMA 203 263 409
Collateralized mortgage obligations 11,926 27,757 38,158
All other U. S. Government agencies 58,822 56,681 54,839
Securities issued by states and political
subdivisions:
General obligations 10,286 13,212 15,025
Revenue obligations 6,666 10,681 10,118
Other domestic debt securities:
Privately-issued collateralized mortgage
obligations 9,377 14,900 24,035
All other 6,090 16,237 36,106
Equity securities 2,327 1,912 1,793
------- ------- -------
Total securities portfolio $192,659 $233,312 $278,337
======= ======= =======
</TABLE>
LIABILITIES
Total deposits increased by $26.3 million to $516.5 million at
December 31, 1996, from $490.2 million at December 31, 1995.
The net increase in deposits is due mainly to increases in time deposits.
Table 3 reflects the changes in the deposit mix for years 1996, 1995
and 1994 (in thousands).
<TABLE>
<CAPTION>
Table 3 - Deposit Composition DECEMBER 31,
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Non-interest-bearing - demand $ 82,693 $ 77,291 $ 75,697
Interest-bearing - demand 68,365 63,678 66,047
Money Market Accounts 88,651 89,806 111,067
Regular Savings and Christmas Club 42,725 43,416 48,718
Individual Retirement Accounts 27,516 27,407 26,681
Time Deposit - Personal 136,746 127,649 117,012
Time Deposit - Non-personal 18,270 19,822 13,623
Time Deposit - Political 51,522 41,099 28,078
------- ------- -------
Total Deposits $516,488 $490,168 $486,923
======= ======= =======
</TABLE>
SHAREHOLDERS' EQUITY
ArgentBank's annual return on average shareholders' equity
was 11.75% for 1996, as compared to 12.9% for the same period in
1995. Shareholders' equity increased $1.2 million during 1996 to
$67.7 million, from $66.5 million at December 31, 1995. Table 4
illustrates the changes in shareholders' equity for years 1996,
1995 and 1994 (in thousands).
<TABLE>
<CAPTION>
Table 4 - Shareholders' Equity Changes YEARS ENDED DECEMBER 31,
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Balance at beginning of year $66,503 $59,022 $54,083
Net income 7,738 8,074 8,002
Cash dividends paid (3,070) (2,837) (2,211)
Common shares purchased & retired (2,212) --- ---
Net unrealized gain/(loss) on available-for-
sale securities (1,296) 2,244 (852)
------- ------- -------
Balance at end of year $67,663 $66,503 $59,022
======= ======= =======
</TABLE>
Bank regulatory agencies require minimum capital standards.
Currently, the minimum total risk-based capital requirement is
8.0%, and ArgentBank's adjusted assets capital ratio stands at
16.35%. The Tier-1 risk-based capital requirement is 4.0%, and
ArgentBank's Tier-1 adjusted assets capital ratio is 15.08%.
ArgentBank's core capital-to-total assets was 11.79% as of
December 31, 1996, compared to a minimum requirement of 3.0% by
the regulatory agencies.
During 1996, the Board of Directors declared cash dividends
totaling $.52 per share, an increase of 8.3% over last year.
During 1995, the Board of Directors declared a two-for-one stock
split to shareholders of record on October 31, 1995.
LOAN LOSS RESERVES AND PROVISION FOR LOAN LOSSES
Management evaluates the reserve for loan losses periodically
to ensure that its level is adequate to absorb loan losses in the
loan portfolio. At December 31, 1996, the reserve for loan
losses was $10.4 million, as compared to $10.6 million at
December 31, 1995. The provision for loan losses is a charge
against current-period earnings and is added to the allowance for
loan losses to establish a reserve level considered adequate by
management to absorb future potential loan losses. A negative
provision of $300 thousand was taken during 1996, as compared to
a negative provision of $1.0 million in 1995. The net
charge-offs for 1996 reflects -.05 percent, as compared to net
charge-offs of .04 percent a year earlier. The favorable reductions in
non-performing assets enabled ArgentBank to record a negative
provision. Management believes that the allowance for loan
losses at December 31, 1996 is adequate to absorb any losses in
ArgentBank's portfolio. Table 5 recaps ArgentBank's charge-offs
and recoveries experience in 1996 and 1995 by quarter (in
thousands).
<TABLE>
<CAPTION>
Table 5 - Charge-offs and Recoveries 1996 1995
YTD 4th 3rd 2nd 1st YTD 4th 3rd 2nd 1st
--- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Charge-offs:
Real estate loans $16 $16 --- --- --- $103 $38 $15 $4 $46
Agricultural loans --- --- --- --- --- --- --- --- --- ---
Commercial & industrial
loans 22 15 7 --- --- 16 --- 16 --- ---
Consumer loans 271 114 68 73 16 135 36 24 42 33
All other loans 96 36 24 16 20 68 17 19 14 18
----- ----- ---- ---- ---- ---- ---- ---- ---- ---
Total Charge-offs $405 $181 $99 $89 $36 $322 $91 $74 $60 $97
===== ===== ==== ==== ==== ==== ==== ==== ==== ===
Recoveries:
Real estate loans $416 $34 $26 $32 $324 $54 $28 $5 $7 $14
Agricultural loans --- --- --- --- --- --- --- --- --- ---
Commercial & industrial
loans 14 2 10 1 1 8 1 5 1 1
Consumer loans 126 22 33 44 27 142 17 36 40 49
All other loans 23 8 3 4 8 16 6 3 2 5
----- ---- --- ---- ---- ---- ---- ---- ---- ---
Total Recoveries $579 $66 $72 $81 $360 $220 $52 $49 $50 $69
===== ===== ==== ==== ==== ==== ==== ==== ==== ===
Net Charge-offs /
(Net Recoveries) $(174) $115 $27 $8 $(324) $102 $39 $25 $10 $28
===== ===== === === ==== ==== ==== ==== ==== ===
Provision for loan
losses/(negative
provisions) $(300) -- --- -- $(300) $1000)$(250) $(250) $(250) $(250)
</TABLE>
LIQUIDITY
Liquidity represents ArgentBank's ability to provide funds to
satisfy demands from depositors, borrowers and other commitments
by either converting assets to cash or accessing new or existing
sources of funds. The principal sources of funds which provide
liquidity are customer deposits, customer payments of principal
and interest on loans, maturities of securities, earnings and
borrowings. Management closely monitors the maturities of
ArgentBank's assets and liabilities through a periodic review of
maturity profiles, yield/rate behaviors and loan/deposit
forecasts to minimize funding risks. ArgentBank's level of cash
on hand is to provide, at all times, sufficient cash and other
liquid assets for expected demand for funds. At December 31,
1996, cash and due from banks, securities, federal funds sold and
repurchase agreements were 45.3 percent of deposits, as compared
to 54.3 percent at December 31, 1995.
ArgentBank's loan-to-deposit ratio at year-end 1996 increased
to 64.9 percent, compared to 56.7 percent as of December 31,
1995. The Indirect Loan Program and the increase in loan demand
represent the major factors for the increased percentage.
RESULTS OF OPERATIONS
The accompanying quarterly summary of income and selected
financial data offers an overview of ArgentBank's results of
operations. ArgentBank reported net income of $7.7 million, or
$1.31 per share in 1996, compared to $8.1 million, or $1.35 per
share in 1995. The 1996 operating results are attributable to
the increased loan demand, the reduction in securities gains,
increase in non-interest expense and a reduction in the negative
provision for loan losses.
NET INTEREST INCOME
The largest source of earnings is net interest income, the
difference between interest income on interest-earning assets and
interest expense incurred on interest-bearing liabilities. Net
interest income was $24.4 million in 1996, as compared to $23.3
million in 1995, reflecting an increase of $1.1 million. The
increase in net interest income is attributable to the shifting
of earning assets from securities to loans.
NON-INTEREST INCOME
Non-interest income remained stable during 1996. Non-interest
income is comprised of service charges on deposits,
other non-customer fees and securities gains and losses. Non-interest
income totaled $3.2 million in 1996 and 1995. As a result of
calls on securities and various sales, a gain of $151 thousand
was recognized in 1996 as compared to $579 thousand in 1995.
NON-INTEREST EXPENSE
Non-interest operating expense increased to $16.6 million in
1996, from $15.7 million in 1995, an increase of $877 thousand or
5.6 percent. Personnel expenses increased by $315 thousand,
occupancy expenses increased by $252 thousand, data processing
expenses increased by $340 thousand, while other operating
expenses decreased by $27 thousand, as compared to 1995. The
increase in personnel cost was due primarily to the expansion of
two full-service branches in Terrebonne Parish, which increased
the full-time equivalent staff, from 210.5 to 222.0. The
increase in occupancy expenses was due to the addition of two
full-service branches and the purchase of a document imaging
system and an on-line teller system in 1996. The increase in
data processing expenses is due to outsourcing of ArgentBank's
LAN/WAN PC support to EDS.
<TABLE>
1996 1995
----------------------------------------- ---------------------------------------------
INTEREST INTEREST
TAXABLE-EQUIVALENT BASIS AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD
(AVERAGE BALANCE SHEET AND BALANCES EXPENSE RATE BALANCES EXPENSE RATE
INCOME/EXPENSE IN THOUSANDS)
- ----------------------------- ----------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-Earning Assets:
Loans, including fees $308,548 $27,145 8.80% $256,880 $22,806 8.88%
Time Deposits ----- ----- ----- ----- ----- -----
Securities:
U. S. Treasury securities and
obligations of U. S.
Government agencies 123,273 7,967 6.46% 129,201 8,062 6.24%
Obligations of States and
political subdivisions 21,292 1,421 6.67% 23,884 1,592 6.67%
Mortgage-backed and CMO's 63,387 3,856 6.08% 62,915 4,008 6.37%
Corporate bonds 10,390 489 4.71% 25,190 1,242 4.93%
Federal Home Loan Bank Stock
and mutual funds 1,977 119 6.02% 1,837 119 6.48%
-------- -------- -------- -------- -------- --------
Total Securities 220,319 13,852 6.29% 243,027 15,023 6.18%
Federal funds sold and securities
purchased under agreements to
resell 13,798 724 5.25% 15,481 904 5.84%
-------- -------- -------- -------- -------- --------
Total Interest-Earning
Assets 542,665 41,721 7.69% 515,388 38,733 7.52%
Allowance for Loan Losses (10,577) (11,229)
Non-Interest-Earning Assets 40,645 36,968
-------- --------
Total Assets $572,733 $541,127
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Interest checking accounts $64,965 $1,097 1.69% $60,007 $1,022 1.70%
Money market accounts 87,474 2,324 2.66% 93,434 2,251 2.41%
Regular savings 42,574 1,058 2.49% 44,151 1,092 2.47%
Individual retirement accounts 27,541 1,516 5.50% 27,204 1,457 5.36%
Time Deposits 204,802 10,832 5.29% 175,719 8,989 5.12%
-------- -------- -------- -------- -------- --------
Total Interest-Bearing
Deposits 427,356 16,827 3.94% 400,515 14,811 3.70%
Federal funds purchased and
securities sold under
agreements to repurchase 47 4 ----- 7 1 -----
Other interest-bearing liabilities 334 12 ----- 415 22 -----
-------- -------- -------- --------
Total Interest-Bearing
Liabilities 427,737 16,843 400,937 14,834
Non-Interest-Bearing Liabilities:
Demand deposits 70,645 71,111
Other liabilities 8,614 6,704
-------- --------
Total Non-Interest-Bearing
Liabilities 79,259 77,815
Shareholders' Equity 65,737 62,375
-------- --------
Total Liabilities and
Shareholders' Equity $572,733 $541,127
======== ========
Net Interest Income/Margin $24,878 4.34% $23,899 4.42%
</TABLE>
<TABLE>
1994 1993 1992
----------------------------------- ---------------------------------- ---------------------------------------------
INTEREST INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCES EXPENSE RATE BALANCES EXPENSE RATE BALANCES EXPENSE RATE
----------------------------------- ---------------------------------- ---------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$210,761 $18,195 8.63% $189,727 $17,266 9.10% $193,126 $19,005 9.84%
71 3 3.96% 130 5 3.52% 131 6 4.31%
149,587 8,411 5.62% 158,765 10,735 6.76% 175,293 13,378 7.63%
24,300 1,607 6.61% 19,979 1,536 7.69% 15,275 1,179 7.72%
75,764 4,223 5.57% 89,661 4,811 5.37% 89,175 5,447 6.11%
44,854 2,272 5.06% 36,225 2,084 5.75% 29,160 2,175 7.46%
1,738 82 4.75% 218 8 3.55% ----- ----- -----
- -------------------------------------------------------------------------------------------------------------------------------
296,243 16,595 5.60% 304,848 19,174 6.29% 308,903 22,179 7.18%
10,673 451 4.23% 17,183 498 2.90% 14,398 508 3.53%
- -------------------------------------------------------------------------------------------------------------------------------
517,748 35,244 6.81% 511,888 36,943 7.22% 516,558 41,698 8.07%
(12,791) (12,521) (9,277)
38,729 36,315 33,732
-------- -------- -------
$543,686 $535,682 $541,013
======== ======== =======
$61,404 $1,048 1.71% $61,451 $1,077 1.75% $57,167 $1,499 2.62%
112,337 2,487 2.21% 113,335 2,564 2.26% 120,971 3,932 3.25%
48,416 1,199 2.48% 47,241 1,206 2.55% 40,188 1,441 3.58%
26,870 1,222 4.55% 27,185 1,295 4.77% 27,650 1,593 5.76%
160,095 5,903 3.69% 167,838 5,722 3.41% 190,994 8,526 4.46%
------- ----- ----- ------- ----- ----- ------- ----- -----
409,122 11,859 2.90% 417,050 11,864 2.84% 436,970 16,991 3.89%
196 10 ----- ----- ----- ----- ----- ----- -----
345 19 ----- ----- 11 ----- ----- 14 -----
-------- ------- ------- -------
409,663 11,888 11,875 17,005
70,432 62,669 54,953
6,327 5,269 4,207
-------- -------- --------
76,759 67,938 59,160
57,264 50,694 44,883
-------- -------- --------
$543,686 535,682 $541,013
======== ======== ========
$23,35 4.30% $25,068 4.68% $24,693 4.56%
</TABLE>
ELECTION OF ARGENTBANK DIRECTORS
(ITEM 2 ON ARGENTBANK PROXY CARD)
The persons named below and described in the table on page 54 under
the caption "CERTAIN INFORMATION CONCERNING ARGENTBANK --
Principal Shareholders" will be nominated for election to serve
until the next annual meeting or until their successors are duly
elected. All of the persons listed are members of the present
Board of Directors. Although our charter calls for twenty-five
directors, we are presently operating with twenty. We do not
plan to fill these vacancies at the present time. Management
feels that twenty directors are sufficient at present. Proxies
cannot be voted for a greater number of person than the number of
nominees named.
Nominations for election for up to 25 persons to the Board
of Directors may be made by the Board of Directors or by a
shareholder or shareholders owning in the aggregate 10% of the
outstanding stock of ArgentBank. Shareholder nominations to the
Board must by made in writing and delivered to the Chairman of
the ArgentBank Board on or before 120 days prior to the annual
meeting of shareholders in order to be considered for inclusion
in a proxy statement for an annual meeting of shareholders. Such
notification must contain certain information concerning the
proposed nominee or nominees.
Shares represented by the proxy will be voted as directed.
In the absence of a contrary direction, the shares represented by
the proxy will be voted for the election of the twenty nominees
listed below.
J. Alvin Badeaux, Jr.
Bonnie E. Brady
Elie J. Cheramie
Randall E. Howard
Alfred G. Robichaux, Jr.
Perry A. Blanchard, Sr.
Weber L. Callais
Garret H. Danos
Irving E. Legendre, Jr.
David J. Robichaux, Jr.
Harold M. Block
Paul B. Candies
Kevin J. Gaubert
James T. Lytal, III
Donald J. Rouse
Joseph E. Boudreaux
Brian P. Cheramie
Carl E. Heck
James R. Peltier
Vernon E. Toups, Jr.
SELECTION OF ARGENTBANK AUDITORS
(ITEM 3 ON ARGENTBANK PROXY CARD)
Deloitte & Touche LLP was employed by ArgentBank to audit
the Statement of Condition as of December 31, 1996, and the
results of operations for the year then ended. The firm is also
retained by ArgentBank to prepare its tax returns. Before each
professional service was rendered by Deloitte & Touche LLP, the
service was approved and the possible effect on the independence
of the accountants was considered by the Audit Committee. The
firm has been retained for 1997. Representatives of Deloitte &
Touche LLP plan to be present at the ArgentBank Meeting to answer
any questions that may arise.
APPROVAL OF AMENDMENTS TO
ARGENTBANK ARTICLES
(ITEM 4 ON ARGENTBANK PROXY CARD)
The ArgentBank Board of Directors has approved and
recommends that the shareholders approve the following amendments
to ArgentBank's Articles of Incorporation, as amended (the
"Articles"). It is ArgentBank's intent to incorporate all of the
amendments set forth in this proposal which are approved by the
shareholders into Amended and Restated Articles of Incorporation
of ArgentBank (the "Restated Articles") to be filed with the
Louisiana Office of Financial Institutions.
The amendments proposed are (1) to change the date of the
general meeting of the shareholders from the third Tuesday of
April in each year to a date to be determined by the Board of
Directors or in the Bylaws; (2) to eliminate shareholder approval
of certain business combinations in which ArgentBank remains the
surviving entity in order to conform to the Articles to the
Louisiana Banking Laws, (3) to increase the number of authorized
shares of Common Stock from 10,000,000 to 16,000,000; and (4) to
authorize the members of the Board or its committees to
participate in and hold meetings by means of conference telephone
or other similar means of communication. The proposed amendments
were approved by the Commissioner of the Louisiana Office of
Financial Institutions on March 6, 1997.
The following discussion is qualified in its entirety by the
text of the proposed Restated Articles attached hereto as
Appendix E. If any of the amendments proposed herein are not
approved by the shareholders, prior to filing the Restated
Articles with the Louisiana Office of Financial Institutions,
ArgentBank will revise the Restated Articles to reflect the
comparable provision of its current Articles of Incorporation.
AN AMENDMENT TO ARTICLE V OF ARGENTBANK'S ARTICLES TO CHANGE THE
DATE OF THE GENERAL MEETING OF THE SHAREHOLDERS
The Board of Directors has adopted a resolution, pursuant to
Section 6:721 of the Louisiana Banking Laws, recommending an
amendment to Article V of the Articles to effect a change in the
date of the general meeting of the shareholders from the third
Tuesday of April in each year to a date to be determined by the
Board of Directors or in the Bylaws.
TEXT OF THE AMENDMENT. The Articles shall be amended by
deleting the first sentence of Article V and replacing it with
the following text:
The business of this corporation shall be conducted by, and
its management be vested in and exercised by a Board of
Directors, composed of not less than 15 nor more than 25
shareholders, all of whom shall be citizens of the United States
and of the state of Louisiana; the said directors shall be
elected at a general meeting of the shareholders, to be held each
year on a date to be determined by the Board of Directors or in
the Bylaws after the term of office herein fixed.
PURPOSE OF THE CHANGE IN GENERAL MEETING DATE REQUIREMENTS.
Allowing the Board of Directors to determine the date of the
general meeting of the shareholders each year will give the Board
more flexibility in selecting the annual meeting date.
VOTES REQUIRED AND RECOMMENDED. Approval of the proposal
for ArgentBank to amend the Articles to change the date of the
general meeting of the shareholders requires the affirmative vote
of two-thirds of the voting power present at the ArgentBank
Meeting. THE BOARD OF DIRECTORS OF ARGENTBANK RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE PROPOSAL FOR ARGENTBANK TO AMEND THE
ARTICLES TO ALLOW THE BOARD OF DIRECTORS TO DETERMINE THE DATE OF
THE GENERAL MEETING OF THE STOCKHOLDERS. Unless otherwise
specified, the enclosed proxy will be voted "FOR" the approval of
the amendment.
AN AMENDMENT TO THE ARTICLES TO ELIMINATE SHAREHOLDER APPROVAL OF
CERTAIN BUSINESS COMBINATIONS IN WHICH ARGENTBANK REMAINS THE
SURVIVING ENTITY IN ORDER TO CONFORM TO THE LOUISIANA BANKING
LAWS
Currently the Articles require shareholder approval for
almost all business combinations, whether or not ArgentBank is
the surviving entity. The Board of Directors has adopted a
resolution to amend Article XI in order to eliminate the
shareholder approval requirement for certain business
combinations in which ArgentBank remains the surviving entity.
TEXT OF THE BUSINESS COMBINATION AMENDMENT. The Articles
shall be amended by deleting the following text in Article XI:
1. Merger or consolidation with any corporation,
partnership, trust or other person or legal entity.
and adding the following text to Article XI:
1. A merger, consolidation or similar combination of the
corporation with any other corporation, partnership,
trust or other person or legal entity in which the
corporation is not the surviving corporation; or
2. Any sale, lease, exchange, transfer or other
disposition of more than 50% of the corporation's
assets or earning power.
PURPOSE OF THE AMENDMENT TO THE DEFINITION OF BUSINESS
COMBINATION. The Louisiana Banking Laws provide that shareholder
approval is not required for certain business combinations. More
specifically, Section 6:352 of the Louisiana Banking Laws
provides that if a merger agreement does not amend the articles
of the surviving bank, and if the shares of such bank to be
issued or delivered under the agreement do not exceed fifteen
percent of the shares of such bank of the same class outstanding
immediately prior to the effectiveness of the merger, approval of
the agreement by such bank's shareholders shall not be required.
The purpose of the amendment is to conform the Articles to
Section 6:352 so that shareholder approval will not be required
for a merger or other similar combination if the requirements of
Section 6:352 are met.
VOTES REQUIRED AND RECOMMENDED. Approval of the Business
Combinations Amendment requires the affirmative vote of
seventy-five percent (75%) of the voting power of all of the outstanding
and issued shares of ArgentBank's Common Stock. THE BOARD OF
DIRECTORS OF ARGENTBANK RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
BUSINESS COMBINATION AMENDMENT. Unless otherwise specified, the
enclosed proxy will be voted "FOR" the approval of the amendment.
AN AMENDMENT TO ARTICLE IV OF ARGENTBANK'S ARTICLES TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 10,000,000
TO 16,000,000
The Board of Directors has adopted a resolution recommending
an amendment to Article IV of the Articles to increase
ArgentBank's authorized capital stock from the current 10,000,000
shares to 16,000,000.
TEXT OF THE AMENDMENT. Article IV currently provides as
follows:
ARTICLE IV: The Capital Stock of this Corporation is
hereby fixed at ten million (10,000,000)
shares with a par value of Ten Cents ($.10)
per share.
The proposed amendment would amend ARTICLE IV to provide as
follows:
ARTICLE IV: The Capital Stock of this Corporation is
hereby fixed at sixteen million (16,000,000)
shares with a par value of Ten Cents ($.10)
per share.
PURPOSE OF AMENDMENT. Although the Board of Directors
currently has no plans to issue the additional shares of Common
Stock, if authorized, the Board of Directors of ArgentBank may
issue any authorized but unissued Common Stock without further
shareholder vote, unless required for a particular transaction by
applicable law. Furthermore, ArgentBank's Board of Directors
may, at its discretion, subsequently authorize the issuance of
additional shares for any valid corporate purpose, including,
without limitation, business combination transactions with other
business entities, or through stock split or stock dividends, and
for employee benefit or dividend reinvestment programs. The
holders of ArgentBank Common Stock are entitled to one vote per
share and do not have preemptive rights to purchase any
securities subsequently issued by ArgentBank. The issuance of
additional shares could cause the dilution of each existing
shareholder's voting power, and could, depending on a variety of
factors, have the effect of diluting the earnings per share or
book value per share of the outstanding shares of ArgentBank
Common Stock.
The issuance of additional shares of Common Stock might have
anti-takeover effects by diluting the voting power of a person
seeking to acquire ArgentBank, but this is not the purpose of the
increased authorization and the Board has no present intention of
issuing Common Stock for such purpose. This proposal to amend
the Articles is not in response to any effort of which ArgentBank
is aware to accumulate ArgentBank's stock or obtain control of
ArgentBank. The Board does not presently contemplate
recommending the adoption of any other amendments to the Articles
which could be construed to affect the ability of third parties
to takeover or change control of ArgentBank.
The Articles and Bylaws of ArgentBank presently contain the
following provisions which could be considered to have an
anti-takeover effect: (i) authorized but unissued shares of Common
Stock issuable by the Board of Directors without shareholder
approval; (ii) Board authority to increase or decrease the size
of the Board of Directors during periods between annual
shareholder meetings; and (iii) the requirement of the
supermajority shareholder approval to approve certain business
combinations. ArgentBank does not plan to employ any other
takeover measures.
The shareholders of ArgentBank Common Stock are entitled to
receive dividends as may be declared by the Board of Directors of
ArgentBank with respect to the Common Stock out of funds legally
available.
VOTES REQUIRED AND RECOMMENDED. Approval of the amendment
to Article IV by the shareholders requires the affirmative vote
of the holders of two- thirds of the voting power present. It is
expected that shares owned beneficially or controlled by the
officers and directors of ArgentBank (approximately 9% of the
outstanding stock) will be voted in favor of the proposed
amendment to the Articles. THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE
ARTICLES TO INCREASE THE NUMBER OF AUTHORIZED SHARES.
AN AMENDMENT TO ARTICLE VI OF ARGENTBANK'S ARTICLES TO AUTHORIZE
THE MEMBERS OF THE BOARD TO HOLD MEETINGS BY TELEPHONE CONFERENCE
The Board of Directors has adopted a resolution, pursuant to
Section 6:721 of the Louisiana Banking Laws, recommending an
amendment to Article VI of the Articles to authorize the members
of the Board or its committees to participate in and hold
meetings by means of conference telephone or other similar means
of communication.
TEXT OF THE AMENDMENT. Article VI shall be amended by
adding the following text:
The members of the Board or its committees may participate
in and hold meetings by means of:
(a) Conference telephone or other similar means of
communication; and
(b) With respect to extensions of credit only,
communication or contact by the chairman, chief
executive officer, or their designee through the use of
any oral, electronic, or written means of
communications, including the use of telephone,
telegraph, facsimile transmittal, or other means of
communication, provided that:
(i) No member objects to a meeting being held in this
manner;
(ii) The chairman, chief executive officer, or their
designee certifies in writing the proposal to be
acted upon, their good faith attempt to
communicate the contents of such writing to all
members eligible to vote to determine their
position on the proposal, the affirmative or
negative position taken by any member, and the
objection of any member under Item (i) of this
Subparagraph; and
(iii) All actions taken pursuant to this
Subparagraph or proposed pursuant to this
Subparagraph but not taken due to the lack
of the necessary votes required for approval
or the objection of a member under Item (i)
of this Subparagraph, be evidenced by the
filing of the written certification required
under Item (ii) of this Subparagraph in the
records of proceedings of the Board of its
committees, as applicable; for review at the
next meeting of such Board of committee.
Participation in a meeting pursuant to this subsection shall
constitute presence in person at such meeting except where the
person participates for the sole, express purpose of objecting to
the transaction of any business on the ground that the meeting is
not lawfully called convened or objects under the provisions of
Louisiana Revised Statutes 6:283(C)(1)(b)(i).
PURPOSE OF THE AMENDMENT. The purposed of the amendment to
Article VI is to allow the twenty members of the ArgentBank Board
of Directors, some of which reside outside of Lafourche Parish,
to hold meetings by telephone conference and to poll its members
by telephone.
VOTES REQUIRED AND RECOMMENDED. Approval of the amendment
to Article VI by the shareholders requires the affirmative vote
of the holders of two- thirds of the voting power present at the
ArgentBank Meeting for or against such approval. It is expected
that shares owned beneficially or controlled by the officers and
directors of ArgentBank (approximately 9% of the outstanding
stock) will be voted in favor of the proposed amendment to the
Articles. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THE AMENDMENT TO THE ARTICLES TO AUTHORIZE
MEETINGS BY TELECONFERENCE.
LEGAL MATTERS
Certain legal matters in connection with the ArgentBank
Common Stock being offered hereby will be passed upon by Watkins
Ludlam & Stennis, P.A., 633 North State Street, Jackson,
Mississippi, counsel for ArgentBank.
EXPERTS
ABI. The consolidated financial statements of ABI as of
December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996, have been included
herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, included herein, and
upon the authority of said firm as experts in accounting and
auditing.
ARGENTBANK. The consolidated financial statements of
ArgentBank contained in this Joint Proxy Statement/Offering
Circular have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing elsewhere herein,
and are included in reliance upon the report of such firms given
upon their authority as experts in accounting and auditing.
OTHER MATTERS
ABI. At the time of the preparation of this Joint Proxy
Statement/Offering Circular, ABI had not been informed of any
matters to be presented by or on behalf of ABI or its management
for action at the ABI Meeting other than those listed in the
Notice of Special Meeting of Shareholders and referred to herein.
If any other matters come before the meeting or any adjournment
thereof, the persons named in the enclosed proxy will vote on
such matters according to their best judgment.
Shareholders are urged to sign the enclosed proxy, which is
solicited on behalf of the Board of Directors of ABI and return
it at once in the enclosed postage-paid envelope.
ARGENTBANK. At the time of the preparation of this Joint
Proxy Statement/Offering Circular, ArgentBank had not been
informed of any matters to be presented by or on behalf of
ArgentBank or its management for action at the ArgentBank Meeting
other than those listed in the Notice of Special Meeting of
Shareholders and referred to herein. If any other matters come
before the meeting or any adjournment thereof, the persons named
in the enclosed proxy will vote on such matters according to
their best judgment.
Shareholders are urged to sign the enclosed proxy, which is
solicited on behalf of the Board of Directors of ArgentBank and
return it at once in the enclosed envelope.
SHAREHOLDER PROPOSALS FOR ARGENTBANK ANNUAL MEETING
Shareholders' proposals intended for inclusion in next year's
proxy statement for the annual meeting of shareholders, to be
held on May 19, 1998 should be sent to Hugh Hamilton, ArgentBank
at P.O. Box 819, Thibodaux, Louisiana, 70302, and must be
received by January 19, 1998. The mailing date for next year's
annual shareholders' meeting will be April 17, 1998.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ABI CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements - Years Ended December
31, 1996, 1995 and 1994
<S> <C>
Independent Auditors' Report. . . . . . . . . . . . . . .F-2
Consolidated Statements of Condition . . . . . . . . . .F-3
Consolidated Statements of Operations . . . . . . . . . .F-5
Consolidated Statements of Stockholders' Equity . . . . .F-6
Consolidated Statements of Cash Flows . . . . . . . . . .F-7
Notes to Consolidated Financial Statements. . . . . . . .F-9
</TABLE>
<TABLE>
<CAPTION>
ARGENTBANK FINANCIAL STATEMENTS
Audited Consolidated Financial Statements - Years Ended December
31, 1996, 1995 and 1994
<S> <C>
Report of Independent Auditors. . . . . . . . . . . . . F-25
Consolidated Statements of Condition . . . . . . . . . F-26
Consolidated Statements of Income . . . . . . . . . . . F-27
Consolidated Statements of Shareholders' Equity . . . . F-28
Consolidated Statements of Cash Flows . . . . . . . . . F-29
Notes to Consolidated Financial Statements. . . . . . . F-30
</TABLE>
<PAGE>
ABI CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Assumption Bancshares, Inc.:
We have audited the accompanying consolidated statements of
condition of Assumption Bancshares, Inc. and subsidiary as of
December 31, 1996 and 1995, and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1996. 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
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Assumption Bancshares, Inc. and subsidiary at December
31, 1996 and 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
January 11, 1997
<PAGE>
<TABLE>
<CAPTION>
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Condition
December 31, 1996 and 1995
Assets 1996 1995
--------- ---------- --------
<S> <C> <C>
Cash and due from banks $ 4,266,633 6,293,399
Federal funds sold 10,400,000 5,950,000
----------- ----------
Cash and cash equivalents 14,666,633 12,243,399
Interest-bearing time deposits 99,000 99,000
Securities:
Held-to-maturity (market values of
$13,988,010 and $14,765,181
at December 31, 1996 and 1995,
respectively) 13,754,817 14,677,589
Available-for-sale (amortized cost
of $20,355,567 and $22,630,690
at December 31, 1996 and 1995,
respectively) 20,339,424 22,686,923
Loans 60,830,935 57,086,118
Less allowance for loan losses 1,190,245 1,195,517
---------- ----------
59,640,690 55,890,601
Other real estate 30,194 20,717
Bank premises and equipment, net 2,092,022 2,230,281
Accrued interest receivable 850,752 814,196
Other assets 328,650 444,794
----------- -----------
$ 111,802,182 109,107,500
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits $ 14,294,965 12,542,093
Interest-bearing deposits 87,082,783 86,806,028
----------- -----------
Total deposits 101,377,748 99,348,121
Accrued interest payable 368,598 340,500
Other liabilities and accrued
expenses 220,702 252,980
----------- -----------
Total liabilities 101,967,048 99,941,601
----------- -----------
Stockholders' equity:
Common stock - $5 par value.
Authorized 1,000,000 shares;
issued and outstanding 160,000
shares in 1996 and 1995 800,000 800,000
Paid-in capital 450,000 450,000
Retained earnings 8,595,789 7,878,785
Unrealized gain (loss) on
securities,net of income taxes (10,655) 37,114
---------- -----------
Total stockholders' equity 9,835,134 9,165,899
Commitments
---------- -----------
$ 111,802,182 109,107,500
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 5,510,430 4,818,574 4,258,766
Interest on securities:
Taxable 1,436,440 1,800,819 2,177,923
Exempt from federal
income taxes 739,605 709,192 489,820
Interest on federal funds
sold 243,989 163,735 146,561
Interest on deposits with
banks 5,956 6,510 4,810
---------- ---------- ----------
Total interest income 7,936,420 7,498,830 7,077,880
Interest expense on deposits 3,210,932 3,124,468 2,568,689
---------- ---------- ----------
Net interest income 4,725,488 4,374,362 4,509,191
Provision for loan losses 36,000 136,000 60,000
---------- ---------- ----------
Net interest income
after provision
for loan losses 4,689,488 4,238,362 4,449,191
---------- ---------- ----------
Other income:
Service charges on customer
accounts 442,916 422,508 382,879
Securities gains (losses) 7,496 (9,318) (48,997)
Other 136,537 223,327 197,340
---------- ---------- ----------
586,949 636,517 531,222
Other expenses 3,723,389 3,581,629 3,539,335
---------- ---------- ----------
Income before income
taxes 1,553,048 1,293,250 1,441,078
Income tax expense 420,044 216,019 274,859
---------- ---------- ----------
Net income $ 1,133,004 1,077,231 1,166,219
========== ========== ==========
Per share data:
Net income $ 7.08 6.73 7.29
========== ========== ==========
Number of shares used in
computations 160,000 160,000 160,000
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1996, 1995 and 1994
Net
unrealized
gain or Total
Common Paid-in Retained (loss) on stockholders'
stock capital earnings securities equity
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at
January 1, 1994 $ 800,000 450,000 6,411,335 271,185 7,932,520
Net income - - 1,166,219 - 1,166,219
Dividends
declared, $2.25
per common share - - (360,000) - (360,000)
Change in
unrealized gain
(loss) on
securities, net
of tax benefit
of $423,981 - - - (823,022) (823,022)
--------------------------------------------------------------------
Balances at
December 31, 1994 800,000 450,000 7,217,554 (551,837) 7,915,717
Net income - - 1,077,231 - 1,077,231
Dividends declared,
$2.60 per common
share - - (416,000) - (416,000)
Change in unrealized
gain (loss) on
securities, net of
tax expense of $303,400 - - - 588,951 588,951
--------------------------------------------------------------------
Balances at
December 31, 1995 800,000 450,000 7,878,785 37,114 9,165,899
Net income - - 1,133,004 - 1,133,004
Dividends declared,
$2.60 per common share - - (416,000) - (416,000)
Change in unrealized
gain (loss) on
securities, net of
tax benefit of $24,608 - - - (47,769) (47,769)
--------------------------------------------------------------------
Balances at
December 31, 1996 $ 800,000 450,000 8,595,789 (10,655) 9,835,134
====================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
-------------------------------------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income $ 1,133,004 1,077,231 1,166,219
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 221,400 201,625 199,800
Provision for loan losses 36,000 136,000 60,000
Securities losses (gains) (7,496) 9,318 48,997
Writedown of other real
estate - - 63,554
Decrease (increase) in
accrued interest
receivable (36,556) 5,620 (46,862)
Increase (decrease) in
accrued interest
payable 28,098 147,026 (18,941)
Other 101,776 113,205 11,057
---------- --------- ---------
Net cash provided by
operating
activities 1,476,226 1,690,025 1,483,824
---------- --------- ---------
Cash flows from investing
activities:
Proceeds from sales of
securities available-
for-sale 1,749,568 5,213,282 11,523,329
Maturities of and principal
payments on securities
held-to-maturity 920,267 2,256,336 5,075,055
Purchases of securities
available-for-sale (2,780,211) (489,431) (458,675)
Maturities of and principal
payments on securities
available-for-sale 3,315,766 1,503,873 3,250,573
Purchases of securities
held-to-maturity - (2,323,160) (14,780,358)
Loans originated, net of
principal collected (3,840,191) (6,577,548) (7,055,327)
Proceeds from sales of
other real estate 51,323 228,733 -
Capital expenditures (83,141) (384,184) (613,554)
---------- ---------- -----------
Net cash used in
investing activities (666,619) (572,099) (3,058,957)
---------- ---------- -----------
Cash flows from financing
activities:
Net increase (decrease) in
demand deposits, NOW
accounts, money market
accounts and savings and
IRA accounts $ 716,216 (778,149) 1,712,634
Net increase (decrease) in
certificates of deposit 1,313,411 1,873,503 (981,814)
Dividends paid (416,000) (416,000) (360,000)
---------- ---------- ----------
Net cash provided by
financing
activities 1,613,627 679,354 370,820
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents 2,423,234 1,797,280 (1,204,313)
Cash and cash equivalents at
beginning of year 12,243,399 10,446,119 11,650,432
---------- ---------- ----------
Cash and cash equivalents at
end of year $ 14,666,633 12,243,399 10,446,119
=========== ========== ==========
Supplemental disclosures:
Interest paid $ 3,182,834 2,977,442 2,587,630
=========== ========== ==========
Income taxes paid $ 340,000 250,000 310,000
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION
Assumption Bancshares, Inc. ("ABI") was incorporated
under the laws of the State of Louisiana in 1984. On
July 31, 1984, Assumption Bank and Trust Company (
"Assumption Bank") was reorganized as a subsidiary of
ABI. Prior to July 31, 1984, ABI had no significant
activity. ABI is currently engaged, through Assumption
Bank subsidiary, in banking activities. Assumption Bank
is the principal asset and primary source of revenue for
ABI.
Assumption Bank is subject to competition from other
financial institutions and the regulations of certain
government agencies. The government regulatory
authorities periodically examine Assumption Bank's
financial condition and regulatory compliance.
(b) BASIS OF PRESENTATION
The consolidated financial statements include the
financial statements of ABI and Assumption Bank. All
significant intercompany balances and transactions have
been eliminated in consolidation. All references to the
"Bank" appearing hereafter shall mean the consolidated
balances of ABI and Assumption Bank.
(c) SECURITIES
The Bank adopted the provisions of Statement of Financial
Accounting Standards No. 115, ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES (Statement 115)
at December 31, 1993. Under Statement 115, the Bank
classifies its securities in one of three categories:
trading, available-for-sale, or held-to-maturity.
Trading securities are bought and held principally for
the purpose of selling them in the near future. The Bank
has not established a trading portfolio. Held-to-maturity
securities are those securities in which the
Bank has the ability and intent to hold until maturity.
All other securities not included in trading or held-to-
maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at
fair value. Held-to-maturity securities are recorded at
amortized cost, adjusted for the amortization or
accretion of premiums or discounts. Unrealized holding
gains and losses on trading securities are included in
earnings. Unrealized holding gains and losses, net of
the related tax effect, on available-for-sale securities
are reported as a separate component of stockholders'
equity until realized. Transfers of securities between
categories are recorded at fair value at the date of
transfer. Unrealized holding gains and losses are
recognized in earnings for transfers into trading
securities. Unrealized holding gains or losses
associated with transfers of securities from held-to-
maturity to available-for-sale are recorded as a separate
component of stockholders' equity. The unrealized
holding gains or losses included in the separate
component of equity for securities transferred from
available-for-sale to held-for-maturity are maintained
and amortized into earnings over the remaining life of
the security as an adjustment to yield in a manner
consistent with the amortization or accretion of premium
or discount on the associated security.
A decline in the market value of any available-for-sale
or held-to-maturity security below cost that is deemed
other than temporary results in a charge to earnings
resulting in the establishment of a new cost basis for
the security.
Premiums and discounts are amortized or accreted over the
life of the related security as an adjustment to yield
using the effective interest method. Interest income is
recognized when earned. Realized gains and losses for
securities classified as available-for-sale and held-to-
maturity are included in earnings and are derived using
the specific identification method for determining the
cost of securities sold.
(d) ALLOWANCE FOR LOAN LOSSES
Management considers the allowance for loan losses
adequate to absorb losses on the loans outstanding as of
each reporting date. The determination of the allowance
for loan losses, using the Bank's procedures and methods,
is based upon various judgments and assumptions. The
factors which influence management's judgment in
determining the level of the allowance for loan losses
and the amount which is charged to operating expenses
are: (1) past loan loss experience; (2) composition of
the loan portfolio; (3) evaluation of potential future
losses; (4) current economic conditions; (5) specific
identification and anticipation of problem and
nonperforming loans, and (6) other relevant factors
affecting loans. No assurance can be given that the Bank
will not, in any particular period, sustain loan losses
which are sizable in relation to the amount reserved or
that subsequent evaluations of the loan portfolio, in
light of conditions and factors then prevailing, will not
require significant changes in the allowance for loan
losses. In addition, various regulatory agencies, as an
integral part of their examination process, periodically
review the Bank's allowance for loan losses. Such
agencies may require the Bank to recognize additions to
the allowance based on their judgment about information
available to them at the time of their examinations.
During the first quarter of 1995, the Bank adopted
Statement of Financial Accounting Standard No. 114,
ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN
(Statement 114) and STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 118, ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OF A LOAN - INCOME RECOGNITION AND DISCLOSURES (Statement
118). The Bank applied the provisions of Statement 114
and Statement 118 to all of its loans, except for its
consumer installment loans which are collectively
evaluated for impairment. Pursuant to Statement 114 and
Statement 118, a loan is considered to be impaired when,
based on current information and events, it is probable
that the Bank will be unable to collect principal and
interest amounts due according to the contractual terms
of the loan agreement. When a loan is impaired, the
measurement of its impairment can be determined in one of
three ways, as follows: (1) the present value of the
expected cash flows of the loan discounted at the loan's
original effective interest rate, (2) the observable
market price of the impaired loan, or (3) the fair value
of the collateral of a collateral-dependent loan. The
amount by which the recorded investment in the loan
exceeds the measure of the impaired loan is recognized by
recording a valuation allowance with a corresponding
charge to the provision for possible loan losses. The
effect of adopting Statement 114 and Statement 118 on the
Bank's financial condition and results of operations was
immaterial.
(e) OTHER REAL ESTATE
Other real estate consists of properties that were
acquired through foreclosure or through acceptance of a
deed in lieu of foreclosure. These properties are
recorded at the lower of cost or fair value, net of
estimated selling costs. When a reduction from the
carrying value of the loan to the fair value of the
property is required at the time of foreclosure, the
difference is charged to the allowance for loan losses.
Revenues and expenses associated with operating these
properties are recorded during the period in which they
are received or incurred.
The process of determining the appropriate valuation of
other real estate involves judgments and estimates that
are particularly susceptible to change.
(f) BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost, less
accumulated depreciation. Depreciation of bank premises
and equipment is calculated using a combination of
straight-line and accelerated methods over the estimated
useful lives of the assets. Estimated useful lives range
up to 39 years for buildings, 3-10 years for furniture
and equipment and the shorter of the lease term or the
useful life for leasehold improvements.
(g) INTEREST INCOME ON LOANS
Accrual of interest on loans is discontinued when
management believes, after considering economic and
business conditions and collection efforts, that the
borrowers' financial condition is such that collection of
interest is doubtful.
(h) INCOME TAXES
Effective January 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 109, ACCOUNTING FOR INCOME TAXES (Statement 109).
Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences
between the financial statement carrying amounts of
existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are
expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the
period that includes the enactment date.
(i) PENSION PLAN
The Bank participates in a noncontributory defined-benefit
pension plan organized by the Louisiana Bankers'
Association which covers substantially all employees.
Pension costs are actuarially determined and include the
amortization of prior service costs over the estimated
remaining service periods of the Bank's employees.
Funding is based on a review of the specific requirements
and an evaluation of the assets and liabilities of the
defined-benefit pension plan. The Bank does not provide
any postretirement or postemployment benefits, except for
those provided under the pension plan.
(j) ADVERTISING COST
The costs of advertising are expensed as incurred.
(k) RECLASSIFICATION
Certain reclassifications were made to the consolidated
financial statements of prior years to conform with the
presentation for 1996.
(l) USE OF ESTIMATES
Management of the Bank has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements in
conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(m) EARNINGS PER SHARE
Earnings per share have been computed on the basis of the
weighted average number of shares of common stock
outstanding during the year.
(n) STATEMENTS OF CASH FLOWS
For purposes of the consolidated statements of cash
flows, the Bank considers due from banks and federal
funds sold to be cash equivalents.
(2) SECURITIES
The amortized cost, gross unrealized holding gains, gross
unrealized holding losses and fair value of held-to-maturity
and available-for-sale securities by major security type at
December 31, 1996 and 1995, were as follows:
<TABLE>
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
--------- --------- -------- --------
<S> <C> <C> <C> <C>
1996
Held-to-maturity:
Mortgage-backed
securities $ 3,404,847 55,659 (23,915) 3,436,591
State and municipal
obligations 9,909,065 166,409 (80,845) 9,994,629
Collateralized
mortgage
obligations 440,905 115,885 - 556,790
---------- --------- --------- ---------
Total held-to-
maturity 13,754,817 337,953 (104,760) 13,988,010
---------- --------- --------- ---------
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
--------- --------- -------- --------
Available-for-sale:
Mortgage-backed
securities $ 13,489,693 75,198 (158,857) 13,406,034
Other U.S.
Government
agencies 2,411,155 34,253 (30,551) 2,414,857
State and municipal
obligations 4,166,230 36,440 (30,844) 4,171,826
Collateralized
mortgage
obligations 288,489 58,218 - 346,707
----------- --------- --------- ----------
Total available-
for-sale 20,355,567 204,109 (220,252) 20,339,424
----------- --------- --------- ----------
Total securities $ 34,110,384 542,062 (325,012) 34,327,434
=========== ========= ========= ==========
1995
Held-to-maturity:
Mortgage-backed
securities $ 4,252,551 81,325 (23,588) 4,310,288
State and municipal
obligations 9,970,032 152,595 (160,637) 9,961,990
Collateralized
mortgage
obligations 455,006 37,897 - 492,903
----------- --------- --------- ----------
Total held-to-
maturity 14,677,589 271,817 (184,225) 14,765,181
----------- --------- --------- ----------
Available-for-sale:
Mortgage-backed
securities 16,748,075 121,091 (137,987) 16,731,179
Other U.S.
Government
agencies 1,420,185 70,755 (9,263) 1,481,677
State and municipal
obligations 4,174,676 32,747 (48,128) 4,159,295
Collateralized
mortgage
obligations 287,754 27,018 - 314,772
----------- --------- --------- ----------
Total available-
for-sale 22,630,690 251,611 (195,378) 22,686,923
----------- --------- --------- ----------
Total securities $ 37,308,279 523,428 (379,603) 37,452,104
========== ========= ========== ==========
</TABLE>
The amortized cost and fair values of securities at December
31, 1996, by remaining contractual maturity are shown below (in
thousands of dollars). Expected maturities will differ from
contractual maturities on mortgage-backed securities and other
securities which may have prepayment provisions.
<TABLE>
Amortized Fair
cost value
<S> <C> <C>
Held-to-maturity:
Due after one year through
five years $ 501 504
Due after five years through
ten years 7,071 7,135
Due after ten years 2,337 2,356
Mortgage-backed securities and
collateral mortgage obligations 3,846 3,993
------- -------
Total held-to-maturity 13,755 13,988
------- -------
Available-for-sale:
Due in one year or less 1,639 1,671
Due after one year through
five years 3,631 3,619
Due after five years through
ten years 1,307 1,297
Mortgage-backed securities and
collateral mortgage obligations 13,778 13,752
------- -------
Total available-for-sale 20,355 20,339
------- -------
Total securities $ 34,110 34,327
======= =======
</TABLE>
During November 1995, the Financial Accounting Standards Board
(FASB) issued "A GUIDE TO IMPLEMENTATION OF STATEMENT 115 ON
ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES" (Implementation Guide). In accordance with the
Implementation Guide, the Bank reclassified securities with an
amortized cost of $10,899,000 and a net unrealized gain of
$14,600, from the held-to-maturity category to the available-for-
sale category as of December 31, 1995.
During 1996, 1995 and 1994, gross gains of $10,001, $40,457
and $55,929, respectively, were realized on sales of
securities. Gross losses of $2,505, $49,775 and $104,926 were
realized on sales during 1996, 1995 and 1994, respectively.
Securities having a carrying value of approximately
$17,678,000 and $21,609,000 at December 31, 1996 and 1995,
respectively, were pledged to secure public deposits as
required by law.
At December 31, 1996, the Bank held no securities issued by a
single issuer which exceeded 10% of stockholders' equity. At
December 31, 1995, the Bank held securities issued by
Assumption Parish totaling $980,000, which exceeded 10% of
stockholders' equity.
(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
A summary of the types of loans follows:
<TABLE>
1996 1995
<S> <C> <C>
Commercial, financial and
agricultural $ 2,680,514 3,497,583
Real estate 50,412,576 46,695,271
Individuals 7,737,845 6,893,264
----------- -----------
$ 60,830,935 57,086,118
=========== ===========
</TABLE>
<TABLE>
A summary of the changes in the allowance for loan losses for
1996, 1995 and 1994 follows:
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $ 1,195,517 1,103,823 1,129,774
Provision charged to income 36,000 136,000 60,000
---------- --------- ---------
1,231,517 1,239,823 1,189,774
---------- --------- ---------
Loans charged-off (133,053) (87,602) (140,623)
Recoveries on loans charged-off 91,781 43,296 54,672
---------- --------- ---------
Net loans charged-off (41,272) (44,306) (85,951)
---------- --------- ---------
Balance at end of year $ 1,190,245 1,195,517 1,103,823
========== ========= =========
</TABLE>
The Bank had loans of approximately $850,000 and $853,000 on
nonaccrual at December 31, 1996 and 1995, respectively. The
amount of additional interest income on nonaccrual loans, which
would have been recognized for 1996, 1995 and 1994, had the
related loans been performing according to their original terms
was not material. Interest income recognized on the cash basis
on loans in nonaccrual status was approximately $53,000,
$48,500 and $39,000 for 1996, 1995 and 1994, respectively.
At December 31, 1996 and 1995, impaired loans, all of which
were on nonaccrual, totaled $850,000 and $853,000, requiring
a total impairment allowance of $235,000 and $235,000,
respectively. The average recorded investment in impaired
loans was approximately $791,000 and $768,000 during the year
ended December 31, 1996 and 1995, respectively. For all
impaired loans, the impairment amount was measured using the
fair value of the underlying collateral.
For purposes of the consolidated statements of cash flows,
noncash investing and financing transactions include other real
estate and assets acquired in settlement of loans of
approximately $54,000, $23,000, and $58,000 during 1996, 1995
and 1994, respectively.
The Bank has extended loans, in the ordinary course of
business, to officers and directors of ABI and Assumption Bank,
their immediate families and companies in which the directors
are principal owners. In the opinion of management, such
transactions are on substantially the same terms as those
prevailing at the time for comparable transactions with others.
The amount of loans to these persons and their interests and
the related activity for 1996 and 1995 is summarized as
follows:
<TABLE>
1996 1995
<S> <C> <C>
Balance at beginning of
year $ 1,888,846 1,056,766
Additions 2,691,550 4,618,705
Payments and renewals (2,350,380) (3,786,625)
----------- ----------
Balance at year end $ 2,230,016 1,888,846
========== ==========
</TABLE>
(4) BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
<TABLE>
Accumulated
Cost depreciation Net
----------------------------------------------------
<S> <C> <C> <C>
December 31, 1996:
Land $ 256,532 - - - - 256,532
Banking houses 1,699,888 (715,368) 984,520
Leasehold improvements 108,198 (102,420) 5,778
Furniture and fixtures 2,769,461 (1,924,269) 845,192
---------- ----------- ---------
$ 4,834,079 (2,742,057) 2,092,022
========== =========== =========
December 31, 1995:
Land 256,532 - 256,532
Banking houses 1,678,007 (667,967) 1,010,040
Leasehold improve-
ments 108,198 (68,280) 39,918
Furniture and fix-
tures 2,708,200 (1,784,409) 923,791
---------- ----------- ---------
$ 4,750,937 (2,520,656) 2,230,281
========== =========== =========
</TABLE>
(5) PENSION PLAN
The Bank participates in a noncontributory defined-benefit
pension plan organized by the Louisiana Bankers' Association,
which covers substantially all of its employees. The following
table sets forth the plan's funded status and amounts
recognized in the Bank's consolidated statements of condition
at December 31, 1996 and 1995.
<TABLE>
1996 1995
------- -------
<S> <C> <C>
Pension benefit obligation:
Accumulated benefit obligations:
Vested $ 2,154,571 1,866,974
Nonvested 110,123 165,697
---------- ----------
2,264,694 2,032,671
Additional benefits based on
estimated future salary levels 435,876 440,659
---------- ----------
Projected benefit obligation 2,700,570 2,473,330
Plan assets at fair value 2,343,655 2,134,586
---------- ----------
Plan assets less than projected
benefit obligation (356,915) (338,744)
Unrecognized net asset being
amortized over 14 years 446,115 387,737
---------- ----------
Prepaid pension cost included in
other assets $ 89,200 48,993
========== ==========
</TABLE>
Plan assets for the defined benefit pension plan consist
primarily of common stocks, corporate bonds, U.S. Government
obligations and cash equivalents.
Net pension expense for 1996, 1995 and 1994 included the
following:
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 57,211 53,927 61,063
Interest cost on projected
benefit obligation 175,574 163,421 151,513
Actual return on plan assets (192,975) (303,418) 29,188
Amortization of transition assets 8,783 136,132 (202,234)
-------- -------- --------
Net pension expense $ 48,593 50,062 39,530
======== ======== ========
</TABLE>
Assumptions used in determining the pension expense for the
years ended December 31, 1996, 1995 and 1994 were:
<TABLE>
1996 1995 1994
------- ------ -------
<S> <C> <C> <C>
Discount rate 7.50% 8.05% 7.25%
Rates of increase in
compensation levels 3.50 3.50 4.00
Expected long-term rate of
return on assets 9.00 9.00 9.00
===== ===== =====
</TABLE>
(6) DEPOSITS
A summary of deposit accounts at December 31, 1996 and 1995
follows:
<TABLE>
1996 1995
------ ------
<S> <C> <C>
Noninterest-bearing $ 14,294,965 12,542,093
Interest-bearing:
NOW accounts 19,740,118 20,518,595
Money market accounts 10,583,829 10,699,688
Savings and IRA accounts 21,573,867 22,393,243
Certificates of deposit
$100,000 and over 3,650,360 3,577,697
Other certificates of deposit 30,857,553 28,778,502
Other time deposits $100,000
and over 677,056 838,303
87,082,783 86,806,028
$ 101,377,748 99,348,121
----------- ----------
</TABLE>
Interest expense related to certificates of deposit and
other time deposits, $100,000 and over totaled $204,731,
$185,470, and $105,364 during 1996, 1995 and 1994,
respectively.
(7) OTHER EXPENSES
Details of other expenses are as follows:
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Salaries and employee
benefits $ 1,835,239 1,797,053 1,709,801
Repairs and maintenance 284,207 277,247 241,800
Depreciation 221,400 201,625 199,800
Stationery and supplies 180,960 195,577 190,886
Occupancy 154,767 149,663 142,037
Data processing 17,889 19,930 17,753
Professional services 386,965 202,413 162,420
Directors' fees 107,250 91,550 91,600
FDIC insurance and state
assessments 24,198 130,024 239,968
Taxes, other than on income 113,252 88,026 75,017
Telephone 68,138 79,683 83,378
Postage 59,720 60,000 61,783
Other real estate 3,892 29,004 93,544
Conventions and seminars 29,200 30,261 43,796
Advertising and marketing 109,341 104,934 92,297
Other 126,971 124,639 93,455
---------- --------- ---------
$ 3,723,389 3,581,629 3,539,335
========== ========= =========
</TABLE>
(8) INCOME TAXES
Income tax expense for the years ended December 31, 1996,
1995 and 1994 consists of:
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Income from continuing operations:
Current $ 366,060 253,850 292,560
Deferred 53,984 (37,831) (17,701)
-------- -------- --------
420,044 216,019 274,859
Deferred tax expense (benefit)
recorded in stockholders'
equity for unrealized gains
(losses) on securities
available-for-sale (24,608) 303,400 (423,981)
-------- -------- ---------
$ 395,436 519,419 (149,122)
======== ======== =========
</TABLE>
Total income tax expense differed from the amounts computed by
applying the U.S. federal income tax rates to income before
income taxes as a result of the following:
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
U.S. federal income tax rate 34% 34% 34%
======= ======= ======
Computed "expected" income tax $ 528,036 439,884 474,432
Increase (decrease) in income taxes
resulting from:
Tax-exempt interest (258,182) (249,440) (173,066)
Non-deductible professional
fees 61,200 - -
Other, net 88,990 25,575 (26,507)
-------- -------- --------
Total income tax expense $ 420,044 216,019 274,859
======== ======== ========
</TABLE>
The tax effects of temporary differences that give rise to the
net deferred tax asset at December 31, 1996 and 1995 are
presented below:
<TABLE>
1996 1995
------ ------
<S> <C> <C>
Deferred tax assets:
Allowance for possible loan
losses $ 278,951 266,635
Unrealized losses on
securities available-
for-sale 5,488 -
Other real estate due to
writedowns 21,608 21,608
Minimum tax credit carryforward - 19,438
Other 488 3,316
-------- --------
Total deferred tax assets 306,535 310,997
-------- --------
Deferred tax liabilities:
Unrealized gains on securities
available-for-sale - 19,120
Bank premises and equipment,
principally due to
differences in cost basis
and depreciation 77,867 60,367
Securities, principally due
to differences cost basis
and discount accretion 90,553 76,953
Pension, principally due to
accrual for tax and not
financial reporting purposes 31,135 18,201
-------- --------
Total deferred tax
liabilities 199,555 174,641
-------- --------
Net deferred tax asset $ 106,980 136,356
======== ========
</TABLE>
No valuation allowance was recorded against the deferred tax
asset because management believes that it is more likely than
not that the net deferred tax asset will be realized in full.
(9) PARENT COMPANY CONDENSED FINANCIAL INFORMATION
Summarized financial information for Assumption Bancshares,
Inc. (parent company only) follows:
[CAPTION]
BALANCE SHEETS
<TABLE>
ASSETS DECEMBER 31,
---------- 1996 1995
------------------
<S> <C> <C>
Cash $ 704 1,854
Investment in 100% of the outstanding
common stock of bank subsidiary 9,834,430 9,164,045
--------- ---------
$9,835,134 9,165,899
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity:
Common stock 800,000 800,000
Paid-in capital 450,000 450,000
Retained earnings 8,595,789 7,878,785
Unrealized gain (loss) on securities,
net of income taxes (10,655) 37,114
---------- ---------
$ 9,835,134 9,165,899
========== =========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Equity in net income
of bank subsidiary $ 1,135,154 1,077,756 1,167,955
Assessments from state banking
commission (2,150) (525) (1,736)
---------- --------- ---------
Net income $ 1,133,004 1,077,231 1,166,219
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
1996 1995 1994
----------------------------------
<S> <C> <C> <C>
Net income $ 1,133,004 1,077,231 1,166,219
Adjustments to reconcile net
income to net cash used by
operating activities:
Equity in net income of
bank subsidiary (1,135,154) (1,077,756)(1,167,955)
---------- ---------- ----------
Net cash used by operating
activities (2,150) (525) (1,736)
---------- ---------- ----------
Cash used in financing activities -
dividends paid to shareholders (416,000) (416,000) (360,000)
---------- ---------- ----------
Cash provided by investing
activities -dividends received
from subsidiary 417,000 416,000 364,000
---------- ---------- ----------
Net increase (decrease) in
cash (1,150) (525) 2,264
Cash at beginning of year 1,854 2,379 115
--------- --------- ---------
Cash at end of year $ 704 1,854 2,379
========= ========= =========
</TABLE>
ABI's primary source of working capital is dividends from
Assumption Bank. Certain restrictions exist under Federal law
regarding the ability of the subsidiary bank to transfer funds
to ABI in the form of cash dividends. In addition, regulatory
authorities also consider the adequacy of the Assumption Bank's
capital in relation to its assets and other considerations.
Therefore, such capital adequacy may limit the availability of
undistributed earnings by a varying amount.
(10) COMMITMENTS
The Bank is a party to financial instruments with off-balance-sheet risk
which are executed in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to
extend credit and standby letters of credit. These instruments involve, to
varying degrees, elements of credit and interest rate (market) risk in
addition to the amounts reflected in the accompanying
consolidated statements of condition.
The Bank's exposure to loss in the event of nonperformance by
the other parties to these financial instruments is limited to
the contractual amount of such instruments. The Bank employs
the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments.
Financial instruments whose contract amounts represent credit
risk as of December 31, 1996 and 1995 are as follows:
<TABLE>
1996 1995
------- -------
<S> <C> <C>
Commitments to extend credit $ 3,530,235 4,185,759
Stand-by letters of credit 923,807 1,016,624
---------- ---------
$ 4,454,042 5,202,383
========== =========
</TABLE>
Commitments to extend credit are agreements to extend credit
to a customer under certain terms and conditions. Commitments
generally have fixed expiration dates of less than one year and
other termination clauses and may require payment of a fee.
Since some of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank
evaluates each customer's creditworthiness on an individual
basis. The amount of collateral required, if deemed necessary
by the Bank upon extension of credit, is based on management's
evaluation of the creditworthiness of the counterparty, and the
terms of the agreement. Collateral held varies, but generally
includes: accounts receivable, inventory, property, plant, and
equipment, and real estate.
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
loan facilities to customers. Letters of credit can be secured
by cash or non-cash items. Those secured by non-cash items are
backed by a note signed by the customer.
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
(Statement 107), requires the disclosure of estimated fair
values for financial instruments. Quoted market prices, if
available, are utilized as an estimate of the fair value of
financial instruments. Because no quoted market prices exist
for a significant part of the Bank's financial instruments, the
fair value of such instruments has been derived based on
management's assumptions with respect to future economic
conditions, the amount and timing of future cash flows and
estimated discount rates. Different assumptions could
significantly affect these estimates. Additionally, these
estimates are only indicative of individual financial
instruments' values and should not be considered an indication
of the fair value of the Bank taken as a whole.
The estimated fair value of financial instruments at December
31, 1996 is as follows (in thousands of dollars):
<TABLE>
Carrying Fair
Amount Value
----------- -------
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 14,667 14,667
Interest-bearing deposits 99 99
Securities:
Held-to-maturity 13,755 13,988
Available-for-sale 20,339 20,339
Loans receivable, net 59,641 60,584
------- -------
Financial liabilities - deposits 101,378 101,414
======= =======
</TABLE>
The following methods and assumptions were used to estimate the
fair value of each class of financial instrument:
Cash and cash equivalents: The carrying amounts reported in the
consolidated balance sheet for cash and short-term instruments
approximate those assets' fair values. The Bank's investment
in interest-bearing deposits with maturities of greater than
three months are quoted at market value.
Securities: Fair values for investment securities are based
on quoted market prices or dealer quotes.
Loans: For loans with maturities of three months or less, fair
value is considered to approximate carrying value. The fair
value of other loans is estimated by discounting the future
cash flows using the current rates at which similar loans would
be made to borrowers with similar credit ratings for the same
remaining maturities.
Deposits: The carrying value for all deposits without fixed
maturities, and for time deposits with maturities of three
months or less, is considered to approximate fair value. The
fair value for time deposits greater than $100,000 with
maturities greater than three months as well as time deposits
less than $100,000 is based upon the appropriate discount rate
for similar pools. The fair value of demand deposits is the
amount payable on demand, and is not adjusted for any value
derived from retaining those deposits for an expected future
period of time. That component, commonly referred to as
deposit base intangible, was not estimated at December 31, 1996
and is not considered in the fair value amounts nor is it
recorded as an intangible asset in the statement of condition.
Commitments to extend credit, standby letters of credit and
letters of credit: Pricing of these financial instruments is
based on the credit quality and relationship, fees, interest
rates, compensating balances and other covenants or
requirements. Many of these commitments are expected to, and
typically do, expire without being drawn upon. Carrying
amounts which are comprised of the unamortized fee income and,
where necessary, reserves for any expected credit losses from
these financial instruments, are immaterial. Because these
instruments are generally priced at the time they are funded,
there is no gain or loss embedded in these transactions.
(12) REGULATORY CAPITAL
The Bank's regulatory capital is summarized as follows:
<TABLE>
1996 1995
------- -------
<S> <C> <C>
Tier I capital $ 9,834,430 9,164,045
Tier II capital 695,080 668,606
---------- ----------
Total capital $ 10,529,510 9,832,651
========== ==========
Risk adjusted assets $ 55,606,399 53,488,441
========== ==========
</TABLE>
<TABLE>
Regulatory Minimums Actual
-------------------------- -----------
Adequately Well
capitalized capitalized 1996 1995
-------------------------- ---------------
<S> <C> <C> <C> <C>
Risk-based capital
ratios:
Tier I 4.00% 6.00% 17.69% 17.13%
Total 8.00 10.00 18.94 18.38
Tier I leverage ratio 4.00 5.00 9.17 8.64
</TABLE>
The Bank's risk-based capital and Tier I leverage ratios
substantially exceed the regulatory required minimums at
December 31, 1996 and 1995.
(13) PENDING MERGER
On November 20, 1996, the Boards of Directors of Assumption
Bancshares, Inc. and ArgentBank announced that they have
unanimously approved a Definitive Agreement which provides for
the merger of Assumption Bank and Trust, a wholly-owned
subsidiary of Assumption Bancshares, Inc. with ArgentBank for
$21.5 million, or approximately $134 per share, payable in a
combination of cash and ArgentBank common stock. The
transaction is subject to regulatory and shareholder approvals
and the satisfaction of certain other conditions. ArgentBank
is headquartered in Thibodaux, Louisiana and operates in
Lafourche, Terrebonne and Assumption parishes.
<PAGE>
ARGENTBANK FINANCIAL STATEMENTS
[insert logo]
Board of Directors and Shareholders
ArgentBank
Thibodaux, Louisiana
We have audited the accompanying statements of condition of
ArgentBank as of December 31, 1996 and 1995, and the related
statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of ArgentBank's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of ArgentBank at December
31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New Orleans, Louisiana
January 17, 1997
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONDITION
December 31, (in thousands, except shares of stock)
1996 1995
-------- -------
<S> <C> <C>
ASSETS:
Cash and due from banks $20,331 $25,436
Federal funds sold 20,950 7,350
------- ------
TOTAL CASH AND CASH EQUIVALENTS 41,281 32,786
Securities:
Held-to-maturity securities
(approximate market value of
$42,465 and $86,346 in 1996 and
1995, respectively) 42,433 86,461
Available-for-sale securities
(amortized cost of $150,080 and
$144,741 in 1996 and 1995,
respectively) 150,226 146,851
------- --------
TOTAL SECURITIES 192,659 233,312
Loans, net of unearned discount 345,713 288,479
Less: Allowance for loan losses (10,427) (10,553)
-------- --------
LOANS, NET 335,286 277,926
Accrued interest receivable 3,980 4,470
Other real estate, net - - - - 54
Bank premises and equipment, net 9,855 8,496
Other assets 6,893 5,043
-------- --------
TOTAL ASSETS $589,954 $562,087
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Non-interest-bearing $82,693 $77,291
Interest-bearing 433,795 412,877
------- -------
TOTAL DEPOSITS 516,488 490,168
Accrued interest payable 4,026 3,803
Other liabilities 1,777 1,613
------- -------
TOTAL LIABILITIES 522,291 495,584
Commitments and Contingencies (Note 13) - - - - - - - -
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value: 10,000,000
shares authorized,
5,863,668 shares outstanding in 1996,
and 5,975,464 shares outstanding
in 1995 586 598
Capital surplus 25,079 25,176
Net unrealized gains on available-for-
sale securities, net of tax 96 1,392
Retained earnings 41,902 39,337
------- -------
TOTAL SHAREHOLDERS' EQUITY 67,663 66,503
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $589,954 $562,087
======== =======
</TABLE>
See notes to financial statements.
<PAGE>
[CAPTION]
STATEMENTS OF INCOME
December 31, (in thousands, except per share data)
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $27,145 $22,722 $18,106
Securities:
Taxable 12,630 13,596 15,185
Non-taxable 793 947 936
Federal funds sold 724 904 451
Deposits in other banks - - - - - - - - 3
-------- ------- --------
TOTAL INTEREST INCOME 41,292 38,169 34,681
Interest expense-deposits 16,843 14,834 11,888
-------- ------- --------
NET INTEREST INCOME 24,449 23,335 22,793
Provision for (recovery of)
loan losses (300) (1,000) (2,091)
-------- ------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 24,749 24,335 24,884
-------- ------- --------
NON-INTEREST INCOME:
Customer service fees 2,703 2,531 2,518
Securities gains, net 151 579 496
Other 332 81 104
-------- ------- --------
TOTAL NON-INTEREST INCOME 3,186 3,191 3,118
-------- ------- --------
NON-INTEREST EXPENSE:
Salaries and employee benefits 7,651 7,336 7,500
Net occupancy expense 2,384 2,132 2,477
Data processing 1,797 1,457 1,214
Expenses related to other
real estate - - - - 3 2
Other 4,781 4,808 5,087
-------- ------- --------
TOTAL NON-INTEREST EXPENSE 16,613 15,736 16,280
-------- ------- --------
INCOME BEFORE INCOME TAXES 11,322 11,790 11,722
Income taxes 3,584 3,716 3,720
-------- ------- --------
NET INCOME $7,738 $8,074 $8,002
======== ======= ========
PER SHARE DATA:
Net income per Common Share $1.31 $1.35 $1.34
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF SHAREHOLDERS' EQUITY
Net
Unrealized
Holding
Gains Total
Common Stock Capital Retained (Losses) on Shareholders'
(in thousands, except per share data) Shares Amount Surplus Earnings Securities Equity
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 2,988 $299 $15,475 $38,309 $ - - - - $54,083
Unrealized holding gains (losses)
on securities at adoption of
SFAS No. 115 1,975 1,975
Cash dividends on common stock,
$.74 per share (2,211) (2,211)
Transfer of retained earnings to
capital surplus 10,000 (10,000) - - - -
Change in unrealized gains (losses)
on available-for-sale securities,
net of tax (2,827) (2,827)
Net income 8,002 8,002
----------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 2,988 299 25,475 34,100 (852) 59,022
Effect of stock split (2 for 1) 2,987 299 (299) - - - -
Cash dividends on common stock,
$.48 per share (2,837) (2,837)
Change in unrealized gains (losses)
on available-for-sale securities,
net of tax 2,244 2,244
Net income 8,074 8,074
----------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 5,975 598 25,176 39,337 1,392 66,503
Common stock purchased & retired (111) (12) (97) (2,103) (2,212)
Cash dividends on common stock,
$.52 per share (3,070) (3,070)
Change in unrealized gains (losses)
on available-for-sale securities,
net of tax (1,296) (1,296)
Net income 7,738 7,738
----------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 5,864 $586 $25,079 $41,902 $96 $67,663
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Years Ended December 31, (in thousands): 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,738 $8,074 $8,002
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on sales of securities (151) (579) (496)
Premium amortization (discount accretion) on securities, net 489 (966) 83
Provision for loan losses (300) (1,000) (2,091)
Provision for deferred taxes 26 (378) (209)
Accretion of deferred loan fees (205) (91) (178)
Loan origination costs capitalized (160) (130) (125)
Provision for losses on other real estate and repossessed assets - - - - - - 286
Loss on disposition of assets - - - - - - 101
Depreciation and amortization 992 878 869
Change in accrued interest receivable 471 (868) 594
Change in accrued interest payable 222 1,701 368
Change in other liabilities 164 484 328
--------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,286 7,125 7,532
--------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities or call of held-to-maturity securities 51,146 52,802 78,149
Proceeds from sales or maturities of available-for-sale securities 85,360 88,004 107,274
Purchases of held-to-maturity securities (7,029) (2,855) (58,443)
Purchases of available-for-sale securities (91,127) (87,981) (93,824)
Proceeds from maturities of interest-bearing deposits - - - - - - - - 130
Net loan principal originations (57,242) (57,589) (31,079)
Loan origination fees received 547 380 332
Proceeds from sales of other real estate 62 270 120
Proceeds from sales of bank premises and equipment 44 127 58
Purchases of bank premises and equipment (3,307) (1,485) (1,216)
Change in other assets (1,189) 213 (335)
Net cash paid in connection with branch sales (5,391) - - - - - - - -
--------------------------------------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (28,126) (8,114) 1,166
--------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 32,617 3,245 (1,591)
Purchase and retirement of common stock (2,212) - - - - - - - -
Dividends paid (3,070) (2,838) (2,211)
--------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 27,335 407 (3,802)
--------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,495 (582) 4,896
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 32,786 33,368 28,472
--------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $41,281 $32,786 $33,368
============================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
Years ended December 31, 1996, 1995 and 1994
1. Summary of Significant Accounting and Reporting Policies
The accounting and reporting policies of ArgentBank conform
with generally accepted accounting principles and the prevailing
practices within the banking industry. A summary of significant
accounting policies is as follows:
Description of Business. ArgentBank operates as a full-service financial
institution in three parishes of Southern Louisiana. During 1996, two new full-
service branches were opened in Terrebonne Parish. ArgentBank sold the New
Orleans and Baton Rouge branch deposits and building facilities in 1996.
ArgentBank continues to operate loan production offices in both areas.
ArgentBank is community oriented and focuses primarily on
utilizing its assets for maximum return to the shareholders through
sound banking practices. ArgentBank's operating strategy is to
serve the financial needs of the markets that it serves through
prudent lending, investment policies and deposit services.
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.
Securities. In May 1993, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards ("SFAS")
No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". This statement requires that only debt securities
that ArgentBank has the positive intent and ability to hold to
maturity be classified as held-to-maturity and reported at
amortized cost; all other debt securities are reported at fair
value. SFAS No. 115 further requires that realized and unrealized
gains and losses on securities classified as trading account assets
shall be recognized in current operations. Securities not
classified as held-to-maturity or trading are classified as
available-for-sale, with the related unrealized gains and losses
excluded from earnings and reported net of tax as a separate
component of shareholders' equity until realized. ArgentBank
adopted SFAS No. 115 effective January 1, 1994. At January 1,
1994, adopting SFAS No. 115 resulted in a $1,975,000 unrealized
gain being recorded in shareholders' equity.
Held-to-maturity securities are carried at cost, adjusted for
the amortization of premiums and the accretion of discounts.
Premiums and discounts are amortized and accreted to operations
using the level yield method, adjusted for prepayments as
applicable. Management has the intent and ArgentBank has the
ability to hold these assets as long-term investments until their
estimated maturities. Under certain circumstances (including the
deterioration of the issuer's credit worthiness or a change in tax
law or statutory or regulatory requirements), held-to-maturity
securities may be sold or transferred to another portfolio.
Available-for-sale securities are carried at fair value.
Unrealized gains and losses are excluded from earnings and reported
net of tax, as a separate component of shareholders' equity until
realized. Securities within the available-for-sale portfolio may
be used as part of ArgentBank's asset/liability strategy and may be
sold in response to changes in interest rate risk, prepayment risk
or other similar economic factors.
Loans. Loans are stated at the principal amount outstanding,
net of unearned discount and fees. Unearned discount relates
principally to consumer installment loans. The related interest
income is recognized utilizing methods which approximate the
interest method. When the payment of principal or interest on a
loan is delinquent for 90 days, or earlier in some cases, the loan
is placed on non-accrual status, unless the loan is in the process
of collection and the underlying collateral fully supports the
carrying value of the loan. If the decision is made to continue
accruing interest on the loan, periodic reviews are made to confirm
the accruing status of the loan. When a loan is placed on non-accrual status,
interest accrued during the current year prior to the judgment of
uncollectibility is charged to operations. Interest accrued during prior
periods is charged to allowance for loan losses. Generally, any payments
received on non-accrual loans are applied first to outstanding loan amounts
and next to the recovery of charged-off loan amounts. Any excess is treated as
recovery of lost interest.
ArgentBank considers a loan to be impaired when, based upon
current information and events, it believes it is probable that
ArgentBank will be unable to collect all amounts due according to
the contractual terms of the loan agreement. ArgentBank's impaired
loans include troubled debt restructurings, and performing and non-performing
major loans for which full payment of principal or interest is not expected.
ArgentBank calculates a reserve required for impaired loans based on the
present value of expected future cash flows discounted at the loan's
effective interest rate, or at the loan's observable market price or the fair
value of its collateral.
Loan origination fees and certain direct origination costs are
generally recognized over the life of the related loan as an
adjustment to the yield using the interest method.
Allowance for Loan Losses. The allowance for loan losses is
a valuation allowance available for future potential losses
incurred on loans. All losses are charged to the allowance when
the loss actually occurs or when a determination is made that a
loss is likely to occur. Recoveries are credited to the allowance
at the time of recovery.
Throughout the year, Management estimates the likely level of
future losses to determine whether the allowance for loan losses is
adequate to absorb reasonably anticipated losses in the existing
portfolio. Based on these estimates, an amount is charged to the
provision for loan losses and credited to the allowance for loan
losses in order to adjust the allowance to a level determined to be
adequate to absorb anticipated losses.
Management's judgment as to the level of anticipated losses on
existing loans involves the consideration of current and
anticipated economic conditions and their potential effects on
specific borrowers; an evaluation of the existing relationships
among loans, potential credit losses, and the present level of the
allowance; results of examinations of the loan portfolio by
regulatory agencies; and management's internal review of the loan
portfolio. In determining the collectibility of certain loans,
Management also considers the fair value of any underlying
collateral. The amounts ultimately realized may differ from the
carrying value of these assets due to economic, operating, or other
conditions beyond ArgentBank's control.
Estimates of anticipated loan losses involve judgment. While
it is possible that in particular periods ArgentBank may sustain
losses which are substantial relative to the allowance for loan
losses, it is the judgment of Management that the allowance for
loan losses reflected in the statements of condition is adequate to
absorb anticipated losses which may exist in the current loan
portfolio.
Bank Premises and Equipment. Premises and equipment are
carried at cost, less accumulated depreciation and amortization.
Depreciation expense is computed principally on the straight-line
method over the estimated useful lives of the assets. Leasehold
improvements are amortized on the straight-line method over the
period of the leases or the estimated useful lives, whichever is
shorter.
Other Real Estate. Real estate properties acquired through,
or in lieu of, loan foreclosure are to be sold and are initially
recorded at fair value at the date of foreclosure establishing a
new cost basis. After foreclosure, valuations are periodically
performed by Management and the real estate is carried at the lower
of carrying amount or fair value less cost to sell. Revenues and
expenses from operations and changes in the valuation allowance are
included in loss on foreclosed real estate.
Income Taxes. Income taxes are provided using the liability
method in accordance with SFAS No. 109, "Accounting for Income
Taxes." Under this method, deferred income taxes are recorded
based upon differences between the financial reporting and income
tax basis of assets and liabilities and are measured using the
enacted income tax rates and laws that will be in effect when the
differences are expected to reverse.
Earnings Per Share. Earnings per share is computed on the
basis of the weighted average number of shares outstanding during
the year. The average number of common shares outstanding, after
giving retroactive effect to the 1995 two-for-one stock split,
amounted to 5,906,000 in 1996, and 5,975,000 in 1995 and 1994.
STATEMENT OF CASH FLOWS. Cash equivalents include cash and
due from banks and federal funds sold; generally federal funds are
sold for one day periods. Interest paid amounted to $16,621,000,
$13,133,000, and $11,520,000, and taxes paid were $3,510,000,
$3,170,000 and $4,090,000 for the years ended December 31, 1996,
1995, and 1994, respectively.
Reclassifications. Certain reclassifications have been made
to prior years' amounts to conform them to the current year
presentation.
2. Cash and Due from Banks
ArgentBank is required to maintain average reserve balances
with the Federal Reserve Bank. "Cash and due from banks" in the
statements of condition included amounts so restricted of
$3,506,000 at December 31, 1996 and $3,453,000 at December 31,
1995.
3. Securities
The amortized cost and estimated fair value of investments in
debt and equity securities are as follows (in thousands):
<TABLE>
DECEMBER 31, 1996
------------------------------------------------------
HELD-TO-MATURITY GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------------------------------------------------
<S> <C> <C> <C> <C>
States and political
subdivisions $16,952 $109 ($112) $16,949
Corporate bonds 6,090 1 (40) 6,051
Mortgage-backed securities 19,391 183 (109) 19,465
-----------------------------------------------------
$42,433 $293 ($261) $42,465
=====================================================
</TABLE>
<TABLE>
DECEMBER 31, 1996
-----------------------------------------------------
AVAILABLE-FOR-SALE GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations
of U.S. Government
agencies $111,931 $929 ($270) $112,590
Mortgage-backed securities 35,849 14 (554) 35,309
FHLB Stock and Mutual
Funds 2,300 27 - - - 2,327
------------------------------------------------------
$150,080 $970 ($824) $150,226
======================================================
</TABLE>
ArgentBank does not own any securities deemed to be "high-risk" in
accordance with the Federal Financial Institutions Examination Council's
tests.
<TABLE>
DECEMBER 31, 1995
----------------------------------------------------
HELD-TO-MATURITY GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
Government agencies $ 4,999 $ - - - ($90) $ 4,909
States and political
subdivisions 23,893 131 (146) 23,878
Corporate bonds 16,237 - - - (176) 16,061
Mortgage-backed securities 41,332 420 (254) 41,498
--------------------------------------------------
$86,461 $551 ($666) $86,346
==================================================
</TABLE>
<TABLE>
DECEMBER 31, 1995
----------------------------------------------------
AVAILABLE-FOR-SALE GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
Government agencies $132,836 $2,180 ($70) $134,946
Mortgage-backed securities 9,993 8 (8) 9,993
FHLB Stock 1,912 - - - - - - - - 1,912
----------------------------------------------------
$144,741 $2,188 ($78) $146,851
====================================================
</TABLE>
The amortized cost and estimated fair value of debt and equity
securities at December 31, 1996, by contractual maturity, are shown below (in
thousands). Actual maturities may differ from contractual maturities,
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
Estimated
Held-to-Maturity Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
Due in one year or less $ 4,603 $ 4,610
Due after one year through five years 12,074 11,996
Due after five years through ten years 2,723 2,690
Due after ten years 3,643 3,704
--------- ---------
23,043 23,000
Mortgage-backed securities 19,390 19,465
--------- --------
$42,433 $42,465
========= ========
Estimated
Available-for-Sale Amortized Fair
Cost Value
---------- ----------
Due in one year or less $ 8,075 $ 8,185
Due after one year through five years 27,945 29,089
Due after five years through ten years 74,909 74,329
Due after ten years 3,288 3,300
-------- ---------
114,217 114,903
Mortgage-backed securities 35,863 35,323
-------- ---------
$150,080 $150,226
======== =========
</TABLE>
On December 15, 1995, as permitted by the Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and
Equity Securities issued by the Accounting Financial Standards
Board, ArgentBank reclassified securities with a book value of
$7,975,943 and unrealized gains of $601,665 to available-for-sale
securities from held-to-maturity securities.
Proceeds from sales of available-for-sale securities were
$36,151,000 and $41,070,000 for 1996 and 1995 respectively. Gross
gains of $151,078 and $579,000 were realized for the same period on
those sales. There were no gross losses realized on those sales.
Proceeds from calls of held-to-maturity securities during 1994 were
$25,132,000. Gross gains of $291,000 were realized on calls in
1994. There were no gross losses realized on those calls.
ArgentBank does not own any securities of any one issuer of
which aggregate adjusted cost exceeds 10% of the shareholders'
equity at December 31, 1996. Securities with a carrying value of
$138,148,000 and $82,284,000 and an estimated market value of
$138,409,000 and $83,477,000 at December 31, 1996 and 1995,
respectively, were pledged to secure public deposits and for other
purposes required or permitted by law.
4. Loans
The loan portfolio consists of various types of loans made
principally to borrowers located in Southern Louisiana and are
classified by major type as follows (in thousands):
<TABLE>
December 31,
1996 1995
---------------------
<S> <C> <C>
Real estate loans $246,882 $210,123
Commercial and industrial loans 42,252 35,275
Consumer loans 53,341 39,608
Loans to financial institutions - - - 326
All others (including overdrafts) 4,117 3,961
------- --------
346,592 289,293
Less unearned discount (879) (814)
------- --------
345,713 288,479
Less allowance for loan losses (10,427) (10,553)
------- --------
$335,286 $277,926
======== =========
</TABLE>
Loan maturities and rate sensitivity of the loan portfolio
before unearned income at December 31, 1996 are as follows (in
thousands):
<TABLE>
Within One- After
One Year Five Years Five Years Total
----------------------------------------------------
<S> <C> <C> <C> <C>
Real estate loans $ 71,515 $112,865 $62,502 $246,882
Commercial and industrial
loans 22,014 18,793 1,445 42,252
Consumer 19,185 33,717 439 53,341
Loans to financial
institutions - - - - - - - - - - - - - - - -
All others 1,897 978 1,242 4,117
-------- -------- -------- --------
$114,611 $166,353 $65,628 $346,592
======== ======== ======== ========
Loans at fixed interest
rates $ 87,948 $155,286 $18,266 $261,500
Loans at variable interest
rates 26,663 11,067 47,362 85,092
-------- -------- -------- --------
$114,611 $166,353 $65,628 $346,592
======== ======== ======== ========
</TABLE>
Included in the above loans are non-accrual loans on which
interest is recorded only when actually collected and not on the
accrual basis. These loans totaled approximately $150,000 and
$124,000 at December 31, 1996 and 1995, respectively. The loss of
income associated with non-accrual loans was $22,000, $51,000, and
$44,000 in 1996, 1995 and 1994, respectively.
Loans amounting to $54,000 and $326,000 were transferred to
other real estate in 1996 and 1995, respectively. ArgentBank did
not refinance 100% of any other real estate sold during 1996, 1995
and 1994.
As of December 31, 1996 and 1995, loans outstanding to
directors, officers and their affiliates were $6,817,085 and
$6,608,649, respectively. As of December 31, 1996 and 1995,
commitments approved but not funded totaled $4,104,573 and
$2,724,805, respectively. In the opinion of Management, all
transactions entered into between ArgentBank and such related
parties have been and are, in the ordinary course of business, made
on the same terms and conditions as similar transactions with
unaffiliated persons.
An analysis of activity with respect to these related party
loans is as follows (in thousands):
<TABLE>
Years Ended December 31,
1996 1995
------------------------------------------
<S> <C> <C>
Beginning balance $6,609 $5,393
New loans 4,017 2,152
Repayments and reductions (3,809) (936)
-------- --------
Ending balance $6,817 $6,609
======== ========
</TABLE>
As of December 31, 1996 and 1995, the recorded investment in
loans that are considered to be impaired were $105,082 and $84,125,
respectively. As of December 31, 1996 and 1995, the related
allowance for credit losses for the impaired loans was $31,589 and
$9,203, respectively. Interest income recognized on these loans
was immaterial for the years ended December 31, 1996 and 1995.
5. Allowance for Loan Losses
An analysis of activity in the allowance for loan losses is as
follows (in thousands):
<TABLE>
Years Ended December 31,
1996 1995 1994
--------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $10,553 $11,655 $13,092
Addition:
Provision (recovery)
charged to operations (300) (1,000) (2,091)
Deductions:
Loans charged-off (405) (322) (323)
Loan recoverie 579 220 977
-------- -------- --------
Net recoveries/(Net
charge-offs) 174 (102) 654
-------- -------- --------
Balance at end of year $10,427 $10,553 $11,655
======== ======== ========
</TABLE>
6. Bank Premises and Equipment
Bank premises and equipment are summarized below (in
thousands):
<TABLE>
December 31,
1996 1995
-------------------------------------------
<S> <C> <C>
Land and buildings $12,330 $11,645
Furniture, fixtures and equipment 7,859 6,611
Construction in progress 87 234
-------- --------
20,276 18,490
Less accumulated depreciation
and amortization (10,421) (9,994)
-------- --------
Bank premises and equipment, net $ 9,855 $ 8,496
======== ========
</TABLE>
7. Deposits
Included in interest-bearing deposits are certificates of
deposit with various maturity dates. These certificates and their
remaining maturities at December 31, 1996 and 1995 are as follows
(in thousands):
<TABLE>
December 31,
1996 1995
---------------------------
<S> <C> <C>
Three months or less $83,573 $91,767
Four through six months 49,832 53,837
Seven through twelve months 41,403 46,194
Thereafter 59,246 24,179
-------- --------
Total certificates of deposit $234,054 $215,977
======== ========
</TABLE>
Certificates of deposit in excess of $100,000 totaled
$96,294,000 and $87,503,000 at December 31, 1996 and 1995,
respectively. Interest expense for certificates of deposit in
excess of $100,000 was $5,034,000, $4,153,000, and $2,713,000 for
the years ended December 31, 1996, 1995 and 1994, respectively.
ArgentBank has no brokered deposits, and there are no major
concentrations of deposits.
8. Interest Rate Risk
ArgentBank is principally engaged in providing short-term
commercial loans with interest rates that fluctuate with various
market indices and short-term, 36 month adjustable rate mortgages.
These loans are primarily funded through short-term demand deposits
and long-term certificates of deposit with variable and fixed
rates. The real estate loans are more sensitive to interest rate
risk than the commercial loans due to their fixed rate and longer
maturity characteristics. At December 31, 1996, ArgentBank had
average interest-earning assets of $542,665,000, with a weighted
average effective yield of 7.69%, and average interest-bearing
liabilities of $427,737,000, with a weighted average rate of 3.94%.
Management continuously reviews ArgentBank's exposure to changes in
interest rates. Among the factors considered during its
evaluations are changes in the mix of earning assets, growth of
earning assets, interest rate spreads, and repricing periods.
Management forecasts and models the impact various interest rate
fluctuations would have on net interest income. Management
believes ArgentBank will not be adversely affected by either rising
or falling interest rates.
9. Financial Instruments With Off-Balance Sheet Risk
ArgentBank is a party to various financial instruments with
off-balance sheet risk in the normal course of business to meet the
financing needs of its customers and to reduce its own exposure to
fluctuations in interest rates. These financial instruments
include commitments to extend credit and standby letters of credit.
Those instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amounts recognized in the
statements of financial condition. The contract or notional
amounts of those instruments reflect the extent of the involvement
ArgentBank has in particular classes of financial instruments.
At December 31, 1996 and 1995, ArgentBank has made various
commitments to extend credit totaling $41,314,000 and $45,660,000
and financial standby letters of credit of $4,305,000 and
$5,125,000, respectively. Management does not anticipate any
material losses as a result of these transactions.
Commitments to extend credit are agreements to lend to a
customer, as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require
payment of a fee. Since many of the commitments are expected to
expire without being fully drawn upon, the total commitment amounts
disclosed above do not necessarily represent future cash
requirements.
Standby letters of credit and financial guarantees are
conditional commitments issued by ArgentBank which do 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 loan facilities to its customers.
10. Income Taxes
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. There is no valuation allowance required on the
recorded deferred tax asset. Significant components of
ArgentBank's deferred tax assets and liabilities as of December 31,
1996 and 1995 are as follows (in thousands):
<TABLE>
1996 1995
------ ------
<S> <C> <C>
Deferred Tax Assets:
Reserve for loan losses not
currently deductible $3,551 $3,588
Non-accrual interest 2 3
Amortization of intangible 27 33
Deferred compensation 198 141
Other 66 116
-------- --------
Total Deferred Tax Assets 3,844 3,881
Deferred Tax Liabilities:
Tax over book depreciation (207) (267)
Prepaid pension cost (30) (63)
Net unrealized gain on
available-for-sale securities (49) (717)
Other (101) (19)
-------- --------
Total Deferred Tax Liabilities (387) (1,066)
-------- --------
Net Deferred Tax Asset $3,457 $2,815
======== ========
</TABLE>
The components of income tax expense are as follows for the
years ended December 31, 1996, 1995 and 1994 (in thousands):
<TABLE>
Years Ended December 31,
1996 1995 1994
-------------------------------------------
<S> <C> <C> <C>
Current 3,558 $3,338 $3,929
Deferred (benefit) 26 378 (209)
-------- -------- --------
$3,584 $3,716 $3,720
======== ======== ========
</TABLE>
The provision for federal income taxes differs from the amount
computed by applying the U. S. Federal income tax statutory rate
(35% in 1996, 1995, and 1994) on income as follows (in thousands):
<TABLE>
Years Ended December 31,
1996 1995 1994
---------------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Taxes calculated at
statutory rate $3,963 35% $4,127 35% $4,103 35%
Decrease resulting from:
Tax-exempt interest (349) (3%) (351) (3%) (356) (3%)
Other, net (30) -- (60) -- (27) --
-------------------------------------------------------------
$3,584 32% $3,716 32% $3,720 32%
=============================================================
</TABLE>
11. Employee Benefit Plans
Retirement Plan. ArgentBank has a non-contributory defined
benefit plan covering substantially all employees meeting certain
criteria relating to length of employment, age and hours worked in
each year. The benefits are based upon years of service and
employees' average of the highest five years compensation during
the last ten years of employment. ArgentBank's funding policy is
to contribute annually an amount between the minimum and maximum
amount that can be deducted for federal income tax purposes.
The following table sets forth the Plan's funded status and
amounts recognized in the financial statements as of December 31,
(in thousands):
<TABLE>
December 31,
1996 1995
-------------------------------------------------
<S> <C> <C>
Projected benefit obligations:
Vested benefits ($6,245) ($6,102)
Non-vested benefits (333) (346)
-------- --------
Accumulated benefit obligations (6,578) (6,448)
Effect of future compensation (2,953) (3,067)
-------- --------
Projected benefit obligations
(PBO) (9,531) (9,515)
Plan assets at fair value 7,884 7,187
-------- --------
Unfunded PBO (1,647) (2,328)
Prepaid prior service cost 1,343 1,669
Prepaid net transition obligation (265) (293)
Unrecognized net loss 583 1,014
Unrecognized net transition
obligation 95 103
-------- --------
Prepaid pension cost $ 109 $ 165
======== ========
</TABLE>
Net Periodic pension cost for the year ended December 31, is
as follows (in thousands):
<TABLE>
Years Ended December 31,
1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during the
period $361 $331 $378
Interest paid on PBO 670 657 581
Return on plan assets (539) (498) (86)
Net amortization and
deferral 49 96 (231)
------- ------- -------
Net pension expense $541 $586 $642
======= ======= =======
</TABLE>
In determining the Plan's funded status, the weighted average
discount rate assumed was 7.75% in 1996, 7.50% in 1995, and 7.75%
in 1994. The rate of increase in future compensation levels was
5.25% in 1996, 5.00% in 1995, and 5.25% in 1994. The expected rate
of return on plan assets was 8.0% in 1996, 1995, and 1994.
TAX-DEFERRED SAVINGS PLAN. ArgentBank has a tax-deferred
savings plan covering all employees meeting certain criteria
relating to length of employment, age and hours worked in each
year. Employees may voluntarily contribute up to 15% of gross pay
to the plan. Employees receive matching contributions from
ArgentBank of 25% of employee contributions up to a maximum of 4%
of the employee's qualified earnings. Vesting in ArgentBank's
matching contributions are immediate. Bank contributions were
$39,000 in 1996, $36,000 in 1995 and 1994.
Postretirement Benefits. In addition to the above benefits,
ArgentBank provides health care benefits (postretirement benefits)
for retired bank officers. All bank officers who have 25 years of
service may become eligible for those benefits if they reach
retirement age while working for ArgentBank. ArgentBank retains
the right to amend or terminate these retiree health benefits at
any time.
The plan covers bank officers retired from active service,
under the age of 65, who are receiving pension benefits from
ArgentBank's retirement plan. The plan basically covers the cost
of medical and dental claims under ArgentBank's health care plan
for the retiree only. No provision has been assumed for spouses
and dependents, and benefits cease once the retiree becomes
eligible for Medicare. The plan has no assets, and ArgentBank does
not advance fund any of these anticipated costs.
At December 31, the unfunded postretirement obligation was as
follows (in thousands):
<TABLE>
1996 1995
------ ------
<S> <C> <C>
Accumulated postretirement
benefit obligation (APBO)
Retirees $ 50 $ 27
Active fully eligible
employees 286 256
------- -------
336 283
Unrecognized net gain (loss) (107) (86)
------- -------
Accrued postretirement benefit
cost $229 $197
======= =======
</TABLE>
The net periodic cost for this benefit plan includes the following
components (in thousands):
<TABLE>
Years Ended December 31
1996 1995 1994
-----------------------------------
<S> <C> <C> <C>
Service cost $ 15 $ 8 $ 10
Interest cost on accumulated
benefit obligation 22 18 20
Amortization of gain 7 2 5
----- ------ ------
Net periodic cost $ 44 $ 28 $ 35
===== ====== ======
</TABLE>
For measurement purposes, a 10.0% annual rate of increase in
per capita cost of covered benefits was assumed for 1997 with rates
trending downward thereafter to 5.5% in 2007. A 10.5% annual rate
of increase in per capita cost of covered benefits was assumed for
1996. The 1983 group Annuity Mortality Table was used in 1996 and
1995 to estimate probable withdrawals from the plan. The discount
rate used in determining the accumulated postretirement benefit
obligation was 7.0% in 1996 and 8.5% in 1995.
The health care cost trend rate assumption has a significant
effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates in each year would increase
the postretirement benefit obligation as of December 31, 1996 and
1995 by $91,900 and $48,500, respectively, and the net periodic
benefit cost by $9,700 and $5,853, respectively.
12. Shareholders' Equity
On October 13, 1995, the Board of Directors declared a two-for-one stock
split, paid November 15, 1995 in the form of a dividend of one additional share
of ArgentBank's common stock for each share owned by shareholders of record at
the close of business on October 31,1995. The stock split resulted in the
issuance of 2,987,732 additional shares of common stock from authorized but
unissued shares. The issuance of authorized but unissued shares
resulted in a transfer of $298,773 from capital surplus to common
stock. Accordingly, earnings per share, cash dividends per share,
and weighted average shares of common stock outstanding have been
restated to reflect the stock split.
The payment of dividends by ArgentBank is restricted by
various regulatory and statutory limitations. In 1997, ArgentBank
will have available to pay dividends, without regulatory approval,
approximately $43.7 million, plus net retained income earned in
1997 prior to the dividend declaration date.
13. Commitments & Contingencies
In January 1995 the Board of Directors authorized a grant of
stock appreciation rights to the President and CEO to provide
incentives for his efforts to enhance growth in shareholder value.
Pursuant to the grant, he was awarded 47,272 units of common shares
which entitle him upon exercise to the difference between the
quoted closing price of ArgentBank's shares as listed on a national
exchange and the quoted value at the date of grant of $12.75. The
grant expires in January 1998 but is renewable at ArgentBank's
option. None of the stock appreciation rights were exercised
during 1996 or 1995 and the effects on the 1996 and 1995 statements
of income were not material.
ArgentBank applies Accounting Principles Board (APB) Opinion
25 and related interpretations in accounting for stock appreciation
rights. However, had ArgentBank adopted the provisions of
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" the effect on its financial
statements would have been the same.
ArgentBank has entered into leases for the rental of certain
facilities and equipment, including the data processing equipment
and services related to that equipment. Minimum future commitments
under non-cancelable lease obligations for the five years ended
December 31, 2001 are detailed below. It is expected that in the
normal course of business, expiring leases will be renewed or
replaced by leases on other facilities or equipment.
<TABLE>
1997 1998 1999 2000 2001
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-cancelable
operating leases $1,688 $1,318 $693 $84 $53
</TABLE>
Rent expense under all non-cancelable operating lease
obligations aggregated $1,834,000 for 1996, $1,621,000 for 1995,
and $1,172,000 for 1994.
ArgentBank is party to various legal proceedings arising in
the ordinary course of business. In the opinion of management,
the ultimate resolution of these legal proceedings will not have a
material adverse effect on ArgentBank's financial statements.
14. Regulatory Matters
ArgentBank is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure
to meet minimum capital requirements can initiate certain
mandatory--and possible additional discretionary--actions by the
regulators that, if undertaken, could have a direct material effect
on ArgentBank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective
action, ArgentBank must meet specific capital guidelines that
involve quantitative measures of ArgentBank's assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory
accounting practices. ArgentBank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Qualitative measures established by regulation to ensure
capital adequacy require ArgentBank to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier 1 capital
(as defined in the regulations) to risk-weighted assets (as
defined), and of Tier 1 (as defined) to average assets (as
defined). Management believes, as of December 31, 1996, that
ArgentBank meets all capital adequacy requirements to which it is
subject.
As of December 31, 1996, the most recent notification from
the Federal Deposit Insurance Corporation categorized ArgentBank as
"well capitalized" under the regulatory framework for prompt
corrective action. To be categorized as "well capitalized"
ArgentBank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1
leverage ratios as set forth in the table. There are no conditions or events
since that notification that Management believes have changed the institution's
category.
ArgentBank's actual capital amounts and ratios are also
presented in the table.
<TABLE>
TO BE WELL
FOR CAPITAL CAPITALIZED
ADEQUACY UNDER PROMPT
ACTUAL PURPOSES CORRECTIVE
ACTION
PROVISIONS
----------------------------------------------------
As of December 31, 1996: Amount Ratio Amount Ratio Amount Ratio
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets) $73,226 16.35% $35,850 8.00% $44,813 10.00%
Tier 1 Capital (to Risk
Weighted Assets) $67,567 15.08% $17,900 4.00% $26,850 6.00%
Tier 1 Capital (to
Average Assets) $67,567 11.79% $22,900 4.00% $28,625 5.00%
</TABLE>
<TABLE>
TO BE WELL
FOR CAPITAL CAPITALIZED
ADEQUACY UNDER PROMPT
ACTUAL PURPOSES CORRECTIVE
ACTION
PROVISIONS
-----------------------------------------------------
As of December 31, 1995: Amount Ratio Amount Ratio Amount Ratio
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets) $70,987 15.10% $37,625 8.00% $47,025 10.00%
Tier 1 Capital (to Risk
Weighted Assets) $65,111 13.85% $18,825 4.00% $28,225 6.00%
Tier 1 Capital (to
Average Assets) $65,111 12.03% $21,650 4.00% $27,075 5.00%
</TABLE>
15. Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which it
is practical to estimate that value.
Cash and Short-Term Investments. For those short-term
instruments, the carrying amount is a reasonable estimate of fair
value.
Securities. For securities the fair value equals quoted
market price, if available. If a quoted market price is not
available, fair value is estimated using a quoted market price for
similar securities.
Loan Receivables. The fair value of loans is estimated by
discounting the 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.
Deposit Liabilities. The fair value of demand deposits,
savings accounts and certain money market deposits is the amount
payable at the reporting date. The fair value of fixed-maturity
certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities.
Commitments to Extend Credit. The fair value of commitments
is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the
agreements and the present credit-worthiness of the counterparties.
For fixed-rate loan commitments, fair value also considers the
difference between current levels of interest rates and the
committed rates.
The estimated fair values of ArgentBank's financial
instruments, as of December 31, follows (in thousands):
<TABLE>
December 31,
1996 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------- ------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term
investments $ 41,281 $ 41,281 $ 32,786 $ 32,786
Securities 192,659 192,691 233,312 233,197
Loans, net 335,286 334,742 277,926 279,941
Financial liabilities:
Non-interest-bearing
deposits $ 82,693 $ 82,693 $ 77,291 $77,291
Interest-bearing deposits 433,795 416,541 412,877 401,781
</TABLE>
16. Pending Transactions
The Board of Directors of Assumption Bancshares, Inc. and
Assumption Bank & Trust Company, and ArgentBank have unanimously
approved a Definitive Agreement (the "Agreement") which provides
for the merger of Assumption Bank with ArgentBank. Under the terms
of the Agreement and Plan of Merger, ArgentBank will issue
ArgentBank Common Stock with an aggregate value at the date of the
merger of approximately $21,500,000, or $134 per Assumption Bank
share. The number of shares of ArgentBank Common Stock to be
exchanged in the merger will be determined by the Average Market
Price of ArgentBank Common Stock at the date of the merger. The
transaction is anticipated to take place in the second quarter of
1997 subject to regulatory and shareholder approval. The
acquisition will be accounted for as a purchase transaction.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as
of the 20th day of November, 1996, is made by and among
ASSUMPTION BANCSHARES, INC., Napoleonville, Louisiana, a Louisiana
corporation ("ABI"), ASSUMPTION BANK & TRUST COMPANY,
Napoleonville, Louisiana, a Louisiana state nonmember bank
("Assumption Bank"), and ARGENTBANK, Thibodaux, Louisiana, a
Louisiana state nonmember bank ("ArgentBank").
In consideration of their mutual promises and obligations, the
parties hereto adopt and make this Agreement for the merger of ABI
with and into its wholly-owned subsidiary, Assumption Bank, and the
subsequent merger of Assumption Bank, with and into ArgentBank and
prescribe the terms and conditions of such mergers and the mode of
carrying them into effect, which shall be as follows:
ARTICLE 1
DEFINITIONS
CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meaning to
be equally applicable to both the singular and plural forms of the
terms defined):
1.1 "ABI" means Assumption Bancshares, Inc., a corporation
duly chartered on March 4, 1984, organized, and existing under and
pursuant to the laws of the State of Louisiana; maintaining its
principal place of business at 110 Franklin Street, Napoleonville,
Assumption Parish, Louisiana; and is a bank holding company within
the meaning of the Bank Holding Company Act of 1956, as amended.
1.2 "AGREEMENT" means this Agreement and Plan of Merger by
and among ABI, Assumption Bank, and ArgentBank and any amendments
thereto. References to Articles, Sections, Schedules and the like
refer to the Articles, Sections, Schedules and the like of this
Agreement unless otherwise indicated.
1.3 "ARGENTBANK" means ArgentBank, a state banking
association, duly chartered on February 26, 1929, organized and
existing under and pursuant to the laws of the State of Louisiana
and maintaining its principal place of business at 203 West 2nd
Street, Thibodaux, Lafourche Parish, Louisiana.
1.4 "ASSUMPTION BANK" means Assumption Bank & Trust Company,
a state banking association duly chartered on December 19, 1933,
organized, and existing under and pursuant to the laws of the State
of Louisiana and maintaining its principal place of business at 110
Franklin Street, Napoleonville, Assumption Parish, Louisiana.
1.5 "BUSINESS DAY" means a day on which ArgentBank is open
for business and which is not a Saturday, Sunday or legal bank
holiday.
1.6 "FDIC" means the Federal Deposit Insurance Corporation,
or any successor United States governmental agency which insures
deposits of commercial banks.
1.7 "FRB" means the Federal Reserve System represented by
actions of its Board of Governors, having regulatory authority over
bank holding companies, or any successor United States governmental
agency performing the function of exercising such regulatory
authority.
1.8 "OFI" means the Office of Financial Institutions of the
State of Louisiana having regulatory authority over ArgentBank and
Assumption Bank or any successor Louisiana governmental agency
exercising such regulatory authority.
1.9 "PARTY" means ArgentBank, ABI, or Assumption Bank and
"Parties" shall mean ArgentBank, ABI and Assumption Bank.
1.10 "PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
1.11 "SEC" means the Securities and Exchange Commission.
ARTICLE 2
THE MERGERS AND RELATED MATTERS
2.1 MERGERS.
(a) Simultaneously with the execution of this Agreement,
ABI and Assumption Bank have entered into the Company Merger
Agreement in the form attached hereto as Exhibit A (the "Company
Merger Agreement"), pursuant to which ABI will, subject to the
terms and conditions stated therein and herein, merge into
Assumption Bank, which shall be the surviving association (the
"Company Merger").
(b) Simultaneously with the execution of this Agreement,
Assumption Bank and ArgentBank have entered into the Bank Merger
Agreement in the form attached hereto as Exhibit B (the "Bank
Merger Agreement," and, together with the Company Merger Agreement,
the "Merger Agreements"), pursuant to which Assumption Bank will,
subject to the terms and conditions stated therein and herein,
merge into ArgentBank, which shall be the surviving association
(the "Bank Merger," and, together with the Company Merger, the
"Mergers").
2.2 THE CLOSING.
(a) The closing of the transactions contemplated herein
(the "Closing") will take place, assuming satisfaction or waiver of
each of the conditions set forth in Article 8 hereof, at the
offices of ArgentBank, 203 West Second Street, Thibodaux, Louisiana
70301, at 10:00 a.m., local time, on a mutually agreeable date as
soon as practicable following satisfaction of the conditions set
forth in subparagraphs (a), (b) and (c) of Section 8.1 hereof, or
if no date has been agreed to, on any date specified by any party
to the others upon ten business days notice following satisfaction
of such conditions.
(b) At the Closing (i) ABI and Assumption Bank, on the
one hand, and ArgentBank, on the other hand, shall each provide to
the other such proof or other indication of satisfaction of the
conditions set forth in Article 8 as the party whose obligations
are conditioned upon such satisfaction may reasonably request, (ii)
the certificates, letters and opinions required by Article 8 shall
be delivered, (iii) the appropriate officers of the parties shall
complete the execution, acknowledgment and delivery of the Merger
Agreements and (iv) the parties shall take such further action as
is required to consummate the transactions contemplated by this
Agreement and the Merger Agreements.
2.3 THE EFFECTIVE DATE AND TIME. The Company Merger
Agreement shall be filed and recorded with the Louisiana Secretary
of State and the OFI as provided by law immediately following (or
concurrently with) the Closing, and the Company Merger will be
effective at the time specified in a certificate or other written
record issued by the OFI. The Bank Merger Agreement shall be filed
and recorded with the OFI as provided by law immediately following
(or concurrently with) the Closing, and the Bank Merger will be
effective at the time specified in a certificate or other written
record issued by the OFI. It is the intent of the parties that the
Company Merger shall be effected immediately prior to the Bank
Merger. The date on which and the time at which the Bank Merger
becomes effective are herein referred to as the "Effective Date" and
the "Effective Time," respectively.
2.4 EFFECTS OF THE MERGERS. The Company Merger shall have
the effects specified in Section 115 of the Louisiana Business
Corporation Law (the "LBCL") and Section 355 of the Louisiana
Banking Laws (the "Banking Laws") and the Bank Merger shall have the
effects specified in Section 355 of the Banking Laws.
ARTICLE 3
CONVERSION OF STOCK
3.1 CONVERSION OF ABI STOCK IN COMPANY MERGER. On the
Effective Date, by virtue of the Company Merger and without any
action on the part of the holders thereof, each share of common
stock, $5.00 par value, of ABI ("ABI Common Stock") outstanding
immediately prior to the Effective Date shall be changed and
converted into one fully paid and nonassessable share of common
stock, par value $25.00 per share, of Assumption Bank ("Assumption
Bank Common Stock"). All treasury shares of each of ABI and
Assumption Bank and all issued and outstanding shares of Assumption
Bank Common Stock owned by ABI shall be canceled.
3.2 CONVERSION OF ASSUMPTION BANK COMMON STOCK IN BANK
MERGER.
(a) Subject to Sections 3.2(b) and 3.2(c), on the
Effective Date, by reason of the Bank Merger, each share of
Assumption Bank Common Stock outstanding immediately following the
Company Merger shall, in accordance with the election made or
deemed to have been made by the holder thereof in accordance with
the procedures set forth in Section 3.3, be converted into (i) that
number of shares of common stock, $.10 par value per share, of
ArgentBank ("ArgentBank Common Stock") equal to (x) $21.5 million
(the "Aggregate Merger Consideration Value") divided by the average
of the closing sale prices of a share of ArgentBank Common Stock on
the NASDAQ Stock Market for the forty days on which the NASDAQ
Stock Market is open for trading preceding the fifth trading day
immediately prior to the Effective Date (the "Average Market
Price"), divided by (y) the number of outstanding shares of
Assumption Bank Common Stock immediately following the Company
Merger; provided that the formula set forth above shall be adjusted
to take into account any change in the number of shares of
ArgentBank Common Stock outstanding as a result of a stock split or
stock dividend (as it may be so adjusted, the "Conversion Number"),
or (ii) the right to receive $134.375 in cash (the "Cash Payment")
((i) and (ii) together, the "Merger Consideration"); provided that,
any holder of 15 or fewer shares of Assumption Bank Common Stock
("De minimis Holdings") shall only be entitled to receive a Cash
Payment for such shares, and holders of shares of Assumption Bank
Common Stock as to which dissenter's rights have been perfected and
not withdrawn or otherwise forfeited under Section 376 of the
Banking Laws or Section 131 of the LBCL shall not receive any
shares of ArgentBank Common Stock for such shares, but shall
instead be deemed to have made an election to receive Cash Payments
for all of such shares.
(b) The total Cash Payments that shall be made hereunder
(including (i) the Cash Payments that holders of Assumption Bank
Common Stock have elected, or have been deemed to have elected
pursuant to Section 3.3(b)(i) to receive ("Elected Cash Payments"),
(ii) the Cash Payments that have been made in exchange for De
minimis Holdings, (iii) the amount of cash paid in lieu of
fractional shares pursuant to Section 3.3(h), and (iv) the amount
of cash paid with respect to shares of Assumption Bank Common Stock
("Dissenting Shares") as to which dissenters rights have been
perfected ("Total Cash Payments")) shall be limited to a maximum of
$10,535,000 (the "Maximum Cash Number") and a minimum of $7,525,000
(the "Minimum Cash Number").
(c) If the Total Cash Payments payable to holders of
Assumption Bank Common Stock in the aggregate exceed the Maximum
Cash Number, the Available Cash (as defined below) shall be
allocated among such holders pro rata, determined by multiplying
the number of shares for which each holder of Assumption Bank
Common Stock has elected to receive an Elected Cash Payment times
a fraction, the numerator of which shall be the Maximum Cash Number
less the amount of (i) Cash Payments that must be made in exchange
for De minimis Holdings (ii) cash paid in lieu of fractional shares
and (iii) cash paid with respect to Dissenting Shares, and the
denominator of which shall be the total amount of Elected Cash
Payments that holders of Assumption Bank Common Stock shall have
elected to receive. The aggregate amount of cash available for all
Cash Payments (the "Available Cash") shall be equal to the Maximum
Cash Number. The number of shares of Assumption Bank Common Stock
for which each holder shall be entitled to an Elected Cash Payment
determined in accordance with the foregoing formula (such holder's
"Pro Rata Share") shall then be multiplied by the amount of the Cash
Payment to determine the total amount of cash such holder shall be
entitled to receive. Each share of Assumption Bank Common Stock
for which the holder has elected to receive an Elected Cash Payment
in excess of such holder's Pro Rata Share shall be converted into
shares of ArgentBank Common Stock in accordance with the provisions
of Section 3.2(a).
(d) If the Total Cash payments payable to holders of
Assumption Bank Common Stock in the aggregate is less than the
Minimum Cash Number, the Available Shares (as defined below) shall
be allocated to such holders pro rata determined by multiplying the
number of shares for which each holder of Assumption Bank Common
Stock has elected to receive ArgentBank Common Stock times a
fraction, the numerator of which shall be the Available Shares, and
the denominator shall be the total number of shares of Assumption
Bank Common Stock for which holders have elected to receive shares
of ArgentBank Common Stock. The Available Shares shall equal
104,000 shares. Each share of Assumption Bank Common Stock for
which the holder has elected to receive ArgentBank Common Stock in
excess of such holder's pro rata share as determined in accordance
with the foregoing formula shall be converted into Cash Payments in
accordance with the provisions of Section 3.2(a).
3.3 ELECTION PROCEDURES AND EXCHANGE OF CERTIFICATES
REPRESENTING ASSUMPTION BANK COMMON STOCK.
(a) Prior to or promptly after the Effective Date, Sun
Trust Bank, Atlanta, Georgia, as the exchange agent (the "Exchange
Agent"), will mail (the "Mailing Date") an election form and other
appropriate transmittal materials as ArgentBank and Assumption Bank
shall mutually agree ("Election Form") to each holder of record of
Assumption Bank Common Stock permitting such holder (or in the case
of nominee record holders, the beneficial owner through proper
instructions and documentation) to elect to receive the number of
shares of ArgentBank Common Stock and/or Cash Payments as such
holder desires pursuant to Section 3.2(a).
(b) In making and honoring elections pursuant to Section
3.2(a), the following rules shall apply:
(i) A shareholder may elect to receive all cash,
all stock or a combination of cash and stock in exchange for his or
her shares of Assumption Bank Common Stock, subject to the
provisions of Section 3.2 hereof. A shareholder who does not make
an election by the Election Deadline (as defined below) will be
deemed to have elected to receive either shares of ArgentBank
Common Stock, or cash, at the option of ArgentBank, as the sole
Merger Consideration for each of such holder's shares of Assumption
Bank Common Stock.
(ii) The term "Election Deadline" shall mean 5:00
p.m., local time on the 20th day following (but not including) the
Mailing Date or such other date as ArgentBank and Assumption Bank
shall mutually agree upon.
(iii) Any election to receive ArgentBank Common
Stock or Cash Payments shall have been properly made only if the
Exchange Agent shall have actually received a properly completed
election form by the Election Deadline. An election form will be
properly completed only if accompanied by certificates (or
customary affidavits and indemnities regarding the loss thereof)
representing all shares of Assumption Bank Common Stock covered
thereby.
(iv) Any election form may be revoked or changed by
the person submitted such election form to the Exchange Agent at or
prior to the Election Deadline. The Exchange Agent shall have
reasonable discretion to determine when any election, modification
or revocation is received and whether any such election,
modification or revocation has been properly made.
(v) As soon as practicable after the Election
Deadline, the Exchange Agent shall determine the allocation of the
aggregate Merger Consideration among Cash Payments and ArgentBank
Common Stock in accordance with Section 3.2, and shall notify
ArgentBank of its determination.
(c) Within five (5) business days after the allocations
described above, the Exchange Agent shall distribute ArgentBank
Common Stock and/or Cash Payments as provided herein. The Exchange
Agent shall not be entitled to vote or exercise any rights of
ownership with respect to the shares of ArgentBank Common Stock
held by it from time to time hereunder, except that it shall
receive and hold all dividends or other distributions paid or
distributed with respect to such shares for the account of the
persons entitled thereto.
(d) After the completion of the foregoing allocation,
each holder of an outstanding certificate or certificates which
prior thereto represented shares of Assumption Bank Common Stock
who surrendered such certificate or certificates to the Exchange
Agent will, upon acceptance thereof by the Exchange Agent, be
entitled to a certificate or certificates representing the number
of full shares of ArgentBank Common Stock and/or the amount of Cash
Payments into which the aggregate number of shares of Assumption
Bank Common Stock previously represented by such certificate or
certificates surrendered shall have been converted pursuant to this
Agreement and, if such holder's shares of Assumption Bank Common
Stock have been converted into ArgentBank Common Stock, any other
distribution theretofore paid with respect to the ArgentBank Common
Stock issuable in the Bank Merger, in each case without interest.
The Exchange Agent shall accept such certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with
normal exchange practices. Each outstanding certificate which
prior to the Effective Date of the Bank Merger represented
Assumption Bank Common Stock and which is not surrendered to the
Exchange Agent in accordance with the procedures provided for
herein shall, except as otherwise herein provided, until duly
surrendered to the Exchange Agent be deemed to evidence ownership
of the number of shares of ArgentBank Common Stock and/or the right
to receive the amount of Cash Payments into which such Assumption
Bank Common Stock shall have been converted.
(e) After the Effective Date, there shall be no further
transfer on the records of Assumption Bank of certificates
representing Assumption Bank Common Stock and if such certificates
are presented to Assumption Bank for transfer, they shall be
cancelled against delivery of certificates of ArgentBank Common
Stock and/or Cash Payments as hereinabove provided. Certificates
surrendered for exchange by any person constituting an "affiliate"
of ABI or Assumption Bank for purposes of Rule 145(c) under the
Securities Act of 1933 (the "Securities Act") shall not be
exchanged until ArgentBank has received a written agreement from
such person as provided in Section 7.8 hereof. No dividends which
have been declared will be remitted to any person entitled to
receive shares of ArgentBank Common Stock under this Article III
until such person surrenders the certificate or certificates
representing Assumption Bank Common Stock, at which time such
dividends shall be remitted to such person, without interest.
(f) Neither the Exchange Agent nor any party to this
Agreement shall be liable to any former holder of shares of ABI
Common Stock or Assumption Bank Common Stock for any amount
properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws. ArgentBank and the
Exchange Agent shall be entitled to rely upon the stock transfer
books of ABI and Assumption Bank to establish the identity of those
persons entitled to receive the Merger Consideration specified in
this Agreement, which book shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of
stock, ArgentBank and the Exchange Agent shall be entitled to
deposit any Merger Consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect
to any claims thereto.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by ArgentBank, the posting by such
person of a bond in such reasonable amount as ArgentBank may direct
as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares
of ArgentBank Common Stock and/or cash, as appropriate, and cash in
lieu of fractional shares, and unpaid dividends and distributions
on shares of ArgentBank Common Stock as provided above, deliverable
in respect thereof pursuant to this Agreement.
(h) No certificates or scrip representing fractional
shares of ArgentBank Common Stock shall be issued upon the
surrender for exchange of certificates for Assumption Bank Common
Stock. In lieu of the issuance of any fractional share of
ArgentBank Common Stock to which a holder of Assumption Bank Common
Stock may be entitled (after aggregation of all fractional shares
to which such holder is entitled) each such holder of Assumption
Bank Common Stock shall be entitled to receive an amount in cash
(without interest) equal to such fractional share multiplied by the
Average Market Price as determined in accordance with Section
3.2(a) hereof.
ARTICLE 4
ACCOUNTING AND TAX MATTERS
4.1 ACCOUNTING TREATMENT. It is intended by the Parties
hereto, that the Mergers will qualify for purchase accounting
treatment under general accepted accounting principles.
4.2 TAX TREATMENT. It is intended that the Mergers will
qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code") for
federal income tax purposes.
4.3 ACCOUNTING AND TAX REPRESENTATIONS. Each Party hereto
represents and warrants that the statements made with respect to it
in the Tax Certificates attached hereto on Exhibit C and made a
part hereof, are true and correct as of the date hereof and will be
true and correct on the Effective Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ABI AND ASSUMPTION BANK
ABI and Assumption Bank represent and warrant to ArgentBank
that, except as set forth in the Schedule of Exceptions attached
hereto:
5.1 ORGANIZATION AND AUTHORITY. ABI's "Consolidated Group,"
as such term is used in this Agreement, consists of ABI and
Assumption Bank. ABI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Louisiana and is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended. Assumption Bank is
a state chartered bank duly organized, validly existing and in good
standing under the laws of the State of Louisiana. Each member of
ABI's Consolidated Group has all requisite corporate power and
authority to own and lease its properties and assets and to carry
on its business as it is currently being conducted.
5.2 AUTHORIZATION.
(a) The execution, delivery and performance of this
Agreement by ABI and Assumption Bank and the consummation of the
transactions contemplated hereby have been duly authorized by the
Boards of Directors of ABI and Assumption Bank. No other corporate
proceedings on the part of ABI or Assumption Bank are necessary to
authorize consummation of this Agreement, except for the approval
of the transaction by ABI's and Assumption Bank's shareholders.
Subject to such shareholder approvals and to such regulatory
approvals as are required by law, and satisfaction of any
conditions imposed in connection therewith, this Agreement is a
valid and binding obligation of ABI and Assumption Bank enforceable
against them in accordance with its terms except as may be limited
by applicable bankruptcy, insolvency, reorganization or moratorium
or other similar laws affecting creditors' rights generally and
except that the availability of equitable remedies is within the
discretion of the appropriate court.
(b) Neither the execution, delivery or performance of
this Agreement by ABI or Assumption Bank, nor the consummation of
the transactions contemplated hereby, will (a) in any material
respect violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under
or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration,
or the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of ABI or
Assumption Bank under any terms, conditions or provisions of (i)
ABI's or Assumption Bank's Charter or Bylaws or (ii) any material
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which ABI or
Assumption Bank is a party or by which ABI or Assumption Bank may
be bound, or (b) violate in any material respect any judgment,
ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to ABI or Assumption Bank or any of its
properties or assets.
5.3 CAPITAL STRUCTURE OF ABI. As of the date hereof, the
authorized capital of ABI consists solely of 1,000,000 shares of
common stock, $5.00 par value per share, of which 160,000 shares
are issued and outstanding and none are held in treasury. The
outstanding shares of capital stock of ABI are validly issued and
outstanding, fully paid and nonassessable. There are no
outstanding options, conversion rights, warrants, calls, rights,
commitments or agreements to issue any form of stock or other
security of ABI, nor any outstanding obligations or commitments to
purchase, redeem or otherwise acquire any outstanding shares of ABI
Common Stock.
5.4 OWNERSHIP OF OTHER BANKS. ABI does not own, directly or
indirectly, five percent (5%) or more of the outstanding capital
stock or other voting securities of any corporation, bank, or other
organization except Assumption Bank. As of the date hereof, the
authorized capital of Assumption Bank consists solely of 45,000
shares of common stock, $25.00 par value per share, of which one
share of common stock is issued and outstanding. The outstanding
share of capital stock of Assumption Bank is validly issued and
outstanding, fully paid and, nonassessable and, is owned by ABI,
free and clear of all liens, claims and encumbrances (except as
provided in Section 262 of the Banking Laws).
5.5 ABI FINANCIAL AND OTHER REPORTS. ABI has made available
to ArgentBank true and correct copies of (a) the consolidated
balance sheets as of December 31, 1995, 1994 and 1993 of ABI and
its consolidated subsidiaries and the related consolidated
statements of income, changes in shareholders' equity and cash flows
for the respective years then ended, the related notes thereto, and
the report of its independent public accountants with respect
thereto (the "ABI Audited Financial Statements"), (b) the unaudited
balance sheets as of September 30, 1996 and 1995 of ABI and its
consolidated subsidiaries, and the related unaudited statements of
income, changes in shareholders equity and cash flows for the
nine-month periods then ended (the "ABI Unaudited Financial Statements,
and together with the ABI Audited Financial Statements, the "ABI
Financial Statements"), and (c) all correspondence between any
member of the ABI Consolidated Group and the OFI, the FDIC, the
FRB, the SEC and the Internal Revenue Service since January 1,
1996. The latest balance sheet forming part of the ABI Unaudited
Financial Statements is referred to herein as the "ABI Latest
Balance Sheet." ABI's Financial Statements (i) have been prepared
in accordance with generally accepted accounting principles,
consistently applied, and (ii) present fairly the consolidated
results of operations of the ABI Consolidated Group for the periods
covered thereby and the consolidated financial condition of the ABI
Consolidated Group as of the dates thereof.
5.6 NO MATERIAL ADVERSE CHANGE. Since the date of the ABI
Latest Balance Sheet, there has been no event or condition of any
character (whether actual, or to the knowledge of ABI or Assumption
Bank, threatened or contemplated) that has had or can reasonably be
anticipated to have a material adverse effect on the financial
condition, results of operations, business or prospects of ABI or
Assumption Bank, excluding changes in laws or regulations that
affect banking institutions generally.
5.7 TAX LIABILITY. The amounts set up as liabilities for
taxes in the ABI Latest Balance Sheet are sufficient for the
payment of all respective taxes (including, without limitation,
federal, state, local, and foreign excise, franchise, property,
payroll, income, capital stock, and sales and use taxes) accrued in
accordance with GAAP and unpaid at the respective dates thereof.
5.8 TAX RETURNS: PAYMENT OF TAXES. All federal, state,
local, and foreign tax returns (including, without limitation,
estimated tax returns, withholding tax returns with respect to
employees, and FICA and FUTA returns) required to be filed by or on
behalf of ABI or Assumption Bank have been timely filed or requests
for extensions have been timely filed and granted and have not
expired for periods ending on or before December 31, 1995, and all
returns filed are complete and accurate in all material respects
and all taxes shown on filed returns have been paid. As of the
date hereof, there is no audit, examination, deficiency or
investigations presently being conducted or, to the best knowledge
of ABI and Assumption Bank, threatened, by any taxing authority and
no material unpaid tax deficiencies or additional liabilities of
any sort have been proposed to ABI or Assumption Bank by any state
or federal governmental representative. All taxes, interest,
additions and penalties due with respect to completed and settled
examinations or concluded litigation have been paid, and ABI's
reserves for bad debts at December 31, 1995, as filed with the
Internal Revenue Service were not greater than the maximum amounts
permitted under the provisions of Section 585 of the Code.
5.9 LITIGATION AND PROCEEDINGS. Except as set forth on
Schedule 5.9 hereto, no litigation, proceeding or controversy
before any court or governmental agency is pending against ABI that
in the opinion of its management is likely to have a material and
adverse effect on the business, results of operations or financial
condition of ABI and Assumption Bank taken as a whole, and, to the
best knowledge of ABI and Assumption Bank, no such litigation,
proceeding or controversy has been threatened or is contemplated.
5.10 BROKERS' OR FINDERS' FEES. Except for the engagement of
Chaffe & Associates, Inc. pursuant to the engagement letter dated
as of May 28, 1996, as amended on October 8, 1996, a copy of which
has been provided to ArgentBank, no agent, broker, investment
banker, investment or financial advisor or other person acting on
behalf of ABI or Assumption Bank or under their authority is
entitled to any commission, broker's or finder's fee from any of
the Parties hereto in connection with any of the transactions
contemplated by this Agreement. The aggregate amount of
consideration to be paid Chaffe & Associates, Inc. in connection
with the transactions contemplated by this Agreement shall not
exceed $150,000.
5.11 CONTINGENT LIABILITIES. To the best knowledge of ABI
and Assumption Bank, except as disclosed on Schedule 5.11 hereto or
as reflected in the ABI Latest Balance Sheet and except in the case
of Assumption Bank for unfunded loan commitments made in the
ordinary course of business consistent with past practices, as of
the date hereof neither ABI nor Assumption Bank has any obligation
or liability of any nature (contingent or otherwise) except as may
have been incurred or may have arisen since the date of the ABI
Latest Balance Sheet in the ordinary course of business consistent
with past practices, and that was not material individually or in
the aggregate or could not reasonably be expected to result in any
such material obligation or liability.
5.12 TITLE TO ASSETS; ADEQUATE INSURANCE COVERAGE.
Except as described on Schedule 5.12:
(a) On the date of the ABI Latest Balance Sheet, ABI and
Assumption Bank had, and except with respect to assets disposed of
for adequate consideration in the ordinary course of business since
such date, now have, good and merchantable title to all real
property and good and merchantable title to all other material
properties and assets reflected on the ABI Latest Balance Sheet,
free and clear of all mortgages, liens, pledges, restrictions,
security interests, charges and encumbrances of any nature except
for (i) mortgages and encumbrances which secure indebtedness which
is properly reflected on the ABI Latest Balance Sheet or which
secure deposits of public funds as required by law; (ii) liens for
taxes accrued by not yet payable; (iii) liens arising as a matter
of law in the ordinary course of business with respect to
obligations incurred after the date of the ABI Latest Balance
Sheet, provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (iv) such
imperfections of title and encumbrances, if any, as do not
materially detract from the value or materially interfere with the
present use of any of such properties or assets or the potential
sale of any such owned properties or assets; and (v) capital leases
and leases, if any, to third parties for fair and adequate
consideration. ABI and Assumption Bank own, or have valid
leasehold interests in, all material properties and assets,
tangible or intangible, used in the conduct of its business. Any
real property and other material assets held under lease by ABI or
Assumption Bank are held under valid, subsisting and enforceable
leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made by ArgentBank in
such lease of such property.
(b) With respect to each lease of any real property or
a material amount of personal property to which ABI or Assumption
Bank is a party, except for financing leases in which ABI or
Assumption Bank is lessor, (i) such lease is in full force and
effect in accordance with its terms; (ii) all rents and other
monetary amounts that have been due and payable thereunder have
been paid; (iii) there exists no default or event, occurrence,
condition or act which with the giving of notice, the lapse of time
or the happening of any further event, occurrence, condition or act
would become a default under such lease; and (iv) the Mergers will
not constitute a default or a cause for termination or modification
of such lease.
(c) Neither ABI nor Assumption Bank has any legal
obligation, absolute or contingent, to any other person to sell or
otherwise dispose of any substantial part of its assets or to sell
or dispose of any of its assets except in the ordinary course of
business consistent with past practices.
(d) ABI and Assumption Bank maintain in force insurance
policies and bonds in such amounts and against such liabilities and
hazards as are considered adequate for institutions of their size
and type operating similar properties and businesses in the State
of Louisiana.
5.13 DEPOSITS. All deposits of Assumption Bank reflected on
the ABI Latest Balance Sheet were created for good, valuable and
adequate consideration in accordance with prudent business
standards and in substantial compliance with all laws, regulations
and rules, and the accounts or evidence of ownership of accounts
are genuine, valid and enforceable in accordance with their written
terms. Neither ABI nor Assumption Bank has agreed to any
modification or extension of accounts or account terms or otherwise
made any agreements regarding such accounts except as disclosed in
writing on the books and records of Assumption Bank; and ABI and
Assumption Bank have no knowledge of any claim of ownership to any
account other than as shown on the written ownership records of
Assumption Bank for each account, and ABI and Assumption Bank have
no knowledge of any alleged improper or wrongful withdrawal or
payment of any such account.
5.14 LOANS. To the best knowledge of ABI and Assumption
Bank, each loan reflected as an asset of ABI on the ABI Latest
Balance Sheet, (a) was, at the time and under the circumstances in
which made, made for good, valuable and adequate consideration in
the ordinary course of business of ABI and Assumption Bank, (b) is
evidenced by genuine notes, agreements or other evidence of
indebtedness and (c) to the extent secured, have been secured by
valued liens and security interests which have been perfected.
Except as set forth in Schedule 5.14 hereto, there are no
outstanding loans held by Assumption 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 5.14 includes,
without limitation, the failure to pay indebtedness or an
installment thereof more than sixty (60) days after it is due and
payable.
5.15 ALLOWANCE FOR LOAN LOSSES. The allowances for loan
losses shown on the ABI Latest Balance Sheet are adequate in all
material respects in accordance with GAAP to provide for possible
losses, net of recoveries, relating to loans previously charged
off, on loans outstanding (including accrued interest receivable)
as of the date of the ABI Latest Balance Sheet.
5.16 INVESTMENTS. Except for investments classified as
held-to-maturity as prescribed under the Financial Accounting
Standards Board Statement Number 115, and pledges to secure public
or trust deposits, none of the investments reflected on the ABI
Latest Balance Sheet under the heading "Investment Securities", and
none of the investments made by ABI or Assumption Bank since such
date, and none of the assets reflected on the ABI Latest Balance
Sheet under the heading "Cash and Due From Assumption Bank," is
subject to any restriction, whether contractual or statutory, that
materially impairs the ability of ABI or Assumption Bank freely to
dispose of such investment at any time. With respect to all
repurchase agreements to which ABI or Assumption Bank is a party,
ABI or Assumption Bank, as the case may be, has a valid, perfected
first lien or security interest in the government securities or
other collateral securing each such repurchase agreement which
equals or exceeds the amount of debt secured by such collateral
under such agreement.
5.17 COMMITMENTS AND CONTRACTS. Except as disclosed on
Schedule 5.17 hereto, neither ABI nor Assumption Bank is a party to
any of the following (whether written or oral):
(a) Any employment contract (including any obligations
with respect to severance or termination pay liabilities or fringe
benefits) with any present or former officer, director, employee or
consultant (other than those which are terminable at will by ABI or
Assumption Bank);
(b) Any plan or contract providing for any bonus,
pension, option, deferred compensation, retirement payment, profit
sharing or similar arrangement with respect to any present or
former officer, director, employee or consultant; or
(c) Any contract not made in the ordinary course of
business containing covenants which limit the ability of ABI or
Assumption Bank to compete in any line of business or with any
person or which involves any restriction of the geographical area
in which, or method by which, ABI or Assumption Bank may carry on
its respective business (other than as may be required by law or
applicable regulatory authorities).
5.18 EMPLOYEE PLANS. ABI, Assumption Bank, and all "employee
benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), that
cover one or more employees employed by ABI or Assumption Bank:
(a) is in compliance with all laws, regulations,
reporting and licensing requirements and orders applicable to such
plan or any of its employees (because of such employee's activities
on behalf of it), the breach or violation of which could have a
material and adverse effect on such business; and
(b) has received no notification from any agency or
department of federal, state or local government or the staff
thereof asserting that any such entity is not in compliance with
any of the statutes, regulations or ordinances that such
governmental authority enforces, or threatening to revoke any
license, franchise, permit or governmental authorization, and is
subject to no agreement with any such governmental authority with
respect to its assets or business.
5.19 PLAN LIABILITY. Except for liabilities to the Pension
Benefit Guaranty Corporation pursuant to Section 4007 of ERISA, all
of which have been fully paid, and except for liabilities to the
Internal Revenue Service under Section 4971 of the Code, all of
which have been fully paid, neither ABI nor Assumption Bank has any
liability to the Pension Benefit Guaranty Corporation or to the
Internal Revenue Service with respect to any pension plan qualified
under Section 401 of the Code.
5.20 VOTE REQUIRED. The affirmative vote of the holders of
at least two-thirds of the voting power present, is the only vote
of the shareholders of ABI necessary to approve this Agreement and
related transactions contemplated hereby. The affirmative vote of
the holders of at least two-thirds of the total voting power is the
only vote of the shareholders of Assumption Bank necessary to
approve this Agreement and related transactions contemplated
hereby.
5.21 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of each, ABI and Assumption
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. Sec. 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 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 ABI and Assumption Bank.
(b) To the best knowledge of each, all property owned,
leased, operated or managed by ABI or Assumption Bank, or in which
ABI or Assumption 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
ABI or Assumption 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 ABI or Assumption 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 ABI or Assumption 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 ABI or
Assumption 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 an
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 ABI or Assumption Bank.
5.22 ACCURACY OF INFORMATION. To the best of ABI's and its
officers' and directors' knowledge, all information furnished by
ABI or Assumption Bank to ArgentBank pursuant to this Agreement is
accurate, and ABI has not omitted to disclose any information which
is or would be material to this Agreement.
5.23 COMPLIANCE WITH LAWS AND CONTRACTS. To the best of
ABI's and its officers' and directors' knowledge, neither ABI nor
Assumption Bank is in violation in any material respect of any
laws, regulations, or agreements to which it is a party nor has
either failed to file any material reports required by any
governmental or other regulatory body.
5.24 INFORMATION FOR REGISTRATION AND PROXY STATEMENTS. None
of the information supplied or to be supplied by ABI's Consolidated
Group for inclusion in the Registration Statement, Proxy Statement
or any other documents to be filed with the FDIC or any regulatory
agency in connection with the transactions contemplated hereby
will, as amended or supplemented at the time the Registration
Statement becomes effective, at the time the Proxy Statement is
mailed to ABI and ArgentBank shareholders, and at the time of
filing of such other documents, respectively, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. All documents, financial statements, or other
information or materials which ABI's Consolidated Group shall
provide for filing with the FDIC and any regulatory agency in
connection with the Mergers will comply with generally accepted
accounting principles.
ARTICLE 6
ARGENTBANK'S REPRESENTATIONS AND WARRANTIES
ArgentBank represents and warrants to ABI that, except as set
forth in the Schedule of Exceptions attached hereto:
6.1 ORGANIZATION AND AUTHORITY. ArgentBank is a state
chartered bank duly incorporated, validly existing and in good
standing under the laws of the State of Louisiana and has the
corporate power and authority to own and lease its properties and
assets and to carry on its business as it is currently being
conducted.
6.2 AUTHORIZATION.
(a) The execution, delivery and performance of this
Agreement by ArgentBank and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of ArgentBank. No other corporate proceedings on the
part of ArgentBank are necessary to authorize consummation of this
Agreement except for the approval of the Agreement by ArgentBank's
shareholders. Subject to such shareholder approval and to such
regulatory approvals as are required by law, and satisfaction of
any conditions imposed in connection therewith, this Agreement is
a valid and binding obligation of ArgentBank enforceable against
ArgentBank in accordance with its terms except as may be limited by
applicable bankruptcy, insolvency, reorganization or moratorium or
other similar laws affecting creditors' rights generally and except
that the availability of equitable remedies is within the
discretion of the appropriate court.
(b) Neither the execution, delivery or performance of
this Agreement by ArgentBank, nor the consummation of the
transactions contemplated hereby, will (a) in any material respect
violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration, or the creation
of any lien, security interest, charge or encumbrance upon any of
the properties or assets of ArgentBank under any terms, conditions
or provisions of (i) ArgentBank's Charter or Bylaws or (ii) any
material note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which
ArgentBank is a party or by which ArgentBank may be bound, or (b)
violate in any material respect any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to
ArgentBank or any of its properties or assets.
6.3 CAPITAL STRUCTURE OF ARGENTBANK. As of the date hereof,
the authorized capital of ArgentBank consists solely of 10,000,000
shares of common stock, $0.10 par value per share, of which
5,863,668 shares are issued and outstanding and none are held in
treasury. The outstanding shares of capital stock of ArgentBank
are validly issued and outstanding, fully paid and nonassessable.
The shares of ArgentBank Common Stock to be issued in connection
with the Bank Merger pursuant to this Agreement have been duly
authorized and, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid, and nonassessable;
and free and clear of all liens, claims and encumbrances, or any
preemptive or similar rights (except as provided in Section 262 of
the Banking Laws).
6.4 ARGENTBANK FINANCIAL AND OTHER REPORTS. ArgentBank has
made available to ABI true and correct copies of (a) the balance
sheets as of December 31, 1995, 1994 and 1993 of ArgentBank and the
related statements of income, changes in shareholders' equity and
cash flows for the respective years then ended, the related notes
thereto, and the report of its independent public accountants with
respect thereto (the "ArgentBank Audited Financial Statements"), (b)
the unaudited balance sheets as of September 30, 1996 and 1995 of
ArgentBank and the related unaudited statements of income, changes
in shareholders equity and cash flows for the nine-month periods
then ended (the "ArgentBank Unaudited Financial Statements, and
together with the ArgentBank Audited Financial Statements, the
"ArgentBank Financial Statements"), and (c) all correspondence
between ArgentBank and the OFI, the FDIC, the SEC and the Internal
Revenue Service since January 1, 1996. The latest balance sheet
forming part of the ArgentBank Unaudited Financial Statements is
referred to herein as the "ArgentBank Latest Balance Sheet."
ArgentBank s Financial Statements (i) have been prepared in
accordance with generally accepted accounting principles,
consistently applied, and (ii) present fairly the results of
operations of ArgentBank for the periods covered thereby and the
financial condition of ArgentBank as of the dates thereof.
6.5 NO MATERIAL ADVERSE CHANGE. Since September 30, 1996,
there has been no event or condition of any character (whether
actual, or to the knowledge of ArgentBank, threatened or
contemplated) that has had or can reasonably be anticipated to have
a material adverse effect on the financial condition, results of
operations, business or prospects of ArgentBank excluding changes
in laws or regulations that affect banking institutions generally.
6.6 LOANS. To the best knowledge of ArgentBank, each loan
reflected as an asset of ArgentBank on the unaudited balance sheet
as of September 30, 1996 of ArgentBank (the "ArgentBank Latest
Balance Sheet") (a) was, at the time and under the circumstances in
which made, made for good, valuable and adequate consideration in
the ordinary course of business of ArgentBank, (b) is evidenced by
genuine notes, agreements or other evidence of indebtedness and (c)
to the extent secured, have been secured by valued liens and
security interests which have been perfected.
6.7 LITIGATION. Except as disclosed on Schedule 6.7 hereto,
no litigation, proceeding or controversy before any court or
governmental agency is pending that in the opinion of its
management is likely to have a material and adverse effect on the
business, results of operations or financial condition of
ArgentBank and its subsidiaries taken as a whole, and, to the best
knowledge of ArgentBank, no such litigation, proceeding or
controversy has been threatened or is contemplated.
6.8 CONTINGENT LIABILITIES. To the best knowledge of
ArgentBank, except as disclosed on Schedule 6.8 hereto or as
reflected in the ArgentBank Latest Balance Sheet and for unfunded
loan commitments made in the ordinary course of business consistent
with past practices, as of the date hereof ArgentBank has no
obligation or liability of any nature (contingent or otherwise)
except as may have been incurred or may have arisen since the date
of the ArgentBank Latest Balance Sheet in the ordinary course of
business consistent with past practices, that was not material
individually or in the aggregate or could not reasonably be
expected to result in any such material obligation or liability.
6.9 ALLOWANCES FOR LOAN LOSSES. The allowances for loan
losses shown on the ArgentBank Latest Balance Sheet are adequate in
all material respects in accordance with GAAP to provide for
possible losses, net of recoveries, relating to loans previously
charged off, on loans outstanding (including accrued interest
receivable) as of the date of the ArgentBank Latest Balance Sheet.
6.10 EMPLOYEE PLANS. ArgentBank, each of its subsidiaries and
all "employee benefit plans," as defined in Section 3(3) of ERISA,
that cover one or more employees employed by ArgentBank or any of
its subsidiaries:
(a) is in compliance with all laws, regulations,
reporting and licensing requirements and orders applicable to such
plan or any of its employees (because of such employee's activities
on behalf of it), the breach or violation of which could have a
material and adverse effect on such business; and
(b) has received no notification from any agency or
department of federal, state or local government or the staff
thereof asserting that any such entity is not in compliance with
any of the statutes; regulations or ordinances that such
governmental authority enforces, or threatening to revoke any
license, franchise or permit or governmental authorization, and is
subject to no agreement or written understanding with any such
governmental authorities with respect to its assets or business.
6.11 VOTE REQUIRED. The affirmative vote of the holders of at
least two-thirds of the voting power present is the only vote of
the shareholders of ArgentBank necessary to approve the Bank Merger
and related transactions contemplated hereby.
6.12 ACCURACY OF INFORMATION. To the best of ArgentBank's
and its officers' and directors' knowledge, all information
furnished by ArgentBank to ABI and Assumption Bank pursuant to this
Agreement is accurate, and ArgentBank has not omitted to disclose
any information which is or would be material to this Agreement.
6.13 INFORMATION FOR REGISTRATION AND PROXY STATEMENTS. None
of the information supplied or to be supplied by ArgentBank for
inclusion in the Registration Statement, Proxy Statement or any
other documents to be filed with the FDIC or any regulatory agency
in connection with the transactions contemplated hereby will, as
amended or supplemented at the time the Registration Statement
becomes effective, at the time the Proxy Statement is mailed to ABI
and ArgentBank shareholders, and at the time of filing of such
other documents, respectively, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All
documents, financial statements, or other information or materials
which ArgentBank shall provide for filing with the FDIC and any
regulatory agency in connection with the Mergers will comply with
generally accepted accounting principles.
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 OPERATION OF BUSINESS. Between the date hereof and the
Effective Date, or until the termination of this Agreement, each
member of the ABI Consolidated Group covenants and agrees that it
will operate its business solely in the ordinary course consistent
with prudent business practices and in compliance with all
applicable laws, regulations and rules; and without the prior
written consent of ArgentBank, it will not:
(a) Amend or otherwise change its respective articles of
incorporation or bylaws, as each such document is in effect on the
date hereof;
(b) Issue or sell, or authorize for issuance or sale,
the shares of ABI or Assumption Bank or any additional shares of
any class of capital stock of ABI or Assumption Bank (except to the
extent required in order to effect the Company Merger or the Bank
Merger as contemplated herein);
(c) Issue, grant, or enter into any subscription,
option, warrant, right, convertible security, or other agreement or
commitment of any character obligating ABI or Assumption Bank to
issue securities;
(d) Declare, set aside, make, or pay any dividend or
other distribution with respect to its capital stock except for (i)
dividends on ABI Common Stock to be payable in December 1996 for
fiscal 1996 not exceeding $1.10 per share and corresponding
dividends on Assumption Bank Common Stock, and (ii) if the closing
shall not have occurred by June 30, 1997, dividends for fiscal 1997
in accordance with ABI's past practices and corresponding dividends
on Assumption Bank Common Stock;
(e) Redeem, purchase, or otherwise acquire, directly or
indirectly, any of its capital stock respectively;
(f) Authorize any capital expenditure(s) which,
individually or in the aggregate, exceed $20,000;
(g) Extend any new loan, credit, lease, or other type of
financing which individually exceeds $100,000 or renew any such
type of financing which individually exceeds $150,000 and does not
meet Assumption Bank's loan policy requirements;
(h) Except in the ordinary course of business, sell,
pledge, dispose of, or encumber, or agree to sell, pledge, dispose
of, or encumber, any assets of ABI or Assumption Bank; provided,
however, any investments in Assumption Bank's securities portfolio
which mature prior to the Effective Date shall be invested in U.S.
Treasury securities with a maturity of two (2) years or less;
(i) Excluding normal and customary banking transactions,
incur any indebtedness for borrowed money, issue any debt
securities, or enter into or modify any contract, agreement,
commitment, or arrangement with respect thereto;
(j) Impose, or suffer the imposition, on any share of
Assumption Bank Common Stock held by ABI, of any material lien,
charge, or encumbrance, or permit any such lien to exist;
(k) Establish or add any automated teller machines or
branch or other banking offices;
(l) Acquire (by merger, consolidation, lease or other
acquisition of stock, ownership interests or assets) any
corporation, partnership, or other business organization or
division thereof, or enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing
except to the extent required in order to effect the Mergers as
contemplated herein and except in the ordinary course of business
in connection with foreclosures or similar actions;
(m) Enter into, extend, or renew any lease for office or
other space;
(n) Except as required by law, enter into, adopt or
amend any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment, or other
employee benefit plan, agreement, trust, fund, or arrangement for
the benefit or welfare of any officer, employee or representative
of ABI or Assumption Bank except for the payment by Assumption Bank
of fiscal 1996 year-end bonuses to its employees consistent with
past practices and not to exceed in the aggregate $50,000;
(o) Grant any increase in compensation to any director,
officer, or employee or representative of ABI or Assumption Bank
except in the ordinary course of business consistent with past
practice;
(p) Take any action with respect to the grant or payment
of any severance or termination pay;
(q) Take any action or omit to take any action which
would cause any of ABI's or Assumption Bank's representations or
warranties to be untrue or misleading in any material respect or
any covenant of ABI or Assumption Bank under this Agreement
incapable of being performed; or
(r) Agree in writing or otherwise to do any of the
foregoing.
7.2 PRESERVATION OF BUSINESS. Between the date hereof and
the Effective Date, ABI will, and will cause Assumption Bank to,
use its best efforts to preserve its existing business and to keep
its business organization intact, including its present
relationships with its employees and customers and others having
business relations with it.
7.3 INSURANCE. Pending the Closing, each of ABI and
Assumption Bank shall maintain in effect its current insurance
policies and bonds.
7.4 ABI SHAREHOLDER APPROVAL. ABI 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, the Merger Agreements and the
transactions contemplated hereby and for such other purposes as may
be necessary or desirable, and (ii) cooperate and consult with
ArgentBank with respect to each of the foregoing matters. ABI, as
the sole shareholder of Assumption Bank, shall approve this
Agreement and the Company Merger Agreement.
7.5 PROPERTY TRANSFERS. At the Closing or from time to time
following the Closing, as and when requested by ArgentBank and to
the extent permitted by Louisiana law, the officers and directors
of ABI and Assumption Bank last in office shall execute and deliver
such deeds and other instruments and shall take or cause to be
taken such further or other actions as shall be necessary in order
to vest or perfect in or to confirm of record or otherwise to
ArgentBank title to, and possession of, all the property,
interests, assets, rights, privileges, immunities, powers,
franchises, and authorities of ABI and Assumption Bank, and
otherwise to carry out the purposes of this Agreement.
7.6 ARGENT DUE DILIGENCE.
(a) In order to afford ArgentBank access to such
information as it may reasonably deem necessary to perform any due
diligence review with respect to ABI and Assumption Bank, each of
ABI and Assumption Bank shall, upon reasonable notice, afford
ArgentBank and its officers, employees, counsel, accountants, and
other authorized representatives access, during normal business
hours throughout the period prior to the Effective Date, to all of
its properties, books, contracts, commitments, loan files,
litigation files and records (including, but not limited to, the
minutes of the Boards of Directors of ABI and Assumption Bank and
all committees thereof), and to the extent consistent with
applicable law, furnish promptly to ArgentBank such information as
ArgentBank may reasonably request to perform such review. No
member of the ABI 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 ABI
Consolidated Group shall be treated as the sole property of the
party furnishing the information until consummation of the Mergers
contemplated hereby. If this Agreement is terminated prior to the
Effective Date, ArgentBank shall return, without retaining copies
thereof, all confidential or non-public documents, work papers and
other materials obtained from ABI's Consolidated Group or their
employees, agents or representatives, in connection with the
transactions contemplated hereby and shall destroy any work papers,
analyses or other materials prepared based on such information, and
for a period of two years following such termination ArgentBank
shall use its best efforts to keep such information confidential,
not disclose such information to any other person or entity except
as may be required by law, and not use such information (including
any work papers, analyses and other materials prepared by it in
reliance upon such information) in its business for any competitive
or other commercial purpose and shall use its best efforts to cause
its employees, agents and representatives to do the same, provided,
however, the obligation to keep such information confidential shall
not apply to any information which (a) ArgentBank can establish by
convincing evidence was already in its possession prior to the
disclosure thereof by ABI or Assumption Bank, (b) was then
generally in the public domain through no fault of ArgentBank, or
(c) was disclosed to the party receiving the information by a third
party not bound by an obligation of confidentiality.
7.7 NO SOLICITATION. Prior to the Effective Date, neither
ABI nor Assumption Bank shall authorize or knowingly permit any of
their officers, directors, employees, representatives, agents or
other persons controlled by ABI or Assumption Bank to directly or
indirectly, solicit or initiate inquiries or proposals with respect
to, or, hold any discussions or negotiations with, or provide any
information to, any persons, entity or group concerning any merger,
consolidation, sale of substantial assets, sale of shares of
capital stock or similar transactions involving, directly or
indirectly, ABI or Assumption Bank except as contemplated by this
Agreement; provided, however, that nothing contained in this
Agreement shall be deemed to prohibit any officer or director of
ABI or Assumption Bank from taking any action that counsel to ABI
or Assumption Bank has advised in writing is required to discharge
his or her fiduciary duties to ABI or Assumption Bank or their
shareholders, a copy of which advise shall be furnished to
AgentBank. ABI and Assumption Bank shall instruct each officer,
director, employee, agent, representative or affiliate of it to
refrain from doing any of the above, and ABI and Assumption Bank
shall immediately notify ArgentBank of the identity and terms of
any such inquiries or proposals received by, or if any such
negotiations or discussions are sought to be initiated with, ABI or
Assumption Bank.
7.8 AFFILIATES. ABI, Assumption Bank and ArgentBank shall
cooperate and use their best efforts to identify those persons who
may be deemed to be "affiliates" of ABI or Assumption Bank within
the meaning of Rule 145(c) or Rule 144 (as applicable) under the
Securities Act. ABI and Assumption Bank shall use its best efforts
to cause each person so identified to deliver to ArgentBank, not
later than thirty (30) days prior to the Effective Date, a written
agreement in substantially the form set forth in Exhibit D attached
hereto.
7.9 CONDUCT OF BUSINESS. ArgentBank agrees to operate its
business solely in the ordinary course consistent with prudent
business practices and in compliance with all applicable laws,
regulations, and rules; but nothing herein shall be construed as
limiting or restricting ArgentBank in its assets, liability, or
capital structure or limiting any action of ArgentBank or its
affiliates, nor shall anything in this Agreement be construed as
limiting the future number and amount of outstanding shares of
ArgentBank stock pending consummation of the transactions
contemplated hereby; provided however, that ArgentBank shall not,
and shall instruct its executive officers, directors, and control
persons and any affiliates of any of the foregoing not to, effect
any transactions in ArgentBank Common Stock in violation of Rule
10b-6 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or otherwise for the purpose, or with the effect,
of manipulating the trading price of Argent Bank Common Stock.
7.10 ABI AND ASSUMPTION BANK DUE DILIGENCE.
(a) In order to afford ABI and Assumption Bank access to
such information as it may reasonably deem necessary to perform any
due diligence review with respect to ArgentBank, ArgentBank shall,
upon reasonable notice, afford ABI and Assumption Bank and their
officers, employees, counsel, accountants, and other authorized
representatives access, during normal business hours throughout the
period prior to the Effective Date, to all of its properties,
books, contracts, commitments, loan files, litigation files and
records (including, but not limited to, the minutes of the Board of
Directors of ArgentBank and all committees thereof), and to the
extent consistent with applicable law, furnish promptly to ABI and
Assumption Bank such information as ABI and Assumption Bank may
reasonably request to perform such review. ArgentBank shall not 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 ArgentBank shall be
treated as the sole property of the party furnishing the
information until consummation of the Mergers contemplated hereby.
If this Agreement is terminated prior to the Effective Date, ABI
and Assumption Bank shall return, without retaining copies thereof,
all confidential or non-public documents, work papers and other
materials obtained from ArgentBank or its employees, agents or
representatives, in connection with the transactions contemplated
hereby and shall destroy any work papers, analyses or other
materials prepared based on such information, and for a period of
two years following such termination ABI and Assumption Bank shall
use their best efforts to keep such information confidential, not
disclose such information to any other person or entity except as
may be required by law, and not use such information (including any
work papers, analyses and other materials prepared by it in
reliance upon such information) in its business for any competitive
or other commercial purpose and shall use their best efforts to
cause its employees, agents and representatives to do the same,
provided, however, the obligation to keep such information
confidential shall not apply to any information which (a) ABI and
Assumption Bank can establish by convincing evidence was already in
its possession prior to the disclosure thereof by ArgentBank, (b)
was then generally in the public domain through no fault of ABI and
Assumption Bank, or (c) was disclosed to the party receiving the
information by a third party not bound by an obligation of
confidentiality.
7.11 REGULATORY MATTERS.
(a) ArgentBank shall prepare and file a registration
statement with the securities and corporate practices division of
the FDIC (the "Registration Statement"), including a joint proxy
statement (the "Proxy Statement") to be filed with the SEC and
mailed to the ABI and ArgentBank shareholders in connection with
the meetings to be called to consider this Agreement and the Merger
Agreements, as soon as reasonably practicable following the date of
this Agreement. The Registration Statement shall comply in all
material respects with the requirements of the Securities Act, the
rules and regulations promulgated thereunder and other applicable
federal and state laws and ArgentBank will use its best efforts to
cause the Registration Statement to be declared effective as soon
as practicable, to qualify the ArgentBank 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) ArgentBank 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 FDIC, the FRB and the
OFI.
(c) ABI's Consolidated Group shall cooperate in preparing
the Registration Statement and the Proxy Statement, and will
promptly furnish all such data and information relating to it as
ArgentBank may reasonably request for the purpose of including such
data and information in the Registration Statement.
(d) ArgentBank will indemnify and hold harmless each
member of the ABI Consolidated Group, each of its directors, each
of its officers and each person, if any, who controls ABI 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 ArgentBank 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 ArgentBank by or on behalf of the ABI 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 ArgentBank under such subparagraph, notify
ArgentBank in writing of the commencement thereof. In case any
such action shall be brought against any indemnified party and it
shall notify ArgentBank of the commencement thereof, ArgentBank
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
ArgentBank to such indemnified party of its election so to assume
the defense thereof, ArgentBank 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 ArgentBank 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 ArgentBank or ABI and one or more of
the indemnified parties, such indemnified parties may retain
counsel satisfactory to them, and ArgentBank shall pay all
reasonable fees and expenses of such counsel for the indemnified
parties promptly as statements therefor are received.
7.12 ARGENTBANK SHAREHOLDER APPROVAL. ArgentBank 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, the Bank Merger Agreement
and the transactions contemplated hereby and for such other
purposes as may be necessary or desirable, and (ii) cooperate and
consult with ABI with respect to each of the foregoing matters.
7.13 CONTINUITY OF BUSINESS ENTERPRISE. It is the present
intention of ArgentBank to continue at least one significant
historic business line of Assumption Bank, namely, financial
services, and to use at least a significant portion of Assumption
Bank's historic business assets in a business within the meaning of
Treasury Regulation Section 1.368-1(d).
7.14 ELECTION OF DIRECTORS. For a period of not less than
two (2) years after the Effective Date, ArgentBank shall nominate
and recommend at least one (1) former member of the Board of
Directors of Assumption Bank to serve as director of ArgentBank.
7.15 INDEMNIFICATION AND LIABILITY INSURANCE.
(a) From and after the Effective Date, ArgentBank shall
indemnify, defend, and hold harmless the former directors,
officers, employees and agents of ABI (each such director, officer,
employee or agent referred to as an "ABI Indemnified Party")
against all losses, claims, damages or liabilities, joint, several
or solidary, and any action or other proceeding in respect thereof,
to which the ABI Indemnified Parties or any of them become subject,
arising out of actions or omissions 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
ABI's Articles of Incorporation and Bylaws as in effect on the date
hereof. ArgentBank further agrees to honor the indemnity
agreements between ABI or Assumption Bank and each of the
individuals listed on Schedule 7.15(a) hereto.
(b) From and after the Effective Date, ArgentBank shall
indemnify, defend, and hold harmless the former directors,
officers, employees and agents of Assumption Bank (each such
director, officer, employee or agent referred to as an "Assumption
Bank Indemnified Party") against all losses, claims, damages or
liabilities, joint, several or solidary, and any action or other
proceeding in respect thereof, to which Assumption Bank Indemnified
Parties or any of them become subject, arising out of actions or
omissions 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 Assumption Bank's Articles of
Incorporation and Bylaws as in effect on the date hereof.
(c) ABI shall pay the insurance premium required for an
extension of the existing directors and officer's liability
insurance policy of ABI and Assumption Bank, respectively, covering
persons who are currently covered by such insurance for a
"discovery" period of three (3) years after the Effective Date on
terms generally no less favorable than those in effect on the date
of this Agreement, provided the total of such premium shall not
exceed $24,675.
7.16 EMPLOYEES. ArgentBank shall not be obligated to retain
in any capacity any of ABI's or Assumption Bank's officers,
directors, or employees or to pay any stipulated compensation to
any employees. ArgentBank shall employ Mr. Harold F. Templet for
the term, and subject to the provisions, set forth on Exhibit E.
If within nine months following the Effective Date, ArgentBank
terminates the employment without cause, or relocates to an office
more than 40 miles from the place of such person's employment on the
Effective Date, or reduces to less than 30 hours per week the
working hours, of any former employee of ABI or Assumption Bank and
such former employee thereafter resigns, ArgentBank shall pay such
person severance benefits in accordance with Schedule 7.16(a)
hereof, and in amounts based on such person's salary on the
Effective Date. ArgentBank will make reasonable efforts to
maintain compensation levels for any retained personnel
commensurate with the employees' experience and
qualifications, and in accordance with ArgentBank's salary
administration program. With regard to any retained employee,
ArgentBank shall be free of any obligation to honor any past
agreement of ABI or Assumption Bank to such person. Within ninety
(90) days after the Effective Date, ArgentBank shall pay to former
Assumption Bank employees any amounts owed in lieu of accrued
personal days through the last day of fiscal 1996. Prior to the
Effective Date, Assumption Bank shall amend its policy so as not to
accrue any further amounts owed in lieu of accrued personal days
after December 31, 1996.
7.17 BENEFIT PLANS.
(a) ABI's and Assumption Bank's group health and life
benefit plan will be continued through the Effective Date of the
Mergers. Thereafter, all retained employees will be eligible to
participate in ArgentBank's group health and life benefit plan
based on the provisions in the plan. The ninety (90) day
employment period will be waived for eligible retained employees in
accordance with ArgentBank's plan. ArgentBank will waive
pre-existing medical conditions for health insurance purposes as to
all retained personnel, provided such pre-existing medical
conditions were covered at Closing under ABI's group health benefit
plan.
(b) ArgentBank will merge the Retirement Plan for
Employees of Assumption Bank into the ArgentBank Pension Plan in
accordance with the Code treasury regulation Section 1.414(1)-1(d)
before the expiration of the transition period described in Section
410(b)(6)(C) of the Code.
(c) From and after the Effective Date, ArgentBank will,
subject to compliance with applicable legal and regulatory
requirements, provide coverage for all Assumption Bank employees
under all ArgentBank employee benefit plans for which they are
eligible, as soon as practicable after the Effective Date. All
prior years of service of Assumption Bank employees will be
counted for vesting and eligibility purposes (including eligibility
for early retirement benefits under the ArgentBank Pension Plan)
under all applicable ArgentBank employee benefit plans to the
extent permitted by applicable law. Any Assumption Bank employee
who, immediately prior to the Effective Date, is covered by or is
a participant in an Assumption Bank employee benefit plan listed on
Schedule 7.17(c) hereto, shall, at the Effective Date, be covered
by or participate in the comparable ArgentBank employee benefit
plan if a comparable plan otherwise is maintained by ArgentBank and
if the eligibility requirements of the ArgentBank plan are met.
(d) Each of ABI and Assumption Bank shall notify its
respective employees of the terms of this Agreement as it affects
and/or relates to them and for complying with any applicable laws
regarding such notices.
7.18 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.
7.19 MUTUAL COVENANT OF BEST EFFORTS AND GOOD FAITH. The
Parties mutually covenant and agree with each other that they will
use their best efforts to consummate the transactions herein
contemplated and that they will act and deal with each other in
good faith as to this Agreement and all matters arising from or
related to it.
7.20 PRESS RELEASES. ABI and ArgentBank shall consult with
each other as to the form and substance of any press release
related to this Agreement or the transactions contemplated hereby,
and shall consult each other as to the form and substance of other
public disclosures related thereto, provided, however, that nothing
contained herein shall prohibit either party, following
notification to the other, from making any disclosures which its
counsel deems necessary to conform with requirements of law or the
rules of the National Association of Securities Dealers Automated
Quotation System.
7.21 CONSENT OF ARGENTBANK. To the extent that any member of
the ABI Consolidated Group is required to obtain the written
consent of a representative of ArgentBank prior to taking any
action, such request shall be made in writing and ArgentBank shall
provide a prompt written response to such written request for
consent, provided, however, any such written response required
pursuant to Section 7.1(g) shall be provided within seven days of
receipt by ArgentBank of such written request. Any failure to
provide a prompt written response shall be deemed to evidence the
consent of ArgentBank to the action that is the subject of the
written request for consent.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGERS. The respective obligation of each party to effect the
Mergers shall be subject to the following conditions at or prior to
the Closing:
(a) SHAREHOLDER APPROVAL. This Agreement and the Merger
Agreements shall have been approved by the requisite vote of the
holders of the outstanding shares of ABI, Assumption Bank and
AgentBank Common Stock.
(b) REGULATORY APPROVALS. All statutory requirements for
the valid consummation of the transactions contemplated by this
Agreement shall have been fulfilled, including the passage of any
waiting period; all appropriate orders, consents and approvals from
all regulatory agencies and other governmental authorities whose
order, consent or approval is required by law for the consummation
of the transactions contemplated by this Agreement shall have been
received; and the terms of all requisite orders, consents and
approvals shall then permit the effectuation of the transactions
contemplated by this Agreement without the imposition of any
material conditions with respect thereto except for any such
conditions that are acceptable to ArgentBank, subject to the
provisions of Section 10.10 hereof.
(c) REGISTRATION STATEMENT. The Registration Statement
shall have been declared effective and shall not be subject to a
stop order or any threatened stop order, and all state securities
and blue sky permits or approvals required to consummate the
transactions contemplated by this Agreement shall have been
received.
(d) NO RESTRAINING ACTION. No action or proceeding
shall have been threatened or instituted before a court or other
governmental body to restrain or prohibit the transactions
contemplated by the Merger Agreements or this Agreement or to
obtain damages or other relief in connection with the execution of
such agreements or the consummation of the transactions
contemplated hereby or thereby.
(e) TAX OPINION. ArgentBank and Assumption Bank shall
have received an opinion of Watkins Ludlam & Stennis, P.A.
substantially to the effect set forth in Exhibit F hereto.
8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ABI AND
ASSUMPTION BANK TO EFFECT THE MERGERS. The obligations of ABI and
Assumption Bank to effect the Mergers shall be subject to the
following additional conditions at or prior to the Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of ArgentBank set forth in this Agreement shall be
true and correct in all material respects (except to the extent
such representation or warranty is qualified by materiality in
which case such representation or warranty shall be true and
correct) as of the date of this Agreement and as of the Closing as
though made at and as of the Closing, except as otherwise
contemplated by this Agreement or consented to in writing by ABI.
(b) PERFORMANCE OF OBLIGATIONS. ArgentBank shall have
performed in all material respects all obligations and complied
with all covenants required by it under this Agreement prior to the
Closing and ArgentBank shall deliver at Closing appropriate
certificates setting forth such.
(c) NO MATERIAL ADVERSE CHANGE. There shall not have
occurred any material adverse change from the date of this
Agreement to the Closing Date in the financial condition, results
of operations or business of ArgentBank and its subsidiaries taken
as a whole.
(d) FAIRNESS OPINION. ABI and Assumption Bank shall
have received a letter from Chaffe & Associates, Inc., or another
financial advisor selected by Assumption Bank, dated within five
(5) days of the date of the mailing of the Proxy Statement to its
shareholders to the effect that the terms of the Mergers are fair
to its shareholders from a financial point of view.
(e) LEGAL OPINION. An opinion of Watkins Ludlam &
Stennis, P.A., counsel to ArgentBank, shall be delivered to ABI
dated the Closing Date and in form and substance reasonably
satisfactory to ABI and its counsel to the effect that:
i. ArgentBank is a Louisiana banking corporation,
duly organized and validly existing and in good standing under the
laws of the State of Louisiana, and has corporate authority to own,
lease and operate its properties and to carry on its business as
presently conducted by it;
ii. ArgentBank has corporate authority to make,
execute and deliver this Agreement, it has been duly authorized and
approved by all necessary corporate action of ArgentBank and has
been duly executed and delivered and is as of the Closing Date
enforceable against it, subject, however, to bankruptcy, insolvency
and similar laws affecting the enforcement of creditors' rights
generally and to the availability of equitable remedies in general;
iii. All required regulatory approvals have been
obtained;
iv. To such counsel's knowledge after inquiry,
there is no litigation or proceeding pending or threatened against
ArgentBank relating to the participation in or consummation of this
Agreement by ArgentBank and consummation will not violate the
charter or bylaws of ArgentBank or any material contract or
agreement to which it is a party;
v. All shares of ArgentBank Common Stock to be
issued pursuant to the Mergers have been duly authorized and, when
issued pursuant to the Merger Agreements, will be validly and
legally issued, fully paid and non-assessable and will be, at the
time of their delivery, free and clear of all liens, claims, and
encumbrances, preemptive or similar rights (except as provided in
Section 262 of the Banking Laws).
vi. 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;
vii. 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 such counsel does 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
viii. 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 ArgentBank may rely, to the
extent they deem appropriate, upon certificates of officers of
ArgentBank, provided, such certificates are delivered to ABI and
Assumption Bank prior to the Closing Date or attached to the
opinion of counsel.
(f) DIRECTOR ACTIONS. ArgentBank's directors shall have
unanimously voted as directors in favor of this Agreement and the
Bank Merger Agreement, and unanimously recommended to its
shareholders the approval of this Agreement and the Bank Merger
Agreement and the transactions contemplated hereby and such other
matters as may have been submitted to its shareholders in
connection with this Agreement.
8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ARGENTBANK TO
EFFECT THE BANK MERGER. The obligations of ArgentBank to effect
the Bank Merger shall be subject to the following additional
conditions at or prior to the Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of ABI and Assumption Bank set forth in this
Agreement shall be true and correct in all material respects as of
the date of this Agreement (except to the extent such
representation or warranty is qualified by materiality in which
case such representation or warranty shall be true and correct) and
as of the Closing as though made at and as of the Closing, except
as otherwise contemplated by this Agreement or consented to in
writing by ArgentBank.
(b) PERFORMANCE OF OBLIGATIONS. ABI and Assumption Bank
shall have performed in all material respects all obligations and
complied with all covenants required by it under this Agreement
prior to the Closing and ABI shall deliver at Closing appropriate
certificates setting forth such.
(c) NO MATERIAL ADVERSE CHANGE. There shall not have
occurred any material adverse change from the date of this
Agreement to the Closing Date in the financial condition, results
of operations or business of ABI and its subsidiaries taken as a
whole.
(d) LEGAL OPINION. An Opinion of Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., counsel to ABI and
Assumption Bank, shall be delivered to ArgentBank dated the Closing
Date, and in form and substance reasonably satisfactory to
ArgentBank to the effect that:
i. ABI is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Louisiana, and has corporate authority to own, lease and operate
its properties and to carry on its business as presently conducted
by it;
ii. Assumption Bank is a Louisiana banking
corporation, duly organized and validly existing and in good
standing under the laws of the State of Louisiana, and has
corporate authority to own, lease and operate its properties and to
carry on its business as presently conducted by it;
iii. ABI and Assumption Bank have corporate
authority to make, execute and deliver this Agreement, it has been
duly authorized and approved by all necessary corporate action of
ABI and Assumption Bank and has been duly executed and delivered
and is as of the Closing Date enforceable against each of them,
subject, however, to bankruptcy, insolvency and similar laws
affecting the enforcement of creditors' rights generally and to the
availability of equitable remedies in general;
iv. To such counsel's knowledge after inquiry,
there is no litigation or proceeding pending or threatened against
ABI or Assumption Bank relating to the participation in or
consummation of this Agreement by ABI or Assumption Bank and
consummation will not violate the charter or bylaws of ABI or
Assumption Bank or any material contract or agreement to which
either of them is a party;
v. 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 ABI and Assumption Bank may
rely, to the extent they deem appropriate, upon certificates of
officers of ABI and Assumption Bank, provided, such certificates
are delivered to ArgentBank prior to the Closing Date or attached
to the opinion of counsel.
(e) Director Actions. ABI's directors shall have, subject to
the provisions of Section 7.7 hereof, unanimously voted as
directors in favor of approving this Agreement and the Merger
Agreements, and unanimously recommended to the ABI shareholders the
approval of this Agreement, the Merger Agreements and the
transactions contemplated hereby and such other matters as may have
been submitted to the shareholders in connection with this
Agreement. A majority of ABI's Board of Directors shall also have
voted the shares of ABI Common Stock held by them in favor of this
Agreement and the Merger Agreements, and shall not have
intentionally, openly and publicly undertaken or participated in
any concerted overt efforts against the transactions contemplated
hereby.
ARTICLE 9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated, either
before or after approval by the shareholders of ABI, Assumption
Bank and AgentBank as follows:
(a) MUTUAL CONSENT. At any time on or prior to the
Effective Date, by the mutual consent in writing of a majority of
the members of each of the Board of Directors of the Parties
hereto;
(b) EXPIRATION OF TIME. By the Board of Directors of
ArgentBank in writing or by the Board of Directors of ABI in
writing, if the Mergers shall have not become effective on or
before June 30, 1997, unless the absence of such occurrence shall
be due to the failure of the Party seeking to terminate this
Agreement to perform each of its obligations under this Agreement
required to be performed by it on or prior to the Effective Date;
(c) BREACH OF REPRESENTATION, WARRANTY OR COVENANT. By
either Party hereto, in the event of a breach by the other Party
(a) of any covenant or agreement contained herein or (b) of any
representation or warranty herein, if (i) the facts constituting
such breach reflect a material and adverse change in the financial
condition, results of operations, business, or prospects taken as
a whole, of the breaching Party, which in either case cannot be or
is not cured within 60 days after written notice of such breach is
given to the Party committing such breach, or (ii) in the event of
a breach of a warranty or covenant, such breach results in a
material increase in the cost of the non-breaching Party's
performance of this Agreement.
(d) REGULATORY APPROVAL. By either Party hereto, at any
time after the FRB, FDIC, or OFI has denied any application for any
approval or clearance required to be obtained as a condition to the
consummation of the Mergers or imposed any condition for the
approval thereof not acceptable to ArgentBank as provided in
Section 8.1(b) hereof and the time-period for all appeals or
requests for reconsideration thereof has run, or 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.
(e) SHAREHOLDER APPROVAL. By either Party hereto, if
this Agreement and the Merger Agreements are not approved by the
required vote of shareholders of ABI, Assumption Bank or
ArgentBank.
(f) DISSENTERS. By ArgentBank, if holders of ten
percent (10%) or more of the outstanding ABI Common Stock exercise
statutory rights of dissent and appraisal in connection with the
approval of this Agreement and the Merger Agreements.
(g) PRICE OF ARGENTBANK COMMON STOCK.
(i) By ABI or Assumption Bank, if the Average Market
Price of ArgentBank Common Stock on the Effective Date,
exceeds $23.00; or
(ii) By ArgentBank, if the Average Market Price of
ArgentBank Common Stock on the Effective Date, is less
than $15.00.
(h) FIDUCIARY OUT. By ABI's Board of Directors in
accordance with Section 7.7 hereof upon payment of the expenses
referenced in Section 10.10(b) hereof.
9.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by any party as provided above, the Merger
Agreements shall also terminate and this Agreement, and the Merger
Agreements shall forthwith become void and except as provided in
Sections 7.6(b), 7.10(b), 7.11(d) and 10.10 hereof, there shall be
no further liability on the part of any party hereto or any of
their respective officers or directors.
ARTICLE 10
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement embodies the entire
understanding of the Parties in relation to the subject matter
herein and supersede all prior understandings or agreements, oral
or written, between the Parties hereto.
10.2 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 9 hereof. Except as provided in Section 10.10
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 8.2 or 8.3 hereof, provided, however, that the
foregoing shall not be deemed a waiver of any claim for intentional
misrepresentation or fraud.
10.3 HEADINGS. The headings and subheadings in this
Agreement, except the terms identified for definition in Article 1
and elsewhere in this Agreement, are inserted for convenience only
and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
10.4 DUPLICATE ORIGINALS. This Agreement may be executed in
any number of duplicate originals, any one of which when fully
executed by all Parties shall be deemed to be an original without
having to account for the other originals.
10.5 GOVERNING LAW. This Agreement and the rights and
obligations hereunder shall be governed and construed by the laws
of the State of Louisiana.
10.6 SUCCESSORS: NO THIRD PARTY BENEFICIARIES. All terms and
conditions of this Agreement shall be binding on the successors and
assigns of ABI and ArgentBank. Except as otherwise specifically
provided in this Agreement, nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person
other than ABI and ArgentBank any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provisions
contained herein, it being the intention of the Parties hereto that
this Agreement, the obligations and statements of responsibilities
hereunder, and all other conditions and provisions hereof are for
the sole and exclusive benefit of ABI and ArgentBank and for the
benefit of no other person.
10.7 MODIFICATION; ASSIGNMENT. No amendment or other
modification of any part of this Agreement shall be effective
except pursuant to a written agreement subscribed by the duly
authorized representatives of all of the Parties hereto. After
approval of this Agreement by the ABI shareholders, this Agreement
may not be amended to change the amount of consideration to be
delivered to the ABI shareholders without further approval of such
amendment by such shareholders. This Agreement may not be assigned
without the express written consent of both Parties.
10.8 NOTICE. Any notice, request, demand, consent, approval
or other communication to any Party hereof shall be effective when
received and shall be given in writing, and delivered in person
against receipt thereof, or sent by certified mail, postage prepaid
or courier service or facsimile at its address set forth below or
at such other address as it shall hereafter furnish in writing to
the others. All such notices and other communications shall be
deemed given on the date received by the addressee or its agent.
ABI AND ASSUMPTION BANK
Assumption Bancshares, Inc.
110 Franklin Street
Post Office Box 398
Napoleonville, Louisiana 70390-0398
Attn: Joseph H. Montero
Fax Number: (504) 369-7993
Copy to: Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
201 St. Charles Ave., Suite 5100
New Orleans, Louisiana 70170
Attn: W. Philip Clinton, Esq.
Fax Number: (504) 582-8012
ARGENTBANK
ArgentBank
203 W. Second Street (70301)
Post Office Box 819
Thibodaux, Louisiana 70302-0819
Attn: Randall E. Howard
Fax Number: (504) 447-0579
Copy to: Watkins Ludlam & Stennis, P.A.
633 North State Street (39202)
P. O. Box 427
Jackson, MS 39205-0427
Attn: Carl J. Chaney, Esq.
Fax Number: (601) 949-4804
10.9 WAIVER. ABI and ArgentBank may waive their respective
rights, powers or privileges under this Agreement; provided that
such waiver shall be in writing; and further provided that no
failure or delay on the part of ABI or ArgentBank to exercise any
right, power or privilege under this Agreement will operate as a
waiver thereof, nor will any single or partial exercise of any
right, power or privilege under this Agreement preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege by ABI or ArgentBank under the terms of this
Agreement, nor will any such waiver operate or be construed as a
future waiver of such right, power or privilege under this
Agreement.
10.10 COSTS, FEES AND EXPENSES.
(a) Except as set forth below, each Party hereto agrees
to pay all costs, fees and expenses which it has incurred in
connection with or incidental to the matters contained in this
Agreement, including without limitation any fees and disbursements
to its accountants, counsel and financial advisors. ArgentBank
will be responsible for preparing the applications, regulatory
filings and registration and proxy statement necessary to obtain
regulatory and shareholder approval of the Mergers and the issuance
of the ArgentBank common stock. ABI will be responsible for all
costs related to conducting its shareholders' meetings and
obtaining its shareholders' approval of the Mergers.
(b) In recognition of the fact that ArgentBank will bear
the bulk of the expense in preparing for regulatory approvals, if
the shareholders of ABI or Assumption Bank fail to approve the
transaction because of action taken by an officer or director of
ABI or Assumption Bank upon opinion of counsel pursuant to Section
7.7, ABI shall pay all reasonable third party out of pocket
expenses incurred by ArgentBank in connection with the Mergers.
(c) In the event that ArgentBank terminates this
Agreement pursuant to Section 8.1(b) because of the imposition of
a material condition to the approval of the transaction
contemplated hereby by any regulatory or governmental authority
which requires a divestiture or other antitrust or anticompetitive
condition, that is not acceptable to ArgentBank, ArgentBank shall
pay all reasonable third party out of pocket expenses incurred by
ABI and Assumption Bank in connection with the Mergers.
10.11 SEVERABILITY. If any provision of this Agreement is
invalid or unenforceable then, to the extent possible, all of the
remaining provisions of this Agreement shall remain in full force
and effect and shall be binding upon the Parties hereto.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their duly authorized representatives
as of the date first above written.
ASSUMPTION BANCSHARES, INC.
By:
Name: JOSEPH H. MONTERO, II
Attest: Title: PRESIDENT & CEO
Harold F. Templet
ASSUMPTION BANK & TRUST COMPANY
By:
Name: JOSEPH H. MONTERO, II
Title: PRESIDENT & CEO
Attest:
Harold F. Templet
ARGENTBANK
By:
Name: RANDALL E. HOWARD
Title: PRESIDENT
Attest:
Hugh E. Hamilton
Secretary
<PAGE>
EXHIBIT A
COMPANY MERGER AGREEMENT
This Company Merger Agreement (the "Company Merger Agreement")
is made and entered into as of the day of , 1996,
between Assumption Bank & Trust Company, Napoleonville, Louisiana,
a Louisiana state nonmember bank ("Assumption Bank") and Assumption
Bancshares, Inc., Napoleonville, Louisiana, a Louisiana corporation
("ABI").
WITNESSETH:
WHEREAS, Assumption Bank and ABI (collectively, the
"Constituent Corporations") and their respective Boards of
Directors deem it advisable that ABI be merged with and into its
wholly-owned subsidiary, Assumption Bank, (the "Company Merger")
pursuant to the provisions of the Louisiana Business Corporation
Law (the "LBCL") and the Louisiana Banking Laws (the "Banking Laws")
and upon the terms and conditions hereinafter set forth and in the
Plan (as hereinafter defined); and
WHEREAS, the Constituent Corporations and ArgentBank,
Thibodaux, Louisiana, a Louisiana state nonmember bank
("ArgentBank") have entered into an Agreement and Plan of Merger
dated as of the date hereof (the "Plan") (the defined terms in
which are used herein as defined therein) setting forth certain
representations, warranties, covenants and conditions relating to
the Company Merger and relating to the merger of Assumption Bank
into ArgentBank (the "Bank Merger");
NOW THEREFORE, in consideration of their mutual promises and
obligations, the Constituent Corporations hereby make, adopt and
approve this Company Merger Agreement and prescribe the terms and
conditions of the Company Merger and the mode of carrying the
Company Merger into effect as follows:
ARTICLE ONE
THE COMPANY MERGER
Upon the terms and subject to the conditions hereinafter set
forth, on the Effective Date (as defined in Article Two hereof) ABI
shall be merged into Assumption Bank, which shall be the surviving
association and the separate existence of ABI shall cease.
ARTICLE TWO
EFFECTIVE DATE AND TIME
The Company Merger shall be effective on the date and time
specified by the Office of Financial Institutions of the State of
Louisiana ("OFI") in a Certificate of Merger or other written
record issued by the OFI (such time and date being herein referred
to as the "Effective Time" and the "Effective Date", respectively).
ARTICLE THREE
CONVERSION AND CANCELLATION OF SHARES
On the Effective Date, by virtue of the Company Merger and
without any action on the part of the holders thereof, each share
of common stock, $5.00 par value, of ABI ("ABI Common Stock")
outstanding immediately prior to the Effective Date shall be
changed and converted into one fully paid and nonassessable share
of common stock, par value $25.00 per share, of Assumption Bank
("Assumption Bank Common Stock"). All treasury shares of each of
ABI and Assumption Bank and all issued and outstanding shares of
Assumption Bank Common Stock owned by ABI shall be canceled.
ARTICLE FOUR
EFFECTS OF COMPANY MERGER
The Company Merger shall have the effects set forth in Section
115 of the LBCL and in Section 355 of the Banking Laws.
ARTICLE FIVE
FILING OF COMPANY MERGER AGREEMENT
If this Company Merger Agreement is approved by the
shareholders of ABI and Assumption Bank, then the fact of such
approval shall be certified hereon by the Secretary or Assistant
Secretary of the Constituent Corporations, and this Company Merger
Agreement, as approved and certified, shall be signed and
acknowledged by the President or Vice President of each of the
Constituent Corporations. Thereafter, a multiple original of this
Company Merger Agreement, so certified, signed and acknowledged,
shall be delivered to the Louisiana Secretary of State and the OFI
for filing and recordation in the manner required by law and
thereafter, as soon as practicable (but not later than the time
required by law), a copy of the Certificate of Merger issued by the
Louisiana Secretary of State shall be filed for record in the
office of the recorder of mortgages for the parishes of Lafourche
and Assumption and shall also be recorded in the conveyance records
for the parishes of Lafourche and Assumption and any other parish
in which any of the Constituent Corporations owns real property on
the Effective Date of the Company Merger, and a copy of the OFI
Certificate of Merger along with a multiple original of this
Company Merger Agreement shall be filed for record with the
Louisiana Secretary of State and in the office of the recorder of
mortgages for the parishes of Lafourche and Assumption.
ARTICLE SIX
MISCELLANEOUS
The obligations of the Constituent Corporations to effect the
Company Merger shall be subject to all of the terms and conditions
of the Plan. At any time prior to the Effective Date, this Company
Merger Agreement may be terminated pursuant to the terms and
provisions of the Plan.
IN WITNESS WHEREOF, this Company Merger Agreement is signed by
a majority of the Directors of each of the Constituent Corporations
as of the day first above written.
ASSUMPTION BANCSHARES, INC.
By a Majority of its Board of Directors
F. N. Carrier, Jr.
Ridley J. Gros, Phd.
Leonard C. Guedry, Jr.
Robert J. Tregre
Patrick E. Cancienne, Sr.
Joseph H. Montero
Clarence J. Savoie, II
Stanley S. Sternfels
Nelson A. Cox, Sr. M.D.
Felix H. Savoie, Jr.
Nicess P. Templet
Risley C. Triche
(consisting of a majority of its Directors)
ASSUMPTION BANK & TRUST COMPANY
By a Majority of its Board of Directors
F. N. Carrier, Jr.
Ridley J. Gros, Phd.
Leonard C. Guedry, Jr.
Robert J. Tregre
Patrick E. Cancienne, Sr.
Joseph H. Montero, II
Clarence J. Savoie, II
Stanley S. Sternfels
Nelson A. Cox, Sr. M.D.
Felix H. Savoie, Jr.
Nicess P. Templet
Risley C. Triche
(consisting of a majority of its Directors)
<PAGE>
AMENDMENT NO. 1
TO
BANK MERGER AGREEMENT
BY AND BETWEEN
ARGENTBANK
AND
ASSUMPTION BANK & TRUST COMPANY
This Amendment No. 1 to that certain Bank Merger Agreement
("Agreement") dated as of November 20, 1996, by and between
ASSUMPTION BANK & TRUST COMPANY, Napoleonville, Louisiana, a
Louisiana state nonmember bank ("Assumption Bank"), and ARGENTBANK,
Thibodaux, Louisiana, a Louisiana state nonmember bank
("ArgentBank"), is entered into as of the 19th day of March, 1997.
W I T N E S S E T H:
In consideration of the premises, and the covenants contained
herein, Assumption Bank and ArgentBank hereby make, adopt and
approve this Amendment No. 1 to the Agreement and hereby agree as
follows:
1. In ARTICLE THREE (a)(i) of the Bank Merger Agreement at page
2 the words "American Stock Exchange" shall be substituted in
lieu of "NASDAQ Stock Market".
2. Except as expressly amended hereby, the Agreement is and shall
continue to be in full force and effect in all respects.
IN WITNESS WHEREOF, ArgentBank and Assumption Bank have
caused this Amendment No. 1 to the Agreement to be executed in
counterparts by their respective duly authorized officers and their
corporate seals to be hereunto affixed as of the date first
abovewritten.
ARGENTBANK
BY:
/s/ RANDALL E. HOWARD, President
ATTEST:
/s/ Hugh E. Hamilton
__________________________________
Title: Secretary
ASSUMPTION BANK & TRUST COMPANY
BY:
/s/ JOSEPH H. MONTERO, II, President
& CEO
ATTEST:
/s/ Harold F. Templet
____________________________________
Title: Secretary
<PAGE>
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ARGENTBANK
AND
ASSUMPTION BANCSHARES, INC.
AND
ASSUMPTION BANK & TRUST COMPANY
This Amendment No. 1 to that certain Agreement and Plan of
Merger ("Agreement") dated as of November 20, 1996, by and among
ASSUMPTION BANCSHARES, INC., Napoleonville, Louisiana, a Louisiana
corporation ("ABI"), ASSUMPTION BANK & TRUST COMPANY, Napoleonville,
Louisiana, a Louisiana state nonmember bank ("Assumption Bank"), and
ARGENTBANK, Thibodaux, Louisiana, a Louisiana state nonmember bank
("ArgentBank"), is entered into as of the 19th day of March, 1997.
W I T N E S S E T H:
In consideration of the premises, and the covenants contained
herein, ABI, Assumption Bank and ArgentBank hereby make, adopt and
approve this Amendment to the Agreement and hereby agree as
follows:
1. In Section 3.2(a)(i) of ARTICLE 3 the words "American Stock
Exchange" shall be substituted in lieu of "NASDAQ Stock
Market".
2. In Section 6.11 of ARTICLE 6 at page 17 the words "a simple
majority vote of the shareholders" shall be substituted in
lieu of "at least two-thirds of the voting power present".
3. In ARTICLE THREE (a)(i) of Exhibit B at page B-2 the words
"American Stock Exchange" shall be substituted in lieu of
"NASDAQ Stock Market".
4. Except as expressly amended hereby, the Agreement is and shall
continue to be in full force and effect in all respects.
IN WITNESS WHEREOF, ArgentBank, Assumption Bank and ABI have
caused this Amendment No. 1 to the Agreement to be executed in
counterparts by their respective duly authorized officers and their
corporate seals to be hereunto affixed as of the date first
abovewritten.
ARGENTBANK
BY:
/s/ RANDALL E. HOWARD, President
ATTEST:
/s/ Hugh E. Hamilton
__________________________________
Title: Secretary
ASSUMPTION BANK & TRUST COMPANY
BY:
/s/ JOSEPH H. MONTERO, II, President
& CEO
ATTEST:
/s/ Harold F. Templet
____________________________________
Title: Secretary
ASSUMPTION BANCSHARES, INC.
BY:
/s/ JOSEPH H. MONTERO, II, President
& CEO
ATTEST:
/s/ Harold F. Templet
____________________________________
Title: Secretary
APPENDIX B FAIRNESS OPINION OF CHAFFE & ASSOCIATES
DRAFT - FOR DISCUSSION ONLY
April , 1997
The Board of Directors
Assumption Bancshares, Inc.
110 Franklin Street
P. O. Box 398
Napoleonville, LA 70390
Gentlemen:
We understand that Assumption Bancshares, Inc. ("ABI") and
its wholly-owned subsidiary, Assumption Bank and Trust Company
("Assumption Bank"), on the one hand, and ArgentBank
("ArgentBank"), on the other hand, have entered into an Merger
Agreement and Plan of Merger by and among these parties, dated as
of November 20, 1996 (the "Merger Agreement") which provides,
among other things, for the merger of ABI into Assumption Bank
("Company Merger") and the merger of Assumption Bank into
ArgentBank ("Bank Merger"). Pursuant to the Merger Agreement and
subject to certain possible adjustments, each share of common
stock, par value $25.00 per share, of Assumption Bank
("Assumption Bank Common Stock") outstanding immediately
following the Company Merger and the exchange of each share of
ABI common stock for one share of Assumption Bank Common Stock
shall, in accordance with the election made or deemed to have
been made by the holder, be converted into (i) that number of
shares of common stock, $.10 par value per share, of ArgentBank
("ArgentBank Common Stock") equal to (x) $21.5 million (the
"Aggregate Merger Consideration Value") dividend by the average
of the closing sale prices of a share of ArgentBank Common Stock
on the American Stock Exchange (the "AMEX") for the forty days on
which the AMEX is open for trading preceding the fifth trading
day immediately prior to the Effective Date (the "Average Market
Price"), divided by (y) the number of outstanding shares of
Assumption Bank Common Stock immediately following the Company
Merger; or (ii) the right to receive $134.75 in cash (the "Cash
Payment") ((i) and (ii) together, the "Merger Consideration");
provided that, any holder of 15 or fewer shares of Assumption
Bank Common Stock ("De minimis Holdings") shall only be entitled
to receive a Cash Payment for such shares, and holders of shares
of Assumption Bank Common Stock as to which dissenter's rights
have been perfected and not withdrawn or otherwise forfeited
("Dissenting Shares") shall not receive any shares of ArgentBank
Common Stock for such shares, but shall instead be deemed to have
made an election to receive Cash Payments for all of such shares.
The total Cash Payments (including (i) the Cash Payments that
holders of Assumption Bank Common Stock have elected, or have
been deemed to have elected, (ii) the Cash Payments that have
been made in exchange for De minimis Holdings, (iii) the amount
of cash paid in lieu of fractional shares, and (iv) the amount of
cash paid to Dissenting Shares)("Total Cash Payments") shall be
limited to a maximum of $10,535,000 (the "Maximum Cash Number")
and a minimum of $7,525,000 (the "Minimum Cash Number"). The
Merger Consideration may be adjusted in accordance with the
formulas set forth in the Merger Agreement to ensure that Total
Cash Payments are not more than Maximum Cash Number nor less than
Minimum Cash Number. The terms and conditions of the proposed
transaction and the Merger Consideration are more fully described
in the Merger Agreement.
You have asked our opinion as to whether the Merger
Consideration is fair, from a financial point of view, to the
stockholders of ABI.
Chaffe & Associates, Inc. ("Chaffe"), through its experience
in the securities industry, investment analysis and appraisal,
and in related corporate finance and investment banking
activities, including mergers and acquisitions, corporate
recapitalization, and valuations for estate, corporate and other
purposes states that it is competent to provide an opinion as to
the fairness of the Merger Consideration contemplated herein.
Neither Chaffe nor any of its officers or employees has an
interest in ABI or ArgentBank Common Stocks. The fee received
for the preparation and delivery of this opinion is not dependent
or contingent upon any transaction.
In connection with rendering its opinion, Chaffe, among
other things: (i) reviewed ABI and ArgentBank's draft Joint Proxy
Statement/Prospectus for this proposed transaction as of April
XX, 1997, in substantially the same form to be sent to
stockholders, including a copy of the Merger Agreement; (ii)
reviewed and analyzed certain publicly-available financial
statements and other information of ABI and ArgentBank,
respectively; (iii) reviewed and analyzed certain internal
financial statements and other financial and operating data
concerning ABI, prepared by the management of ABI, including
budget projections; (iv) discussed the past and current
operations and financial condition, and the prospects of ABI and
ArgentBank with senior executives of ABI and ArgentBank,
respectively; (v) reviewed the historical prices and trading
volumes of the shares of ArgentBank Common Stock and ABI Common
Stock; (vi) compared the financial performance of ABI and
ArgentBank, and the prices and trading activity of the ABI Common
Stock and ArgentBank Common Stock, with that of certain other
comparable publicly-traded companies and their securities; (vii)
reviewed the financial terms of business combinations in the
commercial banking industry specifically and other industries
generally, which Chaffe deemed generally comparable to the
proposed transaction; (viii) considered a number of valuation
methodologies, including among others, those that incorporate
book value, deposit base premium and capitalization of earnings,
and (ix) performed such other studies and analyses as we deemed
appropriate to this opinion.
In its review, Chaffe relied, without independent
verification, upon the accuracy and completeness of the
historical and projected financial information, and all other
information reviewed by it for purposes of its opinion. Chaffe
did not make or obtained an independent review of ABI's or
ArgentBank's assets or liabilities, nor was Chaffe furnished with
any such appraisals. Chaffe relied solely on ABI and ArgentBank
for information as to the adequacy of their respective loan loss
reserves and values of other real estate owned. With respect to
ABI's projected financial results, Chaffe has assumed that they
were reasonably prepared on bases reflecting the best currently
available estimates and judgements of the management of ABI of
future financial performance of ABI. This opinion was
necessarily based upon market, economic and other conditions as
they existed on, and could be evaluated as of, the date hereof.
Chaffe expressed no opinion on the tax consequences of the
proposed transaction or the effect of any tax consequences on the
value to be received by the holders of ABI Common Stock.
Based upon and subject to the foregoing and based upon such
other matters as we considered relevant, it is our opinion on the
date hereof that the Merger Consideration is fair, from a
financial point of view, to the holders of ABI Common Stock.
Very truly yours,
CHAFFE & ASSOCIATES, INC.
GFGL:mb
APPENDIX C FAIRNESS OPINION OF CHASE SECURITIES INC.
April 18, 1997
Board of Directors
ArgentBank
203 West Second Street
Thibodeaux, LA 70301
Members of the Board:
You have informed us that ArgentBank ("ArgentBank") and
Assumption Bank & Trust Company ("Assumption Bank") have entered
into an Agreement and Plan of Merger dated as of November 20, 1996
(the "Merger Agreement"), which provides, among other things, for
the acquisition by ArgentBank of all the outstanding shares of
Common Stock, par value $25.00 per share, of Assumption Bank
("Assumption Bank Common Stock") for $134.375 per share (the
"Consideration") in cash and ArgentBank stock, par value $0.10 per
share to be followed by the merger of Assumption Bank with and into
ArgentBank (the "Merger"). Based upon 160,000 outstanding shares of
Assumption Bank Common Stock, the aggregate Consideration to be
paid to Assumption Bank stockholders is $21.5 million. The
aggregate cash payment amount shall be limited to a maximum of
$10.535 million and a minimum of $7.525 million. The number of
shares of ArgentBank Common Stock issued to Assumption Bank
stockholders shall be determined by the aggregate stock payment
amount divided by the average of the closing price of ArgentBank
Common Stock for the forty days the stock market is open for
trading preceding the fifth trading day immediately prior to the
closing of the Merger. The terms and conditions of the Merger are
more fully described in the Merger Agreement.
You have requested that we render our opinion as to the
fairness from a financial point of view to the stockholders of
ArgentBank of the Consideration to be paid in the Merger.
In arriving at the opinion set forth below, we have, among
other things:
(a) reviewed the Merger Agreement;
(b) reviewed certain publicly available business and financial
information that we deemed relevant relating to ArgentBank,
Assumption Bank and the banking industry in which they
operate,
ArgentBank
April l8, 1997
Page 2
(c) reviewed certain internal non-public financial and
operating data provided to us by or on behalf of the
management of ArgentBank relating to ArgentBank and
Assumption Bank, including management forecasts and
projections of financial results of ArgentBank and
Assumption Bank through the fiscal years ending
December 31, 1997, December 31, 1998 and December 31,
1999;
(d) discussed with members of management of ArgentBank,
ArgentBank's and Assumption Bank's operations,
historical financial statements and future prospects,
before and after giving effect to the Merger, as well
as ArgentBank's view of the business, operational and
strategic benefits and other consequences of the
Merger;
(e) compared the financial and operating performance of
Assumption Bank with publicly available information
concerning certain other companies we deemed
comparable and reviewed the relevant historical stock
prices and trading volumes of such other companies;
(f) reviewed the financial terms of certain recent business
combinations and acquisition transactions we deemed
comparable to the Merger; and
(g) made such other analyses and examinations as we have
deemed necessary or appropriate.
In rendering this opinion, we assumed and relied upon,
without assuming any responsibility for verification, the
accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for
us, or publicly available for purposes of this opinion, and have
further relied upon the assurances of both of the management of
ArgentBank and Assumption Bank that they are not aware of any
facts that would make such information inaccurate or misleading.
We have assumed that under generally accepted accounting
principles the Merger will be accounted for under purchase
accounting. We have neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities of either
ArgentBank or Assumption Bank, nor have we conducted a physical
inspection of the properties and facilities of ArgentBank and
Assumption Bank. We have assumed that the financial forecasts and
projections prepared by ArgentBank and Assumption Bank have been
reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of ArgentBank
ArgentBank
April 18, 1997
Page 3
and Assumption Bank as to the future financial performance of
ArgentBank and Assumption Bank. We express no view as to such
forecasts or projections or the assumptions on which they were
based.
Our opinion herein is necessarily based on market, economic
and other conditions as they exist and can be evaluated, and the
information made available to us, as of the date of this letter.
We disclaim any undertaking or obligation to advise any person of
any change in any fact or matter affecting our opinion that may
come or be brought to our attention after the date hereof.
Our opinion is limited to the fairness from a financial
point of view to the stockholders of ArgentBank of the
Consideration to be paid in the Merger. We were not asked to
consider and our opinion does not address the relative merits of
the proposed Merger as compared to any alternative business
strategies that might exist for ArgentBank or the effect of any
other transactions in which ArgentBank might engage. Our opinion
is directed to the Board of Directors of ArgentBank, and it does
not constitute a recommendation to any ArgentBank stockholder as
to how such stockholder should vote with respect to the Merger.
We have acted as financial advisor to ArgentBank in
connection with the Merger and will receive a fee for our
services, including for rendering this opinion, payment of a
significant portion of which is contingent on the consummation of
the Merger. In addition, ArgentBank has agreed to indemnify us
for certain liabilities arising out of our engagement. The Chase
Manhattan Corporation and its affiliates, including Texas
Commerce Bank and Chase Securities Inc., in the ordinary course
of business, have from time to time provided, and in the future
may continue to provide, commercial and investment banking
services to ArgentBank. In the ordinary course of business, we or
our affiliates may actively trade in the debt and equity
securities of ArgentBank for our own accounts and for the
accounts of our customers and, accordingly, may at any time hold
a long or short position in such securities.
Based upon and subject to the foregoing, we are of the
opinion, as of the date hereof, that the Consideration to be paid
in the Merger is fair from a financial point of view to the
stockholders of ArgentBank.
It is understood that (i) this opinion is for the use and
benefit of the Board of Directors of ArgentBank in connection
with its consideration of the Merger, and (ii) ArgentBank will
not furnish this opinion or any other material prepared by Chase
ArgentBank
April 18, 1997
Page 4
Securities Inc. to any other person or persons or use or refer to
this opinion for any other purpose without the prior written
consent of Chase Securities Inc., provided, however, that
ArgentBank may publish this opinion in its entirety in the Proxy
Statement or in similar documents distributed to its stockholders
in connection with the Merger, subject to our prior written
approval of any summary of, excerpt from or reference to this
opinion.
Very truly yours,
CHASE SECURITIES INC.
APPENDIX D
PROVISIONS OF THE LOUISIANA BUSINESS CORPORATION LAW
RELATING TO RIGHTS OF DISSENTING SHAREHOLDERS
(EXTRACT FROM LOUISIANA REVISED STATUTES,
TITLE 12, SECTION 131)
A. Except as provided in subsection B of this section, if
a corporation has, by vote of its shareholders, authorized a
sale, lease or exchange of all of its assets, or has, by vote of
its shareholders, become a party to a merger or consolidation,
then, unless such authorization or action shall have been given
or approved by at least eighty percent of the total voting power,
a shareholder who voted against such corporate action shall have
the right to dissent. If a corporation has become a party to a
merger pursuant to R.S. 12:112(H), the shareholders of any
subsidiaries party to the merger shall have the right to dissent
without regard to the proportion of the voting power which
approved the merger and despite the fact that the merger was not
approved by vote of the shareholders of any of the corporations
involved.
B. The right to dissent provided by this Section shall not
exist in the case of:
(1) A sale pursuant to an order of a court having
jurisdiction in the premises.
(2) A sale for cash on terms requiring distribution of
all or substantially all of net proceeds to the shareholders in
accordance with their respective interests within one year after
the date of the sale.
(3) Shareholders holding shares of any class of stock
which, at the record date fixed to determine shareholders
entitled to receive notice of and to vote at the meeting of
shareholders at which a merger or consolidation was acted on,
were listed on a national securities exchange, unless the
articles of the corporation issuing such stock provide otherwise
or the shares of such shareholders were not converted by the
merger or consolidation solely into shares of the surviving or
new corporation.
C. Except as provided in the last sentence of this
subsection, any shareholder electing to exercise such right of
dissent shall file with the corporation, prior to or at the
meeting of shareholders at which such proposed corporate action
is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action.
If such proposed corporate action be taken by the required vote,
but by less than eighty percent of the total voting power, and
the merger, consolidation or sale, lease or exchange of assets
authorized thereby be effected, the corporation shall promptly
thereafter give written notice thereof, by registered mail, to
each shareholder who filed such written objection to, and voted
his shares against, such action, at such shareholder's last
address on the corporation's records. Each such shareholder may,
within twenty days after the mailing of such notice to him, but
not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote
was taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of the
corporation may be sent, and at the same time deposit in escrow
in a chartered bank or trust company located in the parish of the
registered office of the corporation, the certificates
representing his shares, duly endorsed and transferred to the
corporation upon the sole condition that said certificates shall
be delivered to the corporation upon payment of the value of the
shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the
corporation, the written acknowledgment of such bank or trust
company that it so holds his certificates of stock. Unless the
objection, demand and acknowledgment aforesaid be made and
delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the
corporate action proposed or taken. In the case of a merger
pursuant to R.S. 12:112(H), the dissenting shareholder need not
file an objection with the corporation nor vote against the
merger, but need only file with the corporation, within twenty
days after a copy of the merger certificate was mailed to him, a
demand in writing for the cash value of his shares as of the day
before the certificate was filed with the secretary of state,
state in such demand the value demanded and a post office address
to which the corporation's reply may be sent, deposit the
certificates representing his shares in escrow as hereinabove
provided, and deliver to the corporation with his demand the
acknowledgment of the escrow bank or trust company as herein-above
prescribed.
D. If the corporation does not agree to the value so stated
and demanded, or does not agree that a payment is due, it shall,
within twenty days after receipt of such demand and
acknowledgment, notify in writing the shareholder, at the
designated post office address, of its disagreement, and shall
state in such notice the value it will agree to pay if any
payment should be held to be due; otherwise it shall be liable
for, and shall pay to the dissatisfied shareholder, the value
demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or
as to whether any payment is due, after compliance by the parties
with the provisions of subsections C and D of this section, the
dissatisfied shareholder, within sixty days after receipt of
notice in writing of the corporation's disagreement, but not
thereafter, may file suit against the corporation, or the merged
or consolidated corporation, as the case may be, in the district
court of the parish in which the corporation or the merged or
consolidated corporation, as the case may be, has its registered
office, praying the court to fix and decree the fair cash value
of the dissatisfied shareholder's shares as of the day before
such corporate action complained of was taken, and the court
shall, on such evidence as may be adduced in relation thereto,
determine summarily whether any payment is due, and, if so, such
cash value, and render judgment accordingly. Any shareholder
entitled to file such suit may, within such sixty-day period but
not thereafter, intervene as a plaintiff in such suit filed by
another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or
decree shall be made by the court staying the proposed corporate
action, and any such corporate action may be carried to
completion notwithstanding any such suit. Failure of the
shareholder to bring suit, or to intervene in such a suit, within
sixty days after receipt of notice of disagreement by the
corporation shall conclusively bind the shareholder (1) by the
corporation's statement that no payment is due, or (2) if the
corporation does not contend that no payment is due to accept the
value of his shares as fixed by the corporation in its notice of
disagreement.
F. When the fair value of the shares has been agreed upon
between the shareholder and the corporation, or when the
corporation has become liable for the value demanded by the
shareholder because of failure to give notice of disagreement and
of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because
of his failure to bring suit within sixty days after receipt of
notice of the corporation's disagreement, the action of the
shareholder to recover such value must be brought within five
years from the date the value was agreed upon, or the liability
of the corporation became fixed.
G. If the corporation or the merged or consolidated
corporation, as the case may be, shall, in its notice of
disagreement, have offered to pay to the dissatisfied shareholder
on demand an amount in cash deemed by it to be the fair cash
value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the
amount so offered, the corporation, or the merged or consolidated
corporation, as the case may be, shall deposit in the registry of
the court, there to remain until the final determination of the
cause, the amount so offered, then, if the amount finally awarded
such shareholder, exclusive of interest and costs, be more than
the amount offered and deposited as aforesaid, the costs of the
proceeding shall be taxed against the corporation, or the merged
or consolidated corporation, as the case may be; otherwise the
costs of the proceeding shall be taxed against the corporation,
or the merged or consolidated corporation, as the case may be;
otherwise the costs of the proceeding shall be taxed against such
shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a
shareholder except the rights accorded by this section. Such a
demand may be withdrawn by the shareholder at any time before the
corporation gives notice of disagreement, as provided in
subsection D of this section. After such notice of disagreement
is given, withdrawal of a notice of election shall require the
written consent of the corporation. If a notice of election is
withdrawn, or the proposed corporate action is abandoned or
rescinded, or a court shall determine that the shareholder is not
entitled to receive payment for his shares, or the shareholder
shall otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares, his share
certificates shall be returned to him (and, on his request, new
certificates shall be issued to him in exchange for the old ones
endorsed to the corporation), and he shall be reinstated to all
his rights as a shareholder as of the filing of his demand for
value, including any intervening preemptive rights, and the right
to payment of any intervening dividend or other distribution, or,
if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value
thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any
corporate proceedings that may have been taken in the interim.
<PAGE>
APPENDIX E
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ARGENTBANK
ArgentBank, a Louisiana state chartered bank ("ArgentBank"),
through its undersigned President and Secretary and by authority
of its Board of Directors, hereby certifies that:
FIRST: The reinstatement set forth in the SIXTH paragraph
below (the "Restated Articles of Incorporation") accurately
copies the articles and all amendments thereto in effect at the
date of the restatement without substantive change except as made
by the new amendments contained in the restatement, which
amendments change the articles by amending Articles IV, V, VI and
XI by deleting certain provisions (shown by striking through the
text) and adding certain provisions (shown by underlined text)
with the new Articles IV, V, VI and XI set forth in the SIXTH
paragraph below.
SECOND: Each of the amendments has been effected in
conformity with law.
THIRD: ArgentBank was incorporated on February 26, 1929.
Its Amended and Restated Articles of Incorporation, accepted and
approved by the Commissioner of Financial Institutions, State of
Louisiana, were filed for record on , in the
Office of the Secretary of State, State of Louisiana, in Volume
of Mortgages at Page , entry , in the records
of Lafourche Parish, and at the Office of the Secretary of State
of Louisiana, charter number .
FOURTH: At a Special Meeting of shareholders held on
, 1997, the shareholders of ArgentBank, by vote of the members
present and voting, at which votes were present or
represented, of which, with respect to the amendment to:
Article IV, votes voted "in favor," and
votes voted "against," and votes abstained;
Article V, votes voted "in favor," and votes
voted "against," and votes abstained;
Article VI, votes voted "in favor," and
votes voted "against," and votes abstained; and
Article XI, votes voted "in favor," and
votes voted "against," and votes abstained,
amended and restated the Articles of Incorporation by
amending Articles IV, V, VI and XI by deleting certain provisions
(shown by striking through the text) and adding certain
provisions (shown by underlined text) set forth in the SIXTH
paragraph below.
FIFTH: In accordance with La.R.S. 6:233, this Amendment
and Restatement of Articles has been executed and acknowledged,
and shall be filed and recorded in the manner provided for
articles of amendment in La. R.S. 6:232 and shall be effective
when filed with the Commissioner of Financial Institutions as of
the date and, if endorsed hereon, the hour of filing with him.
SIXTH: The Restated Articles of Incorporation read in
their entirety as follows:
ARTICLE I
The name of the corporation shall be, ArgentBank. The
domicile of this corporation and the place where its principal
banking house shall be located and its general business conducted,
shall be in the City of Thibodaux, Parish of Lafourche, State of
Louisiana. By and under such corporate name it shall have power to
sue and be sued; to plead and be impleaded; to appear, answer and
prosecute in any and all courts of justice in this state or
elsewhere and before any Boards of Commission, by and in its
corporate name; to hold, receive, purchase, sell and convey such
property, real and personal, or mixed as may be necessary or
convenient to carry into effect the objects for which this
corporation is organized, as sanctioned by the laws of the State of
Louisiana; to make, use, alter and change a corporate seal, which
shall be in the shape and form as may be decided by the Board of
Directors; to name and appoint such directors, managers, officers,
agents, attorneys and employees as may be necessary and proper to
administer its affairs, all directors of the corporation to be
citizens of the State of Louisiana; to make and ordain as well as
to alter and amend at pleasure, in conformity with law, such
bylaws, rules and regulations as may be necessary for the
management of its affairs; to increase or decrease its capital
stock; and generally, for the purpose of its business, to exercise
and have all rights, powers and privileges that may be now, or
hereafter permitted by law to corporations of this character,
including, but not limited to, the power to receive deposits, to
borrow and lend money, to accept for payment at a future date
drafts drawn upon it by its customers, to issue letters of credit
authorizing the holders thereof to draw drafts upon it or its
correspondents at sight or on time, to pledge, pawn, hypothecate,
discount, endorse, buy and sell promissory notes, bills of exchange
and other evidences of indebtedness and generally to do anything
and everything needed, necessary, proper or convenient to the
objects and purposes of this corporation allowed by law.
ARTICLE II
All citations or other legal process shall be served upon the
President, and in the event of his absence from the Parish, or his
inability to act, upon a Vice-President, and in the event of the
absence or inability of such Vice-President to act, upon the
Cashier.
ARTICLE III
The objects and purposes, and the nature of the business of
this corporation are hereby declared to be:
(a) To conduct and carry on a business of banking, savings
bank, safe deposits and trust company business, and to do all
things and enjoy and exercise all privileges accorded to banks,
savings banks and trust companies under the laws of the State of
Louisiana.
(b) To open, establish and operate branch banks within the
limits of the State of Louisiana.
(c) To accept and execute trusts and agencies of any and
every description which may be transferred or committed with its
consent to it, by any corporation, person or persons, board of body
politic, public or private, whatsoever, or by any Court of the
State of Louisiana, or of the several States; to be appointed by
any person or by any Court, executor, administrator, syndicate,
receiver, curator, tutor, trustee or assignees, in the same manner
and to the same extent, and under the same conditions as a natural
person may be appointed.
(d) Generally, to do and perform any and all acts, and to
exercise and enjoy any and all rights, powers and privileges as may
be granted to corporations organized for such purposes.
ARTICLE IV
The Capital Stock of this corporation is hereby fixed at
sixteen million (16,000,000) shares with a par value of Ten Cents
($.10) per share.
ARTICLE V
The business of this corporation shall be conducted by, and
its management be vested in and exercised by, a Board of Directors,
composed of not less than 15 nor more than 25 shareholders, all of
whom shall be citizens of the United States and of the State of
Louisiana; the said directors shall be elected at a general meeting
of the shareholders, to be held each year on a date to be
determined by the Board of Directors or in the Bylaws, after the
term of office herein fixed. Notice of such meeting shall be given
by letter addressed by the Cashier to each shareholder at his last
known place of residence and deposited in the mail at least fifteen
days immediately preceding said general meeting, and by publication
in a newspaper published in the parish of the domicile of this
corporation, in three issues thereof just preceding the date of
said meeting; said election shall be by ballot and shall be
conducted under the supervision of three commissioners or
supervisors of election appointed by the Board of Directors from
the shareholders; each share of stock represented by the holder
thereof, or by his or her written proxy in favor of a member of
this corporation in the name of the owner fifteen days prior to
said election shall be entitled to one vote, provided that a
married person may give his or her proxy to his or her spouse
whether he or she be a member of the corporation or not; the
shareholders receiving the highest number of votes shall serve as
directors for the ensuing year. In the event of a tie between two
or more shareholders among the number to be elected, the tie shall
be determined by casting lots. Should there be no election for any
cause whatever on the day herein fixed, the Board of Directors and
the Officers then in office shall continue to exercise their
functions until their successors shall have been duly elected and
qualified; however, a second election shall be called soon
thereafter as practicable by giving notice to shareholders in the
manner above indicated. Vacancies in the Board of Directors from
any cause whatever shall be filled by the remaining directors.
The Board of Directors shall appoint a President, a Cashier,
a Secretary, who shall each be a different person, and may appoint
a Chairman, Vice Chairman and such other officers or employees as
may be necessary to properly administer the affairs of the
corporation. All such officers and employees shall hold their
respective offices and positions at the pleasure of the Board, and
vacancies in said offices shall be filled by the Board of
Directors.
ARTICLE VI
The members of the Board or its committees may participate in
and hold meetings by means of:
(a) Conference telephone or other similar means of
communication; and
(b) With respect to extensions of credit only, communication
or contact by the chairman, president, or their designee
through the use of any oral, electronic, or written means
of communications, including the use of telephone,
telegraph, facsimile transmittal, or other means of
communication, provided that:
(i) No member objects to a meeting being held in this
manner;
(ii) The chairman, president, or their designee
certifies in writing the proposal to be acted upon,
their good faith attempt to communicate the
contents of such writing to all members eligible to
vote to determine their position on the proposal,
the affirmative or negative position taken by any
member, and the objection of any member under Item
(i) of this Subparagraph; and
(iii) All actions taken pursuant to this
Subparagraph or proposed pursuant to this
Subparagraph, but not taken due to the lack of
the necessary votes required for approval or
the objection of a member under Item (i) of
this Subparagraph, be evidenced by the filing
of the written certification required under
Item (ii) of this Subparagraph in the records
of proceedings of the Board of its committees,
as applicable, for review at the next meeting
of such Board of committee.
Participation in a meeting pursuant to this subsection shall
constitute presence in person at such meeting except where the
person participates for the sole, express purpose of objecting to
the transaction of any business on the ground that the meeting is
not lawfully called or convened or objects under the provisions of
Louisiana Revised Statutes 6:283(C)(1)(b)(i).
ARTICLE VII
In the case of the dissolution of this corporation by the
expiration of this Charter, or otherwise, its affairs shall be
liquidated by three commissioners, appointed from among the
shareholders at a general meeting convened for that purpose, after
thirty days notice by publication in a newspaper published in the
Parish of the domicile of this corporation, and by written notice,
given each shareholder in the manner provided by Article V. In the
event of the death or inabilities of any of the liquidators, the
survivors or survivor shall appoint a successor or successors to
fill the vacancy who shall be selected from among the shareholders
of the corporation.
ARTICLE VIII
No shareholder shall be held responsible for more than the
unpaid portion of the original purchase price of his stock, nor
shall any informality in the organization of this corporation have
the effect of rendering this charter void, or of exposing a
shareholder to any liability beyond the unpaid portion of the
original purchase price of his stock.
ARTICLE IX
The following persons have subscribed the Capital Stock of the
corporation for the amount set opposite their respective names, to-wit:
[The names of the original shareholders of
ArgentBank have been omitted pursuant to Louisiana
Banking Law.]
ARTICLE X
No individual, corporation, partnership, trust or other person
or legal entity, or association of any of the foregoing may acquire
or hold directly, or indirectly, or as beneficial owner or owners
more than fifteen percent (15%) of the total outstanding and issued
stock of the corporation and any purported issued or transfer of
shares which would result in violation of this Article shall be
null and void and shall not be recorded on the books of the
corporation.
No amendment altering the provision of this Article may be
adopted except by seventy-five percent (75%) of the voting power of
all outstanding and issued shares at an annual or special meeting
of shareholders, the notice of which sets forth the proposed
amendment and a summary of the changes to be made thereby.
ARTICLE XI
Unless previously approved by at least a two-thirds (2/3) vote
of the entire Board of Directors, in which case a simple majority
vote of the shareholders will be sufficient for approval, no
Business Combination shall be authorized without the approval of
seventy-five percent (75%) of the voting power of all outstanding
and issued shares at an annual or special meeting of shareholders,
the notice of which sets forth the proposed amendment or a summary
of the changes to be made thereby. "Business Combination" is hereby
defined to include any of the following activities, practices,
structures, organizations, or newly created entities:
1. A merger, or consolidation or similar combination of the
corporation with any other corporation, partnership,
trust or other person or legal entity in which the
corporation is not the surviving corporation; or
2. Any sale, lease, exchange, transfer or other disposition
of more than 50% of the corporation's assets or earning
power.
No amendment altering the provision of this Article may be
adopted except by seventy-five (75%) percent of the voting power of
all outstanding and issued shares at an annual or special meeting
of shareholders, the notice of which sets forth the proposed
amendment or a summary of the changes to be made thereby.
ARTICLE XII
Pursuant to the provision of Louisiana Revised Statutes 12:24
(C)(4), no Officer or Director of this corporation shall be
personally liable to the corporation or to any shareholder for
monetary damages for breach of his or her fiduciary duty as a
Director or Officer of this corporation. This corporation shall
(a) fully indemnify and otherwise hold the said Officer or Director
harmless from any such action or judgment obtained therein or
claim, except that said Officer or Director shall be responsible
for a breach of his or her fiduciary obligation to the corporation
or its shareholders, (b) acts or omissions not in good faith, acts
or omissions of intentional misconduct or knowingly in violation of
the law, (c) liability under Louisiana Revised Statutes 12:92(D);
or (d) any transaction from which the Officer or Director derived
an improper personal benefit.
SIGNED this the day of , 1997.
, President of ArgentBank
<PAGE>
PROXY
SPECIAL MEETING OF THE SHAREHOLDERS
OF
ARGENTBANK
THIBODAUX, LOUISIANA
PLEASE SIGN AND RETURN IMMEDIATELY TO
ARGENTBANK
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned
shareholder of ArgentBank, Thibodaux, Louisiana, do hereby
nominate, constitute and appoint the Board of Directors, or any one
of them, with full power to act alone, my true and lawful attorneys
and proxies, with full power of substitution for me and in my name,
place and stead to vote all the common stock of ArgentBank standing
in my name, on its books on April 18, 1997, at the Special
Meeting of its shareholders to be held in the Board Room on the third floor
of ArgentBank at 400 Green Street, Thibodaux,
Louisiana, on May 22, 1997, or at any adjournment
thereof with all powers the undersigned would possess if personally
present as follows:
(1) Approval and adoption of an Agreement and Plan of Merger,
related Bank Merger Agreement each dated November 20,
1996 (collectively, the "Merger Agreements") and the
transactions contemplated thereby pursuant to which
Assumption Bank, a Louisiana state nonmember bank, will
merge with and into ArgentBank.
FOR / / AGAINST / / ABSTAIN / /
(2) / / FOR / / WITHHOLD Authority to vote for the
election of twenty directors listed below:
J. Alvin Badeaux, Jr.
Bonnie E. Brady
Elie J. Cheramie
Randall E. Howard
Alfred G. Robichaux, Jr.
Perry A. Blanchard, Sr.
Weber L. Callais
Garret H. Danos
Irving E. Legendre, Jr.
David J. Robichaux, Jr.
Harold M. Block
Paul B. Candies
Kevin J. Gaubert
James T. Lytal, III
Donald J. Rouse
Joseph E. Boudreaux
Brian P. Cheramie
Carl E. Heck
James R. Peltier
Vernon E. Toups, Jr.
Instruction: To withhold authority to vote for any individual
nominee(s), list name(s) below:
FOR AGAINST ABSTAIN
(3) Ratification of the selection of
Deloitte and Touche LLP as
ArgentBank's independent external
auditors for 1997.
(4) Approval of amendments to
ArgentBank's Articles of
Incorporation to be included
in ArgentBank's Amended and Restated
Articles of Incorporation:
(a) To change the date of FOR AGAINST ABSTAIN
the general meeting of
the shareholders.
(b) To eliminate shareholder FOR AGAINST ABSTAIN
approval of certain business
combinations in which
ArgentBank remains the
surviving entity in order
to conform to the Louisiana
Banking Laws.
(c) To increase the authorized FOR AGAINST ABSTAIN
number of shares of Common
Stock from 10,000,000 to
16,000,000.
(d) To authorize Board meetings FOR AGAINST ABSTAIN
by telephone conference.
(5) In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Special
Meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO INSTRUCTIONS ARE
GIVEN, IT WILL BE VOTED "FOR" EACH OF THE PROPOSALS LISTED ABOVE.
THIS PROXY IF SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE BY CONTACTING RANDALL E. HOWARD
AND BY FOLLOWING THE PROCEDURES SET FORTH IN THE ACCOMPANYING JOINT
PROXY STATEMENT/PROSPECTUS.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, EVEN IF YOU PLAN TO ATTEND THE
MEETING, PLEASE DATE AND SIGN THE ENCLOSED PROXY FORM AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
DATE , 1997
Signature
Signature, if held jointly
When shares are held by joint
tenants, both should sign.
When signing as attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in the partnership
name by an authorized person.
<PAGE>
Assumption Bancshares, Inc.
110 Franklin Street
Napoleonville, Louisiana 70390-0398
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Patrick E. Cancienne, Sr., Nicess P.
Templet, Robert J. Tregre, or any of them (with full power to act
alone and to appoint a substitute), as Proxies, and hereby authorizes
them to represent and to vote all the shares of common stock of
Assumption Bancshares, Inc. ("ABI") held of record by the undersigned
on April 18, 1997, at the special meeting of shareholders to be held
on May 22, 1997, at 2:00 p.m., local time, and at any and all adjournments
thereof as follows:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger, and related Company Merger
Agreement and Bank Merger Agreement each dated November
20, 1996 (collectively, the "Merger Agreements") pursuant
to which (a) ABI would merge with and into Assumption
Bank (the "Company Merger"); (b) immediately thereafter
Assumption Bank would merge with and into ArgentBank, a
Louisiana state nonmember bank ("ArgentBank") (the "Bank
Merger" and, together with the Company Merger, the
"Mergers"); and (c) upon consummation of the Mergers each
outstanding share of ABI common stock would be converted
into the right to receive a certain number of shares of
ArgentBank common stock or cash at the option of each
shareholder subject to certain allocation restrictions
and as determined in accordance with the Merger
Agreements.
FOR AGAINST ABSTAIN
2. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before
the Special Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" Proposal
1.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR DISCRETION.
Please sign exactly as your name appears on certificate(s)
representing shares to be voted by this proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please
give your full title. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a
partnership, please sign in full partnership name by an authorized
person. If shares are held as joint tenants, each holder should
sign.
Dated , 1997
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
